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Introduction to the Economic Entrepreneurship Theories Report (Assessment)

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Theoretical framework

Economic entrepreneurship theories are essential in the analysis of entrepreneurial individuals. One theory that is highly relevant in today’s marketplace is the Austrian Market Process model, which Joseph Schumpeter initiated in 1934. In this model, adherents assume that an entrepreneur is essentially a driver of a system that dwells on market economics.

An entrepreneur must have ways of satisfying market needs through the creation of new services or goods or use of better mechanisms for doing so (Murphy et al., 2006). The Austrian Market process theory is quite applicable to the person under analysis because she found a better way of offering legal services.

Basdeo noticed an opportunity that other business persons had not discerned, and this was the lack of a female-owned law firm in Princess Town. Furthermore, she was alert to the uncertainties and risks involved in offering this business, but she took it on nonetheless.

In the model, an entrepreneur must cease profit-making opportunities whenever they present themselves; this is what Basdeo did when she opened the law firm (Murphy et al., 2006).

Personality trait theories include all the qualities that individuals in entrepreneurship positions demonstrate frequently (Coon, 2004). Entrepreneurs are optimistic; they choose to see the positive side in situations. They are highly creative and innovative.

They also have a knack for identifying new opportunities. They are highly resilient and immensely committed. Entrepreneurs have a need to alter the status quo and improve things. They are visionary and always want to make a difference. Many of them desire to win and are hard workers (Coon, 2004).

The person involved in this case study possesses most of the personality traits identified in the personality trait framework. First of all, she was unhappy about the way, the legal system was in her area, and wanted to make a change. She is highly creative because she thought of a niche that other law firms had not seen.

Additionally, Basdeo is visionary as can be seen by her involvement in the school boards and other unconventional areas that typical lawyers would not have entered (Gartner et al., 2004). She was also optimistic because there were plenty of risks involved in starting her business venture such as facing malpractice, lacking experience and having no family name (Drucker, 1985).

She chose to look at the glass as half full and started The Globe Law Chamber regardless. In the end, she made up for those risks by her energy and commitment to the business. Additionally, she is a hard worker as seen through her efforts in court and outside. She has a desire to win as also evidenced by her aggressiveness in all her cases. Basdeo possesses the qualities that make a person an excellent entrepreneur (Hisrich, 1986).

The locus of control theory (as postulated by Julian Rotter) is another trait theory that argues that entrepreneurs have an internal locus of control; not an external one. The former term is the conviction that one can control one’s life events.

Conversely, a person with an external locus of control believes that things are outside his or her control and fate or chance determines them (Cromie, 2000). The need for achievement theory is also another trait theory that holds that entrepreneurs have a need to excel or achieve. This causes them to get into new ventures (Shaver and Scott, 1991).

This entrepreneur under analysis demonstrated an internal locus of control. This was because she did not dwell on the negative external circumstances around her. She believed that she was in control of her life and took on this difficult challenge. Furthermore, Petronilla explained that she never lets negativities stifle her as she knows what she wants.

Clearly, she has an internal locus of control, which is symptomatic of many business leaders (Cromie, 2000). Usually, this internal locus goes hand in hand with competitiveness and aggressiveness and innovation as seen through Basdeo’s experiences in and out of court.

Basdeo also demonstrated the need for achievement as explained through the need for achievement theory (Shaver and Scott, 1991). Basdeo demonstrated that she wanted to feel fulfilled and could not experience that in a salaried position as an employee. This restlessness and need to accomplish something pushed her into her field and caused her to start the firm (Drucker, 1985).

Sociological entrepreneurship theory entails explaining entrepreneurship through the application of social context. In this regard, entrepreneurship opportunities should be understood through social networks, life stages, ethnic identification and population ecology (Landstrom, 1998).

The social entrepreneurship theory allows one to understand why Petronilla Basdeo is one of the most successful entrepreneurs in her town and industry. In forging social networks, Basdeo created strong bonds between herself and the people that surrounded her. She was not opportunistic about her relationships; instead, she cemented her relationships with faith (Landstrom, 1998).

This was visible when she participated in the legal aid clinic because she was offering a service to her community. That effort strengthened her ties with the people around her. Additionally, her life-course stage was such that it required a change into the business world. Employment wore out Petronilla, and she was at a stage in her life where she needed fulfilment.

Her experiences in the latter positions caused her to push for something more (Hisrich, 1986). With regard to ethnic identification, Basdeo’s sociological background pushed her into entrepreneurship. She belonged to a marginalised group of people, i.e. women (Vasant, 2009). She used this disadvantage to drive her to success. Lastly, Basdeo’s population ecology also explains why she did well in the field (Landstrom, 1998).

The legislative and social system in the country was such that it allowed female entrepreneurs to lead law firms. Perhaps more importantly, customers required legal aid in Petronilla’s community; this is what she responded to. The needs of her environment inspired her to become an entrepreneur and caused her to become successful (Drucker, 1985).

Entrepreneurship might also be analysed through certain dimensions as explained by Stevenson (2000). The author explains that one can understand entrepreneurship through the use of six dimensions. The first is strategic orientation. This encompasses the utilisation of resources, the application of creativity to opportunity and the use of pull factors such as technology and social values in decisions.

The second dimension is a commitment to opportunity. Here, an entrepreneur must act on opportunities as soon as arise; it is not enough to be creative (Gartner et al., 2004). Nonetheless, the entrepreneur should not take risks blindly; he or she must understand the relationship between risk and rewards.

The third dimension is a commitment to resources, where the entrepreneur must strike a balance between the resources required to achieve a certain goal and returns that can emanate from the venture. Fourth, an entrepreneur must control resources in order to maximise benefits with the least amount of capital.

The fifth dimension is the management structure, which entails making direct contact with all stakeholders rather than delegation of authority. The final dimension is the reward philosophy which should focus on performance and harvesting value rather than external expectations (Gartner et al., 2004).

The dimensions of entrepreneurship framework are particularly insightful in understanding the person under analysis. Basdeo applied creativity to opportunity and thus fulfilled this criterion (Stevenson, 2000). She needed to meet the need of offering legal services from a female perspective.

However, she had no experience; an important quality in the legal industry. She used creativity to confront the challenge by getting someone with experience. In the second dimension, she ceased the opportunity for starting her own law firm after weighing the risks and reward involved in the venture (Drucker, 1985). Chances of succeeding were higher than the risks of malpractice or failure. The third dimension is resource control.

Basdeo has stayed in business for a number of years owing to her rapid responses to resource needs. In the fourth dimension, Petronilla exploited resources such as skills and talents of others (Hisrich, 1986). She lacked experience and made up for it by associating with individuals with those qualities.

The fifth is the management structure where Petronilla proved to be an entrepreneur by her direct role in the law firm. It was not possible to determine the reward philosophy in the case study, but if it is performance driven, then Basdeo is a true entrepreneur (Stevenson, 2000).

Conclusion

In the paper, Petronilla Basdeo talked about the things that drove her into entrepreneurship. She revealed the risks and tensions inherent in this venture. She also talked about how she operates the business, her motivations and aims.

A number of theories were indentified, and they included economic theories of entrepreneurship such as the Austrian process model, trait theories such as the personality trait theories, locus of control theory, and need for achievement theory. Other theoretical frameworks encompassed sociological entrepreneurship theory and the six dimensions of entrepreneurship.

Petronilla demonstrated all the above theories through her assessment of risks and rewards prior to commencement of the venture, her choice to hire someone with the right skills and talent, and her high need for achievement. The case study also supported theory through the external circumstances surrounding her and the responses that she gave.

References

Coon, D. (2004). Introduction to psychology. Minneapolis, West publishing company.

Cromie, S. (2000). Assessing entrepreneurial inclination. European Journal of work and organisation psychology, 9, 1, 7-30

Drucker, P. (1985) Innovation and Entrepreneurship. London, Heineman.

Gartner, W., Carter, K., Shaver, K. & Reynolds, P. (2004). Handbook of entrepreneurial dynamics. CA, Sage.

Hisrich, R. (1986). Entrepreneurship, Intrapreneurship, and Venture Capital. MA, Lexington Books

Landstrom, H. (1998). The roots of entrepreneurship research. Conference proceedings, France, November 26-27.

Murphy, J., Welsh, P. & Liao, J. (2006). A conceptual history of entrepreneurial thought. Management history journal, 12, 9-24.

Shaver, K. & Scott, L. (1991). Person, process, choice: the psychology of new venture creation. Entrepreneurship theory and practice, 16, 23-45

Stevenson, H. (2000). Mastering entrepreneurship. NY, Prentice Hall.

Vasant, D (2009). Entrepreneurial Development. Mumbai, Global Media.

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