Leadership and Entrepreneur
Leadership and Entrepreneur
Leadership and entrepreneurship have become more popular recently so that many researchers have been studied about these subjects and tried to find out their definitions and nature (Northouse, 2007; Kuratko and Hodgetts, 2007 and Deakins and Freel, 2009). It cannot be denied that there are a huge amount of people having leadership and entrepreneurship characteristic. In order to have a look closer about the leadership and entrepreneurship, the author will take the case of Conrad Hilton as an example to evaluate.
However, before doing that, some significant leadership and entrepreneurship theories such as definitions and characteristics of different approaches will be reviewed critically. This essay will be divided into three parts. It will commence with theories of leadership and then focus on entrepreneurship and the last part will combine the theories with term of actual life by judging the characteristics of Conrad Hilton about his leadership and entrepreneurship characteristics. The first part aims to review leadership theories critically. It includes definitions, distinctive approaches and variety of factors that impact on leadership.
There are a number of different definitions about leadership have been published (Stogdill, 1974). According to Northouse (2007), they are divided into six types such as focus of group process, personality perspective, act or behavior, power relationship, transformational process and skills perspective. However, Northouse (2007) states that there are four components such as: leadership is a process; leadership involves influence; leadership occurs in a group context and leadership involves goal attainment play a role as foundation for all of types.
Based on this foundation, the widely accepted definition about leadership can be defined as follow: “a process whereby an individual influences a group of individuals to achieve a common goal” (Northouse, 2007, p. 3) and this is also the suitable one related to discussion in this essay. From this definition, it can be seen that leadership is an interaction behavior between leaders and followers as well as this the definition also indicates the important of the factor “influence”. It is clear that without this factor, leadership will not exist.
However, this factor does not only stand for the power of leader with followers but also followers with leader because this is two-way relationship. In addition, the second factor should be considered is “group”. Whatever the size and type of group such as a community, an organization or a small group, leadership can only occur in context of group. Although each person in each group can have different individual purpose, they still have the same goal and they influence each other to achieve that common goal. Obviously, common goal is one part of leadership.
Last but not least, this definition of leadership considered attendance of goals. This means leadership has to guide the group achieve the goals. As can be seen from this definition, leadership can be any member in the group, it is not a particular person. This means in the process going to achieve common goals of the group, anyone can be a leader and has influence on others. According to Northouse (2007) the leader of a group has five key traits such as sociability, intelligence, self- confident, determination and integrity.
Those five key traits have been utilized in order to adjudge employees’ leadership skills. The following issue of leadership theory is leadership’s nature. As the same situation with leadership definition, its nature also has a several opinions. Authors such as Jago (1982), Bass (1990), Burns (1978), Heller and Van Til (1983), Hollander (1992) considered leadership as a process, while author such as Bryman (1992) defined it as traits. Among those authors, some of them approached leadership as a prominent situation whereas others viewed it as an assigned one.
As a viewpoint of Bryman (1992) seeing leadership as traits, considered leadership as one’s property and different people will have different level of leadership (Northouse, 2007). As the result, following this view, leader can be seen as born-talented and it seems could not be learnt. This view will make people unconfident and do not have motivation to develop their leadership skills. The second concern about the nature of leadership is the distinction between the view of assigned and the view of emergent in leadership. With the view assigned, leadership is understood as the one in a position of a formal organization.
For instance, course leader or dean of a department. However, it can be seen that in some cases, assigned leadership is not the real leader of the group. In contrary view, leader can be anyone who can influence people in a group whenever he has an occupying position or not. It is emergent leadership and there are two points of view about the emergent leadership. On the one hand, some authors state that personal traits will make the point. That means the person who has brilliant brain, confident and dominant performance will become a emergent leader (Smith and Foti, 1998).
On the other hand, other researchers point out that the emergent leader is the person who is sociable and always seeking others’ opinion (Fisher,1974) Finally, thinking about two concepts of leadership and management, comparing some aspects of two of them, people will confuse whether it is different or not because they have many common things. For example, human and their relationship will be the center of both concepts. In addition, achieving one or more common goals is the purpose of the two concepts. Moreover, two concepts involve process.
In brief, many functions of management are also mentioned when envisaged about leadership. However, the nature of the two concepts can prove that they are two different concepts. Kotter (1990) cited in Northouse (2007,) shows that the order and consistency of organizations is the primary function that provide by management while change and movement of organizations is the primary function of leadership. This means management seems to be more ordered and stable, whereas leadership is about looking for adaptive and constructive change.
The second part is about entrepreneurship. The same situation with leadership, entrepreneurship also has a huge amount of definitions and descriptions that over the decades, authors such as Bowen and Hisrich, 1996; Morrison, 2000; Deakins and Freel, 2006 try to clarify (Kuratko and hodgetts, 2007). For instance, Schumpeter (1951) indicates that entrepreneurship is one of aspects of leadership in the wide context. Meanwhile Shapero (1975) states that entrepreneurship is a type of behavior such as risk taker, innovator and visionary.
However, the most used definition by many authors when talking about entrepreneurship is “the process of creating something new with value by devoting the necessary time and effort; assuming the accompanying financial, psychic, and social risk and uncertainties, and receiving the resulting rewards of monetary and personal satisfaction”. This definition was written in the text book of Baron and Shane (2008), Hisrich et al. (2010) and Kuratko and Hodgetts (2007) Seeing inside entrepreneurship, it is easily to discover that there are some different theories written about its nature over decades (Kuratko and Hodgetts, 2007).
In order to evaluate, the two approaches will be used are “School of thought” approach and process approach. On the one hand, the first approach called “school of thought” divided entrepreneurship into six different activities such as environment, financial, traits, venture opportunity, strategic formulation. This essay will look into each activity in order to have a clear concept about its nature. First of all, Van de Ven (1993) state that environment “school of thought” viewpoint is external elements could affect entrepreneur.
For example, the social group or socio-political that the entrepreneurs join in can influence them not only in positive way but also in negative way. Secondly, when raise the idea about financial school of thought, Brophu and Shulman (2002) indicated that entrepreneurship present based on capital-seeking process. This can be understand because “This school of thought views the entire entrepreneurial venture from a financial management standpoint” (Brophy and Shulman, 2002 cited in Kuratko and Hodgetts, 2007, p. 38). This view expresses that financial essential for a development of entrepreneur.
Thirdly, traits in entrepreneur are the school of thought that has been researched the most (Shaver and Scott, 2004). This view considered that the success of entrepreneurs come from the characteristic such as achievement, creativity, determination and technical knowledge (Shaver and Scott, 2004). In this school of thought, it can be found the two opposite point. Aronsson (2004) believes in the element of entrepreneurship such as creative and challenging. In this view, he seems to be except education factor in entrepreneur development.
Contrasting this point, Katz (2004) states that entrepreneur can be made by education. The positive of this point is that it will motivate people in learning to become entrepreneur based on the education and training program. This is very important to enhance entrepreneurship (Katz, 2004 cited in Kuratko and Hodgetts, 2007). Venture opportunity is another school of thought and it concentrates on the opportunity aspect of venture development. It means if someone want to be a successful entrepreneur, he/she must has the awareness of market and be creativity (Kuratko and Hodgetts, 2007).
Last but not least, some researchers have been focused on strategic formulation (Steiner, 1979; Lyles, 2001; Hitt et al. , 2001). In this school of thought, the successful development of entrepreneur cannot be absent of the planning process and this must be uniqueness (Kuratko and Hodgetts, 2007). On the other hand, Morris et al. (1994) indicate that process approach also has some point of view such as integrative, assessment and multidimensional. While there are different approaches and it looking in to different aspect of ntrepreneurship, Kuratko and Hodgetts (2007) wrote that the common aim of those approach is “to describe the entrepreneurial process as a consolidation of diverse factors” (p43) In order to have a comprehensive context about entrepreneurship to adjudge the selected person, some other theories will be added besides the two approaches ways discussed above. For instance, entrepreneur is defined as whom alert to profitable opportunities for exchange (Kirzner cited in Deakins and Freel, 2009) whereas Schumpeter (2009) viewed it as an innovator.
The view of Kirzner make everybody can be an entrepreneur while Schumpeter think that only person who has special ability can be entrepreneur (Deakins and Freel, 2009). Looking into two viewpoint above, it is easily see that Kirzner’s view is better because people can have motivation to become entrepreneur. There are also having a lot of conceptualized of entrepreneur of other authors such as Stokes and Wilson, Drucker. However, the most common entrepreneur approach is the trait approach.
The trait approach indicate that there are five popular personality of entrepreneur: need for achievement, need for autonomy, self-belief, risk-taking and locus of control (McClelland 1961; Getz, Morrison & Carlsen 2004; Wu 1989; Stokes and Wilson 2006; Drucker 1995; Brockhaus & Horwitz 1986 ). Based on those theories, the author will apply on Conrad Hilton. The essay’s author notices that although Conrad Hilton has both skills and traits in terms of leadership and entrepreneurship, it is easily seeing that his entrepreneurship skills seem to outweigh his leadership ones (Baird, 2004).
In fact, no one can deny Hilton’s entrepreneurship abilities because of clearly evidences. This is illustrated in Baird’s research that he tends to do his business in different ways with very good vision and high level of self-believe. Baird (2004) indicates that in 1950s when a platoon of hotels in Washington, New York and Chicago could not get the profit and led to loss, Hilton bought them then operated and got the profit from them.
In addition, a “magic formula” of financial management standards was guided to set in all hotel departments by Hilton in order to reducing costs as well as increasing profits when guest services are remained and enhanced. Moreover, after the World War I, Conrad Hilton was always seeking new opportunities for his business. In 1919, when visiting the Texas town of Cisco, he quickly realized the oil fields and railroad travelers were the new potential business. Thinking about the experience of operated family’s hotels in New Mexico, he can make Mobley Hotel operation better so that he bought it instead of a local Cisco bank.
His business seems very profitable when his hotel averaged 300% occupancy and its profit can make him have enough money to buy the second hotels in Fort Worth despite of the 1920 depression (the Melba, in October 1919). After that, he continued bought two others small Texas hotels. By the end of 1923, the hotels room operation in Texas was 530. During the stock market crash in 1929, as many other American’s hotel, Hilton hotels performed poorly and was going to bankruptcy, however, instead of declaring bankruptcy, he challenged his business again by making a financial agreement with the National Hotels Corporation.
Once again, his business was imaging successful and money earned from that business allowed him to pay off all his loans before. Strand (1951) supposes that the efficient Hilton “magic formula” management system has kept the hotels profitable even with low occupancy. All of those evidences present Conrad Hilton entrepreneurship skills including doing things in different way, need for achievement, need for autonomy, self-belief, risk-taking and locus of control as mentioned in the theories review part above.
Moreover, the most clear and convince evidence is that Comfort (1964) has considered Hilton as an international entrepreneur (Baird, 2004). By contrast, although it is though that he is also a leader, there are very limited references mentioned this aspect of him. From the resources have been found by the essay’ author, only Baird (2004) states that Hilton played “a leadership role in support of an economic mean sand a philosophical approach to achieving world peace”(Baird 2004, p. 3). As a result, “he became not only a business leader but also a statesman with access to world leaders” (Baird 2004, p. ).
According to theories above, it can be said that he belongs to assigned leader because he is not only a chairman in his hotel organization but also a statesman in American political system. However, combining with the process of getting successful in his life in which many his special traits have been presented, it could be said that he also has potential to become an emergent leader without any formal position. To be brief, it is clear that the controversy about leadership and entrepreneurship will never last among writers over years.
Although those theories above are a small part of the giant knowledge about leadership and entrepreneurship and they are not really holistic, they still can be seen as the best core knowledge of these fields. Therefore, the evaluation of skills and ability about leadership and entrepreneurship of Conrad Hilton in hospitality and tourism industry based on these theories is acceptable. In the discussion above, it can be stated that Conrad Hilton is not only an entrepreneur but also a leader specially assigned leader. However, his entrepreneurship is out weight of leadership.