• Subject Name : Entrepreneurship

Business and the Entrepreneur

Introduction to The Importance of Entrepreneurial Competencies

The theory of opportunity recognition elucidates the process of how individuals, businesses find new opportunities that were earlier not known to them. The traditional microeconomic theories assume that agents have full information about the market and that aware of all the actions that would maximize their utility along with a better understanding of the alternatives that are available subject to the constraints subject to the constraints (Augier, 2018). The critics of this theory signify a situation where the knowledge is truly dispersed, the agent has no information about the other respect or a truly unknown opportunity, and these opportunities can be entirely overlooked however they may be present.

Opportunity recognition theory emphasizes identification, recognition, analyzing, and exploiting an opportunity. The entrepreneurs' ability to identify an opportunity may depend on various factors namely perception cognitive abilities, prior knowledge of the net to work in entrepreneur belongs to, and potential net gain that is a result of disequilibrium. The entrepreneurial opportunities are those situations wherein new goods, raw material, services can be produced or organizational methods can be established and can be sold at a higher price than the cost of producing it. A good business opportunity is one that is when recognized by an entrepreneur fits the market needs and can be produced with available resources.

Large Corporations

According to the study of Khin and Lim (2018), opportunity recognition and exploitation are important characteristics of an entrepreneur to convert a potential opportunity into a successful business however without proper exploitation an entrepreneur will not be able to produce the financial or non-financial benefits from direct from the recognized opportunity. The world-renowned companies like Facebook Uber, Airbnb, and Alibaba are examples of entrepreneurship opportunity recognition and discovery. These famous organization founders use a digital platform to connect with people and capture the market. Google spends a huge amount in start-up communities mainly seeking innovative potential. Amazon is investing in infrastructure and has taken up many programs such as Amazon handmade, Launchpad, Storefronts, etc. to support the small businesses) since they understand that small business provides bigger opportunities. On average, in an Amazon store, the small and medium business sells more than 4,000 products per minute. The entrepreneur can establish a delivery business with amazon with an investment capital of less than $10,000 (Amazon, 2019).

Small Business

As per the study of Guo, Tang, Su, and Katz (2016), there is a positive relationship between the performance of Small and Medium Enterprises (SME) performance and the opportunity recognition; this can be associated with business model innovation. This was supported by another study by Bagheri (2017), the entrepreneurial leadership emphasizing innovation has a significant impact on the opportunity recognition in high-technology SMEs. Sandbox VR is an interesting example of SME entrepreneurship, it started with an investment lower than $ 1 million with a team size of 7 (Sandbox VR, n.d.). The brick and mortar retail Sandbox became the no. 1 activity of Trip Advisor in Hong Kong. The business wasn’t a success in its initial time but when the virtual reality experience gaining attention, the demand boosted in no time, and ever since then there has been no looking back.

Role of Women Entrepreneurship

Women play an important role in the economic growth of a nation however much of the research done earlier focuses on male entrepreneurs. Women in society and even in family business face constraints. Men are supported more in terms of the level of education, work experience as well as social networks. Women entrepreneurs have different motivations to balance family and work life. However, women are breaking shackles and have shown how women entrepreneurship can boost the diversity in the global economy; this is caused by the increasing contribution of women in the family business (Women Entrepreneurship in Family Business, 2017).

Entrepreneurial Competencies

As per Lim & Xavier, 2015, Competencies required by entrepreneurs for setting up a business are Alertness, Prior knowledge, Social Network, and Business Performance. This was recognized by Mitchelmore and Rowley (2013), the competencies of an entrepreneur can be classified into four categories, these are, personal and relationship, entrepreneurial, human relations, and business and management competencies. Personal and relationship competencies are associated with the abilities of an individual to negotiate and maintain a good social network, this helps to develop long-term trust and loyalty with others. Moreover, business and management competencies comprise the ability of an individual to manage the business efficiently and pertains to activities such as finance, budgeting, Business planning, and business administration. next is human relation competencies, this is the combination of strategically managing the business as well as human relations, comprising, development of human resource management, and its associated activities with an emphasis on leadership and motivation. Last but not least the entrepreneurial competencies pertain to the abilities of an entrepreneur to innovate, create and recognize opportunities and analyze its strengths and weaknesses.

According to a study by Behling and Lenzi (2019), there are 10 essential competencies of that a large number of entrepreneur possess and these are persistence, commitment to the work contract, Information seeking, goal setting, systematic planning and monitoring, persuasion, and networking, independence, and self-confidence, opportunity-seeking an initiative and calculated risk-taking. Of these 10 competencies, persistence and commitment to work that was possessed by the largest group of the individual micro-entrepreneurs and the least importance can be given to Cacluclated risk-taking and goal setting.

Top Five Competenciees

In my opinion, the top five competencies that are required by an entrepreneur are alertness., Vision, business management skills, Leadership, and Persistence. Alertness is necessary Entrepreneurial competency that supports the exploration as well as the exploitation of any opportunity; alertness helps an individual to identify the opportunity that was not known earlier. It is a must for an entrepreneur to have a vision for the company and its future, vision provides a direction to the business. The vision helps to ensure that all the activities are in accordance with the set objective of the business, variations can be measured and Corrective actions can be taken. The business management competency of an entrepreneur will help to optimally utilize the scarce resources, profit maximization, and cost minimization. An individual with business management competency will be able to analyze the risk such as economic, people, market, technical, strategic, financial, and political and streamline these risks to get the best and maximum possible return, synchronizing with industry, expanding productivity, and managing finances. Leadership is an important competency of an entrepreneur that is necessary in order to sustain, as Leadership comprises of organizing and motivating people to attain a common objective by exercising innovation, risk management, monitoring the External and internal environment, and managing the organization efficiently. Last but not least is an essential competency of an intrapreneur is persistence; the entrepreneur has to continue to maintain a positive outlook, demonstrate confidence in the business idea, promotes active engagement in the business venture, even When there are other alternatives available. In order to sustain in the long run, the entrepreneur needs to manage all the aspects of business both internal and external environment to combat any issue that arises. Moreover, persistence provides for determination.

Role of Small Business in The Entrepreneurial Process

Small business has led to the instigating of new business in an economy which has contributed to economic prosperity over the years (Ribeiro- Soriano, 2017). The small business has supported innovative capacity across many regions and has positive spillover effects in the region that results in job creation, poverty reduction, and development of the area. Entrepreneurs establish a way to connect cultures, policy contexts, economic conditions, and political situations that vary across regions. Entrepreneurial competencies have a significant effect on the performance of the Small, Micro, and Medium Enterprises (SMME) that were owned by women (Zizile & Tendai, 2018). These competencies supported the establishment and ensure the survival of SMMEs in East London. In South Africa, SMMe contributed highly to the development of the nation providing employment and pushing the GDP of the nation. There is a positive relationship between the competencies of an entrepreneur and the strategies of the organization, this is the result of the abilities of the individual to formulate higher quality strategies that enable them to perform better.

Small Business in The Economy

Small business is essential for an economy; however, survival is much lower as compared to the medium and large enterprises. According to the study by (Makarenko, Chernysheva, Polyakova, and Makarenko (2019), most of the small businesses go down in the first year and a very small proportion expands their activities and crosses the five years benchmark. The small firms cannot sustain in the first year as they lack resources, coordination, legitimacy, etc. The larger farms have an advantage as they can easily capture economies of scale and provide goods to a larger market and at a reduced price. The success of the small business depends on the ability and capabilities of the entrepreneur to transform business. The success factor that foster growth in the small scale business is the energy of the entrepreneur, that is, the motivation and desire to grow and the development business, in addition to this, the ability to take risk of the entrepreneur will define the returns to the businesses. For an entrepreneur to make his or her business successful, one has to focus completely and immerse them in the business, along with a deep understanding of the business process is required to ensure the survival of the business.

Although resources play an important role in the expansion of business, however, increased focus is now on expanding corporate entrepreneurship as it improves the performance of an organization by stimulating proactive and risk-taking behavior (Tseng & Tseng, 2019). In this rapidly evolving environment, organizations need to expand the innovation process and have to promote the creative abilities of their employees. In order to minimize the impact of the rising number of competitors, the organization needs to undertake strategic approaches to increase corporate entrepreneurship and promote internal innovation performance.

Process of Setting up A Small Business

According to Small Business Administration (n.d.), the process of establishing a small-scale business comprises of steps from planning to setting up of the business. The first step is to conduct market research so as to understand if the selected opportunity is viable. Next is writing a business plan which will incorporate the structure, plan, and vision of the business. The next step would be to acquire the funds, one needs to decide if the business will start by raising funds or by borrowing the capital. It is essential for the entrepreneur to select the location since it will impact all the other aspects such as taxes, legal requirements as well as revenue. The next step for an entrepreneur is to select the structure of the business, this will provide the individual to understand the requirements of the business. Selecting a name or a brand that will capture the spirit and which is not been used earlier will be an important step in starting the business, then comes registering the business or the brand. Then the next step would be to get the employer identification number, the tax IDs, licenses, and all the permits and lastly opening the business bank account to handle the day to day expenses and revenues. The business will be registered and now the focus is on administrating and expanding the business.

Conclusion and Recommendations on The Importance of Entrepreneurial Competencies

Entrepreneur provides a climate that is essential for efficient use of resources. In this fast-paced dynamic world, the firm needs to remain alert as well as responsive to the changes in technology in order to grow and survive. Organizations need to work on aligning their strategic approach with the innovation process so as to gain higher economic value and attain a first-mover advantage. Corporate venturing as well as strategic entrepreneurship needs to be emphasized. Entrepreneurship promotes growth both at micro and macro-economic levels, hence the emphasis should be on supporting the women entrepreneur and encouraging the role of the small enterprises. Policymakers should specify policies to support the environment of innovation and entrepreneurship since entrepreneurship can provide an economy with various benefits such as a rise in productivity, employment opportunities, and regional development and have other positive externalities. 

Reference for The Importance of Entrepreneurial Competencies

Amazon. (2019). Amazon impact report. Retrieved from https://d39w7f4ix9f5s9.cloudfront.net/61/3b/1f0c2cd24f37bd0e3794c284cd2f/2019-amazon-smb-impact-report.pdf

Augier, M. (2018). The Palgrave encyclopedia of strategic management. United Kingdom: Palgrave Macmillan UK.

Bagheri, A. (2017). The impact of entrepreneurial leadership on innovation work behavior and opportunity recognition in high-technology SMEs. The Journal of High Technology Management Research. 28(2), 159-166. https://doi.org/10.1016/j.hitech.2017.10.003

Behling, G. & Lenzi, C. F. (2019). Entrepreneurial Competencies and Strategic Behavior: a Study of Micro Entrepreneurs in an Emerging Country. Brazilian Business Review, 16(93). https://www.scielo.br/scielo.php?script=sci_arttext&pid=S1808-23862019000300255#t2

Guo, H. Tang, J, Su, Z. & Katz, A. J. (2016). Opportunity recognition and SME performance: the mediating effect of business model innovation. R & D, Wiley Online Library, 47 (2). https://doi.org/10.1111/radm.12219

Khin, S. & Lim, H T. (2018). Entrepreneurial opportunity recognition, exploitation, and new ventures success: moderating role of Prior market and technology knowledge. International Journal of Entrepreneurship, 22 (4). https://www.abacademies.org/articles/entrepreneurial-opportunity-recognition-exploitation-and-new-venture-success-moderating-role-of-prior-market-and-technology-knowle-7793.html

Makarenko, E.N., Chernysheva, Yu.G., Polyakova, I.A. & Makarenko, T.V. (2019).the success factors of small businesses. International Journal of Economics & Business Administration, 0(2), 280-288. https://www.um.edu.mt/library/oar/handle/123456789/51562

Mitchelmore, S. & Rowley, J. (2013). Entrepreneurial competencies of women entrepreneurs pursuing business growth. Journal of Small Business and Enterprise Development, 1(11), 125 -142. http://genet.csic.es/sites/default/files/documentos/biblioteca/Mitchelmore%20Growth%20and%20planning.pdf

Ribeiro- Soriano, D. (2017). Small business and entrepreneurship: their role in economic and social development, Entrepreneurship & Regional Development, 29, (1-2), 1-3, DOI: 10.1080/08985626.2016.1255438

Sandbox VR (n.d.). How I nearly killed my company and spent my life-savings building the holodeck. Retrieved from https://medium.com/sandbox-vr/how-i-nearly-killed-my-company-and-spent-my-life-savings-building-the-holodeck-4e51b31016cf

Small Business Administration. (n.d.) 10 steps to start your business. Retrieved from https://www.sba.gov/business-guide/10-steps-start-your-business

Tseng, C. &Tseng, C.-C. (2019). Corporate entrepreneurship as a strategic approach for internal innovation performance. Asia Pacific Journal of Innovation and Entrepreneurship, 13 (1), 108-120. https://doi.org/10.1108/APJIE-08-2018-0047

Wei Lee Lim, Siri Roland Xavier, Opportunity recognition framework: Exploring the technology entrepreneurs. American Journal of Economics, 5(2), 105-111. DOI: 10.5923/c.economics.201501.10.

Women Entrepreneurship in Family Business. (2017). United Kingdom: Taylor & Francis.

Zizile, T. & Tendai, C. (2018). The importance of entrepreneurial competencies on the performance of women entrepreneurs in South Africa. The Journal of Applied Business Research, 34 (2), 223-236. DOI: 10.19030/jabr.v34i2.10122

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