Alternative Theories and Effective Entrepreneur Characteristic - Research Paper Example

Alternative Theories and Effective Entrepreneur Characteristic By Introduction An entrepreneur isan individual who creates and implements a business idea to make profits. Entrepreneurship is the process of organising and allocating the appropriate resources to enhance the effective functionality of a business idea. Entrepreneurship also involves taking advantage of market lapses and gaps to maximise profits. It revolves around innovation, creativity, risk taking, developing opportunities and effective organisation of the resources. Successful entrepreneurs are capable of organising minimal resources to implement a business idea (Alvarez, 2005). They also take risks and engage other individuals in implementing ideas. The individuals who develop such ideas posses appropriate characteristics and behaviours for the development and success of a business. These qualities range from creativity, persistent, risk-taking, influence, time management and leadership qualities. An entrepreneur is responsible for the success of the business and any failures result to business closure or a reduction in profits. Various theories and laws define entrepreneurship in the economic world (Bygrave and Zacharakis, 2010). The resonant alternative entrepreneurship theories explain its various aspects including uniqueness, personality, and creativity. The alternative theories are also useful in explaining various elements that facilitate effective business development. The alternate arguments for entrepreneurship describe entrepreneurs and their involvement in business development. The theories focus on either individual entrepreneurs or recognition of opportunities. Most of the alternative assumptions reflect essential entrepreneurial phenomena such as the entrepreneur, the decision-making process and the nature of business opportunities (Alvarez, 2005). The alternative approach to entrepreneurship is an excellent avenue to establishing various elements regarding innovation and contemporary entrepreneurship. They are further useful in explaining the development of successful entrepreneurship characteristics. The alternative theories explain how the uniqueness of entrepreneurs influences their success in implementing business ideas. The applications and the impact of these theories reflect on the individual characteristics of entrepreneurs. The entrepreneurship alternative theories include the discovery and the creative theories (Bygrave and Zacharakis, 2010). The discovery theory entails discovery, existence and exploitation of opportunities, and individual influence. The theory comprises of three different entrepreneurial approaches, which include objective opportunities, taking risks and individual uniqueness. The theory is effective in establishing various elements in entrepreneurship that are useful in business development. It further illustrates the various entrepreneurship characteristics that can be useful in enhancing success in the business world. The theory describes how entrepreneurs’ risk-bearing characteristic is effective in enterprise development. It further explains how their individual uniqueness and opportunistic nature influences an entrepreneur’s success in developing a business. The other alternative assumption is the creativity theory. The theory focuses on the development of a business and the entrepreneur. In this case, the opportunities are subjective and the entrepreneur has the ability to create an opportunity rather than recognise it. The above theory is useful in business development and can describe its key elements effectively. In addition, a combination of the two alternative approaches helps to establish successful entrepreneurship characteristics. The alternative theories explain entrepreneurship based on individual characteristics such as risk-taking and creativity. They are also effective in describing how successful entrepreneurs establish opportunities and implement business ideas (Cuervo García, Ribeiro and Roig, 2007). The paper illustrates the key elements of contemporary entrepreneurship and innovation as they apply to the development of the individual characteristics of effective entrepreneurs. The Discovery Theory The discovery theory assumes that there is an objective component in an opportunity. It further recognises the existence of the opportunities regardless of their discovery. The sources of these opportunities are the market attributes within which an entrepreneur intends to take action. The entrepreneur identifies the available opportunities after understanding the market or industry structure. In that case, they will be able to evaluate all the opportunities in the market. The elements of an opportunity influences the value that it can create, hence an entrepreneur should establish and understand the existent opportunities in the market. The other assumption of the creativity theory is that individual uniqueness is an important aspect of entrepreneurship. This uniqueness enables them to identify opportunities in an industry. The persons are alert and quick to notice business opportunities (Gasparski, Ryan and Kwiatkowski, 2010). The assumption affirms that the entrepreneurial nature entails spontaneity and human reaction to opportunities. It involves constant environmental scanning by an entrepreneur who identifies imperfections in the market. Entrepreneurial alertness is, however, effective if an individual identifies an economic opportunity and develops it into a business. The final assumption of the creativity theory is that, risk bearing is part of entrepreneurship. The assumption concurs with other theories in that the objectivity of an opportunity translates to risky conditions. Bearing risks is an element of entrepreneurship that blocks individuals from exploring market opportunities. According to the theory, an entrepreneur is responsible for the business regardless of the risks ascribed to it. It further clarifies that entrepreneurs are keen to explore the gaps in an industry regardless of the risks involved. Risk-taking entails investing capital, energy and time into an idea by monitoring market competition determinants such as demand, supply, price and technology. The theory establishes various key elements of contemporary entrepreneurship and innovation that lead to successful entrepreneurship such as creativity, uniqueness, risk taking and the identification of opportunities. Innovativeness Innovativeness is one of the main elements of entrepreneurship. It enables entrepreneurs to develop a distinct idea in the market and is essential in business development. It also enables an entrepreneur to develop modus operandi for handling competition in the market. It facilitates the creation of ideas that enhance business development and enables individuals to establish effective marketing ideas for their product. In addition, an entrepreneur is able to counter competition by devising effective approaches in the business. It is through the element of creativity that entrepreneurs develop applicable and successful business (Gasparski, Ryan and Kwiatkowski, 2010). A successful entrepreneur should, therefore, be creative to ensure success in their business endeavours. It is the first characteristic of a successful entrepreneur as the theory illustrates. Establishing creative approaches in business development develops self-confidence among entrepreneurs. They are also able to affirm their position in the market share. It contributes to the development of individual characteristics such as innovation and alertness ascribed to successful entrepreneurs. It similarly enhances innovation in the market and leads to the development of new ideas in existing markets (Cuervo García, Ribeiro and Roig, 2007). Risk taking Risk taking is an aspect of entrepreneurship that all entrepreneurs should posses. It involves investing time, capital, energy and other resources to implement a new idea. It is also the basic of entrepreneurship since an entrepreneur has to take risks to create a successful business. Risk taking facilitates business development in many ways. First, an entrepreneur takes risks when staring the business. Secondly, all business decisions entail risk taking including marketing strategies. The theory identifies risk taking as the fundamental aspect of a successful business. Risk taking is a business development element that defines successful entrepreneurs. According to the creativity theory, risk taking enables the implementation of a creative idea. Risks scare many individuals from exploring entrepreneurship in new markets. Risk taking is an element of contemporary entrepreneurship that facilitates innovation and the effective development of a business. It also espouses the development of individual characteristics such as confidence and leadership skills that are essential for successful entrepreneurship. Leadership is a characteristic that develops by setting pace in the market through taking risks. Exploring new business ventures enables entrepreneurs to set pace for other players in the market. Uniqueness Uniqueness is the aspect of establishing a completely new idea in a market. It also involves taking classified approaches when handling issues in business. Uniqueness falls under two categories including product uniqueness or idea uniqueness and individual uniqueness. Product uniqueness entails establishing a new product in an industry. Entrepreneurship involves developing and implementing new ideas in the market. Uniqueness results from creativity and contributes to various individual characteristics among successful entrepreneurs. In addition, individual uniqueness enables entrepreneurs to establish gaps and imbalances in the market easily. Entrepreneurs’ views about the market depend on their individual characters, alluded to as uniqueness. Moreover, a unique entrepreneur creates new ideas in the market, which facilitates business development. The theory identifies uniqueness as an essential contemporary entrepreneurship element that enhances businesses in ways such as the introduction of new products, provision of new services and development of new market approaches. It also enhances the creation of individual entrepreneurial characteristics such as innovation, confidence and risk taking. Uniqueness is a major aspect of entrepreneurship that is effective in business development. Unique entrepreneurs encounter less idea limitations and implement applicable ideas (Cuervo García, Ribeiro and Roig, 2007). Identification of Opportunities Identification of opportunities is a key element in business development. A prospective entrepreneur reviews a particular market and identifies opportunities. The ability of an entrepreneur to identify opportunities in a new or existing marketing varies based on experience and luck. The creativity alternative entrepreneurship theory illustrates that identifying opportunities depends on an individual’s alertness. For example, an entrepreneur may identify a market gap on their first day in a given pace due to high levels of alertness. It is, therefore, essential in business development since it facilitates the generation of new ideas and approaches to running a business in a given market. Opportunities exist in an industry in form of services, production and goods. An effective and successful entrepreneur possesses high levels of alertness that enhance the creation and identification of new opportunities for doing business (Gitman and McDaniel, 2008). The discovery theory establishes the relationship between other business development elements such as risk taking, uniqueness and opportunity. The identification of an opportunity is the first initiative in business development after which the entrepreneur takes the risk to develop a unique idea in the market. Opportunities are not easy to identify and require an in-depth analysis of the target market by an entrepreneur. It is an entrepreneurship characteristic common to successful entrepreneurs and espouses the development of other characteristics such as leadership and alertness. Alertness is important in identifying new opportunities in the market and individuals with good leadership skills identify the available opportunities within a market easily (Gitman and McDaniel, 2008). The Creative Theory This theory focuses on the creation of a business by an entrepreneur. The theory consists of three main assumptions, which include subjective opportunities, creation of opportunities and tolerance to uncertainty. The theory evaluates entrepreneurship by establishing how economic players coordinate resources in uncertain conditions. The theory recognises all the economic determinants of business operations such demand, supply, technology and competition. The criteria for exploiting opportunities are unknown hence; entrepreneurs should develop them by exploiting opportunities. The process of establishing market opportunities under this theory affects the economic factor behind market imperfections. Entrepreneurs can easily identify the economic cause of market imbalance. The creative theory establishes various elements of contemporary entrepreneurship such as the creation of opportunities, generation of profits and uncertainty (Harper, 2002). Creation of Opportunities The creation of opportunities revolves around conducting an evaluation of the current trends in a given market and creating new opportunities through innovation and creativity. Entrepreneurship is mainly a process of creating business opportunities by implementing new ideas in the market. The creation of opportunities is one of the main elements of entrepreneurship that enhances business development. Business development depends on the capacity and effectiveness of an entrepreneur to develop opportunities (Keister, 2005). In this case, an effective business development strategy relies on opportunities that entrepreneurs create through innovation and risk taking (Harper, 2002). Entrepreneurs who rely on creating opportunities tend to minimise competition in the market due to minimal duplication of ideas. In addition, new ideas flourish effectively in the market when compared to modified ideas. Creating opportunities is more effective in business development than identifying one. Entrepreneurship requires uniqueness in decision-making. A successful entrepreneur coordinates resources effectively before attaining knowledge regarding the outcome value of an idea. The element of creating opportunities in entrepreneurship is effective in bringing uniqueness in the industry. Moreover, it facilitates the development of entrepreneurial characteristics such as effective decision-making, creativity and risk bearing (Shane, 2003). Entrepreneurs make comprehensive decisions before venturing into business, which enhances their decision-making capabilities. The creation of opportunities by entrepreneurs enhances creativity and leads to the implementation of new ideas in the market. The entrepreneur develops risk-bearing characteristics since they have no prior knowledge of opportunities in the industry. The creation of opportunities is an element of contemporary entrepreneurships that serves to develop effective characteristics among successful entrepreneurs (Kirzner, 1993). Uncertainty Uncertainty is another aspect of entrepreneurship. Uncertainty occurs when a decision’s outcome and its probability are unknown. The entrepreneurs under such conditions ignore are not averse with future outcomes. The decision-makers are unable to predict or estimate the effects of their decisions on a business instantly. The effectiveness of uncertainty in business development is unpredictable though it is an effective tool of enhancing the successful creation of opportunities. There are many uncertainties in entrepreneurships since the chances of successful implementation of ideas are minimal. In addition, entrepreneurs trust their instincts and most of them are not successful during uncertain situations. For example, some entrepreneurs implement new ideas in the market hoping to achieve certain goals but the output supersedes their target. Uncertainty relates closely to risks, and entrepreneurs with this element are successful in business development (Miner, 1997). Uncertainty is also an essential element of business development since it provides entrepreneurs with opportunities to explore new ideas in a given industry. In addition, it enhances an individual’s decision-making capacity and risk-bearing characteristic. Uncertainty enables business development through the effective implementation of an entrepreneur’s decisions. It also enables the development and implementation of new ideas in a market hence a reduction in competition. It leads to the development of the following characters for effective and successful entrepreneurs; leadership, risk bearing, management, innovation and innovativeness (Strydom, Antonites and Nieuwenhuizen, 2007). Creativity Creativity is the ability to develop a new product or idea in an industry. Creativity leads to innovation and effective decision-making processes among entrepreneurs. It is a contemporary entrepreneurship element that facilitates the development of effective characters is successful entrepreneurs such innovativeness, leadership skill, decision-making, risk bearing and the identification of opportunities. Creativity enhances innovativeness in entrepreneurship through the creation of new ideas and products in the market. Innovation also espouses uniqueness in the market by overseeing the development of different products and ideas. Creativity leads to the introduction of new products in the industry, which leads to the development of organisations. By managing the organisations, the entrepreneurs become their own managers and eventually attain leadership skills. In addition, creative entrepreneurs supervise the implementation of ideas and this enhances their leadership skills. Moreover, it enables entrepreneurs to identify opportunities in the market easily (Strydom, Antonites and Nieuwenhuizen, 2007). Creative entrepreneurs are highly alert and tend to notice market imbalances easily. They are usually eager to implement their ideas, which enhance their ability to identify opportunities for implementing the ideas. Innovative entrepreneurs have high decision-making abilities because of their interaction with various ideas in the market. Profitability Profits are the excesses of a business’ earning after expenses. A business with high profit margin tends to perform better economically. Additionally, high profits facilitate innovation and creativity in the market. Profitability is the main driver of entrepreneurship and a non-profitable market scares entrepreneurs away. It is an aspect of entrepreneurship that enables market players to survive by eliminating competition. It is the main goal of entrepreneurship and facilitates business developments through the following ways: innovation, effective decision-making process, time-managements and cost appropriations. The decisions that entrepreneurs make affect the profitability of a business. Effective and appropriate decision-making processes translate to profitability (Raposo, 2011). On the other hand, entrepreneurs tend to manage their time effectively to enhance profitability. Appropriate cost and time management enhances efficiency, hence profitability. Profitability leads to the development of the following effective characteristics in successful entrepreneurs. Successful entrepreneurs bear risks in order to attain maximum profits. In addition, they have good decision-making skills, which enable them to implement effective decisions to increase in profits. They also possess excellent organisational and planning skills. These entrepreneurs plan and execute ideas effectively by allocating resources sustainably to increase the business’ profits. The alternative entrepreneurship theory is useful in establishing the elements of contemporary entrepreneurship and the characteristics of successful entrepreneurs (Raposo, 2011). Conclusion Entrepreneurship is the process of establishing and implementing a new business idea with the aim of obtaining profits. An entrepreneur is an individual that takes part in the process of inventing, organising, planning and implementing a business idea. The alternative theories of entrepreneurship expound on various aspects of entrepreneurships. The discovery theory explains entrepreneurship based on aspects of innovation, the identification of opportunities and bearing risks. The entrepreneur should develop and implement new ideas. They should posses high decision-making and risk bearing qualities to facilitate effective business development. The theory leads to the development of various elements of contemporary entrepreneurship such as innovativeness, effective identification of opportunities and risk bearing. Successful entrepreneurs are highly innovative and develop new ideas and strategies in the market. Moreover, they easily identify opportunities and market imbalances, which enable the implementation of new ideas. Risk bearing entails investing capital, energy and time on an idea without prior knowledge of the outcome. The entrepreneur undertakes to introduce an idea in the market regardless of the consequences. The creativity theory on the other hand indicates the relationship between entrepreneurship and economic determinants such as demand, technologies, costs and competitions. According to the theory, entrepreneurs create opportunities rather than identify them. In addition, the performance of the business depends on decision-making process, economic factors and uncertainty. Opportunities are subjective and the entrepreneur should create sufficient time to explore them. The creativity theory presents various elements of contemporary entrepreneurship such as profitability, uncertainty, the creation of opportunities and creativity. Creativity entails the development of new ideas or products in the market. It facilitates business development by reducing competition and through the introduction of new products. Creativity leads to the development of the following characteristics in successful entrepreneurs; innovativeness, good decision-making skills and leadership skills. Profitability involves increasing business earnings by reducing expenses. It is the core driver of entrepreneurship in all industries. The ability to identify opportunities enables entrepreneurs to innovate and create new ideas in a market. Opportunity identification is also essential in filling the economic gaps within an industry or market. The two theories of entrepreneurship are useful in identifying the elements of contemporary entrepreneurship and innovation as they apply to the development of the individual characteristics associated with effective entrepreneurs. References Alvarez, S. 2005. Theories of entrepreneuship. 1st ed. Boston, Mass.: Now Publishers. Baron, R. 2012. Entrepreneurship. 1st ed. Cheltenham: Edward Elgar. Bygrave, W. and Zacharakis, A. 2010. The portable MBA in entrepreneurship. 1st ed. Hoboken, N.J.: Wiley. Casson, M. 2003. The entrepreneur. 1st ed. Cheltenham, U.K.: Edward Elgar. Cuervo Garci´a, A., Ribeiro, D. and Roig, S. 2007. Entrepreneurship. 1st ed. Berlin: Springer. Gasparski, W., Ryan, L. and Kwiatkowski, S. 2010. Entrepreneurship. 1st ed. New Brunswick: Transaction Publishers. Gitman, L. and McDaniel, C. 2008. The future of business. 1st ed. Mason, OH: Thomson South-Western. Harper, D. 2002. Entrepreneurship and the market process. 1st ed. London: Routledge. Keister, L. 2005. Entrepreneurship. 1st ed. Amsterdam: Elsevier JAI. Kirzner, I. 1993. Competition and entrepreneurship. 1st ed. Chicago [u.a.]: Univ. of Chicago Press. Longenecker, J. 2012. Small business management. 1st ed. Mason, OH: South-Western Cengage Learning. Miner, J. 1996. The 4 routes to entrepreneurial success. 1st ed. San Francisco: Berrett-Koehler Publishers. Miner, J. 1997. A psychological typology of successful entrepreneurs. 1st ed. Westport, Conn.: Quorum Books. Raposo, M. 2011. Entrepreneurship, Growth and Economic Development. 1st ed. Cheltenham: Edward Elgar Pub. Shane, S. 2003. A general theory of entrepreneurship. 1st ed. Cheltenham, UK: E. Elgar. Strydom, J., Antonites, A. and Nieuwenhuizen, C. 2007. Entrepreneurship & how to establish your own business. 1st ed. 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