Entrepreneurship & Innovation - Dissertation Example

?Characteristics of Entrepreneurs Bygrave and Zacharakis described entrepreneurship as a driving force that revolutionized business in a global scale. The creation of new businesses provides the opportunity for the introduction of new products and services. In addition, entrepreneurial ventures were responsible for majority of jobs created from 1993 to 2008. In terms of standards of living, entrepreneurs were responsible for a 700% average increase in 16 countries in a span of a century – from 1870 to 1979. As of 2010, more than half a billion people have embarked on new entrepreneurial ventures. One of these extraordinary entrepreneurs is Arthur Lok Jack. Arthur Lok Jack is an entrepreneur who possesses the following characteristics: risk-taker; innovative; has foresight and vision; resourceful; persistent; ambitious, intelligent and knowledgeable; hard-working; realistic; adaptable; business savvy; and practices networking. Risk-taking Risk-taking among entrepreneurs involves taking calculated actions designed to control and minimize the risks involved, at the same time ensuring that goals are achieved. This behaviour sets entrepreneurs apart from gamblers who depend on chance and from individuals who prefer to “play it safe” (Joseph 2003). Risk-taking behaviour is viewed as beneficial, as revealed in the positive association between risk and output wherein a higher level of risk increases the likelihood of getting impressive results (Analoui & Karami 2003). Penrose (1959) asserted that entrepreneurship involves determining opportunities within the economic system, including those which entail a high amount of risk. Rauch and Frese (2007) attributed risk-taking behaviour on the entrepreneur’s propensity to make decisions on situations which show low likelihood of success. This behaviour makes entrepreneurs stand out compared to risk-averse individuals. However, risk-taking may have different interpretations. For example, ordinary consumers might view such behaviour as reckless. On the other hand, business owners consider risk-taking as a move to minimize risk when making business decisions. Innovativeness Entrepreneurs constantly strive to find ways to develop and introduce new and unique products and services. Innovation may come in five forms: (1) introduction of a new product or improvement in the quality of existing ones; (2) new methods of production; (3) opening of new market; (4) new source of supply or raw materials or half-manufactured goods; and (5) new industrial organization (Joseph 2003). Schumpeter (1935) envisioned an entrepreneur as an economic agent capable of creating novel combinations of production factors in response to investment opportunities. An entrepreneur is viewed as an indispensable element of the capitalist economy who embodies the principles of capitalist change, as well as industrial and technological change. There is mounting evidence that entrepreneurial innovativeness is significantly correlated to success. This applies to innovation on a personal and organizational level. Organizational level of innovation reflects how innovative an entrepreneur is. The relationship between innovation and success can be predominantly observed on new technology organizations compared to traditional industries (Rauch & Frese 2007). Rutherford and Holt’s (2007) investigation on the link between individual and corporate-level innovativeness pointed out two important facts. First, innovativeness is based on a personal willingness to develop and introduce improvements and innovations in work process. Second, individual focus on innovativeness is suggested since entrepreneurial activities are created and implemented by individuals. Foresight and vision Entrepreneurs are visionaries, able to foresee where the company should be in the future. Gillespie-Brown (2008) describes how an entrepreneur envisions the: (1) future of existing products and services; (2) reinvention of the business; and (3) generation of opportunities in present markets. Bellini (2005) defined foresight and vision as the intuitive idea in relation to possible future states. Foresight is generated based on existing products/market combinations which is analyzed in terms of competencies, functionality and diversity. An example of visionary foresight is the development of the British railway system. From its early beginnings the vision of the railway system was implemented by entrepreneurs: (1) Thomas Gray proposed an integrated railway system running from north to south of Britain; (2) George Stephenson was instrumental in making the components of the modern railway system; (3) Isambard Kingdom Brunel envisioned a high-speed luxury transport system connected by steamships and trains; (4) Robert Stephenson suggested that every part of Britain should have railway access; and (5) the British government envisioned a country connected through a railway network which will improve governance by enabling better access to transportation for Scottish and Irish members of Parliament (Casson & Godley 2010). Resourcefulness Majority of entrepreneurs start out their business ventures with a limited amount and variety of resources. Hence, entrepreneurs rely on their ingenuity to procure the resources that they need (Joseph 2003). Parker (2004) defined entrepreneurial resourcefulness as the ability to overcome unforeseen problems and taking advantage of existing knowledge. Meanwhile, Harper (2005) described resourceful entrepreneurs as individuals who mastered the art of developing entrepreneurial ventures by associating themselves with people driven to fill the gaps in the market. Entrepreneurs foster an environment which encourages the creation of new ideas, opportunities, products, and services. In addition, entrepreneurs continuously look for other firms which they can form beneficial partnerships. Persistence Entrepreneurs consistently encounter situations which can hinder the success of their business venture. Therefore, entrepreneurs should show persistence in the face of difficult situations which enables them to recover from setbacks and learn from previous experience (Longnecker, Moore, et al. 2006). Gillespie-Brown (2008) described persistence as a personal quality which motivates an individual to keep going even when the current situation does not play in their favour. In a business environment, an entrepreneur will face issues and challenges on a daily basis, which could make it difficult to achieve organizational goals. Usually, the likelihood of failure is much greater than success which is why entrepreneurs are required to be persistent in the face of failure and difficulty. Entrepreneurs either attempt to resolve the issue repeatedly until they succeed or consider other alternative solutions to resolve the challenge (Libecap 2003). Harper (2005) depicted entrepreneurs as individuals driven by a persistent idea, concept, theme or obsession which determine the type and nature of business venture they will pursue. Most of the time, entrepreneurs have to experiment with various options before coming up with a successful business approach. However, an entrepreneur must also know when to stop pursuing a venture when there is a clear indication of failure and all options have been exhausted. Ambitious Ambitions provide motivation and serves as a compass to entrepreneurs in their quest to establish a successful long-term business venture. Ambitious entrepreneurs are more likely to create a successful business with the capability of continuous improvement and expansion (Bhide 2000). Joseph (2003) describes ambition as a strong desire to gain fame, honour, wealth, or a higher social/work status. Ambition pushes and individual to work towards the realisation of his/her goals as they pursue business ventures. An entrepreneur’s decision to take on a business is mostly influenced by his/her ambition. Analoui and Karami (2003) describe ambitious entrepreneurs as individuals who start their own ventures with their own vision and instincts. Therefore, entrepreneurs do not seek approval from other people nor gain motivation from them in order to initiate a business. Bhide (2000) further described ambitious entrepreneurs as individuals who strive to make things work well, better, and eventually, to become the best in the field. Once, they have achieved this, entrepreneurs usually sell the business to other companies to compliment their capabilities and move on their next venture. Locke and Baum (2007) argued that ambition does need not to be viewed negatively. Having a healthy ambition is achieved by possessing the need to achieve or improve on something on the grounds that it will be accomplished in a fair and responsible manner. Intelligent and Knowledgeable Entrepreneurs need to act intelligently in the face of challenges by being able to rapidly understand the situation, utilize available resources, and devise a plan to resolve the issue. This applies to securing funds, creating new opportunities, utilizing new technology, and improvement of product/service quality (Joseph 2003). Meanwhile, entrepreneurs should be able to exhibit managerial and technical knowledge to effectively run a business. In order to achieve this, entrepreneurs should gain knowledge in business areas such as marketing, accounting, administration, and management. In essence, the more skills and knowledge an entrepreneur has, the higher the chances that a business will succeed and prosper (Analoui & Karami 2003). Andersson, Curley and Formica (2010) pointed out an entrepreneur’s level of education as a reliable predictor of achievement and business growth. For example, companies in the USA headed by entrepreneurs with graduate degrees are more likely to experience rapid growth. Nurturing the entrepreneurial spirit in the educational system is a long process which starts at an early age and continues throughout all levels of education. Entrepreneurial concepts are introduced in stages as students are initially exposed to the rudiments of business ownership, progressing to more advanced concepts as they move on to higher levels. Concepts include: (1) entrepreneurial basics; (2) competency awareness; (3) creative applications; (4) start-up; and (5) growth. Since an entrepreneur needs to be adept at multiple facets of business, various academic institutions have adopted interdisciplinary approaches designed to educate entrepreneurs in utilizing innovative ideas as business opportunities (Andersson, Curley & Formica 2010). Hardworking Analoui and Karami (2003) described entrepreneurs as individuals who show commitment and persistence in managing their business. Entrepreneurs are able to push forward and achieve their objectives by giving more time and effort to finish the job, even in the face of difficult situations. Karami (2007) added that hardworking entrepreneurs anticipate the need to work long hours due to the responsibilities involved in various aspects of the business. Moreover, entrepreneurs continuously seek for purpose and challenge themselves. They are passionate about their work and show their love of the business by serving and maintaining good relationships with their clients (Lowstuter 2007). Entrepreneurs are more likely to interact with other individuals who share the same passion in creating business innovations and opportunities. They actively seek out experts in their field of business with the aim of learning from them. In addition, entrepreneurs regularly scan the market in order to establish benchmarks which will help determine how their business ventures measure up against the competition (Orton, Menken & Santos 2009). Realistic Joseph (2003) described an entrepreneur as an individual who perceive opportunities, resources, and challenges inherent in a specific situation based on reality and facts. Harper (2005) added that entrepreneurs have realistic expectations about the business such as having times of success and failure, as well as the inevitability of something happening unexpectedly. Though entrepreneurs may be described as dreamers, majority have beliefs that are grounded on a realistic perception of their environment. Entrepreneurs acknowledge the presence of challenges and unforeseen problems which will eventually come to the surface. Having a realistic view of the world places an entrepreneur at an advantageous position by enabling them to make difficult business decisions regarding hiring, firing, salaries, and layoffs without allowing friendships or general sentimentalism to get in the way (Bird 1987). Adaptable As entrepreneurs exist in an environment where events that have the capability to hinder the exploitation of opportunities may occur unexpectedly, the likelihood of encountering such events is inevitable. Entrepreneurs can only fully assess the present, as they have no capacity of seeing or predicting future events. In this light, entrepreneurs must be adaptable and flexible in creating new solutions for their business ventures (Shane 2003). Entrepreneurs are expected to be capable of adapting to changes in the business environment without losing sight of his/her goals and objectives. In addition, an entrepreneur must be possess an open mind and be receptive to change. Should change be inevitable, an entrepreneur must be willing to make adjustments if necessary. Being able to effect rapid changes allows an entrepreneur to effectively address issues and challenges. Moreover, being able to adapt and remain flexible in any business situation places an entrepreneur at an advantage (Gillespie-Brown 2008). By listening to customer feedback and regularly assessing the market situation, an entrepreneur will be able to gain a realistic view of the current situation and formulate the appropriate strategy to effectively compensate for volatile aspects of business (Analoui & Karami 2003). Business Savvy A large part of the entrepreneur population is represented by former employees who have decided to embark on their own business venture. The decision to pursue self-employment requires a corresponding change in thinking. As an employee, an individual has limited responsibilities, face lesser risk, and have fixed working hours. On the other hand, entrepreneurs face a large amount of responsibility, deal with different kinds of risks, have longer-than-normal working hours, and have to juggle business, personal, and domestic priorities (Mitchell & Silver 2011). In order to effectively and efficiently run a business venture, an entrepreneur must be well-versed in every aspect of his enterprise. Knowing the ins-and-outs of the business enables an entrepreneur to handle situations with minimum effort and resources. In addition, entrepreneurs with previous business experience can rely on knowledge gained from their prior exploits in addressing both common and unique circumstances (Analoui & Karami 2003). Harper (2005) added that being under the tutelage of a mentor also helps an entrepreneur in terms of the expertise and experience that a mentor may impart. Analoui and Karami (2003) suggested ways which an entrepreneur can develop their business acumen, namely: (1) research on the current business environment, production techniques, and new market concepts; (2) read, understand and interpret financial statements; (3) plan cash flows; (4) learn how to source funds; and (5) secure resources. Networking As an entrepreneur pursues his/her business venture it is inevitable that he/she will cross paths with numerous individuals and groups. An entrepreneur’s relationship with other entities is crucial due to the possible positive or negative impact it may have on business. Hence, an entrepreneur should be able to create and maintain a beneficial and harmonious relationship between members of his network. An entrepreneurial network may be classified into: (1) personal; and (2) extended networks. Personal networks are composed of individuals and entities which an entrepreneur has a direct relationship. This includes business partners, suppliers, customers, bankers, and family members. On the other hand, extended networks are a collection of interconnected personal networks (Landstrom 2010). Having a dense and diverse social network is crucial for any entrepreneurial venture, both new and existing. An excellent network increases the likelihood of getting more prospective clients and improves the profitability of the enterprise. Moreover, maintaining a social network opens new opportunities, as well as access to resources which may not be available outside the network (Landstrom 2010). Establishing networks also include forming alliances with other individuals, groups, and other entities which help facilitate the growth and development of the business. The benefit of forming alliances is based on three realities. First, most opportunities are short-lived and the time it takes to gather necessary resources may be too long. By forming alliances, an entrepreneur can tap allies with already existing assets. Second, since opportunities require resources and most entrepreneurs start out with a limited amount of resources, alliances allow entrepreneurs to gain access to resources without the need to purchase actual asset. This enables an entrepreneur to combine the necessary resources while controlling costs. Third, alliances with known and established entities enable an entrepreneur to introduce products and services by association with brands which the public is familiar with (Shane 2003). References Analoui, F & Karami, A 2003, Strategic Management in Small and Medium Enterprises, Thomson Learning, Stamford, CT. Andersson, T, Curley, M & Formica, P 2010, Knowledge-driven entrepreneurship, Springer, London, GBR. 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Schumpeter, J 1935, ‘The analysis of economic change’, The Review of Economics and Statistics, vol. 17, no. 4, pp. 2-10. Shane, S 2003, A general theory of entrepreneurship: The individual-opportunity nexus, Edward Elgar Publishing, Cheltenham, GBR. Read More