Entrepreneurship and Small Business - Literature review Example

Entrepreneurship assessment Shahd Ismaeel Mohammed Khalil Ismaeel ID: 12356856 Kevin Blanchard Hand in 15th, Dec, Introduction Strategic creation of a business requires innovative planning and extensive knowledge on marketability of the idea. Moreover, commercial success is embedded in support of creative and innovative people with a vision and willing to take risks. The word entrepreneur is of a French origin meaning one who takes between. Cantillon, a French writer, considers an entrepreneur as typical risk taker whose reward for the ability to take risks is appropriation of profits (Deakins et al., 2005). According to Hamilton et al. (1994), the term entrepreneur started in the 1755. The idea was a high industrial revolution in Britain during this period. Moreover, according to Carland (2014) Ely 1912 was one of the first writers that have illustrated the meaning of entrepreneur and equated an entrepreneur with an adventurer because of the level of risk involved in entrepreneurship (Carland et al, 2014). There are also many other economic writers who have played a significant role in the explaining the term entrepreneurship. Some include Kirzner, Schumpeter, Knight, Casson, Shackel, etc. To Kirznerian, entrepreneurs are more alert to new profitable opportunities, which come from new technologies. Schumpeterian considers an entrepreneur as an innovator who brings changes. Technological opportunities in this case are out of new ideas that are considerably vital for competitiveness of firms. From the innovator perspective, the concept of the entrepreneur can take the definition of someone who is different, and innovators are important in the society. Some writers have carried this forward by distinguishing entrepreneurs (business owners who wish to develop and expand their businesses) from other small business owners who have no ambition to expand their business or want to remain merely self-employed (Deakins et al, 2005, P:6). Knight has defined an entrepreneur as a risk taker who accepts opportunities in uncertain circumstances. Ray considers that we should concentrate on the development of skills and the acquisition of such skills by managers. These concepts are too frequently ignored, and this entrepreneurial and learning process has not been adequately researched. However, there is cognitive evidence of recent progress in the study of entrepreneurship (Deakins et al., 2005). Because of its importance, more research should be done on the concept. Casson view is the closest to Knight as he thinks that the entrepreneur has different skills than the others and willing to take uncertain risks. Casson has defined the entrepreneur as organizer of recourses. Deakins et al. claimed that there was a low women participation in the entrepreneurship in UK. It might be because men are more risk taking than woman as Harris et al. discussed (Harris et al., 2006). Environment can shape the characteristic of people whereas some entrepreneurs take their personality from their family genes. The whole concept and scope of an entrepreneur have changed due to the prevalent advancements in technology. These days there is an internet entrepreneur that will be discussed briefly in this essay later. This essay will critically evaluate the characteristics of an entrepreneur, which are the social entrepreneur, internet entrepreneur, and family entrepreneur. As well as illustrating how the different characteristics within the individual affect the type of entrepreneurial activity they choose to venture. An entrepreneur is an important player in the economic development of the world today. The question of increasing unemployment and underemployment are making entrepreneurial venture a more important idea that it is worth studying and be embraced by civilizations in desire to develop. In this case, it requires that an entrepreneur should be able to possess a wider understanding of business. Furthermore, an entrepreneur is required to be in a position to manage the skills and abilities of others whom the entrepreneur will work with in executing the entrepreneurial idea. The definition of entrepreneurship is varying as in accordance with the various school of thoughts that individual consider in their attempt to understand the concept. It is argued that several individuals who are blessed with special talents end up becoming entrepreneurs. From this perspective, it could be true that talented people become entrepreneurs but the argument renders invalid if some facts are taken into consideration. The dominance of a particular entrepreneur over another in terms of abilities is immeasurable. Considering an individual who starts up a small dry cleaner shop and the suits he cleans are for an individual who works for another entrepreneur say a small micro-finance entrepreneur. From this perspective, the degree of ability dominance between the dry cleaner and the micro-finance executive is immeasurable. From any perspective of argument, for profit entrepreneurs are subjective to the issue of income distribution and job choice. The definition of an entrepreneur in this case is more on the aspect of collusion and consideration of a cross-sectional possibility of varied skills. “Necessity is the mother of innovation” some literature on entrepreneurship argues this as the driving motive of various entrepreneurs. The argument could be valid on specific conditions but void on some other occasions. The adage suggests that, entrepreneurs are created on occasions of no alternatives. The argument in this case distorts the previous argument of entrepreneurial origination from the top distribution of abilities. However convincing this idea is, it also flies away in the look of other realities. Imagine classifying Andrew Carnegie, John D. Rockefeller, Bill Gates and Larry Ellison based on distribution of their abilities. It is imaginable because the extensive abilities portrayed in the great works of the entrepreneurs lack a standard of measure. Characteristics and traits Owner, manager, and Entrepreneur share some of the features and qualities. According to Deakins, 1996 it s hard to measure personality characteristics as they change over time. Personality measurement need subjective judgments as it does not take into consideration the culture influence, the role of education in making the entrepreneurial characteristics as well as the sex, social class, etc (Burns, 2007). It is argued that an individual just chooses an entrepreneurial idea as a means of self-satisfaction. Indeed, even if believe in character traits identification can be considered by an individual, it is difficult for them to explain why individuals chose to apply the personally bestowed traits and characteristics in an entrepreneurial context” (Burns, 2007). Schumpeter 1 and 2 with Freeman Argument According to Langlois (2003) Schumpeter early writings are different from his later writings. As Schumpeter 1, which is his early writings of 1911, was the theory of economic development. Fontana et al., 2012 suggests that Schumpeter 1 innovation can be found when in time of high technological opportunities, less probability and cumulativeness (Fontana et al., 2012). Whereas, Schumpeter 2, which are his later writings argued that Capitalism, Socialism, and Democracy innovations are emerging in high probability and cumulativeness. In addition, it could be noticed that Schumpeter 2 focuses on larger corporations more than Schumpeter 1 (Langlois, 2003). The move that consider the "early" to the "later" in Schumpeters writing reflects not just a mere shift in his emphasis but a significant alteration of his underlying economic vision (Langlois, 2003). According to Langlois (2003) Schumpeter has changed his views because of the technology changes that he saw. His other consideration was his move from an owner-managed business to a larger corporation that is very different from the former situation. The difference could have been a vital contributor to change in traits. Character formation is an essential focus in Schumpeter 1 than it is in Schumpeter 2. It thus focuses on the particular characteristics of an entrepreneur (Schumpeter, 1934, p. 85). A comparison of Schumpeter and Kirzner Schumpeter’s entrepreneur appears to be rational as rationality is very Important (Schumpeter, 1934, p. 85). Goss (2005) further argues that many people see the entrepreneur as a hero, which ignore many of the characteristics, and traits that Schumpeter has discussed. It is thus worthwhile concluding that, and Schumpeters entrepreneur is innovative whereas that of Kirzner is directly opposing the Schumpeter argument. In this case, Krzner contrarily argues that, the entrepreneur does not have to be innovative to be recognized as an entrepreneur. Social entrepreneur Social entrepreneurs need to be individuals with ability to combine personal social talents and be in a position to manage the talents of others. Social entrepreneurs require further innovative skills both in business as a discipline and in social ideas and norms of the society or culture in context. The social aspect of the business environment in this case influences a social entrepreneur and it is from this basis that the social entrepreneur considers his or her social way of innovativeness. At the disposal of a social entrepreneur are social resources and innovative business idea derived from the social environment. The widespread of social entrepreneurship is because of its unique aspect of touching the society directly. The issues to do with the traumatic diseases such as cancer that are affecting the world today are issues of social welfare of humanity. The active involvement of people in the social condition of cancer patients today is an aspect that its trend should not be doubted (Goss, 2005). International academic conferences and discussions on social entrepreneurship are tremendously mushrooming and in institutions of higher learning, the desire for students to take social entrepreneurship is in the rise. The trend can make one wonder but the uniqueness in social entrepreneurial ideas cannot be ignored. The diffusion of the social entrepreneurial knowledge is parallel to different social aspects since it has led to the kickoff of several spheres of social life (Goss, 2005). Due the diverse aspect of social entrepreneurship in the world today, the concept of an entrepreneur means different things to different groups, institutions and individuals. The social aspect of non-profit assistance but with application of social cooperation of enterprises, community entrepreneurial venture and more importantly adoption of business-oriented strategies define a social entrepreneur. A social entrepreneur is however distinct as the environment of dwelling defines his or her uniqueness both in character and traits. Some writers consider a social entrepreneur as an individual who alters the existing primary perception about a particular defined social concern (Goss, 2005). Others consider a social entrepreneur as an organization or an individual who makes changes to social institutions fabric and social arrangements thus hampering the whole process of development. From this argument, a social entrepreneur is to create a service or a product that serves environmental or social benefit. From a theoretical perspective, a social entrepreneur is an agent of change and his or her skills are embedded on the implicit or explicit theory of change. The characteristics and traits of a social entrepreneur are manifested in the business model, tactics and strategies laid down by the entrepreneur. It is however, argued that the traits of a social entrepreneur are manifested in different aspects based on the context in play. The manifestation is so varied because of the underlying fact of the specifications of an opportunity space for a social entrepreneur. The several aspects specifying the social location, political and economic arrangements, define the opportunity space for a social entrepreneur. As a result, phenomenon defines characterization of a social entrepreneur. Social entrepreneurs are drivers of sustainable development. Sustainability of business ideas and general development is reliant in social change. A social entrepreneur defines the social change that an individual or an organization inculcates into his or her actions. In this sense, a social entrepreneur is a vital agent in driving sustainable development that is the current quest for various civilizations today. As an example, two creative little girls made and sold fancy necklaces. From the business of necklace, the two girls earned revenue, which the used in a charity work of decorating the rooms for cancer children patients in the hospital. The environment is a driver of an innovative idea in this case because the two girls could have had a vision to decorate all the hospital rooms because of their desire to have the cancer-suffering children happy. The idea undertaken by the two little girls is a typical representation of Schumpeter’s views, which considers an entrepreneur as an innovator with a vision and uses creativity using easy, cheap things to make fancy necklaces. Social entrepreneurs in this case deal with aspects concerning the social life of people. The innovative ideas of the social entrepreneurs are not only beneficial to entrepreneurs themselves but are beneficial to the entire society. Internet entrepreneur Many entrepreneurs prefer using the internet as a better method that has many advantages. Internet has many facilities as it makes people life easier. According to Deakins 2005, “internet presence can provide powerful benefits for entrepreneurs and small firms, but like any other area of business strategy it needs to be planned carefully and managed with an appropriate e-business strategy.” Therefore, the entrepreneur may need to have a good knowledge of e-business, make a right strategy and willing to learn new things because many new applications are being published every day. Hence, it could be noticed that Deakins does not support Knights views. Moreover, Knight has argued that the entrepreneur is willing to take the risk while being uncertain about the outcome (Deakins, 2005). Todays internet entrepreneurs are very successful such as Amazon,eBay, Uber taxi, facebook, etc. According to Donici et al., Amazon cares about the innovation in the service that they are providing to their customers as it is their strategy. For instance, buying a book from Amazon is much cheaper than buying a book from a bookstore as it saves time rather than going to the bookshop to purchase a book, today even the library use the internet to find the book that the customer is looking for. Internet has affected the entrepreneur’s lives, as Amazon still has security problems but as a business to reduce the risk they have used Paypal to make their payments safer. Jeffrey Preston “Jeff” Bezos Bezos is the founder of Amazon.com. He is an American investor and business magnate. He is skillful technological entrepreneur who contributed significantly to the successful growth of the e-commerce. Amazon.com dealt with books merchandizing but it later diversified to merchandizing of several other products. The significant creative skills of Bezos led to the successful development and expansion of Amazon.com as the world’s largest retailer of books on the World Wide Web. With advice of Bezos, Amazon.com is the world’s top models for internet-based sales. Passion in science can be considered as the driver of Bezos scientific innovativeness. From his historic life, Bezos showed interest in the field of science. In his teenage life experience, he rigged an electric bell that scared away his younger brothers from his room. Desire and passion for something unique defines the founder of Amazon.com. An entrepreneur starts his or her innovativeness from a desire point of view. Bezos stands to be an entrepreneur because of his innovative ideas of in the startup and growth of Amazon.com. Another trait that kept Bezos a head of the business game is his high responsiveness. It is documented that Bezos was among the first investors in Google Corporation. No doubt that he was an innovative and open minded individual that had the skill of spotting opportunities for growth and development. Entrepreneurship works to create wealth out of invention and innovation of viable ideas. The worth of Uber taxi can sound ambiguous to the mere public but in the eyes of an entrepreneur, the venture is worth creating wealth for its investors. Uber was introduced as a ridesharing service. The company has its headquarters in the city of San Francisco, US. Currently, the company runs in several international cities. The entrepreneurial idea behind the development of Urber business is the arrangement of rides between drivers and riders using a smartphone application. The application is utilized by customers in requesting rides in addition to keeping track the location of their vehicles (Karol, 2013). Travis Kalanick invented the impressive idea of Urber taxi service after having a bad experience with taxi services in Paris. As much as the case of Urber taxi is an issue of the old adage that goes, "Necessity is the mother of invention" The idea defines the precise characteristics of Travis. In 2008 in Paris, Travis had to wait for a taxi for 30 minutes. As an entrepreneur, he identified the need for a faster taxi service in the industry of offering taxi services. The desire for a more rapid taxi service could be inborn and concrete to Travis, but the development of the idea proofed that several other people desire a faster services too. An entrepreneur needs to be responsive to that he, or she needs to view challenges as necessary and turn them to business ideas. Travis exhibits this entrepreneurial skill. The success of an entrepreneurial approach depends on the uniqueness bestowed on the idea. Urber never existed before its invention by Travis. Uniqueness in thinking is another characteristic of an entrepreneur that Travis exhibit (Liu, 2010). As much as an idea could be unique and viable lack of networking in the initial startup will lead to failure of a well-thought project or idea. With networking, the Uber Company is growing spontaneously that in 5 years of operation, it has opened in 73 cities and it is moving global. The challenge faced by Urber currently is on how to meet the constantly accruing demand for the Companys product. To allow for good networking and communication the skillful founder of the Company has located general managers to every city of the enterprises operation. One can wonder whether Travis had the networks and the skills to run such a giant growing business innovation. Travis innovativeness is reflected in the growth of Urber taxi service. It is through innovation that the Urber is able to deal with the upcoming environmental challenges in its growth. Most importantly is the resistance from the taxi industry. The worldwide expansions of the Urber services are not received well by various states and businesses, but the company maneuvers strategically by satisfying the need of its customers. In driving Urber, Travis uses his entrepreneurial traits of innovativeness, uniqueness, responsiveness, independence in thinking and self-confidences (Walton, 2014). Intrapreneur Intrapreneurs are innovators emanating from within a company or an organization. An organization could be faced by particular issues or problems that if assumed the business or organization could run into failure trap. Product development innovativeness is an example of a task that a company can bestow to its intrapreneurs. An intrapreneur allocated a task of developing a product will execute his duties based on the typical characteristics and traits of an entrepreneur but differing in the condition and place of working. The other concern that could differentiate an entrepreneur from an intrapreneur is the environment of working, which actually defines what to be done and how to be done. An intrapreneur needs to abide with the policy of the company that he or she works at (Gapp, 2007). An intrapreneur can be defined as an entrepreneur or entrepreneur working within a relatively larger firm or organization. An intrapreneur works on the condition that he or she does not have a direct connection or influence of the risk associated with his or her innovative ideas. An entrepreneur is a risk taker whereas an intrapreneur does not incur the risks associated with his or her actions. From the general sense, intrapreneurs are usually employees of specific large corporations (Gapp, 2007). The basis of these employees to be intrapreneurs is their capabilities of executing a project or a special idea instructed by the organization’s top management. For profit making organizations, the ultimate goal of having intrapreneurs in stake is to develop and turn special ideas and projects into profitable ventures for the company or the organization in question. The basic aim of recent companies today is to create an environment potentially conducive for creation of new and innovative ideas. The dynamics associated with business today are the ultimate drivers of the desire for new and innovative ideas by companies. Demand for products changes rapidly in the world today. The change is more so because of the prevalent changes in technology. The working of intrapreneurship involves employees identifying ideas and presenting them to the top management of the organization. If the idea passes a feasibility test for viability, it is then absorbed with optimism of generating profits from the idea. The employee in possession of the idea is given an opportunity to be an intrapreneur in the company. It is therefore clear that intrapreneurship is leveraging growth and innovativeness from within. Intrapreneurs like Richard Branson belief that, for the success of a firm to be evitable and sustainable it is mandatory that it should inculcate and accelerate the habit of intrapreneurship. Branson is a multi-dimensioned innovator having started and owning several companies including the Virgins Group (Danielle, 2013). The Virgins group presents Branson as a social intrapreneur because his innovativeness is more of social welfare of the society. Intrapreneurship is a considerable component for success of developed innovative ideas because the demand or the challenge that could be vital today could not be necessary tomorrow. Any idea is unique as at its defined time. There are four identified character traits of an intrapreneur. First, an intrapreneur is compared with a greenhouse. Like a greenhouse, an intriguing idea never disappears from the mind of an intrapreneur. Intrapreneurs are capable of creating conducive environment for germination of an idea that they consider unique. Secondly, intrapreneurs understand the pivoting of ideas. Failure is not an option or a source of fear for intrapreneurs. They consider changing courses and celebrating the success that result out of it. Thirdly, intrapreneurs behave authentically and consider integrity in their behavior. Humility and self-confidence is the motive behind the actions of intrapreneurs. Lastly, money is not the measure of intrapreneurs’ success. The economic benefits of companies’ success are vital in the minds of intrapreneurs but this does not mean that intrapreneurs forego the value for money (Burns, 2007). It has been argued wether the intrapreneurship is an action of individuals or group. Moreover, Mark Zacburg could not start Facebook although he have made many things in his early age but have not created Facebook alone he had two of his friends which means that it could be an action of groups. Intrapreneurship means the innovation within an organization or a panel of individuals. An innovative idea requires the integration of various experts and stakeholders into planning and implementation if success is an ultimate desire for the owner of the idea (Iacobucci, 2005). Conclusion The environment contributes a lot to shaping the entrepreneurial characteristics and traits of an individual. Explaining and evaluating the three different types of the entrepreneurs that is, social entrepreneur, internet entrepreneur and the intrapreneur illustrate that the entrepreneurial concept might be a very complex concept, as the different types of entrepreneurs might be very similar and different somehow. Entrepreneurs are same as the environment and culture shapes their personality, characteristics, and traits. Whereas, diverse from the environment that they were living in was different, for example, the two little girls they used to see many children facing cancer, so they wanted to help them. Hence, Mark Zuckburg wished to make a system that helps the university students to communicate together as he was a student. Moreover, the little girls are social entrepreneurs and Mark Zackburg is an intrapreneur. Each type can be different from the other as the environment plays a huge role as well as the culture. Therefore, some types can be more Kirznerian than the others as a social entrepreneur or more Schumpeterian, etc. Entrepreneurs differ in specialization of their skills and ventures. An entrepreneur could be comparatively advantaged in several skills but disadvantaged in another specific skill. It is because of this variance that successful entrepreneurs work with others in attaining their specific goals and objectives. Someone can wonder what exactly takes to be an entrepreneur if he or she could not possess all the knowledge. From a philosophical perspective, the belief is that no individual is in a potential to possess all the knowledge. It is therefore, true that a certain specialist can work for an individual with ability to spot and successfully combine excellent talents but for an entrepreneur, the option is to have the talent. However, entrepreneurs could consider others individuals working for them, a successful entrepreneur need to be well informed with varied skills in order to appoint qualified staff that will drive the entrepreneurial idea to the next level. Entrepreneurship in this case is important to pursue for the sake of improving performance and sustainability of organizations. The changing environment is vital to understand when considering the definition of the type of an entrepreneur that an individual considers. The business environment is vital in bringing change and desire to change since a subject that refuses to keep up with the dynamics of the environment, risks extinction. References Burns, P. (2007). Entrepreneurship and small business. 2nd ed. Basingstoke [England]: Palgrave, pp.31-38. Carland, J. and Carland, J. (2014). A MODEL OF POTENTIAL ENTREPRENEURSHIP: PROFILES AND EDUCATIONAL IMPLICATIONS. [online] Available at: http://sbaer.uca.edu/research/sbida/1997/pdf/02.pdf [Accessed 8 Nov. 2014]. Danielle McLimore (Ed.). (2013). Virgin Rebel: Richard Branson in His Own Words. Agate Publishing. Deakins, D. and Freel, M. (2005). Entrepreneurship and small firms. 4th ed. London: McGraw-Hill. DONICI, A., MAHA, A. and IGNAT, I. (2012). E-Commerce across United States of America: Amazon.com. [online] Web.a.ebscohost.com.proxy.library.lincoln.ac.uk. 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