Introduction
Becoming rich is a function of the ability of an individual to create wealth based on the inevitable role of apt decision-making in accounting and finance. Wealth creation embraces the capacity to develop entrepreneurial culture (Reynolds 2010, p.61: Scott 2003, p.21: Zoltan & Audretsch 2010, p.110). Even though fear of encountering losses or even the overall fall of an established entrepreneurial venture is a catalyst of deterioration of an entrepreneurial culture, entrepreneurs take well-calculated financial risks. Greene and 50 Cent summarise the philosophy of fear and entrepreneurial success by asserting, “Your fears are a kind of prison that confines you within a limited range of actions” (2009, p.x). This assertion implies that the less one fears the repercussion of taking a well-thought decision, the more powerful one becomes in channeling all efforts towards making an idea a success (Gaglio & Katz 2001, p.100). From this perspective, this dissertation paper seeks to evaluate the significance of the claim that ‘fighting fear when making accounting and finance decisions is the only secret for becoming rich from the paradigms of the development of entrepreneurial culture. The evaluation is done by proposing research to determine the relationship between fear and success in entrepreneurial ventures as one of the means of wealth generation.
Problem Statement
The aim of the proposed research is to determine how fear of risks may affect the decisions taken in accounting and finance and in turn the development of an entrepreneurial culture in people. This research is conducted based on the argument that the wealth of nations is created through investment in manufacturing and offering services and other activities driven by profit-making motives (Sutherland 2008, p.205). My experience that prompted the decision to conduct this research is that, in an accounting context, the wealth of an organization increases in case the present value of money increases in some future time. This means that a multiplying factor of the present amount of money is necessary if a nation or an individual is to get rich. In fact, this is the point raised by Greene in his 48 Laws of Power when he says, “Make other people come to you, use bait if necessary” (2000, p.5). While attempting to increase the present amount of money held by individuals through the multiplying effect, people engage in entrepreneurial and other investments including stock exchanges and investment in bonds among other forms of investments. All these forms of investment involve financial risks. The worst scenario of risks is where an investor loses all his or her invested money. Therefore, in the effort to become rich, all investors make their investment decisions with some fear. The problem is that allowing fear to dominate the investment-making decision amounts to a decision not to invest at all. Accounting and finance in organizations is the most crucial function in an organization that is affected by fear. It is therefore important to carry out the study.
Objectives of Research
The objectives of research define the particular aims of a study (Haynes, 2006, p.882). In an attempt to lay a theoretical paradigm of predicting the relationship between fear and richness, the proposed research focuses on two main objectives: to
- Endeavor to show that wealth is created through earning but not saving
- Determine the relationship between fear, saving, and engagement in earning activities such as venturing into entrepreneurship.
- To evaluate the effects of fear when making accounting and finance decisions in entrepreneurship.
Hypotheses
Every credible research needs to have a statement of the hypothesis. Hypothesis refers to “the statement created by researchers when they consider the outcome of a research” (Shuttleworth 2008, Para. 1). Based on this definition, in the current research dissertation paper, it is hypothesized that fear is directly correlated with non-engagement in entrepreneurial ventures and or long-term investments, which have high degrees of uncertainty. There exists a relationship between fear and poor financial decisions in entrepreneurship.
Research Question
In the effort to prove or disapprove the hypothesis in the attempt to determine the relationship between fear and becoming rich, this research paper grapples with two main questions:
- Should people make a decision to re-invest having lost in a prior entrepreneurial venture?
- To what extent should people take risks in an entrepreneurial venture that they perceive would make them rich?
- Is fear a factor while making accounting and finance decisions in entrepreneurship?
Literature Review
Entrepreneurship is one of the mechanisms that are deployed by many young people in the 21st century to create wealth. Most of these people are highly qualified academically and hence employable based on their capacity to make decisions to venture in entrepreneurial activities (Chapman & Hyland 2004, p.55: Wang ＆Wongm 2004, p.164). Apparently, according to Ciavarella et al, global organizations such as Microsoft, Google, Dell, and others all originate from entrepreneurial inventions (2004, p.471). This revelation suggests that the creators of these organizations had to overcome fears associated with the likelihood of failure of their decisions to implement their ideas coupled with the fear of financial insecurity attributed to engagement in activities that are income-insecure. Surprisingly, the inventors of Dell, Microsoft, and Google did not know that their unarticulated inventions would turn out big global corporations (Carter et al. 2003, p.22).
In entrepreneurship, fear is an enormous impediment to success in strategic missions of ensuring that organizations created through engagement in risky investments act as wealth generators (Hult, Snow & Kandemir 2003, p.403: Ozgen 2003, p.7) because any stimuli that create fears pose higher likelihoods of attracting the attention of an entrepreneur compared to a situation that would help in making the entrepreneur rich. In the same line of argument, Greene and 50 Cent assert, “in the evolution of fear, a decisive moment occurred in the ninetieth century when people in the advertising and journalism sector discovered that, if they framed their stories and appeals with fear, they could capture people’s attention” (2009, p.4). This is what happens when the word entrepreneurship is mentioned. People develop the fear that venturing in entrepreneurship is a decision to accept the loss (Vokalo 2000, p.815: Yamada 2004, p.289). Therefore, hardly do non-entrepreneurial people look at it from the dimensions that entrepreneurship provides an opportunity for one to get rich quickly with fear of loss notwithstanding. It is this narrow perception of entrepreneurship that makes people prefer formal employment to self-employment. Indeed, Brown and Eisenhardt (2001) define corporate entrepreneurship as “activities that can lead firms to innovate, take the risk, and seize the opportunity in its markets” (p.344). The authors further argue that innovation entangles taking risky decisions to create new products and services since, at the innovation level, the innovator is not sure whether the products and or services will have a market appeal. They state that accounting and finance as an important pillar of entrepreneurship may be affected by the fear of decision-making. This situation creates fear that the innovator needs to overcome in order to progress with his or her idea to completion (Shane 2000, p.449: Rogers 2005, p.43). Arguably, the motive of engagement in corporate entrepreneurship is to “increase competitiveness through efforts aimed at the rejuvenation, renewal, and redefinition of organizations, their markets, or industries” (Covin & Miles 2009, p. 50). This requires a sound accounting and finance department that is devoid of fear having a goal-oriented organizational culture where risk-taking is a rule. It is also crucial to note that, in the effort to increase competitiveness coupled with seeking greater markets for a business establishment, products and services expenses are encountered without the assurance that they would be recovered. The corporation that attempts to market and invest in other mechanisms of enhancing its competitiveness has the merit of generating more money should the marketing efforts yield success in the placement of the organization’s products and or services (Sharman 2003, p.4: Palmrose, Richardson & Scholz 2004, p.63: Fields et al. 2001, p.271). This implies that the corporations that fear to commit their money and other resources to create more wealth through marketing, accounting and finance have no chances of generating more wealth at all. This argument provides substantive grounds for making Greene and 50 Cent’s argument that fear is the only impediment to gaining the power to be significant (p.112). Most of the studies reviewed indicated that fear in entrepreneurship especially in matters of finance is a factor in the success or failure of a company (Davidsson 2006, p.42: Cox & Taylor 2006, p.122: Etzkowitz & Zhou 2008, p.628). This case hinders entrepreneurial culture from flourishing. Hence, fear has the impact of making calls for retreating and retrenching (De Bettignies & Brander 2007, p.824).
The success of entrepreneurship as one of the ways of becoming rich at an individual level cannot operate in an environment denominated by the fear of failure. In fact, entrepreneurship acts as one of the key drivers of market-oriented nations (Gnyawali & Fogel 2000, p.53: Grundsten 2004, p.16: Haber & Reichel 2007, p.120). To this end, Blaug asserts, “Whereas neoclassical economists have dismissed entrepreneurial activity due to the dominance of general equilibrium analysis, economists outside the mainstream demonstrate how crucial entrepreneurs are to sustaining a dynamic market under appropriate institutional conditions” (2002, p.218). Bird (2001) agrees with this argument by adding that entrepreneurial ventures only emerge due to careful thoughts coupled with actions (p.64). When fear acts to impair the freedom of thought, actions, which are guided by thoughts, suffer flaws. Indeed, some of the things that people fear such as losses cannot be avoided in some situations. Consequently, people “have to find way to overcome fear, or suffer real consequences” (Greene and 50 Cent 2009, p.111).
For success in any endeavor for wealth generation, people seeking to do so need to have a number of characteristics. Gaglio and Katz (2001) exemplify this trait by conducting a study on the significance of confidence and discipline in the success of an entrepreneurial venture (p.97). From the context of discipline, entrepreneurs remain focused on the noble goal of making their ventures succeed in all ways possible. They also endeavor to “eliminate hindrances or distractions to their goals” (Marlow & Patton 2005, p.727).This task can only be done by courageous and fearless people. Indeed, Jyothi reckons that successful entrepreneurs are disciplined enough to take steps every day towards the achievement of their objectives” (2009, p.41). To do this, a bold and fearless decision-making process is required. “Ideas are constantly being generated about workflows and efficiency, people’s skills and potential new businesses” (Marlow & Patton 2005, p.727). All these assertions present opportunities for generating money for both individuals and organizations.
Businesses are risky to manage. Most of the successful ones have to overcome the fear of making decisions. Arguably, therefore, entrepreneurship is a culture shared by people who take decisive actions that would make them rich. Savaya, Spiro, and Elran-Barak (2008) confirm and evidence this argument by claiming, “clusters of entrepreneurs occur at certain times and places because the social and economic environment at those times and in those places encourages entrepreneurship” (p.490). This point implies that entrepreneurs are self-starters. Therefore, they do not mind whether somebody else had invested earlier in the effort to establish a way of benchmarking. Their main objective is to “set the parameters to make sure that projects follow the path” (Savaya, Spiro & Elran-Barak, 2008, p.490). Entrepreneurs do not ask questions on whether their new business ventures would succeed. Rather, they are normally confident that their knowledge would make the new business succeed. Therefore, never at any time do entrepreneurs develop the fear of failure. Apparently, this is perhaps why entrepreneurs have emerged also as the richest people in the world with their otherwise minute business establishments turning out to have a global feel. In this context, fear is the only impediment to becoming rich. However, this inference lacks a backup of quantitative research evidence. The proposed research endeavors to seal this gap.
Research Methodology
The proposed research is both quantitative and qualitative in nature. Therefore, both numerical and qualitative data will be collected, which will help to determine the relationship and or correlation between fear and success of entrepreneurial ventures upon its analysis. The nature and the type of data used in the proposed research make it descriptive. Fear and growth are the two main variables deployed by the proposed study. Unfortunately, fear cannot be measured quantitatively. However, in the proposed research, it will be expressed in terms of the number of people who engage in entrepreneurship within a given geographical area from, which the data is been collected. Success is measured by the rate of growth of entrepreneurial ventures every year within the last period of five years by evaluating the success of the accounting and finance departments in these organizations. This information is generated from the studied venture assets and cash flow records.
Research Design
The proposed research is designed to be primary research. Surveys coupled with the administration of questionnaires will be utilized as the main methods of data collection. The analysis of the growth of the entrepreneurial venture will be represented in the form of percentage with respect to a base year. This base year is the first year in the last period of five years. The research will study 200 small and medium entrepreneurial ventures. To make the research representative across all industries, a simple sampling technique is used to identify SMEs operating both in the service and production sectors. Simple sampling is selected since it consumes lesser financial resources in comparison with some of the other sampling techniques. Where qualitative data is required, the research proposes the codification of the data. This case is reflected in the questionnaires, which are accompanied by multiple choices. Once data is collected, regression analysis will be conducted to determine correlation and relationships.
Conclusion
In the 21st century, the most successful organizations are the ones, which are fuelled by innovation and creativity as the main mechanisms of enhancing their competitiveness (Yamada 2004, p.289). Additionally, at an individual level, likelihoods exist that people who are likely to make billions of dollars within their lifespan are the ones who venture into entrepreneurship besides being innovative and creative. The main fear when starting or running an entrepreneurial venture is the making of accounting and finance decisions that will lead to the imminent collapse of the company. However, this research is important in the sense that it will help to lay theoretical paradigms of how fear may impact the growth and development of a culture of entrepreneurship as a substantive vessel for becoming rich. Nevertheless, in realizing this significance, the research has some limitations. One of the most conspicuous limitations is the inability to measure fear quantitatively. Fear is also a behavioral characteristic as opposed to technical characteristics that can be taught formally to people seeking to explore entrepreneurship. This limitation is delimitated by designing the proposed research to have both qualitative and quantitative research deliverables.
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