Theories of Entrepreneurship Essay

Introduction Entrepreneurship is a phenomenon that is driving the world economy today and aptly so because entrepreneurship is the process of creating economic and social value by means of taking risks, creating and exploiting opportunity and generating new ideas. Entrepreneurship is all pervasive and can exist in any industry and market. Also, entrepreneurship is not limited to creating new ventures; entrepreneurship also exists in large corporations like Google and 3M where employees are encouraged to spot opportunities, take risks and innovate.

People who carry out the process of entrepreneurship are known as entrepreneurs. The term entrepreneur originates from the French word entreprendre which means to undertake. The concept of the entrepreneur has existed and evolved overtime; from the Middle Ages was when the term was first coined, and an entrepreneur was considered a manager of sorts handling projects on behalf of the church or landowners, to the 19th century where JB say defined an entrepreneur as ‘someone who consciously moves economic resources from an area of lower productivity into that of higher productivity and greater yield.

We will write a custom essay sample on
Theories of Entrepreneurship Essay
or any similar topic only for you
Order now

The present day entrepreneur is best described by Drucker’s definition of being someone who ‘always searches for change, responds to it and exploits it as an opportunity (Stokes and Wilson 2006). Drucker’s definition aptly sums up all definitions of an entrepreneur in modern literature as being a risk taker, a catalyst for change, achievement oriented, etc. N. R Smith (1967, cited in Mitra, 2009) classifies entrepreneurs into two broad categories – the ‘Craftsman’ and the ‘Opportunistic’ entrepreneur.

The ‘craftsman’ is characterised by lack of education and social awareness, which limits his/her confidence. This typology of entrepreneurs tends to create bureaucratic firms which tend to stagnate. The ‘Opportunistic’ entrepreneur is well educated and trained and thereby socially aware and confident of his/her abilities. This typology of entrepreneurs tends to create flexible, growth oriented firms. Modern literature further categorises entrepreneurs based on their entrepreneurial characteristics and behaviour.

Serial, Social, Male, Female, Corporate, Profile; are a few of the types of entrepreneurs covered in modern literature. There are various factors that influence entrepreneurial behaviour and actions. These are broadly classified as economic factors, social factors and psychological factors. In order to be able to study these influences in detail and thereby explain, analyse and predict entrepreneurial actions, economists like Schumpeter, Webber etc. , proposed theories of entrepreneurship in the economic, social and psychological context.

Although it is necessary to study entrepreneurs in all of thee contexts in order to develop a holistic understanding of them, this paper intends to concentrate on the social influences on entrepreneurs and analyse how society affects the actions of male and female entrepreneurs in similar and varying ways. Societal norms and conditions, in many parts of the world, influence not only the actions of entrepreneurs but also their personalities and behavioural traits and mind set. Sociological Theory of Entrepreneurship

The sociological theory of entrepreneurship examines the influence of cultural and ideological views, social relationships and networks and organisational and structural factors on entrepreneurial behaviour. Max Weber (1864 – 1920) argued that Capitalism survived because of the Protestants’ positive views on profit making and hard work. This view explains the changing views on entrepreneurship over time, from the extreme of ignorance and neglect to hype and over expectation (Stokes and Wilson, 2006).

However, the gradual decline in the influence of religion on society did not result in the subsequent decline of entrepreneurship (Swedberg, 2000). Also Weber’s theory of Ascetic Protestantism does not explain why entrepreneurship was of significance in other parts of the world such as Akbar’s India, and among the Venetians and Arabs (Mitra, 2009). Weber, in his later works, considered the influence of entrepreneurs on society and their ability to control the excess and bureaucratic nature of Capitalism.

Sociological theory since Max Weber’s time however, has progressed by way of Durkheim’s Collective Effervescence theory that suggests that social, political and economic change is a result of dynamic social networks and relationships between individuals and institutions. (Mitra 2009) Schoonhoven and Romanelli (2001), proposed to that individuals are influenced by the nature of entrepreneurial activity around them and that identification of entrepreneurial opportunity is influenced by work and educational environments. A more modern take on the sociological theory is put forth by Hisrich et al. , (2008, pp. 6-97), where it is suggested that social structure, religion, political and economic philosophy and education are all cultural determinants of entrepreneurship. These determinants can have varying influences on different types of entrepreneurs. The next section of this paper will examine the influence of culture and society on male and female entrepreneurs, focusing on two specific entrepreneurs; Kiran Mazumdar Shaw, Chairman and Managing Director, Biocon India and Azim Premji, Chairman, Wipro Technologies. Case Study Kiran Mazumdar Shaw is India’s richest woman and Biocon, Asia’s number 1 biotech company.

Yet, in her acceptance speech while receiving the Businesswoman of the year award in 2004, she encouraged Indian women to break out of convention and work ‘shoulder to shoulder’ with men, starting and running corporations. She also expressed a strong desire for one ‘Businessperson of the Year’ award that treats men and women on an equal platform. Shaw reportedly had to break through the ‘glass ceiling’ numerous times, being a woman entrepreneur in Indian society. Azim Premji had to take the reins of Wipro at 21, when his father suddenly passed. Since then, he has led it into become the world’s largest independent R&D service provider.

When Premji sat at his AGM, a shareholder expressed doubt about his capabilities and even suggested that the company be handed over to a more mature management. This increased Premji’s determination to make Wipro a success. Approximately thirty years since, Wipro is a globally recognised company and Premji is the richest man in India. The above case studies show how societal perceptions can act as obstacles in the way of entrepreneurs, regardless of whether they are male or female. In both the cases, societal bias acted as motivators to make them more determined to be successful.

In Shaw’s case, she has constantly overcome barriers posed by society by virtue of her being a woman. She is vocal about it, expressing her opinion and creating awareness about these biases and asking for them to be abolished. She is also proving a point through her success that these obstacles can be overcome. Her success is also paving the way for future women entrepreneurs in India. In the case of Azim Premji, society was biased against him because he was young and, according to them, not mature enough to take the reins of a 2 million dollar company.

Instead of giving into the bias, Premji took it upon himself to show his maturity through the success of his company. These cases show that while Indian society is still coming to grips with the present, dynamic Indian woman, it is becoming easier for a woman to be a part of what was traditionally a man’s domain. Biases do not only exist towards women, they exist in terms of age and maturity even, as seen in Premji’s case. Social theory however, is not limited to opinions of society; its scope is wide and covers all external factors that influence an entrepreneur’s behaviour.

Entrepreneurial behaviour and actions are not only influenced social factors around them. It is also based on the individual entrepreneurial mindset and the economic situations in which an entrepreneurs functions. Also, it is imperative to stress upon the fact that entrepreneurial actions are also situation specific. At any given point in time, the entrepreneur has to adjust to the situation around him/her and behave accordingly; and given that the entrepreneurial environment is dynamic and constantly changing entrepreneurs are constantly amending their actions and behaviour to best fir the current situations.

Social theory has evolved over time to include all the external factors that influence an entrepreneur’s actions. From Weber’s initial theory of religion being the biggest external influence, to a more modern approach that includes education, social structure, religion etc, in the scope of the theory. However, examining an entrepreneur from only a sociological perspective, limits one’s understanding of entrepreneurial behaviour. This is because external influences aside, there are also certain psychological factors that make up the entrepreneur.

Hence, it might produce more comprehensive results if entrepreneurs were studies from a more holistic perspective that includes both psychological and sociological factors that impact an entrepreneur and ultimately explain his/ her behaviour. ? References Biocon, 2008. Ms. Kiran’s Profile. [Online] Biocon India. Available at: http://www. biocon. com/biocon_press_kmprofile. asp? subLink=down [Accessed: 3 December 2009] Hisrich, R. D. , Peters, M. P. , Sheperd, D. A. , 2008. Entrepreneurship. 7th ed. Singapore: McGraw Hill. Grundy, L. K. and Ben-Yosef, M. , 2004.

Women Entrepreneurs in the Millennium: Recent Progress and Future Directions for Researach, Entrepreneurship, Development and Teaching. In: Welsch, H. P ed. , 2004. Entrepreneurship: The way ahead. London: Routledge. ICMR, 2005. Biocon: Kiran Mazumdar Shaw’s Entrepreneurial Dream. [Online] Center for Management Research. Available at: http://www. icmrindia. org/casestudies/catalogue/Leadership%20and%20Entrepreneurship/LDEN032. htm [Accessed: 3 December 2009] Indian Entrepreneurs, 200?. Azim Premji Profile. [Online] Indian Entrepreneurs. Available at: http://www. iloveindia. com/indian-heroes/azim-premji. tml [Accessed: 3 December 2009] Kuratko, D. F. , 2009. Introduction to Entrepreneurship. 8th ed. Canada: South-Western Cenage Learning Legge, J. and Hindle, K, 2004. Entrepreneurship: Context, vision and planning. 2nd ed. China: Palgrave Macmillan. Mitra. J, 2009. Theories of Entrepreneurship: Entrepreneurship: Social Aspects and Dimensions. [Online] Essex Business School, University of Essex. Available at: http://moodle. essex. ac. uk/file. php/888/Week_4/entrepreneurship_social_aspects. pdf [Accessed: 5 December 2009] Stokes, D. and Wilson, N. , 2006. Small Business Management and Entrepreneurship. 5th ed. London: Thomson Learning.


Hi there, would you like to get such a paper? How about receiving a customized one? Check it out