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SEGMENTATION: The marketing process by which a company divides a heterogeneous group of buyers in segments. Each segment has similar wants and needs. The company uses a concentrated targeting strategy to sell their products to this group. A different marketing mix is created and used for each segment.

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BEHAVIORAL ALTERNATIVES:

Two different inclinations toward institution changing innovations and maintenance of the status quo. One alternative is entrepreneurial behavior, which is the willingness to develop or adopt innovations that change existing institutions and the status quo. The other alternative is managerial behavior, which is the desire to maintain and promote existing institutions and the status quo. These alternatives can be traced to different preferences for novel and redundant information, which result from the physiological reaction to a potential threat.
People tend to have one of two alternative reactions to innovative changes in society, the economy, and technology. One is to embrace change. The other is to embrace the status quo. The first gives rise to entrepreneurial behavior. The second results in managerial behavior.

Entrepreneurial behavior is a preference for innovation and a change in existing institutions and the status quo. It can be as simple as the willingness to buy a new electronic gadget or as involved as rebelling against the existing political regime and starting a new nation. It often surfaces in the form of an entrepreneur undertaking the risk of organizing production and launching a new business venture.

Managerial behavior is a preference for maintaining and promoting existing institutions and the status quo. It might be seen as following the same familiar routine day in and day out. A bagel for breakfast, a coffee break at exactly 10:05, chicken salad sandwich for lunch, leave for home at 5:00 taking Elm Street to Main and Main to 14th, in bed by 9:30. It can also be seen as administrative efficiency, making sure all i's are dotted and all t's are crossed.

Differences between entrepreneurial and managerial behavior can be traced to differences in novel and redundant information, which is part of the basic fight or flight motive response to a threat. Those with a relative preference for novel information tend to be entrepreneurially inclined. And those with a relative preference for redundant information tend to be managerially inclined.

Innovation

To understand behavioral differences, let's first take a look at the notion of innovation. Innovation is the process of developing and making available a new good, service, production technique, idea, concept, scientific theory, law, business, cultural norm, social organization, or government agency. An innovation represents a change in the status quo, a modification of existing institutions that form the structure of society and the economy. It's new, it's different and it's the primary means of improving society, enhancing living standards, and promoting economic growth and development.

Innovation is related to, but different from invention. Invention is the act of creation. Innovation is the process of making the invention available for use. An invention provides no benefit to society if it's locked away in a closet unaccessible to anyone. Innovation takes the invention out of the closet and begins the process of distributing it throughout society.

Entrepreneurial behavior is usually behind the act of invention, as well as the process of innovation. It is important not only for those who launch the innovation, but also those who most inclined to adopt the innovation. Managerial behavior emerges once an innovation has been around long enough to become the new status quo.

Fight or Flight

Differences between entrepreneurial and managerial behavior can be traced to the fundamental, physiological response to potential threat, what is called fight or flight. The human body automatically prepares itself to fight off a potential threat to flee away from it. Respiration increases. Pupils dilate. Brain wave activity increases. Adrenalin is pumped through the body. Heart rate increases. The human body is primed and ready to recognize the threat and to respond.

The key to this automatic response is achieved by distinguishing between what's new and different and what's old and familiar. The old and familiar is less threatening that the new and different. The human brain sorts between two different types of information that comes through the five senses (sight, hearing, touch, taste, and smell), attempting to discern the potential for danger -- novel information and redundant information.

  • Novel: This is new information. An unusual sight. A strange sound. An unexpected touch. A bizarre taste. An uncommon smell. The human brain takes immediate note of this information. Because it is unfamiliar, it might be threatening. This is information that needs to be identified quickly. It needs to stand out from the ordinary and familiar. A self-preservation reaction (fight or flight) might be needed.

  • Redundant: This is familiar information. A common sight. A routine sound. A ordinary touch. A recognized taste. An everyday smell. The human brain is wired to largely ignore this information. Because it is familiar, it is not threatening. It is the background canvas upon which novel information is displayed.
Redundant and novel information are both intrinsically satisfying. A little bit of excitement is satisfying (think a roller coaster ride). But so too is a little bit of piece and quiet (think resting after a hectic vacation). However, nothing but redundant information is incredibly boring and not particularly satisfying. And nothing but novel information is anxiety inducing, and also not very satisfying. Too much of one or the other is not a pleasant situation. A combination of the two is most enjoyable. It can maximize satisfaction.

However, different people have different preferences over the proper mix of novel and redundant information. Some prefer relatively more new and less old. Others prefer relatively more old and less new.

These individual differences give rise to entrepreneurial and managerial behavior. Those who prefer relatively more redundant information and relatively less novel information tend to pursue managerial behavior. Others who prefer relatively more novel information and relatively less redundant information tend to pursue entrepreneurial (and innovative) behavior.

Managerial Behavior

The first behavioral alternative is managerial behavior. Managerial behavior is a preference for maintaining the status quo over changing it. Managerial types resist innovation. A change in institutions does not generate satisfaction for managerial types. On the contrary, satisfaction is best achieved from keeping things structured and orderly. Managerial behavior displays a relative preference for redundant information over novel information.

This behavioral alternative is well suited for keeping an existing business running smoothly and efficiently. As the name suggests, managerial types are inclined to manage, to administer, to apply existing rules and procedures. They are not absolutely opposed to change, but the change needs to be orderly and within the rules.

While managerial behavior is not conducive to creating an invention or launching an innovation throughout society, once the innovation has taken hold and becomes part of the fabric of society, it takes hold. It promotes the now "old" innovation, getting the most benefit possible. Those who are managerial inclined might not favor product innovations (new products), but process innovations (new ways of making existing products) are acceptable.

Entrepreneurial Behavior

A second behavior alternative, one closely connected to innovation, is entrepreneurial behavior. Entrepreneurial behavior is a preference for changing the status quo over maintaining it. Entrepreneurial types embrace innovation. A change in institutions generates satisfaction for the entrepreneurially inclined. Keeping things structured and orderly is not nearly as satisfying. Entrepreneurial behavior has a relative preference for novel information over redundant information.

This behavior alternative surfaces throughout society. The most noted is entrepreneurship, which launches a new business and undertakes the risk of organizing production. Another common example of entrepreneurial behavior is a consumer who likes to buy the newest and latest products, fashions, or electronic equipment. The desire to take a new route to work or school periodically is also an example. At the extreme are those who rebel against existing social orders, including political revolutionaries.

Entrepreneurial behavior is reflected in those who invent new products, ideas, technologies, and organizations. The desire to create something new is fundamental to entrepreneurial types. It is also reflect in those who seek to innovate, to apply and make use of the new products, ideas, technologies, and organizations. This behavior also affects those most willing to adopt the innovations developed by others.

However, once the newness wears off of an innovation, once the "new" innovation becomes the status quo, once it is institutionalized, then entrepreneurial types want little further involvement. The excitement of the new and different has passed.

A Continuum

Like much of life, the inclination toward managerial or entrepreneurial behavior is seldom one or the other. Most people have a combination of each and few exhibit either in the extreme or in all aspects of their lives. One person might be entrepreneurial in business, but managerial at home. Another person might be just the opposite. Each might fulfill the desire for in one activity, then be satisfy with the status quo in other activities.

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Recommended Citation:

BEHAVIORAL ALTERNATIVES, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2018. [Accessed: January 22, 2018].


Check Out These Related Terms...

     | innovation | managerial behavior | entrepreneurial behavior | novel information | redundant information | institution | innovation profit | technology | process innovation | product innovation |


Or For A Little Background...

     | entrepreneurship | risk | scarce resources | rational behavior |


And For Further Study...

     | economics of information | economics of uncertainty | risk preferences | alternative business cycles | creative destruction | good types | public goods | innovation and entrepreneurship | political views |


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