Entreprenuership-Theories

                        The Theories of Entrepreneurship

a)      Richard Cantilon

An entrepreneur as a person with foresight and competence to operate in conditions of uncertainty. Richard was particular about an entrepreneur being a person who performed in uncertain environments because the market demand is not perfectly predictable not necessarily that his products are untested an untried. Cantilon contributed to the contention that an entrepreneur is somebody who has foresight and confidence to operate under conditions of uncertainty.He associated risks and uncertainties with administrative decisions of entrepreneurs. He identified that profit to the entrepreneur arises out of decision making and  risk taking.

b)     John Baptise

Entrepreneurs coordinate and combine the factors of production

John described the entrepreneur as a rare phenomenon who is able to coordinate and combine the factors of production. He places emphasis on the variety of markers and inputs which the entrepreneur has to deal with “ successfully” in effect, the entrepreneur is expected to “ perceive and realize potential arbitrage” in addition to taking risks associated with uncertainty. According to say, the entrepreneur must surmount abundant obstacles, suppress anxieties, repair misfortunes and devise expedients. As a result, the entrepreneur accommodates the unexpected and overcome problems successfully in dealing both the input and consumer market.

A possible conclusion form this contention is that the entrepreneur is a locator of resources in the adjustment process during equilibrium, during equilibrium, towards equilibrium.

c)      Carl Menger,(1950) and the Austrian School

Carl Menger and what is known as the Autrian school in economics emphasizes the locative role in directing that entrepreneurs role is that of risk taker in an uncertain environment. They added that the entrepreneur needs information and has to have the ability to analyze and use this information to make the correct decision in allocating resources.

Other followers of the Austrian school of Thought went on to add that the alertness, superior perception and leadership of the entrepreneur cause factors of production to be allocated and continuously allocated.

d)     Joseph Schumpeter (Innovation)

He in the early 20th  century provided  perhaps one of the most comprehensive analyses     of entrepreneurship within the context of economic development. He introduced the  notion that the entrepreneur is not just an allocate or director of resources, but combines inputs in untried combinations (innovator). Schumpeter asserted that the entrepreneur only remained an entrepreneur for as long as he is innovative, and losses that characteristics   as   soon   as   he   falls   into   the   routine   management   of   the   business.

Schumpeter described this process as discrete rather than constituting  a  gradualism  change  or evolution.

Entreprenuership-Culture

         The Entrepreneurship Culture

            Culture Definition

•   Culture is defined as asset of values, perceptions wants and behaviour learned by a member of a society from family and other institutions

•   Culture is a tool of leaned behavior patterns of living. It is a powerful human tool for survival constantly changing and easily lost.

•   Weber   argues   that   “Protestantism   encourages   a   culture   which    emphasizes

individualism, achievement motivation, legislation of entrepreneurial vocations, rationality and self – reliance.

•   Hosted   –   defines   culture   as   a   collective   programming   of   the   mind  which

distinguishes the member of one group or category of people from another.

        Entrepreneurial Culture

Refers to the way of embracing the concept of finding new opportunities in business and gathering the necessary resources to fill the opportunity.

•   Many governments around the world want to promote entrepreneurship because they have recognized the importance of entrepreneurship.

•   In other words entrepreneurial culture is away of people embarrassing life by participating in activities that enable then create new business   enterprises.

•   A country can develop the  entrepreneurial  culture  by  forming  policies  that  constitute  the  following ;

o    Integration of entrepreneurship training in the overall education system to tap on youths

o    Exposure of entrepreneurship those look potential to actual business practices and activities through the networks and business contacts of rule models.

o    Creation of a conducive and enabling that permits new business to emerge and flourish.

The creation of entrepreneurial culture has to come from deep social convictions based on strong values and systems of the locals

•   It should be created in away that it welcomes entrepreneurship and respects the investor and also reflecting the core   values

        What Constitutes Entrepreneurial Culture?

•   Growth in concentration of firms networks and linkages

•   Growth in intermediary organizations to which some tasks are delegated and it different form of entrepreneurship

•   High levels of education skills and learning.

         Importance of Entrepreneurship Culture

o    Enhances economic growth and building of social capital.

o    Enhances job creation

o    Acts as a primary source of innovation

o    Helps in the devolution of government power for policy implementation.

o    Direct influence development in tech. H/R capital formation e.t.c.

         The cultural habits that promote entrepreneurial development

a)             Money orientation

•   Money oriented people know the value of money and has the intention of making it.

•   The money oriented people use the need of money as a motivating factor pushing then to being entrepreneurs.

b)           Future orientation

•   A society that has foresight to know about the future  business  environment  is likely to have more   entrepreneurs.

•   This is because they are likely to visualize key changes that are likely to create opportunity.

c)              Time consciousness

• Knowledge that time exists and its importance

•   Knowing the right time to start an entrepreneurial    activity.

•   Utilization of time

•   The correct timing of the market conditions

Entreprenuership-Evolution and Government

         The Evolution of Entrepreneurship in Kenya

•   Interest in the development of entrepreneurship and small enterprise in Kenya gained momentum as a possible remedy to the stagnation of  economic  development and the escalating unemployment problem between the early 1960 and 1970s

•   Although there were attempts by the government to develop entrepreneurship, the main impetus came form the international labour organization (ILO) report.

•   The report centered on the potential of the informal sector and suggested that the bulk of Kenya’s urban workers were self –employed in small enterprises.

•   The report proposed that the development of this sector could;

i)                   promote employment

ii)                 facilitate  development

iii)               facilitate equitable distribution of resources.

•   Based on this report the government responded with a seasonal paper in 1973 – which recognized the role  of  entrepreneurship  in  employment  creation  not  just in the formal sector but also in the formal   sector.

•   Subsequent development plans have devoted time to the development of strategies and to promote small-scale enterprises and entrepreneurs which include.

o    The industrial estate  programme

o    Establishment of development agents e.g ICDC and  KIE

o    Policy and institutional framework to promote entrepreneurs.

o    Promoting indigenous Kenyan enterprises.

Entreprenuership-Innovation

            Entrepreneurship and Innovation

                        Definition

•   Innovation or creativity or novelty refers to the process of devising a new idea, or thing or improving an existing idea or thing.

•   Innovation like all human activities has a cost as well as benefits

•   Innovation turns new concepts into realities, creating wealth and power.

•   Innovation can also disrupt the status quo. E.g computerization i.e Creative destruction.

•   Creative destruction occurs when innovations make long-standing arrangement absolute and frees resources to be employed else where leading to greater economic efficiency.

         Reasons for Opposing Innovation

i)    The entrepreneurs tend to have a practical concern that unforeseen innovation may cause a disaster e.g side effects e.g of a drug.

ii) Fear of loosing profits in the event innovation does not translate to the expectations.

iii)    Where the entrepreneur held a monopoly position in the market, there is fear of losing authority and control.

iv)    Fear of upsetting the moral and social value of demand for the product.

v)     Desire to preserve the existing market   confidence.

vi)    Fear of upsetting tradition in production management and market scope.

vii)   Fear of opening a loophole to competition hence lose of business grip.

         Reasons for Innovation

•   Innovation is essential for the entrepreneur in solving the  inefficiency  problems.

• As a means of cost reduction and imposing significance social and market grip.

•   Profit improvements are looked at from the innovation point of view though newer technology in management and production.

•   To encounter competition by already established businesses.

•   To facilitate opening up of new markets both locally and internationally.

•   To facilitate diversification of products risks and losses.

•   To protect current position of monopoly or    success.

Entreprenuership-Characteristics of an Entreprenuer

         The Characteristic of a Potential Entrepreneur.

a)   Initiative and risks taken by;

•   Doing things before being asked or forced by events

•   Acts to extend business in to new areas products    etc

•   Sees and acts on  opportunities

•   Looks for and takes action on opportunities.

•   Sees and acts on new business opportunities

a)             Persistence and patience through

•  Taking repeated action to overcome   obstacles

•   Taking action to overcome   obstacles

• Taking action in the face of significant obstacles.

b)           Information and property seeking

•   Takes action on his own to get information  to  help  reach  business objectives

•   Does personal research on how to provide a product or service

•   Consultation of experts on business and technical advice

•   Asks questions to clarify information

•   Undertakes market research analysis and investigation.

c)              Concern for high quality work by

•   Acting to do things that meet or beat existing standards

•   A desire to produce and sell top and better quality products or services

•   Compares own work favorable to other.

d)           Commitment to work contract by

•   Placing the highest priority on getting the job completed.

•   Accepts full responsibility for problems that may arise in getting the job done

•   Expresses concern  on  customers satisfaction.

e)             Efficiency orientation by;

•   Finding ways of doing things faster and cost effectively

•   Uses information to improve efficiently.

•   Express concern on  costs improvements  change  etc.

f)               Systematic planning

•   by developing and using logical plans to meet goals

•   breaking tasks down to  sub-tasks

•   developing plans which anticipate obstacles

•   evaluates  alternatives

• takes logical and systematic approach to activities

• identifies new and potential unique ideas to reach goals

•   Switches to alternative strategies to reach   goals.