Now reading:

The Value of Entrepreneurship

The Value of Entrepreneurship

  • 1 April 2023
  • By OCBC Business Banking
  • 10 mins read

An entrepreneur is a person who has the strong will to transform innovative ideas into reality in the business world. Romanticised by popular television shows such as “Shark Tank” and “The Apprentice”, the entrepreneurs here project the bold journey of ambitious individuals leaving their traditional 9 to 5 jobs to venture into a business that is both meaningful and profitable. From an individual’s perspective, some may argue that entrepreneurship is an inborn trait while others think that these qualities can be nurtured. But what does it mean for a business organisation to have entrepreneurship?

Entrepreneurial Orientation (EO) is a phrase referring to business processes and practices with entrepreneurial qualities; it is the value-creating effort to recognise business opportunity, to manage the risk associated with the opportunity, and to mobilise resources to fulfil the opportunity. These values help businesses to grow in competitive industries and remain relevant to the market for years to come.

Several research efforts have shown the positive effect of EO on firm performance. A 2014 paper published by the International Journal of Business and Social Science showed that EO has an indirect influence on attaining competitive advantage and a direct positive impact on SMEs’ growth. EO comprises five dimensions:

1. Autonomy

Autonomy is the degree of freedom to bring new ideas to completion. In an organisation with high autonomy, employees can effectively champion new ideas without being restricted by corporate bureaucracy. Having high autonomy encourages employees to perform at their best and share their views and ideas on behalf of the organisation. Autonomy also helps create independent work units within the organisation to increase the volume of problem-solving ideas and solutions. This also means that high autonomy can further foster higher innovativeness and proactiveness.

2. Competitive aggressiveness

Competitive aggressiveness is the tendency to intensely and directly challenge competitors to dominate the market. Some common competitive actions are price cutting, increasing spending on marketing and expanding production capacity. Although a certain degree of competitive aggressiveness is required for a business to achieve competitive advantage, excessive aggressiveness could lead to unfavourable outcomes. Due to limited resources, SMEs could suffer against larger rivals in a price war. Additionally, excessive aggressiveness could also lead to lower chances of collaborative efforts with other businesses.

3. Innovativeness

Innovativeness is the propensity to pursue creativity and experimentation with the goal of increasing competitiveness. An innovative organisation recognises new ideas and opportunities, and implements new processes and technologies to replace existing ones. Innovative activities include developing new products or services, and implementing new marketing methods or business processes. Due to the general market position of SMEs, it is vital for an SME to offer products or services that are sufficiently distinctive relative to its competitors. The failure to achieve this can lead to low financial performance.

4. Proactiveness

Proactiveness is the tendency to act in anticipation of the future. By anticipating future market demand, the business can gain a competitive advantage over its competitors. A business high in proactiveness tends to be the first to enter new markets or to dominate over market distribution channels. SMEs should constantly be searching for new opportunities, ideas, information, tools and skills that will result in innovation that leads to higher levels of competitiveness. Some sources to conduct searches are buyers, suppliers, competitors, consultants, industry associations, government institutions, exhibitions, traditional media and the internet. Take for instance during the pandemic, how many SMEs shifted to online ventures and may continue to do so even after all the movement restrictions are gone. The will to pivot is all it takes for the entrepreneur within to keep it going!

5. Risk-taking

Risk-taking is the tendency to engage in high-risk projects to achieve goals, and also includes the willingness to allocate resources for projects in an uncertain environment. Businesses with a high-risk tendency will seek superior growth and take risk-related actions, such as decisively experimenting on new processes or borrowing large amounts to finance projects with a potential for both success and failure. While a higher risk appetite is associated with higher profitability, it is important for businesses to assess all available opportunities and apply the necessary tools to minimise and manage risk.

6. Building an Entrepreneurial Orientation

Business owners play a dominant role in SMEs; their personality traits and subjective worldview will greatly affect the organisation’s strategic direction. SME owners should strive to be entrepreneurs that are team-oriented, transformational and value-based. Business owners can enhance their entrepreneurial intensity through education and new insights through a peer group of entrepreneurs, which could also ensure their motivation level stays high. As leaders, they should ensure adequate communication among the team, and show appreciation of the views of others while encouraging contributions. By establishing a strong culture that encourages creativity and innovative behaviour, SME owners can build a strong EO throughout the organisation.

SME owners can design their organisational systems and policies to reflect the dimensions of EO. For example, SMEs can implement a compensation system that rewards sensible risk-taking, or arrange periodic training sessions to enhance their employees’ EO level. Furthermore, SMEs could also consider taking on a debt structure that encourages and finances innovative projects. To improve the growth of EO, SMEs should utilise performance measures that can assess EO levels. For instance, employee satisfaction surveys can be implemented to monitor and reinforce autonomy within the organisation, leading to decreased employee turnover rates. As for gauging innovativeness, SMEs can monitor the rate of new product launches or new processes implemented, including the extent to which these new endeavours meet their goals.

So in sum, as SMEs tend to operate under turbulent markets with narrow opportunities and fierce competition, they should adopt EO as a strategy. By participating in entrepreneurial activities, SMEs could leverage their distinctive capabilities to further enhance their performance and sustainability. An entrepreneur should not aim at monetary profit alone, but focus on opportunities with the goal to improve on production. Entrepreneurs act as a moving force to their industries and economy as they provide innovative technologies, products, and services. Not only that, they also serve as the force behind driving existing firms to challenge and improve themselves in order to remain competitive, and vice versa. Thus, entrepreneurs must seek ways to cement their business within a constantly shifting trade, not only to build a business that reflects their core beliefs and visions, but also to build a brand that matures well down the line. As one who may be short on financing, but never on ideas, the entrepreneur has a good chance when swimming with the sharks.


The information provided herein is intended for general circulation and/or discussion purposes only. Before making any decision, please seek independent advice from professional advisors. No representation or warranty whatsoever in respect of any information provided herein is given by OCBC Bank and it should not be relied upon as such. OCBC Bank does not undertake any obligation to update the information or to correct any inaccuracy that may become apparent at a later time. All information presented is subject to change without notice. OCBC Bank shall not be responsible or liable for any loss or damage whatsoever arising directly or indirectly howsoever in connection with or as a result of any person acting on any information provided herein. Any reference to any specific company, financial product or asset class in whatever way is used for illustrative purposes only and does not constitute a recommendation on the same.