Drucker, P. (2014). Innovation and entrepreneurship. Routledge.
Drucker defines entrepreneurship as the process of coming up with new processes and new methods of achieving a business objective. The author stresses that entrepreneurship involves ingenuity, time and effort in the production of goods and services. He cautions that entrepreneurship is a double blessing with both risks and rewards. The writer opines that new ways of looking at the business involve exploiting existing technology and invention to come up with processes that utilize available tools to produce goods and services that add value to the economy. In simple terms, the author is of the opinion that an entrepreneur takes risks and so stands to reap the rewards.
The author notes that the concept of entrepreneurship brings self-employment to the fore. He asserts that most entrepreneurs become self-employed when they begin to derive their livelihood from the business venture. Since the entrepreneur bears all the risks associated with the business, Drucker is of the view that he or she will also enjoy all the benefits that ensue from the business venture. As a result, not only does the entrepreneur become a self-employed person, he also offers employment opportunities to the jobless and contributes positively to the community.
Drucker also defines the entrepreneur as the person who invents the initial business idea to exploit the new economic opportunities. He explains that the entrepreneur pays a certain price for a particular product, makes decisions for obtaining and using resources and faces risks. He adds that the entrepreneur is a multi-tasking individual who enjoys creating economic activity in the competitive market. Drucker states further that to become an entrepreneur, one has to fulfil four criteria. First, the person must have the ability to identify opportunities and situations that combine resources to realize profits. Secondly, the person must be informative and quick to grasp current ideas. Thirdly, the entrepreneur must be ready to take risks. Lastly, entrepreneurship requires the keen organization of people and resources to realize intended goals. In a way, an entrepreneur should be a person who is ready to take risks, identify new opportunities and exploit them for commercial gains.
The author makes it boldly that, an entrepreneur cannot escape being a risk taker. This attribute requires the entrepreneur to put his or her financial security in the line while promoting the new idea. In the view of Knight, three levels of uncertainties exist for the entrepreneur. They are statistical risks, ambiguity and true uncertainty. Ambiguity is hard to measure statistically since it is a matter of chances. Therefore, an entrepreneur should be ready to venture into an uncertain business deal with risky financial undertakings.
Remedy to Entrepreneurial Risks
Parker, S. C. (2018). The economics of entrepreneurship. Cambridge University Press.
In this article, Parker shed light on the possible causes of actions available for the entrepreneur should difficulties come. The first suggestion that he puts forward is insurance. According to Parker, ensuring the business against losses can mitigate losses occasioned by burglary and fire. He contends further that co-owning the business with another partner can also be exploited by other entrepreneurs. He, however, cautions that co-ownership dilutes the ownership and therefore should only be considered as a last resort. The writer gives a third option as investing in extra security. He views this choice as appropriate for that entrepreneurship that deals with valuable products. The last solution fronted by Parker is the services of a risk assessment expert. In his view, this option is a preventive measure that highlights the areas of risk in the business that the entrepreneur needs to be aware of making vital decisions. In short, the options available for entrepreneurs to militate against risks are insurance, co-ownership, risk expert and investing in extra security.
Theories and Schools of Thought on Entrepreneurship
Kirzner, I. M. (2015). Competition and entrepreneurship. University of Chicago press
Kirzner presents theories of entrepreneurial development. The theories are micro and macro view entrepreneurial thoughts. The first one consists of an environmental school of thought, financial or capital school of thought and displacement school of thought. The second view has entrepreneurial trait school of thought, venture opportunity and the strategic formulation. Essentially, the macro theory reviews factors that the entrepreneur cannot control and hence pushes him or her to develop business ideas.
The author argues that the environmental school of thought are both positive and negative factors which make entrepreneurial lifestyle to change. The author points and societal values lead to the formation of the environmental framework that strongly influences the development of entrepreneurs. He notes further that existence of freedom and support in the work environment may foster a manager's desire to pursue an entrepreneurial career. In summary, the social group a person belongs to; often influence the entrepreneurial development of that person.
In the theory of financial or capital school of thought, Kirzner presents the view that the desire to become an entrepreneur is based on the capital seeking process. He clarifies that the entrepreneurial process is all about making decisions involving finances. For instance, at the start up or acquisition venture stage, the entrepreneur's main concern is deciding on the major sources of funds. He or she may opt for a loan or decide to save up his. The result of these initiatives may make the entrepreneur proceed or abandon the project. At the on-going stage, the entrepreneur is basically concerned with how to manage cash and make investments. The major decision, therefore, is to increase or reduce the size of the business.
In the displacement school of thought, Kirzner suggests that most people will not pursue an entrepreneurial venture unless they are prevented or displaced from doing other activities. He identifies factors such as politics, cultural and economical as the driving forces under this aspect. Kirzner points that at the decline or succession stage, the entrepreneur is forced to investigate the profitability of the venture. After the analysis, the entrepreneur may consider a corporate buyout, dissolution or succession as the ultimate options.
Kinder stated that the micro entrepreneurial thought puts the entrepreneur in a position of determining his success or failure in business. Here, he or she is in charge of factors which control the affairs of the business. In the entrepreneurial school of thought, Kirzner suggests certain traits which are associated with successful entrepreneurship. They include creativity, determination, achievement and technical knowledge. When these attributes are nurtured and complimented with family support and education, they lead to entrepreneurial success.
In the venture opportunity school, Kirzner highlights that the ability to become an entrepreneur lies in the agility of ideas that enhances the development of concepts and implementation of venture opportunities. The author states further that creativity, market awareness and timely development of right idea enhances capturing of niche markets and development of unique products. In the strategic school, Kirzner stress that the planning process is most essential for entrepreneurship. Through strategic planning, entrepreneurs are able to develop effective ventures utilizing effective people and unique resources.
Types of Entrepreneurs
Brenkert, G. G. (2017). Entrepreneurship, ethics, and the good society. In Entrepreneurship
(pp. 85-128). Routledge
In this paper, Brenkert discusses various types of entrepreneurs .He begins by analysing the entrepreneur as an advisor. He compares entrepreneurial advisory to the role played by lawyers, accountants, and financial advisers. In his second example, he discusses entrepreneur as an administrator or the organizer. Here, the entrepreneur engages in organizing events for clients. An example is the wedding organizer who coordinates various activities in the wedding activity. Thirdly, Brenkert presents the entrepreneur as a builder or creator. He gives examples to include bakers, artists, carpenters who create tangible products. Therefore, the first three types of entrepreneurs are advisors, administrator and creator or builder.
The author identifies the fourth form of entrepreneurship to be caretaking. These entrepreneurs take care of other vulnerable people in the society on behalf of the principal. He follows the caretaker with the communicator or trainer and distinguishes that such entrepreneur engages in transmitting information in different languages to suit a mixed audience. They are more relevant in sales, marketing, writing and training. The other type given here is the entertainer. These are the people who entrain the audience for commercial gain. They may do these activities through songs, writings or any other form of arts. The investor entrepreneurs are persons who invest in stock and real estate business. They cover sales persons, brokers and music promoters. The last type of entrepreneurs is the technologists. They include engineers and architects with talent such as those of developing software technologies. In sum, there are various types of entrepreneurs who devise new business opportunities and products.
Other forms of Entrepreneurs
Kuratko, D. F. (2016). Entrepreneurship: Theory, process, and practice. Cengage Learning.
Kuratko article presents other forms of entrepreneurs. He starts with the ethnic entrepreneur who serves as a self-business from the minority business group. In the US, this group comprised of the Chinese and Japanese small business owners. Other examples are the Cuban business owners in Miami and the owners of the Indian motel. The major characteristic of these entrepreneurships is that they offer self-employment and business ownership especially to people of the same ethnic grouping. In short, ethnic entrepreneurship is the tendency to develop business ideas that empower or employ people of the same ethnic groups or language.
The second form of entrepreneurship is the cultural entrepreneurship. In the views of Kuratko, three types of cultural entrepreneurship exist. They are cultural personality, tycoons and the collective enterprise. The first one refers to individuals who build personal brand authority and creativity to sustain cultural enterprises. The second refers to entrepreneurs with substantial clout in cultural sphere and industries to control both industrial and cultural business, political and philanthropic interest. The last one is organizations which engage in specific production. Hence, cultural entrepreneurship entails individual mobility from one profession to the other, control of industrial, cultural interests and achieving specific proud cuts in the business.
Other types of Entrepreneurship
Kuratko, D. F. (2016). Entrepreneurship: Theory, process, and practice. Cengage Learning.
Kuratko has identified two more types of entrepreneurship. He starts with social which entails entrepreneurship seeking business goals while at the same time achieving environmental goals. He mentions these goals to include conserving the environment, offering safe and quality products and responding appropriately to humanitarian challenges in the environment where the business operates. Therefore, social entrepreneurs deal with making commercial gains while at the same time promoting community welfare.
Political entrepreneurship centres on the ability of leaders to take risks, exercise initiatives and make advantage of the market opportunities presented by political environments. According to Kuratko, such environments are characterized by stable political security, favourable trading terms and protection from both political and legal interference. The promptness in establishing of these conditions by the authorities and the corresponding exploitation by business moguls underpin the concept of political entrepreneurship. In sum, political entrepreneurship combines creating a favourable climate for exploitation of new business opportunities and the knowledge of how to quickly convert such opportunities into productive ways.
Further, project-based entrepreneurship is the engagement in the creation of temporary organizations. Such organizations have a limited lifespan and are devoted to producing the single goal of realizing the project. Project based entrepreneurship is common in industries such as film production and software development. The main characteristic of such a venture is seen in the rewiring temporary ventures and modifications of known methods. Therefore, project based entrepreneurship is a form of restructuring existing projects and structures to suit the need of the contemporary market.
The millennial entrepreneur is associated with digital and mass media. These are people who develop business opportunities from new technologies and new business models. They include Mark Zukerberg who invented Facebook. Therefore; millennial entrepreneurship is the development of fruitful business opportunities using current technological advancement.
Entrepreneurial behaviours are the codes of conduct that drives entrepreneurship. For instance, entrepreneurs must be innovative. This attribute involves designing new ideas and business processes. Again, entrepreneurship involves strong management skills and team building abilities. In the opinion of economist, Robert Reichmann entrepreneur should have the guts to demonstrate strong management abilities. Overall, an entrepreneur is defined by his innovative behaviours that provide unique products and services.
Entrepreneurial activities substantially differ depending on the type of organization and the level of creativity involved. For instance, solo and part-time projects do not offer as many undertakings as teams which create many jobs and realize high values. Other forms of entrepreneurial activities are business incubations, science parks, charity foundations and advocacy groups. Thus, entrepreneurial activities may be driven by either government agencies such as chambers of commerce or by private entities and small businesses.
The author distinguishes entrepreneurship and small business in this research. He states that small businesses are majorly sole proprietors run by a small number of employees. Equally, they in most cases offer existing products or services with no clear models for growth. On the other hand, Kuratko expounds that entrepreneurial ventures concentrate on innovating new products, processes and services with a view to scaling up the company. Therefore, the major difference between entrepreneurship and small business is that in small businesses, existing products and services are offered while in entrepreneurship, the focuses to develop and provide new products and services.
Traits of an Entrepreneur
Burns, P. (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.
Burns has identified various traits of a good entrepreneur. He groups them into three categories of personal traits, technical traits and business management traits. The personal traits include being open minded and having the ability to listen. The author stresses that while making decisions such as marketing strategies, formulating new business systems or putting together a piece of software product or service, the entrepreneur should nurture an atmosphere that appreciates new ideas and opinions of others. He adds that personal trait of the entrepreneur should include learning from mistakes. Here, the entrepreneur should make deliberate and concerted efforts to drift away from past and ineffective ways. To learn from mistakes, the entrepreneur should assess ineffective ideas and all lost clients. As a caution, therefore, the entrepreneur takes to utilize the lessons learnt to modify initial ideas.
The third personal trait for the entrepreneur is perseverance. Burns confirms that it involves understanding that great businesses take time to establish. Perverance entails accommodating worse business conditions especially when the entrepreneur appears not to be making headways. The other personal attributes are disciplined, persistent and have a bigger vision. Therefore, the personal traits of the entrepreneur are meant to help the entrepreneur develop business skills that stand corporate challenges.
The first technical trait that Burns delves on is professional competency. It entails amongst others delivering work that meets the standards set by the client and beating competitors.Additionally, being professional means ensuring that entrepreneurs services or products have no any defect of whatsoever nature, is free from errors and any other mistakes. It involves being punctual for meeting with clients, responding to telephone calls respectfully and promptly and sending out timely quotes. But by far, the most important factor about being professional is consistently professional.
On particular traits, Burns contends that an entrepreneur should possess the skills for creating systems. This attribute enables performance of a task that requires multiple steps or procedures. It facilitates smooth workflow and allows the entrepreneur to keep track of things a little easier. For instance, the entrepreneur may design a business website for tracking company products. Thus; it is recommended that the entrepreneur adopts the skills for creating systems that promote smooth workflow in the business.
The author emphasizes that communication and charismatic abilities are a whole aspect of the entrepreneur. These factors enable the entrepreneur to clearly articulate the visions and missions of the business to convey appropriate message to the audience. Entrepreneurs are better off with charismatic traits that also enhance team building. This advantage also makes the entrepreneur transformative. In summary, communication skills are essential to an entrepreneur in conveying the business objectives.
Burns’ business management traits include common courtesy for the entrepreneur.Courtesy requires entrepreneurs to answers phone calls appropriately; use business language at all times and responds to all emails. Other skills are being a team player,engaging in honest business deals and fulfilling set commitments. Therefore,business management traits make entrepreneurship a responsive corporate in the society.
Challenges to Entrepreneurship
Scarborough, N. M. (2016). Essentials of entrepreneurship and small business management. Pearson.
Scarborough presents five main categories of challenges that bedevil entrepreneurship. The first one relates to external factors. According to the author, these are challenges in the economy that fall beyond the control of the entrepreneur. Unfortunately; these factors may force the entrepreneur to close down. Some of these upheavals are economic recessions,boom and depression.They have the potential of making loans expensive for the entrepreneur,fluctuating the prices of products, interrupting supplies, affecting labour market trends and decreasing the exchange rates. In any of these happenings, these factors hinder entrepreneurial development.
The author notes some personal factors as challenges to the entrepreneurship. These may include financial difficulties. Ordinarily, the entrepreneur places all his savings in the business with the belief that they will earn profits. Career risks involve giving up on employment without any fallback plan. The chances here are that if the industry collapses, the entrepreneur has nothing to fall back to. The psychic risk involves the entrepreneur giving up the social life. This decision affects family and friends and may cause psychological problems such as depression and low self-esteem.
Scarborough highlights lack of skills and experience as a third challenge facing entrepreneurship.He laments that some entrepreneur identifies perfect business opportunity. However, due to insufficient skills, the entrepreneur leads the business towards incurring losses and thus fails to meet intended obligations in time. Therefore, it is regrettable to note that some noble business ideas fail to see the light of the due to poor skills and little experience on the part of the entrepreneur.
The fourth challenge is mismanagement. The writers show that some entrepreneurs often employ people to assist in managing the operations of the firm. However, there are some cases when the people hired are not trustworthy and hence expose the business to embezzlement of funds and pilferage of stocks. Again, the entrepreneur may draw lot resources of the company for personal use thus subjecting the industry to depletion. As a result, entrepreneurship may be dogged with mismanagement and close down.
Scarborough's last point is on poor business ethics. He writes that ethics means lack of proper business grooming. He warns that the vice has the potential of leading to unfair business practices by the entrepreneur. One source of this problem peer pressure and misleading groupings which leads to inefficiencies in management. The risk involves conflict with the law leading to expensive suits by other, loss of business reputation and the possible closure. In short, the various challenges facing entrepreneurship are external environmental and economic challenges, personal factors, lack of proper training and experience, mismanagement and poor business ethics.
Role of Entrepreneurship in the Economy
Dees, J. G. (2017). 1 The Meaning of Social Entrepreneurship. In Case of Studies in Social Entrepreneurship and Sustainability (pp. 34-42). Routledge.
Dees has stated in this work that entrepreneurship plays a vital role in today’s economy. He mentions as a start that, entrepreneurship offers employment opportunities to most graduates and even undergraduates. As a job creator, entrepreneur hires personnel who assist in managing the business. These personals include accountants, IT personnel and other casual workers. Through these employment opportunities, entrepreneurship improves the living standards of citizens and raises their income levels.
According to Dees, the second most important contribution of entrepreneurship relates to paying taxes to the government. Typically, the entrepreneur will register his or her firm with government agencies. It then follows that the business will pay taxes to the government on a timely basis. Those that run public limited companies must always comply with annual filing of tax returns. These taxes finance the government capital and current expenditures. Therefore, entrepreneurship positively contributes to economic development of the country.
The author also highlights the role of entrepreneurship in social and environmental conservation. He states that some entrepreneurs contribute financial support to community projects. These projects may be aimed at supporting proper sanitation, environmental protection such as tree planting and afforestation and responding to humanitarian crises such as hunger, floods and drought. In sum, the corporate responsibility of the entrepreneur can be seen in efforts that promote community welfare.
Dees’ last arguments on the significance of entrepreneurship are with regards to the formation of cartels. He explains that these cartels are firms which share the same objective and so establish favourable trade terms to reap profit margins on the goods and services they front to customers. Under such arrangements, entrepreneurs help small firms with weak bargaining power to penetrate into the market and make profits. In a way, these efforts fortify the relationships of businesses, contributes to healthy competition and enable grow with of small firms in the economy.
References
Brenkert, G. G. (2017). Entrepreneurship, ethics, and the good society. In Entrepreneurship
(pp. 85-128). Routledge.
Burns, P. (2016). Entrepreneurship and small business. Palgrave Macmillan Limited.
Dees, J. G. (2017). 1 The Meaning of Social Entrepreneurship. In Case of Studies in Social Entrepreneurship and Sustainability (pp. 34-42). Routledge.
Drucker, P. (2014). Innovation and entrepreneurship. Routledge.
Kirzner, I. M. (2015). Competition and entrepreneurship. University of Chicago press.
Kuratko, D. F. (2016). Entrepreneurship: Theory, process, and practice. Cengage Learning.
Parker, S. C. (2018). The economics of entrepreneurship. Cambridge University Press.
Scarborough, N. M. (2016). Essentials of entrepreneurship and small business management. Pearson.
