State of the Art in Entrepreneurship Literature - Essay Example

of the Art in Entrepreneurship Literature Entrepreneurship has undergone major changes over time.Numerous articles have been written to indicate the changes over time to guide entrepreneurs and scholars in decisions and other directions to take in the course of their ventures into entrepreneurship. Further, entrepreneurship has widened to include other fields that before were not regarded as part of entrepreneurship. It is imperative to note that the change in the way entrepreneurship is viewed is due to the changing economic times. In the course of learning about entrepreneurship, individuals are equipped with necessary skills in business and all other aspects related to business (Braunerhjelm 23). The world has experienced numerous changes in terms of the economy. With fluctuations in the economy, where different economies experience recession and depression and in other times have boom periods, it has become imperative to include methods that business establishments can adopt to protect themselves from harsh economic times and to be prepared for the economic boom periods. This is covered in the recent articles regarding entrepreneurship. In order to develop policies that would be effective in practice and support of entrepreneurship, it has become increasingly important to look into the existing knowledge about the effects of activities in entrepreneurship and the determinants of entrepreneurial activity (Lundstro & Lois, 12). It is common knowledge that entrepreneurship is a fragmented, multidisciplinary and vast field. Therefore, there is a growing need to gather adequate information, keenly assess such information, and come up with a well structured and articulate synthesis of the existing research on entrepreneurship. This is important in the provision of solid knowledge in the existing forms of entrepreneurship. Merging this body of information with the emerging trends in entrepreneurship will form the basis of this paper, as it seeks to define and analyze the relevant existing information and combine it with new information to come up with an updated view into entrepreneurship (Braunerhjelm 33). The late 20th century saw the greatest developments in research on entrepreneurship, with more scholars paying more attention on the matter. Policy makers also exhibited increased desire in the importance of entrepreneurship and the determinants of entrepreneurial activity. This is different from the period between the early 20th century and the 1970s, when small businesses and entrepreneurship were not regarded as economically important topics of policy. In the late 1980s and all through the 1990s, there was a significant change in focus to entrepreneurship and small businesses as essential drivers of the growth of any economy, from understanding the functions of large business establishments. This shift led to the re-emergence of entrepreneurship as a major agenda item for policy makers at both national and international levels. Entrepreneurship Theory and Practice The main aim of studying entrepreneurship theory and practice is so that the student is equipped with the necessary skills in launching and running a business there are various topics which assist in the explanation of the practices in entrepreneurship with regard to what the correct approach to different scenarios is. Entrepreneurship theory and practice covers topics such as the new life cycle of a business, the different aspects of operating a new business, exploiting the strategies offered by e-Commerce and using software tools as an entrepreneur to be successful in an entrepreneurial venture (Lundstro & Lois, 21). The theoretical outcomes in regard to this topic are that the student needs to have the ability to conceptualize entrepreneurship and describe the process of entrepreneurship. Further, there the expectation that the student will be able to explore and understand the dynamics in the entrepreneurial process. In addition to that, the student should be able to compare and contrast traditional methods of management with entrepreneurship, aside from comparing management of small businesses and entrepreneurship. The student should be able to explain how entrepreneurship has evolved over time to become what it is today, the relevance of entrepreneurship in the society and the dynamics that come about with the changes in regard to entrepreneurship (Braunerhjelm 36). The practical outcomes include learning how to come up with a valid interpretation of a case study, developing a definition of the term entrepreneurship and undertaking a research on entrepreneurship in a context that keeps changing every time. These are briefly explained in the subtopics below. Starting a business is a difficult task that one has to be adequately prepared for (Drejer 143). The most important aspect when an individual seeks to set up a new business is the strategy that they will employ in order to make money. It is important to note that the main motive of engaging in business is to make profits. Therefore the strategy that an entrepreneur will use will go a long way in determining whether the business venture they are indulging in will be successful or otherwise. Once the strategy has been settled upon, it is essential to develop policies that will guide the operations of the business. This is different from the old ways of entrepreneurship when the entrepreneur would set up a business and operate it based on his instincts. It is important for any business enterprise to take up branding. This involves establishing a unique identity with which the business shall be known. Branding is an emerging trend in the setting up of businesses. Another emerging trend is establishing an online presence. Most companies today have websites where they can connect with potential and perennial customers, aside from communicating with the whole world on their products. This is important in extending the reach of the company to new markets, and puts information on the company in the global arena. The internet has emerged as one of the most effective communication tools of this era, with more people than ever visiting the World Wide Web than ever before (Parker 638). Companies that have established an online presence have proven that the internet can be a cheap way of advertising and marketing for the company, therefore increasing sales figures and revenues for the business. An increasing number of companies is now transacting business online with the advent of online shopping, which has become very popular especially among the young people (Mobile Version, 1). The company then has to be registered to give it legitimacy and ability to transact business with other entities such as the government. One of the first things a company does at the beginning of its operations is undertaking a market research. A market research gives the entrepreneur an opportunity to find out the nature of the market, the way the market is affected by forces of demand and supply and changes in the strength of currency among other factors. It also helps in getting knowledge on the share of the market commanded by competitors. This can help a company establish strategies to help increase its market share in the industry (Lundstro & Lois, 23). A new business has to have a business plan. A business plan is important because it sets the objectives of the business and gives an articulate way of achieving the set objectives. With a good business plan, a company can forecast and plan for the future. Further, a business plan can help a business acquire additional funding from banks and other financial institutions when such need arises. For start-ups, knowledge on financial systems and financial statements is important in checking the finances of the business and avoid misappropriation of funds. Information on finance can also be essential in calculating taxes the company is supposed to pay to the government. The use of software in accounting is an emerging trend in entrepreneurship. The emergence of Quickbooks and other accounting software has made book keeping and other accounting practices more accurate and easier to manage as opposed to the old paper system that was cumbersome and prone to errors (Braunerhjelm 56). A study into entrepreneurship theory and practice also equips an individual with the necessary information on the different types of companies that exist today. These types are partnerships, sole proprietorships, public and private limited companies. With this knowledge, the entrepreneur can decide on the type of company he would like his establishment to be. This will involve acquiring knowledge on company law and the law in regard to trademarks, copyrights and patents. Journal of Business Venturing The Journal of Business Venturing was initially published in 1986 to become one amongst the leading academic journals of entrepreneurship as a field. Extensive research has been undertaken with regard to this topic, with the findings being used to impact the academic society who use these papers in their citations. This paper shall look into the content written in regard to the Journal of Business Venturing. Findings on research into the role of human and social capital among emerging entrepreneurs suggest that novel entrepreneurs that seek to set up new businesses fare better when they have friends and relatives who are already involved in some kind of business (Obo 6). This is because encouragement and support are vital in the establishment of a new business entity. Research has also posited that there are benefits that an entrepreneur can accrue from taking up formal business classes, as they will be equipped with the necessary knowledge on business. However, such education does not guarantee that a business will succeed. Of importance is the fact that it is not automatic that an individual with past managerial experience in other areas other than the set up of a small business will develop a new business venture. This seems to suggest that entrepreneurial behaviour is not determined by managerial experience, in as much as such experience may be of great help after the business has already been launched and is running (Kumawat, 54). Social capital is an essential element for new entrepreneurs. In this regard, it is necessary for nascent entrepreneurs to invest adequately in making their social networks stronger within the community in which the business should operate. Such a strategy has a higher chance of guaranteeing the good performance of the business over taking up of courses in business or even seeking assistance from agencies which support new businesses. Research in the role that networks play in the process of entrepreneurship has provided an insight into the experiences that numerous people have had when setting up their businesses (Mobile Version, 3). The findings of research into this area indicates that having formal contacts of professionals such as accountants and agencies which offer support to small or new businesses is important as the entrepreneur pulls together the essential elements of their business. However, the most helpful source of contacts for new businesses which are in the process of being created or establishing themselves remained to be family and friends of the entrepreneur (Parker 640). Family and friends provide useful information and help in identifying help in case the business faces challenges in the first stages of existence. New entrepreneurs that seek to establish new business establishments cannot afford anymore to lack both informal and formal networks. There has become an increased need to have efficient networks, in which an entrepreneur can get support and assistance in the face of challenges. Even in the latter stages of the business, these networks can come in handy in terms of performing a diagnosis of the issues a business is facing (Kumawat, 48). The input of these contacts can be of great help in giving the entrepreneur a different perspective from his own, which could be important in the development and success of the company. An emerging trend is the advent of social networking sites. The recent transformation of the Internet into a networking tool has come with great benefits to new businesses everywhere. This is because they have been able to share information on how to overcome challenges in their operations at any stage. Further, the “friends of the business” have been able to offer instant advice through these platforms to the benefit of the business. In addition to that, businesses have been able to form online associations with other businesses and people separate from their familiar friends who have been of great assistance in offering support to the new business (Obo 7). As a business goes through different challenges in its growth, an important finding of research into financial and human capital as important predictors of the performance of a business was that the level of education that the entrepreneur has played a big role in the success of the business. To be precise, an entrepreneur with a higher level of education had better skills of solving the problems that the business faced than entrepreneurs with lower levels of education. An individual’s discipline, motivation and commitment play a big role in supporting the level of education of an entrepreneur. The issue of networks, research has determined, differs across different segment of the population (7). To begin with, males have better connections that females, thus recording higher rates of success than females. A rather controversial result from research into this topic was that new entrepreneurs from the ethnic majority have better business connections and so have higher chances of succeeding than those from racial minority communities. Minority groups and women have a disadvantage because they may not have the business networks, experience and resources enjoyed by their respective opposites (Lundstro & Lois, 44). However, the trends have changed significantly in recent history. With the expansion of democratic space, more women and individuals from minority communities have been able to perform well in business, and have established important networks across all races (8). Further, banks and other institutions have opened up opportunities for these groups to access credit financing for their start-ups. In some instances, the new entrepreneurs have been given training on financial management by financial institutions to support them as they start up businesses. Strategic Management Journal This journal has, since its initial publishing in 1980, been an important and one among the most highly rated publications in the field of management. This journal works to promote the dissemination of advances and development in management by maintaining high standards of intellectualism in the field, coupled with practical relevance. As a matter of principle, leaders in government and other organizations have to come up with responsible policy and strategic decisions. These decisions will help the institutions achieve objectives such as the facilitation and sustenance of high performance across all levels of employment at the organization. Another objective that sound policy and strategic decisions will help address is the management of national and organizational resources so that they can be of great benefit in future to societies and organizations (Drejer 143). In practice, the balancing of objectives, such as the ones indicated above, can be a challenging task. Intellectual contributions cutting across different disciplines are a necessary requirement in the study into strategic management. The SMJ covers an array of topics. One of them is management of resources from the perspective of public policy. Looking at management of resources from the perspective of public policy, management of resources requires the highest levels of integrity. This is because resources are meant to be managed with the best interest of the public at heart. It is prudent to have regulations to guide the management of resources. There also ought to be in place policies to check excesses in the usage of resources to avoid wastage of resources in institutions. Structures should be in place to support efforts towards prudent management of resources in any company. Entrepreneurs need to understand that resources are limited, and the organization they seek to set up requires resources to run effectively. In this regard, entrepreneurs need to identify the places where most resources are spent in order to know where to cut down on spending. If resources are poorly managed, the chances of the business surviving will be minimal. With the use of resources in a company in check, the company is expected to perform well. In that light, it is imperative for the performance of the establishment to be sustained to ensure profitability over a long period (Mobile Version, 7). This requires skills and knowledge in management, to ensure the company operates at optimal levels. Staffing at the organization should be lean at the initial stages of company growth, to ease the pressure on the resources of the company. A sustained performance by the company will ensure the company continues growing over time (143). The company should also find out the comparative advantage that it has over the competitors. This is what makes the company different and better than the other competitors in the industry. Knowing the comparative advantage of the business would be essential in formulating a selling point for the organization. Once the comparative advantage is determined, it is prudent that this comparative advantage is sustained for the organization to stay competitive in the market. This would involve the company maximizing on widening the gap between itself and the competition, making it unique in the market. The company should conduct a regular SWOT analysis to understand where the strengths of the company lie and maximize on them, where the weaknesses exist and how to mitigate these weaknesses aside from identifying the threats that the company faces and the opportunities that the company can take advantage of in order to propel further growth (Braunerhjelm 64). Many companies undergo crises in the course of their existence. The most important issue is whether the company can deal with the crisis before it cripples the activities of the organization. Crisis management from the perspective of the organization involves the management taking drastic measures to save the company from further damage caused by the crisis. These measures may not be popular with some stakeholders, but they ought to be taken if the company is to survive. For instance, if the company is facing a financial crisis, it would be prudent to cut allowances of the employees or even downsize to cut down on expenditure. The company should have in place structures to deal with crises in a timely manner (Kumawat, 30). In recent history, social responsibility has become a practice in most companies. The company owes a duty to the society in which they operate. Social responsibility serves to create and maintain a healthy relationship between the company and members of the public outside the organization. Social responsibility can exist in numerous forms. Most companies take up activities to preserve the environment. Others come up with scholarships for young people to get an education. Any form that social responsibility takes is important for the company, since it creates a good rapport with the members of the public, who are the customers of the business. An emerging issue in strategic management is the use of information technology in the sustenance of company development. IT has become an essential part of management, with most companies embracing it for many reasons. IT has made communication both within and outside the company cheaper and easier. Further, it has reduced the overall operational costs of companies, making them more efficient in their operations. Strategic Entrepreneurship Journal This journal was initially published in 2007. The first volume of the Strategic Entrepreneurship Journal was meant to provide a definition to the topical domain, aside from setting the standards that would serve as a benchmark for the new journal. The Strategic Entrepreneurship Journal is a relatively new document when compared to other journals of entrepreneurship. This indicates the time it took for scholars and policy makers to recognize the role that entrepreneurship can play in the development of the society both economically and socially. More emphasis was placed on large corporations due to the magnitude of their operations (Drejer 145). The Strategic Entrepreneurship Journal covers a number of issues, among them being the practice of management of organizations as they go through the processes of entrepreneurship and the transformations and changes that cannot be avoided in sectors such as innovation, entrepreneurship and economic growth, strategy in comparison with entrepreneurship, entrepreneurial actions, appropriateness and innovation, the characteristics of the behaviour of entrepreneurial activity. One of the articles written on strategic entrepreneurship is by Justin Webb, Duane Ketchen and Duane Ireland. This article titled “Towards a Better Understanding of Strategy and Entrepreneurship in Informal Economies” posits that the informal economy is made up of business activities which take place outside of the boundaries of formal institutions but within the confines of informal establishments. There is a wide gap between the insufficient research taken on the informal sector and the significant value of the informal sector to commerce all over the world, especially in developing countries. Strategic management and entrepreneurship scholars have not done enough studies on the informal economy as much as they have on the formal economy in all the countries of the world. The informal sector has continued to offer solutions to unemployment by creating jobs for many young people especially in developing economies. The advantage that informal economies have is that they demand less capital than the formal economies need to start up a single business unit. Further, informal sectors are not riddled with the inefficiencies that come with the formal sector, such as unnecessary bureaucratic practices which increase the cost of doing business (Kumawat, 33). Policy makers all over the world have warmed up to the informal economy to complement the formal economy, in order to have a society with less unemployed people and more revenue collected from taxing the informal businesses (Lundstro & Lois, 56). Further, it has become the norm for banks to offer credit facilities to players in the informal sector due to the promise that the sector holds. The informal sector is less exposed to the effects of economic turbulence, making it safer than the formal sector (Drejer 145). Furthermore, the informal sector has played a major role in ensuring the natural resources are adequately used. Another article is Strategy and Entrepreneurship in Emerging Economies. This article works to build knowledge on the nature of entrepreneurial and strategic activities in the world’s emerging economies. Further, this article sheds light on the consequences of these actions. In addition to that, the article is effective in the development of a foundation based on theory that would help in future research on strategic entrepreneurship. Entrepreneurship in emerging economies demands a different approach than in developed economies. This is because there are many challenges to entrepreneurship in the developing economies. Aside from ill developed financial systems, emerging economies do not have sufficient skilled personnel to assist in the management of enterprises that have been set up. This explains the high rate of start up failure in emerging economies. In addition to that, emerging economies face issues of political and economic stability. Economic instability leads to increased levels of poverty. With a population that lacks the most basic amenities, it becomes difficult for the government to prioritize entrepreneurship over essentials such as healthcare and education (Braunerhjelm 72). Political instability works to make the economic environment hostile. This hostility reduces the chances of investors coming to these countries to take part in economic activities, since they feel that they may lose their investments to the chaos. However, in recent times, emerging economies have gained the support of numerous institutions, especially banks and other financial institutions. The World Bank and the International Monetary Fund have issued a lot of funds in the development of emerging economies. These funds have come in the form of loans and grants to support entrepreneurial activities in the emerging economies. The benefits that come with establishment of entrepreneurial activities in emerging economies are numerous, as are the opportunities created in these economies for young people. Patterns are emerging where more organizations are moving farther from formal set ups. An increasing number of businesses are not conducted in offices any more, but on the streets and in the field. This has been supported by the emergence of savings and credit societies in emerging economies that encourage people to determine their destiny by working hard and make more money. It is easier for people in the informal sectors to develop financially that those in the formal sector because there are no limits to the good performance of the business (Drejer 147) Global Strategy Journal This journal is published four times in a year, and was first published in 2011. This journal explains the main areas of global and international strategy, putting together the global enterprise, the global strategy and the networks that exist between organizations operating on a global scale, global strategy and performance among other areas (GSJ,1). The importance of global strategy is a vision that goes beyond the boundaries of a country which put into consideration the potential of every location to be a market for an organization’s products. This gives the business comparative advantage over the competitors, making the company get a few steps ahead of the competition. With a competitive advantage, the business can maximize on this advantage to evolve into a powerhouse when it comes to competition in an industry (GSJ,4). Companies that expand their operations to the global domain are presented with unlimited opportunities for growth, since the market is stretched beyond the borders of a country to the international field. Therefore these firms have to come up with strategies that will support expansion of the company to the international markets, diversification of products produced by the organization and undertake integration to protect, develop and assist in the exploitation of the capabilities of the company and its resources. The company must determine the degree of coordination and geographical scope and have them taken into consideration, with the issue of competition now existing on a global scale (Braunerhjelm 81). For a company to undertake its strategic objectives, it has to gather more resources than it has. The additional funding will be channelled to essential sectors that will support the international presence of the company. The company also has to have more access to a wider array of capabilities and brands. This will enable the company to have diversified products, which will assist in giving the company a competitive advantage in the international market. Further, in order to remain in business and profitable, the company will have to exploit the new markets, to increase the reach of its products and maximize sales. This is apart from accessing the technologies employed in many parts of the world, which is important because the company will need high levels of efficiency in production and distribution of its products. The quality of the products that are manufactured by a company that has gone global has to be of high quality for the establishment to compete with other companies operating in the global markets (GSJ,11). In seeking additional resources to expand the company, it may be forced to take part in international mergers and acquisitions, joint ventures, alliances with other international companies and take up value addition for its products. While the effects of factors such as the breadth to which the company can spread in the international markets and the determination of the degree to which the company integrates the resources and activities to fit into the global status, the standard models that guide transactional governance appear to have elaborate limits in an integrated and interactive environment. An essential part of strategic management on a global scale includes developing and selecting the functions and structures for governance in the globalized business entities together with their constituent companies. This is inclusive of the structure of the organization, the management systems, the management of capabilities and resources, and the management of information sharing and operational strategies and networking of all the constituent organizations of the globalized firm (Obo 11). It is imperative to note that the management of a company with a presence in more than one national environment is a continuous, evolving and complex activity. This is because the companies have established a wider reach, therefore increasing the operations at the establishment. At this point, management needs to realize that the strategies adopted in their local operations will not be sufficient in the robust international market. One good example is marketing strategy. It is easier to plan the marketing activities of a company within the borders of a country as opposed to marketing all over the world. Companies have to continue taking part in social responsibility activities in order to maintain the competitive advantage that it may have in the host countries. These non market strategies are essential in the pursuing of the competitive advantage that the company enjoys. They also help a great deal in reducing the competitive and environmental risks that global companies may face. It is essential for the company to collaborate with other companies at all the value chain stages across the boundaries of the organization as well as across the boundaries of a country (Parker 630). This is an important feature of strategic management on a global scale. The company also needs to cooperate with its partners within numerous local host settings. A firm that has gone global may be the flagship of the network it has created. In the event that this is the case, the company has to develop mechanisms for collaborations based on communication as opposed to assuming control and command of its subsidiary companies. By an organization attaching its activities to its performance over a period, it is making a strategic move. Performance has many manifestations, and is a wide concept. Performance is made even more complicated when a company goes global, since its stretches its operations in more than one market, which have different degrees of integration (GSJ,14). The different themes discussed in regard to the global strategy journal work to support the company’s vision statement since they offer a detailed description of the boundaries of global strategy. These themes are expected to evolve with time. Works Cited Braunerhjelm, Pontus. Entrepreneurship, Knowledge, and Economic Growth. Boston: Now Publishers, 2008. Print. Drejer, Anders. "Strategic innovation: a new perspective on strategic management." Handbook of Business Strategy 7.1 (2006): 143–147. Print. Obo, E B. "Strategic Alliances: the prospect for business growth." Global Journal of Educational Research 5.1 (2007): 6-11. Print. Parker, Simon C.. "The economics of formal business networks." Journal of Business Venturing 23.6 (2008): 627-640. Print. "10 Theme Areas." Global Strategic Journal Theme Areas. N.p., n.d. Web. 19 May 2014. . "Journal of Business Venturing." EconPapers:. N.p., n.d. Web. 19 May 2014. . Kumawat, H. S.. Modern entrepreneur and entrepreneurship theory, process and practice. Jaipur, Raj.: Sunrise Publishers & Distributors, 2009. Print. Lundström, Anders, and Lois Stevenson. Entrepreneurship policy theory and practice. New York: Springer, 2005. Print. "Mobile Version." COMPGC18. N.p., n.d. Web. 19 May 2014. . "Strategic Entrepreneurship Journal." SEJ Home. N.p., n.d. Web. 19 May 2014. . Read More