Entrepreneurship: Successfully Launching New Ventures - Literature review Example

Entrepreneurship Introduction Entrepreneurship is an integral part of human life. Some people are entrepreneurs in their ordinary live while solving some common problems with a help of creative and innovative decisions. Other people see entrepreneurship as their career path, and their entrepreneurship activity has much larger scales. While I am relatively young person I also have had a chance/opportunity to be an entrepreneur in some aspects of my life. Entrepreneurship is a process when “individuals pursue opportunities with no regard to resources they currently control” (Barringer and Ireland 2012, 32). This is an activity when one person or a team develops a new idea and implement this idea for commercial benefits. Therefore, an entrepreneur can be defined as an individual who “undertakes” certain activity or efforts in order to develop a new idea, to create a new product/service, to find a new way of doing business, or to start a new venture. This category of people is risk takers, as the result of their activity is usually unknown for sure and is difficult to predict due to its innovation. An entrepreneur utilizes the resources available and finds those needed in order to transform the idea into a business or commercial activity. An entrepreneur usually is a boss to himself, who is proactive, self-disciplined, innovative and risk-taking (Barringer and Ireland 2012). An entrepreneur is an individual who wants to have control and to pursue his/her own ideas and own venture(s), while entrepreneurship is an activity performed by an entrepreneur and his/her team. Principles of reflection Reflection is a term widely used among practitioners. According to Jones (2000:1) reflection is defined as “learning journey through our everyday experience towards realizing one’s vision of desirable practice as a lived reality”. This is a process of self-analysis and self-inquiry where an individual analyzes and evaluates his behavior/activity, analyzes the situation and asks himself provocative questions whether did he respond in the most effective way (Jones 2000). Even if an individual has gained some experience there is still no guarantee that he has learned something. Reflection is an activity which stimulates the learning upon a specific experience gained. If no reflection has been done, the experience is more likely to be forgotten and its value will might be lost (Gibbs, 1988). Reflection stimulates the process of generation of concepts or generalizations, which later help to manage new situations more effectively (Gibbs, 1988). There are many different concepts and cyclical models aiming to explain the process of learning from experience. Thus, for example, Kolb has developed a four-stage model of learning, also known as Experiential Learning Theory. This model is comprised of the following stages: concrete experience; reflective observation; abstract conceptualization; and active experimentation (Gibbs, 1988). Reflection is especially important concept and practice for entrepreneurs. By doing reflection, entrepreneurs learn from their experience and thus, have capacity to make more effective decisions. Team learning Write about team learning, what is it and how does it help entrepreneurs in future? Effectuation entrepreneurship The word “to effectuate” means to engage in a particular type of entrepreneurial action (Sarasvathy, 2008). Effectuation entrepreneurship is a type of entrepreneurship activity which is based on the effectual logic, when the future is uncertain, and non-predictive (Sarasvathy, 2008). Effectual entrepreneurs are the individuals who can work with things within their control and they don’t need to predict future (Sarasvathy, 2008). Sarasvathy (2008:70) explains that there are three elements of effectual problem space, including the following: (1) Knightian uncertainty (impossibility to calculate probabilities for future consequences); (2) Goal ambiguity (no preferences are well ordered or given); (3) Isotropy (uncertain environment where it is difficult to identify what elements to ignore and to consider). In order to reduce failure with effectuation there were developed several key principles of Effectuation entrepreneurship, which are described below in more details. Bird-in-hand principle This principle is applied to expert entrepreneurs who are going to start a new venture, as they should start with the following means: who is he, what does he know, and whom he knows. Once the means are clarified, an entrepreneur imagines the possibilities originating from it (Sarasvathy, 2008; Society for Effectual Action, n.d.). Affordable loss principle This principle allows entrepreneurs to evaluate what they can lose at each step and thus to limit risk by investing they can afford to lose (Sarasvathy, 2008; Society for Effectual Action, n.d.). Lemonade principle (embrace and leverage surprises) This principle implies that surprise factor is integral part of entrepreneurs’ activity. Surprises, threats and negative events are viewed as opportunities and potential clues for new achievements (new product, new market, etc.) (Sarasvathy, 2008; Society for Effectual Action, n.d.). Crazy quilt principle This principle defines the necessity to build a network of self-selected stakeholders. This step helps expert entrepreneurs to avoid or reduce uncertainty in their venture and to co-create or to develop new markets with some of the key partners (Sarasvathy, 2008; Society for Effectual Action, n.d.). Pilot-in-the-plane principle Finally, entrepreneurs should focus on activities that are within the scope of their control. An effectual entrepreneur has a special belief that the future can be made rather than predicted or found. Therefore, the future comes from what people do (Sarasvathy, 2008; Society for Effectual Action, n.d.). Entrepreneur skills and traits In order to be an entrepreneur, an individual should possess certain personality characteristics or traits as well as skills. Entrepreneur traits are certain personal characteristics which are hard or impossible to acquire, while skills are the attributes that are acquired during life, they can be trained and developed. Entrepreneur traits There were identified many different traits which entrepreneurs should have. Thus, for example, there were identified several entrepreneur traits which include the following: internal locus of control; risk-taking; autonomy; need for achievement; self-confidence; innovation; vision & flair; and pro-activity (Classle.net, 2013). Below is presented a brief overview of each of the above listed entrepreneur traits. Internal Locus of Control is an entrepreneur’s belief or worldview that he is an individual controlling his own destiny (Classle.net, 2013). Risk-Taking – is a trait of an entrepreneur, of a person who is ready to take risks especially when others don’t (Classle.net, 2013). Autonomy as an entrepreneurial trait implies that an individual values his freedom, individuality and is ready to take responsibility for his actions (Classle.net, 2013). Need for Achievement is also an important trait of an entrepreneur as it implies that the person is eager for results and needs recognition and achievement (Classle.net, 2013). Self-Confidence trait implies that an entrepreneur should be self-confident and be sure of his own abilities and capabilities in order to take risk (Classle.net, 2013). Innovation as an entrepreneurial trait implies individuals’ capability and readiness for identifying and managing opportunities, often leading to innovations of various types (Classle.net, 2013). Vision & Flair trait suggests that an entrepreneur is an individual who can visualise or know his personal goals and feel that he has the ability to achieve these goals (Classle.net, 2013). Pro-activity as an entrepreneurial trait implies that an individual has proactive position and is actively searching for new opportunities rather than waiting for lucky chance (Classle.net, 2013). Entrepreneur skills In 2007 Smith et al. has carried out an exploratory study with a group of entrepreneurs evaluating the importance of 17 entrepreneur skills. These 17 entrepreneur skills were subdivided into 4 major categories: technical skills; managerial skills; entrepreneurial skills; and personal maturity skills. Below is presented a table with the four categories and entrepreneurial skills defined by Smith et al. (2007). Technical Skills Operational – the skills necessary to produce the product or service Supplies/Raw Materials – the skills to obtain them, as necessary Office or Production Space – the skills to match needs and availability Equipment/Plant/Technology – the skills to identify and obtain them Managerial Skills Management – planning, organizing, supervising, directing, networking Marketing/Sales – identifying customers, distribution channels, supply chain Financial – managing financial resources, accounting, budgeting Legal – organization form, risk management, privacy and security Administrative – people relations, advisory board relations Higher-order – learning, problem-solving Entrepreneurial Skills Business Concept – business plan, presentation skills Environmental Scanning - recognize market gap, exploit market opportunity Advisory Board and Networking – balance independence with seeking assistance Personal Maturity Skills Self-Awareness – ability to reflect and be introspective Accountability – ability to take responsibility for resolving a problem Emotional Coping – emotional ability to cope with a problem Creativity – ability to produce a creative solution to a problem Table 1. Skills developed based on Smith et al 2007 Entrepreneur’s development Define entrepreneur’s development: intrepreur exopreneur independent entrepreneur social entrepreneur References Barringer, B. and Ireland, R. (2012). Entrepreneurship: Successfully Launching New Ventures Global Edition. Boston: Pearson. Classle.net, (2013). entreprenuership development skills | Classle. [online] Available at: https://www.classle.net/content-page/entreprenuership-development-skills Gibbs, G. (1988). Learning by Doing: A Guide to Teaching and Learning Methods, Oxford Further Education Unit: Oxford. Johns, C. (2000). Becoming a Reflective Practitioner: a Reflective and Holistic Approach to Clinical Nursing, Practice Development and Clinical Supervision, Blackwell Science: Oxford. Smith, W. L., Schallenkamp, K, and Eichholz, D. E. (2007) ‘Entrepreneurial Skills Assessment: An Exploratory Study’, International Journal of Management and Enterprise Development, Vol. 4, No. 2, pp. 179-201. Society for Effectual Action. (n.d.). Effectual Principles | Effectuation: Society for Effectual Action. [online] Available at: http://www.effectuation.org/learn/principles Read More