The Entrepreneurial Group - Why Does it Exist? A Case Study

Abstract

An analysis of an organizational development model,called the entrepreneurial group, is conducted to help explain firmgrowth.The entrepreneurial group is analogous to the holding companymodel for large firms - a group of SMEs is connected legally, with one centralfirm and the owner-managers controlling the majority of the company. Data are based on a series of interviews done between September 2002 andJanuary 2003 with the CEOs of two companies: one service firm (group A)controlled by a single entrepreneur and one manufacturing firm (group B)controlled by a family. Based on this qualitative analysis, severalpropositions are proposed for further research.(1) Entrepreneurial groupswill primarily pursue differentiation strategies. (2) The entrepreneurial groupwill develop more relationships, and will attract additional resources (e.g.,social capital) that will lead to more entrepreneurial opportunities. (3) Firmsthat are structured as an entrepreneurial group will display a higher degree ofintegration as compared to single firms of similar size. These findings suggest that the entrepreneurial group, as an organizationalmodel, plays a key role in the development of new opportunities from superiorcomplementary resources, overcoming over-embeddedness, and becoming a means fordiversification and integration.(NEE)

Keywords: Firm growth, Organizational structures, Entrepreneurial orientation, Opportunity development, Firm diversification