Entreprenurial behaviour
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Transcript of Entreprenurial behaviour
ENTREPRENURIAL BEHAVIOUR
ENTERPRISE CULTURE
ENTERPRISE CULTURE Culture is a pattern of share beliefs
and values that provide the members of an organization with rules of behaviour or accepted norms for conducting their operations
It is the philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes and norms that knit an organization or a community together and are shared by members
ENTERPRISE CULTURE (CONT..) Enterprise culture, therefore can be defined
as a set of altitudes, values, and beliefs operating within a community or environment that lead both to the entering behaviour and aspiration towards self employment or venture creation
RESEARCH ON ENTERPRISE CULTUREResearch findings indicate that: Those who have parents or relative who own
small businesses are likely to become entrepreneurs than those without similar acquaintances
Those who have worked in small enterprises are more likely to establish such enterprises later
RESEARCH ON ENTERPRISE CULTURE Those who work in organizations which
allow them greater deal of independence and freedom of operations under conditions of uncertainty are more likely to establish businesses than others
Those coming from a culture which supports individual small business ownership whether for religious purposes, ethical or moral reasons are more likely to establish businesses than others outside the culture
COMPONENTS OF AN ENTERPRISE CULTURE 1. Abundant positive role models of successful
independent businesses
2. Ample opportunity for familiarization with small business tasks especially during youth
3. Network of independent businesses family contacts and acquaintances reinforcing familiarity and providing market entry opportunities
4. Provision of formal/informal knowledge and insight into the process of independent business management
5. Opportunity to practice entrepreneurial attributes reinforced by society culture during formative years
ENTREPRENEURIAL BEHAVIOUR THEORIES
ENTREPRENEURIAL BEHAVIOUR THEORIES Entrepreneurial behaviour looks at
activities, interactions, competences and feeling of entrepreneurs
There exist a number of schools of thought which view entrepreneurship from a fundamentally different perspective.
Such perspectives are:EconomicPsychologicalSocial Managerial
ECONOMIC THEORIES PERSPECTIVE Economic theories of entrepreneurship focus
on the effects that economic environment has on entrepreneurial activities and what impact entrepreneurs have upon the economy
From the economic perspective, an entrepreneur is a person who brings together the resources or factors of production into combinations that make their value greater than before
Economic theories help in providing missing links in the economic environment that are necessary for business startup and survival
ECONOMIC PERSPECTIVE (CONT…) Proponents of economic theory believe
that entrepreneurship and small business development is influenced by factors such as:Market structures and opportunities Investment climateGovernment restrictions or encouragement
An entrepreneur is seen as a person who specializes in taking judgmental decisions about the coordination of scarce resources (Casson, 1982)
ECONOMIC PERSPECTIVE (CONT..) Classical economist like Keynes emphasis
optimization of existing resources in order to reach equilibrium.
Here the entrepreneur is defined as: The stabilizing force that brings market forces
closer to an equilibrium He/she shifts economic resources out of an area
of lower risk/productivity to areas of higher productivity/greater yield
HERE THE ENTREPRENEUR IS DEFINED AS:… An entrepreneur is the person involved in
allocating scarce resources in order to produce goods/services with utility, hence a forth factor of production he/she distributes and organizes resources
An entrepreneur is the stabilizing force which brings markets closer to equilibrium and which makes market forces work more smoothly
The entrepreneur is the person driven by profit motive (profit maximization and cost minimization) and gains socially and financially from economic activities.
HERE THE ENTREPRENEUR IS DEFINED AS:… Entrepreneurs create a dynamic disequilibrium in the
economy as opposed to static equilibrium
This he does by creating innovations which introduce new combinations and production
Entrepreneurial activity is a destabilizing force that starts the process of creative destruction, the essence of economic development
Entrepreneurs are not managers who undertake routine activities on the basis of past experience without idea of change, rather they are risk takers in the area of uncertainty and engage in activities that have not been undertaken before
IN SUMMARY, THE ECONOMISTS SEE ENTREPRENEURS AS:
Risk takers or the bearer of uninsurable risks (Cantillon, 1755)
A combiner of resources or factors of production such that wealth is created (Say, 1832)
Innovators who bring new combinations into production process (Schumpeter, 1942)
Schumpeter saw entrepreneurship as the engine of economic development which resulted in new combinations (called an enterprise)
The new combinations may include: Introductions of new products or services Introduction of new method s of production Opening on new markets Finding new sources of supply of raw
materials or components Providing induction reorganization Neoclassical economist view
IMPLICATIONS/COMMENTS ON THIS THEORY
You can train entrepreneurs by enhancing their creativity and supporting innovating ideas
People can be trained to sharpen their decision making abilities to see and analyse opportunities creatively
SOCIOLOGICAL THEORIST PERSPECTIVE According the this perspective environmental
factors such as belief systems, cultural values, social structure form the basis of entrepreneurial behaviour
Studies by some sociologist indicate that the decision to become self employed is related to having association with another person who is a close relative
Social interactions provide potential entrepreneurs with: Market/market informationCreditSocial support
SOCIOLOGICAL THEORISTS PERSPECTIVE (CONT..) The sociological theories have been based on
the premise that members of a given society generally adhere to system of structured roles which can encourage or discourage entrepreneurships.
Entrepreneurship activities will be high in those cultures where entrepreneurships is held in high esteem.
SOCIOLOGICAL THEORISTS PERSPECTIVE (CONT..) The social influence of
entrepreneurship behaviour can be explained in terms of:
Family background - the general hypothesis is that those whose parents are self employed or business owners are significantly more like to become business owners themselves
Religion – research findings indicate that some particular religious persuasions tend to have entrepreneurial spirit. For example, Jews are commonly perceived as having an enterprising nature
SOCIOLOGICAL THEORISTS PERSPECTIVE (CONT..)Ethnicity – research indicates that
some ethnic groups are more inclines to entrepreneurial activities than others
Education and training – research studies indicate that entrepreneurial activities can be enhances through educational and training programmes .Relevant training provides prerequisites for business ownership and helps in reducing business failure rates
Cultural values – some cultural values discourage/encourage entrepreneurship
COMMENTS OF THIS PERSPECTIVE: It perpetrates the myth and stereotypes in
society related to superiority and class system and are not healthiest for development
PYSCHOLOGICAL THEORISTS PERSPECTIVE The psychological theories of
entrepreneurship are based on traits and personality characteristics that are exhibited by successful entrepreneurs
The central focus of this perspective is that the entrepreneurs have unique values, attitudes and needs which drive them to business creation
People behave according to their values, and attitudes irrespective of the different situations they might be
PYSCHOLOGICAL THEORISTS PERSPECTIVE (CONT..) The psychological school focuses on
personality factors Believe that entrepreneurs have
unique values and attitudes towards work and life
This propel the individual to behave in a certain way
According to this theory, some people are more likely to become entrepreneurs because of their mental attitude for independence or with dissatisfaction with operating under the direction of others
PYSCHOLOGICAL THEORISTS PERSPECTIVE (CONT..) Entrepreneurs, as other people acquire these
values attitudes and needs as they grow up from: Families Schools Churches Communities
These values are learned in the process of socialization into a culture.
PYSCHOLOGICAL THEORISTS PERSPECTIVE (CONT..) Since values are leaned early in life ad
are well established prior to adulthood, characteristics can only be reinforced in those who portray them or have them in latent (dormant, concealed) form
It would not be cost effective to try to develop them in people who do not possess them but to reinforce them in those who already have them
PYSCHOLOGICAL THEORISTS PERSPECTIVE (CONT..) The major distinguishing features, or
quality of characters that have been widely explored within the psychological perspectives that make entrepreneurs different from others are: Need for achievement Locus of control Risk taking propensity Positive self image Initiative Independence Future orientation Goal setting Time bound planning Environmental searching
DISTINGUISHING FEATURES Research has shown that certain traits seem
to be associated with entrepreneurs: A desire to achieve: The push to conquer
problems, and give birth to a successful venture. A strong urge to build
Hard work: It is often suggested that many entrepreneurs are workaholics.
Desire to work for themselves/need for independence Entrepreneurs like to work for themselves rather than working for an organization or any other individual. They may work for someone to gain the knowledge of the product or service that they may want to produce. They seldom are willing to submit to authority
Nurturing quality: Willing to take charge of, and watch over a venture until it can stand alone.
Acceptance of responsibility: Are morally, legally, and mentally accountable for their ventures. Some entrepreneurs may be driven more by altruism than by self-interest.
Reward orientation: Desire to achieve, work hard, and take responsibility, but also with a commensurate desire to be rewarded handsomely for their efforts; rewards can be in forms other than money, such as recognition and respect.
Optimism: Live by the philosophy that this is the best of times, and that anything is possible.
Orientation to excellence: Often desire to achieve something outstanding that they can be proud of.
Organization: Are good at bringing together the components (including people) of a venture.
Profit orientation: Want to make a profit; but the profit serves primarily as a meter to gauge their success and achievement.
Mercurial – ingenious and resourceful, they are cunning, opportunistic, creative and non sentimental
Innovative, calculating inventor, over-optimistic promoter, organizational builder. These four terms are used to describe the characteristics which is not based on personality but on the type of opportunity the entrepreneur faces
Visionary – the entrepreneur ha an enthusiastic vision which is the driving force of the enterprise. This vision is supported by an interlocked collection of specific ideas not available to the market
Persistence and determination - this helps the entrepreneur to develop strategies to make the vision into a reality
Risk taker – calculated risks which includes assessment of costs, market/customer needs and persuading others to join and help
MCCLELLAND ACHIEVEMENT MOTIVATION THEORY Based on the research done by McClelland
and associates findings suggest that human beings have psychological needs that many be divided into 3 categories: Need for affiliation Need for power Need for achievement
To some extent we all have some of these needs but some are more pronounced in some people than others
Which need is more pronounced in Social workers? Sales people ? Politicians? You ? Entrepreneurs?
Think about an successful entrepreneur you know, what have been some of the characteristics ?
Do you match those characteristics?
CHARACTERISTICS OF PEOPLE WITH A HIGH N-ACH (ENTREPRENEURS ) commitment to excellence Commitment to the task Choosing moderate risk Seizing opportunities Objectivity Need for feedback Optimism in novel situations Attitude towards money proactive management
COMMITMENT TO EXCELLENCE Successful entrepreneurs value excellence Demand high performance from themselves
and will not be satisfied with less Aim at accomplishment of worthwhile and
challenging tasks They are not content to let a dream go Their vision seem to stimulate an inner drive
to make their dream come true They find a special joy in winning –
achievement is an end in itself Do you have the desire to be a
winner?
COMMITMENT TO THE TASK Becomes absolved in the task Do not let go Cannot forget or forgive themselves for an
unfinished project Burden of failure bothers them for long They do not wait for a lucky break – they
know that achievement do not come easily or quickly
They dig in for a long haul and stay with a project until it is successfully completed
do you have a quality of stick-to-it-itiveness?
CHOOSING A MODERATE RISK Entrepreneurs are not gamblers They choose moderate risks rather than the
wild speculative gamble – high nAch people take the middle course in risk taking – not conservative or wild risk takers
Choose something large enough, exciting , but with a reasonable hope for gain – moderate risk
Willingly assume responsibility for a project or task they believe they can manage successfully through their own competencies
CHOOSING A MODERATE RISK ( CONT…) They know their own skills Their attitude is one of aggressive realism Their commitment to task rests on
considered judgment of their ability to influence the outcome successfully
Do you prefer a middle course when you have studied a risky problem objectively and think you
can solve it through your own knowledge and skills?
SEIZING OPPORTUNITIES Entrepreneurial persons are quick to see and
seize opportunities They show an innovative turn of mind and
convert opportunities they observe into active programmes for achievement
They anticipate and plan carefully to get where they want to be (they are intensely realistic)
They favour logical predictions based upon facts
SEIZING OPPORTUNITIES (CONT..) In realizing an opportunity, they are not
overwhelmed by obstacles but rather are challenged to future out ways to get around them
Often come out with innovative ways to overcome obstacles
Are you alert to opportunities; do you seize them to your advantage?
OBJECTIVITY Are more realistic than others about
themselves and the ends they seek
They are utterly unsentimental about undertakings close to their hearts
They are not likely to get personal like and dislikes stand in their way
OBJECTIVITY (CONT..) When they require assistance, they
select experts rather than friends or relatives to help them
They take a businesslike attitude towards their business
Do you choose the tough businesslike way to solve problems rather than
giving in to personal likes and dislike in finding help?
NEED FOR FEEDBACK Entrepreneurs seek immediate feedback on
their performance
They want prompt, accurate data on they result they a re getting – does not matter whether the information is good or bad
Stimulated by feedback to pour more energy into accomplishing the task
Do you find it important to know how you are doing when you are working on a project?
OPTIMISM IN NOVEL SITUATIONS High nAch persons tend to be optimistic
in unfamiliar situations The odds may not be clear, but the
circumstances may be appealing Sees no reason why they can win out
through their own abilities Not put off by lack of guidelines Frequently make more of whatever
opportunities they are than more cautious persons who wait for the odds to become better
As they begin to understand the situation and its elements, they revert to their more usual habit and begin to calculate their chances very closely
Thus they present a paradoxical picture - boldness in the face of unknown, prudence in the face of the familiar
Do you welcome tackling and solving an unfamiliar but interesting problem?
ATTITUDE TOWARDS MONEY Tend to respect money but they are not
greedy They do not see money as something to
hoard, rather they see money as counters in a game
When their operations are profitable, they view the profits as an indictor that they are winning the game
Profits or lack if it, gives entrepreneurs the feedback signal they want
When business is profitable, it tells them their activities are sound and should be strengthened or enlarged,
when profits begin to slide off, it tells them that they had better identity and solve the problems causing the decline
Do you see money as an end in itself, or do you see it as a valuable asset that tells you
how you are doing?
PROACTIVE MANAGEMENT Although high nAch persons are careful to
keep an eye on the present, they keep a significant part of their thinking directed toward the future
They plan their business world the way they would like it to be
They work hard to bring their plan to actuality
Do you like to think ahead and plan your future – then work to make it come true?
How well do fit the pattern of the high nAch personality?
If you do not have these characteristics, does it mean all is lost – you cannot start and manage a small business?
Can you develop these characteristics
REINFORCING ACHIEVEMENT MOTIVATION Think like an achiever
Direct your fantasies towards accomplishment of worthwhile goals
Incorporate standards of excellence considering what you do
Think of newer and better things to do and newer and better ways of doing the things you must do
Adopting the language of achievement and using it all the time We choose out personal worlds by the words we
choose to describe them Try using positive language to support your
positive thinking, without of course being brash about it
Need a strong, continuing effort to think and talk constructively
Planning for achievement Plan your goals in writing Set down on paper what you want to achieve in
the nest year, next month, next week Check how you are doing in meeting your stated
goals form week to week This help in stimulating you to take corrective
and more effective actions from the feedback you get and you will be enhancing your nAch
Behaving in a positive and confidence fashion Successful entrepreneurs seize
opportunities for improvement and gain by creative positive actions
Creativity and innovation underlie a major part of successful enterprise activity
Those who don’t think very well of themselves are poorly equipped to take the risk step of venturing into the unknown, which creativity and innovation imply
Learn to have confidence in yourself Have a positive self image Practice behavior aimed at building
personal effectiveness
PYSCHOLOGICAL THEORISTS PERSPECTIVE (CONT..) Extreme psychologist further suggests that:
The entrepreneur has an ability, sixth sense and instinct which is inborn
The entrepreneur portrays intuition, energy, persistence and self-esteem
Entrepreneurs according to this version are born as they have natural abilities, training cannot influence in any way
COMMENTS OF THIS PERSPECTIVE: It perpetrates the myth and
stereotypes in society related to superiority and class system and are not healthiest for development
It simply says people are not equal and it would be difficult to organize training programmes suitable for all
It can give negative attitude towards young people who might not be lucky to possess the unique abilities and traits
MANAGEMENT PERSPECTIVE
This school emphasize organisation of resources in a systematic way to attain maximum profit
Entrepreneurs are therefore organizers of an economic resource venture
They organise, own, manage and assume risks
Entrepreneurships is therefore a series of activists which focus on the central function of managing a business such as production, planning, marketing, coordinating, controlling, evaluating and financing
MANAGEMENT PERSPECTIVE (CONT..) The managerial school therefore
emphasizes on improving a persons capacity through developing his/her
Analytical Rational Cause-effect relationship Another stand of management view
entrepreneurs as leaders on people They have the capacity to adapt their
styles in order to get maximum out of people
MANAGEMENT PERSPECTIVE (CONT..) They view people as their greatest
resource and realize that they cannot accomplish goals alone but must depend on other people and their skills
Training is therefore possible by knowing how to motivate, lead and direct people
Basic questions that people who follow this school of thought would be asking themselves are:What are my plans?What are my capabilities?What are my credentials? How do I get most from the people around me?
CONCLUSION
1. All these theories provide a useful insight in understanding and explaining entrepreneurship
2. It is possible that they can complement each other in developing a rich entrepreneurial programme
3. Pre- starters can benefit a lot form psychological, social and economic schools of thought
4. Start ups and on going entrepreneurs can benefit more from management school