Transformational Entrepreneurship

Vanessa Ratten, Paul Jones

• Publisher: Routledge
• Year: 2018
• Print ISBN: 9781138484757
• eBook ISBN: 9781351051323
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

To achieve progress in society and business practices, more entrepreneurship is needed to encourage action and enhance social capital in society, and transformational entrepreneurship may be the key. Transformational entrepreneurship offers a way of integrating sustainability practices whilst focusing on sustainable future trends.

This book discusses how transformational entrepreneurship uses novel business practices to reduce inequality in the marketplace and how it transforms society through creative solutions that enable change. The book provides useful insight into better understanding this emerging concept.

1 Transformational entrepreneurship

An overview

Vanessa Ratten and Paul Jones

Introduction

Transformational entrepreneurship is a distinct kind of entrepreneurship and has an interdisciplinary nature with linkages to anthropology, economics, sociology and regional planning. Entrepreneurs involved in transformations encourage positive action that has a flow on effect, which enables business ventures to deliver outcomes that change the surrounding environment by viewing things in a different way (Ratten et al., 2017). Transformational entrepreneurship is related to the concept of challenge-based entrepreneurship, as it is an important and socially significant type of entrepreneurship that transcends cultural barriers (Anggadwita et al., 2016). Transformation is a popular term used by entrepreneurship practitioners to indicate major changes in society and when combined with entrepreneurship it is presumed to have superior competitive capabilities that influence market performance (Moscardo, 2014). This means that transformational entrepreneurship has a practical, social and theoretical component, which makes it an interesting field of research.

The field of transformational entrepreneurship is exciting due to its relatively recent emergence and the need to assess the results of innovative behaviour. Transformational entrepreneurship offers a way to understand the causations and implications of entrepreneurship in terms of how innovation flourishes in society (Alvord et al., 2004). This enables valuable insights to be learnt from transformational entrepreneurship and it is an interesting research field with useful practical results. The exploration of transformational entrepreneurship opens up unique research opportunities that can help guide policy initiatives. As such, the chapters in this book provide a good starting point for scholars to further enrich management practice by focusing on transformational entrepreneurship. From this book researchers should be able to contemplate the opportunities around the topic of transformational entrepreneurship, as it is an exciting area of research that will continue to capture the interest of researchers. This chapter examines the role of transformational entrepreneurship in society by introducing the concept and current approaches. Increasingly, scholars, entrepreneurs and policy makers recognize entrepreneurship as having transformational powers and societal facets. Thus, this book adds another perspective to the current debate about the effects of entrepreneurship by placing attention on the transformations that have the biggest effect on society. This chapter explains the role of transformational entrepreneurship in the global economy so as to make recommendations on how the former can help improve the state of the later. In this chapter, the term ‘transformational entrepreneurship’ is introduced as well as the significance of the topic.

Entrepreneurship and social change

Entrepreneurship is a dynamic process that involves unforeseen events that are often unpredictable (Ferreira et al., 2017). The uncontrollable nature of entrepreneurship means individuals need to cope with the changing realities (Ratten et al., 2017). Hall et al. (2010, p. 439) states ‘entrepreneurship is increasingly recognized as a significant conduit for bringing about a transformation to sustainable products and processes’. There is no one type of entrepreneurship, as it is a diverse field with both profit and non-profit motivations (Leal et al., 2016). Therefore, to understand entrepreneurship the context is important in understanding differences in behaviour (Ferreira et al., 2017).

Entrepreneurship is the key to achieving change but depends on the significance of institutional factors influencing business structures. This is due to entrepreneurship being a strategic decision making process that incorporates individual and firm behaviour (Ramadani et al., 2017). Research on entrepreneurship has in many respects been dominated by a corporate perspective with only recently emphasis being placed on social and environmental issues. This is despite there being a positive association between competitive orientation and amount of transformation. The field of entrepreneurship has a multidisciplinary approach that necessitates a better understanding of social tensions requiring solutions (Ratten and Ferreira, 2017). Research based on traditional entrepreneurship theory may not apply to recent and emerging social innovations that are responsible for transformations in society (Tajeddini et al., 2017). Thus, there is much to learn about how entrepreneurship transforms society.

There are different ways to define and conceptualize entrepreneurship. Schumpeter (1934) was one of the first academics to discuss the role of entrepreneurs in society. He suggested that entrepreneurs are those who create new combinations of distribution systems, markets or products (De Bruin et al., 2006). This definition of entrepreneurship is still used by many and is considered one of the more traditional approaches. Another perspective of entrepreneurship is by Kirzner (1985) who viewed it as those with an ability to filter information in order to discover opportunities. This approach has become popular particularly with the knowledge economy and strategic use of information for competitive reasons. A broader approach to entrepreneurship is taken by Aldrich (1999) who views it as the initiation of new activities. This includes an emphasis on the achievements needed to conduct or start a business venture.

Entrepreneurship can be an elusive topic due to its range of definitions and ways it is applied. There is now more emphasis on entrepreneurship in the economy due to its influence on business growth rates. In the past, entrepreneurship was associated with negative connotations but this has changed with more people viewing it in a positive light as it impacts global well-being due to its ability to change society. Entrepreneurship captures a range of activities, attitudes, behaviours and motivations (Schoar, 2010). This means that entrepreneurs have diverse personality characteristics that range from being risk taking, proactive and interested in innovation. The core element of entrepreneurship is adding a form of value. Entrepreneurs are different to managers, as they focus on creating or discovering opportunities that have a degree of novelty. Managers on the other hand focus on existing businesses rather than seeking new opportunities. Thus, transformational entrepreneurship provides a way for managers to be strategically relevant, as it outlines practical examines that facilitate societal change (Tassabehji et al., 2010). The effective utilization of transformational entrepreneurship for business and management studies needs to further address social inequalities in society. Technological innovation has altered the way people live but this has brought about inequalities that can be partly solved by transformational entrepreneurship.

The demand for entrepreneurs increases when there is more diversity in technology, business and consumers (Crecente-Romero et al., 2016). Entrepreneurship involves the use of resources in a productive or destructive way and is viewed as a productive resource because it enables businesses to develop that create jobs, which contributes to societal development. However, entrepreneurship has also been viewed in a destructive way when it hurts the environment or changes society in a negative way. The environment for entrepreneurship is impacted by adverse conditions that require new ways of thinking (Ling et al., 2008). Market environments that are unstable provide opportunities but at the same time require risk. The deregulation of many economies has created market niches. This is more evident in transition, emerging and developing countries that are opening up new markets and require the injection of money into the economy.

Transformational entrepreneurship involves looking at opportunities in new markets to evaluate changing conditions (Matzler et al., 2008). The competitiveness of markets can increase when new businesses enter the market. To get better results there is an emphasis on big changes from entrepreneurship, as information communication has opened up many markets providing ways for companies to compete that were previously hard to do due to geographical factors. In addition, the rise of the knowledge and service economy has demanded entrepreneurs to think about innovative ways to have market penetration. To improve synergies between different sectors of the economy it is important to encourage collaboration. This can influence the launching of potentially transformative products and services that overcome current market barriers.

There are also contextual facts that influence individuals to become transformational entrepreneurs. This includes individuals who are driven to become entrepreneurs because of opportunities compared to those who need money to survive and thus are called necessity entrepreneurs. There are also differences in entrepreneurs because of other factors such as location, gender, age and occupation. Therefore, when we discuss transformational entrepreneurs there also needs to be an acknowledgement of their different characteristics. This helps in understanding the complexities of being a transformational entrepreneur.

Social changes are the result of innovation and improvements to current conditions that enable better collective empowerment. This helps reconfigure better social practices that can help build better community relations. Certain social contexts are characterized by more innovation that influences transformational entrepreneurship. Not all social innovation leads to transformational change due to the more incremental forms of entrepreneurship that take a longer time to process (Yuki, 1999). There is value in the variety of change incorporated within transformational entrepreneurship due to the context impacting the form of transformation. Thus, it is important to understand entrepreneurship by considering which major forms of change are influencing the environment.

Game changes are part of an entrepreneurial society and have been utilized to transform the way business is conducted. Transformational entrepreneurs change the rules of current business practices by incorporating different forms of behaviours. This helps society keep up to date with current trends and technological developments. Social innovation involves new ways of organizing relations that involve change but also a non-profit or altruistic component (Tajeddini et al., 2017). The framing of social relations is built on the practices of how people act together. Transformational change involves social innovation, as it encourages more community-oriented decisions. This is important in altering people’s decisions about business practices.

Because entrepreneurship is a societal phenomenon its antecedents and outcomes lead to transformations in communities. Entrepreneurial behaviour that goes beyond current expectations is considered transformational. The context of entrepreneurship matters in explaining whether there will be transformational change due to the impact of cultural, political and economic influence. Knowledge transfer is necessary for entrepreneurship due to the role communication plays in disseminating ideas. There are a variety of dissemination channels that entrepreneurs can use to transfer knowledge about their findings, including word of mouth, marketing and internationalization.

The question in entrepreneurship arises of whether there is a transformational change from the impact of ideas in society. A desirable achievement for entrepreneurs is to change taken-for-granted assumptions and have disruptive innovation. To do this requires a deepening effect of the entrepreneurship that combines ideas with practical approaches. It is worth looking at transformational entrepreneurship to find mechanisms that ensure the dissemination of knowledge because it offers a way of implementing radical ideas that reasonably questions the current state of affairs.

In entrepreneurship research there is a tendency to emphasize positive personality and environmental factors without taking into account negative circumstances such as economic, emotional and socio-cultural factors (Miller and Breton-Miller, 2017). The challenges people face in their lives can be a source of inspiration for transformational change. This is due to people overcoming adverse conditions that lead to resilient behaviour. People who become effective entrepreneurs may have experiences that lead to better risk tolerance and creative behaviours. In addition, social skills formed through adverse circumstances can help in obtaining business networks for entrepreneurship. Social skills are important in facilitating transformational entrepreneurship as they enable the tapping into other individual’s abilities. Sometimes it is necessary for entrepreneurs to work with and rely on others as part of their business model.

To build transformative change requires the aid of others in order to complement and extend existing capabilities. Entrepreneurs create networks of relationships in order to exchange information. Moreover, in the interconnected global business environment there may be a need to have a team approach that involves multiple business partners. Entrepreneurs with similar goals may utilize networks to help develop their businesses and share ideas. Thus, entrepreneurs can unite with others who share similar goals in order to overcome challenging experiences. Given the risk associated with entrepreneurship it may be essential to partner with others.

Defining transformational entrepreneurship

Research on transformational entrepreneurship is currently under active in the entrepreneurship literature. To further develop the field there needs to be more focus on the extent and need for entrepreneurs to behave in a transformational way. This chapter provides an understanding about transformational entrepreneurship but there remains considerable opportunity for further research. Once an entrepreneurial venture has been launched, individuals can work with others to make their businesses successful. The difference between transformational and non-transformational entrepreneurs is a function of individual, environmental and cultural factors. Individuals with a need for achievement can have a personality that motivates them to launch transformational business initiatives. To support these businesses, often individuals will have a need for autonomy and self-regulation. The co-presence of other factors such as intuition and originality is also important.

Transformational entrepreneurship tries to reconcile the economic and social disparities in society (Newey, 2017). To do this there is a need to change the existing socio-economic strategies. This helps to reconceptualize and alleviate social inequalities that were creating problems in the past, as transformation can take a variety of forms and differs in context (Newey, 2017). Part of the process for transformational entrepreneurship involves changing economic systems so they provide better services to marginalized groups of society. There is an increasing interest in transformational entrepreneurship due to more concern about social and community issues.

There are continual technological innovations that are utilizing entrepreneurship to bring about change. The value of transformational entrepreneurship is in how it becomes a strategic decision to contribute to societal development. The concept of transformational entrepreneurship is evolving due to changing notions about how to define transformation. Organizations need to be supported in their efforts to be transformational entrepreneurs. In order to act in a transformational way there needs to be an awareness of change and how it can be nurtured. Thus, organizations need to permit new ideas in order to have a transformational vision.

Transformational leadership

Transformational leadership focuses on the way leaders influence their organizations through visionary activity (Mittal and Dhar, 2015). Leaders can transform organizations by motivating people and forecasting future demand. It is important that leaders encourage growth by facilitating an innovative attitude in their organizations. This enables an organization to extend its current capabilities by visualizing future changes. By having a collective vision of innovation, leaders can transform current thinking patterns into more beneficial outcomes. This helps change employee thinking from being self-involved to being more collectivist in nature. Mittal and Dhar (2015, p. 906) states ‘transformational leadership is the best way for leaders to develop the creative skills of their employees and consequently to develop effective solutions to their problems’. In today’s globally competitive world, there is a need for transformational leadership that involves creativity and innovation. Leaders that have a transformational style are likely to build a more innovative organizational culture that fosters change. Organizations that share knowledge can improve their information flows and increase overall performance.

The key element of transformational entrepreneurship is universal, as it reflects substantial change that benefits society. Entrepreneurship that serves to benefit the social environment and is economically viable is considered transformational. Increasingly, there is consideration about the environmental effects of entrepreneurship for future generations. It is critical that the global economy becomes more sustainable and engages in transformational entrepreneurship.

Sustainable entrepreneurship involves focusing on how to find more novel ways to be sustainable in the marketplace. There is increased interest in bringing sustainable development strategies into entrepreneurship in order to be more transparent and to manage ecological initiatives (Provasnek et al., 2016). Miles et al. (2009) suggested that the main components of sustainable entrepreneurship are being accountable in terms of long-term environmental management. These components are linked to the presence of innovation in business that integrates environmental initiatives. More organizations are interested in sustainable entrepreneurship due to the emphasis on renewal or improvement in products that are also socially responsible (Provasnek et al., 2016).

Transformational entrepreneurship is an emerging topic of inquiry but has been used in vague terms. Entrepreneurs need to rise to the challenge of finding transformational changes that will help solve global problems and utilize market imperfections to find opportunities that bring about change. This enables information asymmetries to yield opportunities that bring about new economic behaviours as entrepreneurs find solutions to environmental problems. There...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of figures
• List of tables
• Foreword
• List of contributors
• 1 Transformational entrepreneurship: an overview
• 2 Disclosure of social impact in agrifood entrepreneurial initiatives
• 3 Sustainable transformational entrepreneurship at Arouca UNESCO geopark, Portugal
• 4 Development of transformational social entrepreneurship through innovation determinants in the handicraft industry of the Wayuu community in Colombia
• 5 Innovation in informal ethnic entrepreneurship – a result of the opening of the EU’s borders?
• 6 Exploring the excellence in socially responsible human resource practices: a case study from Spain
• 7 The post-mining boom: what next? the innovation agenda of Fortescue Metals Group: a qualitative case study
• 8 Individual innovativeness, entrepreneurial creativity and religious capital: the role of transformational entrepreneurship in Tunisia
• 9 Cultural leadership ideals and cultural practices leading to women’s participation in transformational entrepreneurial leadership
• 10 Open innovation, knowledge creation and capability building: the case analysis of transformational entrepreneurship at Alibaba and SHOP.COM
• 11 Collaborative innovation: a viable strategy to solve complex transformational social issues in sport?
• 12 The future for transformational entrepreneurship
• Index