Entrepreneurship And Small Business Development - Essay Example

Entrepreneurship And Small Business Development Table of Contents Table of Contents 1 Introduction 2 An overview of the theory of leadership as applied to entrepreneurs 3 Practical work 7 Analysis 10 Conclusion 12 References 14 Introduction Traditionally entrepreneurship is considered to be one of the oldest courses of action (Landstrom, 2009, p.3). Entrepreneurship is defined as the process of exploring the prospects of the marketplace and also to accumulate the capital required for exploiting the chances of market. It can be portrayed as the process of grabbing the opportunities of market place by offering superior quality goods and services. Entrepreneurship is also about making proper plans, and arranging the resources required for converting the market opportunities into reality (Dyck and Neubert, 2008, p.173). While on the other hand an entrepreneur is an individual who is focused upon the decision of allocation and harmonization of scarce resources (Casson, 2003, p.19). Bill Gates, Steven Spielberg, Sam Walton, Gordon Moore, Ted Turner and Alan Sugar are among the eminent entrepreneurs of the world (Finance in the classroom, n.d.). However in the context of this project Alan Sugar, the owner of Amstrad will be chosen as the entrepreneur on whom the study will be conducted. Alan Sugar is a successful entrepreneur and tasted success at an early age. The leadership skills of Alan Sugar are also noticeable. Hence considering all the relevant facts Alan Sugar is the ideal person. The study will focus upon the attributes associated with an entrepreneur and also the theories related to it. The report will also highlight the relation between the entrepreneurs and the theories applied. The report will then try to give an insight about the entrepreneur by considering the literature and the practical work. Finally after analyzing the finding from the study a conclusion will be drawn which will portray whether the null hypothesis hold true or it is rejected. An overview of the theory of leadership as applied to entrepreneurs Entrepreneurship has always been a subject of study that has been highly researched and theorized, and is still in the developmental stage. Earlier studies have proposed that entrepreneurs are more inclined to unique psychological needs and are also more spontaneous, motivated to achieve their goals, takes more challenges and are also prone to take more risks. Hence an entrepreneur has to adopt according to the demand of the situation. The most important functions of an entrepreneur are as follows:- 1. Organization building: - An entrepreneur needs to organize all the relevant elements such as manpower, material and the related resources. The entrepreneur has to perform the function of planning, organization and monitoring. The entrepreneur also needs to use the leadership skills to build a team, accumulate resources and finally solve the problems. According to Kilby, entrepreneurship is an important activity in developing countries and encompasses the following rule. Purchasing inputs. Managing finance. Managing production. Attaining charge over the limited resource. 2. Bearing Uncertainty and Risk: - According to the author Andrew F. Newman an entrepreneur has to bear huge risk and uncertainty (Newman, 2007, p.1-2). Every decision related to the creation of a new product, incorporating new technologies, and taking up foreign venture involves risk and uncertainty. Thus in this uncertain environment entrepreneurs needs to make decision by forecasting the associated risk. Since entrepreneurs are not gamblers therefore they takes calculated risks. Entrepreneurs also lead, create and take actions. Therefore all the mentioned behaviours produce leadership competencies. Leadership is about selecting the appropriate style according to the situation. Also the characteristics of the person, who is being guided needs to be considered (BBC, 2006). The leadership qualities are an important characteristic for an entrepreneur. The theory of leadership proposed states that an entrepreneur has all the five behaviours with all the behaviours leveraging on the others, until it defines the characteristics of an entrepreneur. Thus in relation with the leadership qualities an entrepreneur also possesses the qualities such as innovation, action achievement, leadership and organizational growth. The aforementioned characteristics or traits of an entrepreneur are proposed by earlier researchers and scholars. Scholars also indicated that entrepreneurs have a knack of taking challenges, more consistent and also holds the courage to take more risks. Now the five important attributes are described below:- Entrepreneurs are continuous innovator: - According to Schumpeter innovation is the most significant function that is to be performed by an entrepreneur (Publish Your Articles, n.d.). An entrepreneur makes use of his\her knowledge, skills and intuition to come up with new ideas and finally transforms it into products and services. Entrepreneurs also have the ability to solve the problem with more ease as well as economically. An entrepreneur also has the enthusiasm to pursue his/her next discovery. Qualities of leadership are also important for an entrepreneur. Creativity also plays an important role towards the invention and innovation. Thus it allows the following innovative opportunity:- Unexpected success or unexpected failure. Modification in the industry as well as market structure. Changes in demography. New knowledge. Driven by achievement: - As the vision gets exposed, the entrepreneurs are then gets driven by the purpose to convert their ideas or innovations into reality. According to Gurtner entrepreneurs are perceived to have achieved the things that most of the people could not achieve. Processes such as mind mapping, brain storming and possibility thinking are used by entrepreneurs in order to formulate the envisioned solution. However the intensity in which an entrepreneur proceeds purely depends upon the chosen product or service. Takes action: - Entrepreneurs undertake actions from their gut, instinct and perceptions. They do not depend upon any recommendation or decision of others. However taking decision in such a manner involves huge risks. This provides many advantages as well as disadvantages to the entrepreneurs. Authentic Leader: - An entrepreneur is highly committed, dedicated, and passionate and also directed about their core beliefs and leadership philosophies. They also remain true to themselves as well as true to others. Organization builder: - According to Gartner an entrepreneur is an organization builder. An entrepreneur not only keeps on increasing the business but also understands that the employees are the sole of the business success. The theory of leadership also states that an entrepreneur also leads by the 4 factors of innovation, achievement, taking corrective action and also being authentic. Once the 4 factors get accomplished an organizational growth takes place by dispersion of social networking and entrepreneurial knowledge. A study conducted by the Open University revealed that apart from the aforementioned leadership traits, there are some other characteristics as well. They have identified 14 new traits or the indispensable characteristics of a successful entrepreneur. The traits are self confidence, drive and energy, internal locus of control, personal responsibility and high initiative, less fear for failure, acceptance of uncertainty, risk taking attitude, long term involvement, high end use of customer feedback, money as the determining factor and not the closing stages, practical approach towards the problems, proper use of the scarce resource, self imposed standards and a apparent goal setting behaviour (The Open University, 2006). Therefore on an overall view the hypothesis for the project can be formulated as below:- H0- Leadership qualities are necessary for becoming a successful entrepreneur. H1- Leadership qualities are not necessary for becoming a successful entrepreneur. Practical work There were a number of different sources consulted in the process of studying the relation between an entrepreneur and its relationship with the qualities of leadership. The sources include books, journals, articles, and other authentic electronic sources. Among the sources article such as “Who is an entrepreneur? Is the wrong question” by William B Gartner will be mainly used during the course of the study. Apart from this books named “Entrepreneurship: theory, process, practise” by Donald F. Kuratko, Richard M. Hodgetts and also the book titled “Handbook of Entrepreneurship Research: An Interdisciplinary Survey and Introduction” by the author’s Zoltán J. Ács, & David B. Audretsch will be conferred. Some other authentic electronic sources will also be used in the study. Most importantly the study has also considered some of the previous works of some eminent scholars. All the relevant data are collected from the either internet or from the library. However newspaper and some magazines were also considered for the study. The research is purely dependent upon the secondary nature; hence there will be hardly any use of primary data. In the context of the project quantitative approach will be followed. This approach is mainly related with the positivist hypothesis (Alzheimer Europe, n.d.). Sometime in a research study due to any reason the outcome of the exploration and originality differs. In other words there can be dissimilarities in the reality and the result of the research result. Therefore in this context of the project, naturally there is always a question of bias arises. It can be tested at any stage of the study, so as to measure its path and ensure the validity (The University of Sydney, n.d.). Bias can be of various types such as design bias, sampling bias, procedural bias, measurement bias, interviewer bias, response bias and finally reporting bias (Tigger, n.d.). While on the other hand distortion is referred to as deformation of the original work. The possible sources of bias and distortion can be difficult terminologies in the instruction or unclear instruction, there can be more focus on theory and then the study may lack analysis and the bias can generate from selection of literature, measurement and the interpretation (Umdnj, n.d.). Hence in order to prevent bias and distortion of the report following steps has been taken. The Restriction at the design has been undertaken to avoid any bias. The study is only confined to the applicable literatures. Only authentic data sources have been used. Randomization technique can be also applied to avoid bias. Finally eliminating the sources of bias which includes irrelevant and unauthentic data sources. In the context of the project Alan M. Sugar has been selected as the entrepreneur. The study will be based entirely on him. Mostly his leadership qualities will be studied and also it will try to synthesise entrepreneurship and leadership. Therefore to move on with the project a brief introduction of Sir Alan M. Sugar is presented below:- Alan M. Sugar was born in Hackney, East London during the year 1947. He was born into a Jewish family. He is the owner of the electronics giant Amstrad. The other business ventures Alan Sugar of includes Am air, Amsprop, Viglen Ltd, Am screen and Youview. During 1991 he also bought the famous football club Tottenham Hotspur along with Terry Venables (Jewage, n.d.). His journey started with a very nominal amount of capital and now his company is worth $ 1.14 billion. Alan Sugar was ranked at the 89th position in the latest edition of Sunday Times Rich List. He was very much active in the field of politics and has also strong presence in television. Alan Sugar is popular face in the apprentice, a British reality television series which is broadcasted annually since the year 2005. Apart from this he was also highly involved in the political field. The biggest achievement came in the year 2000, when he was knighted for his contribution towards business. Later he became popular as Sir Alan Sugar. Analysis Now in the perspective of the selected entrepreneur i.e. Alan M. Sugar, he carries huge leadership skills. At an early age of 21 he succeeded to register the name of Amstrad, as a company selling electrical equipments. This depicts the inborn leadership qualities of Alan Sugar. He was even a dropout of school at the age of 16. Hence it is very much clear that he did not have any formal training of enhancing the leadership skills. The leadership skills are therefore stated as inborn and sometimes inherited. It is also not possible to train somebody to become a leader. Moreover he also left the job of civil service for starting his own business. Such approaches portray his risk taking ability and also to undertake challenges. Risk taking According to Sir Alan Sugar, he never had an idea of becoming so rich and successful, but the driving force was to become a self sufficient person and to ignore working under any boss. Hence it also demonstrates the qualities a true leader possesses. The action taking quality is truly justified. He has taken the decision of leaving the job he was doing and starting a new venture was purely based upon the guts. The quality of risk taking is also justified in this context. The company within two years of its incorporation took the competitors by surprise. The products such as turn table covers made with injection molding plastics highly contrasted the traditional vacuum molds. The success of this product has helped the company to register itself at the London stock exchange. Such product depicts the qualities of a true innovator. It is a fact that only creativity and innovation gives birth to such products. He also possesses the quality of an authentic leader as he has always remained highly dedicated and committed towards his work. Studies also revealed that Sir Alan Sugar was a transactional business leader as he tends to make slow and steady changes in his business. He has never opted for any radical change in the business. Thus he never intends for a change until the situation demands. Sir Alan Sugar’s leadership style was very much one dimensional, therefore such leadership quality has provided high satisfaction to the employees and they will also work for a longer period of time. Therefore after studying Sir Alan M. Sugar in the context of his leadership skills the key findings are as follows:- Alan sugar is a highly innovative and creative person and thus given physical forms to some of the renowned products of this era. Apart from his high innovation and creativity, he was a brave decision maker and has taken many risks. He also has the qualities of an authentic leader. Therefore on a whole it can be stated that in order to become a successful entrepreneur, leadership skills are essential. However apart from leadership skills other attributes are also significant towards becoming a successful entrepreneurial leader. Conclusion The study was about entrepreneurship and to assess the associated characteristics. Entrepreneurs are those who build their resources and funds by taking huge risk as well as employing uncertainty. The report was also about choosing an entrepreneur and to relate the leadership theories along with him/her. Now in order to conduct the Sir Alan M Sugar was chosen as the entrepreneur for the purpose of completion of study. However the primary objective of the study was to find and test whether the null hypothesis holds true or its gets rejected. The null hypothesis in this report was taken as ‘leadership qualities are essential for an entrepreneur to be successful’ and the alternative hypothesis was taken as ‘leadership qualities are not essential for an entrepreneur to be successful. The findings of the study revealed that leadership qualities are very much essential for a successful entrepreneur. The chosen entrepreneur i.e. Sir Alan M. Sugar also possess many leadership qualities such as the quality of taking action, authentic leadership, innovation and also organization building and the qualities such as risk taking and uncertainty. The study revealed that he was a dropout of school at the age of 16, and has also taken the risk of leaving his job and start a new business venture on his own. His decision purely depicts the risk taking nature and to face the challenges of the business environment. The products of the company highly reflect the creativity and innovation behind its development. Even some characteristics such as commitment and dedication represent his authentic style of leadership. Therefore in this respect it portrays that leadership qualities are essential for becoming a successful entrepreneur. Hence the null hypothesis holds true for this study. However apart from the leadership qualities there are certain set of traits, that are also essential for becoming a successful entrepreneur. For example self discipline, integrity, self motivator, passion for work, competitiveness, ability of selling and various other personality characteristics are also necessary for becoming successful. References Alzheimer Europe, No Date. The four main approaches. [Online] Available at: [Accessed 27 June 2012]. BBC, 2006. Head to head: Tough boss, good boss. [Online] Available at: [Accessed 27 June 2012]. Casson, M., 2003. The Entrepreneur: An Economic Theory. 2nd ed. Massachusetts: Edward Elgar Publishing. Dyck, B., and Neubert, M., 2008. Management: Current Practices and New Directions. Connecticut: Cengage Learning. Finance in the classroom, No Date. Inside the Vault Entrepreneurship. [Pdf] Available at: < http://financeintheclassroom.org/downloads/Entrepreneurship.pdf> [Accessed 28 June 2012]. Jewage, No Date. Alan Sugar – Biography. [Online] Available at: [Accessed 27 June 2012]. Landstrom, H., 2009. Pioneers in Entrepreneurship and Small Business Research. New York: Springer. Newman, A. F., 2007. Risk-Bearing and Entrepreneurship. [Pdf] Available at: [Accessed 27 June 2012]. Publish Your Articles, No Date. 4 essential qualities of a successful entrepreneur. [Online] Available at: [Accessed 27 June 2012]. The Open University, 2006. What makes an entrepreneur. [Online] Available at: < http://www.open.edu/openlearn/money-management/management/business-studies/what-makes-entrepreneur> [Accessed 28 June 2012]. The University of Sydney, No Date. Introduction to Bias in Research. [Pdf] Available at: [Accessed 27 June 2012]. Tigger, No Date. Research Bias. [Online] Available at: [Accessed 27 June 2012]. Umdnj, No Date. Major Sources of Bias in Research Studies. [Online] Available at: [Accessed 27 June 2012]. Bibliography Acs, Z. J and Audretsch, D. B., 2010. Handbook of Entrepreneurship Research: An Interdisciplinary Survey and Introduction. 2nd ed. New York: Springer. Bass, B., 1985. Leadership and performance beyond expectations. New York: The Free Press. Blake, R.R. and J.S. Mouton., 1964. The managerial grid. Houston: Gulf Publishing Company. Buchanan, D. and Huczynski, A. 2004. Organizational Behaviour: an introductory text. 5th ed. Harlow: Pearson Education Limited. Hisrich., 2011. Entrepreneurship. New Delhi: Tata McGraw-Hill Education. Collins, J. 2002. Good to great: Why some companies make the leap and others don’t. New York: Harper Collins. Kuratko, D. F., and Hodgetts, R. M., 2008. Entrepreneurship: Theory, Process, Practice. 8th ed. Connecticut: Cengage Learning. Northouse, P. G., 2009. Leadership: Theory and Practice. 5th ed. California: SAGE. Read More