COURSE GUIDE ENT 204 ENTREPRENEURSHIP AND CHANGE

Michael Morris and his coauthors have tried to combine many of thesevarying concepts of entrepreneurship by developing the followingdefinition:Entrepreneurship is a process activity. It generally involves thefollowing inputs, an opportunity; one or more proactive individuals; anorganizational context; risk, innovation; and resource It can produce thefollowing outcomes; a new venture or enterprise; value; hew productsor processes; profit or personal benefit; and growth.3.2Factors Influencing EntrepreneurshipThere is still no agreement on why some people choose selfemployment and others choose to work for someone else. One recentstudy has identified four spheres of influence in theethno-culturalenvironment, the circumstances in society, and a combination of these.These factors are discussed next.3.2.1 The Individual CharacteristicsDespite the fact that personality traits have not been found to bereliable predictors of future behaviour, many studies still focus on theentrepreneur some people, such as Peter Drucker do not believe thattraits are a deciding factor and believe that anyone can be taught to bean entrepreneur.There is also concern as to cause and effect. Since many studies ofentrepreneurs are completed once the person is a successful businessowner, it is possible that the experience of entrepreneurship affects the13

individual’s personality. Michael Morris points out that the psychologyand behavior of the entrepreneur may change as the business evolves.There is also concern as to cause and effect. Since many studies ofentrepreneurs are completed once the person is a successful businessowner, it is possible that the experience of entrepreneurship affects theindividual’s personality. Michael Morris points out that the psychologyand behaviour of the entrepreneur may change as the business evolves.As Stan Cromie noted in his article on entrepreneurship, manyvocational counselors consider personality in helping people decide ona career choice. Factors that may be considered include basic values andbeliefs, personality traits, personal needs, and the person’s self-concept.It is often argued that people choose jobs that fill their needs and areconsistent with their self-image.One recent study found that “personality is a core antecedent ofentrepreneurship.” This study looked at how views on self-employmentare related to personality. The study explored the “Big Five” personalitycharacteristics and the impact of these on views of entrepreneurship.The Big Five characteristics include extraversion, conscientiousness,agreeableness, openness, and neuroticism. The study found that thecharacteristic of openness is an important factor for entrepreneurship.This is the “part of personality that fosters creativity, originality, andreceptiveness to new experience.Whether entrepreneurial tendencies exist at birth or are developed as aperson matures, certain traits are usually evident in those who enjoysuccess, Many of these traits have been found in successful managers aswell as entrepreneurs. Let’s examine some of these traits.14

- Passion for the BusinessThe entrepreneur must have more than a casual interest in the businessbecause he or she must overcome many hurdles and obstacles. If thereis no passion or consuming interest, the business will succeed. Thispersonal or emotional commitment was described by someone saying,“I couldn’t live without giving this a full try.- Tenacity despite failureBecause of the hurdles and obstacles that must be overcome, theentrepreneur must be consistently persistent. Many successfulentrepreneurs succeeded only after they had failed several times. It hasbeen stated that “Successful entrepreneurs don’t have failures. Theyhave learning experiences.” They know that “difficulties are merelyopportunities in work clothes.” Paul Goldin, CEO of Score Board Inc.,says, “You can’t be afraid of failing. You may have to try seven or eighttimes.”- ConfidenceEntrepreneurs are confident in their abilities and the business concept.They believe they have the ability to accomplish whatever they set outto do. This confidence is not unfounded, however Often they have an indepth knowledge of the market and the industry, and they haveconducted months (and sometimes years) of investigation. It is commonfor entrepreneurs to learn an industry while working for someone else.15

This allows them to gain knowledge and make mistakes before strikingout on their own. One successful entrepreneur described this advantageby saying, “I’d rather learn how to ride a bike on somebody else bicyclethan on my- Self DeterminationNearly every authority on entrepreneurship recognizes the importanceof self-motivation and self-determination for entrepreneurial success.Jon P. Goodman, director of the University of Southern CaliforniaEntrepreneur Program, states that self-determination is a crucial sign ofa successful entrepreneur because successful entrepreneurs act out ofchoice; they are never victims of fate.33 Entrepreneurs believe thattheir success or failure depends on their own actions, This quality isknown as an internal locus of control. A person who believes that fate,the economy, or other outside factors determine success has an externallocus of control and is not likely to succeed as an entrepreneur.- Management of RiskThe general public often believes, that entrepreneurs take high risks;however, that is usually not true. First, more than two-thirds of thosetrying to get a business started have a full-time or part-time job or theyare running another business. They do not put all of their resources andtime auto the venture until it appears to be viable. Entrepreneurs oftendefine the risks early in the process and minimize them to the extentpossible.- Looking at Changes as Opportunities16

To the general public, change is often frightening and is something to beavoided, Entrepreneurs, however, see change as normal and necessary.They search for change, respond to it, and exploit it as an opportunity,which is the basis of innovation.- Tolerance for ambiguityThe life of an entrepreneur is unstructured. No one is sating schedulesor step-by-step processes for the entrepreneur to follow. There is noguarantee of success. Uncontrollable factors such as the economy, theweather, and changes in consumer tastes often have a dramatic effect ona business. An entrepreneur’s life has been described as a professionallife riddled by ambiguity - a consistent lack of clarity. The successfulentrepreneur feels comfortable with this uncertainty.- Initiative and a need for achievementAlmost everyone agrees that successful entrepreneurs take the initiativein situations where others may not. Their willingness to act on theirideas often distinguishes them from those who are not entrepreneurs.Many people have good ideas, but these ideas are not converted intoaction.Entrepreneurs act on their ideas because they have a high need forachievement, shown in many studies to be higher than that of thegeneral population. That achievement motive is converted into driveand initiative that results in accomplishments.- Detail orientation and perfectionism17

Entrepreneurs are often perfectionists, and striving for excellence, or“perfection,” helps make the business successful. Attention to detail andthe need for perfection result in a quality product or service. However,this often becomes a source of frustration for employees, who may notbe perfectionists themselves. Because of this, the employees mayperceive the entrepreneur as a difficult employer.- Perception of passing timeEntrepreneurs are aware that time is passing quickly, and theytherefore often appear to be impatient. Because of this time orientation,nothing is ever done soon enough and everything is a crisis. As with thetendency for perfectionism this hurry-up attitude may irritateemployees who do not see the same urgency in all situations.- CreativityOne of the reasons entrepreneurs are successful is that they haveimagination and can envision alternative scenarios.43 They have theability to recognize opportunities that other people do not see, NolanBushnell, who created the first home video game and the Chuck E,Cheese character, believes the act of creation is nothing mart thantaking something standard in one business and applying it to anotherFor example, Bushnell had worked in amusement parks while in collegeand was able to combine his knowledge of amusement with videotechnology to create a home video game. He believes that entrepreneursmust know what the customers want sometimes a little before theyknow they want it and before they know it’s possible.18

- Ability to see the big pictureEntrepreneurs often see things in a holistic sense; they can see the “bigpicture” when others see only the parts.’ One study found thatsuccessful owners of manufacturing firms gathered more informationabout the business environment, and more often, than those who wereless successful. The process known as scanning the environment, allowsthe entrepreneur to see the entire business environment and theindustry and helps to formulate the larger picture of the businessactivity This is an important step in determining how the company willcompete.- Motivating FactorsAlthough many people believe that entrepreneurs are motivated bymoney, other factors are actually more important. The need forachievement, mentioned earlier, and a desire for independence aremore important than money Entrepreneurs often decide to start theirown businesses in order to avoid having a boss. Many are self-employedfor less pay than they would receive if they worked for someone else.- Self EfficacyA recent study has suggested that the concept of self-efficacy influencesa person entrepreneurial intention. Self-efficacy has been defined as aperson’s belief in his or her capability to perform a task. One studyfound that a sense of personal efficacy that is both accurate and strongis essential to the mi- nation and persistence of performance in allaspects of human development. Therefore, a person who believes he or19

she would be successful as an entrepreneur is more likely to pursue it asa career option.3.2.2 Ethno Cultural FactorsA common finding Is that ethnic enterprise is often overrepresented inthe small business sector; that is, members of some ethno-culturalgroups typically have a higher rate of business formation and ownershipthan do others, However, the effect of culture on entrepreneurialtendencies is not completely clear, because individuals from differentcultural groups do not all become entrepreneurs for the same reason.The effect of culture and traits may be intertwined since some studieshave shown that different cultures have varying value and beliefs. Forexample, the Igbo’s in Nigeria have been known to have anachievement-oriented culture that helps entrepreneurs persist untilthey succeed. Another potentially important factor is whether a culturegenerally has an internal locus of control. For example, U.S. culturetends to support an internal locus of control whereas the Russianculture does not. Individuals from a culture with an internal locus ofcontrol may be more predisposed to believe they have a chance ofsucceeding as entrepreneurs.Cultures also affect the image or status of entrepreneurs. One study ofimmigrant entrepreneurs in Canada found that those from India sawentrepreneurship as something positive while the Haitian respondentstended to view entrepreneurship as an occupation of low self-esteem.Cultural expectations were also an obstacle for one Puerto Rican woman20

in Washington, D.C. While she was thinking of starting a business, herbrother was reminding her that she should be married.3.2.3 Circumstances in SocietyIn all societies, there are those who had not planned to beentrepreneurs but who find at some point that they are pushed towardsell-employment. Workers in the United States who have beendownsized might be included in this group. The decision to become anentrepreneur was precipitated by the changes in the marketplace.Immigrants in many countries follow this route if they find that theirlanguage and job skills do not meet the needs of employers. This isconsidered an adaptive-response behavior. One study of ethno-culturalfactors found that although some people do not come from an hoseentrepreneurship as an adaptive response to marginality and a meansto social integration.Entrepreneurship is an interdisciplinary concept. Hence it containsvarious approaches that can be used to increase one’s understanding ofthe field. Theories pounded by various scholars include: psychological,sociological and economic.4.0CONCLUSIONIn this unit, we have seen the philosophy behind entrepreneurship andthe factors that drive entrepreneurs toward successful endeavours. Asnoted by a scholar, entrepreneurship is characterized by a particularapproach to wealth creation. The entrepreneur undertakes an activity21

and he is also an agent of economic change. As can be seen in this unit,entrepreneurs are uniquely different from other types of peopleinvolved in the generation from other types of people involved in thegeneration of wealth such as investors and ‘ordinary’ managers.5.0SUMMARYLet us recall the major things that were discussed in this unit.Entrepreneurship is derived from the French term “entrepredre” whichmeans to undertake, to pursue opportunities, to fulfill needs and wantsthrough innovation and business. Individual characteristics, luencingentrepreneurship.6.0TUTOR-MARKED ASSIGNMENTThere is no precise definition of entrepreneurship: discuss. Describe thefactors influencing entrepreneurial mindset in an individual.7.0REFERENCES/FURTHER READINGAcheneje, S.S. (2009). The Theory and Practice of BusinessEntrepreneurship. 1st Edition, Kaduna: Tessyma Publisher.Bolton, B. and Thompson P. (2003). The Entrepreneur in Focus AchieveYour Potential. Austria: Thompson Publisher.Gakure, R.W. (2009). Theories of Entrepreneurship. Jomo Kenyatta:University of Agriculture and Technology.Kilby P. (1971). Hunting the Hoffa hump in Kilby Entrepreneurship andEconomic Development. New York.22

McClelland, D.C. (1961). The Achieving Society. New Jersey: PrinceTown.UNIT 2:UNDERSTANDING THE MODERN CONCEPT OF es3.0Main Content3.1Early Concept of Entrepreneurship3.1.1 Modern Concept of Entrepreneurship3.1.2 What it takes to be an Entrepreneur3.1.3 Characteristics of Successful Entrepreneurs3.2Advantages and Challenges of rked Assignment7.0References/Further Reading1.0INTRODUCTIONIn this unit, attempt is made to explain the early references to theentrepreneur. You will also find the description of entrepreneurship byboth earlier and modern scholars. Although entrepreneurship can be23

exciting, there are some challenges faced by entrepreneurs. This unitprovides both the benefits and difficulties in entrepreneurship.Entrepreneurship is a dynamic process and as described by Schumpeter(1934), Entrepreneurship is a forced of “creative destruction” wherebyestablished ways of doing things are destroyed by the creation of newand better ways to get things done.2.0OBJECTIVESAt the end of this unit, you should be able to:- neurship.- Explain in greater details the modern concept of entrepreneurship.- Examine the essential of successful entrepreneurs.- Analyze the merits and challenges of entrepreneurship.3.0MAIN CONTENT3.1Early Concept of EntrepreneurshipEntrepreneurship is one of the four mainstream factors of production ineconomics, land, labour and capital being the others. The wordentrepreneurship derived from 17th century French entreprendre;which refers to individuals that were “undertakers”, that is, those who“undertook” the risk of the new enterprise. They were “contractors”who bore the risk of profit or loss. Many early entrepreneurs weresoldiers of fortune, adventurers, builders, merchants and even funeraldirectors.24

Early reference to the entrepreneur in the l4th century spoke about taxcontractors and individuals who paid a forced sum of money to agovernment for the license to collect taxes in their region. In the 19thcentury, entrepreneurs were the “captains of industry”, the risk takers,decision makers, the individuals who aspired to wealth and whogathered and managed resources to create new enterprises-Schumpeter(1934). Notable early French, British and Austrian economists wroteenthusiastically about entrepreneurs as the “change agents” ofprogressive economies.Richard Cantillon, a French economist, was credited with giving theconcept of entrepreneurship a central role in economics. In his Essaisurla nature du commerce en general, Cantillon described an entrepreneuras a person who pays a certain price for a product to resell it at anuncertain price, thereby making decisions about obtaining and usingresources while consequently assuming the risk of enterprise. A criticalpoint in Cantillon’s argument was that entrepreneurs consciously makedecisions about resource allocations O’neile (1989).Adam Smith spoke of the “enterprise?’ in his 1776 Wealth of Nations asan individual who undertook the formation of an organization forcommercial purposes. In Smith’s view, entrepreneurs reacted toeconomic change, thereby becoming the economic agent whotransformed demand into supply. In 1848, British economist John StuartMill elaborated on the necessity of entrepreneurship in privateenterprise. The term entrepreneur subsequently became common as adescription of business founders, and the fourth factor of endeavour25

was entrenched in economic literature as encompassing the ultimateownership of a commercial venture (Mintsberg 1990).Joseph Schumpeter, Austrian economist revived the concept ofentrepreneurship when he joined Harvard University and his work edentrepreneurship as a force of “creative destruction” wherebyestablished ways of doing things are destroyed by the creation of newand better ways to get things done (Schumpeter 1934). In Schumpeter’sword, the entrepreneur seeks to reform or revolutionized the pattern ofproduction by exploiting an invention or, more generall

Unit 2: Understanding the modern concept of entrepreneurship 19 Unit 3: Psychological Approach to Entrepreneurship 33 Unit 4: Socio-Economic Approach to Entrepreneurship 38 Unit 5: Business Expansion and the Changing Role of the Entrepreneur 44 Module 2