Entrepreneurship: Important in Business and Essential for Economic Growth

Entrepreneurship is important in business and essential for economic growth. Those aspects of factors have been highlighted and proved by different schools. There are some debates about the impact on entrepreneurs’ personal character and their operating environment. Both of them are important and have deep influences on their behaviours. I personally consider that the environment in which entrepreneur operate have more important influence on them. In following, I will discuss both two aspects and show why I consider the operating environment has more important influence on entrepreneur.

It is undeniable that personal characteristics of entrepreneur have influenced on entrepreneurship. In early personality theory is described as single-trait theory because theorists sought to identify a single-trait and link it to a greater propensity to be a successful entrepreneur. A consequence of theory has moved to multi-trait way and then the studies shift to identify ever- wider sets of characteristics to measure entrepreneurial potential to success. For example: High need for achievement prefer situations stimulating their achievement motivation (McClelland, 1961), Self confidence and high internal locus of control illustrates why and how individuals engage in situations with the risk of failure (Brockhaus, 1982), Risk-taker relates different in risk perception and affect the individual’s opportunity evaluation thus determine the entrepreneur’s risk-taking (Meredith, 1982) and Creativity and Innovativeness concern a process of intentional change made to create value by meeting opportunity and seeking advantage. (McMullan and Long, 1983) etc. Those characteristics of above have been proved that are some basic factors which could help entrepreneurs to set up a competitive business and develop their business.
On the other hand, entrepreneur world be treated as deviants – “an anxious individual, a non-conformist poorly organized and not a stranger to self-destructive behaviour” (Kets De Vries, 1971:41). He argued that an entrepreneurial behaviour back to a person’s family life and their early family relationship. Not only in positive characteristics, but also negative characteristics of entrepreneurs will affect their business and cause business failure.

There are some critiques in psychological trait. This approach ignores the role of learning, preparation and serendipity, assumes the static analysis approach, ignores environmental factors that affect propensity to entrepreneurship, the idea of a limited supply of potential entrepreneurs has been criticize and it is inadequate to search for a significant single trait or measure it because entrepreneurs’ characteristics would change over time etc. The study of entrepreneurial behaviour has been shifted from only examining trait to studying the interaction between entrepreneur’s perception, intention, and ability, in combination with characteristics of the situation (Rauch and Frese 2007). In later study, they have researched to cognitive moders of entrepreneurial behaviour. This model has provided better explanations and predictors of behaviour than earlier models. There are three cognitive models: Attitude-based, Achievement context and Ability. Attitude-based model focuses on how our attitudes to entrepreneurship shape our behaviour. Achievement context model is concerned with motivation in contexts where risk and performance are central. Ability model focuses on abilities and skills and how they affect entrepreneurship. Cognition model have great power to explain entrepreneurial behaviour and offer practical advice on how to train and educate future entrepreneurs.

Entrepreneurs’ personal characteristics have influenced how they operate their business, different businesses have different objectives but the commons are keeping survive and earning profit. In latest decade, globalization has developed and changed the economic environment deeply. Globalization describes a process by which national and regional economies, societies, and cultures have become integrated through the global network of trade, communication, immigration and transportation ( Manu R. Shroff, 2000). Due to globalization, overall markets become competitive and easy enter. Entrepreneur can take advantage of new profit opportunities and create new entrepreneurial opportunities and create new entrepreneurial possibilities. Entrepreneurs will be alert to opportunities that lead to the establishment of new, potentially innovative business. Entrepreneurs will need to have innovative attributes, flexibility and adaptability to adjust or change their strategies and objectives for business in order to survival or growth. Moreover, regions and cities economic environment are also important for entrepreneur. They have to analyse those environment that enable firms to compete in their chosen markets and the value these firms generate being captured within their chosen regions (Begg, 1999: Huggin, 2003). Entrepreneurs would have consider to consist of the capability of an economy to attract and maintain firms with stable or rising market shares in an activity, while also maintaining stable or increasing standards of living for those who participate in it.

There are several researches that support entrepreneurship is a key which have huge impact in economic development. The process of entrepreneurship is widely considered to stimulate competition, drive innovation, create employment, generate positive externalities, increase productivity by introducing technological change and provide a route out of poverty (Audretsh and Thurik, 2001). Across major industrialized economics, levels of entrepreneurial activity are positive correlated with levels of per capita gross domestic product (GDP) and the rate of GDP growth (Acs , 2006). Entrepreneurs drive the market forward towards efficient outcomes by exploiting profit opportunities and moving economies towards equilibrium (Kirzner, 1973). Entrepreneur also contributes to the market’s process of “creation destruction”, with new innovations replacing old technologies (Sobel, Clack and Lee, 2007). All of those researches have proved that entrepreneurship has been recognized as a crucial element in economic development. In other words, Different economic situation in different areas have provide different opportunities and possibilities for entrepreneurs to expand their business. They need to consider and analysis for choosing an areas that could offer them the maximum chances for their business.

Culture and social environment which entrepreneurs operate in are also important and will have lots of influences for them. Culture is the characteristics of a particular group of people, defined by everything from language, religion, cuisine, social habits, music and arts.(Hofstede, 1991). Culture shapes what individuals perceive as opportunities. Entrepreneurs need to understand what culture in their operating environment. Therefore, entrepreneurs should take an effective institutions and a culture support to make it possible for being a competitive advantage of perceived opportunities. Entrepreneurship can be considered self-reinforcing in nature and can concentrate geographically because of the social environment, as individuals follow societal clues and are influenced by what others have to chosen to do (Minniti, 2005). Entrepreneurs should operate their business within considering what impact of their business activities will bring to culture, also try to meet up culture which people would accept their business thus entrepreneurs may change their business objectives and activities. Moreover, entrepreneurs would consider business ethics which is primarily concerned with those issues not covered by law, or where is no definite consensus on whether something is right or wrong (Crane, A & Matten, D, 2010). Entrepreneurs should operate their business ethically in order to benefit social environment. This is a competitive advantage in build up a positive reputation for entrepreneurs and gaining the possibilities of them to survive and develop their business. In addition, entrepreneurs can attract social capital to develop their business. A key cultural trait of places is their social capital, consisting of the economic significance of social relations facilitated through personal contacts, networks and norm of behaviour (Meadowcraft and Pennington, 2009). In a way, social capital can be considered as a “social pressure” which is entrepreneurship gives to community that can have positive or negative effects. Entrepreneurs should consider what types of impact will transfer to community from their activities. They should try to bring positive benefits to community because it is important to operate business in considering corporate social responsibility. Entrepreneurs will be benefited if they operate positive. Entrepreneur will become more easily to attract talents join in their business that is more helpful in developing business and can adopt the change in the market. Entrepreneur should build up and utilize a valuable resource, enabling communities with stocks of social capital to benefit from economic development.

Government and small business interrelate. Government can have lots of effect on firms that how they operate, their opportunities to grow and control economic situation in a certain level. Indeed, government policy and its influence on the institutional environment and social capital has become a key focus of effect to improve how entrepreneurship develop and compete. According to the market failure argument, small firms will not invest or develop some field, therefore, government should assist. The main basis of this argument is that, because SMEs are small, they lack of control of markets in which they operate, awareness of advice and financial capital. Therefore, governments would help them to survive and develop in order to contribute economy and society. Almost all governments in different countries and localities now have an active policy for improving competitiveness.

There are three dimensions to the government roles: government as regulator, government as economic agent and government as strategic planner and promoter. Government issues legal rules determinate how trade rules operate in nationally and internationally, the legal forms of companies, the extent of legal limits on company liabilities and the strength of antitrust, restrictive practices and antimonopoly regulations. Government also influences regulations on the employees’ welfare such as conditions of work, minimum wage and working hours. In addition, government policy also influence on customers protection like safety, health and environmental pollution.; Government can issue some government taxes, change fees, debts and spends to create barriers to prevent external enterprises invest or attract them. Taxation and fees levels affect entrepreneurial incentives and market entry; government debt levels severely affect the economic climate. In additional, government spending influences the competitive environment and rules for government contracts influence markets; Government finance can be used to offer grants, subsides, loans or information and advisory support to entrepreneurs and can seek to improve the infrastructure of business factor inputs. For example: in the area of education, skills, research and development, marketing and productivity initiatives and international trade protection etc. Entrepreneurs would take an advantage of target business area of government policy to achieve some business advantages like cost and risk reduction, the flow of information and extra financial support etc. The use of grants, subsides or reduced-rate loans to lower of inputs into the business; the use of macroeconomic politics in tax, interest rates and other instrument to stabilize the economy and reduce oscillations and uncertainties. Moreover, entrepreneurs should take more readily available information on international trends in markets, national and local issues and government policies that effect business.

Different governments would provide wide and different areas of policy to support entrepreneurship. In contrast, government can issue anti- entrepreneurship policy to limit the number of entrepreneurship and create barrier for external entrepreneurship due to their different market situation. There are some limitations on government support actions that can lead market failure to entrepreneurs. The result would be small firms can be harmed; the costs exceed the benefits of intervention to entrepreneur and far exceed the costs of accepting the market failure that exist in the place. Entrepreneur should not rely on government’s support heavily to expand their business. Before entrepreneurs enter the target market, they should also consider the politic situation in that market in order to taking a steady environment for them to operate their business.

In conclusion, Entrepreneurs should aware the external environment that they operate such as economy, social culture and politics. At the prior stage of business, entrepreneurs’ personal characteristics may be a principal factor that influences their business. In long-term, the influence of environment which entrepreneurs operate will have more impact on them than the personal factors. Entrepreneurs should concern more about the environment to create and implement strategies for developing their business.

Word court: 1919 words
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