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Int. j. econ. manag. soc. sci., Vol(3), No (10), October, 2014. pp.

540-545

TI Journals

International Journal of Economy, Management and Social Sciences


www.tijournals.com

ISSN:
2306-7276

Copyright 2014. All rights reserved for TI Journals.

Investigating the Strategic Relations between Entrepreneurship


And Organizational Innovation in Mahsan Electrical Industries
Company
Hesam Naie *
Faculty of Management and Accounting, Islamic Azad University (IAU), Qazvin Branch, Iran.

Reza Kianimavi
Assistant Professor Faculty of Management and Accounting, Islamic Azad University (IAU), Qazvin Branch, Iran.

Kaveh Teymournejad
Assistant Professor, Department of Public Administration, Faculty of Management, Islamic Azad University (IAU), Central Tehran Branch, Iran.
* Corresponding author: Hesam.naie@yahoo.com

Keywords

Abstract

Organizational Entrepreneurship
Organizational Innovation
Mahsan Co

To achieve high functioning and gain dominance over the competitive environment, organizations must
attempt to create an entrepreneurial organization these days, and this purpose is reached through
organizational innovation. The present article is aimed at determining the relation between strategic
entrepreneurial factors and organizational innovation in Mahsan Electrical Industry Company. The
conceptual research model was presented to test the relation between strategic entrepreneurial factors
(including individual skills, common ambitions, active endeavors, and environment) and organizational
innovations. It can be said that there is a direct significant relation between strategic entrepreneurial
factors and organizational innovations regarding the presented model and results of hypotheses test.

1.

Introduction

Managerial researches in entrepreneurship have mostly emphasized short-term and mid-term businesses and executive management before, but
more attention is paid to long-term guidelines and entrepreneurial behavior in strategic domain in recent studies [1]. Therefore, paying attention
to entrepreneurial strategic factors seems to be very important. Creating a long-term strategic view on entrepreneurship will cause a strategic
capability like organizational innovation which then creates wealth and competitive advantages leading to better functioning [2]. Leading
companies are out of activity circle due to their environmental adaption disability, or lack of achievement or ability in creating change. Strategies
are tools through which an organization can achieve different purposes of its era. Management theories also suggest that entrepreneurial
approach is crucial for an organization to create strategies to afford competition in present world [3]. Also, entrepreneurial process contributes in
organizational strategy formulations and innovations. Innovation is a multidimensional concept related to products, processes, technology,
management, rapid growth, or development. Innovation occurs in new products or processes form in many cases, but may include new ways for
company organization and administration, and/or recognizing new markets for products and services [4]. When human force is risk-taking and is
discovering new opportunities to develop organizational purposes, he also is looking for a solution to organizational issues and problems through
fostering ideas, and is applying innovations in organization, it can be said that entrepreneurship and innovation are institutionalized in that
organization. The issues in question are now as follows: How strategy institutionalization activities and innovations are ranked in an
organization? What is the relation between entrepreneurship and innovation? Also, what are the important and effective factors on
entrepreneurship and innovation development? How their relation is effective on innovation distribution and the analysis of interaction
strengthening factors?

2.

Literature Review and Method

The main subject of this research is studying the importance of and the relation between entrepreneurship strategic factors and organizational
innovation regarding the four factors of individual skills, common ambitions, active endeavors, and environment in Mahsan Electrical Industry
Company. The location of this study is limited to Mahsan Electrical Industry Company, and the statistical population included all 495 employees
there. The research data was collected in spring, 2013. The purpose of this study is implicational in that it seeks a functional purpose, and it is
categorized as correlation in method and nature in that it studies the significant relation between strategic factors and organizational innovation
from an entrepreneurial view. The information collection method is fieldwork through questionnaire. The t test was used to analyze the obtain
correlation in the data. The reliability of Cronbach's alpha index was calculated for independent and dependent variables by entering the data in
SPSS which equals 0.989. This number is above 0.7 and indicates high reliability for the present research tool.

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Investigating the Strategic Relations Between Entrepreneurship And Organizational Innovation In Mahsan Electrical Industries Company
International Journal of Economy, Management and Social Sciences Vol(3), No (10), October, 2014.

Table 1.The reliability coefficient (Cronbach's alpha) for variables using SPSS software

495

100.0

Excluded

0.0

Total

495

100.0

Valid
Cases

Cronbach's Alpha

N of Items

0.989

20

2.1 Innovative Organization


Most of the literature on innovation has focused on technological innovation [5], and the restricted view resulting from that bias has been
criticized in studies of organizational innovation [6]. However, the concepts innovation and organization are central to organizational theory.
The most common distinction with respect to types of innovation is between product and process innovation. Organizational innovation is often
added to these two basic types. Business organizations attempt to create value and thereby achieve competitive success. Ever since Schumpeter
(1934) pointed out that innovation plays an important in economic development, it has received much attention and has been widely studied for
its organizational innovation issues [7]. From an organizational perspective, innovation is generally understood as the successful introduction of
a new thing or method or embodiment, combination, or synthesis of knowledge in original, relevant, valued new products, processes, or services
[8]. Innovation is also considering and acting on insights leading to significant organizational improvements in terms of improved or new
business products, services, or internal processes[9]. The interactive nature of the innovation process calls for organizational structures and
mechanisms to ensure the appropriate interactions among the various institutions that makes up spatial systems of innovation [10].
Innovative Organization is an implementation of a new or significantly improved product (goods or service), or process, a new marketing
method, or a new organizational method in business practices, workplace organization or external relations [11]. Firms can derive four basic
benefits for Innovative Organization by: (1) an increased market size; (2) a greater returns on major capital investment or on investments in new
products and process; (3) a greater economies of scale, scope, or learning; and (4) a competitive advantage through location (e.g., access to lowcost labor, critical resources, or customers) [12]. In a flurry of theoretical and empirical investigations, most researchers have used intangible
assets and total factor productivity growth as proxies for innovative activities. An intangible asset transforms into skilled actions, providing firms
with competitive advantage and improved performance [13]. Structural capital (also called organizational capital) refers to knowledge and skills
owned by the firm including databases, intellectual property, trade secrets, business routines and processes, and organizational competencies.
Relational capital is knowledge and resources embodied in external stakeholders, including R&D collaborators, suppliers, and customers.
Human capital includes knowledge and skills of individual employees [14].
The innovative capacity of a country is a basic driving force behind its economic performance, providing a measure of the institutional structures
and supporting systems that sustain innovative activity. Furman, Porter and Stern framed a concept of national innovation capacity measured by
patenting rates, and estimated its institutional sources for a group of 17 OECD countries[15]. Innovation is widely regarded as a central process
driving economic growth and competitiveness of nations. But it takes a long time for a country to reach the technological frontier where
innovation becomes a principle driver. In the case of the outstanding latecomer economies of the 19th century, Germany and the US, it took
from 50 to 100 years for these countries to catch-up with and overtook the UK that was the leader. In the 20th century, Japan has caught up with
the leaders, and in the postwar period, outstanding cases have been those of the East Asian Tiger economies, Korea, Taiwan, Hong Kong and
Singapore, described by the World Bank as the East Asian Miracle [16]. Taiwan is equipped with an innovation system that is much more
flexible and suited to dealing with changes than those of Japan and South Korea. Thus, it is also conspicuous how much better Taiwan fared
through the crisis than Japan and South Korea [15]. The personal mastery is influences on organizational performance through organizational
learning and innovation in large firms and SMEs. Most previous publications agree that organizational innovation influences performance
positively [2]. The resource-based view showed positive relationship between technological innovations and organizational performance [17] as
the study showed positive relationships between organizational innovation, a market orientation, and organizational learning, showing that all of
these elements together influenced the potential for good performance [18]. The leaders positive view of innovation is an essential factor for its
implementation and development within the firm and improvements in organizational performance [19]. On the way to move toward wealth
creation, serious attention has to be paid to the interconnection between the productive and the distributive dimensions of the creation process.
Production as an innovative process and the improvement of productivity were not an issue, while distribution was enforced in an extremely
egalitarian way. Productivity increase became a key goal in the economic reformation leading to a greater inequality in which a stronger
motivating structure could be obtained and millions of Chinese people could be lifted out from the poverty. Anyhow, later on the inequality then
became greater causing a decreasing rate of productivity. For development ethics, it is therefore important to promote virtuous cycles between
production and distribution and prevent vicious cycles. Financial outcomes are separated causally and temporally from improving employees'
capabilities. The complex linkages make it difficult, if not impossible, to place a financial value on an asset such as workforce capabilities or
employee morale [20].
For an organization, innovation would denote the generation or adoption of novel ideas or behavior. Hence, to an enterprise, an innovation can
be a new product or service, a new production technology, a new operation procedure or a new management strategy. Most successful
innovations are the result of gradual changes in concepts and methodology implemented continually over time [21]. Accumulation of
organizational resources relies on the creation, search, acquisition and sharing of knowledge; and effective organizational innovation is the key
to maintain competitive advantage in a constantly changing environment [22]. Innovation may occur in every aspect of an organizations
operations and can therefore be classified by organizational function: managerial innovation, technological innovation, process-, product- and
market-innovation, etc [23].
2.2 Entrepreneurship Organization
Entrepreneurship is a crucial engine for innovation, competitiveness, job creation and economic growth. Also promote the transformation of
innovative ideas into successful businesses in high-tech sectors and can unlock the personal potential of individuals. Thus, in recent years,
researchers have shown that smaller and new companies are the main providers of new jobs and not large ones, because they are more flexible
and responsive to market demands. Finally, innovation is adopted by the company through new business initiatives leading to increasing
competition and forcing companies to respond by choosing to innovate or to increase their efficiency [24]. The term entrepreneur etymologically

Hesam Naie *, Reza Kianimavi , Kaveh Teymournejad

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International Journal of Economy, Management and Social Sciences Vol(3), No (10), October, 2014.

originates from the French word entrepreneur meaning to begin something, undertake. During the mediaeval times, this word was being used
to describe an active working person [25]. However, in the economic theory, it was Richard Cantillon (1759), -an Irish economist of French
descent- first, who used the term entrepreneur. According to Cantillon, the entrepreneur is a specialist in taking risk [26]. Risk-taking is one of
the famous attributes of entrepreneurs which is also frequently emphasized in the literature. Spiritually, some people are observed to tend to
behave extra-ordinarily. As Jobs addresses; You have to trust in somethingyour gut, destiny, life, karma, whateverbecause believing that
the dots will connect down the road will give you the confidence to follow your heart, even when it leads you off the well-known path, and that
will make all the difference [27]. Taking the risk phenomenon and the spiritual reflections into consideration; it can easily be summed up that
entrepreneurship has something to do with inner-journey.
Another emphasis on entrepreneurship is its presentation as a mind-set. Entrepreneurship is first and foremost a mind-set. To seize an
entrepreneurial opportunity, one needs to have a taste for independence and self-realization. said Olli Rehn, a member of the European
Commission [28]. Understanding the entrepreneurial mind-set requires a certain threshold of empathy. First of all, entrepreneurship is the story
of ambiguity. An anonymous supporting quote is likely to highlight the gist of entrepreneurship. Its as follows: Anyone, (can be an
entrepreneur) who wants to experience the deep, dark canyons of uncertainty and ambiguity; and who wants to walk the breathtaking highlands
of success. But I caution, do not plan to walk the latter, until you have experienced the former [29]. In this regard, as Schumpeter also points
out; entrepreneurs seem to have some heroic vision. Schumpeter focused on high-level entrepreneurship, and larger businesses [30].On the other
hand, Marshall examined smaller businesses, partially [31]. It was Hayek and Kirzner, who examined the entrepreneurs as middlemen hoping to
profit by buying cheap and selling expensive [32], This preference of discussing entrepreneurship inside smaller boundaries is closer to the intent
of this paper which will be clarified in the upcoming sections. Stopford and Baden-Fuller considered entrepreneurs as opportunists even in
chaotic situations, and they also approached to entrepreneurship in a metaphorical way. According to them, entrepreneurs are like Olympic
athletes, long-distance runners, symphony orchestra conductors, and top-gun pilotsThese metaphors underline the entrepreneurs being
ambitious, determined, self-challenging and talent of synchronizing [33].
When it comes to define entrepreneurship; it can easily be discovered that various people have defined entrepreneurship differently. In spite of
this fact, the most common classification follows the mainstream of Collins and Moore; who claimed two types of entrepreneurship,
differentiating due to the context of entrepreneurial activities undertaken. These are, firstly, independent entrepreneurship and independent
entrepreneurs (similar to entrepreneurship/traditional entrepreneurship and entrepreneurs/traditional entrepreneurs in this paper), implying the
process whereby an individual or a group of individuals, acting independently of any association with an existing organization, create a new
organization. Secondly, corporate entrepreneurship and administrative entrepreneurs (similar to entrepreneurship and entrepreneurs in this
paper), implying the process whereby an individual or a group of individuals, in association with an existing organization, create a new
organization or instigate renewal or innovation within that organization [34]. A brief definition of an entrepreneur, inspired by Kuratko, can be
made as the following: An entrepreneur is an undertaker who notices and seizes opportunities; converts those opportunities into commercial
ideas; adds value via processes, effort, capital, or capabilities; and confronts the risks of the competitive market to apply those ideas; and what an
entrepreneur accomplishes, is therefore called entrepreneurship [35]. Now, entrepreneurial activities within an existing organization, namely
entrepreneurship will be discussed.
2.3 Strategic Entrepreneurial Factors and Their relation to innovation
Strategic Entrepreneurial factors include individual skill, common ambition, environment, and active endeavor. After defining each, their
relations to organizational innovation are studied.
Individual Skill: Individual skill is the capacity and capability in developing and learning at an individual level relying on innovational
dimensions in organizational innovations belonging to an individual. Organizational life depends on different employee skills, awareness, and
knowledge to a great extent. Human force training and improvement cause deeper perception and insight, higher knowledge and wisdom, and
more employee ability and skill in organization for a better task work performance and therefore achieving organizational aims to obtain better
and more efficiency and productivity [36].
Common Ambition: The outlook or common ambition consists of a common commitment to future tendencies and a common feeling towards
organizational purposes, and provides an innovation opportunity. Mere individual authority for innovation start and decision is not enough
because people support something they help to create; therefore a common outlook and a general commitment must exist among organizational
members [2].
Active Endeavor: The term "Active Endeavor" was first applied merely in its general sense (i.e. hyperactive), but its applications are in
behavioral sciences named hyperactive thinking framework, hyperactive behavior, and management. It became a general term in business and
commerce in management, and was applied to mean taking action before a situation or source goes into conflict or crisis, and also predicting or
taking responsibilities in different situations [37].
Environment: An influential factor on innovation in an organization is its activity environment. These environments are defined with
sometimes different cultural, climate, human, and organizational components. Some multiple environmental factors are mentioned in this
research as follows: dynamism, showing repeated change and turbulence in external environmental forces; complexity, referring to the number
of external elements that can influence organizational functions; and heterogeneity, showing the variety, multiplicity, and complexity in
companies' competitive environment [37].
Finally, a designed model is obtained from performed studies including strategic factors (such as individual skill, common outlook or ambition,
active endeavor, and environment) having a relation with entrepreneurship (including innovation) adapted from Malars et al.'s model (2007). It is
therefore attempted to study the mentioned model in Mahsan Electrical Industry Company.
Individual Skill
Common Ambition

Innovative
Organization

Active Endeavor
Environment
Figure 1. Structure Model

Entrepreneurship
Organization

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Investigating the Strategic Relations Between Entrepreneurship And Organizational Innovation In Mahsan Electrical Industries Company
International Journal of Economy, Management and Social Sciences Vol(3), No (10), October, 2014.

3.

Data Analysis

The main issues in question are as follows in this research: How strategy institutionalization related activities and innovations are ranked in an
organization? What is the relation between entrepreneurship and innovation? Also, what are the important and effective factors on
entrepreneurship and innovation development? How their relation is effective on innovation distribution and the analysis of interaction
strengthening factors?
Some hypotheses must be proposed now to answer these questions. The main one is considered the positive relation between strategic
entrepreneurial factors and organizational innovation which resulted from alternative hypotheses of the positive relation between individual skill
and organizational innovation, the positive relation between common ambition and organizational innovation, the positive relation between
active endeavor and organizational innovation, and the positive relation between environment and organizational innovation.
3.1 Main Hypothesis
Hypothesis 0: there are no positive relations between strategic entrepreneurial factors and organizational innovation.
Hypothesis 1: There is a positive relation between strategic entrepreneurial factors and organizational innovation.
Table 2. The test results

Innovative
Factors

Pearson Correlation

0.379**

Sig. (2-tailed)

0.000

495

The Pearson's correlation index was used to study the relation. As this index is positive, there is a positive relation between strategic
entrepreneurial factors and organizational innovation. As the significance level Sig =0.000 which is lower than 0.05, therefore the above
correlation is significant. Of course, the above correlation index is also significant at 99% security level. This software report was performed
based on t test.
3.2 Alternative Hypothesis
The tested alternative hypotheses in this research include the following:
There is a positive relation between individual skill and organizational innovation.
There is a positive relation between common ambition and organizational innovation.
There is a positive relation between active endeavor and organizational innovation.
There is a positive relation between environment and organizational innovation.
Table 3. The results of Pearson correlation coefficient

Individual skill

Common ambition

Active endeavor

Environment

Pearson Correlation
Sig. (2-tailed)

Innovative
.416**
.000

495

Pearson Correlation

.361**

Sig. (2-tailed)

.000

495

Pearson Correlation

.375**

Sig. (2-tailed)

.000

495

Pearson Correlation

.356**

Sig. (2-tailed)
N

.000
495

The Pearson's correlation index was used to study the relation in researching the alternative hypotheses. As all indexes are positive, there are
positive relations between the four strategic entrepreneurial factors and organizational innovation. As the significance level Sig =0.000 which is
lower than 0.05 in all cases, therefore all above correlations are significant. Of course, the above correlation indexes are also significant at 99%
security level. This software report was performed based on t test.

4.

Results

4.1 The Obtained Results from the First Hypothesis


The positive relation between individual skill and organizational innovation was confirmed in the first hypothesis. Individual skill is the art of
mind and learning and people with high levels of individual skill develop their competences and abilities continuously, and an organization
results from their tendency towards learning and innovation. In fact, individual skill is related to organizational innovation because it clarifies
and improves the individual outlook of members and lets them get nearer to this outlook or ambition through innovative actions. In fact, people
with high levels of individual skill are more committed to their continuous improvement, have high levels of systemic thinking, and therefore
cause organizational function improvement and organizational innovation.

Hesam Naie *, Reza Kianimavi , Kaveh Teymournejad

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International Journal of Economy, Management and Social Sciences Vol(3), No (10), October, 2014.

4.2 The Obtained Results from the Second Hypothesis


The positive relation between common ambition and organizational innovation was confirmed in the second hypothesis. The common ambition
or outlook is in fact a presently unachieved organizational purpose and is trying to achieve it. Therefore, purpose recognition will make its
achievement easier. Therefore, employees with deeper perception about their own future occupational status and department can act knowingly
in recognizing existing opportunities or threats, this common outlook encourages them to benefit the organization or its profiteers with an
opportunity or let them free from a threat through presenting innovative guidelines. In fact employees will reach at a stage where there is no need
to tell them why they should learn, but they themselves will yearn for learning and innovation.
4.3 The Obtained Results from the Third Hypothesis
The positive relation between active endeavor and organizational innovation was confirmed in the third hypothesis. This term refers to active
endeavors by individuals for making effective changes in their environment. As the company environment is dynamic and is changing and
reforming continuously, employees with continuous active endeavors are seeking to obtain new skills and trainings, are more motivated to offer
their suggestions on job procedures to adapt to or change their environment, and are searching for new ways to cope up with environmental
uncertainties. This employee interest in obtaining new skills and in increase in their ability against some opportunities and threats can be an
effective factor in innovation, and leads them to innovation in working methods, on the other hand.
4.4 The Obtained Results from the Fourth Hypothesis
The positive relation between environment and organizational innovation was confirmed in the fourth hypothesis. Environment is defined as a
combination of effective institutes or forces on organizational function with either low or no organizational controls over them. Organizations
always work in an environment and field. This environment have been consistent and stable not long ago, but organizational environments have
accompanied high complexity and dynamicity these days due to important changes and reforms in business areas, technology, people and
clientele expectations, economic globalization, and so on. An organization must adapt to its environment and show flexibility to survive and
maintain its growth, achieves growth under innovation's shadow, and therefore maintain its life. So, environmental dynamicity requires
creativity, innovation, and entrepreneurship.

5.

Discussion and Conclusion

This research argues that the entrepreneurship and innovation combination is a key factor for organizational consistence and stability in this era
of all rapid changes. As entrepreneurship and innovation are systematic behavior, systematic attempts are required for their integration in
organization activities. Entrepreneurship and innovation must be considered continuous and daily subjects in organizations. This research will
contribute greatly in developing such attitude in Mahsan Electrical Industry Company, will help organizational success, and will cause business
expansion and development. When organizational conditions are ready for organizational entrepreneurship institutionalization, the organization
members will show greater tendency towards accepting innovative responsibilities and expressing creativity. It can be concluded that the relation
between strategic entrepreneurial factors and organizational innovations plays a crucial and fundamental roll in productivity of entrepreneurship
strategy in the organization. Regarding multiplicity of research variables, each one can be studied separately but meticulously, because
organizational innovation and organizational entrepreneurship have extended dimensions each of which can be the subject of a new research. It
seems that future researchers must study organizational culture and reformist leadership variables in addition to the already studied ones.

Acknowledgement
The author is grateful to Reza Kianimavi from Faculty of Accounting and Management Islamic Azad University Gazvin Branch and Dr. Kaveh
Teymournejad from Faculty of Accounting and Management at Islamic Azad University Central Tehran Branch, for a thorough review and
useful suggestion in the article.

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