Entrepreneurship – Prowriterslanka

Importance of Entrepreneurship

Introduction

Entrepreneurship is the search for opportunities beyond the resources which currently available at hand. It is a subject with interest in variety of fields in creations, capital, social ventures, innovation business models, global business, and biotechnology. Entrepreneurship will have the impact and create noteworthy value for stakeholders including indirectly the country and global economic growth at large. The goal of entrepreneurship means creating value and utilizing resources in innovative manner and interacts with global markets.

“Entrepreneurship is a dynamic process of vision, change, and creation. It requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions. Essential ingredients include the willingness to take calculated risks in terms of time, equity, or career; the ability to formulate an effective venture team; the creative skill to marshal needed resources; and fundamental skill of building solid business plan; and finally, the vision to recognize opportunity where others see chaos, contradiction, and confusion.” (Kuratko & Hodgetts, 2004, p. 30)

There seem to be as many definitions of Entrepreneurship as there are scholars of the art of Entrepreneurship is doing something new for the purpose of creating wealth and adding value to society. Demarcation lines between the behaviorist perspective based on external factors which can be altered to change the behavior of the actor coupled with identified training systems, and the psychological perspective based on some sort of innate attitude and this could be called the “Entrepreneurial Gene”

Entrepreneurship Education

Generation of the twenty first century is known as the E- generation as they have become the most entrepreneurial generation after the industrial revolution. According to the research, the number of colleges and universities which have courses related to entrepreneurship has grown from few in 1970s to 1699 in 2003 ( Katz 2003 ). In this huge increase, of courses remains the challenge of conducting courses in entrepreneurship more effectively. Business educators and professionals have evolved beyond the myth that entrepreneurs are born and cannot be made. The leading management thinkers of contemporary times Peter Drucker has said, “The entrepreneurial mystique? It’s not magic, it’s not mysterious, and it has nothing to do with the genes.

Teaching Entrepreneurship

It is a discipline and, like any other discipline, it can be learned. (Ducker 1985). Additional support for this view comes from a ten-year (1985-1994) literature review of enterprise, entrepreneurship and small business management education that reported most of the empirical studies surveyed indicated that entrepreneurship can be taught, or at least encouraged, by entrepreneurship education (Gorman, Hanlon, & King, 1997, p. 63). Given the widely accepted concept that entrepreneurial ventures are the key to innovation, productivity, and effective competition (Plaschka and Welsch, 1990); the question of whether entrepreneurship can be taught is out of date. Ronstadt (1987) posed the more relevant question regarding entrepreneurial education: what should be taught and how should it be taught?

History of Entrepreneurship Education

Albert Einstein has stated that “Logic will get you from A to B. Imagination will take you everywhere”.Nearly 800 years ago there are documented stories about the need for a good reputation in developing a small business. “Next comes reputation. A good reputation is indispensable to a successful business” Most comprehensive chronology of entrepreneurship education developed by Katz in 2003 included economic and agricultural literature and experiences dating back to 1876 and others have touted the Havard courses in 1947 the reality of entrepreneurship education in business schools began in early 1970s. By early 80s over 300 Universities were conducting courses in entrepreneurship and by the 90 s number increased to 1050 schools ( Solomon, et at., 1994 ) As such, exact emergence of entrepreneurship education took place in 1980s. In the year 1987, Zeithaml & Rice reviewed some of the pioneering universities of entrepreneurship Education in the Untied States of America. Several suggestions for the future education and research in the entrepreneurship are included in Zeitham’s review.

Entrepreneurship and ancient Greek Society

The ethical, social, legal and economic limits forced on ancient Greek Society ruled out the role of the entrepreneur as the forceful and vigorous force in economic activity which has proved so productive during more current times. The entrepreneur played a more conservative role which tendered more towards the conservation than the accumulation of wealth. Yet, the writers recognized some of the functions of entrepreneurship which were also noted in the pre-classical and early classical economic literature. What they said could be best shown by dividing the production activities of economic man into following;

I. Pure capitalist,

II. Capitalist entrepreneur and

III. Labourer-entrepreneur.

Personality traits of Entrepreneur

Looking at personality traits of what is called an Entrepreneur, this is an amalgam of a number of outlines but is centered on the work of Gibbs. A summary overview is presented by Stanworth and Gray and it used to be based on a mixture of the following traits:-

I. Extrovert

II. Decision maker

III. Problem solver

IV. Positive

V. Self reliance

VI. Needing control

VII. Networker

VIII. Single minded

IX. Acceptance of responsibility

X. Able to focus on the customer

XI. Opportunist

XII. Ambitious

XIII. Self confident

XIV. Commitment to achieve and

XV. Visionary

There are softer traits such as:

I. Holistic Manager

II. Facilitator

III. Coach

IV. Mentor

V. Having a sense of family

VI. Delegator

VII. Flexible

VIII. Continuous learner

IX. Having self awareness

X. Persuasive

XI. Acceptance of ambiguity and uncertainty

XII. Intuitive

XIII. Personal networker

XIV. Sense of humour

XV. Able to focus on staff

XVI. Having negotiating skills and

XVII. An information gatherer

Entrepreneurial perspective

Entrepreneurship is more than mere creation of business.It is important characteristics of seeking opportunities, taking risks and having the resolve to drive ideas and concepts to reality. Entrepreneurial perspective can be developed in persons for the purpose of bringing out the creative ideas. Therefore, entrepreneurship is an integrated concept that pervades business in an innovative manner. Not all but many entrepreneurs are motivated by the desire to produce something new and need a change. entrepreneurship may be engaged in the innovation of a new product. It can be using a variety of methods of production or marketing. Anyway, it is also possible that dong nothing more than launching a new business to sell and existing products using existing production techniques.

Entrepreneurial Behaviour

Entrepreneurial Behaviour is the key to innovation and applying new product and service ideas and changes throughout the society. The desire of the entrepreneurship for changes goes hand in hand with the innovation. Most essential fact is the inclination to change the part of the innovation process. Invention is the starting point for innovation, activities of creating something fresh and new. The invention is the best part of entrepreneurial behavior. The performance of invention includes the creating a new product or services, new idea, scientific theory, painting, poem, song, novel, computer software, programs or video. Computer programmers, musicians, writers, and artists have a entrepreneurial inclination. Another common entrepreneurial behavior is those at the forefront of the latest fashions and styles. The fashion means not just clothing but to name a few includes furnishing, automobiles, electronic gadgets, entertainment etc. Great Inventor Thomas Edison once stated “I never perfected an invention that I did not think about in terms of the service it might give others. I find out what the world needs,

then I proceed to invent”.

Historical Appearance

Changes in social and political background are among the most historical appearance of entrepreneurial behavior. For an example birth of United States of America in the late 1700 is a clear example and many other examples display significant entrepreneurial behavior. Entrepreneurial behaviour also surfaces in non specific actions in daily activities. The desire to once in a while take a new route to work is an example. Another is rearranging furniture in a house or office or intermittently visits a different restaurant or go for a new cuisine. Entrepreneurial behavior is also necessary to keep an existing business running smoothly and efficiently.

Contribution of entrepreneurship to the economy

Contribution of entrepreneurs to the economy can be categorized into following three segments;

I. Employment generation

II. Innovation

III. Productivity and growth

Entrepreneurs have very significant function in the economy. They engender relatively much employment creation, productivity, growth and produce quality innovations. More importantly recent research shows that entrepreneurial firms produce important spillovers that affect employment growth rates of all companies in the region in the long run.

Entrepreneurship and Economic growth

Promoting development and entrepreneurship in particular has become a crucial feature of development policy in the recent past. When global development is being in danger by disasters of man made such as wars and natural, financial crisis, climate changes has resulted the need to integrate innovation and the pursuit of profit with role of state and not state sectors is becoming more important. This atmosphere has resulted the necessity to explore the nature of economic development and its link with various concepts of entrepreneurship, evaluates and presents evidence on the development and its link with the various concepts of entrepreneurship. It authenticates the issues and impact of entrepreneurship evaluate and presents evidence and role of entrepreneurship and economic development. It is necessary to evaluate how entrepreneurs can play their innovative responsibility to the benefit of the economy.

Salvation of Economies

Some politicians seem to regard improved levels of entrepreneurship the salvation for economies struggling with declining economic growth rates. Is it true that entrepreneurship unmistakably can be claimed to improve growth? Baume (1990) raises the question whether entrepreneurship always is beneficial for the society. He distinguishes between,

i. Productive entrepreneurship

ii. Unproductive entrepreneurship

iii. Destructive entrepreneurship

It can be argued that an operational of these concepts implies that productive entrepreneurship is entrepreneurship which has a positive effect on GDP while destructive entrepreneurship has a negative effect of GDP (Desai and Aces, 2007). In fact, previous empirical findings give a somewhat scattered image of the role of entrepreneurship for economic growth. Audretsch et al. (2006) provide a somewhat contradictory scenario of the role of entrepreneurship for employment growth. At one point, the importance of new entrepreneurs for stimulating employment growth is emphasized. However, later on the representation is somewhat changed and studies that show that for certain countries and certain durations the evidence is less convincing. Also Henrekson and Stenkula (2007) and Karlsson et al. (2005) find that the empirical evidence regarding the role of entrepreneurship for employment growth. Van Praag and Versloot (2007), on the other hand, present a research overview based on studies published in selected international journals and conclude that entrepreneurs are important to employment growth and productivity.

Pragmatic Studies

Pragmatic studies on the relationship between entrepreneurship and productivity growth usually distinguishes between the effects on total factor productivity (TFP) growthand labour productivity (LP) growth. Ahn (2001) provides an extensive overview of the empirical results regarding importance of firm dynamics for productivity growth. Ahn (2001) concludes that in the short run the effect of new entrepreneurship formation on productivity may actually be negative, but in the long run the new entrepreneurs that actually survive are important to productivity growth. He also concludes that the importance of entry and exit of entrepreneur is more pronounced for TFP compared to LP. It should, nevertheless, be noted that most of the studies included in Ahn’s general idea refer to the manufacturing industry. A apparent reason for the lack of studies covering the service sector is that it is much more easier said than done to calculate productivity in this sector compared to the manufacturing sector. Though, studies that actually are available for the service sector tend to show that firm dynamics seem to be even more important for productivity growth in this sector. Since the overview provided by Ahn (2001) includes the most important studies published before 2001, the rest of this survey will focus on studies published after 2001.

Employment Growth

By the end of the 1970s, Birch (1979) published a study on the importance of small entrepreneurs for employment growth. This study became highly influential to both researchers and policy makers. According to Birch’s study small entrepreneurs, and in particular new entrepreneurs, accounted for the lion’s part of new jobs created in the United States of America. This study was followed by several other studies trying to measure the role of small and new entrepreneurs for employment growth ( e.g. Davidsson et al. 1994). Sadly, many of these studies do not explicitly distinguish between small entrepreneurs and new entrepreneurs. In this review of the empirical evidence have decided to exclude this measure since it regards entrepreneur size as a less straightforward proxy for entrepreneurship ( e.g. van Praag and Versloot, 2007).

Entrepreneurship and employment growth

Prior to proceed to further review the empirical findings in this field, it is important to mention that the causal relationship between entrepreneurship and employment growth, can be expected to be dual. This implies that employment changes can be expected to be influential for entrepreneurship rates. As an example, it obviously the case that the level of unemployment might influence the level of requirement based entrepreneurship i.e. entrepreneurship induced due to lack of other opportunities of employment.

Empirical Results

There are a few researchers who have tried to summarize the empirical results on the relationship between entrepreneurship and employment growth and their findings are in some cases contradictory. Additional frequently cited reviews worth mentioning are Caves (1998) and Geroski (1995). Caves (1998) emphasizes that while the short term employment effects of new entrepreneurship formation may be small the effects may be much more important for long term growth. Geroski (1995) claims that new entrepreneurship formation does not seem to be important for employment growth in the manufacturing industry.

Employment Effects

The employment effect of new firm formation is found to be larger in the manufacturing industry compared to the service sector. Brandt (2004) finds a statically significant relationship. However, the size of the effect is moderate. The study by Brandt (2004) includes nine EU-countries, but it should be emphasized that the study covers a very short period. In disparity to the lack of cross country studies, there are relatively a few empirical studies at the country level available. Ashcroft and Love (1996) study the relationship between new entrepreneurship formation and net employment growth in Great Britain during the 1980s and find a strong positive relationship. Folster (2000) uses self-employment as a measure of entrepreneurship and find that increased levels of self-employment enhanced employment growth. Persson (2004) find that the net employment contribution by entering and exiting firms was positive, while the net contribution by incumbent entrepreneurs was negative. ACS and Armingon (2004) find a strong relationship between new entrepreneurship formation and faster regional employment growth. However, this finding does not seem to be valid for the manufacturing industry. They also reflect on the fact that the immediate employment effect may be rather small since many newly established entrepreneurs do not survive. However, this negative effect, due to the low survival of the new entrepreneurs, is compensated by the growth of the surviving entrepreneurs. Hence, a more dynamic perspective needs to be applied in order to reconcile the full employment effects of entrepreneurship.

Great Entrepreneurs

Great entrepreneurs blend

I. Environment

II. Resources

III. People

IV. Events

V. Information, and

VI. Technology

into an understandable perspective. They comprehend the policies, procedures, and rules of a system and know when and how to stretch beyond given limits, and when to strictly adhere. In brief, they comprehend how the system works, and how to work the system. Their global vision opens up horizons where they see an opportunity-filled environment presenting choices rather than restrictions. Therefore, they operate with an eye on the future with confidence and optimism. The truly great entrepreneurs understand that their actions create a climate of means for all others in their field. They manage a positive image to keep total integrity positive. The entrepreneurs who are behind these organizations continually test their own abilities and willingness to act. They test to see how far they can go and they push allies to test their abilities for development and to know their limits of support. Madam C.J. Walker, creator of a popular line of African-American hair care products and America’s first black female millionaire once has stated “I had to make my own living and my own opportunity. But I made it. Don’t sit down and wait for the opportunities to come. Get up and make them.”

Successful Vs Unsuccessful Entrepreneur

The psychological characteristics used to describe successful entrepreneurs have frequently included the need for achievement, propensity for risk taking, personal and interpersonal values and innovativeness. However, entrepreneurs themselves have a slightly different view of the characteristics which they believe result in enterprise success or failure. Watson, Ponthieu and Doster isolated the following top five constructs which they assigned to successful entrepreneurs;

I. Commitment to Business,

II. Leadership Qualities

III. Self-Motivation

IV. Customer Service and Business planning and

V. Organizing

In the contrary, the top five constructs, they assigned to unsuccessful entrepreneurs were ineffective planning and Organizing

I. Lack of Commitment

II. Poor Ethics

III. Poor resources management, and

IV. Lack of business knowledge

V. Lack of Skills

Conclusion

Attempts to characterize successful entrepreneurs have raised a number of issues. Brandstatter suggests that, although there are many reasons why so many new entrepreneurs fail within the first five years, misfit of personality structure and task structure may be one of the most common causes of failure. Furthermore, it is emotional stability and independence that foster the skills necessary for business success, especially during the initialization phase when entrepreneurs need to

(a) have the courage to take risks and

(b) have the flexibility

However, Chell et al concluded: “The skills necessary to ensure the growth and development of an enterprise may well be different from those required to conceive and launch a business.” This view of the entrepreneurial process as a dynamic one is becoming more widely recognized, as an example it has been argued that as an organization enters a growth phase there is an increasing need for entrepreneurs to have `managerial skills’. It is pertinent to quote from Napoleon Hill “If you cannot do great things, do small things in a great way”. Analyzing facts, and figures in respect of the importance of entrepreneurship locally or globally or in specific nations it can be concluded that the higher the levels of entrepreneurship is in the nation the higher is its level of development.