A Study of Entrepreneurial Orientation in Design-Based Businesses

Problem Definition
Arts and Design entrepreneurship is a promising field of research that involves different disciplines. During the last decade, there has been growing interest in Entrepreneurship in Art and design, in both the scholarly literature and in practice. With this in mind, this research aimed to study different dimensions of entrepreneurial orientation(EO) in Design-based businesses, to discover, understand, and describe the special entrepreneurial characteristics of this type of business. Entrepreneurial orientation (EO) is a key concept when executives are crafting strategies in the hopes of doing something new and exploiting opportunities that other organizations cannot exploit. Based on Lumpkin & Dess studies, EO refers to the processes, practices, and decision-making styles of organizations that act entrepreneurially. Any organization’s level of EO can be understood by examining how it performs relative to five dimensions: (1) autonomy, (2) competitive aggressiveness, (3) innovativeness, (4) proactiveness, (5) and risk-taking. Autonomy refers to whether an individual or team within an organization has the freedom to develop an entrepreneurial idea and then pursue it to completion. In an organization that offers high autonomy, people are offered the independence required to bring a new idea unrestricted by the bonds of corporate bureaucracy. Competitive aggressiveness is the tendency to intensely and directly challenge competitors rather than trying to avoid them. Aggressiveness includes sales & marketing strategies and competitive approaches. Innovativeness is the tendency to pursue creativity and experimentation. Some innovations build on existing skills to create incremental improvements, while more radical innovations require new skills and may make existing skills out of date. Also, innovativeness is aimed at developing new products, services, and processes. Proactiveness is the tendency to anticipate and act on future needs rather than reacting to events after happening. A proactive organization embraces an opportunity-seeking perspective.  Risk-taking refers to the tendency to engage in bold rather than conservative actions.
Research Question
What are the dimensions of each measure of entrepreneurial orientation, including (1) autonomy, (2) competitive aggressiveness, (3) innovativeness, (4) proactiveness, and (5) risk-taking in design-based businesses?
Research Method
To achieve the aim of this research, a qualitative study was conducted through an exploratory-descriptive multiple case study using semi-structured in-depth interviews and observation on ten Iranian Design-based businesses. The data gathered based on the Lumpkin and Dess standard five measures for entrepreneurial orientation, which is one of the most cited measures, including (1) autonomy, (2) competitive aggressiveness, (3) innovativeness, (4) proactiveness, and (5) risk-taking, was iteratively and inductively coded and then formed the framework of the results in this study.
A design-based business is a business in which design is considered as the core of its value proposition and operates with a design-driven innovation approach in the market. In this type of innovation, innovation in the meaning and design language is more important than innovation in function and technology. The selection of the sample size for the study was done using a judgmental non-random sampling method. In this regard, due to the lack of a comprehensive list of these businesses in the country, first through interviews with design experts and professionals in this field, along with checking websites, accounts on social media, online stores, and works presented in concept stores and design physical stores, a list of design-based businesses was prepared. In the next step, with a survey of experts in this field, the number of ten businesses among the businesses in this list, according to indicators such as (a) focusing on design as the main value creation factor in products, (b) quality of design and production, c) having at least five years of experience, and (d) upward growth trend of the business since its establishment in terms of attracting new customers and sales volume. Also, in addition to these ten successful businesses, interviews were conducted with the owners of three failed design-based businesses. During the research process, with the help of data collection tools including in-depth semi-structured interviews and observation, the owners of these businesses were asked to narrate in detail the process of starting and growing their business from the beginning of its establishment until now, and things such as how to identify and responding to customer and market needs and opportunities, design and production process, business strategies and how to compete with competitors, marketing and sales methods, etc., describe them with case studies in their business. Then, all descriptions and explanations of the owners of these businesses were recorded and documented. After conducting the interviews and recording and documenting them, some visits were made to the design studios and production workshops of these businesses, and at the same time, their websites and social media accounts were studied. In the next stage of the research, the themes in the collected data were extracted and the process of open coding was performed on them, and then based on the five measures of entrepreneurial orientation(EO), axial coding was done and the results of the study were extracted based on them and were analyzed. In all stages of coding, an effort was made to increase the credibility and reliability of coding by multiplying the researchers and reviewing the codes multiple times with the help of professors and entrepreneurship experts.
Findings
The results of the study revealed the impact of the design context in the entrepreneurial orientation(EO) dimensions. The outcomes showed that Design-based businesses, due to Design-driven innovation at the product level, have significant potential and capacity for entrepreneurial orientation, but because of dilution of their enterprise-level innovation, in terms of growth and scalability are facing some serious challenges; Also, these businesses are completely risk-taker in product innovation and significantly risk-averse in financial issues, and this risk-aversion has led to the development of more conservative business models for them; So, some strategies and activities in design-based businesses, act as driving forces and others as preventing factors for entrepreneurial orientation in these types of businesses. Focusing more on product-level innovation (innovation), investigating the social and technological trends (proactiveness), registering and exploiting intellectual property rights for design works (competitive aggressiveness), risk aversion (risk taking), and forming an open and flexible work atmosphere aligned with the independence and freedom of employees(autonomy) can be introduced as one of the main characteristics with a positive impact on entrepreneurial orientation in this type of businesses. Also, focusing more on business-level innovation, especially innovation in the business model, pioneering in identifying and exploiting economic opportunities and focusing on profitable markets, taking more risks in scaling the business and accelerating its growth speed identified as existing gaps in EO of design-based businesses; So, focusing on mentioned gaps, resolving them with solutions and their sustainable institutionalization in the business structure could be lead to more effective entrepreneurial orientation in this type of businesses and could improve their market performance. Also, a reflection on the entrepreneurial processes studied in this research showed that the different pieces of the EO puzzle in the design-based businesses are put together from different sources, some of them could be traced back to the childhood of the designers. Therefore, various factors such as individual talents and capabilities, parenting, childhood experiences, formal and informal education, and the designers’ communication and networking skills as well as legal institutions and infrastructures could be effective in EO in this business ecosystem. Also, especially, the development of personal ambidexterity and developing an entrepreneurial character coupled with a designerly character is necessary for the better economic and financial performance of these types of businesses in the market. Entrepreneurial orientation is not an absolute, isolated, and inflexible concept, and all five mentioned EO dimensions are used conditionally in different situations for design-based businesses. The findings of this study at the policy-making level can lead to the setting up of the necessary infrastructures to support this type of business, and at the enterprise level, provide insights for the owners of Design-based businesses to achieve more effectiveness through entrepreneurial behaviors.