ENTREPRENURIAL BEHAVIOUR

ENTERPRISE CULTURE

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

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

RESEARCH ON ENTERPRISE CULTUREResearch 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

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

COMPONENTS OF AN ENTERPRISE CULTURE 1. Abundant positive role models of successful

independent businesses

2. Ample opportunity for familiarization with small business tasks especially during youth

3. Network of independent businesses family contacts and acquaintances reinforcing familiarity and providing market entry opportunities

4. Provision of formal/informal knowledge and insight into the process of independent business management

5. Opportunity to practice entrepreneurial attributes reinforced by society culture during formative years

ENTREPRENEURIAL BEHAVIOUR THEORIES

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:EconomicPsychologicalSocial Managerial

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

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 climateGovernment restrictions or encouragement

An entrepreneur is seen as a person who specializes in taking judgmental decisions about the coordination of scarce resources (Casson, 1982)

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

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.

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

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)

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

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

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 informationCreditSocial support

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.

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

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

COMMENTS OF THIS PERSPECTIVE: It perpetrates the myth and stereotypes in

society related to superiority and class system and are not healthiest for development

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

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

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.

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

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

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

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.

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.

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

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

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

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

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

Think about an successful entrepreneur you know, what have been some of the characteristics ?

Do you match those characteristics?

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

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?

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?

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

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?

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

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?

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

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?

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?

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

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?

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

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?

PROACTIVE MANAGEMENT Although high nAch persons are careful to

keep an eye on the present, they keep a significant part of their thinking directed toward the future

They plan their business world the way they would like it to be

They work hard to bring their plan to actuality

Do you like to think ahead and plan your future – then work to make it come true?

How well do fit the pattern of the high nAch personality?

If you do not have these characteristics, does it mean all is lost – you cannot start and manage a small business?

Can you develop these characteristics

REINFORCING ACHIEVEMENT MOTIVATION Think like an achiever

Direct your fantasies towards accomplishment of worthwhile goals

Incorporate standards of excellence considering what you do

Think of newer and better things to do and newer and better ways of doing the things you must do

Adopting the language of achievement and using it all the time We choose out personal worlds by the words we

choose to describe them Try using positive language to support your

positive thinking, without of course being brash about it

Need a strong, continuing effort to think and talk constructively

Planning for achievement Plan your goals in writing Set down on paper what you want to achieve in

the nest year, next month, next week Check how you are doing in meeting your stated

goals form week to week This help in stimulating you to take corrective

and more effective actions from the feedback you get and you will be enhancing your nAch

Behaving in a positive and confidence fashion Successful entrepreneurs seize

opportunities for improvement and gain by creative positive actions

Creativity and innovation underlie a major part of successful enterprise activity

Those who don’t think very well of themselves are poorly equipped to take the risk step of venturing into the unknown, which creativity and innovation imply

Learn to have confidence in yourself Have a positive self image Practice behavior aimed at building

personal effectiveness

PYSCHOLOGICAL THEORISTS PERSPECTIVE (CONT..) Extreme psychologist further suggests that:

The entrepreneur has an ability, sixth sense and instinct which is inborn

The entrepreneur portrays intuition, energy, persistence and self-esteem

Entrepreneurs according to this version are born as they have natural abilities, training cannot influence in any way

COMMENTS OF THIS PERSPECTIVE: It perpetrates the myth and

stereotypes in society related to superiority and class system and are not healthiest for development

It simply says people are not equal and it would be difficult to organize training programmes suitable for all

It can give negative attitude towards young people who might not be lucky to possess the unique abilities and traits

MANAGEMENT PERSPECTIVE

This school emphasize organisation of resources in a systematic way to attain maximum profit

Entrepreneurs are therefore organizers of an economic resource venture

They organise, own, manage and assume risks

Entrepreneurships is therefore a series of activists which focus on the central function of managing a business such as production, planning, marketing, coordinating, controlling, evaluating and financing

MANAGEMENT PERSPECTIVE (CONT..) The managerial school therefore

emphasizes on improving a persons capacity through developing his/her

Analytical Rational Cause-effect relationship Another stand of management view

entrepreneurs as leaders on people They have the capacity to adapt their

styles in order to get maximum out of people

MANAGEMENT PERSPECTIVE (CONT..) They view people as their greatest

resource and realize that they cannot accomplish goals alone but must depend on other people and their skills

Training is therefore possible by knowing how to motivate, lead and direct people

Basic questions that people who follow this school of thought would be asking themselves are:What are my plans?What are my capabilities?What are my credentials? How do I get most from the people around me?

CONCLUSION

1. All these theories provide a useful insight in understanding and explaining entrepreneurship

2. It is possible that they can complement each other in developing a rich entrepreneurial programme

3. Pre- starters can benefit a lot form psychological, social and economic schools of thought

4. Start ups and on going entrepreneurs can benefit more from management school