Policy and support for entrepreneurial behaviour

Citation

Deakins, D. (2000), "Policy and support for entrepreneurial behaviour", International Journal of Entrepreneurial Behavior & Research, Vol. 6 No. 3. https://doi.org/10.1108/ijebr.2000.16006caa.001

Policy and support for entrepreneurial behaviour

The promotion of an entrepreneurial society has become a focus of policy in the developed World. For example, the European Commission has identified the importance of promoting and supporting "entrepreneurial" and "innovative" start-ups (EC, 1999a, 1999b); in the USA much attention has been directed at "models" of entrepreneurial start-ups and spin-outs in Silicon Valley and Stanford University; in the UK a greater focus has been placed on support for start-up entrepreneurs and the encouragement of entrepreneurial behaviour. For example, the Competitiveness White Paper (DTI, 1999) stated:

Developing an entrepreneurial culture in the UK is at the heart of the White Paper - and when entrepreneurs, at whatever age, are ready to make a start, Government will be there to offer them help and advice - there is much it (the Government) can do to encourage innovative start-ups in their early years.

This editorial is being written shortly after the official launch, in April 2000, of the Small Business Service (SBS) in England and Wales. Among the aims of the SBS are the support and development of high quality entrepreneurial new ventures through the role of business advisers (DTI, 1999). This editorial takes the opportunity of the launch to review some of the issues in supporting entrepreneurial behaviour and place them in the context of papers presented at the 3rd Enterprise and Learning Conference, held at Paisley, in November 1999. The role of support is closely linked to entrepreneurial learning and behaviour. This Issue contains four papers, all concerned with research into entrepreneurial behaviour, that are complementary and have implications for the role of support. The next issue of the Journal will also contain four further papers associated with the Conference that also have implications for support. This editorial reviews some of the issues and then considers the first four papers for this Issue. A connected but separate editorial will be provided with No. 4.

Issues in developing entrepreneurial support programmes

In the UK, support for small businesses has been characterised by variety, an absence of consistency and potential duplication (DTI, 1999). While flexibility can be desirable to meet local needs, variation is illustrated by the range of programmes which can be classified into the following categories or levels of general business development support programmes:

1. 1.

   Short-term and episodic part-funded external consultancy (including marketing, finance, IT and HRM), such as "expert help".

2. 2.

   Medium-term programmes targeted at specific aspects of business development, such as innovation.

3. 3.

   Longer-term relationships such as mentoring through key adviser or non-executive directors (perhaps linked to specific funding).

Short-term support

The principle of short-term "expert" help assumes that an entrepreneur's need for support will be essentially sporadic and short-term. It assumes that the entrepreneur can self-diagnose problems and need for help; yet such support is often driven by assumed needs, rather than diagnosed individual needs. Such support will meet a one-off need for help in a specific area such as marketing or IT management systems. TECs and Business Links have had a variety of schemes with the same essential characteristics. These schemes will meet some specific needs but they also contribute to confusion due to the variety and schemes and the range of agencies and authorities involved.

Medium-term programmes

Medium-term support programmes attempt to build a longer working relationship based on client need. Examples include regional innovation strategies in the West Midlands, Yorkshire and Humberside. In Strathclyde, the LECs work with client companies over an extended period to instil management change with the company. National initiatives include quality management (ISO 9000) and Investors in People which review company performance and take them through a planned strategy of improvements which may be introduced in a phased manner over an extended period of time that may take several years to implement.

Longer-term relationships

In the UK, the operation of business links with their personal business advisers (PBA) was intended to provide more continuity and flexible provision of business support. Operating with key client customers, PBAs could build a longer-term relationship with small businesses. However, the indications are that practice varied considerably (Agar and Witzel, 1994) and obviously depended on local policies. For example, Devon and Cornwall TEC introduced an advanced PBA service which involved some of their PBAs working as mentors (building a longer-term relationship with the client). In practice, however, funding programmes are often relatively short-term which often dictates the nature of relationships, which means that more commonly a short-term relationship existed between PBAs and their small business clients.

Style of support

Application of contingency literature (Hersey and Blanchard, 1977) to the adviser issue may imply that advisers require to adapt the type of advice (generalist/expert) and their style of delivery (collaborative/directive) to suit individual clients; or, alternatively, because it may not be possible for all advisers to adapt their approach, they may have to be carefully screened and selected to fit the needs of individual clients; the recognition being that some advisers may well be flexible all-rounders with a balance of generalist experience and context-specific expertise; others may well be constrained by being either a generalist or a specialist and/or, by their preferred/natural approach, for example, collaborative or directive.

Developing relationships

There is a substantial body of prescriptive literature on mentoring and consulting. In the case of consulting in small firms particularly, however, the actual research findings are scant and somewhat fragmented (Deakins et al., 1996). Analysis of the prescriptive literature reveals that the advocated mentoring and consulting roles appear very similar with emphases on: establishment and maintenance of a dynamic, long-term, collaborative, problem-solving relationship in which mentors and consultants fulfil varied roles within varied time-frames (Clutterbuck, 1991). Broadly speaking, however, the existing body of research evidence (Moran, 1996) suggests that the mentoring role can be placed at the long-term, generic, non-expert and collaborative end of a continuum; whereas the consulting role appears to be short-term, specific, expert and directive. Theoretically, a relationship that develops insightful, questioning learning is more likely to arise from a longer-term, mentoring-style relationship than from a shorter-term, consulting-style relationship.

Selection and matching issues

Selection and matching appear to be issues for different adviser roles above - i.e. advisers, mentors and consultants - and for the learning that may occur. For "mentoring": credibility, reputation, professional judgement, and context-specific expertise and broad business knowledge, personal and professional networks (Moran, 1996) are cited as reasons for appointment.

One issue which arises within the mentoring and consulting literature is that of "personal chemistry". Stead and Wiggans (1994) argue that the bond of shared context-specific experience between mentor and protÅgÅ may help foster a positive chemistry between them. In the consultancy literature, Redman and Allen (1993) and Fenn (1994) hold opposing viewpoints about the chemistry issue: the former question the reliability and validity of selection based on personal chemistry (and on "references" and "repeat business"); the latter advocates selection on the basis of personal chemistry or "fit" between consultant and client but with the caveat that this choice should occur from a previously validated short-list of consultants.

Dependency issues

With public sector support, programmes ideally should avoid the development of a dependency on publicly-funded advisers such as mentors. Potentially, non-executive directors (NED) provide one method to formalise an adviser relationship and remove the need for public resources since a small developing company pays for the NED. The development of a NED role may bring additional power base issues.

Power base

A NED appointment is likely from three situations - contractual conditions imposed by VCs; via publicly-funded support agencies; and internal pressures, e.g. a recognised skill gap. Therefore, there is arguably, a potential "power-base" issue (McNulty and Pettigrew, 1999) within this specific adviser relationship: whereby the entrepreneur's and/or NED's relative power, and ability to influence the firm's decisions and activities, are dependent on the circumstances which have brought the relationship about, i.e. how and why the NED was appointed; and whether the NED was selected by the entrepreneur or imposed. Theoretically, the way that NEDs interpret their role(s) would depend on their own perceptions of their accountability and loyalty (e.g. to entrepreneur and/or external investor); and the way that NEDs may use, or abuse, their perceived power base could prove beneficial or detrimental, e.g. stimulate or constrain organisational growth. As with other advisers, such as mentors and consultants, NEDs may have their own preferred/natural way of working - e.g. directing or guiding and advising - which in turn could exacerbate or alleviate the conflict and tensions that an imposed appointment might bring. Even where a NED has been selected by the entrepreneur, there is still the potential for tensions to arise from personality clashes or dislike of the NED's approach; theoretically in this case, however, it would be easier to remove/replace a NED than in an "imposed" appointment.

Hypothetically, the NED role is likely to be most similar to the mentoring-style role, i.e. long-term and generic. Nonetheless, in certain situations, NEDs may also have to provide short-term and specific advice, and perhaps even "direct" rather than "advise" or "guide", to avert/remedy potential crises; as argued above, some NEDs may prove to be "directive" rather than "guiding", not because of the firm's needs at any given time, but because of their own perceived "power-base" or natural/preferred "style". NED roles and approaches, therefore, are likely to be varied and complex.

The papers presented in this and the next Issue have something to say on the three main roles identified of adviser, mentor and NED and their potential for affecting entrepreneurial behaviour. Programmes introduced by the new SBS will in theory be research-informed; hopefully research issues identified in these two issues of the Journal will be taken into account by the development of new programmes.

The papers in context

All the papers in this Issue are concerned with the nature of entrepreneurial learning. It is encouraging to find that researchers are now responding to the identified need for more research in this area. The first paper, by Cope and Watts, deals with the nature of entrepreneurial learning and in particular the importance of critical incidents. Returning to the support issues; how the entrepreneur is able to handle and learn from such critical incidents will affect the value and role of adviser, consultant or mentor. Cope and Watts place the importance of critical incidents in the nature of learning and the entrepreneurial process. As they suggest, critical events are very powerful in terms of outcomes and the learning achieved. If interventions are used then we need to understand the nature of the process of learning; as Cope and Watts indicate, the implications for support programmes, which are examined at some length, are that support should be provided through longer-term mentoring relationships.

The second paper by Harris et al. examines some of the issues in entrepreneurial development with young entrepreneurial graduates from a specific "graduate enterprise" course run at the University of Stirling. The paper examines emergent strategies of such young entrepreneurs and, although different in approach from the other three papers, it contains similar insights into the importance of relationships for entrepreneurial learning and development. The authors also tackle the issue of the implications of their insights for course and curriculum development and they stress the importance of the inclusion of emergent and informal strategies alongside the more formal planning techniques that are normally included in such courses.

The third paper, by Rae, is closely related to the first by Cope and Watts, and it could be claimed that there are some striking similarities. Through a similar methodology of longitudinal case studies designed to reveal insights into entrepreneurial learning, Rae also remarks on the importance of critical events, although the nature of such events is given a rather different context. In Rae's paper it is learning episodes that are important for the process of entrepreneurial learning and hence changed entrepreneurial behaviour. Whereas Cope and Watts compare the changed behaviour with the Greiner model, Rae's paper implies that changed behaviour is more gradual and a response to longer periods of learning episodes, with the entrepreneur taking time to reflect on what has been learned before significant change is observed. Rae does not tackle the implications for policy, rather focusing on the development of a conceptual model of the learning process; nevertheless, the insights provided by Rae are supportive of the policy implications made by Cope and Watts.

The final paper by Sullivan also focuses on the entrepreneurial learning process, but examines the process in the context of a mentoring support programme. Sullivan compares the nature of individual entrepreneurial learning with organisational learning. In contrast to Cope and Watts, Sullivan argues for an approach closer to the Churchill and Lewis model of entrepreneurial development and, therefore, is closer to the approach of Rae. Sullivan focuses on some of the issues that exist in developing a mentoring support programme, given the nature of entrepreneurial learning. These include, for example, matching and the advisory style of the mentor.

Conclusion

In the introduction to this editorial we noted the increased focus of policy makers on supporting entrepreneurial behaviour. This policy focus, in the UK, has received increased attention with the recent launch of the SBS. Policy developments extend to both rural and urban areas, growth "poles" and deprived areas. A recent policy action team report noted that the support has a key role in promoting enterprise in deprived areas (HM Treasury, 1999). In the UK, previous experience with business links and the TECs does not give a lot of cause for confidence in such support to be effective or consistent in stimulating and developing entrepreneurial behaviour. If, however, the Government takes note of some of the issues concerning entrepreneurial behaviour and learning, presented in the papers in this Issue, then there will be greater confidence in the ability of new developments in policy to be more effective.

David DeakinsPaisley Enterprise Research Centre, University of Paisley