Theory E²: Working with Entrepreneurs in Closely-Held Enterprises X: Interplay between Entrepreneurship and Organizational Structures and Operations, and Organizational Culture
Closely-held enterprises have traditionally been based on hierarchical and centralized structures. Clear boundaries exist between the top and bottom of the organization. Information is collected and distributed primarily at the top of the organization. These organizational structures are still dominant in our society. Appropriate styles must be found to serve this type of closely-held enterprise.
Typically, an assertive style is most welcome in hierarchical, centralized organizations. Just as participating leaders are products of the new corporate commitment to people, so assertive leaders are products of the traditional emphasis on control, predictability and efficiency. Assertive entrepreneurial leaders operate very effectively in hierarchical organizations and thrive under conditions where authority is clearly defined and responsibility flows downward A more participatory approach to entrepreneurship may be needed, however, if the leaders of a traditional closely-held enterprise are concerned about keeping their employees committed, creative and flexible.
The participating leader can make this work through her emphasis on training all employees in communication, conflict-management, problem-solving, and decision-making skills which has been reserved traditionally for managers. A participating entrepreneur can also help the closely-held enterprise make more effective use of technology (e.g. computer networks) so that all employees can gain access to vital information related to their work.
Many contemporary organizations are typified not by centralized and hierarchical structures, but rather by decentralized and dispersed structures. They look more like networks than like pyramids. The boundaries that exist between units of the organization and between this organization and other organizations are unclear. Information usually is found at, distributed by and distributed to all levels of the organization. In such an organization, decisions are being made not at the top of the organization but at lower levels of the organization where there is maximum relevant information.