Different conceptions of entrepreneurial strategies - Essay Example

Economics and Business Strategies Table of Contents Introduction 3 Schumpeter’s and Kirzner’s Conception of Entrepreneurial Strategies 4 Various Conditions for Entrepreneurship 6 Conclusion 11 References 12 Introduction The principles of entrepreneurship are recognised as essential components for the progression and the advancement of financial or economic actions. It is a continuous procedure of financial development. According to Schumpeter, an entrepreneur is a person who acts as an innovator by executing certain transformations within the financial market through utilising various resources. Schumpeter also defines entrepreneurship as an innovative function and necessarily a financial activity. The financial activity along with the purpose of attaining maximum revenue can only be fulfilled by encouraging upon the outlook towards the principle of entrepreneurship (Ahmad & Seymour, n.d.). According to Kirzner, an entrepreneur is recognized by the activities that an individual performs within the market economy. It is the entrepreneur who organises the plans and creates new products along with modernising the production system. Kirzner also defined entrepreneurship as an organising element of the market, working for technical process advancement and development along with affecting various financial market theories (High, 2009). In the paper, the different conceptions of entrepreneurial strategies that are presented by Schumpeter and Kirzner are taken into concern in the discussion. Various aspects with regard to the deliberate efforts of Robert Frank relating to the case study of Ed Bazinet and Tim Blixseth along with justification of the diverse arguments of Schumpeter and Kirzner are also considered in the discussion of this paper. Schumpeter’s and Kirzner’s Conception of Entrepreneurial Strategies It has been identified that the conceptions of different entrepreneurship strategies that are floated by Schumpeter and Kirzner were mainly based on certain aspects that include driving the financial procedure away from economical balance and driving the financial procedure towards economical balance among others. One of the entrepreneurial strategies that Schumpeter remarked was that the resources which are drawn from the existing utilised components are recombined to form a dynamic model for the economy (Mathews, 2006). This particular conception of recombining would eventually insist the entrepreneur in order to draw the resources from their existing utilisation and ultimately to recombine them. In this context, the entrepreneur would generate new combinations of the resources for the purpose of creating new activities that help towards the progression as well as the advancement of the market economy of the entrepreneur (Mathews, 2006). On the other hand, according to Kirzner, the entrepreneur plays a role as a financial agent, who may realise the requirement of the resources, become familiar with the opportunities relating to profit and act accordingly with the opportunities through activation and resource mobilisation. This particular strategy of Kirzner was based to attain expected result i.e. entrepreneurial income or profit on behalf of the entrepreneur (Mathews, 2006). The other important strategy of Schumpeter was in the fact of generating and maintaining a position of disequilibrium. In lieu of this, Schumpeter greatly emphasised a strong association between entrepreneurial attitude and innovation along with generating the position of disequilibrium. The main reason for generating and maintaining the position of disequilibrium is to enhance different entrepreneurial initiatives taken by the entrepreneurs and to maintain the economical balance within the market economy (Mathews, 2006). On the other side, Kirzner’s conception of entrepreneurship strategies was fundamentally based on “alertness” towards various opportunities relating to profit, which is one of the significant as well as well recognised approaches of economics. According to Kirzner, an entrepreneur is very much conscious and alert towards a new product or towards a finer production procedure. Kirzner regarded entrepreneurship as “extra-economic” which implied that the entrepreneurs of Kirzner do not possess individual capital and hence they are required to be aware towards income opportunities (Klein & Cook, 2005). The other entrepreneurial strategy of Schumpeter laid in the fact that the ‘corporate entrepreneurship’ is visualised as a deliberate effort to enlarge the competitive benefit of a business organisation through executing and conducting in-house innovations. This particular entrepreneurial strategy of Schumpeter eventually maintains the competition balance within an industry (Ferreira, 2002). According to Schumpeter, corporate entrepreneurship is a procedure of initialising various dimensions such as venturing and innovation along with developing the market economy through implementing or undertaking process, technical, product and managerial modernizations among others (Ferreira, 2002). Kirzner did not regard the significant factor of innovation as the entrepreneurial strategies. For him, the factor of innovation is not prioritised to be e crucial element in the entrepreneurial strategies. Kirzner introduced the concept of “pure entrepreneur” who is very much aware of his opportunities and purchases goods or utilises the resources and ultimately possesses the capability to sell them at a profit. Kirzner greatly believes that the “pure entrepreneur” is more adept and faster as compared to others while responding towards any limitation or modification that prevails in the financial market (Ferreira, 2002). Thus, in the Kirzner’s views and conceptions, the various entrepreneurial opportunities neither require the new products’ introduction, nor they demand technically more effective production procedures. In order to attain various entrepreneurial opportunities, Kirzner mainly emphasised upon the alerting features of the entrepreneur that generates from the market circumstances (Ferreira, 2002). Various Conditions for Entrepreneurship There lie various conditions for entrepreneurship which is undertaken by an individual or a business organisation that ultimately direct towards certain transformations in the marketplaces. The numerous essential circumstances for entrepreneurship include the survival or the continuation of diverse entrepreneurial opportunities regarding certain ecological transformations. These transformations include technical, social and political factors among others and thus making differentiation between the people in their compliance and capability to respond upon an opportunity (Stam, n.d.). The several other conditions also include various uncertainties or risks until the entrepreneur pursues the opportunity, organising an innovative approach of developing the opportunity and recombining of the resources in order to evolve a change in the marketplace (Stam, n.d.). By focusing upon Frank’s work relating to the life history as well as the business making policies of Ed Bazinet and Tim Blixseth, it can be stated that these two entrepreneurs belonged to average families who executed various entrepreneurial strategies and flourished greatly in the financial market. Frank indentified that the crucial reason behind the success of these two great entrepreneurs in the business world is that these entrepreneurs possessed a good will to work, executed better ideas and loved their work and always thought about their business (Frank, 2008). The cases which have been provided by Frank relating to the case study of great businessman individuals such as Ed Bazinet and Tim Blixseth, it can be stated that both the businessmen followed a variety of entrepreneurship strategies which were associated with the conception of innovation and capitalism (Ferreira, 2002). In this connection, Schumpeter brilliantly symbolised innovation as “industrial mutation” which implied towards constant demolition of the old theory and generating a new one in order to attain success into the business world. Schumpeter defined this particular procedure as the procedure of ‘Creative Destruction’ and according to him; ‘Creative Destruction’ is the necessary piece of evidence regarding the conception of capitalism (Ferreira, 2002). In lieu of the case studies relating to Ed Bazinet and Tim Blixseth that have been provided by Frank, it can be stated that both these businessmen had a remarkable journey while executing their business operations and ultimately flourished greatly into the business world. Relating to these case studies, Schumpeter and Kirzner, the two great and notable economists have made important and remarkable contributions towards the thought and idea of entrepreneurship for the entrepreneurs. According to the case studies of Ed Bazinet and Tim Blixseth, Schumpeter and Kirzner held noticeably dissimilar viewpoints upon entrepreneurship and the role of entrepreneurs in a capitalist economy. In this context, Schumpeter visualised entrepreneurs as innovators who enthusiastically generate various prospects by recombining the available resources and transforming them into innovative products or new production procedures (Mathews, 2006). Schumpeter stated that the entrepreneurs establish innovative production techniques and develop the old products and ultimately transform the old products in new ways. Moreover, Schumpeter’s entrepreneurs create an impermanent gap between the input and the output price and therefore generate revenues for their business organisation. In addition, the innovative entrepreneurs’ of Schumpeter usually survive in speedy developing market and thus generate innovative products along with innovative production techniques in order to fulfil their future requirements (Mathews, 2006). In contrast, Kirzner focused upon the capability of the entrepreneurs in order to recognise and make or develop the gaps in the existing financial system. In order to make, use or develop an opportunity, the entrepreneurs of Kirzner do not bear the tendency to innovate but rather trace upon the various pricing inadequacies along with developing an information benefit for attaining profit (Mathews, 2006). According to Kirzner, the entrepreneurs are the individuals who unexpectedly discover ideas themselves rather than following the process of innovation. Thus, it can be stated that unlike the entrepreneurship conception of Schumpeter, Kirznerian approach focuses on developing the existing gaps in order to fulfil today’s requirements and make no long-term effect upon financial development (Mathews, 2006). In relation to the case studies that are related with Ed Bazinet and Tim Blixseth, Schumpeter’s conception of entrepreneurship can be identified as an “innovative” approach. On the other hand, Kirzner related his conception of entrepreneurship as an “alertness” or conscious approach in which the entrepreneurs are very much aware of their opportunities and purchase goods or utilise the resources and ultimately possess the capabilities to sell them at a profit (Mathews, 2006). Certain aspects of the case studies of Ed Bazinet and Tim Blixseth included the theory and principle of “innovation” which eventually justified the arguments of Schumpeter and Kirzner and the other aspects such as the capability and the discovery of various opportunities of the entrepreneurs do not justify the arguments between Scumpeter and Kirzner (Mathews, 2006). The main topic for the arguments between Schumpeter and Kirzner was laid in the fact that Schumpeter had greatly as well as remarkably concentrated and emphasised the factor of innovation that is performed by the entrepreneurs in order to attain their desired business objectives. This particular factor of innovation has been exactly seen in the two case studies which made the two great businessmen to outstandingly flourish in the business world by generating new or innovative ideas as well as business conceptions (Mathews, 2006). Whereas, Kirzner did not prioritise the factor of Schumpeter’s innovation, rather than, he prioritized upon the awareness, consciousness and alertness of the different opportunities along with utilising the resources in order to attain desired business objectives to attain highest revenue while executing business operations. This was the crucial argument between the entrepreneurship conception of Schumpeter and Kirzner (Mathews, 2006). Conclusion On the basis of the theoretical and practical outline of the different ideas of entrepreneurship, the paper has discussed various entrepreneurship strategies of the two great and notable economists such as Schumpeter and Kirzner along with a polished argument regarding comprehensive approach towards the entrepreneurial strategies. After acquiring a fundamental idea of the different entrepreneurial approaches of Schumpeter and Kirzner, it has been identified that the entrepreneurship conceptions rest on two primary pillars. The pillars include the theory and the principle of “innovation” and the theory of “alertness” which could be applied as entrepreneurship strategies in order to generate various opportunities, to utilise the available resources and to ultimately attain the desired business objectives. Thus, it can be stated that these entrepreneurial strategies, theories and principles that are propounded by Schumpeter and Kirzner among others will ultimately seek to find ways especially for the entrepreneurs to permit them to create more advantages from their various thoughts related to business. References Ahmad, N. & Seymour, R. G., No Date. Defining Entrepreneurial Activity: Definitions Supporting Frameworks for Data Collection. Conflicting Extant Definitions. [Online] Available at: http://www.oecd.org/dataoecd/2/62/39651330.pdf [Accessed February 21, 2012]. Frank, R., 2008. Richistan: A Journey Through the American Wealth Boom and the Lives of the New Rich. Crown Publishing Group. Ferreira, J., 2002. Corporate Entrepreneurship: A Strategic and Structural Perspective. Introduction. [Online] Available at: http://hadjarian.com/esterategic/tarjomeh/kermanshah5.pdf [Accessed February 21, 2012]. High, J., 2009. Entrepreneurship and Economic Growth: The Theory of Emergent Institutions. The Quarterly Journal of Austrian Economics, Vol. 12, No.3, pp.3-36. Klein, P. G & Cook, M. L., 2005. T.W. Schultz and the Human-Capital Approach to Entrepreneurship. Entrepreneurship and Economic Organisation. [Online] Available at: http://web.missouri.edu/~kleinp/papers/06011.pdf [Accessed February 21, 2012]. Mathews, J., 2006. Knowledge, Innovation and Competitiveness: Dynamics of Firms, Networks, Regions and Institutions. Entrepreneurship and Competitive Forces. [Online] Available at: http://www2.druid.dk/conferences/viewpaper.php?id=406&cf=8 [Accessed February 21, 2012]. Stam, E., No Date. Entrepreneurship and Innovation Policy. Entrepreneurship and Innovation. [Online] Available at: http://www.fep.up.pt/conferencias/eaepe2007/Papers%20and%20abstracts_CD/Stam.pdf [Accessed February 23, 2012]. Read More