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Entrepreneurial Team Structure Based on Five Factors Analysis: A Case of ∗

Xie Kefan1, Wu Qian1, Zhao Shi1, Chen Yun1 1 School of Management, Wuhan University of Technology, Wuhan, P.R.China, 430070 (E-mail: [email protected], [email protected], [email protected], [email protected])

Abstract The structure of entrepreneurial team has great influence over team behavior and performances. On the contrary, individual behavior, personality, communication etc. affects the structural stability of entrepreneurial team. This paper applies the five factors analysis to entrepreneurial team, and puts forward the five factors analysis to eighteen founders of Alibaba Group. The paper also discusses the relationship among team members by using the mutual generation and restriction model. Moreover, the paper carries out an analysis on the management thought of Ma Yun, chief executive officer of Alibaba Group, and furthermore on recent shift in top management of Alibaba Group. Finally, the paper proposes a thought of so-called harmony entrepreneurial team in order to emphasize the importance of combination rule to entrepreneurial team. Key words The five factors analysis; Entrepreneurial team; Harmony entrepreneurial team; Alibaba group

1 Introduction Along with the technological updating, economic development and diversity of life style, many new businesses appear. Entrepreneurship has become one important part of economic and social activities. Evidence is accumulating that more and more entrepreneurial activities are carried out by entrepreneurial team rather than a single individual, and the probability of business success is mostly much higher in entrepreneurial team than in individual business. However, it is difficult to make high-efficient operation when the entrepreneurial team consists of more than one member. It requires meeting three goals: a) Make best use of every member’s abilities in entrepreneurial team; b) Reduce contradictions and conflicts among team members to a minimum; c) Establish efficient group decision-making system. According to team issues, most researches pay much attention to working performance (effectiveness) of multi-members in the fields of group decision making, marketing, enterprise strategy etc.. In order to find out a better way to improve the performance, many scholars propose that individual personality in team, or team personality diversity (TPD), is a very important factor in team issues (George A. Neuman etc., 1999)[1]; (IJ Hetty van Emmerik etc., 2009)[2]; (Miranda A. G. Peeters etc., 2008)[3]. The most famous theory in team is the Big Five Personality model (1987)[4]. After that, many scholars research the team structure based on the Big Five Personality, such as (Susan L. Kichuk and Willi H. Wiesner 1997)[5], (Le Pine and Jeffrey A. 2003)[6], etc.. They research on the individual characteristics, the relationship among the team members, and cooperation in team etc. which impact in team performance. They also research the similar issues in Top Management Team (TMT) (2001)[7]. Most researches in entrepreneurial team are mainly in formation of entrepreneurial team, structure characteristic of team members, learning process of entrepreneurial team, leadership of entrepreneurial team, and group decision-making process. Some researchers are mainly in the relationship between entrepreneurial activities and performance. (Tihula and Huovinen 2009)[8]propose that management teams are more common in the firms owned by habitual entrepreneurs than first-time ones. Correspondingly, there are more solo entrepreneurs among the first-time entrepreneurs. (Bart and Nathalie 2004)[9] held that start-up teams with seven persons or more were extremely difficult to work with. They needed too much overhead and create too much tension between management authority and shareholder power. (Gaylen and Douglas 2001)[10] hold that the number of technical and operation experts was much larger than management, market and finance experts in start-up firms. (Timmons 2003)[11] propose that there are always a person to play a core leadership role in entrepreneurial team, who has very clear mind to the team aspiration. (Mohammed and Ringseis 2001)[12] propose that unanimity decision rule groups achieved more cognitive consensus than majority rule groups. In

∗ Project No.07JA630041 supported by the MOE Research Plan of Humanities and Social Science * Supported by“The Fundamental Research Funds for the Central Universities”(Project No.2010-lb-028 )

·1244· Proceedings of the 7th International Conference on Innovation & Management addition, group members inquiring concerning the reasons underlying others’ decision preferences. Cognitive consensus also positively influenced expectations regarding decision implementation and satisfaction.

2 Five Factors Analysis of Entrepreneurial Team The characteristics of entrepreneurial team members can be analyzed by five important factors, including innovation power, executive power, decisive power, risk preference and cooperative degree. Entrepreneurial team members can have five elements ascriptions according to the five factors. Innovation power refers to the ability of presenting new project and obtaining more competitive advantages in the case of having internal reform to element resource of company and internal reform. Executive power refers to the working ability at the premise of having a correct understanding to the assignment undertaking or projects. Decisive power refers to the decisiveness of guiding to a target when making selection, adjustment and determination to the direction, content and ways of activities. Risk preference, is the psychological attitude towards the decision-maker viewing of risk. Cooperative degree refers to willingness and ability of team members to participate in group decision-making, collective action and cooperation with each other. Table 1 Analysis Table of Five Factors Characteristics of Entrepreneurial Team role innovation power executive power decisive power risk preference cooperative degree

leader relatively strong relatively strong strong risk loving relatively strong innovator strong relatively strongrelatively weak risk aversion relatively strong executor relatively weak strong strong risk aversion moderate pioneer middle relatively strongmoderate risk loving relatively strong supervisor moderate relatively strongrelatively weak risk neutrality moderate

In the five characteristic factors, innovation power, executive power, decisive power, and cooperation degree has five indexes of strong, relatively strong, moderate, relatively weak and weak. Risk preference is classified into three types of Risk Loving, Risk Aversion and Risk Neutrality. The five elements characteristic of entrepreneurial team is shown in Table 1.

3 Five Factors Analysis on Entrepreneurial Team of Alibaba Group Alibaba Group (Alibaba.com) is a privately owned Hangzhou-based family of Internet-based businesses that include business-to-business trade, online retail, a payment platform, business management software and regionalized classified listings. It founded by Ma Yun () in 1999, which is the biggest one of the online trading platform and business exchange community in the world at present, and also the pioneer of the global business-to business (B2B) E-Business. Ma Yun and seventeen other founders started the country’s first e-commerce website—www.china.alibaba.com. Alibaba Group put out .com in 1999 which is one of the main domestic online retail marketplace in May 2003, and established the third-party online platform— in October of the same year. Alibaba.com Limited had strategic partnership with Yahoo!, Inc. and took charge of Yahoo! China in 2005. Alibaba.com was listed in the Hong Kong Stock Exchange at the IPO price of HK$ 13.5 on 5 November 2007, and found the Internet-based business management solutions—Alisoft at the same time. The company put out the leading online advertisement trading platform—Alimama.com again in 2009. Tremendous success of Alibaba.com is closely connected with the entrepreneurial team of Ma Yun and other seventeen founders who are called “18 Arhat”. In the book of Alibaba Myth: reveal hidden Ma Yun growth history[13], wrote by Sun Yanjun, it made a description in details on the personalities of Ma Yun and his “18 Arhat”. Therefore, the empirical study is based on the book, Quotation of Ma Yun and lots of investigations. The eighteen founders of Alibaba Group have their own characteristic and personality. According to the five factors model, the eighteen members can be divided into five types which are shown in Table 2.

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Table 2 Analysis on Entrepreneurial Team of Alibaba Group

Role leader person innovator person executor person pioneer person supervisor person

Number one five five four three Wu Yongming, Li Qi, Sun Xie Shihuang, Shi Yufeng, Ma Cai Chongxin, Tongyu, Peng Jin Yuanying, Name list Ma Yun Changwei, Zhou Zhang Ying, Lei, Dai Shan, Jin Jianhang, Yuehong, Sheng Jiang Fang Lou Wensheng Han Min Yifei

It is appeared from Table 2 that the five elements allocation owned by entrepreneurial team of Alibaba Group shows unique characteristic. The eighteen founders are distributed into the five factors analysis tables, which form a unified and equilibrium system. Each type of members plays important role on the development of entrepreneurial team: a) Leader, represented by Ma Yun. As a successful leader, he owns a lot of excellent individual characteristics. Firstly, Ma Yun has strong innovation power, executive power, and decisive power, who has the courage to try something new and has the ability to make things true. He proposed the new thought of so-called online business-to-business e-commerce marketplace in 1999. At the same time, he leaded the team to realize the online B2B marketplace mode at the highest speed. Secondly, Ma Yun has a big appetite for risk with resolute and brave spirit, who regards crisis as a turning point to success. Thirdly, Ma Yun has good appetency and communication skill so that he can efficiently operate a team up to eighteen persons. They have achieved solidarity and unity with little negative contradiction and conflict; b) Innovator, represented by Wu Yongming. This type of members in the team is mainly engaged in network technology work. They have strong innovation power and executive power. They are interested in digging at problem to improve their professional skill. But they are relatively passive, and are considered of a lack of decisiveness, so they are risk aversion; c) Executor, represented by Li Qi. This type of members in the team is mainly engaged in daily routines of company, such as administration, HR management, executing significant decisions etc. Their executive ability is considerable. They have highly-developed sense of responsibility. They are cautious and pragmatic. But they still have weaknesses, which are indecisive and not good at innovation; d) Pioneer, represented by Jin Jianhang. This type of members in the team is mainly engaged in sales administration, market, and public relations etc. They are risk loving with periods of very creative thinking. They are also good at communicating, and with sense of responsibility; their work is careful, and the enunciation is clear. Therefore, they have strong association team spirit; e) Supervisor, represented by Cai Chongxin. This type of members in the team is mainly engaged in high professional work, such as financial management, legal consultation and so on. They have a good knowledge of professional knowledge. They are rational and cautious in thought in character. Therefore, they play a lead role in supervision and controls of the entrepreneurial team. They are also risk neutrality. The five factors analysis on entrepreneurial team of Alibaba Group which shown in Table 1 reflects three characteristics as follows: a) Ma Yun is the life and soul of the entrepreneurial team of Alibaba Group. He is the first advocator of the Alibaba mode, the founder of the Alibaba.com, and the leader of the team. He plays a vital and essential role in the team in establishing the development strategy and culture of the company, making important decisions, and guiding the team to form unified values and standards of behavior; b) Innovator and executor are relatively larger groups in the team comparing with other types. On one hand, Alibaba.com is the world’s leading online B2B trade platform, so innovation is the most important factor in the company. Therefore, the company owns R&D talents of network technology captained by Wu Yongming (Network Engineer of Alipay) and Shi Yufeng (Technical Director); On the other hand, executors are the backbone of the entrepreneurial team whose executive ability is considerable. The development model of the company is distinctive and peculiar so they have no precedent to go by. Based on this, executor members, captained by Li Qi (COO of Alibaba.com) and Sun Tongyu (CEO of Taobao.com), shoulder a very important task of turning the thoughts into realities; c) Supervisors, who are fewer in number, play a very important role in the entrepreneurial team. This type of members is usually the experts or talents in specific field, whose professional knowledge is very useful in regulating behavior standard and criterion and maintaining normal operation of the entrepreneurial team. Taking Cai Chongxin for example, he is Chief Financial Officer (CFO) and legal affairs consulter in the company. When he joint the entrepreneurial team, Cai Chongxin helped the company to draft an international advanced administration and supervision system, which leads the company having the most modern development model and achieving solid internal unity in its team.

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In a word, according to the five factors analysis on Alibaba Group, the team structure of Alibaba Group has its reasonableness. Eighteen founders, who are sticking together and fully developing their own abilities, form a unified and equilibrium relationship. The relationship among the entrepreneurial team of Alibaba Group is shown in Figure 1 as follows.

Ma Yun

Leader

generate generate Wu Yongming Cai Chongxi Shi Yufeng Zhang Ying Ma Changwe Jiang Fang Supervisory Innovation Zhou Yuehong Sheng Yifei

restrict

generate generate

Pioneer Execution generate Li Qi Xie Shihuang Sun Tongyu Jin Yuanying Peng Lei Han Min Dai Shan Jin Jianhang Lou Wensheng

Figure 1 The Generate-Restrict Relationship Among Entrepreneurial Team of Alibaba Group

Based on the five factors analysis, the main reason why the five factors can reflect dynamic equilibrium and circulating movement is that it objectively has an automatic mechanism, which is named as Generate-Restrict Relationship. The Generate-Restrict relationship consists of two regulations, one is “generation” regulation; the other is “counter-restriction” regulation. Any element has the relationship of “to be generated”, “to generate”, “to be restricted”, and “to restrict”, which guarantees the normal relationship of Interrelationship. According to the Generate-Restrict relationship, we can see that: a) Entrepreneurial team in Alibaba Group is a successful team which has reciprocal advantages and differentiation abilities among the eighteen founders. Every member of the team can fully develop their potentialities and abilities to make outstanding contributions to the team; b) The entrepreneurial team elaborates a system of common values and unified goals by mutually promotion and supervision. They finally develop the team to be harmony entrepreneurial one and improve the entrepreneurial performance continuously. The harmony development of Alibaba.com is embodied in the dynamic equilibrium of mutual generation and restriction of the five elements theory. The idea of harmony entrepreneurial team refers to “individuality harmony”, “role characteristic harmony”, and “interrelationship harmony” among team members. Entrepreneurial performance of harmony entrepreneurial team is much higher than performance of inharmonious entrepreneurial team.

4 Conclusions From the researches of the five factors analysisl, four conclusions can be drawn: a) The structure of entrepreneurial team should be heterogeneous. They also should have complementary advantages and characteristics; b) Every member of the team should take on corresponding work according to their own characteristics. In that case, entrepreneurial performance will be improved to the high level; c)

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Functional departments of the entrepreneurial team are not closed system. There must be interaction, cooperation, and constraint among those departments in order to form a unified and harmony system; d) The idea of harmony entrepreneurial team refers to “individuality harmony”, “harmony of role characteristic”, and “interrelationship harmony” among team members. Entrepreneurial performance of harmony entrepreneurial team is much higher than performance of inharmonious entrepreneurial team.

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