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The Economic Theories of Entrepreneurship

Entrepreneurship refers to the activity that involves establishing or starting a new business venture or enterprise, or more than one business or enterprise, and taking on numerous financial and other risks with the hope of incurring profit upon doing so. There are a number of theories that are associated with entrepreneurship, namely, economic theories, resource based theories as well as psychological theories (Alvarez & Barney, 2017). The economies theories focus on the risk taking abilities and interests of entrepreneurs, the resource based theories dwell on how effectively it is that entrepreneurs are able to make use of the resources that are made available to them to maximize profit and the psychological theories highlight the mental traits that entrepreneurs are usually possessed with, that drives them to do what they do (Baron et al., 2016). This essay undertakes an in-depth analysis of the mindset, orientation and behavior of the larger than life Australian entrepreneur, Solomon Lew. Lew is well known for being the proprietor of the Coles Group, and draws attention from media and civilians by virtue of his excellent entrepreneurial abilities and flamboyant nature. The analysis of the entrepreneurial traits of Solomon Lew is carried out in reference to the economic, resource based and psychological theories that are associated with entrepreneurship. The report concludes that Lew is one of the most effective and versatile of entrepreneurs in today’s day and age and that his success in life proves the relevance of the economic, resource based and psychological theories under discussion. 

The economic theories of entrepreneurship date back to the initial years of the eighteenth century. This was the time when Richard Cantillon who introduced the notion that entrepreneurs are individuals who are willing to take on risks in order to accomplish their goals in the most effective ways possible (Bradley & Klein, 2016). The Austrian market school of thought on entrepreneurship as well as the classical and the neo-classical views on entrepreneurship posit the idea that entrepreneurship is essentially an activity that focuses on economic conditions, specifically the opportunities that are created by economic conditions, for the generation of wealth or revenue (Bassell & Lambert, 2018). The economic theories that are associated with entrepreneurship have however invited a considerable amount of criticism owing to the fact that such theories do not take cognizance of the open and dynamic nature of the market system. The economic theories of entrepreneurship tend to ignore the unique nature that is associated with entrepreneurship and also downplays all the varied and diverse contexts in which entrepreneurial activities are seen to take place (Bylund & McCaffrey, 2017).  

Solomon Lew and Economic Theories of Entrepreneurship

The economic concept and theories of entrepreneurship are those that apply quite easily to the nature and the personality of Solomon Lew and his way of thinking in particular. Lew has gone on record to say that the calculated risks that are taken by entrepreneurs in particular are what sets them apart from other individuals. It is the desire and the ability of an entrepreneur to understand the risks that are involved in doing a business and take those risks anyway in order to realize his business goals and visions that distinguishes such a person easily from any other individual (Bassell & Lambert, 2018). Lew’s most risk taking venture till date of course was the importing of toys, goods and apparel from China into Australia, at a time when Australian investors were quite skeptical of doing business with the Chinese. What ensued as a result of such risk taking abilities on the part of Solomon Lew is that he became one of the few entrepreneurs in Australia to make high quality clothing available to the average Australian for an affordable price (Bassell & Lambert, 2018). 


The psychological theories of entrepreneurship focus greatly on the emotional and the mental elements that have a role to play in getting entrepreneurs to take the decisions that they do (Higgs & Dulewicz, 2016). David McLelland for instance argues that entrepreneurs are people who are possessed with a desire and a need for achieving success. It is such a desire or need that has an overbearing influence on the various business activities that they undertake or which they seek to undertake, even if it means risking some or a lot of their assets in order to do so (Bylund & McCaffrey, 2017). Julian Rotter on the other hand forwards a psychological theory of entrepreneurship that is associated with control as being the focus of everything that entrepreneurs do. According to him, people who have this very strong sense or feeling of control are people who believe that they can impose their views and ideas on others and get others to do what they want, in order to achieve the goals that they wish to achieve (Bylund & McCafrrey, 2017). The psychological theories of entrepreneurship also focus on resilience, creativity and optimism as being important traits of entrepreneurs that gives them the motivation that they need in order to do their business (Bylund & McCaffrey, 2017). Solomon Lew is clearly an entrepreneur who is possessed with a desire and a need for success at all times, else he would not have taken the decision to import goods, toys and apparel from China into Australia. Lew believes that it is necessary for entrepreneurs to learn from mistakes as quickly as possible in order to avoid repeating such mistakes when undertaking future decisions for the purpose of business Lew is not a person who is likely to allow failure to get him down at any point of time (Bassell & Lambert, 2018). He thinks and he reads a lot and by doing so, he keeps himself calm and composed even during situations of crisis. Yet the decision to import goods and other essential items from China into Australia was not received well by toy and apparel manufacturers in Australia, who believed that the import of Chinese goods posed a threat to their products. Thus, the risk taken by Solomon Lew resulted in him inviting a lot of hostility from his Australian counterparts. However, this is not something that got him down completely, and Lew is willing to take on many such risks in the future in order to realize his dreams. For Lew, just like every other entrepreneur in Australia and elsewhere, it is having the vision that counts. Failure, rivalry and competition must be taken in stride and efforts need to be made to move on from such failure (Kirzner, 2017). Lew even credits his success with failure by stating that entrepreneurs are people who never ever failure. Rather they are people who learn from their failure, particularly, the mistakes that they commit and their move on from there. Such a statement on the part of Solomon Lew is one that reeks of optimism. The psychological theories of entrepreneurship that dwell on optimism and tough mental abilities of entrepreneurs thus find a lot of relevance when looking at the case of Solomon Lew, who is a billionaire entrepreneur running his operations from the country of Australia (Carsud et al., 2017). While the rivalry that he invited from his fellow Australian competitors is not something that can be regarded as failure as such, yet it is never easy to take rivalry in stride and move ahead with business, especially given the hostility that Lew faced based on his decision to import goods from the Chinese market into the Australian market. Many Australian businessmen believed that their enterprises were at stake because of this decision taken on the part of Solomon Lew. However, it is a fact well known that Lew is not a man who allows anything to get him down and continues to take bold decisions for the wellbeing of Australian consumers even today. His main aim was to make clothes and accessories accessible to Australian customers at very low rates and he succeeded in doing so (Carsud et al. 2017). 

The Psychological Theories of Entrepreneurship


The resource based theories of entrepreneurship are those that focus a great deal on the manner in which resources are leveraged by entrepreneurs in order for their efforts to take shape (Kirzner, 2017). While the access of capital is often something that is regarded as the most imperative for getting business ventures to take off in a successful manner, most entrepreneurs of the globe are those that usually begin their work with very little of ready capital. Some of the well-known resources that entrepreneurs are likely to go ahead and leverage in order to achieve their ends include the use of social media, particularly, the information that is disseminated through the use of social media as also the use of human resources (Kirzner, 2017).  It is a fact well known that all business owners require a sufficient and steady pool of employees in order for them to be able to realize their business goals and visions. Employees who are sufficiently well educated and who possess enough work experience, are the type of human resources that are valued by employees the most. Additionally, the resources that entrepreneurs themselves bring to the table in the form of good leadership are resources that cannot be replaced too easily at all (Knight & Schumpeter, 2015). 


Solomon Lew is an individual who is possessed with the skills and the traits that resonate with what is put forward by the resource based theories of entrepreneurship. Lew makes very active use of social media in order to promote his products and services and has personal as well as business accounts on social media such as Facebook, Twitter and Instagram which he uses on a regular basis (Alvarez & Barney, 2017). He is renowned for being a family man and for the sweet images that he puts up of himself, his family members and his associates on such social media pages, drawing the attention and the interest of both prospective and existing clientele at the same time. In fact, one of the main reasons why Lew and his products are so well known and in demand today lies in the fact that he is an entrepreneur who people get to see all of the time through social media.  He tweets every now and then, appears in front of the camera almost all of the time and post pictures on Instagram quite a bit in order to capture the attention of his customers. Due to the fact that he is so visible on social media, and also the fact that he has a larger than life personality, Lew is one of the most successful entrepreneurs in Australia and in the world today (Marques, 2017). He clearly has what it takes to be visible before his target audience and makes effective use of such social media resources to achieve his end. Lew is also an entrepreneur who values his employees. He has gone on record to state that employees should be treated in a manner that they feel no incentive to leave the organization that they are working for. As such, Lew is a person who makes effective use of his human resources. He behaves beautifully with the people who work from him and is known to be very charming in his behavior. He makes sure of the fact that all of his employees are paid on time and that they are provided with all of the incentives that they need to do well for him. Ultimately, Lew’s leadership skills are his greatest resource and are what he is able to leverage most successfully to achieve his ends. The essential arguments of the resource based theories of entrepreneurship thus appear to hold quite true for this Australian entrepreneur (Baron et al., 2016).

Solomon Lew and Psychological Theories of Entrepreneurship

Thus, Solomon Lew is undoubtedly a man who can be regarded as one of the most well- known examples today of what a successful entrepreneur should be. He has the drive, the grit, the stamina and the determination to do what needs to be done for the success of his business. He does not know how to be defeated by failure even though he is accepting of all the lessons that are brought by failure. Solomon Lew is an impeccable leader by virtue of his ability to motivate and look into the interests of those who work for him. As such, some of the important theories that are associated with entrepreneurship such as the resource based theories, psychological theories, and economic theories of entrepreneurship all appear to be quite relevant when it comes to analyzing the case of Solomon Lew. The skills and traits that entrepreneurs should possess, such as optimism, the ability to take risks and the ability to make the most effective use of available resources are all clearly visible in the mindset, the orientation and in the behavior of Solomon Lew, one of the most high achieving businessmen Australia and the world has seen until date. 

References

Alvarez, S. A., & Barney, J. B. (2017). Resource?based theory and the entrepreneurial firm. Strategic entrepreneurship: Creating a new mindset, 87-105

Baron, R. A., Franklin, R. J., & Hmieleski, K. M. (2016). Why entrepreneurs often experience low, not high, levels of stress: The joint effects of selection and psychological capital. Journal of management, 42(3), 742-768.

Bassell, M., & Lambert, S. (2018). Marketing Leadership in a Knowledge Economy. Atlantic Marketing Journal, 7(1), 3.

Bradley, S. W., & Klein, P. (2016). Institutions, economic freedom, and entrepreneurship: The contribution of management scholarship. Academy of Management Perspectives, 30(3), 211-221.

Bylund, P. L., & McCaffrey, M. (2017). A theory of entrepreneurship and institutional uncertainty. Journal of Business Venturing, 32(5), 461-475

Carsrud, A., Brännback, M., Elfving, J., & Brandt, K. (2017). Motivations: The entrepreneurial mind and behavior. In Revisiting the Entrepreneurial Mind (pp. 185-209). Springer, Cham.

Higgs, M., & Dulewicz, V. (2016). Developments in leadership thinking. In Leading with Emotional Intelligence (pp. 75-103). Palgrave Macmillan, Cham

Hunt, J., & Fitzgerald, M. (2018). STYLES OF LEADERSHIP. Leadership: Regional and Global Perspectives, 62.

Kellermanns, F., Walter, J., Crook, T. R., Kemmerer, B., & Narayanan, V. (2016). The resource?based view in entrepreneurship: A content?analytical comparison of researchers' and entrepreneurs' views. Journal of Small Business Management, 54(1), 26-48

Kirzner, I. M. (2015). Competition and entrepreneurship. University of Chicago press

Knight, F., & Schumpeter, J. (2015). Supply-Side Theories of Entrepreneurship. Public Sector Entrepreneurship: US Technology and Innovation Policy, 28

Marques, J. (2017). Leadership and Purpose. In Leadership Today (pp. 7-19). Springer, Cham.

Morgan, G. (2018). Strengthening Our Own Leadership by Design. In Exceptional Leadership by Design: How Design in Great Organizations Produces Great Leadership (pp. 49-72). Emerald Publishing Limited

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