Four traps that inhibit entrepreneurial cultures

Innovation is crucial for the competitiveness of organizations. While entrepreneurship research often focuses on innovation and creativity, little is known about how entrepreneurs create an environment that enhances innovation. Entrepreneurial culture of a new venture enables innovativeness.

From the perspective that organizational cultures are shaped by their founders, it is expected that entrepreneurs create entrepreneurial cultures in line with their innovative approach. A study conducted by our faculty member Secil Bayraktar challenges this expectation by drawing attention to the potential challenges that may inhibit entrepreneurs from forming and maintaining innovation oriented cultures as intended. Four traps that act as barriers in the formation of entrepreneurial (innovative) cultures are identified.

Source: Bayraktar, S. (2016). Do entrepreneurs really create entrepreneurial cultures? When intentions do not match actions. Bogazici University Journal, 30 (2).

1. Trap of Control “My Command”:

Entrepreneurial cultures and their essential element, creativity, are fostered via empowerment. However, at the early stage of the firm, entrepreneurs may have the tendency of not letting go of control as they may prefer autonomy and self-reliance. Although this might have advantages such as fast and centralized decision making, employees may develop leader dependence over time, and thus feel stressed when empowered and need to take initiative. Consequently, this stress reduces creativity and thus has a negative impact on maintaining an entrepreneurial culture.

2. Trap of similarity “My Worldview":

Founders of an organization create cultures by reflecting their own values. As a result, entrepreneurs will be likely to recruit those people who are congruent with their ideas and beliefs. Although this congruence may have beneficial outcomes in terms of group harmony and cohesion, there is an unintended consequence in terms of increasing homogeneity. Reduced diversity in the organization hinders formation of an entrepreneurial culture by lowering the potential of creativity.

3. Trap of preservation “My Best Way”:

Entrepreneurs may feel a strong ownership towards their business such that their idea may become a monument to them. The strong ties to the business may decrease the openness to change, which is a hindrance for innovation. Also, after consequent successful decisions, entrepreneurs may face the fear of failure with the next moves. In that case, rather than trying and testing new strategies, the proven strategies begin to create path dependencies As a result, fear of failure reduces openness to change, again contradicting with entrepreneurial culture.

4. Trap of individual identity “My Organization”:

A major prerequisite of creativity and innovation is teamwork and collective identity. Entrepreneurship should diffuse throughout the organization, allowing for experimentation and development, and leading to a collective capacity to innovate. Therefore, emphasizing “us” versus “me” approach is crucial for creating an entrepreneurial culture. However, sometimes the entrepreneur is perceived as a hero whose identity constitutes the organization. The “hero” perception can act as a barrier for the collective identity perception. Consequently, focus on the individual identity of entrepreneur is negatively related to creativity and entrepreneurial culture.

So, what is the solution? In order not to get caught in the potential traps, empowerment rather than over-control; diversification rather than homogenous selection of members, exploration of opportunities rather than preservation, and focusing on collective identity of the organization rather than on the individual identity of the entrepreneur are suggested as facilitators of an entrepreneurial culture.