Elements of Entrepreneurial Actions Research Paper

Download this Research Paper in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from Research Paper:


Elements of entrepreneurial actions

Different elements of entrepreneurial actions:

Evaluating risks, dealing with uncertain environments, and taking advantage of competitor's weaknesses

When contemplating 'going out on their own,' prospective entrepreneurs know they face a number of potential risks as well as rewards. The attractions of entrepreneurship for the businessperson are the independence it offers; greater freedom and control over the final product, and also the unlimited earning potential that can be derived from owning one's own business. An entrepreneur is not limited to earning a fixed salary. But unlike someone working for a salary, the entrepreneur must also bear the risks of the venture. Some of the most common obstacles faced by budding entrepreneurs include the difficulties of marketing; researching the customer base and potential financial rewards for a new business; dealing with government regulations; writing a business plan, obtaining capital and a good location, and creating partnerships with others (Schulaka 2009: 8). "Individuals are forced to expose themselves to the possibility of either committing an error of commission (taking action only to find their belief was unfounded) or committing an error of omission (not taking action only to regret it when time proves that their passed-over hunch was correct)" (McMullan & Shepherd 2006: 139). Entrepreneurship is a risk, but so is not acting and missing out on an opportunity.

Entrepreneurship offers no guarantees. Many businesses fail but a handful of ventures meet with great success. "Uncertainty is an attribute not only of entrepreneurial settings but also of virtually every environment in which marketing occurs today" (Read et al. 2009:1). There is no set model for operating under conditions of uncertainty but rather a series of models which the entrepreneur can consider when embarking upon a venture. Some may use past outcomes to provide a guideline but the entrepreneur must ask: "Is your environment stable enough that you can reliably base future actions on data from the past?" (Read et al. 2009: 3). Others may focus solely on the goals of the enterprise to determine decision-making, rather than a focus on the exterior environment. However, in most instances of uncertainty, some risk-benefit analysis of competitors and the marketplace is required so that the most appropriate actions will be taken, since businesses do not operate in a vacuum.

On a psychological level, most people are uncomfortable with uncertainty and many observe the principle that "failure is likely in uncertainty. Make small bets, so when you fail, it is not catastrophic, and you can incorporate the learning into the next iteration of the opportunity instead of having to terminate the project" (Read et al. 2009: 3). But an 'expect the worst' mindset may lead to pessimism. Ultimately it is better to cultivate a proactive and positive attitude, and look for possible new relationships.

Successful entrepreneurs act with confidence, even in the face of uncertainty. An excellent example of this is Bill Gates. As a budding entrepreneur, Gates took advantage of his major competitor IBM's arrogance when negotiating with the technology giant. Gates "asked for one thing: unfettered rights to license the OS to potential clones of the IBM PC. IBM, assuming that no PC-clone market would emerge quickly, was happy to grant Gates' wish" but the rapid pace of technology ensured that 'clones' in the form of Dell and HP supplanted IBM's former unquestioned dominance (Cohan & Rangan 2006: 58). "The entrepreneurial mind seeks to understand an incumbent's confirmatory biases because they represent strategic blind spots that may present a rich source of profitable new business. Microsoft's performance shows just how rich those new markets can be" (Cohan & Rangan 2006: 58).

The example of Microsoft also highlights one of the paradoxes of entrepreneurship. On one hand, small start-ups can be uniquely vulnerable to the ups and downs of the market, since they have a fragile customer base and so much to lose. On the other hand, large enterprises like IBM can become too 'comfortable' with themselves and are unable to perceive the need for change. "Successful start-up CEOs, such as the ones running Google, for example, believe that, while the future is so difficult to predict, experimentation will allow them to make sense of it" (Cohan & Rangan 2006: 58). A successful entrepreneur has the confidence to be able to perceive such an opportunity, and the emotional wherewithal to pounce upon it.

Another successful company, Google, likewise tries to remain one step ahead of the competition, a critical element of thriving in the constantly changing, technologically-driven market of today. Google has an entrepreneurial mindset and is always offering new services to users. It has adopted a 'break all the molds' approach to running and growing its company. Provided that entrepreneurs make use of uncertainty in an intelligent fashion, they do have the potential to use their flexibility to exploit volatile conditions and to gain inroads against a more established, seemingly intractable competitor like IBM. The then-tiny Microsoft knew that it had no choice but to act boldly against IBM, and to use IBM's arrogance against it.

Unlike Microsoft, which has fallen prey to accusations that it has become 'stogy' and hidebound to tradition much like IBM, Google has continues to take advantage of risks and opportunities. Despite its great success, it has not grown complacent. Google is willing to fail, provided it learns from its failures. Entrepreneurs are also willing to 'steal' and learn the lessons of success and failure from their competitors. A new entrepreneur cannot always have the available funds to do as much market research as he or she would like, and allowing competitors do to the research is one way to exploit the competition. Sam Walton, the founder of Wal-Mart "measured competitors' shelf space and noted sales prices at Ames, a department store chain" to determine the dimensions of his own stores as well as scouted the business practices of its major competitors Target and Kmart, noting everything down to the organization of their parking lots (Cohan & Rangan 2006: 59).

But despite the brashness entrepreneurs must use when dealing with an uncertain market, they must also act with some degree of caution and realism. "Nothing is more detrimental to a start-up than having to confront an incumbent endowed with large resources at an early stage in its life. By avoiding head-on competition, upstarts fly under the radar, get stronger over time, and then attack the incumbents when the incumbents are not expecting it" (Cohan & Rangan 2006: 60).

Entrepreneurs function as an engine of social change as well as can take advantage of such changes, as is seen in the examples of these now-great companies. The extent to which entrepreneurship avoids or is driven by uncertainty is a controversial issue amongst economists: researchers studying entrepreneurship on a macro level stress how uncertainty can inhibit risk-taking, based upon a risk-benefit calculation, but individuals have used a variety of situations, including risky ones, to capitalize upon their idea during times where there may be high levels of risk.

There is thus a psychological, internally-driven aspect to entrepreneurship despite the need of the entrepreneur to take into consideration external circumstances. In one stream of research, "the amount of uncertainty is considered to be the barrier between prospective entrepreneurs and entrepreneurial action. The second stream highlights the willingness to bear uncertainty and typically proposes that those who decide to act entrepreneurially are distinguishable from those who do not owing to differences in motivation, attitude, or risk propensity" (McMullan & Shepherd 2006: 133). 'More' entrepreneurship flourishes in an environment which promises greater returns and less risk on a macro level, but some individuals will take risks at all times, depending on their psychological inclinations and may succeed.

Uncertainty has increasingly not been perceived as an objective quality by social scientists, but instead conceptualized as a subjective one, based upon the…[continue]

Cite This Research Paper:

"Elements Of Entrepreneurial Actions" (2013, January 05) Retrieved December 8, 2016, from http://www.paperdue.com/essay/elements-of-entrepreneurial-actions-104856

"Elements Of Entrepreneurial Actions" 05 January 2013. Web.8 December. 2016. <http://www.paperdue.com/essay/elements-of-entrepreneurial-actions-104856>

"Elements Of Entrepreneurial Actions", 05 January 2013, Accessed.8 December. 2016, http://www.paperdue.com/essay/elements-of-entrepreneurial-actions-104856

Other Documents Pertaining To This Topic

  • Entrepreneurial Leadership of the Many Theories and

    Entrepreneurial Leadership Of the many theories and frameworks of entrepreneurial leadership, those from Jim Kouzes and Peter Drucker have over time proven most applicable to a broad range of situations and leadership challenges. Noted entrepreneurs including Steve Case, co-founder and CEO of America Online has often said that the key to succeeding as an entrepreneur is combining the best possible people, being passionate about a vision, and having a strong sense

  • Entrepreneurial Leadership Styles Comparative

    As a result, economic development was redefined in terms of reduction or elimination of poverty, inequality, and unemployment within the perspective of a growing economy (Mamede & Davidsson, 2003). Research indicates that entreprenuership can be both the cause and effect of economic development in the sense of wealth distribution. Countries in which wealth is concentrated in the hands of a small fraction of the population face greater difficulties in coordinating

  • Action the Importance of Creativity and Innovation

    Action The importance of creativity and innovation in the workplace is well documented, but the debate over nature vs. nurture continues with some authorities maintaining that people are born with attributes such as creativity and innovation while others argue that such attributes can be inculcated over time (Furnham & Heaven 1999). To determine the facts in these matters, this case study examines the relevant literature to gain some fresh insights

  • Entrepreneurial Leadership

    Leadership Create a hybrid theory/philosophy which combines the common elements found in the thinking of Case, Kouzes, and Drucker. In your philosophy, be sure to include the new definition of entrepreneurial leadership presented in Understanding Entrepreneurial Leadership in today's Dynamic Markets. The new definition of entrepreneurial leadership as defined by the article Understanding entrepreneurial leadership in today's dynamic markets is a leader who is enterprising, transformational and who "operates in a dynamic

  • Strategy in Action and Contemporary

    The shared understanding is crucial in order to build strength and enough confidence necessary for the implementation of strategy and to necessitate evolution. Second Phase: LG's strategic intent In order to remain competitive, LG has to stick to its long-term vision which should act as stabilizers to the corporation in times of uncertainty. The vision in this case refers to as a statement of the things that can be achieved by

  • Creative Business Practices Entrepreneurship Innovation and the

    Creative Business Practices: Entrepreneurship Innovation and the Relevance to the Modern Organization The work entitled "Globalization of Social Entrepreneurship Opportunities" reports that entrepreneurship "...by new and established companies is a major source of wealth and job creation, economic and technological growth and social transformation. This transformation is made possible by the powerful forces entrepreneurship unleashes, where ordinary people conceive innovative ideas, organize production, assume risk, and engage customers to accumulate wealth

  • Damages Is Whether or Not There Is

    damages is whether or not there is a contract that has been breached. Under Texas law, a plaintiff must be establish four elements in order to prevail on a breach of contract clam. The four elements are: 1) the existence of a valid contract; 2) performance or tendered performance by the plaintiff; 3) breach of the contract by the defendant; and 4) damages sustained by the plaintiff as a

Read Full Research Paper
Copyright 2016 . All Rights Reserved