This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
An appropriate and effective system to measure the performance and skills of successful entrepreneurs for growth in small businesses has become an issue of mounting concern for not only practitioners, but also for academics (Storey and Greene, 2010). Entrepreneurship is a meticulous type of mindset, a unique way of dealing with the world, a creative kind of adventure and the ultimate realization of self fulfillment and self recognition (Ma and Tan, 2005). Numerous researchers (Strebler, 1997; Jennings and Beaver, 1995; Politis and Gabrielsson, 2009; Mitchelmore and Rowley, 2010) have recorded and criticized the shortcomings and errors of entrepreneurship which has led to failure in small businesses. Day et. al., (2006) condemns that there are some root causes that can be identified. Some symptoms of the failure can be detected as entrepreneurs tend to confuse it with root causes.
Though "entrepreneurs" have hit scores of different definitions, this literature review uses it to refer to individuals who manage small businesses in order to expand with their entrepreneurial skills and capabilities to achieve their targets for successful growth (Gray, 2002; Burns, 2001). Entrepreneurs, in early epoch, were seen as small business owners or managers, who merely stay ahead of their competitors through resistance to change in innovation, products and processes (Gray, 2002; Schumpeter, 1934, 1949). Research and practice related to entrepreneurial competence is driven by objectives to achieve superior performance (Spencer and Spencer, 1993). Scholars and researchers further investigated that Management skills and Entrepreneurial skills, both are required for the successful business growth (Churchill and Lewis, 1983). Some suggest that managerial skills are necessitated to grow the business and entrepreneurial skills are required for the start up of the business (Mitchelmore and Rowley, 2010).
Alstete (2008) outlines the fact that successful businesses are built and led to ensure profit maximization by combining different elements effectively that is the ability of the entrepreneurs to seek and utilize resources efficiently. Hence, it leads to financial efficiency and better competitiveness skills which show in developing revenues, customer base and market share. .
Entrepreneurs often require skills of economic risk taking propensity. Further studies proved that examining tolerance for ambiguity, which is a concept recounted to risk taking, that entrepreneurs have a greater degree of tolerance than managers in unpleasant, challenging and complex situation (Carter and Evans, 2006). In similar studies Rose et. al. (2006) and Ray (1986) located that entrepreneurs are more than willing to relinquish job security and take specific risks in order to gain superior performance. In conceptual work Day et. al., (2006) argues that the concept of risk is taken in order to focus on likelihood of a new venture failing and likelihood of missing out on a strategic opportunity. It is golden rule of business that states "higher the risk, higher the profit". Famous entrepreneur, John Baldwin states that "Entrepreneurs who have tried and failed are part of the risk taking economy, but it is not necessary to accept the current failure rate as normal".
There are many factors delineated by researchers that affect on success and not a minor is the personality of an entrepreneur (Aldrich and Zimmer, 1986). In researches and literature several personality traits were uncovered to have a statistically significant relationship with the motivation to grow, skills and growth strategy in an organization (Carter and Evans, 2006). Therefore, one critical factor to success is Innovation which is seen as the basis of economic growth and brand's absolute requirement. Additionally, Gray (2002) argues that growth seeking entrepreneurs are more buccaneering and profit oriented when starting the business. Hence, new business opportunities are more essential to them than others.
One of the most popular skills pointed out by Shonesy and. Gulbro (2004) associated with entrepreneurs is 'Need for Achievement' which is closely related to the risk taking concept and the perceived level of competence. According to Carter and Evans (2006), entrepreneurs with high need for achievement skills make them suitable to create ventures. It has been proposed that such individuals enhance and choose to take up situations characterized by individual responsibility, risk taking as a function of skills, knowledge of results of decisions and anticipation of future possibilities (Alstete, 2008). Results show that consistent validity in such competence correlates significantly with entrepreneurial performance, particularly growth (Miner et.al. 1994).
Studies in entrepreneurship taking the context of skills into consideration have found that the concept of 'Locus of Control' has conceived as one of the determinants of expectancy of success (Down and Warren, 2007). Entrepreneurs possessing such skills have high tendency of categorizing situations according to their underlying shared properties. Hence, such individual's perception of control affects their behavior (Ma and Tan, 2005). Entrepreneur's belief in achieving goals by one's own competency and skills is considered to have Internal Locus of Control (Down and Warren, 2007). Empirical results by Kor et.al. (2007) show that high internal locus of control personality trait tend to undertake innovative strategies in stable environment whereas their external counterparts tend to prefer low cost strategies, associated with better performance.
Additionally, competitive intelligence concept has taken over many other business concepts. Adapting the skills of competitive intelligence has been analyzed for decision making which has become an expectancy of success in the field of entrepreneurship. It has been defined by Nixon (1986) that the competitive intelligence is an unique process of consistent gauging and analysis of information in regards to the capabilities, vulnerabilities, and intentions of business competitors which is carried out by using information and other 'open sources'. It has been proved that entrepreneurs acclimatizing the skills of competitive intelligence offer approximations and accurate views of the competitors' market position, discover new markets, analyze and foresee its competitors' venerable actions (Welter and Smallbone, 2006; Scarborough and Zimmerer, 2002).
Carter and Evans (2006) strongly put forward their view that the concept of Emotional Intelligence has taken a major turn in business press in recent years. Inheriting such competency has successfully assisted famous entrepreneurs like Steve Jobs, Richard Branson, Oprah Winfrey and Jeff Bezos, to move beyond intellectual know-how and develop their emotional intelligence (Bell et. al., 2004). The key skill which is tagged along with emotional intelligence is the leadership skills. It has been said that higher level of emotional intelligence lead to better performance, hence growth. This rationalist method has been criticized as it indicates absence of emotional intelligence which can be led due to difficulty with interpersonal relationships and problems changing and adapting in the environment (Goleman, 1998; Ruderman et.al., 2001)
There is a phrase which states "Actions speak louder than words". Entrepreneurial perspective is best in their action (Ma and Tan, 2005). As noted by Venkataraman (1997), a major entrepreneurial action which can be detected under leadership is Persuasion. Persuasive skills is about convincing people, taking people to place they would and forcing the entrepreneur's vision on to others (Canty et. al., 1987). Entrepreneurs project their confidence and success via persuasive skills. McGrath and MacMillan (2000) suggest that skills to track down opportunities and resources are a good sign to success. Further studies suggest that entrepreneurs in motion in search of opportunities, relying on different resources reflects an intuitive entrepreneurial response which states "God helps those who help themselves" like Gates and Co. of Microsoft, who continuously centralized itself by keeping track of all the programming jobs in hand.
Flexibility is one of the hallmark skills of true entrepreneurs (Scarborough and Zimmerer, 2006). Surprisingly, research highlights that increasingly growing competition, changing technological innovations and rapidly changing customer requirements have pressurized entrepreneurs to continuously adapt and adjust their businesses to meet those growing changes and solve problems (Shui and Walker, 2007). Lacobucci and Rosa (2010) agree by illustrating an example of Hewlett-Packard, one of the most successful electronic companies in the world, which possibly survived due to the founders' flexibility. Some of the early ideas list, a clock drive for a telescope, a shock machine for losing weight and a bowling foul line indicator.
Cooper et.al.,(1988) have put forward his view by saying optimism is closely related to the expectancy of success and have perceived chances of success shortly. Many researchers (Verheul et. al., 2009; Carter and Evans, 2006; Ma and Tan, 2006; Alstete, 2008) outlines the fact that successful businesses are built and led to ensure profit maximization by combining different elements effectively that is the ability of the entrepreneurs to seek and utilize resources efficiently. Hence, it leads to financial efficiency and better competitiveness skills which show in developing revenues, customer base and market share.
Verheul and Carree (2009) argue that optimism to a certain extent in regards to the attractiveness of their product, consumer demands, degree of competition and venture performance may lead to positive outcome but when an individual's optimism in decision exceeds accuracy in that judgment then such over optimism may lead to high failure in the business. It was further added by Alstete (2008) that specifically over informed entrepreneurs are likely to be overoptimistic leading to failure.
How many times have knowledge intensive entrepreneurs lost their clients because of the inability to offer them one extra service that they were looking for? It can be clearly verified that it is because of lack of communication and networking skills (Man, 2006; Knight, 2008). According to Borgatti and Cross (2003) and Ireland et.al. (2001) networking in business context is often called as pattern between actors with like business people, potential clients and customers. It has particularly developed from the studies of small business networking focusing on the skills and knowledge of the small and medium-sized entrepreneurs which are largely acquired through their external communication and social links outside organization (Man, 2006; Gray, 2002; Groen, 2005). Therefore, valuable interactions and development of social networking is found particular in the early stage of business to organize and set up future optimization of processes and goal attainment (Groen, 2005). The conceptualization of networks reflects positive aspects which includes strategic alliances, joint ventures, licensing arrangements, subcontracting and joint R&D (Deakins and Freel, 2003). An example that can be highlighted is any university like the University of Northampton influencing individual researchers through institutionalized processes of the commercialization of knowledge.
An entrepreneurial networking is illustrated fitted within a dimension of action which is shown below.
Fig 1.1 Four dimensions of Entrepreneurial Networking
Power &Authority, influence, strategic intent
Using Power, Redefining strategy
Using financial incentives cost cutting.
Institutions and pattern maintenance
Cultural/ Human capital
Values, organization, knowledge, skills, experience, technology
Training &education, Teambuilding Organizational systems, new technology.
Interaction pattern/ Process
Contacts (multiplex, filling structural holes, cohesive, equivalent)
Relation management, Changing network structure, using brokers, Supply Chain Management.
Adapted from Groen (2005)
The above diagram highlights that all four mechanisms work simultaneously which influence the results of networking in a structured but not in a determined pattern (Alstete, 2008). Entrepreneurs use resources in order to develop positions via interactions with other (Groen, 2005) and the use of capital leads to recursive relations (Smith and Schallenkamp, 2008).
The business incubator study conducted by Smith and Schallenkamp (2008) demonstrated that more entrepreneurs are likely to be successful who had technical skills beyond just producing commodities and services. The consistent findings were taken from writers like Smith and Miner, 1983, 1967). Entrepreneurial pattern suggested by Omerzel and Antoncic (2008) shows two continuum that are artisan entrepreneurs on one hand, who create ventures in order to exploit their technical skills, irrespective to other skill, and on the other hand opportunistic entrepreneurs who supplements technical skills, in addition to other skills.
Last but not the least, knowledge intensive entrepreneurs in small and medium sized firms in the globalized competition is paid more attention, as it is one of the most important determinants of growth and sources of sustainable competitive advantage, hence success. Most organizations believe in hiring "minds" more than "hands" (Papulova and Mokros, 2007). Researchers like Gibbs (1997); Politis (2005); Omerzel and Antoncic (2008) informs that around 18% of the entrepreneurs' knowledge is dependent on the company's performance. Knowledge intensive entrepreneurs are well distinguished from their competitors and have ability to organize uncertainty, effectiveness and notice changes quicker. On the contrary, there is a saying "too much knowledge is dangerous". Excess of knowledge may lead to over optimism and failure of the organization.
This study was conducted based on a conceptualization of entrepreneurial learning known as skills in order to attain growth and success in small and medium size enterprise. This framework suggests that it is incredibly important to consider an integrated set of skills, knowledge and attributes which facilitates the development of expansion and growth of small scale industry which majorly would lead to success. The main implication of this study of entrepreneurs is that an emphasis should be made on entrepreneur's competence, most importantly, managerial skills, entrepreneurial skills and technical skills. Main conclusion is that combining all the set skills for analyzing entrepreneurial processes for growth contributes to the relevant framework of this literature review.
Entrepreneurial skills in business context are often interchangeable with insufficient attention to their meaning such as competency, entrepreneurial behavior or attitude. For SMEs, entrepreneurial skills are the capabilities and the attitude in developing successful resources to foster organizational growth. The success and failure of the organization heavily depends on the entrepreneurial skills and competencies (Mitchelmore and Rowley, 2008). Hence, it is very important to possess both entrepreneurial and managerial skills to support successful business growth (Man and Lau, 2005).
Discussions on entrepreneurial skills and competencies have been made regarding close links with disciplines such as leadership skills and management skills. It is essential to maintain these skills in order to lead people effectively and efficiently and execute the organization smoothly. The peril that can be highlighted is the over doing of the skills which may be fatal to the organization like over assumption, excess of knowledge and the over desire of autonomy.