INTERVIEW WITH PROFESSOR SASCHA KRAUS – by Jeroen Geelhoed, &samhoud consultancy
“We need more entrepreneurship in this country”. Since we came to that conclusion a couple of years ago we decided to take our societal responsibility. In order to foster entrepreneurship in the Netherlands, in cooperation with Utrecht University, we set up the &samhoud sponsored Chair of Entrepreneurship. Professor Sascha Kraus has held this Chair since 2008, in addition to academic positions at the University of Liechtenstein and at the Lappeenranta University of Technology in Finland. He was a start-up entrepreneur himself in the 1990s. We interviewed him about value creation and about stimulating entrepreneurship in organizations and among students.
How do universities create value, and how is it different from business?
Universities create value? I am joking, of course they do, but in a way that is very different indeed to how enterprises create value. Universities usually only lay the foundation for value creation, especially through subjects such as Entrepreneurship, which have become a key element in nearly all curricula at European and American universities in the last decade. In these courses, universities try to implement a certain, entrepreneurial, mind-set into the intellect of their ‘customers’, which hopefully in some cases then indeed leads to the creation of something new and something of value. That is when industry then picks up the baton. In sum, the role of universities in the creation of value is usually one that is a lot more indirect – perhaps with the only exception when so-called ‘spin-off s’ are generated by the university directly.
What are the major challenges on value creation for the coming 10 years?
To balance out the different stakeholders, and to create long-term and sustainable value – and not only short-term profits. The topic of value creation had thus far mostly focused on financial or shareholder value, but not so much on value for employees, customers or even overall society. This is what Heskett, Sasser and Schlesinger tried to pick out as a central issue in their 2002 book ‘The Value Profit Chain’ – the reciprocal relationship between employee satisfaction, loyalty, and commitment on the one hand, and its influences on tomorrow’s customer satisfaction, loyalty, and commitment on the other hand, which in sum leads to greater company success and therefore also to positive outcomes for society.
How do entrepreneurs define value?
About two years ago we published a special issue on the topic of Value Creation of the academic journal of which I am Chief Editor, the International Journal of Entrepreneurial Venturing, and my personal take on it was: everybody is talking about value creation, but nobody knows how to ‘grasp’ it. Or, in other words, there is no real academic consensus yet about the concept from a scientific viewpoint. What is agreed upon, however, is that value creation should be at the very heart of any entrepreneurial behaviour, and reflected in the exploitation of opportunities and subsequent organizational growth. As Nahapiet & Ghoshal highlight in their ground-breaking Academy of Management Review article, value creation is more likely to occur if a firm has the organizational capacity to combine and exchange information into new knowledge and products. So, one of the keys to entrepreneurial success seems to be to develop something new through the combination of many old things, like for example Apple has done with the iPhone. In essence, this was nothing spectacular: mobile phones already existed, there were MP3 players, digital cameras, and also touchscreen-based computers, but only the combination – peppered with a shot of feminine design and an extraordinary marketing capacity – made the whole package a real innovation, and thus something which the customer was not even aware of that he or she would desperately need. This is how entrepreneurship functions in the 21st century: innovate, don’t wait for customer needs to be explicitly expressed, but rather create a demand yourself, be proactive, and take some risks. This is what creates the greatest value – both for the customer and the company!
To what extent do organizations foster entrepreneurship? Could you perceive a change during the last 10 years?
Certainly. At the beginning of this century, entrepreneurship was mostly only understood as the creation of new organizations, i.e. start-ups. This was a result of the dotcom boom and the worldwide expansion of the Internet. After these bubbles crashed, more and more intelligent people, from business practice as well as from academia, started to rethink this ‘business model’ and concluded: “Hey, the vast majority of companies out there are not the high-flying Internet start-ups, but small- and medium-sized, often family-led, enterprises operating in traditional industries. How can we also make these companies more successful in order to survive and compete in an increasingly turbulent and globalized world?” This is how the academic subject of entrepreneurship was extended to these other companies too – with highest relevance to the real world. The questions how entrepreneurial behaviour and entrepreneurial orientation can be ‘transferred’ from the start-up sphere to the level of work floor employees will be the biggest task for current research, but it is already quite obvious that entrepreneurial leadership, including inspiration and the willingness to change and rethink existing patterns, will play the most vital role in this process.
Which companies are great examples of fostering entrepreneurship? And what do they do?
It would be easy to name all the Googles, Microsofts and Virgins of the world here, but are these really the best examples for fostering entrepreneurship, or, even more importantly, ‘Intrapreneurship’, i.e. the entrepreneurial behavior within existing companies? In reality, it’s more the small- and medium-sized enterprises ‘around the corner’ which influence the local business community through their customer orientation, accessibility, innovation and vision. The most successful of these make their employees real ‘intrapreneurs’ who act as if they were the entrepreneurs themselves.
What is the current status of entrepreneurship among students? What do you expect from this generation in future?
It’s slowly becoming more and more distinctive, at least at Utrecht University. One of the reasons surely is that we are a ‘School of Economics’, and not a business school. Nevertheless, the topic is steadily becoming popular among Economics majors – especially due to UCEME (the Utrecht Centre for Education in Management and Entrepreneurship) and the &samhoud sponsored Chair of Entrepreneurship. Students love the topic! And with the university-wide ‘incubator’ Utrecht Inc., we also have the infrastructure to foster real entrepreneurial start-ups in the city and the region, and not only teach about it.
You hold the &samhoud Chair of Entrepreneurship at Utrecht University. You lecture and you do research. What did you lecture on last year and this year? What is the effect on the students? What responses and changes do you see?
Yes, I developed a totally new course on ‘Corporate Entrepreneurship and Innovation’ for our USE Bachelor students last year, which started with officially enrolled students plus a number of students who could not gain any credits for this class, but were so interested in the topic that they participated anyhow. The results of student evaluations of my lectures were quite high, so I was already very happy, but this year – the 2nd round just started in November – tops everything: the number of students has more than doubled! It seems that the word-of-mouth propaganda between the different year cohorts works well. Interest in the topic is clearly increasing, so that the development of the new course has already paid off , and will most likely also bring more students into our Master’s program in Entrepreneurship, and hopefully later on also into the ‘real world’ of (Corporate) Entrepreneurship, meaning that they don’t all necessarily have to found a start-up themselves, but rather act entrepreneurially in established or larger firms also, like the title of this course and also the title of the booklet accompanying my inaugural lecture suggests! Before, and partially also in addition to this Bachelor’s course, I was mainly involved as a lecturer in special ‘Honours’ classes at Master’s level, with a very heterogeneous and interdisciplinary group of (non- Economics) students brought together by my colleague Professor Arie Buijs. This is a different, and perhaps an even more interesting way of teaching since these students bring in so many different mind-sets – even different to mine, being a Management graduate and experienced entrepreneur myself – who is still broadening his own horizons as a professor! It is always great to hear when some of these graduates write me emails years later that they had somehow been reminded of what they learnt in my classes – and sometimes also how far these differ from reality…
What research are you currently working on and which lessons can learn from it?
Two of the most promising projects I am currently carrying out are actually quite familiar to you since my USE colleagues Coen Rigtering, Erik Stam and I have been involved in extremely interesting research projects initiated by &samhoud: one is about ‘entrepreneurial behaviour’ within a very large financial services company, where we have obtained valid data from more than 1,100 employees within that company, which actually makes this one of the very first and also largest investigations on the topic of Corporate Entrepreneurship at an individual level. The first results indicate that also middle-level and work floor employees, and not only top managers or entrepreneurs themselves, can act entrepreneurially. And if they indeed do, also contribute to higher corporate success.
The other one is &samhoud’s international vision research in which a total number of 3,000 people were interviewed in seven different countries! Here, we will search for country and cultural differences in terms of ‘entrepreneurial orientation’, and our preliminary calculations promise very interesting results! As you can see, the collaboration between the Chair of Entrepreneurship and &samhoud as its sponsor does not only work in the field of academic teaching, but also with regards to, both practically relevant as well as scholarly high-class, research! This is what I always call the ‘perfect world’ – when there is an effective two-way interaction between science and practice fruitfully benefiting each other, and then finally also spread out into teaching, in order to educate a new generation of young people with an entrepreneurial mind-set. We are actually very thankful to have a ‘foot in the real world’ of entrepreneurial practice with this collaboration.
The third research project I am currently working on is no less interesting, but located in a different geographical area: the role of innovation in family firms with a large dataset from Finland, where I also hold an Adjunct Professorship in Entrepreneurship & Family Firm Research. The results indicate that, contrary to previous research findings, innovation is important for family firms as well, but manifests itself differently than in non-family firms! In family firms, organizational innovations such as new organization of work, management structures or relationships with external partners bring greater company success, whereas in non-family firms, it’s managerial innovations such as new knowledge management systems or supporting activities that correlate with performance.
What publication are you most proud of?
That’s an easy one: I have published a Springer textbook on 30 best practice case studies in European Entrepreneurship gathered from 30 European countries, and I have also co-authored five of these case studies. It still surprises me that case studies, especially those using real case companies, have still not received too much acceptance in business education at European universities. I attended an extensive program on case study teaching at Harvard Business School in 2008, and its successor at IESE in Barcelona in 2009, and must say that there is nothing better to illustrate the, sometimes complex, theoretical academic models than with case companies which we can all understand and follow!