The entrepreneurship, in today’s globalized economy, is linked with autonomy, venturing into new business, development of new products, pro-activeness, taking risks, innovation, strategic renewal, self-renewal, and competitive aggressiveness (Zahra and Garvis 1998). In this age of rapid developments in technology and the emerging global markets, the IT company has been able to utilize and develop its resources. The principles of corporate entrepreneurship are followed by prospering through the absorption of the pressures. It is a well known doctrine that the company’s performance is positively impacted by the involvement of corporate entrepreneurship (Wiklund 2009). The implication of this is by practicing entrepreneurship, the organizations would be successful in increasing the results that can be leading to the increase in GDP.
2. Introduction
The entrepreneurship, in today’s globalized economy, is linked with autonomy, venturing into
new business, development of new products, pro-activeness, taking risks, innovation, strategic
renewal, self-renewal, and competitive aggressiveness (Zahra and Garvis 1998). In this age of
rapid developments in technology and the emerging global markets, the IT company has been
able to utilize and develop its resources. The principles of corporate entrepreneurship are
followed by prospering through the absorption of the pressures. It is a well known doctrine that
the company’s performance is positively impacted by the involvement of corporate
entrepreneurship (Wiklund 2009). The implication of this is by practicing entrepreneurship, the
organizations would be successful in increasing the results that can be leading to the increase in
GDP.
This paper delves into the barrier and enablers of the entrepreneurial activities with regards to the
IT startup business. The aspects that are being considered in the primary research are the people,
process, organizational structure, and resources of the entrepreneurship in the IT startups. The
findings of the study are discussed critically on the basis of a framework of literature relevant to
the research topic.
Framing from the Literature
Pertinent to most countries, is the corporate entrepreneurship related to the innovation in e-
business. The critical factor for the e-business to be successful has been through government and
business taking place through ICT on the basis of networks that are computer mediated,
administrative or commercial transactions and exchanges of information. The companies to be
developing new businesses and creating new streams of revenue have been using the
entrepreneurial activities for enhancing the success of the company by product promotion and
innovation of the process (Zahra et al 1999). The risk taking is required as radical innovation of
the products and pro-activeness in the activities of the corporate entrepreneurship. The
innovation product might not be enough, innovation in process is also necessary.
3. Despite, the process in place, the success of a company depends to a large extent on the
performance of its employees. The critical factor for the optimal performance of my employees
is the corporate culture within which they work. Rauch et al (2009) argues corporate
entrepreneurship’s influence on the performance of the business has been varying with respect to
the function of the norms of the culture. While, Venter et al (2008) has been differentiating
between the corporate culture and entrepreneurial culture, the differentiating is done with
definition of corporate entrepreneurship being diametrically opposite to a corporate culture
which is conservative. The business performance to be sustainable should be involving a culture
that encourages new ideas and is tolerant of risks.
The entrepreneurial culture has been stimulating performance, flexibility, and innovation
(Lumpkin and Dess 1996). It should be encouraged that entrepreneurship with the creation of
culture that is appropriate and a climate of entrepreneurship is fostered.
In an organization, there are five important parts. These parts sometimes are seemingly pulling
themselves in various directions that are varied from one another. The structure leads that can be
implemented in an IT startup company most appropriately are the Simple Structure. This
structure is basic and lacking in elaboration as there is dearth of hi-tech parts. However,
generally it is being devoid of standardization and formalization. Although, the supervision is
provided from the top apex, but unlike what Mintzberg has described in his Simple Structure,
liberty and freedom should be provided to the employees to work independently within the given
structure. This is best strategy for a small company where a dedicated human resource team
cannot be afforded to manage the employees. Although, the structure is centralized, the
organization should be adaptive and flexible. There should also be ensuring that there is no
occurrence of the issues related to the operation and strategy as new ideas are encouraged and
implemented as much as possible along with a culture of noninterference in the employees’ day
to day work. There should also be prevention of the use of intuition in directing process and
dependence should be more on analysis so that the process is not run on uncertainty.
The marketable opportunities are developed on the promises that prospects that are significant
for gaining are representative of the entrepreneurial process, a key aspect. The decision that is
taken for creating a new venture emanates from a perception related to the identification of a
unique opportunity. The development of opportunity has been considered key factor in
4. entrepreneurship research (Shane and Venkataraman 2000). The different viewpoints
conceptualize opportunities in terms of the perspective of either constructivist or the objectivist.
The most appropriate approach is the adoption of human capital approach for the development of
opportunities. The theory of human capital has been assuming the recognition capacity in
developing opportunities related to the entrepreneurship on the human capital that is specific or
general (Becker 1975). The general human capital is bent on building work experience and
education, while the specific human capital is on the basis of the elements such as, technical
capabilities, experience of the management, knowledge of the industry, and experience of the
ownership.
The venture capitalists invest on the team management so that they develop the ability in
executing the business plan. The VC’s next consideration is the targeting of the business to
addressable and large market opportunity. They want returns that are large sized which come
from their investments. With the potent managers that they insists the entrepreneurs to hire, they
try to ensure that the startups grows millions of dollars in their worth in quick time. The
expectation of the VCs from the startup in question is that their business plans must be including
the analyses of the detailed market size. Further, the investors prefer to be investing in products
and services that are endowed with competitive edge and are likely to lasting for long. The IT
business satisfies these conditions.
Methodology
The conduction of this study is one the basis of one-on-one interviews with the entrepreneurs and
entrepreneurial ecosystem’s other stakeholders. The interviews are all conducted in the city of
London. Fortunately, all respondents of entrepreneurs, without any exception, had been helpful
with respect to their responses with their display of considerable involvement and interest. The
interviews that were carried out with the entrepreneurs had been on the basis of the questions that
represented flexible framework, while maintaining the core issues of people, process and
structure as priority. The interviews are also conducted with other stakeholders of IT business
such as, IT bidders, software engineers, and programmers. Further, the interviews are carried out
with entrepreneurs’ association, institutional networks, and associations of industry, chambers of
5. commerce, and educational institutions. Finally, requests were sent and profiles were received
from the entrepreneurial icons providing direction and valuable insights.
Apart from the qualitative data on the issues of people, process and structure in the IT startups,
the entrepreneurs were also asked for rating their perceptions in the numerical scales. The
qualitative and the quantitative data is described and analyzed on the given parameters. The
study is based on the exploration of the issues of people, process and structure of the IT startup
firms and their resources along with recommendation on the findings.
The total sample size taken is 50 participants. Out of the 50 participants, 35 participants are
entrepreneurs based in London. Apart from them, 2 IT bidders are taken as participants from 2
medium sized IT firms that are based in London. In the same way, 2 software engineers
employed in the same IT firms from where the IT bidders are taken were included as the
participants of this study. Also, two IT programmers were interviewed from the same firms.
Lastly, 9 executives were interviewed from entrepreneurs’ association, institutional networks,
and associations of industry, chambers of commerce, and educational institutions.
The process of conducting the interviews is described as follows. The names of the organizations
were finalized from the internet and social networking sites. The addresses and the phone
numbers were obtained from the company website. The appointments were taken with the CEOs
and Directors to explain them about the project. After the appointment and successful
demonstration of the project, one-on-one interviews were sought from them as per their
convenience. In case of the stakeholders, permission was sought from them regarding the
interviews of the relevant employees who were contacted after the permission is granted. The
interviewer reached their office on the day of the interview and the interview was conducted
which is recorded with a Dictaphone.
Results
The results of the study conducted are explained below for each issue that had been raised in the
interview. One of the best ways to develop businesses for an IT startup, 55 percent of the
participants have expressed the bidding process on the freelance projects as the best way, 32
6. percent said contracting with the big corporations as the best way and 13 percent of the
respondents said it is the government tenders that provides the best opportunity for the IT
startups to develop their businesses. On the question of approaches related to the regular revenue
flow, 62 percent said it is the freelance bidding process that will ensure regular revenue flow, 29
percent said it is contract with the big corporations that will ensure regular revenue stream and 9
percent thinks the government tenders is the surest way of ensuring it. 95 percent thinks that
innovation in the process is necessary for the success of the startups, while 97 percent thinks that
organizational culture determines the performance of the employees. Further, 87 percent thinks
new idea generation is critical for the IT startups and this aspect should be encouraged in the
culture of the organization. Then, 67 percent are of the opinion that brainstorming is the best
way for idea generation, while the rest 33 percent thinks otherwise. 61 percent of the participants
are of the idea that Simple Structure suggested by Mintzberg is the most appropriate
organizational structure for an IT startup. However, an overwhelming 83 percent of the
participants feel that modifications are needed to the Simple Structure for the IT startup. For
optimal performance of the staff, 80 percent of the participants feel that their day to day activities
should not be interfered with. 76 percent feel that the decision making of the apex body should
be based on analysis, while 34 percent feels it should be based on intuition. Lastly, 73 percent
feels that venture capitalists choose the management of an organization as a criterion for
investment and 53 percent feel that industry they choose to finance have competitive edge in the
market.
Discussion
The IT startup, instead of trying to secure big and long term projects (which includes big
corporation projects and government tenders) that are hard to come by, developed a process of
bidding the freelance projects which are easier to obtain. This process set the stage of regular
flow of revenue until the company had enough funds to attract high profile tie ups for big
projects. The organizational culture that is tolerant of the criticism can enhance innovation
exponentially. This is because innovation is ensured with idea generation within the organization
and criticality towards the organization can help it to remove the impediments towards its
growth. The organization should be holding weekly brainstorming sessions, where all kinds of
7. ideas are encouraged even if they are critical of my organizational practice. No offence is taken
against any employees for being critical to the company. In the contrary, the criticism is
analyzed, evaluated and actions are taken to correct the critical areas. The risks involved in
running an IT firm are offset, to an extent, by another translation business that almost ensured
with some old clients. Although, the head of the company provide supervision, but unlike what
Mintzberg has described in his Simple Structure, there is provision of liberty and freedom to the
employees to work independently within the given structure. This is the best strategy for a small
company that cannot afford a dedicated human resource team to manage my employees.
Although, the structure is centralized, the organization must be adaptive and flexible. It is also
ensure that there is no occurrence of the issues related to the operation and strategy as new ideas
are encouraged and implemented as much as possible along with a culture of noninterference
with the employees’ day to day work. The use of intuition is also prevented in directing process
and dependence is more on analysis so that the process is not run on uncertainty. The reasons
that venture capitalists stress on the management of the companies they invest on are the
business ideas are simple prototype or mere concepts, the promoters have very little experience
that are based on real life management, the ventures in question cannot boast of much sales and
so on. However, for the startup firm to secure funds from the venture capitalists, the
management is the key factor for the investors to take into account. . They ask the organizations
to employ executives that have built businesses from the scratch and have been successful to
generate returns for the investors. The promoter of the startups are asked to provide a list of
qualified and experienced candidates who have been playing roles that are central to the
development of the companies. Their condition had been that the business lacking in talent
amongst their managers must be willing to be hiring them from the outside. It is convincing to
the investors to finance the business as IT is one of the most profitable and global lines of
business. The investors have a tendency to fund product and services that are indispensible to
the target customers. This is because; these products generate competitive advantage in the
market.
Conclusion
8. It is clear now that the firms have been involving endeavor of the entrepreneurship register
increased profitability and growth than firms not attempting to be engaging in the activities of
intrapreneurship. It can be concluded that there is positive relationship between the firms
engaging in the activities of entrepreneurship and the profitability and growth of the
organizations. There is an existence of positive relationship between the performance and the
Entrepreneurial Orientation. There have also been studies that have found positive relationship
between the activities of Corporate Entrepreneurship and the performance of the organization.
Lastly, convincing a venture capitalist is critical for Startup Company, which requires certain
conditions such as, credible management, products and services that have sufficient market
opportunities and experiences of the management that are relevant to the products and services in
question.
The barriers and enablers of entrepreneurship in the context of IT startup firms are discussed at
length along with the ways of reducing the barriers. The analysis of such barriers and enablers
has been done with respect to process, people, and structure of the company as well as resources
of the entrepreneurship in the IT startups. The business development, innovation, organizational
culture, idea generation, simple structure, and the role of the venture capitalists for the IT
startups are being discussed comprehensively in this paper.
The study recommends bidding process in freelancing websites as the primary business
development approach for the IT startups. The culture must not represent a dictatorial style of
leadership, but should encourage the employees to provide constructive criticism. The
brainstorming sessions must be a regular feature in the organization so that innovative ideas are
generated. The decisions must be taken based on the analysis and evaluation by the top
leadership instead of intuition. The venture capitalists must be approached even at the cost of
heeding to their suggestions related to the management.
The limitation of this study is that it is conducted only in London. Therefore, it might not
represent the opinions of the entire country. Additionally, a sample of 50 participants might not
be enough to provide a clear indication of the views of the entrepreneurs and the other
stakeholders. A larger sample size might have provided a more accurate result.
9. References:
1. Becker, G. S. (1975) Human capital. New York, London: The Univ. of Chicago Press.
2. Lumpkin, G. T. and Dess, G. G. (1996) “Clarifying the entrepreneurial orientation
construct and linking it to performance”, Academy of Management Review, 21(1), 135-
72.
3. Rauch, A., Wiklund, J., Lumpkin, G. T. and Frese, M. (2009) “Entrepreneurial
Orientation and Business Performance: An Assessment of Past Research and Suggestions
for the Future”, Entrepreneurship theory and Practice, 33(3), 761-787.
4. Shane, S. A. and Venkataraman, S. (2000) “The promise of entrepreneurship as a field of
research”, Academy of Management Review, 25, pp. 217-226.
5. Venter, A., Rwigema, H. and Urban, B. (2008) Entrepreneurship: theory in practice, 2nd
edition, Oxford University Press Southern Africa (Pty) Ltd, Cape Town.
6. Wiklund, J. (1999) “The sustainability of the entrepreneurial orientation-performance
relationship”, Entrepreneurship Theory and Practice, 24(1), 37-48.
7. Zahra, A. S. and Garvis, M. D. (1998) “International Corporate Entrepreneurship and
Firm performance: The moderating Effect of International Environmental Hostility”,
Journal of Business Venturing, 15(1), 469-492.
8. Zahra, S. A., Nielsen, A. P. and Bogner, W. C. (1999) “Corporate entrepreneurship
knowledge, and competence development”, Entrepreneurship Theory and Practice,
23(3), 169-189.
10. Appendices
Appendix 1
Questionnaire
1. What is best way to bring business for an IT startup?
a. Bidding from the freelance projects websites
b. Directly contacting big corporations
c. Putting tenders for government projects
2. Which of the following business development approaches ensures regular revenue
streams the most?
a. Bidding from the freelance projects websites
b. Directly contacting big corporations
c. Putting tenders for government projects
3. Innovation is necessary in the process.
a. Agree
b. Disagree
4. Performance of the employees depends on the organizational culture
a. Agree
b. Disagree
5. Culture of new idea generation in the organization is critical for entrepreneurial success
a. Agree
b. Disagree
6. Brainstorming sessions are the best way of generating innovative ideas in an organization
a. Agree
b. Disagree
7. Mintzberg’s Simple Structure is best organizational structure for an IT startup
a. Agree
b. Disagree
8. Do you think that modifications are needed in the Simple Structure for an IT firm?
a. Yes
b. No
11. 9. Do you think noninterference in the day to day activities of the employees is best way for
their optimal performance?
a. Yes
b. No
10. Which one of the following do you think is a better process of taking strategic decision in
an IT startup?
a. Intuition
b. Analysis
11. It is very important for the venture capitalists to consider the management of an
organization
a. Agree
b. Disagree
12. The industry VCs choose should have competitive edge
a. Agree
b. Disagree