Overview of Entrepreneurship Theories
Entrepreneur is the person who undertakes the ownership, creation and risk of the business. Entrepreneurship is the function of the entrepreneurial which can be conceptualized as the detection of opportunities and the ensuing creation of new economic activity.
There are various theories of entrepreneurship that defines the different perspectives of the author. These theories are applied by the organization and entrepreneur to attain the success. Some theories are defined below.
The concept of this theory is introduced by Schumpeter as an essential element in entrepreneurship in addition to pretentious risks and arranging the factor of production. It has been defined by Schumpeter that entrepreneurship is the creative activity. An innovator is the person who carries new product or services into economy which is liable to the status of an entrepreneur (De Haan, 2010). The entrepreneur is considered as the engine of growth in this theory, the entrepreneur looks for the opportunity for initiating new products, new forms, new markets and new tools of industrial organization for the purpose of developing the discovered sources. The functions of this theory are mentioned below.
- This theory helps to introduce the new product from which consumers are not familiar or make changes in the existing product to improve the quality.
- The introduction of the new method of production which has not been experienced or tested by a branch for the concern of manufacture.
- To enter in the new market which the particular branch of manufacture of the country has not entered (Kirkwood, 2009).
There are various economists revealed that the term of entrepreneurship and economic growth will take place in those situations where specific economic conditions are in favor of the business environment. Economic theory of entrepreneurship was introduced with the work of Richard Cantillon, who initiated the idea of entrepreneur to take risks. It is the theory of entrepreneur to take significant risk for failing to identify the dynamic, avoiding the nature of the entrepreneurial activity and the open nature of the market system (Bruton, Ahlstrom & Li, 2010). There are various factors exist in the country that promote or demote the entrepreneurship in the country (Genus & Nor, 2007). these factors comprises the availability of the bank credit, productive resources, the formation of capital at high rate with a good flow of savings and investment, increased demand of customers towards products and services and effective policies of economic such as fiscal and monetary. It has been said by many researchers that the economic development was the consequences of the rationalized technology and accounting systems and the attainment of the capital.
Political systems can enclosure the adequate infrastructure, favorable taxation, favorable laws and procedures. It allows providing the incentives along with subsidies build the promoting policies, safety for entrepreneurs and can motivate the people towards the term of entrepreneurship (Nair, 2010). The theory of political system is made for the purpose of the growth of entrepreneurial and for this the government of any country can build the supporting system for potential entrepreneurs. Hence, the commitment of government is well enough in the context of the entrepreneurial development. As per Hoselitz, the entrepreneurs of Japanese could flourish due to their political system was able to properly incorporate with different sectors such as the tiny and handicraft industries, labor intensive, industrial and agriculture and tradition and modem social structure. This theory contributes in the potential growth of the entrepreneurship (La Rocca, Ford & Snehota, 2013).
Factors Affecting the Success of New Business Ventures
From the above discussion, it has been concluded that these theories are favorable in the context of growth of entrepreneurship. Innovation is necessary for the growth of the business and entrepreneur can bring the change in the organization by doing innovative things. Economic growth is integral for the growth of the country and the contribution of the entrepreneur can be effective if the economic conditions are in favor in the decision of the entrepreneur (Ufen, 2009).
It has been analyzed that the best theory for the entrepreneurial process that fits the society in Malaysia to support the government in the Malaysia Transformation agenda is Economic theory of entrepreneurship. Sustainability and inclusiveness is the pillar behind the formation of Malaysia Transformation Agenda. It ensures that entire population of the Malaysia should be benefited from the development of the country that growth of economic is constant over the long term. The execution of the plan and the allotment of the resources are also considered in the social needs such as safety and security of the citizens, quality of life and environmental sustainability. Economic theory of entrepreneurship will be facilitated to make changes in the country adequately and enhance the importance of entrepreneurship to expand the business in all over the world. The Malaysia Transformation Agenda is built for the progress of the citizen of the Malaysia and that is why the economic theory of entrepreneurship will be fitted because the various impacts of economic condition and political favor may influence the growth of the entrepreneurship (Foley & Alfonso, 2009). The Deloitte Company gets success which enhances the economic condition of the Malaysia. Economic incentives are playing a major role in the entrepreneurial activities in any country. The main reason behind this theory is that successful entrepreneurship may improve the standard of living of Malaysia. In brief, to create wealth from the entrepreneurial ventures, they also build jobs and the situation for the flourishing society. This theory will enhance the national income by providing the job opportunity and higher earnings. The improved and innovated products, services or technology by entrepreneur enable the new markets to be progressed and new wealth to be built. This theory is also able to community development, there are some famous entrepreneurs, like Bill Gates, have used their money to invest in good causes, from providing education to needy child to public health.
It has been analyzed that the successful new business venture and economic development are the consequences of the combination of the right environment, innovation and effort. Entrepreneurs are the reason behind the right combination of the business venture and the economic development. They are able to give a concise blue print for motivating technology; research and finance to facilitate promote the matured business. Entrepreneur is the key factor of the development process (Cornelissen, Clarke & Cienki, 2012). It is considered as the domain of the entrepreneur whose procedures and policies comprise the wide areas such as financing, pricing, production marketing and personal relations. Effective policies and implementation of these policies are liable in the growth of the entrepreneurship. There are various myths of entrepreneurship and many researchers in this field have noted that the study of entrepreneurship is still emerging. There are eight myths explained below:
Market Orientation of Asia e University
Entrepreneurs are doers, not thinkers: it is fact that the entrepreneurs tend towards action but they are also thinkers. The nature of them is very methodical and they moves carefully. The business plan is made with the thinking of that “thinking” entrepreneurs are as important as “doing”.
Entrepreneurs are always inventors: Invention is being done by entrepreneurs to bring the amendments in the environment of the social as well as professional life. There are various inventors who are entrepreneurs and numerous entrepreneurs comprise different kind of innovative activities. For instance, Ray Krok was not person of invention of fast food franchise but his innovative ideas made McDonalds the largest fast food enterprise in the world. A contemporary understanding is the most important in the context of entrepreneurs in comparison of invention. It needs an entire understanding of the behaviour of innovation in entire forms (Christensen, 2013).
Money is required by all entrepreneurs: it is fact that money is integral to survive in the life for entrepreneurs. Along with that it is also fact that there are various businesses that failed due to lack of sophisticate financing. It cannot be said that the lack of financing is the only reason behind the failure of the business, there can be other reasons such as managerial incompetence, lack of understanding about financial terms and poor planning (Lewin, 2011).
Luck is required for success: it is one of the statements of myth that describe the need of luck for success of entrepreneurs. It is always advantageous factor to being at the right place at right time (Liechti, Loderer & Peyer, 2014). It is equally appropriate saying that luck happens when preparation meets opportunity. Prepared entrepreneurs grab the opportunity when it arise and become “lucky” rather it is possible due to their prepared plan and mind towards attaining the growth. What come into view to be lucky is determination, innovativeness, desire, knowledge and preparation (Saiegh, 2009).
In the above discussion, it has been cleared that there are various myth regarding entrepreneurs and as per the statement “the success of new business venture is mostly dependent upon the availability of ample resources and luck”, it is analyzed that ample resources are required to attain the growth because without planning of resources and support of resource, business cannot move ahead in the path of growth. Luck is all about to grab the opportunity at the right time and it can be done with prepared mind and plan of entrepreneur (Di Gangi & Wasko, 2009). There are various examples of entrepreneurs that reach at the peak of success due to their sharp mind and people think that it is done due to their luck. These examples are Levi Roots (musician and TV personality), Will King (founder of king of Shaves) and Doug Richard Founder, (School for Startups). It has been analyzed that luck can have a portion to play in some situations and on the other hand someone just find himself in the right place at the right time and it feels like a lucky break. But as per experience of various entrepreneurs, it is kind of hard work, compel, purpose and the unthinking belief in your view that will force someone ahead (Hashemi & Hedjazi, 2011).
Entrepreneurship Buyouts and Buy-ins
Levi Roots is the entrepreneur and the creator of Reggae Reggae Sauce. It was said by him that since my appearance on Dragons’ Den in 2007 the life of mine has amended extremely. He met with various successful person and heard that the part of luck is vital to get succeed in life while some of them give importance to qualities and hard work. Luck kept great role in his success because he had never heard about this show before Dragon’s Den. He was not sure about the participation in BBC because he was a delivery driver but one day he realized that he should have done something else to be different from others. His experience in the Den taught him that along with the little luck a person also require good people around to help someone for guidance. He had good team and great people along with the people at AB World Foods, who make the sauce; he was succeeded because he was supported by great professionals. There is another example of Doug Richard who was founder of “School for Startups”. In his case, he said that luck is important in the success of business, but in term to be lucky it is vital to be there in the first place. He was brought up to be confident and independent and that facilitated him to be succeeded (Startup, 2017). Planning, strategy and different perspective from others is more important to get success because luck is important but not more that much (Gilbert, Ahrweiler & Pyka, 2007). The statement is true but it is not damn true because luck is important but not more than planning and hard working.
Asia e-University is the private university which is located in Malaysia. There are eight schools under this university such as school of foundations studies, school of management, school of graduate studies, school of technical and engineering education, school of professional and executive education, school of education and cognitive science, school of information and communication technology and School of Arts, Humanities and Social Sciences. Asia e-university has been rated very well in the Malaysian ministry of higher education. In the context of market orientation, it is considered as the philosophy focused on determining and meeting the requirement of the consumers through its product mix (Chen, Yu, Yang, Ito, Wang, Madsen & Boomer, 2008). The market orientation of Asia E-university is effective because it provides various programs at one place with e-university which brings the comfort level of the student. It is formed for e-education with the support of more than 25 ACD member countries. Many people want to do study with job for getting promoted or learning something new. It offers various opportunities to the student for different course. The orientations are described below that is customer, competition, inter-functional and profit orientation.
Myths of Entrepreneurship
Customer orientation is considered as an approach to sales and good bonding with customers in which the employees target on facilitating customers to meet their long term requirements and needs. Asia E-university can be more advantageous for customers by providing various facilities to the students with offered courses. It can offer the personalized learning in which high quality teaching that is receptive to the various ways students attain their best (Volery, Mueller & von Siemens, 2015). Various offers in its course can be provided for the purpose of retaining the customers. The university can focus on the internal and external need of the customers of business. Customer orientation manufactures and monitors standards of consumers satisfaction and endeavor to meet the need of clients and expectations regarding to the product and services sold by the business (Baya, Mathaisel & Parker, 2010). E-university should explore the new markets because it make ensures that its systems, process and people are flexible. Customer oriented organizations are willing to do whatever to takes to retain the customers and competitive advantages. It is necessary for being as a customer oriented organization to make changes in the structure, policies and strategy so that it meets the changing requirements of customers. It is vital for the organization to consider the requirements of the customers for making them satisfied from the products or services so that they can recommend to others for education.
Competitive orientation is where when a business is competitively oriented. It continuous reconsiders its strengths and weaknesses regarding to its competitors. Performance evaluation is necessary which comprises pricing, delivery times, consumer satisfaction, employee retention, market share and innovation. In context of E-university of Asia, university must analyze the competition in this field in comparison of marketing. The Singaporean institutions National University of Singapore and Nanyang Technological University are the major competitors of Asia E-university. It has been analyzed that the economy of Asia is going to boom, in contrast to unsure economic prospects for European along with other developed countries, it is expected that in coming next five to ten years could see a foremost change in the world of transactional education. In the context of international student market, Asia could develop into a well built competitor. It is vital for the university to keep focus on the competition and analyze the market competition on regularly basis and make amendments to stable in the competitive environment (Simón-Moya, Revuelto-Taboada & Ribeiro-Soriano, 2012). Various courses are offered by university to the student but it can increase the number of more courses after analyzing the strategy of competitors and can provide the campus hiring to the student for growth which can make it highlight in the view of students (Denhardt, Denhardt & Aristigueta, 2012).
Inter-functional orientation is the perspective that includes under the market orientation. The inter-functional activity is effective of Asia E-university because the communication and sharing of information resources are managed in the Asia e-university. Along with that the integration and collaboration between different departments are maintained which make the university internally strong. As per the different perspective, university can enhance the number of employees and adapt the latest technology to reduce the workload and attract the students towards new courses. Adaption of latest technology and rapid information and work of internal department may attract the number of potential students and maintain the relationship with exist ones. University need to apply the various approaches to make satisfied the customers, motivate the employee and customers and execute the various corporate strategic approaches or functional activities.
It is the term which elaborates the business that run under the primary objectives of increasing the growth. There are various forms of profit orientation to encourage the employees to enhance the revenues, the most successful organization also incorporate the customer orientation into their philosophy of corporate for the purpose of preventing the reputation of the organization and help to client satisfaction with its products. Asia E-university should frame and produces the products and services depending on what it is better at, along with that produces products should assigned to segments that it manufactures by itself (Chand, e.d.). It has been analyzed that sue to amendments in the customers’ requirements, university can face the trouble because it constants to create what it can, and has no way to estimate the requirements of customers and correct course. The profit oriented organization does not consider the competitors and focus on the profit making (Broz & Willerslev, 2012). The e-university can spend on marketing widely to be on equality with competitors. Profit oriented organizations is not that much interested in new markets because they are happy what they doing but as per different perspective it is not good for expanding the business.
Innovation is necessary for surviving in market because it increases the globalization, competition, customer expectations, workplace conditions and advancing technology. It has been analyzed that the competitors are getting smarter and hitting the market by producing new products and services more rapidly. Innovations are taking place in the strategy of marketing and reduce the time of innovation cycle (Nolan, 2016). New products and services are introduced in the market in rapid manner and it enhance the additional burdens on existing organizations to keep up, it is important for the company to match the product features or trying to leap frog over competitors. Innovation is liable to increase the globalization and due to it world is shrinking (McGrath & Keil, 2007). Due to social media and advancement in latest technology, marketing will become enhance personalized for each customer. The competitions are increased and now a day’s customers will not accept obsolete products because they have various options. They want to live easier life that is why they are searching companies to resolve their issues. As a consequence, the expectations of customers are and will constant to drive innovation.
The statement of “Firms that fail to innovate will die” defines that innovation is integral for new venture because without innovation new venture cannot compete with existing industry. The wide range of business challenges are built by the internet that have influenced on the process as well as the speed of innovation. It is being done from the never-ending options of online shopping, to the influence of stories of brand which is described by the social media. It has been analyzed that there are various companies that everyone knew from childhood have spoiled due to lack of innovations. On the other hand, there are very few of the powerhouse companies of the last century that are still working as they used to. It reflects that they are still here; it is because they have adapted new technology but many more have had to near their doors eternally. There are many bankrupt companies that failed to innovate such as Kodak, blockbusters, HMV, Clinton Cards and Tie rack. Kodak was famous company for inventing roll film. It had access to the first digital camera technology and the company did not choose to develop it as they felt it would spoil the entire process of their own film venture. At the end, Kodak was filed for bankruptcy in 2012. The conclusion has arisen “if you do not do it, someone else will.” Another example can be seen of Blockbuster that was killed by the growth of Netflix. The company produced same business plan for over and over again. Tie rack is the company that are famous for offering various and different kind of ties for men but it has been analyzed that men tend to buy ties where they purchase shirts and Tie rack was unable to do different things which tracked them in failure zone (Lapham, 2016).
It has been concluded from this statement that no company is too big, secure or famous to fall if it oppose innovation. In the context of new ventures, entrepreneur should learn lesson from those companies and implement the strategy in order to innovate new services and products for attracting customers’ constant basis and for being stable in the competitive environment. Entrepreneur should constant focus on improvement processes by challenging the team for the purpose of reviewing the market verticals and along with that they should chase the new opportunities and precedence unruly ideas.
There are various strategies and approaches that facilitates to manage the growth and success of the company but as it is mentioned in the statement that the managing the growth and success is far tedious in comparison of establishing the new venture. On the other hand, establishing the new venture brings the various challenges that entrepreneur have to face and for this it is vital for entrepreneur to get ready for challenges. There are various companies that manage the growth and success with the help of market penetration, market expansion, product expansion and diversification. These strategic approaches are helpful to maintain the relations with customers for introducing the innovative things in to existing products. It is easier for the company to establish the new venture if entrepreneur is financially strong and have preplanned strategy but after getting success it is tedious for the company to manage the success and growth for a long term. For instance, Nestle was introduced in 1860 and faced various challenges to get success such as impact of Second World War, competitors and many more. Nestle is still functioning in today’s competition with number of employees and branches in all over the world. It shows that the establishing a new business is not easy but it is too difficult to maintain the growth and success in the view of outsiders and for maintaining the growth, Nestle implemented the various strategies and approaches to make satisfy customers. Nestle has sustained to grow in spite of the recent challenging times and it is done because it continuous maintain the trust of employees by providing the efficient quality in the products (Business News, (2003). There is a recent example of Nestle product- Maggie that denied and banned by India as it was found that it is not good for health due to lack of making procedures. In that case Nestle has positioned and proved itself that the product of it is eatable and manufacture the product under strict supervision. The action of Nestle towards customer satisfaction enables it to reproduce the Maggie with under supervision and people liked it again. It shows that the Nestle Company had to face many challenges but its strategy to maintain the growth and success was very effective which brings the trust of many people on the existing products (Reuters, e.d.). Along with that there are other examples of this statement such as McDonalds, KFC, Toyota, Samsung and many more that get succeed and faced difficult situations to maintain the growth and success in the competitive environment.
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