Positive Impact of Entrepreneurs on Business Environment - Research Paper Example

?Literature Review Table of Contents Literature Review 3 Analysis of Characteristics of Entrepreneur 3 Positive Impact of Entrepreneurs on Business Environment 6 How Entrepreneurs Create Business Success 8 References 12 Literature Review Analysis of Characteristics of Entrepreneur The characteristics of entrepreneur are believed to be a key determinant in business effectiveness. Li (2009) stated that personal aspects of individuals which tend to have an impact on the business performance are personality traits and capabilities with respect to the procedure of entrepreneurship. Emphasising on a similar context, Kiggundu (2002) argued that the overall entrepreneurial capabilities are attributes of entrepreneurship which comprise approaches, principles, knowledge, skills, personality traits and behavioural attitudes. These attributes are further directed towards the effective accomplishment of success in business. Correspondingly, as stated by Sarwoko & et. al., (2013), entrepreneurial characteristics are determined with a person by his/her level of education, individual morals, age, work capabilities, moral support and professional support. Sorensen & Chang (2006) also noted a similar perspective stating that entrepreneurial characteristics which determine the business success comprise psychological factors and educational factors. It is in this context that psychological factors which essentially constitute a successful entrepreneur comprise requirement of accomplishment, locus of control and personality traits. These factors are further noted to impose a direct impact on the business performance. In the similar context, educational factor such as higher education is also believed to have a considerable impact on entrepreneurship as it reflects the capability of entrepreneurs or specific individuals in business in comparison to average people. Blackman (2003) had divided the characteristics of an entrepreneur into two types which can be identified attribute and attained qualification. Attribute, in this contest refers to the age, gender, religion and family background of the entrepreneur which are learnt to accumulatively create substantial effects on his/her characteristics. On the other hand, attained qualifications such as education and business experiences also have strong influences on entrepreneurial characteristics of an individual. The study of Shane & et. al. (2003) described in this regard that establishment of entrepreneurial character is influenced by several external and internal aspects such as social and business environment, education level, individual values and work experiences among others. Furthermore, Islam & et. al. (2011) noted that characteristics of entrepreneur can be referred to the demographic features, individual features, personality traits, entrepreneur alignments and entrepreneur willingness. Several researches on entrepreneurship had found that demographic characteristics such as age, gender and socio-economic background accumulatively imposes considerable influence on entrepreneurial objectives, efforts, individual qualities and personality traits such as self-assurance and persistence, independence, innovativeness, risk taking behaviour, reactiveness, aggressiveness and inspiration. Zacharakis & et. al. (2000) also found that people with the age group from 25 to 44 years were mostly active in entrepreneurial activities. Majority of the successful entrepreneurs were also learnt to be somewhat younger in age. With respect to gender, it can be observed that women are usually less prospective to be a founder of a new enterprise, than men. In this regard, Zacharakis & et. al. (2000) revealed that males pursue significantly higher entrepreneurial objective in comparison to females. The success of business is classified into three categories which are individual characteristics of entrepreneur, organisational characteristics and environmental nature. In this context, it can be stated that individual characteristics comprise attributes such as education, managerial experiences, industrial understanding and social abilities which can be further assessed to define the entrepreneurial capabilities in the individual. The education qualities pursued by an entrepreneur generates independent enterprising abilities. Furthermore, education also enhances the creation of new ventures, the prospect of self-employment, possibility of developing new products and opportunity of owning a high-tech business. Besides, several researches have also revealed that entrepreneurship education can enhance the sales growth of evolving organisations. Sinha (1996) also stated that entrepreneur with higher commercial and technical background usually acquire better place to understand and examine reality and handle it instinctively, which appears to play a vital role in business effectiveness (Islam & et. al., 2011). The personal characteristics of entrepreneur have also gained considerable interest with respect to business success and failure. In accordance with the study of Yusuf (1995), the personal qualities of an entrepreneur such as self-assurance and determination can have a substantial impact on organisational success. One of the most important personal characteristics of entrepreneur is passion. In this context, it can be stated that when people feel passionate about their work, they care intensely about it. Entrepreneurs have also been found to be more concerned with their work, rather than making money. Although income happens to be a vital factor for entrepreneurship, the amount of income is often perceived as a secondary aspect for entrepreneurs in the real life scenario. The other important characteristic of entrepreneurs is revealed as the behavioural trait of self-reliance (Yusuf, 1995). As revealed in the report by University of Illinois Extension (n.d.), entrepreneurs seldom wait for gaining suggestions from other persons. Entrepreneurs are mostly characterised as self-starter and always feel assertive regarding making any kind of business decisions. Apart from that, entrepreneurs also have other qualities such as self driven attitude, determination and the capability to complete responsibilities. Moreover, they are opportunity focused and forward looking. Entrepreneurs are also capable of setting both short-run and log-run objectives depending upon their vision about the future of business and accordingly work harder in order to accomplish it (University of Illinois Extension, n.d.). Entrepreneurs also have other characteristics such as ambition, persistence, capability to complete tasks and readiness of working hard. Entrepreneurs tend to prosper on competition. In other words, they constantly attempt to develop their own performance irrespective of other competitors’ strategies. The intrinsic characteristics of entrepreneurs can be further identified as creativity. They always search for innovative and improved ways for conducting business activities. To conclude, it can be stated that entrepreneurs have high willingness to learn and obtain valuable information and knowledge from others which the help to gain success in business (University of Illinois Extension, n.d.). Positive Impact of Entrepreneurs on Business Environment Entrepreneurism has been found to have a positive impact on the business environment. The most important reason why entrepreneurs assist in enhancing the business environment is through invention. New invention can help to enhance the competitiveness, because it provides a better way to satisfying people. Besides, new business can also contribute to the overall growth of economy. Entrepreneurs also impose certain degree of impact on business environment by creating wealth and by pursuing new business opportunities. Although wealth creation is not the reason for seeking entrepreneurial activities, it considerably influences the existing business environment within a particular economic region. By developing new products or services, entrepreneurs can enhance the bargaining power of consumers by providing added advantages to the economy by ground-breaking business ideas (Young Entrepreneurs of America, n.d.). According to Acs (2007) entrepreneurs can create new businesses which in sequence create new employment opportunities. As a result, it deepens the competitiveness in business environment and can even enhance the efficiency by bringing change in the traditional business activities. It is believed that new businesses act as an instrument for knowledge dissemination and knowledge utilisation as well within the economic region. Entrepreneurs founded to take advantage of plentiful unemployed knowledge and therefore strengthen creativity by developing new products and business procedures. Nevertheless, the origin of business opportunities is also driven by the existence of research intensive incumbent. Hence, the larger the presence of knowledge and technology incumbent, the more entrepreneurial chances will appear (Acs, 2007). According to Chou (2008) entrepreneurship is the core of gaining competitive advantage for business. Entrepreneurial activities can also significantly influence the sales growth, market share, productivity, overall business performance and customer satisfaction. The construct of entrepreneurial orientation on business environment is subject to products and/or services innovation which assumes risky endeavours. These risky endeavours however help to change the competitive business landscape. Impact of entrepreneurial activities on business environment is determined by five aspects which are entrepreneurial reactiveness, risk taking behaviour, creativity, competitive aggressiveness and independence. Schumpeter, in this regard, observed that entrepreneurship as an economic procedure of creative destruction by which wealth is generated and as a result, the business environment is interrupted. Schumpeter also stated that by creating new products and/or services, entrepreneurships cause new business to expand. The innovative behaviour of entrepreneur is observed as prime endogenous cause of change in the business environment. On the other hand, Drucker describes entrepreneurship as creation of new business opportunities. The most vital attribute of entrepreneur which tends to impose strong impacts on the business environment is the inclination to move from traditional methods of conducting business. Innovation and creativity are conditions which are inherent in the role of entrepreneurship reflecting the organisation’s desire to develop products and commercial progresses (Chou, 2008). Chamduang & et. al. (2012) stated that entrepreneurial activities are considered as searching for new prospects on the introduction of new products and/or services in order to create changes in the business environment. Entrepreneurs, with their abilities have further been affirmed to possess the ability to anticipate the tendencies of people, and accordingly follow the innovative activities. To conclude, entrepreneurial activities are achievement oriented which concentrate on taking new initiative, creating transformation and predicting evolution in the existing business environment (Chamduang & et. al., 2012). How Entrepreneurs Create Business Success The success of businesses at the company level and also, the sustenance of the overall business environment depend on several factors among which, entrepreneurial approaches are considered as one of the key attributes. In the modern day context, it has often been argued that the qualifications, commercial knowledge, understanding and expertise of entrepreneurs play a vital role in the success of a business. According to Driessen & et. al. (2010), the belief, persistence and decisiveness of entrepreneur play a pivotal role in the successful accomplishment of pre-determined business objectives which further contribute to the long-term competitiveness of the business. They have stated that entrepreneurship comprises the capability to establish a team with corresponding skills and talents that assist in business progress by a substantial extent. Creating business is a complex procedure which is characterised by difficulties, success and failures. From the study of Mehralizadeh & Sajady (2006), it can be observed that several businesses unable to survive in the first year of business. Researchers have recognised significant influences in the success of small business. Among all influences, entrepreneurs play a vital role for business success. In a general sense, success of businesses is associated with the accomplishment of objectives. It is often used for describing financial performances of a particular business unit. From financial perspective, success of business can be observed from the level of sales, effectiveness, rate of return of capital and the market share. Li & et. al. (2005) use three indicators in order to measure the success of business, which are effectiveness, growth and profit. However, in reality, it can be stated that business success is actually a phenomenon of numerous aspects which are hard to be quantified. As explained by Lee & Tsang (2001) in this regard, experience, job development activities, business associates and the desire of entrepreneurs have positive impacts on business success. It is worth mentioning that several researches observed the personalities of entrepreneurs for business success. Historically, it can be observed that majority of individuals who have entered in the business was due to certain family influences or interests. Nevertheless, from the viewpoint of personality, emerging opinions observe that particular traits of entrepreneurs help to make successful businesses. Sirec & Mocnik (2010) stated that one of most important aspects of entrepreneurship which act in favour of business success is the ‘need to achieve’. The need to achieve is the reason for entrepreneurs to accomplish the business objectives. Several researchers found that the need to achieve is the key element of entrepreneurs’ behavioural orientation. ‘Need to achieve’ is associated with independent alignment, risk taking tendencies and awareness of control business activities. Thus, this characteristic of entrepreneur helps to accomplish difficult organisational objectives by providing more dedication towards tasks and by compromising other activities along with individual time, resulting in business success (Sirec & Mocnik, 2010). Boohene & et. al., (2012) further affirmed that the emotional constancy and individuality of entrepreneurs nurture the skills necessary for business success, particularly throughout the initialisation phase when entrepreneurs require having courage to take risks and having the flexibility and tenacity to follow their objectives. It is therefore argued that the risk tolerance activity of entrepreneurs is a key contributor of business success. The risk tolerance ability of any individual is further argued to be based on individual’s self-assurance and perception on controlling the business activities. Researches also identified that successful entrepreneurs represent an attitude of self-determined and independence that further express their innovativeness and explore new thoughts without requiring support of others. Position towards independent behaviour requires the capability and the determination to be self-directed in the quest of business opportunities. It is therefore related with an opportunistic, risk alignment and creative behaviour that can lead towards the development of a new business. However, the success of the new businesses require proper planning comprising in-depth market research, identification of primary customers and business expansion concerns among other activities. Through planning, entrepreneurs are capable of taking advantages of business opportunities. It also helps to create the vision for future of businesses, to develop the required business objectives and to make procedures in order to accomplish the vision (Mehralizadeh & Sajady, 2006). It has also been observed in this context that most of the business failures in the US have been instigated fundamentally due to the lack of general management abilities and planning of entrepreneurs. There are several mistakes of entrepreneurs which can be attributed as vital causing factors for business failures such as entering in the business for wrong motives, underestimation of time requirements, pressure of time and money obligations, egotism, low level of market understanding, low level of awareness about financial accountability and lack of concentration among others (Mehralizadeh & Sajady, 2006). Business success can be demarcated in several ways. Several researches describe success as survival of a business for a period of at least five years. The character of entrepreneur thus describes the success in economic ways. It is in this context that although adequate capital and managerial abilities are crucial for business survival, they are rarely sufficient for business success. Therefore, the survival of business must be complemented by entrepreneurial aspects such as inspiration, hard work, determination and flexibility among others (Driessen & et. al., 2010). 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