managing public–private partnerships: the enactment of a new business venture

Managing public–private partnerships: the enactment

of a new business venture

Oswald Jones*

Manchester Metropolitan University Business School, Aytoun Street, Manchester M1 3GH, UK

Abstract

Phoenix was established to encourage nascent entrepreneurs to set-up technology-based companies. The project developed as an informal

partnership between a small number of staff from X Business School and the business contacts of a retired entrepreneur. Data are drawn from

participant-observation and interviews with all main actors to illustrate the process of enactment over an 18-month period. It is concluded that

the failure of Phoenix was due to difficulties in reconciling substantially different objectives between public and private sector participants. In

addition, the micropolitical activities of key actors associated with the new organization contributed to the lack of trust between the two

groups.

q 2004 Published by Elsevier Ltd.

Keywords: Enactment; Ethnography; Micropolitics; Public–private; Sensemaking; Start-up

1. Introduction

This paper is based on the analysis of activities

associated with the setting-up of an innovative public–

private partnership. Phoenix was the idea of a retired

entrepreneur who wanted to use his experience to develop

technology-based companies. The idea was discussed with a

number of staff employed at X Business School (XBS) and

eventually it was decided to establish a jointly run

organization to help create new companies and stimulate

economic regeneration. For 18 months, I was actively

involved in the setting-up of Phoenix and used this

opportunity to observe actors and events which shaped the

organization. The basic concept was that those with direct

experience of managing small firms would support nascent

entrepreneurs wanting to establish technology-based

businesses. Two years on, not one business had been

created and there were deep divisions between public and

private-sector participants.

0166-4972/$ - see front matter q 2004 Published by Elsevier Ltd.

doi:10.1016/j.technovation.2004.07.012

* Tel.: C44-161-247-3633.

E-mail address: [email protected]

This case provides insight into difficulties associated

with public–private collaboration involving universities and

the business sector. UK government initiatives such as

HEROBIC (Higher Education Reach Out to Business,

Industry and the Community) are designed to encourage

universities to interact more closely with the business world

(Armstrong, 2001; HEFCE, 1998; Starkey and Madan,

2001). Recently, Sir Gareth Roberts (head of the RAE

[Research Assessment Exercise] review team) acknow-

ledged that it had contributed to conflict between work

which helps the business community and that which is

valued in academic journals (Jha, 2003). For both practical

purposes (demonstrating the usefulness of academia) and

intellectual reasons (a new type of knowledge creation),

business school academics should interact with the real

world of business (Gibbons et al., 1994; Tranfield and

Starkey, 1998). The collaboration discussed here was

‘bottom-up’ rather than ‘top-down’ which had positive

and negative implications. Because involvement was

voluntary, participants in the setting-up of Phoenix were

highly motivated and committed to the principle of a

unique public–private partnership. The more negative

aspect was that the lack of institutional support meant

limited availability of basic resources including stationery

Technovation 25 (2005) 587–597

www.elsevier.com/locate/technovation

http://www.elsevier.com/locate/technovation

O. Jones / Technovation 25 (2005) 587–597588

and telephones. This case contrasts with other studies of

business start-ups associated with universities which con-

centrate on conventional ‘spin-off’ companies (Perez and

Sanchez, 2003; Ndonzuau et al., 2002).

According to data from Dun and Bradstreet over

200,000 new businesses are founded every year in the UK

alone. Approximately 70% of these businesses fail in the

first 3 years which indicates a substantial amount of

‘churning’ in terms of firms entering and exiting the

marketplace (Beaver, 2002, p. 14). Given this level of

activity, interest from policy-makers and politicians as

well as academics is not surprising. A considerable

amount of the research effort associated with new venture

creation concentrates on factors, which trigger the

entrepreneurial decision. Some influential studies suggest

that entrepreneurs start new businesses primarily because

of the need for approval and independence (Birely and

Westhead, 1994). Recent emphasis on entrepreneurship as

a process rather than a single event emphasises the

importance of identifying the various stages associated

with a business start-up. For example, Beaver (2002,

p. 20) suggests six distinct activities:

1.
developing idea or business concept;
2.
establishing a market;
3.
assessing the competition;
4.
pre-start planning, preparation and assessment;
5.
market entry (trial run or commercialisation);
6.
post-entry development (refine and acquisition of
resources).

In a similar vein, Deakins and Whittam (2000) propose a

five-stage model: idea formation, opportunity recognition,

pre-start planning and preparation, entry and launch, post-

entry development. Although Phoenix was not a conven-

tional ‘for profit’ business start-up, it was intended to

operate as a commercial venture. The various stages

incorporating idea formation to post-entry development

were definitely relevant to Phoenix. My objectives in

writing this paper are two-fold. First, to illustrate the social

interaction which is fundamental to the creation of new

organizations. Secondly, to highlight conflict likely to

emerge during public–private partnerships because of

differing objectives and contrasting sensemaking activities

(Weick, 1995). Literature related to business start-ups is

reviewed and this is followed by a discussion of the research

methodology. Data are presented on attempts establish

Phoenix as a functioning organisation and the theoretical

implications are then discussed.

2. Organizational enactment

Definitions of organizations can be divided into those

which focus on structure (Weber, 1947) and those which

emphasise process (Weick, 1979). ‘Mid-range’ definitions

encompassing both process and structural elements are the

most useful in studies of emerging organizations (Katz and

Gartner, 1988). The authors argue that emerging organi-

zations can be viewed as ‘myopically purposeful’

(McKelvey, 1980) activity systems with input–output

resource ratios which influence survival prospects. Organ-

izations emerge as a result of interaction between agency

(entrepreneurial activity) and structure (environment) based

on four distinct elements: intentionality, resources, bound-

ary and exchange. Intentionality refers to the entrepreneur’s

activity in seeking the information necessary to establish a

new business venture. In organization creation, resources

refer to the physical elements (finance, equipment and

premises) that provide new businesses with a tangible

reality. Conventional organisational theorists regard ‘the

boundary’ as that which separates organizations from their

environment (Daft, 2001). At a practical level, ‘the

establishment of boundaries, such as incorporations, tax

number requests, and phone listings, offer the first concrete

and somewhat cleanly defined sampling frames for

observing organizations early in their creation’ (Katz and

Gartner, 1988, p. 432). The final factor, exchange refers to

the range of transactions, which underpin any commercial

venture such as the selling of products or services. Exchange

also refers to other activities, which are carried out in both

private and public sector organisations such as financial

reports, legal and taxation information. As all four proper-

ties are necessary for an organization to exist they are useful

for identifying emerging organizations (Katz and Gartner,

1988).

Gartner et al. (1992) draw on earlier work (Katz and

Gartner, 1988) to suggest that theories of organisation are

based on the ‘taken-for-granted’ assumption that organi-

sations exist. The challenge for entrepreneurial theory is to

‘probe how and why’ organisations are created, enacted

(Weick, 1979) or socially constructed (Berger and

Luckman, 1967). According to Weick (1979) organisations

are representations of an on-going process of interaction

between individuals and groups. Change from emerging to

existing organisation represents quantum rather than

evolutionary change. In other words, small firms are not

simply small, large firms (Dandridge, 1979; Welsh and

White, 1981). New organisations are created by the actions

of ‘entrepreneurs who talk and act ‘as if ’ equivocal events

were non-equivocal’ (Gartner et al., 1992, p. 17). In existing

organisations, non-equivocal events (Weick, 1979) are

based on the routines and repertoires performed by actors.

Organisational emergence is, in part, concerned with

generating appropriate interactions which are convincing

for external actors including (potential) customers, suppliers

and employees as well as resource providers such as

bankers.

While a wide range of authors have proposed frame-

works for understanding new venture creation (Gartner,

1985; Van de Ven et al., 1989; Vesper, 1990; Katz and

Gartner, 1988), there is little evidence to suggest a common

O. Jones / Technovation 25 (2005) 587–597 589

pattern of events. Carter et al. (1996) draw on Weick’s

(1979) theory of organizing as the conceptual basis for their

exploration of business start-ups. The process of new

business creation is analogous to the concept of ‘enactment’

which refers to the generation of specific patterns of

interlocking behaviours (Weick, 1979).

‘In broad terms, a view of organization formation as

“enactment” would assume that entrepreneurs who were

involved in behaviors that demonstrated to others that the

emerging business was “real” would be more likely to

create an organization’ (Carter et al., 1996, p. 154).

The study was based on the analysis of two existing

data-sets (Reynolds and White, 1992; Curtain, 1982)

which provided a total of 71 nascent entrepreneurs.

Interviews with the entrepreneurs resulted in a list of 14

‘precursor behaviors’ associated with new venture cre-

ation. These 14 activities were also categorised according

to time between initiation and completion (3 month

periods up to 5 years). The authors were able to

discriminate between three distinct groups (started, still

trying and given-up) at a statistically significant level.

Successful entrepreneurs were more aggressive in making

their business tangible to others by obtaining equipment,

finance, organising their team and in establishing a legal

entity. Those who gave-up were quite similar in their

activities to the first group but their early enthusiasm soon

dissipated. The ‘still-trying’ group seemed to lack

motivation because they had undertaken fewer activities

and those activities were ‘internal’ such as saving money

and preparing a business plan. Significantly, they put

much less effort into the more ‘external’ activities likely

to make the business real to others.

‘In terms of advice to individuals considering starting

a business, it would see that the results provide

evidence that nascent entrepreneurs should aggres-

sively pursue opportunities in the short-term, because

they will quickly learn that these opportunities will

either reveal themselves as worthy of start-up or as

poor choices that should be abandoned’ (Carter

et al., 1996, p. 163).

The authors acknowledge the weakness of using

secondary data and suggest a number of directions for

future research. They particularly emphasise the importance

of research into the process of ‘enacting’ an organization by

making the venture visible to others (Weick, 1979). Starr

and Fondas (1992) utilise theories of organizational

socialisation to illuminate the role of entrepreneurs in

emerging organisations. The model of entrepreneurial

socialisation simulates the journey from neophyte to firm

founder. Socialisation is useful because it specifies attitu-

dinal and behavioural changes as well as revealing role

relations between the entrepreneur and key outsiders who

act as socialising agents (Starr and Fondas, 1992, p. 67).

Various ‘life-cycle’ models of firm-growth (Grenier, 1972,

1998; Churchill and Lewis, 1983) suggest that there are

clearly defined stages through which firms move towards

maturity. Successful socialisation is associated with

the creation of a sustainable new business while failed

socialisation leads to the abandonment of entrepreneurial

activity.

‘Thus, the organization is formed by surviving as a viable

business entity beyond the first stage of mere existence.

The new firm has established stable roles and organi-

zational routines necessary to gain customer acceptance,

produce sufficient product quality, maintain a production

schedule, and generate sufficient cash to achieve

financial break even’ (Starr and Fondas, 1992:73).

A similar theme is pursued by Larson and Starr (1993)

who critically examine the role of network relations in

organization formation. The authors suggest that the

network model has a number of advantages because it

captures emergent processes, focuses on linkages between

units, emphasises exchange processes between actors and

stresses the evolving nature of exchange relationships

(Larson and Starr, 1993).

Influences on the enactment of new organizations are

conceptualised in Fig. 1. As pointed out by a number of

key writers, the creation of any new venture is shaped by

both the individual entrepreneur and broader environmen-

tal influences (Bird, 1988; Brazeal and Herbert, 1999;

Gartner et al., 1992; Greenberger and Sexton, 1988; Katz

and Gartner, 1988; Ucbasaran et al., 2001). Despite

criticism of approaches which concentrate on individual

attributes and behaviours it seems clear that new

organizations cannot be created in isolation from human

agency (Schoonhoven and Romanelli, 2001). Conse-

quently, individual motivation, persistence and commit-

ment together with social factors such as family, gender,

education, work experience and networks influence

emerging organizations. Secondly, entrepreneurial activity

is shaped by the broader environment incorporating

economic, political, social and technological factors as

well as what Mazzarol et al. (1999) describe as

‘infrastructure’. Agency and structure combine to shape

the entrepreneur’s activities during the move from

equivocal to unequivocal reality. The conceptualisation

of this process is linked to the work of Katz and Gartner

(1988) who suggest organizations emerge as a result of

four factors: intentionality, resources, boundary and

exchange. Identification of a business concept will

generally be the precursor to any new organization but

this must be combined with the intentionality (agency) of

the entrepreneur or entrepreneurial team (Beaver, 2002;

Deakins and Whittam, 2000). Successful opportunity

recognition, investigation of the market and evaluation

of competition, stimulates a search for resources necessary

Fig. 1. Organizational enactment.


to establish the organization. Pre-start planning incorpor-

ates the creation of an organizational boundary by

incorporation, locating premises, setting telephones lines

and websites. Market entry means the routinisation of

exchanges with suppliers and customers as well as links

with legal and taxation authorities. It is not suggested that

the enactment process described in Fig. 1 is a straight-

forward linear process. Rather, many of the activities will

either overlap or be interactive as entrepreneurs engage in

the ‘messy’ process of enacting new organizations.

3. Research methods

My involvement with Phoenix began because I

believed the idea could help regenerate the area adjacent

to XBS by supporting viable technology-based businesses.

It gradually became apparent that this attempt to create a

new organization also provided an excellent research

opportunity. Initially, data collection took place on an

informal basis as a result of my participation in the

setting-up of Phoenix. After the first few meetings I

decided that it was necessary to inform the main actors

that I was intending to use my involvement for a case

study on organizational enactment. Approximately 12

months later I interviewed the main actors to establish

why they became involved with Phoenix and whether they

felt that their objectives had changed (Appendix). Prior to

the interviews, I explained to each participant that I had

two objectives: first, to help the management team

evaluate progress and identify areas for improvement.

Secondly, participants were informed of my intention to

use both the interview data and my own record of

activities during approximately 24 2-h meetings, which I

attended over an 18-month period as a basis for an

academic paper. I explained that both the company and

individual actors would be given pseudonyms. On that

basis, all agreed that they would participate in the

schedule of interviews. Additional data were acquired

from my informal discussions related to the progress or

otherwise of Phoenix with Harry Thompson who was also

employed by XBS.

Gartner et al. (1992) concur with Aldrich’s (1990)

assertion that there has been too much emphasis on

sophisticated quantitative techniques in entrepreneurial

research. Instead, it is suggested that there is a need for

researchers to ‘spend more time with entrepreneurs as part

of the theory building process’ (Gartner et al., 1992, p. 21).

The implications of their review of the OB literature

suggests there is no need to ‘invent’ new theories to explain

entrepreneurial behaviour. Rather, there are ‘countless ideas

and perspectives’ which can provide insight into the

phenomenon of emerging organisations. Secondly, Gartner

et al. (1992, p. 26) argue that researchers should adopt a

broader array of research methodologies in studies of

entrepreneurship:

‘We should be willing to conduct single case studies and

recognise the different ways reliability and validity

issues can be resolved with small samples. Many

aspects of the phenomenon of entrepreneurship are not

very likely to be understood with quantitative survey

method techniques’.

Case studies and oral histories (McMullan and Vesper,

2000) provide a more effective mechanism than surveys

for developing a fuller understanding of the entrepreneur-

ial process (Stevenson and Sahlman, 1989). This same

point is made by Katz and Gartner (1988) who state that

there should be more emphasis on the study of

organizations in the process of creation. Studies attempt-

ing to analyse the start-up process are generally based on


methodologies which require entrepreneurs to provide

retrospective accounts of their activities (Mazzarol et al.,

1999). Carter et al. (1996) suggest approaches based on

the enactment (Weick, 1979) of new organisations would

make a significant contribution to the understanding of

business start-ups. As Aldrich (2000) points out, there are

many practical difficulties associated with observing the

entrepreneurial process of developing and establishing a

new business idea. There are good reasons for this

omission including the difficulty of identifying nascent

entrepreneurs and the problems associated with obtaining

detailed access to their activities during the start-up

process. Therefore, this unplanned access to the creation

of a new business venture provides a unique opportunity

for insight into activities associated with the ‘enactment’

of a new organisation.

4. The founding of Phoenix

I met Alan Pearce at a social event and eventually we

discussed the difficulties of establishing technology-based

firms. Although he had recently retired, Pearce had set-up

and managed a number of high-technology companies.

Furthermore, he suggested that he wanted to use his

experience to help nascent entrepreneurs to establish their

own businesses. I thought the idea deserved support because

it could help XBS students who wanted to become

entrepreneurs. Together with Harry Thompson, a colleague

at XBS, I agreed to help Pearce set-up Phoenix. An

inaugural meeting was held at XBS to which a range of

people directly involved with the local small business

community were invited. Thompson provided a room along

with tea, coffee and sandwiches and we continued to meet at

XBS offices for our fortnightly meetings over the next

18 months. During the first four months, Phoenix meetings

were regularly attended by Pearce and three business

associates, Graham Frazier, Brian Johnson and Colin

Ainsworth; Edward Davis manager of a local bank; Katy

Grant (city council), Harry Thompson and myself (XBS).

Less regular attendees included Steve Gordon (entrepre-

neur), Eddie Lawton (owner-manager), Fred Howard

(inventor). Early meetings involved lengthy discussions

about the viability of a business proposition put forward by

Howard an engineer-inventor of the ‘old school’. Howard

had been involved in a number of ventures for more than

25 years and had recently patented an idea to reduce the cost

of manufacturing constant velocity joints (for transmitting

power to front-wheel drive cars). Howard presented his

business proposition to representatives of Phoenix. It

appeared the idea had considerable business potential and

Pearce seemed enthusiastic although he expressed some

concern about the cost of setting-up manufacturing

facilities. On the other hand, Howard’s experience of earlier

‘rip-offs’ meant he was reluctant to lose control of his idea

by outsourcing manufacturing. At the next meeting, Pearce

said while there was still work to be done on the business

plan he wanted the relationship formalised within two

weeks by a ‘letter of offer’. In fact, there was little progress

and 15 months later, Pearce and other members of the

management group were still discussing the idea with

Howard.

The management group, Pearce, Brian Johnson and

Graham Frazier, issued a call for shareholders and Phoenix

was formally incorporated 6 months after the inaugural

meeting. Pearce became MD with directors Brian Johnson

and Graham Frazier supported by a steering group

comprising those still attending meetings. In the short-

term, it was agreed that XBS would support the venture by

providing a meeting place. We anticipated that as Phoenix

became established a longer-term solution would be found

by renting office space in the City.

5. The enactment of Phoenix

An early dispute between public and private sector

participants was fundamental to the shaping of Phoenix.

Katy Grant who worked for the local council had

considerable practical experience with the small firm

community. Grant suggested that there should be limits to

individual financial gain based on the voluntary efforts of

others. However, her suggestion that Phoenix should seek

charitable status or a fund be created independent of

distributed profits to shareholders was not considered

practical by Pearce, Johnson and Frazier:

‘The management group considered the matter but were

of the opinion that such a scheme would result in

increased bureaucracy and could create a distraction

from the main aims of Phoenix. The management group

also believe such a fund would create incompatibility

between Phoenix and companies it forms. Such work

could be regarded as a “loan from other sources” as

referred to above’ (Call for Shareholders).

Pearce and his associates wanted the freedom to charge

directly or acquire equity in exchange for business advice.

The alternative view stressed the importance of establishing

the extent of an individual’s shareholding and limiting

‘profit taking’. In other words, there was a tension between

public sector ‘philanthropy’ and private sector profit-

motive. Public sector participants gradually accepted that

if the project was to progress there had to be a financial

rather than a philanthropic imperative. Grant stopped

attending believing the organization would fail: ‘I had no

confidence in the management group being able to pull

things together. The more I heard them the more I thought

“you’re not going to get this thing going” and I was not

going to waste valuable time trying to change something I

couldn’t change’. About this time Edward Davis identified

what he saw as a fundamental change in objectives:


‘There’s nothing wrong in wanting or expecting to take a

shareholding in a new company. But I think personal

agendas were beginning to surface. Phoenix was being

seen as a business in itself. and the rasion d’etre moved

quickly from a support organization to one that was

trying to develop a lot of the ideas for itself.’

After 6 months, Thompson and I felt excluded because

we felt that major decisions were increasingly made in

private by Pearce, Johnson and Frazier. For example, they

claimed that ‘confidentiality agreements’ signed to protect

the rights of potential clients prevented them from sharing

certain information. However, Thompson and I decided

that while there was still the potential for helping new

businesses we would continue to give our support.

Although our frustration was accentuated by what we

saw as an unwillingness to consider external business

propositions in favour of ideas put forward by the

management group themselves. While neither Thompson

nor I objected to some of these proposals very few were

technology-based.

Gradually, my participation was primarily motivated by

the opportunity to observe what I believed would be the

disintegration of Phoenix. I decided to interview the main

actors, as well as those who were no longer involved, to

establish whether they thought the original objectives had

changed. In addition, I believed that the interviews would

be useful for the management group in identifying

successes and failures during the first 12 months of

operation as well as helping clarify their strategic

objectives. Four of the 11 main participants were

employed in the public sector and the seven private

sectors participants were mainly involved in the small

firm sector either as owners or senior managers. The two

exceptions were Edward Davis who managed a bank near

XBS and Colin Ainsworth who was an independent

management consultant (Appendix). There was consensus

about the original objective which all agreed was to help

inexperienced entrepreneurs. There was less agreement

about whether or not, after 12 months, this objective had

changed. Three public sector participants felt that there

was more focus on developing the business ideas of those

directly involved with Phoenix. Three private sector

representatives agreed that there was now more focus on

‘profit’ but the other five participants thought there had

been little or no change. The following quotations from

participants illustrate the conflicting objectives. Thompson

explained why he became involved:

‘First I saw it as an opportunity for the university and

I felt that I should be playing a role in Phoenix. Secondly,

I saw it as an excellent example of altruism in that

successful people like Alan Pearce were happy to give

their time help other people achieve some sort of

success.’

As discussed above, Edward Davis had quickly decided

that altruism was not a driving force for the private sector

participants. This perception was also shared by owner-

manager Eddie Lawton:

‘The organization has a number of people who are in it

for personal reasons. Pearce wants to setup some

companies. Ainsworth wants the business from the new

firms which are set-up. Some of the others are going

along with those two.’

Fred Howard, whose patent of a modified constant

velocity joint appeared, in the early stages, to offer an

excellent opportunity for Phoenix became increasingly

suspicious. In his view:

‘It started off as a group with everyone putting in their

knowledge and ended with a few individuals trying to

snaffle the one good idea which they’d looked at. Pearce,

Johnson and Ainsworth. if I were to speak darkly those

three were trying to grab my idea for themselves.’

In contrast, members of the management board insisted

that those involved with Phoenix remained true to the

original principles (Brian Johnson):

‘There’s certainly a philanthropic element to it. I think

that most people involved realise there’s more to creating

a business than money. Phoenix will establish and grow

successful companies but will also provide opportunities

for the University.’

Graham Frazier also acknowledged the altruistic element

in Phoenix’s creation but recognised the frustration this

caused for those wanting freedom to generate profit.

Following a meeting of the management group 1 year

after the founding of Phoenix he felt that the rather ‘woolly’

guidelines had been clarified:

‘We’ve reviewed and crystallised the objectives which

are to help people create new companies. But also for us

to create Phoenix as a company as well. We’ve moved

slightly away from the original idea because at the outset

it was to act as a virtual incubator. We would provide the

expertise and these companies would be totally separate.

We want to try and use our experience in a proactive day-

to-day role to stop them (entrepreneurs) from making

mistakes’.

Pearce explained that while participants remained true to

the original principle of supporting new businesses he

believed profit was central to the creation of thriving

enterprises:

‘There’s a happy medium between philanthropy and

ripping people off. I felt we needed to create innovative


firms that were good enough to allow people within the

organization to receive salaries and to generate profit we

could invest in new companies. So that’s what it was and

I don’t think it’s changed substantially.’

Approximately 2 years from start-up, the interview

results (Appendix) were presented to the steering group.

While not disguising failures, I provided a positive

account of the results to help resolve problems rather

than criticise previous activities. Pearce agreed with the

general conclusions but suggested that the management

group had begun to address issues such as conflicting

objectives. However, he gave no indication of how these

intractable problems could be resolved and this meeting

convinced me that the original vision of an innovative

public–private partnership was not attainable. Thompson

attended meetings for a further 6 months and then

informed Pearce that, because of a job-change, he could

no longer provide XBS accommodation for meetings.

Although two and half years had elapsed since the

inaugural meeting, not one company had been created and

Phoenix now consisted of only Pearce and his business

associates.

6. Discussion: the micropolitics of enactment

Much of the small firm literature concentrates on the

various stages associated with business start-up. Despite

the presence of a number of actors who had experience

of starting and managing small firms there was little

emphasis on a formal approach to any of the various

activities described by writers such as Beaver (2002) and

Deakins and Whittam (2000). The business concept was

that experienced entrepreneurs would assist those con-

sidering setting-up technology-based businesses. In the

Articles of Association, the management group stated

that the charge for helping to create such a company

would be a ‘fixed fee’ and a ‘shareholding’. However,

the fee level and extent of the shareholding were never

discussed in any meetings. As a result, it was difficult to

know whether or not a market actually existed for the

Phoenix product. A number of nascent entrepreneurs did

submit ideas, which were considered by the management

group but none reached the stage where a fee was

charged nor a shareholding negotiated. At some of the

early meetings, there were brief discussions related to

potential competitors for the services provided by

Phoenix. The consensus amongst Pearce and his

colleagues was that no existing provider, either public

or private, could call on the experience they themselves

possessed. As a consequence, it was not judged necessary

to carry out a detailed survey of existing providers nor to

analyse the nature of their products. The limited amount

of ‘pre-start’ planning that did take place was also done

very informally. There were no targets for the number of

customers nor any attempt to evaluate the ‘conversion

rate’ (the ratio of successful to unsuccessful applicants).

In other words, in my view it was very much a

pragmatic ‘seat-of-the-pants’ approach in which there

was an implicit belief that customers would turn up and

fees could be negotiated on an ad hoc basis.

Pearce’s position as originator of the business concept

meant that he took the lead in sensemaking activities

related to how the organization should develop. If, as

was the case with Katy Grant’s suggestion about

charitable status, he disagreed with an idea then it was

difficult to persuade others to go along with it. Also, his

previous experience as an entrepreneur and owner-

manager gave Pearce authority in suggesting how best

to encourage the setting-up of new companies. ‘Real-

world’ business success was regularly used as a

legitimatory device to differentiate practitioners and

‘theorists’:

‘I’ve created a small business, run and grown it for

ten years. I’ve tripped over every pothole and lump in

the road so I can pass that experience on to business

start-ups. That’s an immense amount of knowledge

that frankly you wouldn’t get sitting down in front of

a lecturer listening to the theory of how it should be

done. It never happens that way’ (Pearce).

As Weick (1979, 1995) points out, sensemaking

reflects actors’ attempts to impose order on unstructured

events. Despite the business experience of Pearce and his

colleagues, it was public sector participants, particularly

Harry Thompson, who tried to introduce greater for-

mality into proceedings. Thompson’s efforts focused on

the need to establish criteria against which performance

could be measured giving better organizational control:

‘In any endeavour you need to identify the prime

purpose and the critical success factors. You need to

identify key actions that have to be undertaken to

attain each of the success factors. Performance

standards help us judge whether we have been

successful or not. Phoenix didn’t seem to operate in

that way.’

Despite encouragement from public sector participants,

there was an unwillingness to operate on a more formal

basis. A further example of this was lack of any clearly

delineated roles other than the creation of an MD

(Pearce) and separation of management group and

steering group. While informality was initially a strength

compared to other institutional actors (Appendix), it

increasingly became an arena for disputes between public

and private sector participants:

‘I don’t think Pearce is the person to lead such a project.

He took far too long to formalise Phoenix as a company


and that’s because the objectives weren’t sorted out early

enough. Pearce didn’t strike me as the dynamic

entrepreneur who could get everyone behind it and

really get the thing going’ (Edward Davis).

There was also little emphasis on ‘enactment’ which

would have made the organization visible to potential

customers and resource providers. Thompson, who until

the setting-up of the management group had worked

closely with Pearce in establishing Phoenix, was persistent

in putting forward his view that the lack of a coherent

vision was detrimental to the attraction of entrepreneurs

with potentially successful businesses. As well as provid-

ing facilities for meetings Thompson tried to introduce a

more professional approach to promoting Phoenix’s

activities:

‘We didn’t have any marketing material until I

produced a rough draft. We didn’t have questions to

ask potential customers until I produced a rough draft.

Now the direction’s changed and I’m less able,

possibly less willing, to contribute to the development

of products for Phoenix. I think that the organization

is evolving in a very informal way but I like structure,

minutes and properly run meetings.’

With reference to the model outlined in Fig. 1, the

early stages associated with matching business concept

and opportunity based on the intentionality of the

‘entrepreneurial team’ were achieved. However, as a

result of two sets of sensemaking routines, the enactment

process did not proceed beyond this stage. The model

suggests that successful enactment means that equivocal

reality is gradually transformed into unequivocal reality

through the actions of the entrepreneurial team. Lack of

permanent premises and associated infrastructure meant

that Phoenix was not made real for external actors through

the creation of an organizational boundary. Telephone

queries were directed to Thompson at XBS but because he

Fig. 2. The micropoliti

had a demanding full-time job, he was often unavailable

to take calls during working hours. Similarly, meetings

with potential clients were held in XBS which hardly

helped to promote the view that Phoenix was a fully

functioning organization. While some of this equivocality

stemmed from an understandable desire to minimise costs,

it was also the result of conflict between public and

private participants about the nature of the organization

itself.

The source of conflict which underpinned the failure of

Phoenix was based on the ‘micropolitical’ activities of

key actors. Micropolitics are defined as the way in which

individuals pursue their own particular interests by

attempting to gain political influence and status (Burns,

1961; Narayanan and Fahey, 1982; Knights and Murray,

1994). As Burns points out, micropolitics focuses atten-

tion on ‘the structure and dynamics of interpersonal

relations’ (Burns and Stalker, 1994, p. xiii). In his notable

study of ICI, Pettigrew (1973) identified the politics of

career advancement as a key element in shaping decision-

making in organisations (Mills, 1956; Dalton, 1959).

Knights and Murray (1994) argue that there has been very

little subsequent work which examines organisations from

a political perspective (Noble, 1977; Wilkinson, 1983;

Scarbrough and Corbett, 1992; Thomas, 1994). Although

entrepreneurial activity is underpinned by a political

ideology (Ogbor, 2000), there appears to be no considera-

tion of this factor in mainstream literature. The micro-

politics of actors involved with Phoenix are illustrated in

the quotations presented above. For example, Howard’s

suspicion that certain individuals wanted to ‘snaffle’ his

idea or Lawton’s feeling that some people were ‘in it

for personal reasons’. Local banker Edward Davis

was certainly frustrated by the management group’s

activities:

‘How can someone like me add value if I’m not privy

to ideas in the first place? I think there were some

very strong personal agendas coming to the fore

cs of enactment.


because they didn’t want to share good business ideas

with the advisory body. The cynic in me says Pearce

wanted to keep the ideas to himself. At this point I

felt that I had to quickly withdraw.’

In other words, a number of actors involved with this

private–public partnership felt that others were pursuing

objectives which were not made explicit to the group as

a whole. Therefore, the argument put forward here is that

the enactment of any new organization, particularly those

which are team-based, will be strongly influenced by

individual political activities (Fig. 2). Hence, micropo-

litics are conceptualised as intervening between individ-

ual actors and the shift from equivocal to unequivocal

reality. As discussed above, a number of key writers on

start-up business acknowledge there has been far too

much emphasis on questionnaire-based research (Gartner

et al., 1992; Carter et al, 1996). Future research should

pay more attention to the process of enacting new

organizations by examining how the personal motivations

of individuals influences the development of those

organizations.

7. Concluding comments

I accept that this is only one perspective on the attempt

to establish Phoenix. There are limits to what we can

observe and claim to ‘know’ about even relatively simple

organisations (Gummerson, 2000, p. 35–6). The best we

can hope is that our fragmentary knowledge helps develop

better ways of researching, conceptualising and even

managing groups of social actors. Equally, it is impossible

to evaluate the impact researchers have on other actors.

Van de Ven and Huber (1995, p. xi) point out in

commenting on the social science equivalent of the

Heisenberg1 principle:

‘The researcher-as-observer faces the problems of

influencing the system being observed and of correctly

interpreting what is observed.. If you are part of it, you

affect it. If you affect it, you cannot observe the system in

its natural state and can report only the processes of a

disturbed system

Rather than reporting the objective reality I attempt to

extend entrepreneurial theory by focusing on a single

organisation. Based on direct involvement, I have

analysed activities of actors associated with the setting-

up of Phoenix. As Aldrich (2000) points out, there are few

studies which examine the process by which new

1 The Heisenberg principle refers to indeterminancy in scientific

experiment because the act of measurement changes the behaviour of

objects under scrutiny. Even in the hard sciences, there are physical limit on

the accuracy with which phenomenon can be measured.

organizations are established. Despite ‘much exhortion’

to conduct longitudinal studies ‘the percentage of

published research articles that report data collected at

more than one point in time is minuscule’ (Monge, 1995,

p. 268). Phoenix, as originally conceptualised, was

intended to operate as a vehicle by which the knowledge

of experienced entrepreneurs could be transferred to those

considering starting new businesses. Initial steps to reduce

equivocality occurred through the conjunction of the idea,

developed by Pearce, and the provision of resources

(a meeting-place in XBS) by Harry Thompson. This

partnership helped mobilise two networks (Larson and

Starr, 1993): the private sector comprising business and

friendships ties associated with Pearce and the public

sector consisting of XBS employees. The strength of this

public–private partnership gradually became a weakness

as differing sensemaking approaches of the two groups

were revealed.

Three main factors inhibited the enactment of

Phoenix: conflict over the profit-motive, changed objec-

tives vis-a-vis development of new ideas and the

micropolitical activities of certain actors. Disagreement

about the ability of individuals to profit directly from the

venture dominated early meetings and led to the

withdrawal of Katy Grant who had considerable

experience in promoting start-up firms. Secondly, a

perception that there was increased emphasis on ideas

put forward by the management group at the expense of

ideas submitted by nascent entrepreneurs further disillu-

sioned the remaining public sector participants. Thirdly,

Thompson and I were frustrated by what we saw as the

management group’s unwillingness to commit to

Howard’s idea which we believed had considerable

business potential. We also thought that having a real

business to develop would have given much greater

focus to the activities of all those associated with

Phoenix. Moving towards an unequivocal reality was

further inhibited by lack of premises and lack of full-

time employees. That this was not a conventional ‘start-

up’ company also has some implications for any

conclusions which can be drawn from the study. The

voluntary status of participation meant that there was no

real imperative to resolve deep-seated differences based

on divergent normative values. As a consequence, those

such as Katy Grant and Edward Davis as well as

Howard simply stopped attending when they felt their

opinions were no longer being considered. Similarly,

because both Thompson and I recognised that the

trajectory was very different than originally anticipated

we became passive observers rather than active partici-

pants. However, I do not want to over-state the

uniqueness of Phoenix because as evidenced by exten-

sive research on ‘misbehaviour’ in organisations it is

possible for employees at all levels to withhold their

commitment as an expression of dissatisfaction (see

Ackroyd and Thompson, 1999).

Appendix. Summary of interviews

Question Harry

Thompson

Katy Grant OEJ Brian Johnson Fred Howard Ruth Wilson Eddie Lawton Edward Davis Graham Fra-

zier

Colin Ains-

worth

Alan Pearce

Original

objectives

Facilitation of

business ideas

Help new

entrepreneurs

Assist

business start-

ups

Grow suc-

cessful SFs

Help com-

mercialise

ideas

Commercia-

lise ideas

Help start-up

companies

Help budding

entrepreneurs

Foster people

with ideas

Commercia-

lise innova-

tive ideas

Create inno-

vative compa-

nies

Revised

objectives

Developing

mgt group’s

ideas

Too much

emphasis on

profit

Developing

mgt group’s

ideas

No change Focus on mgt

group’s ideas

Develop own

ideas

Needs to be

more focused

Emphasis on

profit

Same but

have crystal-

lised

No—tem-

pered by

practicalities

Moved a little

way from

philanthropy

Five year

objectives

Set-up new

companies

Withdrawn Withdrawn Generate

capital to

invest in SFs

Don’t know No longer

attend

Not clear at

present

Stake in a few

successful

SFs

Portfolio of

investments

6–10 success-

ful startups

Generate

profit —

invest in own

ideas

Main actor AP AP AP Mgt group Harry

Thompson

Harry

Thompson

AP Mgt group Mgt group Mgt group Mgt group

Advantages

of Phoenix

Informality Don’t know Experienced

entrepreneurs

Business

experience

Lack of

bureaucracy

Harry

Thompson

Focus on

people

No clear USP Understand

the problems

Offer com-

plete package

Entrepreneur-

ial experience

Reason for

involvement

Opportunity

for university

Interest in SFs Help XBS

students

Involvement

with AP

Help exploit

own idea

Help others

exploit ideas

‘Ideas’ person Interest in

entrepren-eur-

ship

Put something

back into

community

Interest in

innovative

SFs

Wanted to

encourage

new ideas

Personal con-

tribution

Links to XBS Understand

SF sector

Link students

and entrepre-

neurs

Understand

private sector

Balance

business and

academia

Practical

business

experience

Sales and

marketing

ideas

FinanceC

business net-

work

Experience as

management

consultant

Experience of

SF commu-

nity

Created and

run number of

SFs

Change in

role

Less willing

to contribute

No longer

involved

No longer

involved

No—except

take minutes

No longer

involved

No longer

involved

Not so

involved

Withdrawn Currently MD More

involved

Not much

SkillsC

experience

Project man-

agement

Business and

public sector

Business and

academia

Engineer-

ingCmanu-

facturing

30 years as

inventor

Commerciali-

sation of ideas

Experience of

SF sector

Evaluation of

high-tech SFs

AccountantC

MD of SF

Mgt consult-

ant

Retired entre-

preneur

Successes Too early None Continues to

survive

Attracted

large number

of ideas

None None Continued

survival

Group of like-

minded

people

Combining

group with

common aim

Too early to

say

None

Failures Needed

greater for-

mality

Lack structure

and mission

No clear

objectives

No—one

works full-

time

The executive No help with

new ideas

Too long time

to mobilise

No structure

no objectives

Not one SF up

and running

Reluctance to

act

Perhaps too

slow to react

O.

Jon

es/

Tech

no

vatio

n2

5(2

00

5)

58

7–

59

75

96


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managing public–private partnerships: the enactment of a new business venture

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