Critical Review of the Characteristics of an Entrepreneur

Introduction

Before digging into values of an entrepreneur, it is important to note the entrepreneurship. In defining entrepreneurship, one can state that it is the process of designing new businesses. Entrepreneurship processes takes place in diverse facilities. Entrepreneurship takes place in non-profit, Profit as well as social organizations. Intrapreneurship on the other hand is a theory related to an individual behaving like an entrepreneur while working in a large organization (Paliwal, 2015). In relation to the above information, an entrepreneur is individual willing to take risks in the business environment.

These individuals are willing to take initiative of the business opportunities, wiling to plan in addition, organize business ventures. Entrepreneurs are important users of available resources in the business environment. The most important feature of these individuals is that they are able to innovating products as well as improve existing ones. There are various categories of entrepreneurs. These categories include knowledge, political and social entrepreneurs. The practice of self-employment is an important aspect in careers of workers (Paliwal, 2015). Most of the workers have had a period of self- employment in the careers. This therefore shows that entrepreneurs are important economic drivers in the economy.

Thoughts of entrepreneurs

Entrepreneurs in the market may represent individual persons, corporations as well as in part-time ventures. In order to encourage entrepreneurship it is important to understand the thoughts of entrepreneurs. Understanding such individuals would encourage entrepreneurship ideologies and activities in the economy. In relation to the thoughts of entrepreneurs, location counts a lot. Most of the entrepreneurs in the business environment consider funding as important as location (Forbat, 2007). The other aspect of consideration is networks of businesses. Education is another important aspect in entrepreneurship. Most studies approve that education plays an important role in the success of entrepreneurs.

Another important thought of entrepreneurs is their perception on sources of capital. Most entrepreneurs consider personal savings as basic financial base. These individuals put trust on the assistance of friends and family in funding their ventures (Marchand & Hermens, 2015). Considering venture capital in the business environment, entrepreneurs argue that venture capital favours established firms. Another basis for thought for entrepreneurs concentrates on hard work and risk. Successful entrepreneurs attest that risk is an important consideration in any business undertaking. They argue that the business environment includes various uncertainties (Rivera-Santos et al 2015).

Therefore, while undertaking business activities individuals need to guard against such uncertainties. There is also need to provide a margin for error. Entrepreneurs, further argue that hard work is an important aspect for success. To fight competition in the market entrepreneurs need to move beyond norm (Marchand & Hermens, 2015). Their activities need to be above normal functions; explaining the importance of hard works in any venture. According to these individuals, challenges are seen as opportunities.

In their business functions, entrepreneurs undergo various setbacks. Instead of avoiding these challenges, entrepreneurs take such setbacks as business opportunities. Entrepreneurs see their competitors as industry study subjects. Instead of perceiving competitors as threats, entrepreneurs study competition as a report for future growth (Rauch & Hulsink, 2015). Their perception on perfection is that perfection is a threat to development. They argue that there is always room for improvement. The other thought of entrepreneurs is that outside influence is not important; discipline is another aspect of importance to entrepreneurs.

Theories of Entrepreneurship

Knight Theory

There are various theories that researchers have come up with concerning entrepreneurs. These theories have been instrumental in providing various philosophies about entrepreneurs. The first theory in consideration is the risk- bearing theory. This theory came into consideration after Knight’s formulation. The foundations of the theory came from early theorists. In relation to the contribution of the theory, Knight states that entrepreneurs are risk takers in the market. According to the theory, uncertainty seems to be an important factor of production.

For example, the owner of Starbucks is a risk-taking entrepreneur. Despite the fact that his franchise faces stiff competition in Northern America, he has been able to open over 1600 branches thus increasing his horizon. This shows that entrepreneurs need to assume uncertainties in their operations. His taking of risks needs to be in a level that protects other stakeholders from failures. Further Knight is able to distinguish between risk and uncertainty. According to his interpretation, an entrepreneur may insure risk influences. However, uncertainties are uninsurable (Agbim, Oriarewo, & Zever, 2014). Examples of uncertainties include natural calamities. He points out that entrepreneurs need to exercise specific judgement against these influences. Knight states that entrepreneurs are owners of companies. This thereby means they are owners of profit.

In order for such entrepreneurs to meet such profits, they must consider certain aspects. The aspects of consideration are; the entrepreneur needs to consider innovation of products. He must be able to shield stakeholder by assuming the consequences related to taking risk. Another aspect of consideration relates to the ability of the entrepreneur to adapt in the environment of operation. In summary, the entrepreneur earns profit in form of a reward for taking risks in the environment.

Sociological theory

According to this theory, the influence of entrepreneurship depends upon cultural factors. In this respect, an entrepreneur conforms to the role of the society. For example, Atlantic Airlines had to conform to the needs of its customers to provide daily flights. Other social aspects that might have an influence on the performance of entrepreneurs include taboos, customs and religious alignments. Max Weber further places emphasis on the influence of religion on entrepreneurship.

He stresses that Capitalism thrives best in places with protestant beliefs. This is because according to this faith there is need for individuals to have private business enterprises and have freedom of performance. In the foundation stage of firms, entrepreneurs make a choice on the formation of firms. The firms may be formed under sole ownership or in teams. Before teams come into formation, various aspects need consideration (Repapis, 2011). Teams may be formed with respect to people choosing individuals with similar characteristics. One might find a team formed based on racial background or on gender. Other teams come into formation depending upon possession of skills by other team members.

The other factor of consideration in team formation concerns aspects of opportunity structures. Such teams rely on the principles of give and take. This means that formation of such teams depends upon team members aiming for financial gains from such transactions. Members in such teams need to have been present since its inception and must hold some value of equity (Slavec, A, & Prodan, 2012). The unique aspect of such teams as opposed to having single owners is the sharing of risk. On the other hand, team members in the firm share responsibilities. Decision- making processes takes place between team members.

Casson Economic Theory

According to the economic theory, entrepreneurship stems from the presence of conducive-e economic conditions. He further states that the demand for change seem to be driving for entrepreneurship. According to him, various forces have an influence in promoting the theory. Industrial, taxation policy, availability of raw materials; market opportunities, availability of technology and market conditions can influence entrepreneurship (Bostaph, 2013).

Casson’s definition further defines an entrepreneur as an individual able to make decisions concerning utilization of scarce resources. This means that an entrepreneur needs to be a specialist. Imagination is the most important aspect for any entrepreneur. They need to manage business activities as well as in execution of projects. In the management of organization activities, certain skills need to be available. An entrepreneur needs therefore to seek for such skills from other individuals.

The employing of various skills to organizations provides diverse benefits. This then might force the entrepreneur to be able to delegate activities within teams. He further argues that such individuals are market makers. They are responsible for setting up institutions and market for their goods and services. Casson argues that markets come because of human activities (Bostaph, 2013). The main obstacle for such markets is lack of information. There is need for entrepreneurs to have excellent bargaining skills. According to his theory, profits refer to earnings since entrepreneurs perform their functions in the market.

Schumpeter’s Innovation Theory

According to this theory, an entrepreneur has the following qualities; foresight, creativity and innovation characteristics. These aspects become prominent if an entrepreneur creates a new product. The other aspect of consideration for such entrepreneurs is their ability to reach new markets with products (Kurtakko, 2014). Further, if an entrepreneur is able to organize activities and find new products the theory come to its completion. According to Schumpeter’s theory, the entrepreneur is not interested in profits (Becker, Knudsen, & Swedberg, 2012).

The need of such a person is to provide goods that satisfy the society. Such innovations in the market have the ability of moving the market from static representation. It is not necessary that the entrepreneur may have the creation of all combination (Kurtakko, 2014). However, such individuals have the ability to create the combinations that meet market demand. This process of “creating uncertainty” by the researcher provides aspects of economic development. Schumpeter’s theory however ignores the aspects of risk taking as well as skills of organization. The other aspect of consideration is its applicability in large-scale companies (Yang & Danes, 2015).

Kirtzer’s Theory of Entrepreneurship

According to this theory, the concept of entrepreneurship relates to alertness and constant learning. According to the aspect of alertness, the researcher states that it is necessary for one to be alert to recognise opportunity. According to his model, these aspects come to consideration; Entrepreneurs borrow from capitalists to fund ventures (Kurtakko, 2014). An entrepreneur might recognise an opportunity by buying products and selling the same. Another venture might be producing goods and services as selling it in the market. The promoter of the theory argues that the market is in disequilibrium.

It is only through the alertness aspects of entrepreneurs that the economy comes to its equilibrium. Kirtzer argues that change in production has an influence in the equilibrium of the market. Shifts in preference also have an effect on the equilibrium. Provided the market is in it equilibrium, entrepreneurs might not receive profits. In case there are changes in market, entrepreneurs will change production to meet the shortfall. This therefore provides no room for innovations. This means that the market is always in constant change. The theory answers this influence by stating that only alert entrepreneurs have the means of overcoming such changes. The theory illustrates elimination of disequilibrium in the market by use of alertness. He further argues that entrepreneurs might not get profits beyond the break-even- point. This is because the economy faces various uncertainty that influence profits.

Cantillon’s Theory

According to Cantillon’s theory, the value of an entrepreneur is not his production function. The most important aspect of such an individual relates to his ability to be a risk taker. This value of risk taking in the economy assists in balancing the supply and demand functions within firms. The market of factors of production in the economy is uncertain. This then provides certain aspects of uncertainty that affect business decisions. As we have deliberated that entrepreneurs are specialist in taking risks, they insure workers risks by buying their services.

Before making their final price to consumers, entrepreneurs buy the services of workers. This means that they face the risk of price fluctuations in the market of consumers. There is need for such individuals to understand if risks involved in the business falls under certainty of risks or uncertainty. In controlling such risk influences, entrepreneurs may pool them or include a third party. The individual may “lay off” the risk and handle risks with uncertainty.

Shakle Theory

Shakle provides that individuals be after choices. He specializes in the concept of probabilistic reasoning. In his theory, the researcher states that it is upon the choice of an entrepreneur to make a choice about the future now. According to this representation, entrepreneurs make decisions based on their imagination of future outcomes. This form of decision-making does not depend on some particular notions in the market. It depends upon an unknowledgeable future.

One might know the product now but future eventualities of the product may vary to some extent. Investors are further unable to gauge the amount of resources to use in the development of such products in the future. Shakle is probably the most interesting theorists. In this theory of entrepreneurship, he chooses imagination over choice. This illustration is closer to truth than that of other scholars.

Hayek Theory

Hayek theory on entrepreneurship depicts aspects of capital to details. The economy according to the researcher depends upon tacit knowledge. The other important feature relates to competition. According to Hayek, an entrepreneur’s environment comes under the characteristics of competition, which provides a basis for equilibrium (Repapis, 2011). In his research, the scholar does not provide a distinction between a businessperson and an entrepreneur. He provides an analysis of the process rather than equilibrium. In his analysis, entrepreneurs see opportunity at the period of disequilibrium (Tucker, 1988). Therefore, competition between entrepreneurs will eventually bring the market prices into equilibrium. This will only happen market information does not change. Hayek Emphasis concentrates on mutual learning and knowledge within markets.

Characteristics of Entrepreneurs

Knowledge

Throughout history, researchers have provided various characteristics of entrepreneurs. The most important aspect of entrepreneurs relates to knowledge. Successful entrepreneurs need to have current market trends and price fluctuations. It is also imperative for entrepreneurs to have knowledge on the consumer market. This knowledge would be effective in branding of products as well as marketing. Knowledge is also important in the development of new products. Through research and designs, entrepreneurs might be able to develop products that meet market needs. Knowledge is also important in understanding competitors (Casson & Wadeson, 2013). By understanding competitors firms may be able to better brand their products, market and in product innovation. Their goal is to define particular problems that affect a society. After defining the societal problems, these individuals formulate various solutions. The world today consists of many social organizations. Constant research is necessary to ensure quality and tilely delivery of goods and services.

Self-Employment Mentality

For most of successful entrepreneurs, the aspect of self-employment mindset needs to be in born. An entrepreneur is not an individual who would be happy to relinquish his freedom to a boss. The individual wants to be in total control of their lives. However, it has been a case that many entrepreneurs operate business personally (Chuanyin, 2014). In most occasions, such enterprises face various challenges. It is advisable that such individuals enter into partnership since there is a share in responsibility between partners.

Managerial Skills

Managerial skills are an essential part for successful entrepreneurs. Managerial skills relate to the perception where many individuals in the managerial positions misconceive certain aspects. It is a misconception of many that if an organization is failing, hiring of more workers provides the solution. Entrepreneurs need to understand that the bigger the organization does not translate to more results. An increase in employees in organizations may provide negative implications rather than promote growth (Širec & Močnik, 2010). A huge amount of profitability would go into paying workers in place of investments.

Self- Confidence

Entrepreneurs need to have a high degree of self-confidence. Entrepreneurs as stated are individuals who value their autonomy. These individuals wish to be their own boss. It is therefore imperative that they have self-confidence. Their levels of self-confidence need to surpass competition. They need to advertise their products with much zeal (Širec & Močnik, 2010).

Innovation

Successful entrepreneurs in the market need to be innovative. These individuals’ innovation does not necessarily relate to product development. The other aspects of innovations include branding, marketing as well as advertising. Innovation relates to the development of new idea. With such influences in the market, entrepreneurs are able to sell product to diverse preferential market (Peiris, Akoorie, & Sinha, 2013). The marketing as well as advertising ideas might be important in entering new markets.

Entrepreneurial Investor

The Purposes of Entrepreneurship is to gain profit. Following this, it is important for entrepreneurs to be able to manage money. Investing in these organizations might mean investing for maximum returns. An investor might be able to invest in other branches within the locality. If the entrepreneur is not able to manage this function on their own, employing financial managers might be an important goal (Slavec, A, & Prodan, 2012).

Good Communicator

Successful entrepreneurs recognize the importance of human resources in their investments. Whether the human resources include clients, workers or other stakeholders, effective communication is important. Communication is a formidable element in human interaction. Entrepreneurs need to understand how to utilize various communication tools. The mode of communications may be written, face-to-face and other technology.

Team Player

Entrepreneurs need to be team players. These individuals need to utilize teams for their own profitability. Teams assist in implementing projects with the supervision of entrepreneurs.

Dedicated

Entrepreneurs need to dedicate their time and efforts in achieving company and personal success. They need to dedicate themselves in fulfilling their dreams, visions and aspirations. The main reason that make businesses fail is the lack of meeting targets. Entrepreneurs need to clarify their goals, define objectives or even refine brands. These individuals need to act beyond their normal calling.

Optimistic

Entrepreneurs need to have a positive outlook in their business. These investors need to learn from past mistakes and move forward. Entrepreneurs need to relegate past shortcomings, mistakes so that they may not interfere with present efforts (Širec & Močnik, 2010). When business prospers, it provides hopefulness to entrepreneurs. Entrepreneurs need to be risk takers.

Social Entrepreneurship

Social entrepreneurship refers to utilization of business techniques to solving social problems. The concept applies to various organizations in various forms and sizes. The difference between typical entrepreneurs and social entrepreneurs is on their views of profitability. Social entrepreneurs see the benefit of their investments on the society. On the other hand, typical entrepreneurs measure their success on their benefits on profits (Širec & Močnik, 2010). The goal of social entrepreneurs is to promote cultural, social as well as environmental goals. There are many categories of social entrepreneurs.

Modern definitions of social entrepreneurs include environmentalist, social activists as well as philanthropists. A closer look at the definition of social entrepreneurs reveals that social innovators fall in the same branch. Modern day social entrepreneurs target the needs of the society (Agafonow, 2014). Their goal is to transform basic social capital to meet certain needs. It is the intention of social entrepreneurs to look at immediate social impacts (Rivera-Santos et al 2015). However, their views provide basis for future adjustments. Their goal is to define particular problems that affect a society. After defining the societal problems, these individuals formulate various solutions. The world today consists of many social organizations. These organizations; creations of entrepreneurs captures the need of various societies (Zaefarian, RTasavori, & Ghauri, 2015).

Types of Social Entrepreneurs

There are various types of social entrepreneurs in the society. They fall under different categories depending on their economic climate and situations. The first type of organization is the leveraged Non-Profit organization. This type of venture places resources in order to solve social needs. Their most important goal is to use available resources in order to solve a specific need (Dobele & Pietere, 2015). In conception of this design, one can learn that it is the most traditional method of social advantage. However, in today’s environment there has innovative ways in depicting Leveraged Non-Profit organizations.

The Next Category of organization is the Hybrid Non-profit organizations. This organization is able to utilize its operations to sustain operations. The purpose of these organizations is to support market failures and various governments’ operations (Ostetska & Berezyak, 2014). The other important type of social organization is the social business venture. These models are essential in creating changes through social means (Dobele & Pietere, 2015). Such kinds of organization arise in a society due to lack of funds. In order to solve societies problems, these organizations became profit ventures.

Conclusion

There is no one single theory that defines an entrepreneur fully. In order to understand the value of an entrepreneur, there is need to understand the values of decision makers. Respective theories try to reconcile various aspects of entrepreneurs. An entrepreneur needs to have contributory educational background. They need to be able to analyse market risks and ways of overcoming such risks. Capital is an essential item in success of business. Entrepreneurs source of capital include personal savings as well as from other organizations. Over years, various theories of entrepreneurship have come to fore.

These theories include Cantillon’s, Hayek, Shakle, Kirtzer’s, Schumpeter’s Innovation, Casson Economic and Sociological theory. These theories provide various perspectives on the characteristics of entrepreneurs. When one comes to the essential characteristics of entrepreneurs, various aspects come into discussion. Entrepreneurs need to have essential managerial skills, they need to be team players and dedicated. In response to the study of entrepreneurs, one needs to look at various types of entrepreneurship. This paper looks at social entrepreneurship in detail. It defines a social entrepreneur as an individual who focus on providing needs according to societal demands.

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