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The rise of the Entrepreneurial Leader

It is clear that leadership and entrepreneurship are many things in common, and often this is due to the fact that well-known entrepreneurs are also leaders.

McGrath and MacMillan (2000) explain that the two disciplines have merged because the increased uncertainty and hyper-competitiveness of modern business makes analytical leadership and long-range strategic planning less useful than it once was, and in its place is emerging entrepreneurial leadership, which accomplishes two challenges. The first is the leadership challenges - to shape an organisation capable of, and committed to, accomplishing the adaptive transformation that will lead to the new profit model. The second challenge is the entrepreneurial one - to reposition business units to exploit opportunities as they emerge.

Fernold (2005) states that since the 1980’s, the concern has been that major business corporations have lost their competitiveness through an emphasis on management rather than leadership, and calls entrepreneurial leadership a "new paradigm" in business.

It is clear that the three concepts of management, leadership and entrepreneurship are interrelated, probably in part because organisational leaders often perform all three.

To separate them, lets return to Schumpeter to remind ourselves that "entrepreneurship consists in doing things that are not generally done in the ordinary course of business routine" (Hagedoorn, 1996 citing Schumpeter, 1934). Also, commonly agreed is that entrepreneurship deals with increased uncertainty and risk, and is associated with high levels of innovation and new venture creation. On the other hand, leadership deals mainly with influencing people (Avolia, Walumbwa, & Weber, 2009), and management deals with getting things done by others (Hannagan, 2007). 

So, what is entrepreneurship after all?

Here's what I've learned while writing this article series. Although all schools of entrepreneurship have validity, here's my view:

Entrepreneurship is best considered as the act of taking risks, having a vision, dealing with uncertainty, being innovative and creating a new venture - all activities that require leadership skills to influence others to supply resources, capital and effort, and management skills to do so in a coordinated way.

Returning to the premise, is entrepreneurship a special form of leadership? Well, no. But special leaders can be entrepreneurs, or at least behave entrepreneurially by embodying the traits and employing the skills required to accomplish the above definition. However, by no means is the club of the entrepreneur exclusive to those born with a propensity to accept high risks and have charisma.

Conclusion

With the pace of business ever-increasing and bringing with it ever-increasing uncertainty and hyper-competitiveness, the role of the entrepreneurial leader will become more important, both in creating new ventures and in re-imagining existing organisations.

We are now living in the age of the entrepreneur (Hisrich & Peters, 2002), and a new phase in the long evolution of the term entrepreneur has begun.


This is the final installment in a series of articles exploring the relationship between entrepreneurship and leadership, adapted from research I performed for my Master of Business.

The complete series is listed below:

  1. Is Entrepreneurship merely a special case of leadership?
  2. Entrepreneurship as a personality trait
  3. Entrepreneurship as a leadership style
  4. Entrepreneurship as an activity
  5. Entrepreneurship as a skill
  6. Entrepreneurship as corporate culture
  7. The rise of the Entrepreneurial Leader