Sustainable Value Creation through Entrepreneurial Leadership in SME

Academic Publishing International Limited
Publication Type:
Conference Proceeding
Proceedings of the 8th European Conference on Management Leadership and Governance, 2012, pp. 96 - 102
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Abstract: Firms need three capacities to create sustainable value: dynamic capabilities, ambidexterity and absorptive capacity. Dynamic capabilities confer firms the capacity to sense and seize new opportunities in the face of rapid environmental changes, and to reconfigure and protect knowledge assets, competencies, and complementary assets so as to create sustainable value. Ambidexterity allows firms to operationalize the requisite organizational designs to simultaneously exploit its current capabilities to efficiently serve the existing customers and explore fundamentally new competencies and innovations to flexibly serve emerging customer segments. Absorptive capacity enables firms to recognize the value of new, external knowledge, acquire and assimilate it with existing knowledge, and apply the newly acquired and assimilated knowledge to innovations to achieve commercial ends. Theoretical and empirical studies of these three related concepts to date have predominantly focused at the firm or organizational levels, but rarely at the individual leadership level. This paper explores if and how these value-creation concepts might be applicable to the study of entrepreneurial leadership. We conducted case studies of three Small Medium Enterprise (SME) founders/CEOs (in manufacturing, finance and outsourcing service industries in Australia and Hong Kong), who have successfully led their firms over long periods â ranging from twelve to thirty-three years since inception. Multiple sessions of semi-structured interviews were conducted, directly, with two founders/CEOs and, indirectly, through a founding director/partner of the third. Interviews focus on the CEOsâ strategic and operational leadership practices, especially on strategic decisions, actions taken and lessons learned in managing uncertainty and change in the decades-long course of running and growing their companies from inception. The research uncovers the following key patterns, amongst others, of successful entrepreneurial leadership practices by the founders/CEOs, which appear to resonate well with the fundamental characteristics of dynamic capabilities, ambidexterity and absorptive capacity: 1.Companies were founded with clear strategic intents (with relentless customer focus) and on simple business models which underwent continuous redesign/improvement through learning from interactions with customers. 2.Business strategies tend to be âemergentâ following an âaim-act-learn-adjustâ lifecycle, but with laser-sharp focus on execution aimed at customer satisfaction. Bold long-term vision conceived collectively in each firm only emerged after the business had achieved semblance of stability. 3.Ensure currency of social capital (with customers, suppliers, industry experts, regulators, competitors, and adjacent industry experts) to maintain flows of new external ideas/knowledge for organizational renewal and business opportunities. 4.Strong leadership âownershipâ of vision/direction and cognitive capacity to lead and manage the exploitâexplore contradictions/paradoxes decisively and persistently â seemingly thriving at âthe edge of chaosâ . 5.Superior âorchestrationâ capabilities to effectuate reconfiguration of internal and external resources, via insource, outsource and/or joint-venture, to co-create superior customer value. The research, while limited to three SMEs, contributes preliminary new knowledge towards answering: âHow do these value-creation concepts work in practice at the leadership level?â Further research is needed perhaps with a larger sample size to see if similar or new patterns could be found.
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