Strategy Making, Organizational Learning & Frim Performance in Smes

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Strategy Making, Organizational Learning and Performance in SMEs Author: Edward Gonsalves

Open University Business School & Visiting Lecturer, European Business School The theoretical role of organizational learning in entrepreneurship strategy has been largely limited to in-depth case analysis both empirically and as method. Such developments reflect the diverse nature of entrepreneurial phenomena, definitional controversy over what constitutes entrepreneurship, the emergence of entrepreneurship as a semi-autonomous discipline within contemporary organizational inquiry and the competing demands of managerial, educational and industrial-policy interests. Secondly, learning approaches to entrepreneurial theory have in the main confined themselves to cognitive and experiential perspectives of knowledge as a source of value-creation. Nevertheless there is a growing consensus that frameworks, which seek to examine the role of organizational learning within entrepreneurship strategy research, are necessary. Mintzberg & Waters' (1985) work on deliberate and emergent strategy formation is one of the central pieces of literature in what has been described as the 'process' school of strategy. This paper adopts a process-based approach when examining entrepreneurship strategies. It elaborates a typology of strategy formation processes based on Mintzberg's (1988) definition of strategy as a pattern in a stream of actions. The survey-based research reported is derived from a UK project (Gray & Gonsalves, 2002), and builds on the Mintzberg & Waters’ postulate that ‘emergent strategies imply learning that works’ to hypothesise a relationship between senior managers’ orientations to organizational learning, strategy making and environmental uncertainty. The paper cons iders the methodological debate within entrepreneurial studies by attending to the structure-agency debate as duality rather than dualism. The paper also argues that a multidimensional approach to theorising organizational learning will provide a more robust basis from which to deliver both diagnostic and normative models of learning within the field of entrepreneurship. It explicates the methodological, and definitional dynamic inherent in moving from verbal conceptualisations of a theory to the corresponding empirical investigation of that theory's central tenets. In doing so the author attempts to fill some of the methodological gaps promulgated by theorists in each of the research domains considered. The empirical model integrates a ‘configuration’ perspective of firm strategy, which seeks to establish building blocks for theory construction. Configuration theories constitute a widespread body of literature on the tendency of organisational variable relationships towards 'ideal' types. The assumption is that active searches for new ways of operationalising concepts lead to better correspondence between theory and measures, and that non-standard operationalisations of variables allow for relationship verification and external validity despite substantial methodological variation. Keywords: Entrepreneurship, Organizational Learning, Resource-View, Strategic Modes

1: Introduction
SME researchers are increasingly attending to the potential for the organizational learning concept to contribute to an understanding of entrepreneurship and entrepreneurial success. In developed market economies the antecedents for this growth in research are increasingly driven by two factors. Firstly the increasing emphasis at policy level on the need to promote entrepreneurial activity through education initiatives (Rae & Carswell, 2001), and secondly, the increasing willingness by large firms and development agencies to participate in the establishment of entrepreneurial cultures within their networks of SME suppliers and customers (Gray, 1998). Most of these reports readily admit that researching the process of organizational learning within entrepreneurial, small and medium-size...
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