Characteristics of Entrepreneurs
Discuss about the Entrepreneurial Alertness in Opportunity Identification.
Although there is no universally accepted definition of an entrepreneur, Hapiro (2016) suggests that an entrepreneur as an individual who initiates a business enterprise, by accepting various risks and challenges associated with entrepreneurship with the aim of making profit. A person who identify an opportunity in a particular area, recognises the needs and wants of the customers and establishes a business enterprise to satisfy the identified needs and wants is known as entrepreneur.
Entrepreneurs are known to be people who take financial risks with the aim of making profit. They tend to be good at identifying new opportunities and coming up with better ways of operating their businesses in order to satisfy their customers. For example, they are good in identifying new possibilities and noticing unmet market needs. The high pro-risk-taking attitude which they possess make them more likely to exploit the possible opportunities they spot.
According to Yavuz (2014), an entrepreneur can be in control of commercial activities, directing various factors like production of goods and services, human resources, financial flows and material resources. In addition to initiating a business, entrepreneurs play the role of a manager and oversees various factors which favour the growth their businesses. Most of the entrepreneurs are good in time management and this makes it possible for them to balance family life and business activities.
According to Valdez (2011), the term entrepreneur refers to the qualities of initiative, team-building, leadership and innovation in new venture design. Unlike small business owners, entrepreneurs are focused to growth of their business and always seek to use technology innovation to establish a change for the sake of maximizing profit. Some key features which characterize Entrepreneurs comprise of being resourceful, self-motivated, willing to take risks, and having vision and flair.
Small business is defined as an enterprise that employs less than 20 members of staff (Williams, 2015). Although sometimes the word entrepreneur and small business owner are used interchangeably, they refer to two different things. One of the factor which brings the difference between the two is the level of their self-efficacy. Comparing the two, entrepreneurs have strong belief of their capabilities as compared to small business owners. Entrepreneurs have goals and enjoys seeing their businesses at a different level after sometime while small business owners enjoy the existence of their businesses more than their growth.
Entrepreneurs exhibit dynamic forces when planning and launching of new business enterprises. They handle various issues in their businesses like for example product design, establishing most efficient production methods, undertaking marketing activities among others (Rose, 2011). On the other hand, small-business owner is a person who owns a business enterprise but may not be involved in running the business. Comparing the two, small business owners plays few roles in running a business as compared to an entrepreneur.
Difference between Entrepreneurs and Small Business Owners
Entrepreneurs and business owners differ in the manner in which they relate to their business. To start with, entrepreneurs take their businesses as assets, or something that need to be well managed so that it can enable them to realize better returns (Judith, 2015). On the other hand, small business owners happen to be more sentimental concerning their enterprises.
An entrepreneur is an organizer and a person who takes risks, and utilizes available opportunities to make profit. They introduce new idea after the other, and use innovation to enhance customer satisfaction (Colleen, 2015). On the other hand, small business owners are individuals who organize the processes involved in running businesses and experience the challenges of running an operation-based business opportunity to make a profit. Small business owners are also referred as owner-operators because they mostly put much emphasis on sales than developing their businesses.
According to Beverly (2014), entrepreneurial self-efficacy (ESE) refers to the ability of an individual to effectively accomplish the duties and responsibilities of an entrepreneur. He also claims that people slowly develop self-efficacy through social, cognitive and physical experiences. As a result of this, previous positive outcome of a particular task can impact the expectations of an individual and also assist in reinforcing his/her self-efficacy.
As it has be utilized in entrepreneurial literature, ESE focuses on one’s belief that he/she can take undertake entrepreneurial roles based on assessment of their functional, managerial, supervisory and technical skills (Fotopulos, 2015). In much of the entrepreneurial literature, scholars have been concentrating on explaining the competencies of entrepreneurs in terms that are closely related to the duties and responsibilities an effective manager.
ESE can be used to differentiate small business owners from entrepreneurs because of several facts. Over the past years and even the recent time, self-efficacy has been commonly related to ones commitment to attain desired goals. Entrepreneurs and small business owners differ in the manner in which they commit their efforts to attain their goals. Entrepreneurs have strong desires for their businesses to remain successful and grow. This means they put more efforts, performing different roles in order to attain this. On the other hand, small business owners do not struggle too much because they feel fine as long as their business is in existence.
According to Yavuz (2014), entrepreneurs plan for their businesses and focus on growth and always identify things that are likely to impact the success of their firms. This means they utilize ESE to identify all strengths and weaknesses which influence their ability to successfully run their businesses. On the other hand, small business owners do not put much emphasis on growth, they simply enjoy owning a business, meaning they rarely analyse personal traits that can influence the success of their businesses.
Self-efficacy is known to have an extensive theoretical foundation and pragmatic support in predicting future performance of businesses (Judith, 2015). Based on the fact that entrepreneurs focus on growth than small business owners, it means ESE works better for entrepreneurs than small business owners. Entrepreneurial self-efficacy enables entrepreneurs to establish growth expectations for their businesses and come up with strategies of attaining their goals.
Entrepreneurial self-efficacy is closely related to business/ individual performance in the fact that it assists one to find out if he/she has what it takes to successfully run a business (Judith, 2015). When making decisions on whether to utilize business opportunity or not, entrepreneurial self-efficacy assist individuals to identify their strengths and weaknesses so that they can make a decision that cannot make them to land into pitfalls.
According to Hapiro (2016), entrepreneurial self-efficacy influence performance because it can be used by companies and individuals to determine areas of strengths and weaknesses so that they can assess the potential of an entrepreneur. The success of businesses depends on one’s ability to perform the duties and responsibilities of an entrepreneur According to Yavuz (2014), entrepreneurial self-efficacy is a rational belief that requires systematic and constant efforts to be changed.
In the field of entrepreneurship, different empirical studies have identified the existence of a positive relationship between the general measure of self-efficacy and performance (Jun, 2010). These studies have also suggested that entrepreneurial self-efficacy can be used by firms or individuals to identify the major reasons that make an individual or organization not to perform well. This means if well utilized, entrepreneurial self-efficacy can assist individuals and organizations to realize positive performance.
According to Colleen (2015), entrepreneur self-efficacy can be used to identify the reasons that may make an entrepreneur to avoid utilizing a business opportunity. Many people avoid entrepreneurial activities or fail to utilize available opportunities not because they lack what it takes but because they believe they do (Yavuz, 2014). This mostly happens among women and other minority groups who are perceived to lack the skills and abilities required to undertake various activities in the society. In order to encourage entrepreneurship, the society should use entrepreneurial self-efficacy to identify sources of entrepreneurial avoidance and encourage women and other minority groups to initiate their businesses.
According to Williams (2015), entrepreneurial self-efficacy can assist in minimizing chances of business failure because it helps in identifying if one can effectively perform the roles of an entrepreneur. Entrepreneurs have entrepreneurial self-efficacy because they hold strong beliefs that their abilities can assist them to accomplish various tasks required for the success of their businesses.
Hapiro, R. S., 2013. The Real Problem Solvers: Social Entrepreneurs in America. Stanford, CA: Stanford Business Books.
Yavuz, R. I., 2014. The Outsider Entrepreneurs. El Paso, TX: LFB Scholarly.
Valdez, Z., 2011. The New Entrepreneurs: How Race, Class, and Gender Shape American Enterprise. Stanford, CA: Stanford University Press.
Williams. T., 2015. Think Agile: How Smart Entrepreneurs Adapt in Order to Succeed. New York: American Management Association.
Rose, T., 2011. Self-Efficacy and Effort in New Venture Development. Journal of Management and Organization, 17(1), 78-92.
Judith, G. V., 2015. Female Entrepreneurs and Negotiation Self-Efficacy: A Study on Negotiation Skill Building among Women Entrepreneurs. Journal of Entrepreneurship Education, 18(2), 525-589.
Jun, Y., 2010. The Impact of Entrepreneurial Personality Traits on Perception of New Venture Opportunity. New England Journal of Entrepreneurship, 13(2), 145-168.
Colleen, C. M., 2015. Entrepreneurial Passion as Mediator of the Self-Efficacy to Persistence Relationship. Entrepreneurship: Theory and Practice, 39(5), 25-58.
Beverly, B. K., 2014. Entrepreneurial Alertness in Opportunity Identification and Opportunity Development. Journal of Business and Entrepreneurship, 26(2), 12-52.
Fotopulos, D., 2015. Accounting for the Numberphobic: A Survival Guide for Small Business Owners. New York: AMACOM.
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