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The meaning behind the concept of entrepreneurship has been undergoing constant evolution since the introduction of the concept in 1700s. Studies on the subject matter have contributed to the topic matter leading to widening of the concept. However, despite the development in the concept, there is no consensus on a theory to encompass the topic. However, there are numerous points that feature prominently in the discussion on entrepreneurship. This paper will focus on the development of entrepreneurship, the role of government in entrepreneurship and common features of successful entrepreneurs.
Since the introduction of the concept of entrepreneurship in 1700s, the meaning behind the idea has been evolving ever since to create a complex body of knowledge. Various additions have been made to the entire discipline due to the various studies on the subject matter. However, entrepreneurship as a discipline has been there since the development of trade. The different meanings that many equate the topic to are viable depending on the viewpoint that one has about the issue (Minniti, 2007). Most of the people simply equate the entrepreneurship to the simple act of starting a business. However, some of the scholars in the discipline have come to distance themselves from the simplistic approach to the concept. They seek to look at the things that make entrepreneurship more than the act of starting up an enterprise.
Development of trade is probably one of the main reason behind the creation of entrepreneurship in any society. Most of the communities find themselves lacking on the production of one item. However, they still have to use the item for their daily lives for survival, as it is the case with food or a mere enhancement of their lives. Therefore, there is a need to procure the lacking item from another community. A community that does not produce an item finds itself in a position that demand trading (Rušinović, 2006). Entrepreneurs find ways of ensuring that the item is availed to the people that need it when they need it and in their demand specifications. Therefore, an entrepreneur is a person that plays the role of market creation through bridging the physical and logistic distance between the sellers (suppliers) and the buyers.
Therefore, an entrepreneur is mainly poised on the profiting from the venture. Other entrepreneurs do not operate the market creation role (Schumpeter et al., 2011). This is a unique set of entrepreneurs that are poised on the development of new products for the community. This kind of entrepreneurs is the innovators. They could be within the community. Traditionally, people that have a certain craft such as ironwork skills would make up the majority of the entrepreneurs in this class. Being able to create a unique product places a person in a special position to be an entrepreneur.
Trade was mainly conducted using barter trade, which was full of limitations. Communities could meet and exchange products. This meant that one had to find hope that he find the community that he was looking for and that there would be another person that would be demanding his commodity (Minniti, 2007). This scenario was known as coincidence of wants and it was a major impediment to the development of trade. Often, there would be no coincidence of wants and a person had to hope that next time there would be a person demanding whatever he or she was selling (Schumpeter et al., 2011). The second issue that arose from bartering of goods was the divisibility issue. Some of the goods on offer could not be divided into smaller potions to suit the demands of some clientele. Therefore, a person would be forced to buy products in their entirety.
The aforementioned limitations of barter trade system were later abolished with the introduction of the money system (Minniti, 2007). The developments of various types of money have made it possible for the creation of easier ways of conducting trade hence the development of entrepreneurship. Other sources of the increase in the entrepreneurship ventures include the development of transport and communication. Shipbuilding and advances in maritime technology allowed most of the traders that were limited by physical barriers to access new markets. Bigger and faster ships have been developed for specialized handling of goods and easier transport of the commodities.
Innovations in communication have led to the development of new ways of communicating that have made business activities easy to start and run. Some of the developments in the information and technology has resulted in the development or creation of new opportunities, which have also been exploited by the modern entrepreneurs to develop business ventures. Change in the world economic systems are instigated by entrepreneurs who seek out new and better ways of conducting business that lead to the creation of the right value to the society. The issue is not how well a venture is designed or how unique it is. The paramount concern amongst the entrepreneurs is the ability of the venture to provide to the changing needs of the society.
The entrepreneur is any person that has the will power to bear the inherent risks in a new venture for a return in the form of profits. Other scholars view an entrepreneur as a person that takes the self driven initiative to start a new venture from an innovation and proceeds to market the innovation to the mainstream markets. The other perspective of an entrepreneur is that he is a person that makes new goods and/or processes that are not currently being supplied in the market but are demanded (Schumpeter et al., 2011). This approach means that an entrepreneur is a person who will identify a niche in the market and find feasible means of filling the gap through provision of goods that are in short supply.
According to Schumpeter et al., (2011), entrepreneurship is a result of a drive borne by the entrepreneur for improvement and innovation of the current production approaches those results in market upheaval and change of the major processes. This perspective borne in 20th century creates the image of the concept of entrepreneurship as creative destruction. The entrepreneur creates new approaches of carrying out a certain task. As a result, the old and conventional ways of doing things are changes completely leading to the rendering of the old industries obsolete. Creation of new and improved ways of doing business destroys the established market heuristics, hence the term creative destruction.
This idea of entrepreneurship was later advanced by Peter Drucker who described an entrepreneur as a person that has the knack for identification of market opportunities by searching for the changes and exploiting them for instance, the shift from typewriters to computers is such an opportunity that major entrepreneurs have exploited to create viable businesses (Schumpeter et al., 2011). Therefore, change is a significant element that defines the development trajectory assumed by the entrepreneurship as a discipline and practice. To allude to the expression by Charles Darwin, the species that end up surviving are not necessarily the strongest but the ones that have the ability to identify change and adapt.
Entrepreneurs have been able to survive due to their ability to identify instances of change and work on aligning themselves to change. It has come to be agreed upon that entrepreneurship is an integral part in the stimulation of the economic growth and employment. This is the truth in the majority of the countries in the developing and developed worlds alike since small businesses are viewed as major vehicles for poverty eradication (Schumpeter et al., 2011). The governments that have positively identified entrepreneurship as the potential area of growth have ended up leading their countries into the desired development realms. In fact, the greatest empires in the history were built on the success of business and not military might since the military was mainly placed to expand the opportunities for the businesses.
The role of the entrepreneurship in the development of the countries is pivotal as the business and industry advisory committee to the OECD concurred in 2003. The advisory committee identified that the ability of the government to develop policies that foster entrepreneurship is of absolute importance for the creation of jobs and the attainment of the desired economic growth. Governments that have provided an environment that allows the flourishing of the entrepreneurial culture have always played a crucial and integral role in the development of the business ventures that, in turn, contribute to the social welfare and the attainment of social development goals. Therefore, provision of incentives by the government for business development is an important ingredient in the development of the most successful business models in the world.
Cultural values held by a community can also play an integral role in the development of the entrepreneurship culture. Cultural differences between societies determine the different levels of entrepreneurship manifested. Cultural differences may lead to a scenario whereby entrepreneurship is a less rewarding activity to the people involved. Communities that accord social status to the people that hold the top positions in hierarchical organizations or the ones that have expertise of some sort may end up discouraging the development of the correct approach to entrepreneurship culture.
On the contrary, the communities that accord highest status to the people that have the self-made status have a higher level of entrepreneurship than the previously allegorized community does. The goal of the research paper is on why and how people opt to be entrepreneurs, the benefits that an economy drives from the presences of entrepreneurship culture and the role of the government in the creation of entrepreneurial culture through direct assistance or provision of a viable business opportunity. The paper will also cover the pitfalls that are inherent in entrepreneurship and provide a possible solution to the problems.
Minniti (2007) opines that the immediate perception that is associated with entrepreneurship is that of the creation of new business ventures or the trend of self-employed people. The activities mentioned above are actual expressions of entrepreneurial behavior. However, entrepreneurship is more than the creation of new business ventures. The authors opine that the human life is dominated by decisions that are geared towards improvement of their lives. As a result, all the people are potential innovators who are out to find new and improved ways of conducting business. As a result, entrepreneurship is a human behavior that is poised on the creation of the best improvements on their life. Entrepreneurship is also universal in that it is present in all human beings regardless of the location and it manifests in different ways.
This means that the human being is the core of the entrepreneurship and any failure to focus on the people aspect of entrepreneurship makes the quest to understand it pointless (Minniti, 2007). Therefore, people aspect forms the forefront of understanding the idea of entrepreneurship. Systems created by the people such as government are also important since they determine the availability of the environment that will play a vital role in fostering innovation in the society. Therefore, the first point that one has to make in order to understand the whole idea of entrepreneurship is the understanding of the human aspect (Minniti, 2007).
Why are some people more focused on the concept of entrepreneurship than others are? Why does a certain community churn out more entrepreneurial ventures than another does? The complex analysis of entrepreneurship can be interpreted using the interchanges approach. Interdependence between the people in the world leads to the development of entrepreneurial culture. Personal and collective changes that emanate from entrepreneurship eventually lead to the attainment of change in the world.
Henry (2007) opines that the creative industry forms one of the most important industries in the global industry in the 21st century. This sector has been heralded as the sector with the fastest projected development. The sector is now purported to be integral in the development of fasted developing and developed economies . This potential has been recognized in various countries. The creative industry as it has come to be referred to be a set of interlocking or interrelated sectors of the economy that are knowledge intensive. The focus of the creative industry is the exploitation of the intellectual property.
The vast nature of the sector leads to a vast economic expanse. The broad economic spectrum presented by the creative industry sector as the potential of overlapping into the non-profit sector (Henry, 2007). The creative sectors account for approximately 8% of the major world economies. Entrepreneurship in the creative industry has a significantly strong social focus. This makes the ventures in this industry assume a more involving focus, which is poised on the attainment of political correctness, social and economic agendas at the international level.
The ability of the players in the industry to come up with the innovative ideas and products that are relevant to the society in that they effectively cater for the needs of the society leads to the eventual creation of the viable entrepreneurial culture (Henry, 2007). Social appeal of the creative sector acts as the major source of the viability of the entrepreneurial culture in the sector. The main source of competitive edge or advantage of the ventures in the sector is the ability to come up with the set of services or a product that will be able to appeal to all the people. Political focus on this sector has been a source of impetus for the business ventures in the section. Major businesses have been able to thrive on the intellectual property (Henry, 2007).
Entrepreneurs always need a viable business model that will make the organization of the idea or service provision in a manner that will lead to optimal profits. However, Verstraete and Jouison-Laffitte,( n.d.) opine that the business model is a term that has been subject to a lot of business buzz. The book seeks to provide a concise meaning to the business model and differentiate it from the various closely related issues in the market. Briefly, the book focuses on the differences between the concept of the business model and other tested concepts. It seeks to address the differences between the business model and a business plan while maintaining the weight of the model.
The books focus on the position of the business model in the strategy and the importance of a good business model in the success of any entrepreneurial culture by focusing on the application of the business model by an entrepreneur in the development of the successful business. It also focuses on the translation of the business model into viable tools that are applicable in the entrepreneurship. The authors seek to place their focus on the practical application of the business model in the creation of the right business by entrepreneurs.
Common business models applied by the majority of entrepreneurs include business-to-business model and business to consumer model. The selection of the business model depends on the target market and the expected returns. Some business models are better suited for some kinds of businesses than others are. The ability of the entrepreneur to select the most viable business model marks the initial step towards the development or creation of a successful business venture. Business models depend on the ability of the entrepreneur to come up with feasible imaginative and practical considerations.
Drucker (1985) posits that innovation is a tool that most of the entrepreneurs apply in the creation of viable business ventures. The entrepreneurs exploit change as a source of opportunity through the tool of innovation. The ability of the entrepreneurs to search for the sources of innovation determines their ability of creating businesses that are viable and relevant to the society or the targeted markets. Therefore, innovation is a tool that has to be learnt and practiced by any ambitious entrepreneur.
The entrepreneurs that have the power to identify the symptoms of change and recognize the opportunities that the changes present are always capable of creating new products that are better suited to meet the market demands. J. B Say’ definitions of the role of the entrepreneur were focused on the movement of the resources or rather shifting of the resources from regions of lower productivity to areas of higher productivity. Drucker (1985) distances himself from the assertion that the entrepreneur is that person who comes up with a small business since this notion is neither exhaustive nor absolute. It is not exhaustive since there are entrepreneurial ventures that do not involve setting up of the physical business. It is not absolute since not all small ventures are indicative of the entrepreneurship.
Innovation in entrepreneurship is not necessarily concerned with the creation of a new product. Innovation could be simply the creation of a new and improved way of producing a product or provision of service. Therefore, the ability of the person to produce a product in a new way does not solely determine the innovation. However, a person could be offering a generic product without any improvements with a new focus of creating value. For instance, the no- frills airlines are focused on the creation of a unique experience that is based on the equality. The service is the same but the approach used in the service delivery is different hence the terming of such as an approach as innovative.
Gelderen and Masurel, (2012), concur with other researchers that there are numerous instances of confusion when it comes to the definition of entrepreneurship. The authors appreciate the fact that there are numerous notions and theories that have been developed relating to the concept of entrepreneurship. The general trend in the theories is that the entrepreneurs are key in the explanation of the theory. Therefore, the entrepreneur is a fundamental key of analysis. The differences in the perception of entrepreneurship make it hard for the provision of an overarching explanation of what entrepreneurship encompasses in its entirety. However, the existing definitions of entrepreneurship focus on who qualifies to be termed as an entrepreneur whereby there are two definitions (Gelderen and Masurel, 2012).
One of the perception is that an entrepreneur is a person while the second perception seeks to define the entrepreneur as a product. Scholars of enterprises often focus on the personal profile of the entrepreneurs and the performance of their firms. As a result of the above phenomena, there is a confusion between the bibliographies of successful business people and the material that focus on the entrepreneurs.
The book focuses on the habitual entrepreneurs who are the people that have been in the business for a long time. The second class of entrepreneurs is that they are the entrepreneurs that have just entered the business. The book opines that the entrepreneurs have a specific input in the economy and the government that provide enabling environment for the entrepreneurs always post higher results (Gelderen and Masurel, 2012).
The book identifies that the focus of the entrepreneurship works should not be on the people rather on the processes that are used in the creation of the new or improved products as opposed to the people that are involved in the creation of the products in question. The habitual entrepreneurs have a higher rate of success compared to the novices since they have accumulated experience. The book also introduces another dimension of entrepreneurship, which stems from the heterogeneity of the experience that the entrepreneurs have (Gelderen and Masurel, 2012). Therefore, the habitual entrepreneurs are the ones that have a wider array of experience. The skill set for the habitual entrepreneurs is larger than that for the novices.
Welsch (2004) defines the concept of insurance as a dynamic field that has fast instances of evolution and reinvention. At each stage of its evolution, the topic has a lot of evolution that makes it hard to come up with a succinct definition. The book focuses on the outlook of the topic of entrepreneurship since the topic has rapid instances of evolution (Welsch, 2004). Every entrepreneur has to refocus on the nuances of the topic from the perspective or view point of the emerging issues of community involvement, globalization and the innovations in the information technology sector.
The book looks at the past views of entrepreneurship as unfinished since the focus of the century is rapidly challenged by the emerging trends. Entrepreneurship practice is the component of the topic that has witnessed the most rapid expansion. The entrepreneurs are rapidly expanding into regions that were previously viewed as less likely focus areas for the expansion drives. The academics are in a race to keep up with the new theories that are being spun by the dynamic nature of the discipline (Welsch, 2004).
The opportunity recognition is rapidly expanding such that it is a burgeoning subspecialty in the discipline. Since the opportunity recognition has the creative aspect and the actual creation of a venture, it is possible to view the discipline from the perspectives of finance, growth and marketing. The technology bubble burst initially leading to realization that some of the internet fads were mere fallacies. However, there are concerns on whether the entrepreneurs in the technology field have a new and different way of dealing with the issue. The dynamic nature of the entrepreneurship has also span in the not-for-profit sector with the creation of the social entrepreneurship (Welsch, 2004). Entrepreneurship based principles can also be applied in the community-based organizations to contribute to the final economic growth of the said sector.
Ucbasaran et al., (2008) opine that entrepreneurship is a sector or a subject of social science that has been in existence or use for a considerable amount of time. The subject has featured in the majority of the disciplines such as economy and psychology. The topic has a unique focus or special place in the scholarly attention since it represents the creation or invention of something that is new in the world. As a result, most of the people have come to view the entrepreneurs as a rare subspecies in the myths or people that display unique characteristics. The new organizations are representative of the means for the creation and marketing of new ideas to the rest of the world. The fascination with the subject is clear since the topic is a fundamental dynamic of any society.
The fascination is focused on the ability of the subject to create and renew wealth that the society holds. However, there is paradox in that there is not standard theory on the topic despite the universal belief that the aspect has the power to drive the society. The nexus of most of the fundamental questions in entrepreneurship whether they touch on the definition or not depend on the understanding that the root of the dynamic change in the society is in entrepreneurship (Ucbasaran et al., 2008). Therefore, entrepreneurship is more than a discipline that is in limbo. It is an integral and crucial part of any society that determines the dynamics and the rate at which they occur. Therefore, the new organizations both use the resources that are in existence and create others through the creation of innovative approaches (Ucbasaran et al., 2008).
Population and other demographic effects are crucial in the development of entrepreneurship. This book focuses on the impact of the immigrants in Netherlands and the effect of the immigrants in the development of business ventures. Population growth creates an important aspect that will eventually stimulate the development of new businesses. An influx in population leads to the development of new market for the products that are under sale. Population growth also presents labor. New businesses can start since they have access to the often-cheap immigrant workers (Rušinović, 2006). When the immigrants are well educated, they bring with them important inputs in the products process.
Traditionally, the immigration of people from regions that had a certain trade made it possible for the creation of new business ventures based on the incoming skill set. The book focuses on the Netherlands case whereby the immigration of the expatriates from Indonesia led to the development of a new workforce that had to be assimilated into the society. The best way of incorporating the immigrants into the society was by providing them with the necessary incentives to start their business ventures (Rušinović, 2006). Other situations that were in play at the time of the immigration included the expanding post war economy.
Therefore, the immigrants were able to use their unique skill set on the creation of new entrepreneurial ventures. Immigration presents new focus on the topic whereby there is a correlation between the immigration and the development of entrepreneurship. Governmental regulations feature prominently in the determination of the prevalence and success of immigrant entrepreneurship. Governments that are accommodative to the outsiders encourage the movement of capital and the consequential investment in the various sectors.
Therefore, the government has the role of promoting entrepreneurship in its countries by relaxing the restrictions associated with the investments (Rušinović, 2006). Creation of economic blocks is another aspect that has favored the immigrant entrepreneurship. The economic blocks such as Eurozone facilitate the movement of capital from one of the member countries to the other. Since joining the Eurozone, immigrant entrepreneurship activities have been on a sharp increase. Insights accumulated from the original country of residence allow the immigrant entrepreneurs understand the economic forces that are in force due to the different viewpoints from which they look at the matter.
The research assumed a qualitative design whereby the main agenda of the research was the identification of the certain qualities that affect man and entrepreneurship. A qualitative research is a research that seeks to explain a certain phenomenon. Quantitative data was also collected but it was not the focus of the research although it assisted in the creation of the right data set. As a result, quantitative data was used to supplement the qualitative data. The qualities under the investigation included the role of entrepreneurship in the human society, the role of the government in the creation of an entrepreneurial culture, the cultural influences that lead to the creation of the entrepreneurial culture and the broad definition of entrepreneurship and entrepreneurs.
The research used both the secondary and primary data sources. Primary data is the data that is collected first hand from the field while secondary data is the data that had been collected before and was later recorded. Secondary research or desk research is concerned with the collection of data through report analysis. The research mainly used the desk research due to the financial constraints and other logistic issues associated with the conduction of the primary research. The existing time constraints made collection of the primary data hard hence the decision to the base the research on the secondary data. Secondary data was also selected since it involved minimal travelling.
However, the section of the secondary data was not sufficient hence the need to include a limited selection of primary data. The secondary data lacked in the sense that it did not provide the needs of the researcher with the much-required certainty. Collection of the secondary data was also quite challenging since the topic is broad. Some of the information that the data presented was outdated hence the lack of utility over the long haul. The other issue that emanated was the variations in the definition of the research parameters hence the need to make adjustments. Some of the secondary data sources presented inaccurate or biased data.
In order to avoid the above pitfalls commonly associated with the secondary data, some part of the research was conducted using primary data collection method. There was also a keen approach that was applied in the assessment of the secondary data sources was applied to ascertain the validity of the data. The assessment covered the time when the data was recorded, the relevance of the data in the population of interest and the comparability of the units of measurement.
The primary data collection method focused on the collection of relevant primary data. Various approaches were used to collect the data from a sample of students on campus. The research used in-depth interviews, semi-structured interviews, focus groups and questionnaires. Collection of the qualitative data included the interaction between the researchers with the individuals on a one on one bias, interaction with a group, as it was the case in focus groups and the reduction of the sample size to reduce the time taken in the data collection stage. The research focused on the qualitative data more since this type of data provides information that is richer and of deeper insight on the phenomenon that was under study.
In-depth interviewing is a conversation conducted with a goal. This means that the participant views are both valuable and useful. Interviews allow a combination with observation whereby the researcher can derive additional meaning to the responses from the observations made on the respondent. The in-depth interviews called for high listening skills and proper framing of questions. Constant reframing of the questions was called for in order to develop a better understanding of the questions from the different perspectives. Observations made during the in-depth interviews were both concrete and non-judgmental. The observation method used was the unstructured observation.
A focus group is an approach in data collection that uses a group of people that are unfamiliar. The main reason behind using a focus group is to ensure that the data provided by the group is as independent as possible since there is no exertion of undue influence on the members by the most predominant member. It also allows the members to provided objective information without the restrain common in groups made of people with some history. The research selected seven focus groups each made of seven people.
He created an enabling environment by asking focused questions. The focused questions encouraged discussion between the members of the group. Repetition of the activity with different groups allowed the verification of the information provided. The main issue with the focus groups was that it was difficult to control the group since exercising too much control would restrict the collection of all data. The group dynamics could kick in eventually leading to the negation of the goal of the research.
Simple questionnaires were also applied in the collection of the data. The design of the questionnaires was made in such a way that the participants in the process were able to understand the data and come up with the answers to the questions with ease. Some of the questions were rephrased to evaluate the consistency of the response provided. Sequential arrangement of the portions of the questionnaires was used to ensure that the participant has an easy time transitioning from one section to the other. The main advantage of using the questionnaire was that it was easy to administer and comparatively cheaper.
The main shortcoming of this approach of data collection was the lack of validation of the authenticity of the responses since the majority of the respondents could falsify their responses in the questionnaire. It was also impossible for the researcher to make follow up questions on the responses that were provided in the questionnaire. Personal interviews were also used on a limited scale on the expert participants. However, the personal interviews were time consuming and could easily veer off the topic of the research since the majority of the expert participants gave to many details.
Correlation analysis was applied to identify the possible relationships between the various variables and the nature of the correlation.
The final findings of the research were compiled in a report. The report format of data presentation is desired since it allows the presentation of data in ways that can be understood by the majority of the people. Prose reports allowed the writer to include all the findings and observations in a format that was easy to prepare and was all-inclusive. Therefore, the target audiences of the report would be able to understand the background or the foundation of the research. However, the report was limited by the bulk of information that it contained. Getting a summary of the research from a report was harder than when the researcher used pictorial or diagrammatic aids such as pie charts and other graphs.
From the findings of the research, it is apparent that there is no special attributes in person that determine his or her chances of being an entrepreneur. This means that there is no definitive profile of an entrepreneur given that they come in all ages, races and gender. There could be a significant difference in the experience or the level of education (Gelderen and Masurel, 2012). However, research points out that there are some personal attributes that manifest in most of the successful entrepreneurs. These characteristics include knack for creativity, dedication to the goal, a high level of determination to achieve a certain goal, flexibility, amiable leadership qualities and confidence.
Creativity is the inherent ability of a leader to develop new or improved products or come up with new way of doing business (Henry, 2007). The creativity in an entrepreneur is the push that leads to the development and production of innovative products. Creativity stems from continuous learning, questioning the existing paradigms and thinking outside the domain of conventional ism. On the other hand, dedication is the inherent power that makes it possible for the entrepreneur to work hard towards the fulfillment or attainment of the goals. Most of the dedicated entrepreneurs are always willing to work hard towards the attainment of the enterprise goals. This is a character trait of an entrepreneur that is invaluable in the early days of the business and it is mainly responsible for the kick starting of the business. Dedication enables a business to succeed since it is what ensures that the plans are accomplished.
Determination is the inborn desire in a person to attain ascertain goal or to achieve the requisite levels of success. This is the character trait that enables the business to bounce back even after it has been hit by some setbacks (Minniti, 2007). Determination has an aspect of persistence, which means that the entrepreneur should not be faint hearted. The persistence makes the entrepreneur to make another attempt at something even after the previous attempts failed. This means that the true value of any entrepreneurial venture is not the money but the success. Money is just bust a reward for the effort placed by the entrepreneur.
Flexibility is the ability of the entrepreneur to move fast in response to the needs of an ever-changing market (Minniti, 2007). This means that the entrepreneur has to remain true to his initial goal in life while being mindful of the changes in the market that may affect the expeditious attainment of the goal. This means that the entrepreneur ought to be accommodate to the changes in the market while retaining his vision for the organization (Schumpeter et al., 2011). Leadership is the ability to exert influence on a people due to a number of aspects as a leader, the entrepreneur ought to be able to set the rules of the organization and ensure that the workers follow them. He should have the capability to follow through the rules and see to it that that the goals of the organization are attained (Minniti, 2007). Passion is one of the most prominent traits of the entrepreneur. The entrepreneur convinces the other people to believe in his vision. If an entrepreneur has a high level of passion, he is more capable of convincing other people to believe in his enterprise and what it stands for.
Entrepreneurs have a high level of self-confidence. Main source of self-confidence comes from thorough planning (Welsch, 2004). Planning helps in the reduction of uncertainty and the level of risk. Self-confidence can also be derived from the expertise indicated by the entrepreneur. A self-confident entrepreneur has the capability of listening to the criticism and other ideas of the people without being swayed.
Finally, character trait that is predominant in the most successful entrepreneurs is that they are smarts. The term is coined to bring out the connotation of a combination of the knowledge or experience that is relevant to the field of business. Common sense in the business enables a person to have the instincts to handles issues in an expeditious manner. The latter gives the entrepreneur the expertise to handle some of the issues that he may be facing. Being able to keep a household on budget accords a person the organizational and financial skills (Schumpeter et al., 2011). This experience can be transferred to the business hence end up creation a business that is capable of surviving the challenges that are often presented by the market. A person will only discover his combination of smarts if he or she invests. Due to this aspect of the smarts, many people have smarts that they may not recognize.
The above qualities are present in every entrepreneur only that they come out in varying proportions. Some of the skills could be acquired from the environment due to exposure to other entrepreneurs. Others are acquired from the educational institutions. This means that the entrepreneurs are not unique people or special people in the society (Verstraete and Jouison-Laffitte, n.d.). They are ordinary people with unique approach to the issues that face the business world and find better ways of dealing with them. The main strength that the entrepreneurs have is the ability to identify their strengths and build on them to come up with something that can accord them the desired level of success.
Various motivating factors make most of the people move into entrepreneurship. A person could be frustrated in one way or another in his traditional workplace. He or she could have been laid off by the organizations that he has worked for in the past making him less agreeable to the idea of working for another person. Others are born into families that rely on their businesses and they improve on the experience that they garner from working at the family businesses (Welsch, 2004). A person could also be frustrated in his current job leading to low job satisfaction, hence the person could be moving into entrepreneurship in pursuit of more job satisfaction. A person could be seeing no opportunities of growth in the current employment position for a person of his skill set or interests.
Another group of entrepreneurs is made of people that are repulsed by the idea of working with another person. They may have an aversion to the system of rewards that relies on the seniority and not the accomplishment. They may be against the scenario whereby they have to comply to rules that do not add directly to their output such as the compliance with the corporate culture (Schumpeter et al., 2011). Other choose to work at the being entrepreneurs since they have low tolerance with the bureaucracy involved with the business profession in getting ahead.
However, most of the entrepreneurs are drawn into starting their own businesses by the prospects that are presented by the businesses. Entrepreneurs are drawn into the field because they have the autonomy that is absent in most of the employment. Entrepreneurs are their own bosses and they make all the decisions without consulting any other person. They have the choice of the people to work with and what to do (Verstraete and Jouison-Laffitte, n.d.). They have the power to decide on the number of daily hour to bill in the office and when to take the vacations. This autonomy is mainly attracting to the entrepreneurs that have been frustrated by working with other people.
Others go into entrepreneurship since entrepreneurship presents them with greater opportunities of financial gains than employment. Since the entrepreneurs are rewarded according to the profits that they make as opposed to the employed people that have to rely on the salary regardless of the business performance (Welsch, 2004). This motivation is particularly appealing to the people that prefer to change the current business model whereby the rewards are dependent about seniority as opposed to the accomplishment of the people. Entrepreneurship comes with the prestige.
Entrepreneurship also presents the entrepreneurs with the opportunity of equity creation, which can be passed on, to the other generations. Equity creation is comparatively easier for the entrepreneurs than the people that rely predominantly on their salaries. Therefore, the creation of equity for the future generations is one of the most predominant motivators for entrepreneurs in starting up their business. Few entrepreneurs make the investment with the economical contribution in mind. Entrepreneurship creates viable opportunities for the people to contribute directly to the economic growth.
The government may be particularly concerned with the performance of the economy. The few entrepreneurs contribute directly to the economic growth. Some of the entrepreneurs have been responsible for the creation of the best international brands. The brands collectively add value to the economy through employment creation and tax contribution (Gelderen and Masurel, 2012). The consideration between starting a business on one’s own or staying on the career path may be the most predominant motivator towards the creation of the entrepreneurial drive. Nonetheless, there is no reason for entrepreneurship is more valid than the other is.
Entrepreneurship is a rewarding option for the people that have managed to start up business ventures. However, various decisions have to be arrived at before the launch of the business. More decisions are made in the conventional management of the business regardless of the size of the establishment. An entrepreneur has to make decisions on who will assume responsibility for the business (Gelderen and Masurel, 2012). The entrepreneur has to decide on the product or service that is on offer. He or she may have to determine the products that will form the flagship product for the enterprise. He also has to decide on the unique aspect in his array of products that will set his products apart from the competitors in a bid to attain the required competitive advantage. He/she may have to decide whether he has the required capital to start the business and operate it.
Upcoming business owners have to make considerations on some of the key factors. Failure to focus on the key factors is tantamount to failure for the young business establishment. The entrepreneur has to decide on the main motivation of being in business. He or she has to decide on whether he is in business for the personal gain that comes from the financial benefits of running the business. If the main motivation is monetary gain, the entrepreneur may find it hard to cope in the initial days since the monetary gains are often restricted in the formative stage of the business.
The entrepreneur has to decide on the strategy of the organization. They have to decide on the strategy that they will use to distinguish their business from that of the competitors. They may have to decide on what they will use as the main source of competitive advantage. They have to decide on competing on the selling price of the products or services that they offer. However, the decision to use the price as the main competing point is risky more so if it is used alone. Established firms can counter this strategy by producing in bulk and using the economies of scale to produce products at cheaper prices. As a result, the strategy will end up failing.
The entrepreneur has to come up with a realistic vision for the business. In as much as the visions could be appealing, some of the entrepreneurs may find huge disparities between the vision and their respective financial gains (Gelderen and Masurel, 2012). The overestimation of the revenues and underestimation of the expenses leads to the creation of an unrealistic business model.
The other highly important decision that the entrepreneur has to make is whether to go at it alone or include the input of another person. In most of the cases, the businesses that are started by two people are successful. This means that working as a team can bring some benefits to the business model. In most of the successful ventures created by teams are made of people that have some familiarity. In most cases, they are spouses or longtime friends. Working as a team has some gains such as the shared management duties and decision-making. Shared burden of management and decision-making reduces the stress that would otherwise be vested in the individual. Companies that are formed of more than one entrepreneur have somewhat lower risks compared to the ones formed of a single entrepreneur.
In the event that one of the founders is not in a position of running the business, the other founder can come in and help in the steering of the company with equal enthusiasm. Team interactions leads to creativity since the team can brainstorm and come up with new ideas. Different specialties lead to synergy, which eventually leads to the creation of the anticipated value. It is also easier for a joint venture to find capital since most of the financial institutions are more likely to fund the businesses that are made of more than one person. In the best situations, teams of entrepreneurs have complementary skills.
The entrepreneurs can work at the areas whereby they are best suited leading to the creation of a cumulative advantage. Strong teams have better chances of attaining the success. Companies formed by teams of individuals have lower chances of failure compared to the ones formed by individuals. Teams that are composed of all array of skills have better chances of success. Trends indicate that the teams that have a marketer always post higher rates of success.
Teams formed of members of different ages lead to creation of complementary relationships. Young people are characterized by the dominant spirit of can do. The age and experience that comes with it leads to the creation of realism.
However, the teams have the potential of creating detrimental effects too. One of the disadvantage that faces the teams is the sharing of ownership. The sharing of ownership does not take place unless the potential partner has some contribution that he adds to the venture. The second issue that manifests itself is the shared control of the diction making process. This means that if one of the team members has poor judgment the entire team has to pay for the shortcoming.
The other issue with working with teams is the constant team wrangling and conflict. The team members may have issue with some aspect of running the business since they have the view that they can do better or that there is another option that has better chances of positing returns. The conflicts between the team members lead to the creation of an undesired delay in the decision making process. Conflicts could also stem from the unequal commitment to the goal of the organization. Personality issues between the team members may also hinder the operation of the business. In the best-case scenarios, the conflicts can be successfully resolved using various interventions. However, in other instances, it is hard for the teams to deal with the issues leading to selling of the venture or at worse the closure of business. Therefore, the ability of the entrepreneur to identify the potential issues that are going to affect the business is important since it helps in the identification and prevention of some of the undesired issues. However, the general gains of working as a team outweigh the demerits of the team environment.
Selection of the idea is an important part of the business development. The prospective business owner has to identify the best idea of creating the business. In some cases, the entrepreneur identifies the need in the market and that identification creates the business idea for the production of a product or provision of a service meant to fill the market gap. The business idea could be an improvement of an existing product in the market, introduction of a new product in the market, introduction of an existing product in a new market or the introduction of a new product in a new market.
An entrepreneur can select different entry strategies for a product. The main idea behind the creation of an entry strategy is the ability to provide a product that is significantly different from the products that are on offer in the market. To attain the unique feel to a product, the investor can select products that are differentiated. This means that the product has the same functionality with the products sold by the competitors but has features that enable its uses to be used with ease. Another entry strategy that the entrepreneur can chose is innovation which is a strategy focused on the production of a product that is significantly different from the one produced by the competition. Innovation could be radical such that the product is different from the ones on offer. It could also be an incremental improvement of the existing products. Innovation covers all aspect of the business.
Entrepreneurship has manifested itself in the existence of humankind in various forms. Traditionally, the people used to carry out trade for the sake of survival since trade was only used to acquire the goods or services that the people could not produce for themselves. This was not entirely entrepreneurship but it formed a significant basis for the development of the entrepreneurship (Henry, 2007). As the people realized that they could not seek the other people of like minds to sell their product to the, there arose a class of traders that relied predominantly on trade for their survival. This is probably the oldest manifestation of entrepreneurship.
As man made advancements in trade, transport and communication, there various entrepreneurial ventures sprout. Communication made it possible for the people to bargain and access each other for the purposes of trade. Transport led to opening up of new markets in the world, which in turn led to the creation of new exchanges. The transport industry also presented numerous entrepreneurial opportunities such as shipbuilding and maintenance. The development of the transport industry also allowed the entrepreneurs of the day to access goods that were previously unavailable to the majority of the people. The array of goods available for trade was also increased such that the businesses were not restrained to the traditional products (Schumpeter et al., 2011).
In the recent past, there have been developments such as globalization. The modern modes of transport have been built on the traditional one through the continued improvement of the machines used for that purpose (Henry, 2007). Development of information communication technology has led to the development of an approach that does not depend on the traditional political boundaries. People can move freely leading to the creation of new approach to the entire issue of entrepreneurship. Internet has led to the creation of new virtual ventures. This development could not be fathomed in the initial days of entrepreneurship. It also means that entrepreneurship is entirely concurrent with the advancement made in human life. The dynamic nature of the human life eventually rubs off in the entrepreneurship since entrepreneurship is focused on the creation of new products that will suit the changes in the human life and provide for the ever-changing needs of the society.
Entrepreneurship has a duo focus. One perspective of looking at the topic is as a quick adaptation to change that is manifested in the society. It is the ability of the entrepreneur to identify change and pin point the opportunities that that the change presents is the most propounded notion of entrepreneurship (Schumpeter et al., 2011). However, there is another side of entrepreneurship that is manifested in the daily lives of the human beings. This is the aspect of entrepreneurship that is responsible for the creation of change as opposed to being reactive to the change. Entrepreneurship seeks ways of improving the lives of the people. Creation of change is required if entrepreneurship is to serve the role of improving the lives of the people.
Innovation is called for in the human life. Entrepreneurship allows the people to be innovative while maintaining the profit making intention ingrained in the capitalism ideal. Innovation could be the creation of something new (Gelderen and Masurel, 2012). In the developing world, innovation amounts to the creation of something new using the ideals that have been already applied in the developed world. In essence, this kind of innovation does not meet the definition of innovation but it is what some would refer to as the creative imitation. Man has chosen to implement change in the society using creative imitation too. As a result, the entrepreneur develops a product or service that improves the human life.
Entrepreneurship creates change through differentiation. A product could be designed in a manner that meets the most basic demands of the market but does not move the extra mile in solving the rest of the issues that may be facing the market (Gelderen and Masurel, 2012). Differentiation seeks to maintain the basic functionality while attending to the other needs of the market that may not be termed as core functions but are important to the target market. Differentiation could assume the form of ergonomics and other human aspects in a product that makes its use easy and comfortable.
Entrepreneurship is more than the creation of a new venture. It is concerned with the creation of improved products from the positive identification of the changes in the market and the effective improvement of the products to create a product that meets the market requirements while earning profits to the business owner. All people can successfully be entrepreneurs (Gelderen and Masurel, 2012). However, some aspects or character traits are predominantly present in the profiles of the most successful entrepreneurs (Schumpeter et al., 2011).
The success of a new venture could be dependent on the ability of the entrepreneur to identify and operate a successful business model that will make exploitation of the market niche possible. Finally, most of the successful business ventures are the ones that provide and improved input in the society or the market. Uniqueness of a product can be attained through differentiation of the product from the ones in the market or through innovation (Gelderen and Masurel, 2012). Differentiation aims at the maintenance of the functionality of the product in the market while innovation focuses on the creation of a new product or continuous improvement of the product through the addition of functions. The government has a direct role for the creation of the environment that will motivate the entrepreneurs to come up with new products.
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Growth is crucial for any business venture. An organization that does not prepare effectively for growth risks falling behind its competitors. In order to execute growth effectively, an organization needs to put in place a growth plan. This text examines the importance of a growth plan, its core components, and the specific strategies that an organization could use to realize growth.
Entrepreneurship: Business Growth
Question 1: What is a growth plan?
Every entrepreneur with a successful venture will often take time to sit down and speculate about the future of their business. A growth plan is a roadmap detailing the specific strategies that an entrepreneur plans to use to take their business to the next level in a smart and disciplined way. It is meant to guide entrepreneurs and reduce their risk as they grow their business. A growth plan basically includes three core components:
i) a clear picture of the business’ strengths, weaknesses and opportunities;
ii) a vision for where the business us expected to be (in revenue terms) in the next 3-5 years, and
iii) an action plan for achieving this vision, that is the specific strategies to be used, who will be responsible for implementing them, and by when.
The overriding aim of having a growth plan is to get the key players in the business on the same page, thinking about the organization’s future. Growth plans are created through a series of steps that include:
i) Establishing a value proposition
This involves understanding the specific factors that set one’s business apart from the competition. The entrepreneur needs to establish what makes them relevant in a particular market; that is, why customers come to them for a particular service or product (Biederman). Some businesses compete on uniqueness, whereas others such as Walmart compete on the basis of price. This step is about identifying what benefit or value only you can provide (Biederman).
ii) Identifying one’s ideal customers
Every entrepreneur gets into the market to solve a problem for a particular client group (Biederman). This step is focused on identifying whether that particular group constitutes the business’ ideal customers. If not, then who is it that the business is serving, and what tactics can be used to make the business appealing to the ideal customer group?
iii) Defining business growth goals
The entrepreneur needs to articulate the business’ revenue goals clearly. They need to state exactly where they expect the business to be in the next 1-2 years (in terms of revenue), and what they expect to have been achieved (Biederman). Revenue projections need to be realistic, and ought to be based on how the business has performed over recent periods (Biederman)
iv) SWOT Analysis
A SWOT analysis is an analysis of the business’ current strengths, weaknesses, threats and opportunities. Here, the entrepreneur will be required to understand how their strengths have led them to maintain their position in the market, how their weaknesses have worked for competitors, and how the venture stands to benefit if the opportunities present in the market are capitalized on. Understanding one’s strengths, weaknesses, threats and opportunities is crucial in setting realistic revenue projections and developing effective growth strategies.
v) Developing tactics and strategies
The final step involves developing the specific tactics and strategies to be used in achieving the required growth. Tactics should capitalize on the identified strengths while improving on the weaknesses. They should focus on the business’ value proposition, and how the same can be used to attract the ideal customer group and consequently, realize the business’ revenue goals. The entrepreneur should clearly articulate who is responsible for what strategy, and when the when it ought to be completed. If one’s goal, for instance, is to achieve a 20 percent growth in revenues over the next 5 years, they could use such growth tactics as acquiring small, promising ventures; investing in talent and training; expanding the product line, and so on.
Failure to prepare a growth plan could have some serious implications including declining innovation, lack of commitment to growth on the part of employees, lack of accountability in the organization as it is not clear who is responsible for what in the organization’s progression, and a lot of wasted effort and resources.
Question 2: What are Milestones and Implementation?
Milestones are formal breaks that allow an entrepreneur and their team to evaluate whether the business is progressing in the way they planned. The growth plan will often state in general terms, what the company’s direction is (Schill 13). One goal could state, for instance, that the business plans to achieve 20 percent growth in revenue in the first two years of the plan’s implementation. This could be translated into a measurable milestone, say ‘in the first year of implementation, sales will grow by 10 percent, measured on the first day of our financial year.’ This milestone makes it possible for the team to assess progress along the way, and to sharpen their expectations about ultimate failure or success (Smith et al 18). Moreover they provide means for the team to take measures early enough to either correct ineffective strategies or to enhance the expected benefits of the milestone program (Smith et al 18).
A number of best practices need to be observed in the implementation of milestones to make them more effective. First, milestones should be set for each goal formulated in the process of developing the growth plan (Smith et al 18). Secondly, the entrepreneur needs to designate who will be responsible for each milestone. In the example above, the milestone will most likely be designated to the sales manager. Such designation is likely to increase accountability among team members.
Moreover, it gives the entrepreneur a go-to person to check in with as the deadline approaches – in the case of the milestone above, for instance, the entrepreneur could meet with the sales manager in the last month of the current financial year to review sales figures that indicate growth towards the targeted sales level. A third best practice is to assign a budget to each milestone – this will help managers understand the amount of resources they have to reach specific milestones. In the case of the milestone above, for instance, a budget for advertising and extra staff would need to be assigned to the sales department to enable it reach the milestone. Finally, milestones need to be reviewed as end dates pass so that one is able to identify those milestones that were missed and take corrective action (Smith et al 17).
Question 3: Discuss business operations connectivity and growth
The diffusion of the internet has increased the degree of connectivity among people on a large scale, making the world a global village. The same is the case in the business sphere – networking has made it easier for people within an organization to connect easily and share ideas regardless of their geographical locations (Gwin 36). Today, thanks to such tools as LAN and WAN, an employee in the sales department can interact virtually, and share knowledge with their colleague in purchases, whose department is located on a different floor or even miles away in a different state. This is referred to as business operations connectivity – the process by which different sections of an organization – employees, employers, customers, suppliers, and so on - are linked together and interconnected for the easy sharing of knowledge and information.
This is one strategy that businesses could use to stimulate growth. Business operations connectivity stimulates organizational growth in several ways. First, it increases accessibility to persons both inside and outside the organization (Gwin 36). An employee can easily access and seek clarifications or share knowledge with another employee or their supervisor through social networking sites such as Skype. This enhances efficient use of staff time and eliminates the need to move and meet one’s audience physically. As a result, employees get to achieve more in less time, and overall productivity is enhanced.
Moreover, it is possible for a supervisor to hold virtual meetings with their subordinates even when they are away from the organization. This helps to ensure continuity in business operations, and prevents a situation where work stalls or has to be postponed because the supervisor is not around. Ultimately, overall efficiency is increased and the organization is able to produce more.
The organization is also able to easily and conveniently share information on products and services with customers, and to obtain immediate feedback on the same. This accessibility and speed enhances the process of research and development, enabling the organization to stay above the competition.
Besides improving knowledge sharing, business operations connectivity also helps in the effective monitoring of goals and milestones. Rather than making a physical trip to the sales department to obtain sales data, an organization’s CEO can simply check sales levels for a particular period instantly via the office network. This not only saves time, but also helps the organization conveniently assess the effectiveness of its milestone program and take corrective action early enough.
Generally, therefore, business operations connectivity offers attractive prospects for organizational growth.
Biederman, Rob. “7 Key Steps to a Growth Strategy that Works Immediately.” The Entrepreneur Magazine, 2015. Web.
Gwin, Catherine. Sharing Knowledge: Innovations and Remaining Challenges. Washington, D.C: World Bank Publications, 2003. Print.
Schill, Nancy. Coach-in-Box Goal-setting Workbook: Target and Achieve your Goal at Work. Austin, TX: ExecIntel Solutions, 2014. Print.
Smith, Janet, Smith Lester, Smith Richard, and Bliss Richard. Entrepreneurial Finance: Strategy, Valuation and Deal Structure. Stanford, CA: Stanford University Press, 2011. Print.
(I) Abstract: The creation of a country dynamism and wealth is often dependent on the competitiveness of firms, and this often relies essentially on the competencies that exist within the entrepreneurs of the country.
(II) Introduction to man and Entrepreneurship: In Entrepreneurship, the entrepreneur is the one that is often involved in funding the capital for the firm. The theory of an entrepreneur can be said to put emphasis on the heterogeneity of principles about resources.
(III) Literature review: Entrepreneurship is not a well-developed component when it comes to the modern economic theory. Many economists who are neo-classical have often found it difficult to reconcile the different requirements of rational decision-making with the functions that are ascribed to entrepreneurship.
(IV) Methodology: The research procedure that was used in this research study compromised of desk research, case study of small-scale organizations and interviews.
(V) Findings and Discussion: From the findings, it can seen that in developing countries there is a strong belief that entrepreneurship is a crucial driver of economic growth. It was found out that amongst the personal characteristics of the founder, family background can be singled out as an important factor by econometric estimates that explain new firm formations as an act of self-employment.
(VI) Conclusions: After examining the history of entrepreneurship and man, it can be realized that there was a divide after the industrial revolution which enabled developed nations to better the environment for entrepreneurs to start-up their businesses. In developing countries, innovation is often generally achieved through importation as well adaptation of technologies that was developed by abroad. Therefore, for this reason, it was not very astounding that only insufficient studies have been able to link innovation with entrepreneurship when it comes to the developing countries context.
(VII) Reflection: Most people are often familiar with the names such as Marks & Spencer and Heinz. However, most people do not realize that today famous large companies were initially very small. These large companies were either started by one person or a group of people. Therefore, many businesses often start as one person’s idea and the creator is often an entrepreneur who in many cases spots a gap in the market or a commercial opportunity.
Man and Entrepreneurship
The creation of a country dynamism and wealth is often dependent on the competitiveness of firms, and this often relies essentially on the competencies that exist within the entrepreneurs of the country. This essence of the modern firm often lies in the concentration of tasks. The ‘business men ‘who are in charge of managing economic activity in the strict sense can be said to be both entrepreneurs and managers. The corporate entrepreneurs often partake meaningfully in terms of capital which is crucial in controlling the firm. This paper looks at the history of entrepreneurship, the importance of entrepreneurship to man and the differences that exists between entrepreneurship in developed countries and developing nations.
Introduction to man and Entrepreneurship
The individual entrepreneur often detects and creates opportunities in business that he or she exploits through either small or medium sized firm. The entrepreneur is the one that is often involved in funding the capital for the firm. He or she also carries the role of arbitrator selling an idea of a business project. The entrepreneurial function implies discovery, assessment as well as the exploitation of different opportunities. In other words, the entrepreneur function involves the innovation and discovery of new products, production process, new strategies as well as the formation of new markets. The entrepreneur opportunity can be said to be unexpected by yet one of the most unvalued economic opportunities. The entrepreneur opportunities often exist because of different agents who all have contradictory ideas on the comparative value of the different resources that exist in the society. The resources are then turned from inputs into outputs by the different agents and this, therefore, creates business.
The theory of an entrepreneur can be said to put emphasis on the heterogeneity of principles about resources. The purpose can be abstracted as the discovery of opportunities as well as the subsequent creation of a new economic activity which in many cases comes about via the start of a new organization. It is of the principle to appreciate that owing to the detail that there is no marketplace for chances, the entrepreneur mist is able to exploit any opportunity that arises and this consequently means that one must be able to progress his or her competences in order to obtain the relevant resources. The entrepreneur must further go ahead and organize and exploit the opportunities in the best way possible which would bring around maximum financial gain. However, the downside of the market of ideas and opportunities often lies in the difficult that is involved in the protection of ownership rights of ideas that are not related with patent or charters.
Entrepreneurship is often deliberated under the heading of the entrepreneurial factor, the entrepreneur function, entrepreneurial inventiveness and business behavior. This factor is often unspoken to be a new issue in production which is different to the classic ideas of earth, capital and work which must be explained via the remuneration through income of an impresario along with the lack of people with entrepreneur skills. Its consequent consideration as an entrepreneur function is often dependent on the discovery as well as the exploitation of different opportunities as well as the creation of an enterprise. The entrepreneur behavior is often seen as a behavior that often manages to combine innovation.
The concept of the business process often includes the identification as well as the assessment of new opportunities, the decision to exploit them or sell them and the efforts that are used to obtain resources and the development of a strategy and the general organization of business. It has been recently claimed that if managers and businessmen of many of the firms were to adopt and entrepreneur l behavior in the development of their strategies, then the firms would be facing brighter futures than the current perceptions currently suggests. The basic entrepreneur central activity is often that of business creation, and this can be studied at an individual or even at a group level by analyzing the psychological aspects, as well as social variables of education, background and the family. Further, there are those that use the environmental level using the variables that enable business development or even analyzing the aspects of the social, economic and cultural environments.
The study of entrepreneurs and man analyzes the different variables that explain their appearance such as a psychological profile, personal characteristic, and the need for achievement, the capacity bestowed unto them that enable them to control and the general ambiguity and tendency to take risks. Equally, the socio-cultural and institutional focus underlines the role of exclusion and social change as the primary motivators of the entrepreneur function in minority as well as marginalized groups. Studies that have been done on the environmental variables have been able to emphasize the culture or even the shared values that exist in the society today. The institutions are often linked to a legal framework and several aspects of the economic environment. Consequently, it can be alleged that there are three basic ideas which explain the appearance of entrepreneur activity.
They all focus on the individual, the entrepreneurial action as a conceived human attribute and the willingness of the entrepreneur to face uncertainty is an important that is often studied. There is also the ability of him or her to accept risks and to have a need for achievement. This is, in fact, what differentiates an entrepreneur from other people that exist in the society. The second fundamental idea emphasizes the fact that economic, environmental and social factors motivate as well as enable entrepreneurial activity. This includes the dimension of the market, the dynamics that are found in the technological changes, the market structure and also the industrial self-motivated. The third issue is linked to the operational function of institutions, culture, and societal values. However, it is of the essence to note that these approaches are not exclusive, and this is because the entrepreneur activity is a human activity which does not have to spontaneously occur due to the economic environment, the demographic changes or the technological normative.
Entrepreneurship can be described as an essential element when it comes to economic progress, and it can be able to manifest itself when it comes to its fundamental importance. It involves the identification, assessing and the misuse of business opportunities, the creation of new firms or renewing existing firms by making them more dynamic and the driving of an economy frontward through modernism competence, the value of job creation and the general well being of the society. It is important to note that entrepreneurship often affects all organizations regardless f their age, size, race and whether they are considered as private or public. It also exists in independence of the objectives of the corporation and its position to the economy is often reflected through visible economic growth.
When it comes to referring to entrepreneurs, there is often a differentiation that exists between individual entrepreneurs and businessmen that independent. There is also a difference in corporate entrepreneurs who are related with the higher stratums of the firm’s management. The entrepreneur in the 21st century has been given different names and has been used to describe several people in the society who start their business or even work their way up the corporate ladder. The concept of entrepreneurial management can often be considered to be different to the traditional ways of managing organizations. Many managers are often looking for new ways to make their organizations more entrepreneurs in many aspects from a general strategic orientation to their consequent reward schemes. There exists a positive association between the intensity of corporate free enterprise and the strength of the search of opportunity, strategic adaptation as well as that of value creation. The 21st century man should be simultaneously entrepreneurial as well as be strategic.
The wealth as well as the poverty of emerging countries has been related in modern times to the impresario nature of their economies. It is imperative to note that where it has existed in plenty, entrepreneurship has been able to play a significant role in financial growth, competitiveness and innovation. Over along period, it has also played a role in poverty alleviation. However, entrepreneurship in developing countries can be described as arguably the least studied economic and social phenomenon. Over 400 million persons in developing countries are either owners or managers of new firms. It is imperative to note that over 200 million of these people are found in Africa and India alone. In one of the two best books that deal with research on entrepreneurship Africa is mentioned in two pages while India is not even mentioned at all. Specialist literature has often focused on the description of attributes of entrepreneurship in developing countries as compared to providing a framework that both entrepreneurs, as well as policy makers alike, can be able to rationally plan as well as execute the innovative business models.
Models of entrepreneurship such as the Bhides uncertainty, investment profit diagram are solely based on the research that was conducted in the U.S as well as other developed countries, and this does not adequately describe how entrepreneurship has been carried out in developing countries. It is of consequence to note that until recently there was very little that was known in regards to entrepreneurship in develop countries and in particular the characteristic of new and growth oriented firms. Scholars as well as different practitioners have often assumed that entrepreneurship is largely the same the world over and that it is a drive by the same impulses which are played on the homo economics everywhere.
However, research has shown that indeed there are differences when it comes to ambiguity aversion, self-control and the evolution of businesses in developing countries. There are changes across nations, and these alterations are important as they help us to gain a better understanding as to why some countries have had more successful entrepreneurs as compared to others. This paper suggests that entrepreneurship in man has evolved over time and that there is a distinction between entrepreneurship practiced by main developed countries and that which is practiced in developing countries (Zacharakis, 2000). This paper seeks to understand the distinctions that exist which can be said to be very critical to private segment development in emerging countries.
Entrepreneurship is not a well-developed component when it comes to the modern economic theory. Many economists who are neo-classical have often found it difficult to reconcile the different requirements of rational decision-making with the functions that are ascribed to entrepreneurship. These include co-ordination, arbitrage, uncertainty bearing and innovation (Barrett, 1989). Entrepreneurs have often been described variously as the bearers of business risk and the taker of opportunities, and they are agents that bring together the factors of production and they are the organizers of innovation (Schumpeter, 1942). However, it is of the essence to comprehend that there was no one of thee thinkers that distinguished between entrepreneurs who were operating in different business environment or those who were considered entrepreneurs in wealth and poor countries. They did not document any differences between these two set of entrepreneurs at various stages in economic history. The academic interest in entrepreneurs in the developing world started after decolonization with interest until recently on a small-scale industrialization.
There are four kinds of firms that have been identified in developing countries, they included newly established, established and growing slowly, established but not growing and graduates to a larger size (Liedholm and Mead 1999). In respect to the study of the subset as well as the new and growth- oriented firms in developing countries, a significant step frontward has been the rich productivity of the GEM project which despite a lot of methodological shortcomings was able to give a better sense of entrepreneurship diversity all around the world. It is of the quintessence to recognize that of particular awareness to the topic of this paper has been the recent work of the project on the identification of new factors that are associated with variations in the national entrepreneur activity (Zacharakis, 2000).
It is these date that are disaggregated into wealthy and poor countries that then are ale to help distinguish between necessity as well as opportunity entrepreneurs. The findings suggest that freer, or competitive poor countries in many cases are not correlated in a statistically momentous way with advanced levels of chance entrepreneurs. Further, the findings in the GEM report shows that recent economic growths in poor countries is also not correlated in a statistically significant way to the higher levels of opportunity and entrepreneurship. Lastly, it was also determined that the protection of property rights and the levels of corruptions in the developing countries do not also seem to matter either.
According to Peterson, 2003, there are some distinctive attributes of entrepreneurship in developing countries that often appear to advance the likelihood of success for growth oriented firms while it appears that the same criterion appear to hold back other firms. Johnson (2004) cites that opportunities for entrepreneurs in developing countries are often in a broader scope as likened to those that happen in developed markets. This is because they often allow a firm to pursue a selection approach to strategy that in many cases can efficiently manage the higher levels of market and business risk. He further adds that entrepreneurs who exist in emerging countries face a dissimilar set of circumstances as compared to their counterparts that exist in the developed world. Robinson (2010) agrees with Johnson stating that some of the differences that exist between the entrepreneurs of the two regions are mainly rooted in the underlying economies in which they operate. He contends that intend emerging markets often lack a stable and mature value and consistency. For this aim, it can be said that the opportunity that exists in these countries is pervasive.
Western Entrepreneurs according to Knight, (2006) often operate at the fringes of their economy and this is entirely a different case when it comes to emerging market entrepreneurs who often have to operate closer to the core. In this way, the needs and the opportunities can be said to be more widespread. It is of significance to appreciate that despite the fat that the competitive threat to entrepreneurs forms the well-established incumbents is often reduced in developing countries, the risk that is posed by economic and political, regulatory uncertainty is often extremely high. This reduces the effects and outweighs the direct competitive threats. Knight (2006) goes on to argue that the rational, though counter-intuitive response is for the entrepreneur who are living in the developing countries to spread their resources across several but destiny business in a bid to eliminate systematic risks. Underwood (1999) argues that entrepreneurs who work in a segmented market (most developing countries have segmented market) often play a surrogate role as a financial investor can manage risk in developing countries.
He further continues to state that portfolio risk is often operated by having several diverse trades in lieu of financiers who might then do the same thing. The lack of alternative financing, as well as successful entrepreneur, may use the internally generated cash flow from of the business into another in order to create diversity. In fact, the keiretsu system that exists in Japan and the chaebols that exists in Korea are just but examples of highly developed conglomerates that have interlocking ownerships and business partnerships. Underwood continues with this line of thought and argues that in addition to risk mitigation as well as a source of funding, the interlocking of businesses often provide a source of informal information flow which then leads to a broader pool of skills and resources which if well implemented creates a brand name which can be easily leveraged across different types of businesses. Fairbanks and Lindsay (1997) argue that inadequate access to capital, as well as a fragmented retail and distribution, often requires entrepreneurs to being their businesses downstream with direct access to their end consumer.
By starting downstream businesses, can reduce dramatically the initial capital requirements as working capital is, therefore, much reduced, and this permits access to the customers as well as the informational flow which in many cases is often the one that is lacking. The lack of access to the end consumer has been cited by many include Fairbank and Lindsay 1997 as the primary reason by which businesses fail to move from commodity markets into higher value added activities. In the developing economies, after the entrepreneurs have been able to achieve success in both retail and distribution, they often leverage the domain experience, the informational flow and the cash flow which is directed towards having to generate vertical integration in a bid to upstream the business.
Tom, (2007) states that while entrepreneur opportunities are broader and that the resultant strategies are naturally self hedging in developing countries, limited personal as well as family saving and the absence of an organized financial innovation system limits the growth prospects of what can be described as promising startups in developing countries. He further continues to state that the nature of the entrepreneurial opportunities in the developing countries often play a critical role in the market for entrepreneur finance in developing countries. In fact to a greater extent as compared to the developed world, nascent entrepreneurs often must answer several fundamental financial questions. These questions include but not limited to whether the firm will survive the first five years, and whether it is rational for the entrepreneur to commit his or her financial resources to the new firm.
(Bygrave, 2003) argues that unpromising odds of entrepreneur success, internal finance can be said to comprise the majority of bankrolling of small and average enterprises in most developing nations. The entrepreneurs that exist from the emerging markets often rely heavily on different informal sources of finance in order to start their business. These outside informal sources often provide around 87% to 100% of financing. Bygrave continues by stating that other sources of financing in the emerging market such as bank lending, as well as venture capital, often play a very incomplete part when it comes to the financing of the entrepreneurs more especially in the start-up stage. However, it can be seen and argued that very little is often known and understood in regards to the mechanisms by which potential entrepreneurs that exist in the developing countries can gather the necessary capital to start their businesses. Questions such as where do the entrepreneurs in the developing world get funds, in order to start their own businesses, have been a question that has yet to be researched on. Recent evidence has however suggested that indeed capital requirements could be quite modest especially in the least developed countries.
According to (Bhide 2004 and Johnston et al, 2004) there are often two issues that need to be looked at, first there is the source of income and the appropriate depositories that are often made until the new business is able to start. The sources of income can often include but not limited to retained earnings from previous businesses as well as the ones that exist in the retail or distribution sector. However, there are countries where well-paid government positions are still available and as such potential entrepreneurs can be able to save start-up capital from their salaries. Research that has been done on the determinants of private saving in the developing countries has suggested that the countries which have experienced economic instability in many cases are more likely to have higher rates of people saving privately and this is maintained by an insurance mechanism (Loaayza, Schmidt-Hebbel and Serven, 2000). This has shown that indeed crisis in these terms means opportunity at least as saving and private capital for the necessary finance for startup is concerned.
The author continue to argue that as much as successful entrepreneurship is related to urbanization, urbanization often leads to an increase in individual consumption and consequently a non-commit ant decrease in terms of the private savings that one has. Therefore, in this regard, successful entrepreneurs are more likely to find access to the greater pools of private savings in the countryside when they want to start their businesses. This line of though highlights the importance of a well-developed family network that spans both urban and rural areas. However, it is notable to point out that how such sequestered rural investments are intermediated into the urban entrepreneurship is at present not well understood and almost with certainty will vary by country.
An important but overlooked as well as undocumented force is the increasingly consumerist nature that has grappled the developing economies which has caused personal saving rates to fail as well as personal consumer related ineptness to grow and spiral out of control Anecdotal evidence from different regions such as the Asia and Africa have suggested that high and inappropriate level of ineptness might in cases severely constrain the entrepreneurs ability to start a new firm (Zacharakis, 2000).
While the results of this literature review must be pickled with restraint and subjected to peer review, they may call into inquiry some of the current efforts of expansion finance organizations to endorse entrepreneurship through primarily the improvement of general business environment which in turn can be able to turn help the economies based on the findings of institutional economics.
The research procedure that was used in this research study compromised of desk research, case study of small-scale organizations and interviews.
The desk research was the main method of research methodology used in this research project, and it involves looking at the current literature. The number of entrepreneurs in the developing world has grown tremendously, and this largely occurred due to the design of having business incubation program. The Business incubation programs have become more popular amongst entrepreneurs because of the strategic benefits that they have such as having a clear mission to start-up companies and the ability of the banks and other financial institutions to loan the entrepreneur’s capital to start their businesses (Zacharakis, 2000). The business environment and climate in the developing countries are often different from the ones that exist in the developed world. The developing countries have weak economies that are extremely fragile; this, therefore, makes it hard for entrepreneur to start a business that will grow fast as compared to their counterparts in the other world.
The desk research involves investigating the different types of entrepreneurs that are found in the different economies and the resultant way in which they make money. It also looked into the challenges and constraints of starting up a business in the developed world as opposed to starting a business in the developing world. These constraints were found to be different, and, therefore, further research into the different constraints in specific was important and was, therefore, carried out.
In order to facilitate a consisted and widely applicable selection of entrepreneurs in developing countries, I used a methodology that was based on four principles. First, the methodology aimed to be consisted with the existing theoretical perspectives in regards to entrepreneurship. It looked at three aspects; firstly there was the social mission, revenue model and innovativeness. Secondly, there was to capture the importance of the different aspects. For example, if the entrepreneurs in the developing countries had revenues or they had it saved privately (Zacharakis, 2000). Lastly, in order to exclude country specific bureaucratic definitions of the word entrepreneurship, this study avoided the word entrepreneurship but instead used the word businessman using a series research.
There was the exploration of small companies in the developing countries where a series of questions were looked at in their individual websites. These questions were related towards the social mission of the company, the revenue model and the innovativeness that was needed in order for the company to operate at the level that it currently operated in. In order to get additional info on the enterprises, questions in regards to the founding dates of the social venture and the type of activity that was first practiced was used (Zacharakis, 2000). The founding dates were important as they allowed me to differentiate between new enterprises and already established enterprises. Performance measurement of the organizations was facilitated by looking at the company’s financial records and their profits.
Further, I researched material that related to the individuals partial or full-time involvement in the social venture, the number of people that worked in an organization that were not volunteers and expectations of the people that worked fro the company. It is imperative to understand that although this last criterion might be said not to represent per se a defining characteristic of the enterprises that were opened by the country, many researchers often consider performance measurement as a fundamental differentiator on the growth of a company and the rate at which the company is growing (Zacharakis, 2000). Small scale industries referred to as cottage industries in most developing countries was also looked, and this shows that indeed there are different entrepreneurs in the developing countries.
Findings and Discussion
From the findings, it can seen that in developing countries there is a strong belief that entrepreneurship is a crucial driver of economic growth. New firm founder differ in the developing countries and developed countries In regard to characteristics such as previous work experience, financial status, family tradition, and personal enthusiasm. To start with, the initiator of a new firm is often heavily influenced by the background that he or she comes from. This is in particular reference to his or her previous job experience and area which has often been discussed in the literature review section (Zacharakis, 2000). On the other hand, the importance of a previous job experience often explains the sectorial inertia in entrepreneurship while the loss or the fear of losing the previous job might trigger one to start a new business as an escape route from unemployment.
It was found out that amongst the personal characteristics of the founder, family background can be singled out as an important factor by econometric estimates that explain new firm formations as an act of self-employment. For instance, in a paper by Burke, (2008) on Kenyan individuals that were born in the year 1985, it was discovered self-employed father as well as father who were managers of small firms often tend to encourage entrepreneurship among their daughters and sons. Another important piece of literature investigated the impact of the financial constraints on the business start-up; most of their work was a follow up from the works of Fazzari, Hubbard and Peterson (1998). For instance (Vivarelli, 2007) found out that initial level of assets strongly influences whether one will start-up a business. This might be the motive as to why many advanced countries which have advanced economies find it less difficult to start-up a business for the reason that they must have much money saved privately. This is in opposition to the people that live in developing countries who often have to borrow their relatives as they do not have enough money saved up to start-up a business.
Other studies looked at the initial level of assets and the probability of a transition into being self-employed after one got an unexpected monetary gain, such as a sweepstakes prize, a job bonus, or a windfall gain. Interestingly, these studies found out that invariably the exogenous arrival of new financial resources increased the probability of one starting up a company. The fact that wealth, inheritance as well windfall gains often spur entrepreneurship is a testament that the business start-up is in many cases underfinanced (Zacharakis, 2000). Therefore, because most new companies need external capital, the differences that occur in the ability of capital markets to select as well as finance the most promising of the business project might lead to important differences in the level as well as the quality of entrepreneurship among different developing countries.
Another finding showed that the heterogeneous entry processes can be said to play in the economy and that there is a necessity to distinguish opportunity entrepreneurs who are often found in the developed nations to the necessity entrepreneurs who are often found in developing countries. The opportunity entrepreneurs are persons that want to open companies in order to boost their employment security as well as to make an extra coin. They often have much capital, and they save to start-up their businesses that they deal in (Zacharakis, 2000). This should be differentiated from the necessity entrepreneurs; these persons, on the other hand, are people who start a business in order to earn a living. Most of them do not have sufficient capital to open up the business that they require and consequently they start with extremely underfunded businesses. Entrepreneurship as well as self-employment in the developing countries often generates informal as well as very transient activities not very different from what can be described as disguised unemployment.
Many studies showed a positive relationship between start-up size as well as their survival. This is because entry implies that there are sunken costs and this often generally occurs at a scale that is lower than the MES and a larger entry size is a signal of commitment as well as self-confidence ad it makes both an occurrence of an entry mistake (Yunus, 2002). Therefore, the risk of failure because of diseconomy of scale are often less likely. On the other hand, it is imperious to understand that there are a number of papers that have found a negative relationship between the start -up size as well the post entry growth of small companies in developing companies.
This evidence suggest that small entrants who have a sub-optimal entry size often have a higher risk of early failure and must often grow in order to survive and for them to reach the middle enterprise as soon as possible (Zacharakis, 2000). In a consistent way, the firm’s age turns out to be positively correlated with its survival and negatively with its growth. This, however, is not astounding given the fact that it is consistent with learning theories which show that experienced, mature firms are often able to deal with market dynamics and consequently they are more likely to survive.
However, after already having reached the Medium enterprise they do not have to grow very fast. It is of the essence to comprehend that despite almost the evidence coming from developed countries, the evidence that transpires from developing countries can be said to be similar. For example, Das (1995) which dealt with an Indian computer industry found out that significant negative relationship between firm growth and the actual size of the firm. Further, another study by McPherson (1996) in a study of five Southern African countries found a significant negative link between the firm growth and both the age of the firm as well as its size. However, the companies were able to survive in the industry and they grew tremendously.
In economies that can be described slightly behind their modern industrial counterparts, entrepreneurship is a word that is often viewed as an important component when it comes to stimulating economic growth, innovation, competitiveness as well as the different methods of alleviating poverty in these countries. However, it is of the principle to understand that there are often some very unique features which affect entrepreneurship in developing countries while some of the distinct aspects of developing countries that inhibit entrepreneurship and it enable entrepreneur activities, and they allow start-up businesses to be successful despite great odds. The first and obviously important factor that affects free enterprise in un-industrialized countries is the lack of capital as well as financial innovation. In many cases, individuals in these emerging countries often have very limited personal savings, and they lack the necessary capital that is needed to start-up their own businesses (Zacharakis, 2000). The entrepreneurs must therefore, understand that they need to have external financing where they can charge high-interest rates because of the risky nature of business projects. It is of the quintessence to understand that with the underdeveloped financial markets, as well as expensive borrowing rates, entrepreneurs that exist in the emerging markets often use informal sources of finance to start their businesses, and they then generate income from different but yet multiple jobs and businesses.
With that being said, it can be claimed that this is where the advantage of developing countries often starts s to come in the play. Having multiple jobs as well as running several start-ups with businesses at one time provides a unique advantage for entrepreneurs in developing countries. For example, most entrepreneurs often have farming commercial, while, at the similar time they are involved in carpentry, construction or commodity businesses in order to generate income needed for their farming business (Yunus, 2000). This wide-ranging business nature is very common in developing countries and it allows entrepreneurs to eliminate the high different market risks as they all follow a diversified portfolio strategy. Along with the diversification effect, the needs as well as opportunities that are widespread within developing countries. This, therefore, means that start-ups can be pursued. However, in developed countries, growth-oriented firms is usually focuses on one niche market as they are less needy, and the major markets are often crowded with a lot if entrepreneurs. The nature of the developing countries means that there is interlocking businesses in several markets of need and this allows entrepreneurs in the developing countries to develop what can be described as a broader pool of skills and consequently build a diverse set of customer relations (Yunus, 2000). If this is successful, the entrepreneur is able to create a brand name which can be able to leverage across several large markets.
Lastly, there is the cultural aspect of the developing countries which shows that the effects of entrepreneur practices. Our research shows stresses the importance of the culture interplay in-considerate entrepreneurship in dissimilar countries. The culturally based beliefs and the different ways of thinking in the developing world affect how entrepreneurs operate their businesses. While the entrepreneurs in the emerging economies may face many encounters particularly when it comes to starting up business, the entrepreneurs have their own unique set of advantages which enable them to create new ideas that provide a promising future which is irrespective of the countries that they come from (Xu, 1998).
The original entrepreneurs were traders and merchants. The first known instance of humans trading came from New Guinea in the year 17000 BCE. These traders exchanged obsidian, a black rock which was used to make arrowheads, as well as other needed goods. These early businesspersons switched one set of goods for another. The domestication of animals took place around 15,000 BCE followed by the domestication of plants at 10,000 BCE. It is imperative to understand that this step towards agriculture can be described as a critical stage when it came to the advancement of human species in relation to trade. Instead of having to move around as nomadic tribes, people could stay in one place and hunt and gather. It is agriculture that allowed persons to start and as well as from large stationary communities in the cities. This was the basis of civilization that consequently set the stage for both development as well as the advancement of human knowledge. Agriculture changed everything as it enabled the population to grow from 15 million to the over 7 billion in only a millennia (Xu, 1998).
As more humans moved into stable communities which had found a place to settle, one of the most important advances that came about was the advent of specialization. Instead of tribe hunting and gathering for food, different individuals in the society started to specialize and become experts at certain tasks such as fishing, gathering, hunting, shelter building, and clothes making and even cooking (Xu, 1998). It is of the principle to understand that the importance of specialization in the various tasks versus the self-sufficiency in all of them can never be overstated. In fact, when some individuals in the society focused on only one activity then with time they became better, and this consequently led to innovation. People started exchanging goods with the goods that they did not have and this increased the benefits for all.
Methods of agriculture improved and the first towns, as well as cities, were born. There was for the first time dependable food supplies which allowed people to build permanent houses and consequently settle in one area. The settlements increased in size, and there was the advent of social institutions such as courts, marketplaces and religious centers. Further, the advent of these cities and towns brought around further specialization with people focusing on tool making, pottery, masonry and other important jobs. These specialist created items were made faster, and they were of a better quality that the ones that each family was making. This consequently increased the standards of living for many people (Xu, 1998).
Trade routes between new cities sprang up, and people started using camels, horses and donkeys which they had domesticated to enable trade caravans to move between civilizations. Ships were then built in a bid to carry trade over the seas. The hubs as well as networks that were formed eventually led to a complex structure which led to the Great Pyramids being formed in Cairo and temples in Sumerian. It is around the year 2000 BCE that the iron was discovered. Iron was extremely important to trade as it leads to advances in warfare and the building of what can be described as tumultuous few centuries. Human warriors on horsebacks led to the creation of Empires and different empires such as the Han Chinese Empire, Roman Empire, Alexander’s Empire and the Persian Empire grew.
The growing of these empires led to complex political systems as well as philosophies and beliefs. With time trade routes expanded, salt from Africa was able to reach Rome, rice was able to travel from China to Asia and the secrets on how to make paper were transferred from cities in China to cities in Europe (Xu, 1998). Around the year 800 gun-powder was discovered in China by combining sculpture, carbon and potassium nitrate. In the year 1200, an Italian that was named Leonardo Fibonacci transported the standard scheme of numbers that are still in use today from Arab to Europe.
The invention of money was important to different traders and entrepreneurs. The early trade had consisted of barter, the exchange of one good for another. The problem with barter trade was the fact that there had to be a coincidence of wants in order for the system to work. This coincidence of wants did not happen and, therefore, the demands of growing business and trade eventually gave rise to a money system (Xu, 1998). Silver rings were initially used as money in ancient Iraq in the year 2000BCE. There were different forms of money such as seashells, tobacco leaves, beads and large round rocks that existed in different civilizations. It is of prominence to note that while the money system had much development to go through, the credit as well as paper money had not yet been invented.
Its invention that occurred around four thousand years ago was of extreme importance to the world that we are living in today. Its invention and use enabled it to be stored and be an accepted medium that would facilitate easy exchange from one hands of a trader to the other. This eliminated the barter system which had heavily relied on the double coincidence of goods. By the year 1200, the cultural system in the Western world was feudalism. This was a world of Kings, Serfs, Kingdoms and Manors (Xu, 1998). Long distance trade was expanded, and new world of distant spices, oriental resources and well-appointed silks were discovered. Three hundred and fifty years later after a black death was weathered and a hundred years war was over, Europe emerged by being able to expand trade to new levels and consequently building the foundation and start of the competitive market and economy that exists today (Xu, 1998).
Population spurs started in the 1470’s and cities, markets as well as the general volume of trade grew tremendously. For example, Baking that was initially started by the ancient Mesopotamians grew into unimagined heights and complexities, the guild system was able to expand, and the idea of a business as an impersonal entity that was separate from its owner started to take hold. Silver imports from different parts o the new world drove traders into bookkeeping and created what can be described as standardized principles of keeping a firm’s account (Xu, 1998). Early entrepreneurs referred to then as explorers and merchants began to raise capital as well as stimulate monetary development in diverse parts of the world. It is at this time that it can be argued that capitalism begun.
Early on the history of capitalism, the general idea of monetary gain was shunned as well as shared by many persons. The religious institutions were especially hell bent against it, and the practice of usury, charging interests on credits was barred by the Christian church. For the first time jobs started being assigned by caste and tradition, innovation was stripped down, and advancement went on a go slow. Efficiency was seen to reduce jobs and in fact in England a mass production factory workshop was outlawed on the pretext that the high efficiency reduced the number of available jobs (Xu, 1998). With time, however, the world saw that indeed innovation was generally a good thing, and it was making lives better. Efficiency was now seen as a path towards a higher customary of incarnate and for the first time it was fully embraced by monarchs and Kings.
The story of the last 300 years has been that of markets and machines. With the invention of a complex marketplace as well as a system of capitalism, a battle of ideas that raged to explain the sources of wealth and to explain the working of the market were developed. Monopolies and tariff were promoted, and competition wad discouraged, fortunately, this did not stay on for too long as new schools of thoughts were established which promoted commerce as a source of wealth (Xu, 1998). Different philosophers argued that self-interest was able to act as a guiding force towards what the society desired. The regulator of trade became competition, and this was carried on to the industrial revolution.
The start of the developed age began in the year 1712 with the invention of the steam engine in Devon Britain. However, it is of the spirit to comprehend that it was not until James Watt’s steam engine in 1763 was created that things started moving. They enabled work to be done with the movement of pistons as compared to the movement of muscles. The nascent industrial revolution had already started to rear it head (Xu, 1998). The effects of the humanist movement, the enlightenment focus, and empiricism translated into the launch of a movement that impacted the world like nothing ever before.
It was at this time that the revolution had started, and there was a development of innovations, technology and a rise in the standards of living. It is from the industrial revolution that the concept of mass production was able to take effect. The economies of scale were double and tripled within a span of 50 years (Xu, 1998). Modern entrepreneurs such as J.P Morgan, John Rockefeller, Fran Kennan and Andrew Carnegie came out. While some of these early titans can be said to have questionable ethics, one object that is unquestionable is that no one can deny that they were innovators. These early entrepreneurs of the 20th century forged alliances and consequently developed new ways of doing business. This created efficiency across different industries.
After examining the history of entrepreneurship and man, it can be realized that there was a divide after the industrial revolution which enabled developed nations to better the environment for entrepreneurs to start-up their businesses. The developing nations were in turn locked out of the industrialization process, and consequently, it has become very difficult form them to start-up a business (Xu, 1998). One of the main problems that face entrepreneurs in the developing world is credit constraints and the lack of financial capital in general through the limit the rate of entry of new businesses, their likelihood of survival and the rate of growth.
Nevertheless, topical studies have been able to show that the role of credit in developing nations has been overemphasized and that entrepreneurial saving plans often suffer because of borrowing constraints. It is authoritative to apprehend that the risk of overstating the hindering role of credit constraints is particularly high when it comes to questionnaire analyses where newborn or nascent entrepreneurs are asked to list their main difficult when starting their new firms and businesses. In fact, most of the entrepreneurs in the developing nations tend t be self-indulgent and indicate the lack of external financial support as the main cause of their problems.
Conversely, in most cases this is not factual, and this is often a indication of a more fundamental deficiency that is an internal problem to the firm. At any degree, it can be perceived that entrepreneur initiatives that exist in the Developing countries are often credit rationed in the vast majority of cases, and this is often because of lack of collateral, imperfect local capital markets and informational asymmetries (Xu, 1998). For example, a study by Goedhuys and Sleuwaegen in a study investigating around 947 small as well as medium entrepreneur firms in several manufacturing firms in sub-Saharan countries found out that financial constraints can be single out as a major obstacle.
As pointed out in the findings section of this research paper, entrepreneurship is often characterized by sectoral as well as geographical inertia. However, far from being considered as a disadvantage, persistence in entrepreneurship generates above the average post entry performance. This is because past experience in the same sector and in the same area is often a signal of better skills as well as informational advantages.
In fact, in a recent paper by Silva (2007) it was found out that the portion of entrepreneurs who set up their occupational awareness in the area where one was born was significantly higher and that the firms which were created by locals were bigger, more valuable and more capital intensive and better financed as compared to the companies which were created by non-locals (Xu, 1998). I interpreted these finds by arguing that the local entrepreneurs on average were able to effectively exploit the economic and financial opportunities which were available in the region that they were born in. In the same breadth, it was found out by research by Dahl and Sorenson (2011) that companies performed better, survived longer, and they generated higher profits when they were located in regions where their founders had lived longer.
This effect was also similar to the size that was associated with the experience in the same sector. Further, in the same line of reasoning, both spinoffs who are entrepreneurs that leave a mother firm to found their own business as well as serial entrepreneurs who are founders who had previously run other related companies had an advantage as compared to those who were new entrepreneurs. The spinoffs and the serial entrepreneurs are generally found in developed countries as compared to developing countries. This is because of the level of development and industrialization that is found in developed economies. Turning the attention to managerial perspectives, it can be seen that founders that have previously been employed as top managers in the same sectors often had better access to relevant information and were expected to exhibit better post entry business performance. Conversely, it is authoritative to understand that there exists a link between previous job experience and post entry performance when it comes to developing countries too.
McPherson (1996) found that there was a positive relationship which existed between annual employment growth, as well as previous experience of the founders in similar activities for firms in Swaziland and Botswana. Goedhuys and Sleuwaegen (2000) while studying Ivory Coast found out that job experience which was previously acquired in the same industry increased the likelihood of not only the new business but also increase the performance of the company.
In developing countries, innovation is often generally achieved through importation as well adaptation of technologies that was developed by abroad. Therefore, for this reason, it was not very astounding that only insufficient studies have been able to link innovation with entrepreneurship when it comes to the developing countries context. As far unemployment or even the fear of becoming underemployed is concerned, the literature points out that there are two stylized facts. The first is that there are those that have entered self-employment from unemployment exits into higher extent as compared to those who had previously entered from paid employment.
In fact, in one study by Carrasco found that those who had entered and tried to from a business after being formerly unemployed have on average lower economic outcomes as well as lower propensity that contributes to job creation. For example, Vivarelli (1999) the authors found out that the defensive motivations which includes concern for future career developments as well as the fear of becoming unemployed were predictors of what can be described as below the average post entry evolution. In the same token and breadth, another study by Anderson (2007) shows that those who were previously unemployed systematically had lowers incomes as compared to those that were previously wage earners.
However, another interesting conclusion is the fact that those that were found to have income from self-employment in many cases declines with the number of days that are spent in unemployment and that previously unemployed entrepreneurs are often significantly more likely to be solo entrepreneurs, that is to have no employees. Again, as expected, the literature that was found in this sector was extremely scarce. However, one study by Wang (2006) found out and brought compelling evidence that unemployment had fostered start-ups in Taiwan over the period starting the year 1986 to the year 2001. In contrast with the work by Santarelli (2011) there was no significant impact of the unemployment rate on a new firm formation in the developing country of Vietnam was found.
Most people are often familiar with the names such as Marks & Spencer and Heinz. However, most people do not realize that today famous large companies were initially very small. These large companies were either started by one person or a group of people. Therefore, many businesses often start as one person’s idea and the creator is often an entrepreneur who in many cases spots a gap in the market or a commercial opportunity. There are four main categories of business: manufacturing retail, wholesale and service. The historical perspective in this paper is important when it comes to empathetic the connection between entrepreneurship and man.
The history shows that before the year 1960, many economists were able to understand the importance of entrepreneurship; however, they tended to underrate it. Even in the industrial revolution period most economists paid attention to the big companies and they did not realize the fact that it was actually the newer and smaller companies which generated most of the fresh jobs in the economy. Additionally, it can be argued that the role of entrepreneur is often to organize new productive resources intended to increase supply in the market. This thought has never been big in the dominant school of economics, where persons are only interested in managing consumer demand and the promotion of product purchase from different from customers. There is a big difference in entrepreneurship in developed countries and developing countries.
This difference manifests itself in the challenges and constraints the two different entrepreneurs face and the way they contribute to the economy. However, it is of supreme significance to understand that it is not all roses for those in developed economies. This is because there is a clog of businesses in their economy and therefore, it is very difficult for them to start businesses. However, there are disadvantages such as credit constraints, lack of enough financial and human capital, and general lack of innovativeness that can be said to plague the developing countries entrepreneurs. All in all, this paper has demonstrated the importance of entrepreneurship because it holds least for social benefits and it fosters economic growth, creates new technology, rejuvenates competition and it increases productivity. The main reason as toy why economists are placing their eyes on newer small firms both in the developing world, and the developed nations is the fact that it seems that they have been the ones responsible for providing jobs within the economy.
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