Example Answer to Exam on Entrepreneurship

Many academics studies have tried to offer an explanation to "why" people engage in entrepreneurial activities and "what" factors impact individuals to decide to become enterprisers. The answers range from individual characteristics like genetic reasons (Nocolaou et al. , 2008), the possession of balanced skills (Lazear, 2005), psychological and personality traces (Zhao and Seibert, 2006) to environmental factors like institutional options (Aldrich and Fiol, 1994), geographic inertia produced from public embeddedness (Sorensen and Sorensen, 2003) and the industry structure (Glaeser et al, 2009). Acknowledging those dissimilarities Thornton (1999) suggests that the entrepreneurship literature can be labeled into two distinct institutions: one called supply-side point of view and the other demand-side point of view and although both are concerned a comparable phenomena they use different methods. Corresponding to Thornton, as the first is focused on the individual characteristics of business owners, the second is concerned with the influence of the contextual factors on the creation or restriction of entrepreneurial manners. A careful and impartial analysis of the arguments presented by the several theoretical trends contributes to the conclusion that it is extremely hard to isolate an individual concept able to cover all different specific and environmental measurements described in the entrepreneurship books. In doing this researchers have behaved like the proverbial blind men hoping to describe an elephant, with some ideas treating internet marketers like ropes, others like threes but still others like snakes (Carland and Carland, 2004). Thus, in order to truly have a full picture, or at least a better one, of the entrepreneurship phenomena it is recommended the use of more than one analytical level (e. g. , specific and environmental). For instance, while the founding of a company may be grasped as an function heavily reliant on the individual entrepreneur, as would be suggested by a supply-side approach, it is also very clear a single individual is very unlikely to efficiently mobilize without the necessary infrastructure, as recommended by the demand-side point of view (Thornton, 1999). This way, even although isolation of specific factors will offer an efficient option to advance the entrepreneurship books, it is important to keep open the possibility for the use of integrative frameworks.

Venkataraman (1997) highlights that the key concerns seen in the entrepreneurship books has been clustered on three points: (1) "How" and "why" opportunities for the creation of goods and services arise in an market (entrepreneurial opportunities); (2) "How" and "Why" a lot of people are able to discover and exploit these opportunities while others cannot or do not, and, (3) what exactly are the economic and social effects associated with an entrepreneurial work (for both society and the average person entrepreneur). Trying to check out an integrative strategy some authors (e. g. , Venkataraman, 1997; Shane, 2000; Chiles et al. , 2007) claim that the Austrian Custom offers a thorough view that fits well with different measurements that encompass the entrepreneurship happening. Notably two of the strongest contributions growing from that theoretical school are Schumpeter and Kirzner (Chiles et al. , 2007). Following the ideas of these theorists organizational scholars developed two different, but deeply correlated perspectives. The first is predicated on the Schumpeterian custom and sees business owners as impressive and creative people that disrupt the economic order through an activity that Schumpeter details as "creative destruction". And the second, following Kirzner, considers internet marketers as individuals who discover opportunities rising from incorrectness and disequilibrium conditions and exploit them by moving the market toward an equilibrium condition (even though the equilibrium is never reached). Surprisingly, it is possible to see a supplementary mother nature between those two perspectives, since the Schumpeterian businessperson would be the cause of disruption in the monetary system that therefore will generate market failures, as the Kirznerian business owner makes corrections (by behaving entrepreneurially and taking benefit of market failures) and drives the overall economy to converge toward equilibrium again, creating ideal conditions for a new disruption (Chiles et al. , 2007). The paragraphs that follow will try to discuss how those strategies can be used to consider and examine issues regarding entrepreneurship.

Following lots of the assumption found in the Austrian University, Shane (2000) starts his approach to clarify "how" and "why" entrepreneurs exist by explaining entrepreneurial opportunities as opportunities for delivering into living goods, services, raw materials and arranging methods that allow outputs to be sold by a price superior to their production costs. Moreover, according to him, the living of market failures and information asymmetry are some of the two main determinants for the life of entrepreneurial opportunities within an economy. The existence of market failures means that resources are being misallocated and not put into their best use (Casson, 1982) and therefore there are options for reorganization or creation of new ways for their use (an entrepreneurial function) (Cantner et al. , 2007). A simple exemplory case of market failure that may generate an entrepreneurial opportunity could be the circumstance of some unattended demands the effect of a misalignment between your demand and supply for a specific good; in cases like this internet marketers would be inclined to enter the forex market and increase the offer (of the nice in question) through satisfying the consumer's needs and use the opportunity to generate and appropriate income. Regarding the affect that information asymmetry is wearing the creation of opportunities for internet marketers, it is possible to infer that if all individuals experienced the same level of information (about market conditions and characteristics) at the same point in time (perfect information) they might be more likely to identify the same opportunities and therefore would conclude competing on price (those that decided to take advantage of that opportunity), what would decrease the incentives that folks have to be entrepreneurs. Supporting this point of view Kaish and Gilad (1991) claim that internet marketers are opportunistic learners that take action combining the seek out information (opportunities) with the opportunistic reactions to chance incidents. This way, regarding to this point of view the occurrence of information asymmetry and the lifetime of market failures are critical determinants for the existence of entrepreneurial opportunities and then the very existence of internet marketers.

The arguments above are only worried about contextual explanations (within the surroundings) while specific reasons were not reviewed, which at the very best produces an imperfect approach. To be able to have a far more comprehensive point of view Shane (2000) also concentrated his quarrels on the actual fact that individuals are not equally more likely to uncover the same entrepreneurial opportunities. He tried out to describe why individuals become enterprisers by suggesting that the possession of idiosyncratic information allows people to see particular opportunities that others cannot see. Due to the fact individuals have different securities of knowledge formed from professional encounters, academic backdrop, socio-economic context and situations that individuals pass over their lives, every individual is expected to be more likely to find certain opportunities and unlikely to find others. An important moderator within the relationship between the finding of opportunities and the possession of idiosyncratic knowledge is the very nature of the knowledge accumulated by an individual, since one is much more likely to find an opportunity to become a business owner in areas related to the people he already have knowledge about. For instance, a person with an academic degree and professional experience in anatomist could be more more likely to identify an opportunity (originated from a market failing) to give a product or service in areas related to building and structure instead of entertainment. Encouraging this point of view, Cohen and Levinthal (1990) claim that to be able to enter a fresh market it's important to get over knowledge-based barriers since to access those marketplaces it is first essential to recognize and interpret new exterior information. Consequently, prior knowledge presents an important selection device for what individuals will be able to identify and take benefits of emerging opportunities. A complete picture of the perspective could be described as distinctions in idiosyncratic knowledge among individuals as the driver of the likelihood that one individual will identify market failure (entrepreneurial opportunity) that others cannot; this problem will be improved by the existence of information asymmetry. Another point that emerges from the quarrels above is the fact that characteristics like genetics or personality traces aren't among the reason why to clarify why some individuals become entrepreneurs while others do not. Actually it appears that this theoretical style will refuse or disregard the arguments that individual characteristics, apart from the possession of idiosyncratic knowledge, can describe the lifetime of entrepreneurial acts.

On the other side, following Schumpeterian tradition, it is possible to observe a description of situations where entrepreneurs do definitely not start their activities predicated on a market failure. Those situations are likely to be witnessed when an entrepreneurial act is from the creation of a totally novel good, new approach to development, new market, new source of supply and\or a fresh form of industry company (Schumpeter, 1934, p. 66). While business people that build their activities on a market failure are more likely to be found in standard and existing marketplaces, this second type of business owner is associated with completely new ideas, concepts and works of creativity. The definition of entrepreneur suggested by Schumpeter can be easily linked to this second type of individuals referred to here. Corresponding to Schumpeter ". . . the function of business owners is to reform or revolutionize the routine of creation by exploiting an invention or, more generally, an untried technological possibility for producing a new product or producing an old one in a fresh way, by opening up a new source of supply of materials or a new electric outlet for products, by reorganizing a business etc" (p. 132). Heading deep in the information proposed by Schumpeter you'll be able to observe that even though the starting point for an entrepreneurial activity had not been a market failure; the expected result of an entrepreneurial act is indissociable from the destruction of the set up monetary order, which operates moving the economy away from the steady talk about. Therefore, the theoretical evidences support that if internet marketers do not result from market failures they are incredibly more likely to lead the economical system to a situation of disequilibrium. A fascinating point regarding this theoretical pattern is the sharply divergences from Kirzner, because the Schumpeterian entrepreneur is described as a "heroic" shape who'll create and bring in revolutionary combinations into the market (Chiles et al. , 2007), considered by Schumpeter as differentiated individuals when compared to the whole world. Additionally, taking into consideration the magnitude of the impact that an entrepreneurial results generate in the economy, according to this perspective entrepreneurs have necessarily to be individuals hardly ever found, or at least the outcomes originating from an entrepreneur cannot be normal happenings, other way the economical system would be powered into situation of complete chaos (by the effect of a continuous procedure for creative damage).

An important concern that emerges from the analyses above is the fact that even though enhancements have been extensively described as the main element function of entrepreneurship, empirical evidences give contradictory results. Although it is very tempting to describe business people as very creative individuals in a position to revolutionize the economical system, Singer (1990) argues that entrepreneurial functions can be classified in a continuum that varies from new and ground breaking to the replication of existing products, services and process. Actually, the majority of the innovations placed in to the market are seriously based (if not all inventions) on ideas and items already developed, and despite of having less originality those products and services can be considered the vast majority of what is brought in to the market by entrepreneurs. Shane (2008) provides good picture of the fact by talking about what he message or calls the "the misconception of entrepreneurship". Shane provides four important evidences: 1- Individuals who change jobs more often or who are unemployed are more likely to open their own business, configuring what Stop and Sandner (2009) illustrate as necessity entrepreneurs, characteristic that does not match with the "heroic" specific; 2- Around 35 to 40 percent of all business started in US each year are focused on construction, retail and professional services, which historically are seen as a the reduced rate of creation of new products, services or organizational varieties; 3- Folks are more likely to get started on their own companies in poorer and agricultural places than in richer and more industrialized places, which interestingly suggest that business people are more likely to emerge in environments with an increase of scarce resources (This isn't the case for a few specific industries like software or biotech, however in more traditional and common ones that seems to be); and lastly 4- Considering the percentage of the working-age populace it was possible to observe that, in 2002, around 30% of the Turkish individuals, 18% of Spaniards, 10% of Germanys, 8% of Danish and 7% of Americans were self-employed, and the email address details are even more interesting in pointing out that as much as 40% of the US population will be self-employed at some point with their life. Additionally, it is also possible to see that each yr in the US more folks starting their own business than engaged and getting married or have children (Shane, 2008, p. 3). Those evidences indicate that entrepreneurs are not very rare individuals with special characteristics, but are extremely present in the day to day activities of the market.

Although the empirical evidences referred to above seem to provide support to the arguments proposed by creators like Venkataraman (1997), Shane (2000), Chiles et al. , (2007) and Cantner et al. , al (2007) the attempt to explain why a lot of people become entrepreneurs exclusively based on market failures, information asymmetry and prior knowledge presents some restrictions. The most notably one is the lack of efforts to incorporate alternative explanations that are not necessarily contending ones, but complementary. For instance, the discussion that the people with previous and related knowledge are the most likely ones to exploit entrepreneurial opportunities is definitely not contradicted by the presence of genetic predispositions, well-balanced skills or psychological traces. As the possession of prior knowledge gives a person great part of the necessary conditions to take advantage or not of an opportunity, it is necessary to clarify "why" a lot of people decide to take advantage of it and "why" others make a decision not to achieve that. In the end the ultimate analytical question relies on the decision, since an individual can always choose not to become an entrepreneur even having all the required conditions. In addition, the assumption a person will usually exploit any entrepreneurial opportunity that he/she can identify is highly unrealistic. Additionally, a similar reasoning can also be applied to environmentally friendly and contextual factors that influence the introduction of entrepreneurs, because the explanations shown here do not give a more comprehensive explanation for what industry, institutional or regional options and conditions can favour or hinge the introduction entrepreneurial opportunities. In this manner, trying to offer a more realistic framework, the analyses that follow will take up area of the Austrian tradition assumptions as set up a baseline to create on and assimilate it with complementary explanations.

Also We Can Offer!

Other services that we offer

If you don’t see the necessary subject, paper type, or topic in our list of available services and examples, don’t worry! We have a number of other academic disciplines to suit the needs of anyone who visits this website looking for help.

How to ...

We made your life easier with putting together a big number of articles and guidelines on how to plan and write different types of assignments (Essay, Research Paper, Dissertation etc)