Online Social Entrepreneurship - Research Paper Example

Abstract

Online social entrepreneurship has emerged has the recent trends in the business world. Technology developments have contributed to online marketing. The study aimed at identifying the determinants of successful online entrepreneurship. The study used literature review to exploit the research topic. It is important to note that the study used resources that are not more than ten years old as they help to reflect on the current entrepreneurship issues. The study findings indicate that a number of factors determine success of online social entrepreneurship and this include democratic leadership style, adequate marketing and risk management. On the other hand, it was established that inadequate funding and lack of objectivity hinder development of online social entrepreneurships. The report recommends that future success of online social entrepreneurship will be achieved by engaging stakeholders in decision making. In addition, future research can be done effectively by selecting single theme to study.

Introduction

Online social entrepreneurship has emerged to be among the best growing businesses globally. Due to developments in technology, individuals and organizations are engaging in social entrepreneurship with the aim of improving growth of their businesses. It is considered as the strategy that is applied by entrepreneurs to create awareness of their products and services. It is important to note that there is a high unemployment rate globally and this means that individuals have to take appropriate measures to create employment opportunities (Chaston 2009). As a result, individuals are engaging in various activities to improve their living standards instead of depending on the government for the business operations. In this regard, online social entrepreneurship has grown tremendously in the entrepreneurship industry and this has helped to create job opportunities for unemployed besides providing products and services to improve wellbeing of individual. The paper discusses the main determinants in online social entrepreneurship as well as theories of entrepreneurship that have influenced individual actions to take entrepreneurship activities.

Research objectives

The aim of this research is to determine main determinants of online social entrepreneurship. In this regard, the study is guided by the following research questions;

• What are the main theories of entrepreneurship?
• What are the main determinants of online social entrepreneurship?
• What are the main challenges faced by online social entrepreneurs?

Research method

The research method applied in this study is literature review. Specifically, the study uses thematic literature review to understand the main determinants that influence the success of online social entrepreneurship. However, the literature review will be reviewed critically with the aim of identifying the main concerns raised by the previous literature. Literature review is divided into various sections that focus on the concentration on the research topic (Clydesdale 2009). In order to collect effective research information about the topic, the researcher uses resources that are not more than ten years old. This means that the resources used will provide adequate information that reflects on the current issues regarding online social entrepreneurship. Furthermore, the resources used should have bibliography to further clarify the main points because lack of bibliography it will be hard to evaluate the main issues presented by the author. In this effect, the researcher will be able to conduct the research effectively as this helps to improve focus on the research topic.

Structure of the report

Report of the structure is important because it helps the reader to straight go to the topic or research issues in concern. It also helps to understand how the study was carried out thus evaluate reliability of the research study. In this regard, the abstract of the study give a brief overview of the study. It helps to understand the research study findings in summary for the readers who do not have time to read the entire content. The study has the introduction part that introduces the research topic, literature review that reviews existing literature considering the research topic and finally recommendations and conclusions. This is the final part that summarizes the research findings and making recommendations considering the research topic and identified loopholes in the previous research. Specifically, conclusion sums up the entire research findings.

Literature review

Theories of entrepreneurship

There are various theories that explain existence of social entrepreneurship and factors that influence the success of online social entrepreneurship. These theories are discussed below;

Economic theory: The theory dates back in 1700s. It argues that the entrepreneurs are risk takers. The theory argues that most entrepreneurs enter into entrepreneurship with the aim of developing economic benefit from the identified opportunity (Drucker 2007). The economic system theory focuses on the ability to identify a business opportunity and take appropriate measures that can be used to exploit the opportunity. However, the theory is criticized because it does not consider dynamics in the market but focuses on creating economic benefit. According to economic theory, market dynamic determine success of online social entrepreneurs. This is because if an entrepreneur does not consider changes in the market dynamics, it will be hard to achieve economic objectives hence the goals and objectives cannot be achieved.

Resource based theory: It is another entrepreneurship theory that influences success of online social entrepreneurs. As the name suggests, resource based theory focuses on the ability to combine and utilize resources effectively to exploit identified opportunity. This means that access to capital influences the ability to identify an opportunity (Drucker 2007). Other social entrepreneurs engage in social marketing with the aim of exchanging information with the customers thus creating good relationship with the customers. Success of an entrepreneurship depends on the availability of resources like capital and human skills.

Opportunity based theory: This is entrepreneurship theory that argues that skills of the entrepreneur influence success of failure of the enterprise. Skills required by an entrepreneur to identify an opportunity include ability to conduct market research effectively. Opportunity based theory argues that an entrepreneur has to identify available business opportunity before mobilizing resources required to exploit the opportunity (Zahra 2009). In this regard, success of an online social entrepreneurship depends on the ability and interpretation of entrepreneurship theories. This is because there are opportunities identified but due to lack of resources it will be hard to exploit the identified opportunity. The theory has been criticized because it does not consider the viability of different market opportunities. It is not just identifying a business opportunity but it must consider the possibility of exploiting the opportunity considering dynamics in the market and resources required to exploit the opportunity.

Determinants of successful online social entrepreneurship

There are various determinants of online social entrepreneurship. It is important for an entrepreneur to consider these issues when venturing into business because they determine success or failure of the venture. Discussed below are the determinants of successful online social entrepreneur;

Leadership style: It is the first important factor that influences critical success of online social entrepreneurship. Entrepreneurship can be I form of sole trader or partnership. What is most important is the leadership skills required to manage a venture (Zahra 2009). In this regard, leader is expected to coordinate various functions in the venture including mobilization of resources to work towards effective achievement of goals and objectives. Since an entrepreneur cannot work alone, he or she will have to hire some staff to help in managing the operations of the venture. In this way, the leader of the business has to motivate the staff through effects rewards and remuneration so that they can offer their best skills to achieve organizational goals and objectives. In addition, a leader should be visionary and hardworking as well as leading by example and this will help to motivate the followers. This means that effective leadership should mobilize resources and motivate staff and work as a team towards exploiting the identified business opportunity (Shane & Venkataraman 2000). This is because failing to get support from the stakeholders will be hard to succeed in the market. However, it is not only leadership that determines success of online social entrepreneurship. This implies that leadership has to combine with other factors to ensure success of the venture.

Management skills: For the success of any organisation, management plays an important role. In online social entrepreneurship, the management team should comprise effective skills to communicate effectively and solve workplace issues that can otherwise affect relationship among the staff. For instance, it is expected that there will be conflicts and if they are not managed effectively (James 2014). There will be high employee turnover affecting reputation of the organisation. Moreover, a good leader should lead by example and this contributes to improved organizational performance leading to improved employee morale. Therefore, management determines success of online social entrepreneurship.

Careful business planning: In addition, careful business planning is another determinant that influences success of online social entrepreneurship. For any start up business, careful planning has to be done so that there will be no misuse of resources (James 2014). After identifying a business opportunity, evaluation of the resources and how the business will be managed concept should be done. This means that objectives should be formulated and they should be realized and achievable. Most organizations fail to achieve their goals and objectives because they formulate goals that are not realistic considering size of the venture. In this way, it will be difficult to succeed in the online social venture. In addition, careful financial planning is another factor in the marketing plan that determines success of online social entrepreneurship. In this regard, a leader has an important role to play in formulating objectives that can be achieved considering the size of the organisation (Lundstrom & Stevenson 2005). Furthermore, location of the business influences convenience of the products and services to the customers. However, due to technological development, ecommerce has been applied and the products can be distributed to the customers online.

Marketing strategies: This is another important factor that influences success of an online social entrepreneurship. Due to high competition in various industries, marketing is an important aspect that influences success of an organisation (Deakins & Freel 2009). Products and services should be marketed effectively with the aim of creating awareness of the products and services to the target market. Internet is being used to market products and services and this helps to create awareness of the products in the target market. For instance, social sites are used to market products and services. As a result, sites such as Facebook and Twitter will be used to create awareness of the products and services. In this way, the marketing strategies applied by an entrepreneur determines successful of an online social venture (Foo 2011). This is because customers tend to buy products they are familiar with. Through effective marketing, a social entrepreneur will be able to interact with the customers and in the process he will understand the strategies that can be employed to improve customer satisfaction and in the process improve success of the online social entrepreneurship.

Risk management: It is the process of identifying the main risks facing the venture. Most online social entrepreneurships fail to succeed in the market because they fail to identify the risks and strategies that can be employed to manage the risks before they affect the business operations. An entrepreneur has to be foreseeing. This includes focusing on the risks facing the venture and appropriate measures that can be taken to manage the risks. Risks are unforeseen (Robinson et al 2008). For instance, legal policies should be followed by an entrepreneur to avoid legal constraint by relevant organizations mandated to oversee operations of various businesses. An entrepreneur has to seek approval from relevant authorities and get operations license before embarking on the business. In this effect, it will be possible to engage in legal services. Failing to seek approval and licenses from relevant organisations makes the business illegal and this affect its reputation in the market thus it will not have capacity to attract customers.

Challenges faced by online social entrepreneurs

Online social entrepreneurs are faced with many challenges. An entrepreneur should be able to understand main requirements in developing entrepreneurship venture. In this regard, the following are the main challenges faced in online social entrepreneurships;

Inadequate funding: Since online social entrepreneurships are not for profit making organisations, most of them fail to raise adequate financial resources to implement their projects. This is the main challenge that affects online social entrepreneurs. In most cases, social entrepreneurs depend on donation and charity from well wishers to fund their projects (Rae 2007). In this effect, the online social venture are faced with lack of appropriate financing strategy because they are not for profit making organisations but focus on sustainable business. It implies that it will be hard to attract investors to an organisation that is not for profit making hence it will be hard to growth venture steadily.

Inability to communicate value of the business objectively: Social entrepreneurs are not commercially motivated. It is a traditional way of building passion. Individuals engage in doing activities that are not for profit making (Perez & Rose 2009). However, this does not mean that the organisation will not focus on raising some money to sustain its operations. The organisation does not engage in competition in terms of attracting and retaining customers but focus on improving living standards of individuals. It is difficult to communicate the objective of the business to the investors because the business does not engage in profit making and in this way the venture will not be attractive to the investors. As a result, the management might shift the focus to creating an objective that focuses on generating profit with the aim of making the venture to e attractive (Mitra 2009). Therefore, the business fails to remain objective. However, it is important to remain objective even without making profits but focus on social entrepreneurship.

Summary

Technology development has contributed to online social entrepreneurship. The literature review has identified various theories relating to social entrepreneurship. These theories include economic theory and resource based as well as opportunity based theories. In addition, the factors that determine success of online social venture include leadership, marketing, risk management and marketing plan. However, due to dynamics in global business, these factors keep on changing. On the contrary, challenges facing online social entrepreneurs include inadequate funding and lack of objectivity.

Conclusion and recommendations

Success of online social entrepreneurships is determined by various factors. These factors include leadership style, marketing plan effectiveness, risk management and careful planning. However, if these factors cannot be designed effectively, the success of online social entrepreneurship will not be achieved. However, the literature review determined that online social entrepreneurs are challenged by inadequate findings and inability to communicate objectivity of the venture.

Recommendations

In order for management of a venture to improve its performance, it is important to engage the representatives of stakeholders when formulating policies (Mellor 2008). This will help to understand their needs and expectations and eventually lead to motivation of the staff.

For future research, it is important to identify specific area of interest to research on instead of broad topic (Martin & Thompson 2009). For instance, research should be narrowed down to impact of leadership style on online social entrepreneurship. This will help to give reliable and specific results.