Entrepreneurship Research

Amazon and Priceline.com each captured the public’s attention in the 1990s with groundbreaking success; yet soon thereafter, these companies’ trajectories diverged from each other, suggesting a new paradigm in management.

Mays Business School’s Dr. Michael Hitt and Dr. R. Duane Ireland tracked the divergence of these companies and many more in their exploration of strategic entrepreneurship.

LESSONS FROM CUTTING-EDGE ENTREPRENEURS

The pair began to research what was emerging among entrepreneurial companies that were shaking up the marketplace. Amazon began as an online book business with a large on-demand inventory and no brick-and-mortar stores. As its entrepreneurial model proved successful, Amazon’s leaders strategically identified new horizons. “Amazon expanded into music and many other areas,” Hitt said. “The company entered more and more markets and now, as a huge firm, has overtaken many industries.”

Yet, Hitt noted that Amazon’s success story is the exception, not the rule. Other entrepreneurial companies, such as Priceline.com, offer a cautionary tale about what happens when leaders disregard strategy. The online travel business offered a unique entrepreneurial model that, in its early stages, was more successful than Amazon. “Priceline was wildly successful with its reverse auction system,” he said. “This model was good for the airlines at that time. They were flying with empty seats that they couldn’t recoup, so that was lost revenue.” However, other companies began to copy its model. “Priceline still exists today, but they have many other online competitors, some bigger and more successful,” Hitt said. “In comparison, Amazon kept innovating and staying ahead of the curve.”

THE IMPORTANCE OF THE PIVOT

What sets successful entrepreneurial ventures apart is the ability to be both innovative and strategic. Hitt noted, “If you look over a longer term, you have to consider your competitive landscape. You may have no competitors when you start because you’re so unique, but if you’re successful, you’re going to invite competitors. Those companies that have staying power are the ones that tend to be more strategic.”

Ireland pointed out that strategic management and entrepreneurship seek to create different types of behavior. “Through strategic management, firms engage in advantage-seeking behavior. They attempt to exploit their current competitive advantages to achieve success and outperform competitors. In entrepreneurship, firms engage in opportunity-seeking behavior. They explore the external and internal environments to specify the competitive advantage they will need to achieve success and outperform competitors tomorrow or at some point in the future,” Mays’ Interim Dean said. “Combining these actions to exploit and explore simultaneously results in Strategic Entrepreneurship.”

The researchers also believe large firms that are strategic must increasingly be entrepreneurial to thrive in the rapidly changing environment, Hitt noted. “A lot of big firms become leaders in their fields, and then they rest. They take less risk because they have been successful and decide to stay with what they have—but today, you can’t do that. You have to continuously be entrepreneurial.”

TAPPING AN EMERGING FIELD

The field of strategic entrepreneurship began to emerge in the 1990s, and by 1999, the Mays professors had enough data to write a book chapter on the topic. In 2001, the pair collaborated in creating a special issue of the Strategic Management Journal focused on strategic entrepreneurship.

With research in this area of study continuing to expand, Hitt helped launch the Strategic Entrepreneurship Journal (SEJ) in 2007. Dr. Dan Schendel, Purdue University professor emeritus of management and SEJ’s founding editor in chief, worked closely with Hitt on the journal’s launch. Schendel shared, “The interest and importance of entrepreneurship was needed as an offering of the Strategic Management Society, and as a service to our members and an outlet for research in the field.” This academic journal’s influence has grown to the point that the Financial Times now recognizes it among the top 55 business journals.

The study of strategic entrepreneurship continues to expand across the globe. “Duane and I were the catalysts that started this initially, but there now are many, many others who work in the field,” Hitt said. “Because of the work that has been done by many others, strategic entrepreneurship has become a very vital and active field academically but also from a practical standpoint.”

Ireland agrees. “I think both the short and long-term outlook is very positive. Researchers continue to examine questions and issues related to Strategic Entrepreneurship,” he said. “Moreover, the Strategic Entrepreneurship Journal, which was established for the purpose of publishing strategic entrepreneurship-related work, is becoming stronger and more widely respected.”

MOVING INTO PRACTICE

The study of strategic entrepreneurship has become a mainstay in the Department of Management’s undergraduate programs. Hitt, now a professor emeritus, initiated the strategic entrepreneurship class, which guides students, including those from other Texas A&M colleges, on how to develop a strategic entrepreneurial venture. This class offers Aggies the chance to learn how to launch a business.

While the term “entrepreneurial” often is equated with start-up companies, Aggies who plan to work with traditional companies also benefit from this class as they learn how to add value to their employers. “We encourage them to keep the mindset of being strategic and entrepreneurial. Always look for better and new ways to do things,” Hitt explained. “Obviously, as an entering new young employee, they can’t immediately make changes on their own, but they can suggest new ideas and help companies see how they can be more entrepreneurial and more innovative, or be more strategic considering what competitors may do or how they may react.”

THE FUTURE OF STRATEGIC ENTREPRENEURSHIP

Both Ireland and Hitt expect this area of study and education will continue to grow, especially with the increasing rate of change as well as global repercussions from events, such as the pandemic and war. Additionally, economic and societal changes are increasing the need for leaders who are well-versed in both entrepreneurship and strategic thinking to guide public organizations such as non-governmental organizations (NGOs) and higher education institutions.

Ultimately, a strategic entrepreneurship mindset is increasingly critical for organizations of all kinds in the future. “There’s a lot of uncertainty out there that can’t be predicted, regardless. Just look at our recent pandemic,” Hitt said. “Today, I believe very strongly that all firms need to be engaged in strategic entrepreneurship by being strategic and entrepreneurial, whether they are large or small or in any industry. They have to be, if they are going to stay in existence.”

Research will play a critical role in helping organizations understand how to use strategy and entrepreneurship in the world’s rapidly changing, disruptive, and often-disorienting environment. “Today, organizations face increasingly complex and rapidly changing conditions while engaging in competitive battles. Having a solid and robust understanding of strategic management practices, tools, and techniques along with possessing a highly developed set of entrepreneurial insights is critical to identifying paths to follow to achieve success given the competitive realities,” Ireland said. “The primary benefit of research in this area is that when engaging successfully in strategic entrepreneurship-related practices, firms increase the likelihood of being able to compete successfully today, tomorrow, and in the future.”