OrgUtilSME - ORGANIZATION UTILITY: IMPLICATIONS FOR NEW...

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ORGANIZATION UTILITY: IMPLICATIONS FOR NEW VENTURE AND SMALL BUSINESS SUCCESS ROBERT DESMAN Department of Management and Entrepreneurship Michael J. Coles College of Business, Kennesaw State University Kennesaw, Georgia • USA ABSTRACT As open systems, organizations must import more energy than they export because some energy is consumed in their transformation processes (maintenance energy). Maintenance energy is allocated to either or both of two transformation functions: 1) task — ends-oriented functions that execute effective transformations, and 2) administration — means-oriented functions that facilitate efficient task accomplishment. New venturing places unprecedented demands on organization administrative functions. Anecdotal evidence, however, suggests that new ventures tend to be highly task-oriented and administration-indifferent. The Organization Utility Construct, presented here, demonstrates that excessive energy allocations to one function at the expense of the other do not yield improvements in that function; the energy is simply wasted. The high task- orientation of new ventures, therefore, not only deprives them of potential efficiencies, it disposes them to progressively deplete existing efficiencies if they redirect energy allocations from administration to task functions when in crisis. Their attempts to improve task effectiveness are shown to simply result in wasted energy with no improvement in operating results. Organizations cannot become more effective and less efficient nor more efficient and less effective: misallocated energy is simply wasted in both instances. INTRODUCTION Whether pushed by creative spark, sheer desire, or idle assets, or pulled by opportunity or the fear of obsolescence, the large enterprise expands, contracts, or changes direction; the small enterprise grows; the new enterprise is founded. Immediately thereafter, the organization faces critical new challenges. Significantly impacted, are those organizational sub-systems that facilitate control, conservation, communication, conflict management, consistency/continuity, coordination, and compensation (the 7Cs). Any change in the scope, scale, or complexity of organizational functioning necessitates corresponding changes in the supporting administrative functions if the change is to be successful. In the literature of small and family-owned business, new venturing, and entrepreneurship, vision, creativity, innovation, and leadership occupy center-stage. Perhaps because the subject lacks sufficient glamor and mystique to be fashionable, administration receives little attention. In his discourse on the entrepreneurial organization, for example, Kao (1991 p. 7), acknowledges that integration “becomes more significant as the organization evolves.” Integrative mechanisms are administrative in nature, but his discussion is limited to matters of organization-environment fit. The focus of the literature on more task-oriented issues may devolve upon the
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OrgUtilSME - ORGANIZATION UTILITY: IMPLICATIONS FOR NEW...

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