Home > Free Essays > Business > Strategy > Entrepreneurship and its Components

Entrepreneurship and its Components Essay

Exclusively available on IvyPanda Available only on IvyPanda
Updated: Jan 24th, 2020

Introduction

Since the Industrial Revolution, the twenty first century Generation, is becoming more enterprising. Today, more and younger individuals, below 35 years of age, are trying to start their own business.

Today, a huge percentage of people between 18 to 30 years study entrepreneurship in business schools, more than one third of the new entrepreneurs are below the age of 30 years. More resources are getting devoted by the major universities to study Entrepreneurship. The young entrepreneurs are showing great success in their ventures (Kuratko, 2009, P.29)

After the Second World War, attaining economic development within the shortest period of time gave new meaning to entrepreneurship. By bringing the people to carry out risk bearing activities, is one of the most important entrepreneurial stimulus, which accelerates the pace of economic development (Baruah,n.d., P.2)

The economic growth and development of nation is largely dependent on its entrepreneurial activities. “It is a risk taking activity and challenging tasks, that need utmost devotion, total commitment and great sincerity with fullest involvement for personal growth and personality” (Baruah,n.d., P.3).

Meaning

According to A Schumpeter “The Entrepreneurship is essentially a creative activity or it is an innovative function” (Baruah,n.d., P.2). Early theories of entrepreneurship come from the area of economics (Cope, 2005, p. 1).

To understand entrepreneurship usually individual businesses are taken into consideration, as the success of enterprise depends upon the imagination, vision, innovation and risk taking capacity of an individual.

The cooperation between land, labor, capital, market, management and of course entrepreneurship are the various factors of production. “The entrepreneurship is a risk taking factor, which is responsible for the end result of profit or loss” (Baruah,n.d., P.2).

Gartner (1988, p.26) says “entrepreneurship ends when the creation stage of organization ends”(Sandberg, 1992. P. 9).

Optimum utilization of the unexploited resources, self-employment and a self-sufficient economy are achieved by developing entrepreneurship (Baruah,n.d., P.2).

David Melelland emphasized “the importance of achievement motivation as the basis of entrepreneurial personality and a cause of economic and social development through entrepreneurship by fulfilling the following needs such as 1) Need for power 2) need for affiliation and 3) Need for achievement” (Baruah,n.d., P.2).

Individual, socio cultural environment and support system are some of the factors influencing entrepreneurship (Baruah,n.d., P.2).

“One who ventures out, prefers change as a means of growth and in the process is prepared to take calculated risk and while taking risk is aware of the possibilities, success as well as the failure is an entrepreneur” (Baruah,n.d., P.3)

An entrepreneur is a person who develops and owns his own enterprise, works under uncertainty for achieving goal, innovative, reflects strong urge to be independent, dissatisfied with the routine, prepared to face the hard life, determined, patient, exhibits leadership, future oriented, and converts a situation into opportunity (Baruah,n.d., P.2).

According to Frank Carney, founder of Pizza Hut, “Entrepreneurs are the corner stone of the American enterprise system, the self-renewing agents for economic environment. They are uniquely optimistic, hard driving, committed individuals who derive great satisfaction from being independent” (Kuratko, 2009, P.29).

The act of being innovative in the quest of a specific opening by setting up a new endeavor is called entrepreneurship (Anon, n.d., para 1)

Characteristics of an Entrepreneur

The common characteristics of an entrepreneur can be compiled as: (Kuratko, 2009, P.30).

  • Total commitment, determination and perseverance
  • Drive to achieve and grow
  • Opportunity and goal orientation
  • Taking initiative and personal responsibility
  • Problem solver
  • Seeking and using feedback
  • Calculated risk taker
  • Low need of status and power
  • Integrity and reliability

Howard H. Stevenson and David E Gumpert define the entrepreneurial characteristics as imagination, flexibility, and willingness to accept risks. John Hornaday formulated a list of 42 characteristics often attributed to an entrepreneur. The list is as under: (Kuratko, 2009, P.30).

Characteristic of Entrepreneur by John Hornaday
1 Confidence 15 Intelligence 29 Pleasant personality
2 Determination 16 Clear goals 30 Egotism
3 Diligence 17 Positive response to Challenges 31 Courage
4 Resourcefulness 18 Independence 32 Imagination
5 Ability to take calculated risks 19 Responsiveness to suggestions and criticism 33 Perceptiveness
6 Leadership, Dynamism 20 Time competence, efficiency 34 Toleration for ambiguity
7 Optimism 21 Ability to make decisions quickly 35 Aggressiveness
8 Achiever 22 Responsibility 36 Capacity for enjoyment
9 Versatility; knowledge of product, market, machinery, technology 23 Foresight 37 Efficacy
10 Creativity 24 Accuracy, Thoroughness 38 Commitment
11 Ability to influence others 25 Cooperativeness 39 Ability to trust workers
12 Ability to get along well with others 26 Profit orientation 40 Sensitivity to others
13 Initiative 27 Ability to learn from mistakes 41 Honesty, integrity
14 Flexibility 28 Sense of power 42 maturity, balance

Source John A. Hornaday, “Research about living Entrepreneurs,” in Encyclopedia of Entrepreneurship, ed. Calvin Kent, Donald Sexton and Karl Vesper (Englewood Cliffs,NJ: Prentice Hall, 1982), 26-27, Adapted by permission of Prentice Hall, Englewood Cliffs, NJ.(Kuratko, 2009, P.31).

Concepts of Entrepreneurship

The main concepts of entrepreneurship are entrepreneur traits, creativity, and business planning and growth management (Anon, n.d. p 1). Some also suggest as having previous experience to be more important. There are many techniques available to help the entrepreneur to be more creative and see the things in a different perspective and to come up with new innovative ideas (Anon, n.d. p 1).

Implementation of newly created ideas is called innovation and the process can be defined as creation, addition, replication and fusion. To assess the entrepreneur’s position in external / internal environment Strategic planning is used. Strategic planning identifies key success factors or competencies and implements a strategy (Davison, 2010, P.1)

Traits

Cunningham and Lischeron (1991) have grouped the traits into six schools of thought. They are: (Davison, 2010, P.1)

“Great Person – Born Entrepreneur, e.g. Ford ,Rockefeller, Trump

Psychological – Entrepreneurial personality, behavior developed over time.

Classical – Entrepreneurial key factors are innovation and creativity

Management – Can be developed or trained in the Classroom

Leadership – Attract people to support a vision and transform it into reality

Intrapreneurship – Encouraging people to work in semi-autonomous units” (Davison, 2010, P.1).

But these theories cannot be generalized as these characteristics are not unique to entrepreneurs and can be found in successful managers and executives. Liles (1974:43) says “certain kinds of experiences and situational conditions, rather than personality or ego, are the major determinants of whether or not an individual becomes and entrepreneur”.

O’Neile (1989) also was in favor and affirms that the entrepreneur is a “product of his historical and environmental circumstances”. As per Brockhaus and Horwitz (1986) “The choice to become an entrepreneur must be influenced by events that led to the decision.

They suggest previous experience has an effect. These could be positive, like role models and education, or negative displacements”. If getting employment is difficult refugees can become an entrepreneur. Other reasons for becoming an entrepreneur could be job dissatisfaction or job loss (Davison, 2010, P.1).

Creativity

Combination of creativity followed by innovation, are part acts of the entrepreneurship, where in thinking new things, coming up with new ideas is creativity and implementing newly created ideas and act of doing new things is innovation.

New ways of solving problems and new ways of looking at opportunities are also creativity. Sixteen techniques to stimulate creativity is described by Mukerjea (2003) in “Brain Symphony”. These are: (Davison, 2010, P.1)

“Visual Gym – Creating scenes through thoughts, used by Nikola Tesla

Torrence Tests – quash, substitute, amend, adapt, new uses, merge, eradicate, simplify

Random’ Riting – Paragraph creation from randomly selected words

Cinquains – Noun, two adjectives, three verbs, four word statement, noun

Matchmaking – Attributes matrices, linking, lists and morphological breakdown

Radiant Thinking – Word association to branches radiating from the center

Metaphorical – Analogical judgment – crisis, comparison, attributes, evolving ideas

Cut n’ Paste – Collage of cut out images with captions

Abstract Designs – Creative interpretation of instructions for drawing objects

Object Analogy – use ordinary objects to draw analogies for problem solving

Freewheeling – Combine randomly selected object to produce new object

Metamorphosis – infusing oneself into the actual form of the central problem

Idea visuals – Picture codes and story boarding, used by Walt Disney

Kaleidoscope – Mixing and matching synonyms of the key problem words

SitSol Reversal – Reverse the situation and focus on the negatives

Fishboning – Causes and effect diagram for clarifying ambiguities” (Davison, 2010, P.1).

As per Gillian Franklin “surround yourself with people who are different from you. Always ask for help and another point of view – even when you may not think that you need it. You’ll often be surprised that there is a better way to look at the original idea” (Davison, 2010, P.1).

Business Planning

Entrepreneurs are always in the look-out for the windows of opportunity. Strategic planning is required to assess the usefulness of the opportunity and the means of its successful exploitation.

Strategic planning is must to ensure successful operation. It is also a useful tool for the entrepreneur when the business is growing. There are many schools of strategic management thoughts available; Mintzberg (1990:12) illustrates the Design School Model.

The Design School Model has eleven components:

  • External Appraisal – Strategy options get influenced by the examination of external elements. These elements are customers, competitors, market and the environment. By environment it means political, economic, society, technology and ecology consideration. The external appraisal helps in identifying the opportunities and threats to the entrepreneur (Davison, 2010, P.1).
  • Internal Appraisal – An examination of the employees skills, resources, innovations and financial position shows the constraints by its capabilities and resources.
  • Social Responsibility – Entrepreneur’s obligation as required by the law to carry on long-term goals that are good for society (Davison, 2010, P.1).
  • Managerial Values – Building team spirit, influential marketing efforts, shaping of employees behavior and guidance for manager’s decisions and action are some of the examples of managerial values (Davison, 2010, P.1).
  • Creation of Strategy – Strategies taking advantages of environmental opportunities and exploitation of the company’s strength (Davison, 2010, P.1).
  • Evaluation and choice of strategy – Scenario consideration, sustainable competitive advantage, organizational vision and objectives, feasibility and the relationship to the other strategies of the entrepreneur should be considered while evaluating the strategies (Davison, 2010, P.1)

Implementation of Strategy – conversion of strategic alternatives into an operational plan is the implementation.

Mintzberg’s Illustration of The Basic Design School Model

Mintzberg’s Illustration of The Basic Design School Model

Is entrepreneurship helpful in implementing strategies?

Entrepreneurship is very helpful in designing such strategies which contribute in the growth and development of an organization where an organization always need the strategies which try to find new ventures, acquisitions, mergers or joint ventures to gain commercial success through innovations.

These characteristics could be seen in a sole person and also many business functions. Not only the size of an organization matters but also cultural and structural components are very important parts in deciding the organizational capability in entrepreneurship (Kaluarachchi, 2010, Para 1-2).

If a staff has entrepreneurial skills and insights to convert a business into profitable business, the strategies could be implemented successfully (Kaluarachchi, 2010, Para 3).

Entrepreneurship is not a new concept like leadership. It is an emerging concept which is being researched largely. Entrepreneurship has been given many definitions. According to Zhao (2005) “entrepreneurship is about creating something which did not exist before” (Kaluarachchi, 2010, Para 4).

Draft (2006) states that “Entrepreneurship is the process of initiating a business venture, organizing the necessary resources and assuming the associated risks and rewards” (Kaluarachchi, 2010, Para 5).

According to Cope (2003), Deakins and Freel (1998) “the entrepreneurship is a non-linear and discontinuous process that is categorized by significant and critical learning events” (Kaluarachchi, 2010, Para 6).

Schumpeter (1934) discusses that entrepreneurship is a creative destruction in the sense that it reconfigures, reorganizes and recombines. “It changes and through the change, it destroys the mould and puts something new in place” (Kaluarachchi, 2010, Para 6). According to him no one is a permanent entrepreneur. People are entrepreneur only when they innovate. That is why it is not a constant process (Kaluarachchi, 2010, Para 6).

Entrepreneurship is helpful in synthesizing the current information. It also clarifies designs. McGrath (1997) suggests that “entrepreneurship is not a flash of inspiration or luck; it is the conscientious application of discipline to exploit resources. It is rooted in flexibility and a willingness to embrace and champion change” (Kaluarachchi, 2010, Para 7).

Entrepreneurship is not a concept that is restricted to new businesses only. It has a big concept and can be classified. It is not restricted to individual, social, environmental, institutional and corporate entrepreneurship (Kaluarachchi, 2010, Para 8).

Zhoa (2005) mentions that “the corporate entrepreneurship normally refers to the introduction of a new idea, new products a new organizational structure, a new production process or the establishment of a new organization by or within an existing organization” (Kaluarachchi, 2010, Para 9).

It is necessary to see the meaning of entrepreneurship in different perspectives from the concept of leadership and management. Though it is difficult to distinguish the meaning of all these three concepts, still an effort has been made to understand these theories separately.

Leadership is the process of influencing others to achieve another’s goals or common goals (Kaluarachchi, 2010, Para10). Hunt (2004) mentions that “a leader influences others towards a goal” (Kaluarachchi, 2010, Para 11). Gartner et al. (1992) suggest that “an entrepreneur does not only see opportunities but also organize resources to carry out his or her vision” (Kaluarachchi, 2010, Para 11).

A similarity between leadership and entrepreneurship is still likely that can be noticed in many theories of management. Also, many authors have given explanations regarding this too. Schumpeter (1934) has clarified that “entrepreneurship is a special case of leadership and it could be separated from other forms of leadership in terms of one who created the company instead of managing an existing one” (Kaluarachchi, 2010, Para 12).

Stoner et al (2002) separates entrepreneurship from management. “Entrepreneurship involves initiating changes in production, whereas management involves in the ongoing coordination of the production process. It is a discontinuous phenomenon, appearing to initiate changes in the production process…and then disappearing until it reappears to initiate another change” (Kaluarachchi, 2010, Para 13).

Entrepreneurship and Organizational Structure: According to traditional view entrepreneur ship is supposed to be at the top of the organization (Kaluarachchi, 2010, Para 14). Schumpeter states that “an entrepreneur may not necessarily be the same as the financial risk taker i.e. the capitalist or the owner” (Kaluarachchi, 2010, Para 14).

Gartner (1989) and Wortman (1987) found that researches done for entrepreneurship did not do very well as this field has been very complicated (Brazeal & Herbert, 1999, p.1). Now It is very important to understand the concept of strategy implementation.

Stoner et al (2002) states that Strategy implementation is to manage administrative tasks that are required to put strategy into practice. The procedure of applying visions in actionable business schemes has many steps. It varies from implementing strategies to observing implementation (Kaluarachchi, 2010, Para 15).

“Simplify the proposition into a small meaningful statement, clearly indicating the expected change, defining the long term and short term goals clearly and preciously, identifying risk involved and absorbing uncertainty, encapsulating the key issues of risk and crisis management, obtaining commitment and getting a strong sense of resolve from others in the organization and managing resistance and change” (Kaluarachchi, 2010, Para 16).

Monitoring Implementation

The above mentioned procedure says about the management process, which is related to the values, environment and resources of an organization. The aforesaid stages of entrepreneurship go through the management process, beginning from planning through to controlling, then organizing and then leading of tasks and then in implementing strategies (Kaluarachchi, 2010, Para 17).

The individual entrepreneur does the strategic planning in a small set up of a company. Bhide (1994) mentions that “entrepreneurship deals with risk in strategy creation or formation with a quick initial screening using a careful, but limited, analysis to evaluate the quality of an idea, but then it says flexible throughout the process of implementation” (Kaluarachchi, 2010, Para 18).

So to achieve an active and well-organized strategy implementation, some certain goals are required to put strategy into practice like the support of entrepreneurship in functioning administrative tasks related to structure, systems, staff, strategy and style etc. (Kaluarachchi, 2010, Para 19).

Stoner et al. (2002) mention that “super-ordinate goals refer to guiding concepts, values and aspirations that unite an organization in some common purpose” (Kaluarachchi, 2010, Para 19).

Williams and Tse (1995) suggest that an entrepreneur’s style and management, his views related to opportunities and threats in the external environment everything put influence in the strategic decision making (Kaluarachchi, 2010, Para 20).

Thomas (1999) suggests that the E-V-R (Environment-Values-Resources) congruence model shows a suitable agenda for evaluating the effectiveness of entrepreneurship that helps in gaining organizational efficiency and success by the means of efficacious implementation strategies (Kaluarachchi, 2010, Para 21).

Reference List

Anon. Concept of Entrepreneurship. Very Small Business. Web.

Anon. Concepts of Entrepreneurship. Small-Scale Enterprise for Neo-literates through CLCs. Web.

Anon. What is Entrepreneurship. Web.

Baruah, Shri Achintya Kr. Entrepreneurship: Concept and Definition. Indian Institute of Entrepreneurship. Ministry of Industry, Department of SSI & ARI. Web.

Brazeal, Deborah V. & Herbert, Theodore T. (1999). The Genesis of Entrepreneurship. BNet. Web.

Cope, Jason. (2005). Toward a Dynamic Learning Perspective of Entrepreneurship. Business Publications. Web.

Davison, Russell. (2006) Concepts of Entrepreneurship. Web.

Kaluarachchi, Sudam, Chandima. (2010). Does entrepreneurship help in implementing strategies? Daily FT. Web.

Kuratko, Donald F. (2008) Entrepreneurship; Theory, process and Practice. South western Cengage Learning. U.S.A. p.249

Sandberg, William R. (1992). Strategic Management’s potential Contributions to a theory of entrepreneurship. All Business. Web.

This essay on Entrepreneurship and its Components was written and submitted by your fellow student. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.
Removal Request
If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda.
Request the removal

Need a custom Essay sample written from scratch by
professional specifically for you?

Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar
Writer online avatar

certified writers online

Cite This paper
Select a referencing style:

Reference

IvyPanda. (2020, January 24). Entrepreneurship and its Components. https://ivypanda.com/essays/implementing-strategies-essay/

Reference

IvyPanda. (2020, January 24). Entrepreneurship and its Components. Retrieved from https://ivypanda.com/essays/implementing-strategies-essay/

Work Cited

"Entrepreneurship and its Components." IvyPanda, 24 Jan. 2020, ivypanda.com/essays/implementing-strategies-essay/.

1. IvyPanda. "Entrepreneurship and its Components." January 24, 2020. https://ivypanda.com/essays/implementing-strategies-essay/.


Bibliography


IvyPanda. "Entrepreneurship and its Components." January 24, 2020. https://ivypanda.com/essays/implementing-strategies-essay/.

References

IvyPanda. 2020. "Entrepreneurship and its Components." January 24, 2020. https://ivypanda.com/essays/implementing-strategies-essay/.

References

IvyPanda. (2020) 'Entrepreneurship and its Components'. 24 January.

Powered by CiteTotal, easy referencing generator
More related papers