IMPLICATIONS FOR NEW VENTURE AND SMALL
Department of Management and Entrepreneurship
Michael J. Coles College of Business, Kennesaw State University
Kennesaw, Georgia • USA
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
transformations, and 2) administration — means-oriented functions that facilitate
New venturing places unprecedented demands on organization
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.
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.
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