Entreprenurial behaviour

1. Entreprenurial behaviour

2. ENTERPRISE CULTURE

3. 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

4. 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

5. Research on enterprise culture Research 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

6. 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

7. Components of an enterprise culture • Abundant positive role models of successful independent businesses • Ample opportunity for familiarization with small business tasks especially during youth • Network of independent businesses family contacts and acquaintances reinforcing familiarity and providing market entry opportunities • Provision of formal/informal knowledge and insight into the process of independent business management • Opportunity to practice entrepreneurial attributes reinforced by society culture during formative years

8. ENTREPRENEURIAL BEHAVIOUR THEORIES

9. 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: • Economic • Psychological • Social • Managerial

10. 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

11. 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 climate • Government restrictions or encouragement • An entrepreneur is seen as a person who specializes in taking judgmental decisions about the coordination of scarce resources (Casson, 1982)

12. 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

13. 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.

14. 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

15. 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)

16. 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

17. 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

18. 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 information • Credit • Social support

19. 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.

20. 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

21. 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

22. Comments of this perspective: • It perpetrates the myth and stereotypes in society related to superiority and class system and are not healthiest for development

23. 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

24. 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

25. 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.

26. 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

27. 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

28. 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

29. 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.

30. 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.

31. 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

32. 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

33. Risk taker – calculated risks which includes assessment of costs, market/customer needs and persuading others to join and help

34. 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

35. Which need is more pronounced in • Social workers? • Sales people ? • Politicians? • You ? • Entrepreneurs?

36. Think about an successful entrepreneur you know, what have been some of the characteristics ? • Do you match those characteristics?

37. 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

38. 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?

39. 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?

40. 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

41. 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?

42. 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

43. 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?

44. 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

45. 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?

46. 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?

47. 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

48. 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?

49. 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

50. 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?