Entrepreneurs and Business Development in Japan and Britain D. Hugh - - PowerPoint PPT Presentation

CBR Summit: Innovation and Governance 29-30 March 2006

Entrepreneurs and Business Development in Japan and Britain

• D. Hugh Whittaker

Professor Doshisha Business School Director Institute for Technology, Enterprise and Competitiveness (ITEC)

CBR Summit: Innovation and Governance 29-30 March 2006

Who is an entrepreneur?

(is the wrong question)

• Entrepreneur as an organization creator (e.g. Gartner and

Cater, 2005)

• Organizations cannot be grown single handed. One of the

most important tasks the entrepreneur faces is to recruit, allocate work to, motivate and retain employees who will help the business to grow.

• This is no easy task…

CBR Summit: Innovation and Governance 29-30 March 2006

Entrepreneurs and HRM

• Kets de Vries view of entrepreneur as ‘an individual who refuses to

delegate, is impulsive, lacks any interest in conscious, analytical forms of planning’ must ‘be regarded as approximating the most “typical” pattern.’ (Stanworth and Curran, 1989: 161)

• Standardization, formalization, systematization, decentralization

associated with growth in size. (Aston School studies, replicated recently)

• BUT e.g. Hornsby and Kuratko (1990: 16-17): ‘the personnel

practices of smaller firms are much more sophisticated than the literature leads one to believe’ and ‘The highest ranked issues in all three size categories focus on the need to obtain and retain a quality workforce.’

CBR Summit: Innovation and Governance 29-30 March 2006

HRM orientations: best fit and best practice

• How do/should they go about doing this?
• ‘Best fit’ versus ‘best practice’ schools of HRM
• Does ‘best fit’ lead to significantly different orientations in

Japan and the UK? (Fit with what?) Are there similarities - e.g. ‘high commitment’ practices - especially between ‘high performers’ in Japan and the UK?

CBR Summit: Innovation and Governance 29-30 March 2006

HRM orientations in Japan and the UK: 3 hypotheses

• Hypothesis 1 The HRM orientations of UK entrepreneurs are

systematically different from those of Japanese entrepreneurs

• Hypothesis 2 These differences are in part attributable to

differences in the environments in which the entrepreneurs

• perate (need for ‘fit’).
• Hypothesis 3 HRM orientations in ‘high performing’ businesses

in both countries retain many of these differences

CBR Summit: Innovation and Governance 29-30 March 2006

Research design and data set

1st J Quest. July-Aug. 1996 ‘Venture’ 308 valid resp. (13.3%) 2nd J Quest. Feb.-March. 2002 ‘Venture’ 349 valid resp. (9.4%) UK., Japan cases Selection of 25 UK, 25 Japanese cases (‘theoretical sampling’), K interviews 2001, J. interviews 2004-05 2nd UK Quest.

• Dec. 2000-Jan.2001

‘High tech’ 349 valid resp. (9.4%) Comparative entrepreneur data set ‘High tech’ manufacturing, 1-199 employees, founded 1945 ~, Total n = 336; UK n = 113; Japan n = 223 1st UK Quest.

• Jan. 1998

‘High tech’ 510 valid resp. (26.9%) Integrated (quantitative-qualitative) data

CBR Summit: Innovation and Governance 29-30 March 2006

Characteristics of respondent CEOs and their businesses

Businesses CEOs UK (%) J. (%) Size 1-19 employees 26.5 20.2 20-49 45.1 30.5 50-199 28.3 49.3 Sector Instruments 45.1 52.0 Comp.s, electr.s 25.7 39.0 Other manufac. 29.2 8.9 Founding 1945-79 43.4 65.9 1980-89 28.3 21.5 1990 - 28.3 12.6 UK Japan Founder % 82.3 49.8 Average age 52.8 57.0

CBR Summit: Innovation and Governance 29-30 March 2006

HRM orientations

‘Some personnel policies are more important than others in recruiting and keeping good personnel. How important are the following for you?’

(5 point Likert scale: 1= not at all, 5 = crucial) Encouraging autonomy in decision making Giving employees a financial stake in the company Providing an attractive physical working environment Providing a good welfare and fringe benefit package Providing incentives for individual excellence Offering flexible/family friendly work arrangements Providing a stable and supportive work environment Providing/facilitating training and education Giving challenging job assignments Paying top rates JAPAN UK

CBR Summit: Innovation and Governance 29-30 March 2006

HRM orientations of Japanese and UK entrepreneurs (UK n=113; Japan n=223)

.01 3 .80 3.76 4 .96 3.36 Encouraging autonomy in decision making .01 8 .95 3.20 10 1.07 1.92 Giving employees a financial stake in the company NS 7 .78 3.28 7 1.01 3.15 Providing an attractive physical working environment NS 10 .83 2.89 9 1.03 2.97 Providing a good welfare and fringe benefit package .01 1 .71 3.83 5 1.03 3.27 Providing incentives for individual excellence .01 9 .81 3.17 3 1.11 3.54 Offering flexible/family friendly work arrangements .01 5 .77 3.54 1 .79 4.06 Providing a stable and supportive work environment .01 4 .78 3.58 8 .88 3.08 Providing/facilitating training and education .05 2 .85 3.82 2 .83 3.58 Giving challenging job assignments .01 6 .85 3.43 6 .91 3.17 Paying top rates SIG Rank SD Mean Rank SD Mean HRM Orientation JAPAN UK

CBR Summit: Innovation and Governance 29-30 March 2006

Principal component analysis for the total sample

HR Policies INDIVIDUAL ENVIRONMENT Giving employees a financial stake in the company .661

• .077

Encouraging autonomy in decision making .656 .037 Giving challenging job assignments .648 .097 Providing/facilitating training and education .648 .137 Providing incentives for individual excellence .646 .137 Paying top rates .396

• .005

Providing a stable and supportive work environment

• .052

.750 Offering flexible/family friendly work arrangements

• .100

.732 Providing a good welfare and fringe benefit package .158 .647 Providing an attractive physical working environment .236 .596 Cronbach alpha .68 .64 Eigenvalue Variance Explained % Cumulative Variance Explained % KMO .723 Bartlett Chi-sq 456.82 df 45 Sig .000 2.37 23.75 23.75 1.92 19.27 43.02

CBR Summit: Innovation and Governance 29-30 March 2006

Principal component analysis for the U.K. sample

UK SAMPLE HRM orientations (item rank) ORG CLIM OWNERSHIP RECOG- NITION Offering flexible/family friendly work arrangements (3) .746 .116

• .155

Providing a stable and supportive work environment (1) .673

• .069

.166 Providing an attractive physical working environment (7) .496 .130 .370 Providing a good welfare and fringe benefit package (9) .448 .311 .310 Encouraging autonomy in decision making (4) .139 .697

• .090

Giving challenging job assignments (2) .398 .618 .171 Giving employees a financial stake in the company (10)

• .323

.601 .140 Paying top rates (6)

• .138
• .151

.752 Providing/facilitating training and education (8) .248 .199 .641 Providing incentives for individual excellence (5) Eigenvalue Variance Explained% Cumulative Variance % KMO .740 Bartlett Chi-sq 126.56 df 45 Sig .000 .307 1.91 19.12 19.12 .306 1.52 15.18 34.31 .404 1.48 14.80 49.11

CBR Summit: Innovation and Governance 29-30 March 2006

Principal component analysis for the Japanese sample

JAPAN SAMPLE HRM orientations (item rank) GROWTH ORG CLIM 1 ORG CLIM2 RECOG- NITION Encouraging autonomy in decision making (3) .773 .074

• .052

.182 Providing incentives for individual excellence (1) .730

• .204

.276 .072 Providing/facilitating training and education (4) .691 .115 .059

• .052

Giving employees financial stake in the company (8) .533 .512

• .152

.189 Providing an attractive physical working environment (7) .022 .796 .209

• .001

Providing a good welfare and fringe benefit package (10)

• .014

.778 .211

• .022

Offering flexible/family friendly work arrangements (9)

• .046

.133 .843 .054 Providing a stable and supportive work environment (5) .187 .248 .779

• .016

Paying top rates (6)

• .023

.052 .069 .913 Giving challenging job assignments (2) Eigenvalue Variance Explained % Cumulative variance % KMO .678 Bartlett Chi-sq 386. df 45 Sig .000 .459 2.14 21.39 21.39

• .050

1.65 16.46 35.86

• .040

1.52 15.17 53.02 .604 1.28 12.79 65.82

CBR Summit: Innovation and Governance 29-30 March 2006

Overview of HRM orientation factors in the UK and Japan

UK Japan Organization/ ・Organization ・Background Environment climate ・Foreground Individual ・Ownership ・Growth ・Recognition ・Recognition

CBR Summit: Innovation and Governance 29-30 March 2006

Interpretation through case interviews

(UK n = 25, Japan N = 25)

• Contrast in HRM discourse between the two groups: much

more prominent in the UK; more entrepreneur and activity/product-centred in Japan

• Both groups looking for similar people: ‘fit’ with
• rganization/culture crucial, positive, not clock-watchers
• But systematic differences…

CBR Summit: Innovation and Governance 29-30 March 2006

1) Employment relations: implicit contract

• Trade-off in the UK; ‘give and take’. In return for discretionary

effort, commitment, UK entrepreneurs sought to offer supportive environment AND flexibility, family friendliness…

– These guys are the A team. They will stick with me through thick and thin. We work as a team. Nobody says that’s not my job, or I’m too busy with my job to help you with yours… Immense flexibility. If you want to go four hours early today that’s no problem, so long as it’s not happening constantly. No recording, no clocking in and out… – Whatever this company does in terms of entertainment, we always involve families… We have some very dedicated people and it’s to thank them for allowing their husband or wife to work so hard.

• The Japanese entrepreneurs needed to make no such trade-off.

Discretionary effort expected, in return stable employment,

• pportunities for growth offered. Facilitated by greater social
• stability. ‘Mature’ employees do not let family matters impinge on

their work.

CBR Summit: Innovation and Governance 29-30 March 2006

2) Role of the entrepreneur

• UK entrepreneur as conductor: Many started business with small

team of colleagues - specialization from early on; delegation achieved more easily, especially with highly qualified workforce; teamwork emphasis. Related to backgrounds - experience in working in more businesses, in a variety of management positions.

• Japanese entrepreneur as locomotive: Often started business by

himself, or with ‘right hand man’ but not team; pulling along a train which threatened to go off the rails. Tension between desire to provide incentives for individual excellence, give challenging assignments (linked to antipathy towards HRM in large firms), and view that the business continued to depend on them. Result = ‘ikusei’ orientation.

CBR Summit: Innovation and Governance 29-30 March 2006

3) Training and education

• The above differences were manifest in different approaches to

training and education: greater awareness of T&E as part of ‘give and take’ in the UK, more external courses (targets for this), hoping employees would gain new insights, motivation which they would bring back and share.

• Less use of external courses in Japan. Entrepreneur at apex of

essential skills, knowledge, training involved imparting this. Gradual process embodied in broader socialization.

• UK ‘through the head’; Japan ‘through the body to the head’.

CBR Summit: Innovation and Governance 29-30 March 2006

Company culture

means and rankings

UK JPN Mean SD Rank Mean SD Rank SIG My business is a personal place; it’s like an extended family 3.96 .86 2 2.11 1.05 5 .01 Employment is competitive; measurable goals are important 3.59 .89 5 4.26 .75 1 .01 There are clear rules which employees are expected to follow 3.70 .84 3 3.76 .72 3 NS People here are able to make decisions autonomously 3.68 .80 4 3.51 .84 4 NS Team work and joint problem solving are encouraged here 4.42 .56 1 3.78 .75 2 .01

CBR Summit: Innovation and Governance 29-30 March 2006

‘High performers’

UK n = 40, Japan n = 78

UK JAPAN HR Orientation Mean SD Rank Mean SD Rank SIG Paying top rates 3.20 .79 6 3.58 .78 5 .05 Giving challenging job assignments 3.73 .85 2 3.99 .88 1 NS Providing/facilitating training and education 3.20 .94 6 3.65 .74 4 .01 Providing a stable and supportive work environment 4.25 .63 1 3.52 .77 6 .01 Offering flexible/family friendly work arrangements 3.73 1.09 2 3.19 .84 9 .01 Providing incentives for individual excellence 3.25 1.03 5 3.93 .70 2 .01 Providing a good welfare and fringe benefit package 3.05 1.18 9 2.88 .73 10 NS Providing an attractive physical work environment 3.20 .91 6 3.32 .72 8 NS Giving employees a financial stake in the company 1.83 .96 10 3.36 .93 7 .01 Encouraging autonomy in decision making 3.68 1.02 4 3.77 .84 3 NS

CBR Summit: Innovation and Governance 29-30 March 2006

Next steps

• Focus in this presentation on fit with environment, but same survey

results show:

– A strong influence of entrepreneur business orientations/values – Strong correlations with competitive advantages

• These need to be built into the analysis, and this analysis in turn

needs to be incorporated into a step-by step analysis and presentation of:

– Entrepreneurs’ backgrounds/starting out – Business objectives – (HRM) – Interfirm relations and collaboration – Competitive advantage – Innovation and performance

• though not necessarily in that order, to develop this approach to

comparative entrepreneurship.