a study on entrepreneurship and its presence in hospitality business life

8/13/2019 A Study on Entrepreneurship and Its Presence in Hospitality Business Life

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Introduction

The following paper is going to include a review of concepts, theories, models

and existing empirical studies, covering the field of entrepreneurship. The main

aim of the report is to give an overview about the selected segment of the

business life, with special emphasize on the connections to the hospitality

industry. Entrepreneurship as such is present in the history since centuries. The

meaning of being an entrepreneur has changed during the years, this way an

entrepreneur transformed from a person, who overtakes duties, into an

instrument of change (Stokes and Wilson, 2002, pg.31). Nowadays there are

entrepreneurs everywhere, thinking only about a few examples, such as Richard

Branson, Bill Gates, Steve Jobs or Anita Roddick (Thompson and Martin,

2010).This research tries to discover the background of this phenomenon, find

answers for general questions regarding entrepreneurship, and its focus is set on

the topics relations towards the hospitality industry. The main body of this

paper focuses on the explanation of a key model and two relating theories in

context with the entrepreneurship. After the comparison of these sources, the

author concentrates on the research, which has been already done on the topic.

Online journal articles were used to explore different segments of the hospitality

industry and compare their findings in order to give a general overview about

the main topic and be able to find the research gaps where further research

could be done.


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Definition of entrepreneurship

Hitt et al. defines entrepreneurship in the following way:

Entrepreneurship is the process by which individuals or groups identify and

pursue entrepreneurial opportunities without being immediately

constrained by the resources they currently based on the literature, small

organizations, which have good potential for further financial and

economical process in the business life, by identifying the product or service

gaps in the market, control.(Hitt et al., 2007, pg.393).

Several authors (Johnson et al., 2011, Barringer and Ireland, 2010, Mariotti and

Glackin, 2010, Darling et al., 2007, Hitt et al., 2007, Allen, 2012, Thompson and

Martin, 2010) explain the definition by stating key characteristics both

entrepreneur and entrepreneurial-led businesses. Those organizations, which

have open-minded, creative leaders and employees and gain competitive

advantage by developing new products and services before their competitors,

can be seen as entrepreneurial businesses. Moreover, constant development,

changes and high risk factor specify the typical features of such an organization.

Generally the risk is caused by shortage in financial support for the business.

E-V-R congruence model

The first important model is the Environment-Values-Resources (E-V-R)

congruence. The base is, that a company needs to find the perfect balance

between the three main influencing factors: environment, resources and values.


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These aspects can be also called the three Cs: customer expectations (standing

for environment), competencies and capabilities (resources) and culture

(values) (Thompson and Martin, 2010, pg.30), moreover they are bound

together, and the organisations aim is to keep them in an ideal balance with the

help of a strong business plan. The concept is also associated with the use of

SWOT analysis; strength and weaknesses are a part of resources, while

opportunities and threats are considered to have connection with the

environment (Dransfield, 2001). In order to characterize an entrepreneurial

business, the need for making high risk factor decisions has to be taken into

consideration. This way the employees entrepreneurial mind-set (Hitt et al.,

2007, pg.395) gets the required freedom to create new values in order to help

the company in gaining competitive advantages on the market. (Thompson and

Martin, 2010) In this case, the model needs to be changed to make it more

suitable for the specialized situation: the three connecting aspects are

competencies and capabilities (resources), windows of opportunity

(environment) and entrepreneurship (values) (Thompson and Martin, 2010,

pg.410). In this context the model interprets a process instead of a status, which

describes the way of the actual use of the above mentioned entrepreneurial

mind-set with the help of the resources for the further development of the

company.

Internal Innovations Theory

Concentrating more on the internal changes and influences in an organization, as

Hitt et al. (2007) describes, that two types of development can be seen. The first

type includes the incremental changes.


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The other type of internal innovations is the so-called radical innovations. In

contrast with the previous one, this type suits perfectly for an entrepreneurial-

led company by providing the above mentioned needed freedom of creating or

developing a new product or service, which can be beneficial for the

organization. Obviously this means higher risk, and has more significant effect,

but at the same time ensure the vantage against the competitors. This kind of

decisions, being revolutionary and non-linear in nature (Hitt et al., 2007, pg.

400) is most likely to lead the company to notable economic and financial

growth.

Strategy structure theory

The main idea behind Mintzbergs theory (1989 cited Thompson and Martin,

2010) is that different organizations need different leading styles and business

plans. These are built up from the four links, learning form the past,

understanding the present, imagining the future and competing and innovating

to stay ahead of rivals and seize new opportunities (Thompson and Martin,

2010, pg.46), but in various context, which is influenced by the type of the

strategy and leadership style, owned by the organization. Based on these

categories, both amongst the entrepreneurial businesses, two totally different

implementations can be seen. In one case the organization bases its strategy

mainly on its competiveness, supported equally by the learning, understanding

and imagining parts. In contrast, an ambitious, entrepreneur-led business

emphasizes the employees inventiveness and the competition and disregards

the other two aspects.


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Assuming the three above mentioned concepts and theories in connection with

entrepreneurship, we can see how complex this phenomenon is. All of them is

analysed in different context, starting form external determining factors, through

the various classifications of the decisions, based on different theories. The first

concept, in comparison with the following two, concentrates on the relationship

between the entrepreneur and the environment and analyses their effect on each

other. Nevertheless the theories study the structure of the entrepreneurial

decisions, which can be seen also as a supplemental part of the previously

mentioned model. They complete each other, and one gives deeper

understanding to the others meaning, however only this information does not

give an extensive overview in every aspects of entrepreneurship.

General studies on entrepreneurship

Both Jones et al. (2001) and Landstrm et al. (2012) state in their research,

which were collecting data since the 1990s, that the field of entrepreneurship is

not in an extended state yet and in order to fill out the research gaps, several

more studies should be done in the following years. In their opinion, this would

support the work of the next generation of researchers in this area. El Harbi et

al.s (2011) study was conducted in 34 countries, which gives a general overview

about their main aim, which was to identify whether entrepreneurship causes

economic growth or it works the other way around. In their findings the

relationship has been stated, as they identified, that in a short period,

entrepreneurship could be useful in order to increase the GDP per capita,

however it is not the most appropriate way in long terms.


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Motivation and entrepreneurship

Five key areas were discovered by Hornsby et al. (2002), which highly influence

the middle level managers motivation to promote corporate entrepreneurship

and inspire the employees to participate. The research was done in the USA and

Canada, and states that the existence of those factors is crucial, and absolutely

beneficial for the organization. Hospitality relatedly, the research, conducted by

Brizek and Khan (2007) provides information about the connection between

corporate entrepreneurship and an organizations human resources aspects in

the casual dining area. The main focus of the study is on support of the

management team, the remuneration and job satisfaction in intrapreneurial

context. The authors came to the conclusion, that intrapreneurial strategies help

the development of the above-mentioned factors and have positive effect on

them.

Gender and entrepreneurship

The Swedish study of Obschonka et al. (2013) concentrates on the relationship

between the dysfunctional social behaviour in early ages and having an

entrepreneurial career. The research found connections between male

entrepreneurs antisocial behaviour and registered crime (Obschonka et al.,

2013, pg.386) in their childhood, however only going against the rules did not

really have enormous influence on any of the genders. Another study from

Sweden puts the genetic and environmental influences in the spotlight by

examining their effect on male and female people in connection with becoming

an entrepreneur.


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Obviously the findings are totally different regarding the two genders, but they

provide further valuable information separately on both of them.

Entrepreneurship in the hospitality industry

The study of Li, L. et al. (2009) compares the basics of corporate

entrepreneurship in the manufacturing and hospitality industries. Surprisingly

they have found more corresponding points, than differences and these results

could encourage other researchers to conduct comparison studies not only

generally on corporate entrepreneurship. More research was done in the fields of

hotels and restaurants in this industry. Glancey and Pettigrew (1997)

concentrated on the small hotel industry, examining the factors, which are

influencing an individuals decision to become an entrepreneur. These aspects

were motivation, age, gender, education, main aims and economics. Similarly,

Ramos-Rodrgoues et al. (2012) focus also on the same topic, but in regards of

the hotel and restaurant segment of the industry. In their point of view a young,

female and middle or upper category household income person has the highest

chance to become an entrepreneur.

Conclusion and Recommendations

As the economic and business world has changed, there became more and more

space for entrepreneurship, which keeps this whole engine in progress,

providing the constant changes, innovations for further development (Lee-Ross

and Lashley, 2009). This paper presents an incomplete overview of the basics of

entrepreneurship and review on the already existing research.


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Special emphasize is in this study on the existence of entrepreneurship in the

hospitality industry. There is a wide range of definitions available, several books

are teaching the enthusiastic individuals how to become a successful

entrepreneur, but this particular segment still has to be studied further in order

to understand it completely, since it depends heavily on the individuals

characteristics and personality. It can be said, that this phenomenon has an

increasing importance in the tourism industry, nevertheless much less research

has been done and those are also not really specific and detailed. The collection

of studies shows that this is not a single case, other industries also need deeper

investigation in this topic. On the other hand the existing research papers

support each other and add on more information in terms of finding more details

and complete the current aspects. Due the above-mentioned reasons, the author

would like to recommend her study for further research. Several options have

been identified which were not discovered and researched yet in terms of the

tourism and hospitality industry. The aspects, in which the entrepreneurship has

been already examined, could be all implemented in the hospitality environment.

The cases can be made very specific by monitoring different continents,

countries and cultures. On interest differentiation can be based on evaluating

data from diverse age groups, gender and people from discrepant educational or

salary level. The possibilities are limitless and these studies help the industry to

understand the subject better and find the solutions for the occurring issues. The

author recommends her work for the industry, hoping that it helps with

recognising new opportunities, which are apparently present in other industries,

and successfully implementing them into the hospitality businesses.


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