Entrepreneurial Thinking and Behavior - Literature review Example

Entrepreneurial Thinking and Behaviour Literature Review Businesses the world over are initiated by people who started by having an idea about what to do and decided to take the risk and start to do it. These kind of people are known to take an opportunity whenever it arises and for them to do so they need to be alert at all times to ensure they seize the best opportunity available according to Mellor et al, (2009). These are the entrepreneurs who constantly are required to make decisions on what to do and how to do it and this requires them not to be risk averse. The whole idea behind entrepreneurship is to take risks that many have developed averseness towards and turning them into profitable and sustainable ventures. Studying entrepreneurship requires one to give an extensive analysis of the different facets that surround the concept. Due to the complexity that the topic poses it is important to mention that many researches and articles written but none seems to dwell conclusively on the topic. This paper aims at uncovering entrepreneur themselves then looks into their thinking and behaviours. Researchers for example Schumpeter argue that entrepreneurs are people who are driven by innovation in order to come up with new products and services within their line of operation. They further state that they endeavour to enhance efficiency in production processes thus ensuring that their organisations generate good quality products and services. The other argument is developed by Shackle which states that an entrepreneur tries to seek new opportunities that will bring benefits through their highly creative and innovative minds. This person called the entrepreneur is good in seizing new opportunities in areas when others are not aware. Mellor (2009) goes ahead to stipulate that an entrepreneur organises the various factors o production in order to stimulate growth and development. In doing this huge benefit is gained more so economically be the stakeholders of such a venture. Entrepreneurs under this definition are seen to be the driving force for economies around the world. To a huge extent this can be regarded as the truth since many economies in the current global market place are being supported by private enterprise. These economies are becoming more and more reliant on the private sector that rests its potential on its initiators who are the entrepreneurs. Many studies that have been carried so far have tended to focus more on the macro perspective of the entrepreneurship issues. Under these kinds of studies the conditions that are said to prevail are that the people involved have passed through similar experiences, the group is particularly homogenous and that the demographic qualities of the people in question is technically the same says Kuratko (2008). This perspective goes further to look more into the social factors that impact on the entrepreneur, structure of other supportive services and lastly, finances. These as can be seen are quite broad in their coverage and they therefore do not give the best picture in determining who is an entrepreneur and what are the circumstances that they operate under. A narrower perspective was therefore sought to look into more of the micro factors surrounding the operations of an entrepreneur and their behaviours. In order to be able to look into the micro issues and factors surrounding and entrepreneur it is important to first take the entrepreneur as an individual and study their personal characteristics. In doing so many characteristics have been seen to be common among all entrepreneurs for example risk taking tendencies, values adopted and locus of control. It is also important to note that entrepreneurs also have certain psychological traits that enable them do what they do e.g. their innovative minds, problem solving skills and their role models. Other factors that also show their significance are: their respective environment, education background, perceptions that they have as well as their work experience. All these variables have been seen to play their part in order to come up with a more wholesome concept of an entrepreneur and what entrepreneurship entails. Personal characteristics have come to be studied by some researchers separately whereby they have concentrated more on the individual characteristics. These characteristics have been seen to contribute more to the entrepreneur acting the way they do in maintaining alertness and seizing available opportunities for them to gain at the end of the day (Morrison 2000). Researchers under this have come to appreciate that for a person to become an entrepreneur they must first be risk takers. Taking of risks in this respect means that they are able to venture into new areas of operations whereby they will invest their resources (time and money) with the aim of gaining profits. This is one of the fundamental personal traits that all entrepreneurs share and it is quite a defining one when it comes to differentiating them from the rest of the people. The other trait is that they are motivated to achieve greater heights in their endeavours. In so doing they find themselves expanding and diversifying their ventures to bigger businesses thus more revenue generated. Locus of control is the other train whereby they take full control of what they do and that they believe in themselves as well as their potential to excel. This acts as a supporting pillar to their other trait of being risk takers. They are also good in solving problems and are innovators. They are faced with challenges in their every day affairs but at the end of it all they are motivated to overcome them as they are focussing on the prize at the end of it all i.e. profitability. For them to be able to view opportunities that others do not see, they need to have innovative minds so as to ensure that they develop new ideas to ensure that each opening to them is an opportunity to expand as argued by Mellor et al, (2009). Kuratko (2008) on the other hand acknowledges this but goes on to say that the surrounding circumstances are important to consider since the businesses operate within certain set of environmental variables. Entrepreneurs are people whose perception of various things and issues is quite different from other people. They view risky ventures as viable opportunities and they do not hesitate to send their resources there to test the waters despite others averseness. They have a different insight that ensures that they are always ahead of others when it comes to identifying business opportunities. The above approach of researchers looking into the concept of the entrepreneur and their behaviours and the way of thinking was seen to neglect a number of issues that act as catalysts to how they think and behave. These factors are more related to the social cognitive aspects whereby their environment was seen to be of huge importance to consider and study. As argued by Gartner (2001) traits of an entrepreneur are not enough to understand them and how they behave and that their environment is also of huge importance. The first of this is culture whereby a person’s culture gives a great deal of impetus on how they act. There are people who are regarded as entrepreneurs by nature as a tribe or family lineage or nation. To give an example of this are the Indians who are regarded to be entrepreneurs by nature. Although this is regarded to be a stereotype that is too general to consider, it has a bearing to many people from Indian. This aspect to the Indians makes them feel that they are businessmen and women by birth and it goes ahead to instil in them the sense of risk taking. Within the Indian society there are families that are also regarded to be extreme entrepreneurs and when a member of this family especially a son fails to enter into the business arena, they are seen as not to be performing to their full potential. Family pressure on ‘what to be’ or ‘not to be’ also carries a great deal of weight in this respect. The other key variable from a person’s environment is the role models that one has. Entrepreneurs usually have role models who have excelled in the line of business and they try to follow their advice if they are close to them as argued by Mellor et al, (2009). In cases where the role model is a person they cannot converse with for advice them they follow what they say on the media and what they have done already. The latter is the most common where people wish to ape others who have excelled in order to be like them or even more. In so doing entrepreneurs excel dramatically as they get consolation from the cases of these role models on the hardships they had to endure in order to be where they are. Work experience is the other factor that has given rise to entrepreneurial tendencies. A good number of people who venture into businesses usually have the required experience or slightly less to handle the type of venture. People become motivated to venture into business after taking time to learn it as employees in another. This approach is most advised as although the move to have a new venture is risky in its own right, it is of a measured risk. Experience as the saying goes is the best teacher and for such an entrepreneur acting out of experience the huddles to face are fewer. This approach also helps one to start at a more elevated level since one may have calculated the problems that the other firm faced and the best way to overcome them. In cases where the former firm becomes a competitor one is able to have a competitive edge as there is enough information on how the competitor operates and the strategies put in place to approach the market. Education background of an entrepreneur also acts as a factor facilitating their involvement in some ventures and not others states Morrison (2000). When one did a course maybe focusing on the hospitality industry, it is highly likely that they will engage in businesses that are more related to the industry. The reason for this trend with entrepreneurs is that they feel that they have knowledge of the line and that they may have a little experience toward the sector. The other example is where the entrepreneur does not have a good education background. In this latter case the type of venture to go into for a person will not be one requiring more of specialised skill to venture into. Morrison (2000) however disputes this saying that since more and more entrepreneurs especially with the globalisation trend are entering into businesses where they have no clue about and they hire qualifies staff to work for them. A good example lies with the bosses of some huge firms and companies and even football clubs who have little or no knowledge of the business their firms handle but since they have hired experienced staff, they need not worry as revenue will stream in anyway. The underlying factor with education that has not been refuted is that one people tend to lean more on the areas they have specialised in while in school or college. Kuratko (2008), states that the other factor is the general environment in which one operates. When an environment is favourable to start business or it is such that people are encouraged to venture into business, people tend to come up with ideas on how they can make the best out of the situation states Morrison (2000). Entrepreneurs in this regard excel more due to their character trait of being alert to situations and seizing opportunities whenever they arise. Taking an example of governments in the emerging markets, they have been initiating programs that enhance entrepreneurship skills for their young generation. Competitions are held for the best business proposals and the winners are sponsored to make their proposals a reality with either grants or cheap loan facilities. In such an environment the best entrepreneurs always emerge the top and benefit. This form of entrepreneurship is driven more by the environmental factors surrounding the entrepreneur which get their impetus from their inner motivation to achieve. References Gartner, WB 2001, Is There an Elephant in Entrepreneurship? Blind Assumptions in Theory Development, Business research, Entrepreneurship Theory and Practice. Kuratko, DF 2008, Entrepreneurship: Theory, process, and practice, 8th edn, Cengage Learning. Mellor, RB et al, 2009, Entrepreneurship for Everyone, A student textbook, 1st edn, Sage. Morrison, A 2000, Entrepreneurship: What triggers it? International Journal of Entrepreneurial Behavior & Research, 6(2), 59-7. Read More