Organizational Structures and the Evolution of the Entrepreneur
Organizational Structures
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Hierarchical Linear Model: Based on each person being immediately subordinate to a superior.
- Advantages: Simplicity, ease of understanding, and rapid decision-making.
- Disadvantages: Excessive concentration of authority and lack of motivation on the part of subordinates.
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Functional Model: Characterized by the existence of specialists who devote all their efforts to a particular task in the enterprise. Subordinates do not depend on the top immediately above them; there may be several heads or managers.
- Advantages: Employers are devoted exclusively to their specialty, communications are made directly without intermediaries, and the specialty is promoting decisions.
- Disadvantages: Employees may receive orders from more than one boss, and sometimes these orders are contradictory.
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Line and Staff Model: Tries to solve the drawbacks of the above. It has a central hierarchical structure with support from the departments of counseling, but they have no authority.
- Advantages: Allows the intervention of specialists who advise various departments.
- Disadvantages: Decisions are slow because we must consult the advisory departments.
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Committee Model: Several people work together to assume authority and responsibility, sharing decisions.
- Advantages: Decisions are taken from several points of view.
- Disadvantages: Decisions are sometimes made out of friendship and commitment, or problems may arise from the fact that there is more than one authority.
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Matrix Model: This is the proper model for industrial enterprises. It combines two organizational variables: functions and projects. Each person receives instructions from the project director and director of the functional department, but the project manager usually has more authority than the head of the department. The distribution tends to have a limited duration for the project.
- Advantages: It is a flexible organization.
- Disadvantages: It is necessary to coordinate all those involved in a project.
The Entrepreneur
Historical Evolution of the Entrepreneur
- 18th Century: The Capitalist Entrepreneur as Owner of the Means of Production. During the Industrial Revolution, the employer is an individual who is the owner of capital and faces the risks of the business.
- 19th Century: The Entrepreneur as an Organizer. The conception of the entrepreneur changes because of the adaptation of business to social change. From this moment, the business objectives are separated; on one side are the shareholders and on the other, the business professional. Thus, for Marshall, the employer is a professional person.
- 20th Century: The Entrepreneur as a Risk-Taker. According to Knight, the entrepreneur is the person who assumes the risk and should be rewarded with a profit.
- 20th Century: The Innovative Entrepreneur. For Schumpeter, the risk is not the factor explaining the profit of the entrepreneur, but innovation and technical progress.
- 20th Century: The Technocrat Entrepreneur. According to Galbraith, economic power has moved away from the people and property to organizations. This is what he calls techno-structure, which is shared by technical direction where shareholders are merely investors.
- 20th-21st Century: Business Leaders. Currently, the employer must be innovative, a good leader, and know how to be a good strategist. When talking about innovation, it concerns all its aspects, namely technical innovation and management innovation.
The entrepreneur is the professional who manages and operates despite failing to provide assets, and the property entrepreneur is one who has contributed assets to the firm and also directs. Training focuses more on experience gained through years of work than on formal education.