Current Theories of Entrepreneurship The theory of the Entrepreneur focuses on the heterogeneity of beliefs about the value of resources (Alvarez and Busenitz, 2001: 756). Contemporary writers in management and business have presented a wide range of theories of entrepreneurship. Many of the leading thinkers remain true to the Say-Schumpeter tradition while offering variations on the theme. For instance, in his attempt to get at what is special about entrepreneurs, Peter Drucker starts with Say’s definition, but amplifies it to focus on opportunity. Drucker does not require entrepreneurs to cause change, but sees them as exploiting the opportunities that change (in technology, consumer preferences, social norms, etc.) creates. He says, “this …show more content…
How a venture begins and whether others are recruited to join the effort can have lasting consequences for its performance and survival. Enterprises can be formed as a result of teams. Three principles underlying team formation may be distinguished: choice on the basis of homophily, purposive choice, and choice constrained by context or opportunity structure (Ruef 2001). Homophily refers to the tendency of people to associate with others similar to themselves, such as choosing others on the basis of gender or ethnicity. Purposive choice reflects people‟s tendencies to choose others who possess valuable skills, such as education or experience. Finally, opportunity structures set a context within which the first two principles operate. Founders cannot choose someone whom they have not met or have no way to reach, such as a person who works in another organization or lives in another city (Ruef et al. 2002). Entrepreneurship has a psychological contract involving a give and take transactionary relationship in form of teamwork involving two or more individuals who jointly establish a business in which they have an equity (financial) interest. These individuals are present during the pre-start-up phase of the firm, before it actually begins making its goods or services available to the market.” By this definition, a person must be involved from the beginning and also must have an equity stake in the venture to be considered a member of the team. Much of the literature is based on the assumption that teams are a deliberate choice of a lead entrepreneur or set of founders (Kamm et al. 1990: 7). Bird (1989) postulate that there are psychological benefits derived from relationships between team members Unlike a solo entrepreneur, who must bear the burden of making decisions and facing
Morris and Lewis (1991) offered a model to examine the effects of entrepreneurship on the quality of life in seven domains: economic, health, social, technological, work, institutional, and ecological. This paper will use Morris and Lewis’ framework to present a discussion of Drucker’s views on the broad societal impact of entrepreneurial activities.
One of which hails from the notion of Professor James V. Koch suggesting, entrepreneurs are born “with a specific set of genes and characteristics” (Vennare 2014). As Koch puts it, “some individuals are simply more naturally fitted to become entrepreneurs,” because “they are pre-wired” with an entrepreneur gene (Kihara 2014). However, this calls to question an opposing school of thought advocated by Professor Julian Lange with the opinion that entrepreneurs are made and can be taught. Lange’s assertion derives from the belief that individuals can discover their entrepreneurial passion in a class setting and have their enterprising skills and abilities enhanced through teaching and practice (Daley 2013).
The tasks to create a company start with deciding what problem needs solving for a specific market, then choosing a business structure, performing direct market research, strategy development, determining how to finance the company and most importantly, who will be on the founding team. Businesses with multiple founders are more successful; entrepreneurship is a team effort. (Aulet, 2013). Finding co-founders with similar values is a key component to company success. From there, the founders set rules of engagement frameworks between them to act as a guidepost in how to work wi...
Formation of a new venture is considered as the central activity of entrepreneurial research (Aldrich, 1999; Gartner, 1985). Gartner (1985) further defined venture as a goal directed, a boundary maintaining activity system which emerge when entrepreneurs take initiative to execute the founding activities. The dynamic process of venture formation involves various activities such as forming a business plan, obtaining resources, developing products, finding financial, government, infrastructural, market research, patenting and legal support (Lebrasseur, 2003; Brush et.al, 2008a;b). Thus, the process of a venture formation has been generally also known as the sequence of activities or events performed by an entrepreneur for firm formation (Liao & Welsch, 2008). Various frameworks have been presented by researchers for exploring activities in the firm formation process. They had identified that the firm formation process is majorly descriptive and conceptual assuming it to be a unitary and linear formed with the combination of activities (Carter et al., 1996). On other side, the life cycle study of firm formation argues that the process goes from diverse phase or stages. Carter et al., (1996) had identified that activities which are executed during the process of setting up a firm have high variation in their sequence and amount of activities Moreover, the empirical studies carried by Carter et.al (1996) and Lichtenstein et.al (2006) identified that execution of more activities lead to venture survival. Carter et al. (1996) also analyzed the occurrence, series, and time frame allied with the key activities and events in firm formation process. In addition to this, Reynolds and Miller (1992) identified significant deviation in activitie...
There has been a large amount of attention paid to the subject of entrepreneurship in the last few years; mainly because most people have chosen to go from working for somebody else, to be their own bosses and work for their dreams. Nevertheless, many still wonder what is entrepreneurship and what is that sets entrepreneurs apart from other regular business owners. At first, it seems both concepts do not differ much from each other since they both start up and run businesses and assume risks to pursue opportunities; however, there are certain traits that difference them.
The classical management perspective represents the first well-developed framework of management (Davidson. P. et al, 2000). It’s the framework from which later theories evolved and concerns efficiency and productivity, which in turn leads to effective and efficient management. Scientific management and the Administrative theory are both classical management theories, which provide information on managing in the workplace, which are very useful and vital to have in the workplace. These theories are very different in many ways as they both have different purposes when managing in the workplace although there are one or two similarities, which illustrate its importance in the workplace. Both these theories contribute greatly to the understanding of management in many ways and can impact on contemporary management practices. The following analysis will further explain the classical management theories, which are scientific management, and the administrative theory. In analysing scientific management and the administrative theory one gains a greater knowledge of management and how it contributes to the workplace. It will then go onto comparing and contrasting the two theories and how they contribute to the understanding of management. And finally it will go into the importance, if any, for contemporary management practices. Through scientific management and the administrative theory one is able to understand management in the workplace and the importance of the theories.
This paper examines the myths associated with what it takes to be an entrepreneur, the profiles and the common characteristics among these successful entrepreneurs.
Schumpeter and Knight had some similar points in their conceptualization of an entrepreneur. Both believed that innovation and initiation of change is a vital task of an entrepreneur. Since entrepreneurs generate capitalistic development, Schumpeter and Knight also considered them the driving force behind economic growth. The main difference between the two authors is their approach to uncertainty. Schumpeter firmly believed t...
Is there truly a link between entrepreneurship and economic development? Schumpeter (1934) observed a link between both of these and he also suggested that innovations which are radical can lead to creative destruction, transforming industries for the better as well as improving the quality of life for inhabitants. In this following essay, I am going to be examining an innovation’s contribution to economic development as well as the link between economic development and entrepreneurship.
Entrepreneurships can be two ways whether it is by individual intention or entrepreneur taking by family firm. Based on Kuratko (2005) asserted that an entrepreneurship intention can be developed in ad individual since it is related to the individual characteristics of seeking opportunity, taking risk, and giving tendency to push an idea through. Entrepreneurial that become because of their family have a talent across generation, intelligence to success in business and has a dedication (Poutziouris, 2001). Business that from family has a benefit to the owner because there should ...
entrepreneurs have the ability to come up with new ideas in various situations of which one might have never imagined. Entrepreneurs have a curiosity that identifies overlooked niches and they are constantly trying to innovate (Robinson, 2014). They imagine another world and have the ability to communicate that vision effectively to investors, customers and staff.
These theories have their roots in economics, psychology, sociology, anthropology and strategic management. The multidisciplinary nature of entrepreneurial management is given a close examination in this thesis.
The Entrepreneur is, “an individual who takes initiative to bundle resources in innovative ways and is willing to bear the risk and/or uncertainty to act” (Hisrich, 2013). The entrepreneurial process is unique onto itself; for it does not merely involve the taking of tremendous risks, but also evokes some of the most creative and innovative characteristics of the individual. This dynamic process pushes the aspiring entrepreneur to his/her limits in a quest to take full advantage of particularly identified available opportunities in the marketplace. Among the entrepreneur’s objective is to adopt and effectively implement processes and procedures which would grant him/her the ability to meet the needs of potential customers. Furthermore, as the entrepreneur toils away in an effort geared towards creating something new or adding value to a product or service; the ultimate goal is the success acquisition of significant wealth. For the aspiring entrepreneur there are various successful examples of “Corporate Entrepreneurship” which can serve as sources of motivation. Some of these Corporate Entrepreneurships include: Hewlett-Packard Company, Microsoft Corporation, Apple Inc, and Dell Computers Inc.
Risk-taking is one of the chief dimensions of entrepreneurship. Entrepreneurs are found to be more risk takers than the managers and salaried employees, such that, they are willing to put their homes on mortgage, jobless and can work for years without any earning (Burns, 2011; Masters & Meier, 1988). According to (Moore & Gergen, 1985), entrepreneurs always take calculate risk and always analyse the situation. Cognitive Psychology supports that the risk taking ability is just limited to their area of expertise (Sjöberg, 1978, Heath & Tversky, 1991). According to (Heath & Tversky, 1991), entrepreneurs take more risk in the area of their interest and expertise and not in those area, they have little knowledge about. But even then also, they take more risk than general population.
Many people dream of becoming entrepreneurs someday. But it made me realize that there other factors that needs to be taken into consideration. We need to ask ourselves are we ready to take the challenge to the outside world. Not everyone have the vision, innovation and creativity to become an entrepreneur. The individual must have a positive attitude and accept the responsibility, have discipline to meet their goals, and take action when the opportunity presents itself. Many prefer a job security and rely on a weekly paycheck, while entrepreneurs will take risks and doesn 't have that luxury to know the amount of their income.