Risk-Taking Ability for International Entrepreneur's Success - Essay Example

Running head: The Greater the Risk-Taking Ability, the More Successful the International Entrepreneur The greater the risk-taking ability, the moresuccessful the international entrepreneur In APA Format Contents ABSTRACT. 3 The greater the risk-taking ability, the more successful the international entrepreneur4 Seminal works relating to international entrepreneurship and innovation...4 Contribution of Economists and Scientists to International Entrepreneurship and... 6 Entrepreneurial approaches to internationalization.8 Conclusion.9 References..10 Abstract For any business to be successful an entrepreneur has to take certain risks, no entrepreneur can ever be successful without taking risks. In order to take the company to new heights certain risky decisions become inevitable. A person who starts a new organization is called an entrepreneur. Entrepreneurs create job opportunities for many a people. This is quite obvious because when a person starts a new business, he/she would certainly require employees to work for them. The activities of an entrepreneur varies, this depends on the business which is handled by the entrepreneur. People often misunderstand the terms entrepreneurs and leaders, it is perceived that both the terms are synonymous but in reality it is not so. The traits of an entrepreneur are quite similar to that of a leader but it is unfair to say that both the terms are synonymous. This paper is going to deal with the risks which the entrepreneurs take and the dividends the same pays at a later stage. Seminal works relating to international entrepreneurship and innovation. The word seminal means original and influential. These two are the most important qualities expected of any entrepreneur. It is very important that an entrepreneur sustains the growth of the company and at the same should look forward to increasing the same and it becomes highly imperative that the company uses innovation and creativity. An entrepreneur is expected to have a drive which can take the company to another level altogether. The hunger of the entrepreneur should reflect in the activities of the company. Entrepreneurship is considered to be very risky and trick, simply because many new ventures fail to perform as expected. "Most commonly, the term entrepreneur applies to someone who creates value by offering a product or service. Entrepreneurs often have strong beliefs about a market opportunity and organize their resources effectively to accomplish an outcome that changes existing interactions." ( Wikipedia, August 21, 2008). People who think out of the box, in the sense that, those who are able to see an oppurtunity and react according to the situation usually become entreprenuers. Eutreprenership contributes immensely to economy of that particular country, it also creates many job openings for the people. There are many views of the entrepreneurs for instance the classical view, the psychological etc, innovation falls under classical view of the entrepreneurs and it is based on the assumption that the entrepreneur is doing rather than owning. Innovation provides the entrepreneur with a great start and enables early growth in the organization. The risk faced by the international entrepreneurs is much high than the domestic entrepreneurs. This is also because the activities of a foreign market are much more complex than the domestic market. The international entrepreneurs take full advantage of their access to the foreign markets and availability of cheap labor but everything comes at a price, they also have to adjust to the foreign culture quickly, failing to do so would go on to produce undesirable results for sure. The market power of an entrepreneur is increased by the movement in the market power. The same helps the entrepreneur in spreading the risk and leveraging faster returns on new products. To be an entrepreneur one needs to have greater independence and self -fulfillment. When a person becomes an entrepreneur, he/she becomes self employed and it is a proven fact that when a person becomes self employed he/she initially suffers from a negative effect on the monetary income but at the same time being an entrepreneur is much more rewarding than being employed by someone else. An entrepreneur succeeds on the basis of innovation and execution of the same but study shows that innovation has devastating effect on the society, to prove the same there is a classic example, September 11 2001, is that classic example which is an entrepreneurship masterpiece. An entrepreneur starts a new business with an idea but many fail to convert the same into a real opportunity. A successful entrepreneur converts the idea into a real opportunity and capitalizes on the same. Contribution of Economists and Scientists to International Entrepreneurship and Innovation The research on international entrepreneurship flourished during the 1960s and the 1970s and this was primarily in the work of heterodox economists. The research during that time was a narrower conception of historical context. The main focus of this research was to identify traits and personalities. Economics and entrepreneurship go hand in hand, an entrepreneur is provided powerful theories only because of economics and hence it is fair enough to say that economics and entrepreneurship go hand in hand. Economics provide an entrepreneur with an option of quantitative research in uncertain situations and the same is very helpful in reducing the risk element for the future. It is very helpful in decision making. It can be argued that economics is of very little or no help when it comes to analyzing the psychology of an entrepreneur but this will be just like using incomplete applicability to judge a thing. There is no denying that the very same limitations do apply to all the other subjects. The term entrepreneur was first introduced by the French economist Cantillon. He defined an entrepreneur as "the agent who purchased the means of production for combination into marketable products". After that many economists have given their own definition of the term entrepreneur. "Romijn (1989), however, has observed three basic approaches, which, according to him, have, to date, retained some validity: (i) the entrepreneur who is the fourth factor of production... (ii) the entrepreneur who commits the capital and bears the risk under condition of unpredictable change, as described by Knight (1921), and (iii) Shumpeter's (1934) as innovating entrepreneur who conceives and engineers change, or ... carries out new combinations. These can be the introduction of a new good, the introduction of a new production method, the opening of a new market, the discovery of new raw material supply sources or the reorganization of any industry"( Ossrea, August 21, 2008). Gibb another famous economist analyzed and found similar outcomes. Gibb also found out that in the past little was discovered about the roles and functions of an entrepreneur. Another approach on the same is the psychologists approach. For instance "Bird (1988) observes that the entrepreneurial process has both attitudinal and behavioral components. The attitude component refers to the willingness of the entrepreneur/organization to take advantage of new opportunities and act accordingly. The behavioral component includes those activities required to asses an opportunity, create the business idea, acquire the necessary resources, organize and operate the business venture" (Ossrea, August 21, 2008). Six entrepreneur terms are given immense importance and those six terms are motivation, innovativeness, risk taking, self-confidence, proactive ness, and future orientation. Achievement is described as the ability to overcome obstacles. Innovation is the ability to do and execute something new, that's what makes a successful entrepreneur. Risk taking is basically investing resources in a deal which is likely to go either way. Self confidence is the trust which you have in your idea. Proactive ness means the ability to accomplish a task. Many entrepreneurs differ in the way they act according to situations, some may not be able to handle a particular situation well on the other hand some may handle the same situation with ease and this is what goes to decide who becomes a successful entrepreneur and who does not. Entrepreneurial approaches to internationalization. Early study of internationalization neglected the role of entrepreneur's internationalization process of firms. All this has changed since the last decade; more interest has suddenly spurred in role of entrepreneurs in internationalization. There are two approaches to internationalization, first is the Uppsala internationalization model and the second is the innovation model. Stages model is the common name given models. This is because both the models propose that the internationalization occurs in incremental steps. The Uppsala model provides attractive explanation for the traditional increment. These days the firms get internationalized pretty quickly because of the accelerating technologies present with companies. Early internationalization was called international new ventures. The old models of internationalization are still applied and fruitful results are obtained every time they are applied. These old models are off course the Uppsala models and these are combined with the network relationships. These relationships often lead people into participating in the foreign market activities. The most powerful tool for the entrepreneur is networking, a successful entrepreneur always ahs a good network of people associated with him. Network analysis has been a very powerful framework which is available at any entrepreneur's disposal these days. Firms use this tool in order to gain access to resources and to improve their strategic positions. This is also used in learning new skills and legitimacy. The network of an entrepreneur represents his capital which is intangible in other words it cannot be felt but holds a lot of value. The most important factor which goes to decide how strong an entrepreneur's network is trust. No network can ever be strong without the existence of trust between people. Conclusion The golden rule of business states that when there is no risk there can be no gain, so taking calculated risks becomes part and parcel of an entrepreneur's routine. The idea of an entrepreneur needs to be converted into a full fledged business, the idea should be a good enough idea and should have a scope of development in the future and at the very same time should also have the planning to back it up. The vision of an entrepreneur should be crystal clear in his/her mind. At the same time a successful entrepreneur has to have a good strategy which should be stuck with no matter what. For instance if two people come together and decide to open a fast food outlet, the risk here is high but the entrepreneurs never shy away form taking risks. There are many risks involved in this case, there is even possibility of bankruptcy but to gain something one has to put something equally precious at stake. The idea of opening a food outlet at a place where food outlets are not many is a very good idea and can turn out to be very successful but on the other hand if a person decides to sell the same food items which are available in plenty then the idea surely won't be as successful as the other idea of selling stuff which is not easily available and which is unique and hard to find. The cases involve risks but it is just the ability to bear the risk and the same gives rewards in the future, this is what makes a successful entrepreneur. The ability to take risk is a very important quality which every entrepreneur is expected to have and no entrepreneur will remain an entrepreneur for a long time without this quality. So the fact that greater the risk-taking ability, the more successful the international entrepreneur is very true and no one can deny this fact. It would make perfect sense calling it a fact rather than a statement. Word Count: 1,963 References International Entrepreneurship. In Hewpem.Econ . Retrieved on August 21, 2008 form: http://hewpem.econ.upatras.gr/pdf/zimmermann_hewpem.pdf Importance of Entrepreneurship. In National Content Standards. Retrieved on August 21, 2008 form: http://www.entre-ed.org/Standards_Toolkit/importance.htm Research Problem. In ossrea.net. Retrieved on August 21, 2008 form: http://www.ossrea.net/girr/no9/no9.htm Rediscovering History. In Hbs.edu. Retrieved on August 21, 2008 form: http://www.hbs.edu/research/pdf/06-036.pdf Read More