Entrepreneurship and entrepreneurial skills as key concepts of the study

Behind this study is the notion that farmers are expected to become more entrepreneurial in their business. However, there are several alternative ways to understand the concept of entrepreneurship. Therefore it is crucial to consider what is actually meant by the term ‘entrepreneurial’ in this connection.

The term entrepreneurship has different meanings. For example, in some contexts it is used to imply the centrality of economic profit in business, as distinct from such business activity in which profit is seen as subordinate to other goals (Carland et al. 1984). In this sense, entrepreneurship is associated primarily with the aim of profit maximisation and optimising economic efficiency or competitiveness in business, whereas running a business with the sole aim of securing a satisfactory standard of living for the family would not fulfil the criteria of entrepreneurship. In some other contexts, running a firm as such would be considered as entrepreneurship, regardless of the centrality of the economic aims.

According to the results of the expert interviews in the pilot stage of the ESoF project (de Wolf & Schoorlemmer 2007), it is a widely shared view among experts that the changing environment of farms at present necessitates that farmers must develop their farm business and business activities in economic terms, in order to survive and be successful. Worthy of note is the division into three strategic orientations (conventional, value adding and non-food diversification) which was suggested in the pilot stage to describe the ongoing responsive changes on farms, implying that it is not enough anymore simply to practise primary production on the farm in order to make a living for the family and contribute to the continuity of the work of preceeding generations. Instead, some active measures need to be taken, especially measures that are strategically relevant from the perspective of economic goals in business.

By the notion of centrality of economic profit we do not mean to imply that other goals are denied or excluded. Instead, we refer to an understanding in which economic profit is viewed as a starting point for the definition of entrepreneurship. It is quite possible, for example, that this primary understanding is further reframed in terms of other goals or values.

When the centrality of economic goals in business is seen as one crucial criterion for entrepreneurship, all these strategic orientations and corresponding activities might be called entrepreneurial. However, entrepreneurship may be also defined in other ways. In the study of entrepreneurship it has been common to associate entrepreneurship especially with innovative and dynamic developments within the SME sector, and consequently to view entrepreneurship as the creation of new business enterprises. From such a perspective, it would be possible to state that in the farm context, value adding and non-food diversification in particular reflect an entrepreneurial orientation, assuming that this implies a change away from conventional production that reflects ‘traditional’ farming or an already existing form of business on farms.

Exactly what is considered a new or an old form of business is, of course, relative. The crucial issue here is that it would be possible, at least in principle, to interpret the recommendation for farmers to become more entrepreneurial to mean that, in general, they should be starting new business activities on their farm, instead of keeping on with the old ones, or even that they should orient themselves towards niche products and processing and direct sales of agricultural products, or towards other lines of business, instead of focusing on primary production.

However, it is quite feasible to argue as well that a farm business can be developed within primary production in ways that fulfil the criteria of entrepreneurship. For example, if one considers risk-taking and growth-orientation in business as crucial criteria for entrepreneurship, which is not uncommon in the study of entrepreneurship, it would be quite understandable to call business developments within conventional farming ‘entrepreneurial’ as well.

One of the basic assumptions in this study has been that the division into three strategic orientations reflects real world differences within the farm sector, as outlined also by a number of EU-wide studies, especially within the nature of the entire business that is practised on individual farms. At the same time, we have not been committed to the assumption that one or other of these orientations would be considered more entrepreneurial than any other by definition, although we have been aware that such an assumption could be argued for. Instead, it has been our aim to explore each of these three orientations from the perspective of entrepreneurial skills, and compare them using an empirical, qualitative approach.

In this study we approach entrepreneurship on farms by using the concept of entrepreneurial skill. According to the theoretical approach utilised in this study (Vesala 2008), entrepreneurial skill is a relational concept which refers to the individual as well as to the activity. It describes, on the one hand, the individual who knows how to do something in business. On the other hand, it describes those tasks and activities that the individual needs to know how to do in the business context. It must be emphasised that while the concept of entrepreneurial skills tell us something about the individual, it does not tell us everything. Similarly, it tells us something about the business activity, but not the whole story. The concept stands for one possible way to approach entrepreneurship, not for the whole construct of entrepreneurship.

According to our theoretical elaboration, entrepreneurial skills are to be understood as higher level skills. They have to do with establishing, running and developing a business enterprise. In such business activities several types of lower level skills are needed, corresponding to the tasks of production, administration, marketing and so on. These may be referred to as technical, professional or managerial skills. However, entrepreneurial skills may be conceptually differentiated from all these as meta-level skills that touch the whole process of initiation, steering and developing a business (Vesala 2008).

The results from the expert interviews reported in the pilot stage indicated five categories of skills. As a synthesis from that study, de Wolf & Schoorlemmer (2007) state that while professional skills and managements skills are basic requirements for farmers, opportunity skills, strategic skills and cooperation/networking skills can be viewed as proper entrepreneurial skills. Thus, studying entrepreneurial skills does not imply that other skills are assumed to be irrelevant or not important. Nevertheless, our theoretical analysis based on the literature on entrepreneurship and small business research suggests that it is warranted to view entrepreneurial skills as a hierarchical construct, where the pursuit of opportunities may be viewed as a key entrepreneurial skill that covers the core tasks in entrepreneurship, and represents the ‘top of the pyramid’ of the hierarchy of entrepreneurial skills. The pursuit of opportunities has two aspects: recognition and realisation of opportunities. Further, in order to realise opportunities, the entrepreneur must have access to resources that are needed in that pursuit. One crucial measure in this comprises the utilisation of social contacts and networking, i.e. the second key entrepreneurial skill that has been selected for study in this project. Finally, in the pilot stage it was proposed that strategic skills would be taken into account among the entrepreneurial skills in the main stage. This was considered a worthy suggestion, especially because three subgroups of the farmers interviewed could be formed according to strategic orientation.

Thus, it was assumed that entrepreneurial skills among farmers may be approached as the skills of:

· Recognising and realising opportunities

· Networking and utilising contacts

· Creating and evaluating a business strategy