Assignment on Theories of Entrepreneurship

Question; Critically analyze the  management theory of entrepreneurship. Support or criticize  it with examples.

27 replies
  1. Wada Freda Nguavese,De 79159917BE
    Wada Freda Nguavese,De 79159917BE says:

    I firmely support the management theory of enterpreneurship , first and famous let briefly define management theory as a collection of ideas which set forth general rules on how manage a business or organization. While an entrepreneur is the person who starts his own business.
    So therefore this because it helps an individual with ideas to start up with his or her own business in order to earn a living rather than depending on federal government job,companies etc.for example a graduate who has been looking for a job can start up with a business of making liquid soaps,detergents, cup cake,making hair,tailoring work etc in order to make ends meet.

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  2. BILKISU ALIYU BALE. (D.E)
    BILKISU ALIYU BALE. (D.E) says:

    Sociological theory is complex theoretical and methodological frameworks used to analyze and explain object of social study. Examples of sociological theories are conflict theory,critical theory,feminist theory, functionalism theory, and rational choice theory , therefore sociological theory can be defined as a complex theoretical framework that is used to explain social theories through empirical formula ( science method) and making judgement.

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  3. ALIYU BASHIRU
    ALIYU BASHIRU says:

    NASARAWA STATE UNIVERSITY, KEFFI
    FACULTY OF ADMINISTRATION
    DEPARTMENT OF ENTREPRENEURSHIP

    COURSE TITLE:
    PRACTICE OF ENTREPRENEURSHIP

    NAME:
    ALIYU BASHIRU

    MATRIC NUMBER:
    NSU/PT/ENT/0006/16/17

    ASSIGNMENT QUESTION:
    Critically analyze the management theory of entrepreneurship support or criticize it with examples

    MARCH, 2018
    Introduction
    An entrepreneur, as described by the Small Business Association, puts together a business and accepts the associated risk to make a profit. While this definition serves as a simple but accurate description of entrepreneurs, it fails to explain the phenomena of entrepreneurship itself.
    Psychological Theories
    Psychological theories of entrepreneurship focus on the individual and the mental or emotional elements that drive entrepreneurial individuals. A theory put forward by psychologist David McCLelland, a Harvard emeritus professor, offers that entrepreneurs possess a need for achievement that drives their activity. Julian Rotter, professor emeritus at the University of Connecticut, put forward a locus of control theory. Rotter’s theory holds that people with a strong internal locus of control believe their actions can influence the external world and research suggests most entrepreneurs possess trait. A final approach, though unsupported by research, suggests personality traits ranging from creativity and resilience to optimism drive entrepreneurial behavior.
    Sociological/Anthropological Theories
    The sociological theory centers its explanation for entrepreneurship on the various social contexts that enable the opportunities entrepreneurs leverage. Paul D. Reynolds, a George Washington University research professor, singles out four such contexts: social networks, a desire for a meaningful life, ethnic identification and social-political environment factors. The anthropological model approaches the question of entrepreneurship by placing it within the context of culture and examining how cultural forces, such as social attitudes, shape both the perception of entrepreneurship and the behaviors of entrepreneurs.
    Resource-Based Theories
    Resource-based theories focus on the way individuals leverage different types of resources to get entrepreneurial efforts off the ground. Access to capital improves the chances of getting a new venture off the ground, but entrepreneurs often start ventures with little ready capital. Other types of resources entrepreneurs might leverage include social networks and the information they provide, as well as human resources, such as education. In some cases, the intangible elements of leadership the entrepreneur adds to the mix operate as resource that a business cannot replace.
    Economic Theories
    Economic entrepreneurship theories date back to the first half of the 1700s with the work of Richard Cantillon, who introduced the idea of entrepreneurs as risk takers. The classic, neoclassical and Austrian Market process schools of thought all pose explanations for entrepreneurship that focus, for the most part, on economic conditions and the opportunities they create. Economic theories of entrepreneurship tend to receive significant criticism for failing to recognize the dynamic, open nature of market systems, ignoring the unique nature of entrepreneurial activity and downplaying the diverse contexts in which entrepreneurship occurs.

    Opportunity-Based Theory
    Prolific business management author, professor and corporate consultant, Peter Drucker put forward an opportunity-based theory. Drucker contends that entrepreneurs excel at seeing and taking advantage of possibilities created by social, technological and cultural changes. For example, where a business that caters to senior citizens might view a sudden influx of younger residents to a neighborhood as a potential death stroke, an entrepreneur might see it as a chance to open a new club.
    References
    • SBA: What Is An Entrepreneur
    • The Concise Encyclopedia of Economics: Entrepreneurship
    • European Journal of Business and Management: Entrepreneurship Theories and Empirical Research: A Summary Review of the Literature
    • NOW: Theories of Entrepreneurship: Alternative Assumptions and The Study of Entrepreneurial Action
    • Safari: Technology Entrepreneurship – Resource Based Theory; Thomas N. Duening, et al.
    • Journal of Economic Studies: The Entrepreneur In Theory And Practice
    • Harvard University Department of Psychology: David McCLelland
    • University of Connecticut: UConn Today: Theories of Emerican Professor Julian Rotter Still Relevant to Field of Clinical Psychology
    • The Drucker Institute: About Peter Drucker – Drucker’s Career Timeline And Bibiliography

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  4. Martha John Shadoma
    Martha John Shadoma says:

    Martha John Shadoma. DE 79168777BC
    Am strongly in support of management theory of entrepreneurship because it gives direction to managers on how to strategize and come up with desirable, acceptable and beneficial decisions to achieve organizational objectives. But first, an entrepreneur is a person who takes an idea, develops a business around it, manages the business, and assumes the risk for its success to make ends meet. Examples of entrepreneur, Steve Jobs, Bill Gates, and Mark Zuckerberg who started Apple, Microsoft and Facebook respectively. The world is littered with entrepreneurs you never heard of who had an idea and turned it into a thriving, profitable business. They might have used management theory to manage their enterprises. Seeing the fact that; Management theory addresses how managers and supervisors relate to their organizations in the knowledge of its goals, the implementation of effective means to get the goals accomplished and how to motivate the employees to perform to the highest standards. It means management theory is the engine that cause an entrepreneur succeed. it gives one strategies and better ways to have profitable business. Theory of management help in increase organizational productivity and service quality. Also, it addresses management strategies for workforce motivation, again it implemented to help increase worker productivity. However, there are diverse theories of management, one can make use of combination of a number of theories, depending on the workplace, purpose, situation at hand and workforce. A manager takes appropriate action based on aspects most important to the current situation. For example, managers in a university may want to utilize a leadership approach that includes participation from workers, while a leader in the army may want to use an autocratic approach.

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  5. nwaire faith chiamaka
    nwaire faith chiamaka says:

    Nwaire Faith Chiamaka
    ENT/PT/0016/16/17

    Theory of entrepreneurship helps us to comprehend phenomena better. Understanding theory one can apply the same in practice more effectively. Various theories of entrepreneurship have been propounded by thinkers. They can be classified in so many categories: Economic,Sociological,Psychological,Resource-Based Theories, and Opportunity-Based Theory

    Economic Theories
    Economic theories of entrepreneurship tend to receive significant criticism for failing to recognize the dynamic, open nature of market systems, ignoring the unique nature of entrepreneurial activity and downplaying the diverse contexts in which entrepreneurship occurs.
    Economic entrepreneurship theories date back to the first half of the 1700s with the work of Richard Cantillon, who introduced the idea of entrepreneurs as risk takers. The classic, neoclassical and Austrian Market process schools of thought all pose explanations for entrepreneurship that focus, for the most part, on economic conditions and the opportunities they create.
    Entrepreneurship in Economic Theory Let us take a closer look at how the figure of the entrepreneur is treated in economic theory. We have a surprise in store. Astonishingly, in the literature of economics the entrepreneur has been largely left out. Entrepreneurship is an important and, until recently, sadly neglected subject, says Mark Casson who could be called the rediscovered of the entrepreneurial figure. In the past ten years, research has taken a new direction, bringing out the separate and distinct function of the entrepreneur in contrast to that of the manager. Why is so much emphasis placed on this difference? Because it is about a quality all of its own, something new. The essence of entrepreneurship is being different says Casson. What is so different here? The manager, one could argue, must operate under normal conditions and in routine business, while for successful entrepreneurship exactly the opposite qualities are needed. The entrepreneur is not the capitalist, either, a distinction that goes back to J. B. Say and which was taken up by Joseph Schumpeter (quoted from the 1993), the classic economic reference for entrepreneurial behaviour. This distinction is significant, since the two functions have been repeatedly treated, in non-specialist literature but to some extent in the history of economics as well, as if they were one and the same. The difference can be otherwise expressed in a current: “The entrepreneur creates jobs, the capitalist opens them up. The entrepreneur has an idea, founds a business, employs people. The capitalist has money, buys into an enterprise and tries to increase the return on his capital. He rationalizes or closes unproductive parts of the business, thereby tending to make employees redundant. Schumpeter, too, describes the entrepreneur as forsaking well-trodden paths to open up new territory and as turning (believe it or not!) dreams into reality. Schumpeter puts the stress on innovation, not on the invention. The entrepreneurial function consists not of inventing things, but rather of bringing knowledge to life and into the market. Schumpeter himself assumes that with innovation existing structures are destroyed. He saw the markets, realistically viewed, as dominated by oligopolies. Competition, and with it a more efficient allocation of resources, arises only through the invasion of these markets by new entrepreneurs, who destroy the existing market equilibrium with their innovations. This mechanism has been taken into economic discourse and is termed creative destruction. Hans Hinterhuber (1992) points out a special relationship between the entrepreneurial vision and the person: entrepreneurial ideas, he says, are an expression of one´s own life and professional experience. He even speaks of the feeling of a mission. This sense of mission must be present to set free the energies needed to market a product successfully. The author gives several examples of some entrepreneurial ideas that have marked our society more than others, because their originator had an idea in the Platonic sense and were imbued with a sense of mission: Switzerland, with his idea of breaking down traditional commercial structures and offering products much cheaper, especially to poorer population groups, or Steven Jobs and Stephen Wozniak, with their vision of democratizing the computer. Interesting, too, the indication that entrepreneurial vision is an idea of sweeping, classic simplicity going along with this is a sense of reality: ideas by themselves do not yet constitute vision. A sense of reality means seeing things as they are, not as one wishes them to be. And finally the ability to withdraw from reality: the highhanded creation of new basic conditions which redefine the rules of the game. In the American literature, this latter is often described thus: The entrepreneur has to put the odds in his favour, even if and especially if founders of enterprises when first presenting their ideas often cannot make them comprehensible.
    Economic development essentially means a process of upward change whereby the real per capita income of a country increases over a long period of time.
    IMPORTANT OF ECONOMIC THEORIES
    1. Entrepreneurship promotes capital formation by mobilizing the idle saving of the public.

    2. It provides immediate large-scale employment. Thus, it helps reduce the unemployment problem in the country, i.e., the root of all socio-economic problems.

    3. It promotes balanced regional development.

    4. It helps reduce the concentration of economic power.

    5. It also induces backward and forward linkages which stimulate the process of economic development in the country.

    Sociological/Anthropological Theories
    The sociological theory centers its explanation for entrepreneurship on the various social contexts that enable the opportunities entrepreneurs leverage. Paul D. Reynolds, a George Washington University research professor, singles out four such contexts: social networks, a desire for a meaningful life, ethnic identification and social-political environment factors. The anthropological model approaches the question of entrepreneurship by placing it within the context of culture and examining how cultural forces, such as social attitudes, shape both the perception of entrepreneurship and the behaviors of entrepreneurs.
    Sociological perspectives and research provide important and distinctive contributions to the understanding of entrepreneurship in three ways. The first is through the development of societal conceptions regarding productive activities that encompass the entrepreneurial role or function. The major alternatives emphasize socioeconomic systems as (a) moving toward an equilibrium (reflecting a broad consensus) or (b) reflecting the outcome of class competition (emphasizing conflict resolution). Both assume the Inevitable dominance of massive productive organizations. These conceptions have recently been supplemented with attention to the dual nature of advanced economies or the benefits of flexible specialization. The second is through attention to specific societal characteristics affecting entrepreneurship: modernization; the role of the state in economic development; variations in the scope and nature of the unregistered (underground) economy; and the character of organizational populations and their ecological niche as they affect new firm founding. The third through attention to the impact of social context on the decisions of Individuals to pursue entrepreneurial options. This includes attention to the individual’s life course stage; social networks and embeddedness; ethnicity; and work experiences.

    RESOURCE-BASED THEORIES
    Resource-based theories focus on the way individuals leverage different types of resources to get entrepreneurial efforts off the ground. Access to capital improves the chances of getting a new venture off the ground, but entrepreneurs often start ventures with little ready capital. Other types of resources entrepreneurs might leverage include social networks and the information they provide, as well as human resources, such as education. In some cases, the intangible elements of leadership the entrepreneur adds to the mix operate as resource that a business cannot replace.

    OPPORTUNITY-BASED THEORY
    Prolific business management author, professor and corporate consultant, Peter Drucker put forward an opportunity-based theory. Drucker contends that entrepreneurs excel at seeing and taking advantage of possibilities created by social, technological and cultural changes. For example, where a business that caters to senior citizens might view a sudden influx of younger residents to a neighborhood as a potential death stroke, an entrepreneur might see it as a chance to open a new club.
    Someone who exercises initiative by organizing a venture to take benefit of an opportunity and, as the decisionmaker, decides what, how, and how much of a good or service will be produced.
    An entrepreneur suppliesrisk capital as a risk taker, and monitors and controls the business activities. The entrepreneur is usually a sole proprietor, a partner, or the one who owns the majority of shares in an incorporated venture.
    According to economist Joseph Alois Schumpeter (1883-1950), entrepreneurs are not necessarily motivated by profit but regard it as a standard for measuring achievement or success.
    Schumpeter discovered that they
    1. Greatly value self-reliance,
    2. Strive for distinction through excellence,
    3. Are highly optimistic (otherwise nothing would be undertaken), and
    4. Always favor challenges of medium risk (neither too easy, nor ruinous).

    Nwaire Faith Chiamaka
    ENT/PT/0016/16/17

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  6. BLESSING JOHN ENE NSU/PT1/ENT/0013/16/17
    BLESSING JOHN ENE NSU/PT1/ENT/0013/16/17 says:

    QUESTION; CRITICALLY ANALYZE THE MANAGEMENT THEORY OF ENTREPRENEURSHIP. SUPPORT OR CRITICIZE IT WITH EXAMPLES.

    Critically analysing the theory stated above, we firstly need to break down the terms “Management” and “Entrepreneurship” to give a better understanding of the subject matter.

    Definition of Management: Its Nature and Purpose

Weihrich and Koontz defined Management and explained it as follows in the tenth edition of their book Management: A Global Perspective..
”Management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently and accomplish selected aims.” This definition needs to be expanded:

1. As managers, people carry out the managerial functions of planning, organizing, staffing, leading, and controlling.
2. Management applies to any kind of organization.
3. It applies to managers at all organizational levels.
4. The aim of all managers is the same: to create a surplus.
5. Managing is concerned with productivity; this implies effectiveness and efficiency.

    Entrepreneurship
    Some of the definitions of entrepreneur that have been proposed over the years are as follows:
    1. One who develops new profitable business opportunities by combining resources in a new way
    2. Is an individual who owns and manages a business for the principle purpose of profit and growth. The entrepreneur is characterized principally by innovative behaviour and will employ strategic management practices in the business
    3. A contractor acting as intermediary between capital and labour; one who undertakes an enterprise; one who owns and manages a business; a person who takes the risk of profit or loss
    4. One can also refer to an entrepreneur as some one who engages in the process of entrepreneurship. This calls for behavioural definition of the term ‘entrepreneurship’.
    5. An entrepreneur takes initiative, organizes some socio economic mechanisms, and accepts risks of failure
    6. An entrepreneur always searches for change, responds to it and exploits it as an opportunity

    In this vein it is therefore safe to say management theory of entrepreneurship give the entrepreneur a clear cut direction n how to strategize and make beneficial decisions to achieve organizational set goals and objectives. The world today in as we see it is full of mind blowing ideas and only the managerial style entrepreneur takes the day. Clear cut examples are: Elon Musk (co-founder of Tesla) who build electric cars, Bill Gates (Microsoft) who started the windows computer era, Mark Zukerberg (Facebook) who took social media to a whole new level etc. These Managerial Style entrepreneurs clearly took the day in their chosen line of business.

    Establishing this fact that; Management theory defines how managers and supervisors relate to their organizations in the knowledge of its goals, the implementation of effective means to get the goals accomplished and how to motivate the employees to perform to the highest standards. It means management theory is the driving force that brings exponential growth to an entrepreneur which trickles down to the organization and makes the entity succeed.

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  7. Joseph Modupeola Tolulope
    Joseph Modupeola Tolulope says:

    NAME: JOSEPH MODUPEOLA TOLULOPE
    MATRIC NO: Nsu/Ent/Pt/0001/2018

    A Critical Analysis of the Innovation and the X-efficiency Theories of Entrepreneurship

    It will be trite to undertake an analysis and criticism of the above theories of entrepreneurship without shedding a ray of light on the concept of entrepreneurship. The word entrepreneur is a derivative of the French word ‘Entreprendre’ which means to undertake or a person who assumes the risks of new business or enterprises. The post 16th century saw an Irishman living in France use the term entrepreneur to refer to economic activities. Over time, the meaning of the word has taken various dimensions that cannot be divested from economic activities undertaken to gain profit and better society.

    As an emerging academic field, that has gained traction in the past two centuries, it has had its fair share of modifications as knowledge and research increases. Like other know academic fields, it is complex and attempts to better understand it have given rise to theories which fall into economic, political, sociological, religious, cultural and even psychological. The reason for the plethora of theories can be pegged on social scientists varying perception and economic environmental in which they situate.

    This work attempts to analyze briefly and criticize the theories of Innovation and the X-efficiency as propounded by Schumpeter and Leibentein respectively.

    Innovation Theory by Schumpeter.
    This theory as proposed by Schumpeter is a revolutionary attempt on economic growth. It sees the entrepreneur as a problem solver, who must look within society, identify a new problem or an unsolved problem, and then provide a new solution in an innovative manner. Simply put, he must introduce new goods of a new quality that have hitherto not be seen. Besides, he must introduce a new method of production that will radically minimize operations and procedures. Furthermore, the entrepreneur should open a new market also or be an entrant into a new area not earlier ventured. Moreso, the entrepreneur should source a new avenue for getting raw materials with reduced costs. Finally the entrepreneur, for monopolistic competition to be broken, a new organisation that will break the chain of monopoly. If all these ate met by someone, he therefore qualifies as an entrepreneur.

    As much as this theory was applauded in time past and in the era in which it was proposed, it has been overtaken by present realities and no longer holds much truth and relevance given that it smacks of lack of innovation now. This is so because the theory operates on the premise of individualism running the affairs of a business but modern business now have more than a personal effort geared at achieving organizational goals. The concept of teamwork and delegation of duties have much more facilitated the successes of a business rather than individual efforts as opined in the theory.
    Also, another unrealistic posture posited by this theory is the assumption that an entrepreneur sees to be one when he has filled a void by creating and executing a business. The moment, the business is up and running, he is considered less of an entrepreneur until he takes on another venture. This is not operable in modern economic enclaves. Business are meant to be established, built on and made global beans rather than their plantations and jump offs to others.

    Another error in this theory is the thinking that an entrepreneur is one who is a large scale businessman who introduces a new technology. Granted, that’s an entrepreneur but going by such narrow understanding, it means that in less developed countries in Africa and parts of Asia who lack the technological inventions that are requirements to be entrepreneurs, they won’t be regarded as one even when an individual or a group of individuals are able to break into business without technology. This fact negates the universal tenets of entrepreneurship. In Nigeria for example, bedeviled by poor power supply and an enabling industrial environmental, a young man who manages to provide a solution to a national problem would not be considered an entrepreneur on the basis that his efforts are are not technology driven. It is laughable and myopic an effort to determine who an entrepreneur is or not.
    The theory tramples on the efforts made to undertake risks and sustain a business since it only gives credit to innovation. For existing business to the live and grow, the conscious risk taking and organizational efforts should be applauded.

    Well, despite the above failings of the theory in modern times, it will be biased and ill to not give credit to Schumpeter for the thoughts given to the realization of the theory and the purpose it served.

    X-efficiency Theory by Leibenstein
    This theory alternatively called the Gap filling theory to measure the amount of input engaged in a production in relation to the output gained from the effort. It measures the differences in production input and output so as to gauge the efficiency of the exercise. X-efficiency is there the amount of wasted resources in a firm. It sprouts to show the loss incurred from either wrong usage of resources or sheer waste in the case of not being used at all.

    It demonstrates the features of routine entrepreneurship where all is well with the ratio of input to output is well maximized. It also acknowledges new business where i out-output is yet to be steadied or determined. It sues for gap filling in deficient markets and that there should be completion of inputs especially in underdeveloped regions.

    The whole gamut of the X-efficiency theory is the minimization of waste or loss in the resources given to production. It is an economic theory that evolved from earlier theories. But the theory of X-efficiency popularized by Harvey Leibenstein no longer has a place in modern day economic system. The world has moved on from a business environment or entrepreneurial world where individuals are non-maximising. This theory is now in abeyance with the neoclassical microeconomics theory. It is a clash with the principles of economics, it is against the principles of demand and supply. Against the norms of market forces.
    One of the most disadvantaged point of this theory is its inability to measure the ratio of the missing variable in the input-output calculation so its erect can not be emphasized. If for example motivation is a variable in the relationship between production resources and its offerings, then it should be able to be quantified when it is missing. A variable should have the ability to be measured.

    Conclusively, the theory plagues itself in the sense that X-efficiency can lead to X-inefficiency because given the relationship between the principal and the agents in the ownership and management of the organisation, there arise conflicts on profit maximization(goal of principal) and better production output(goal of the agent). Often time, this conflict of interests will result in X-inefficiency.

    To this end, one can wrap up this one by saying that both theories considered were very relevant in time past and still enjoy a level of attention in current times but as the world evolves, they are fast losing grounds to the more practicable ones. However, they are attempts at understanding the concept of the ever dynamic field of entrepreneurship.

    Works Used.

    Leibenstein, H. (1966). Allocative Efficiency vs. “X- Efficiency”. American Economic Association , 392-415.

    Leibenstein, H. (1978). On the Basic Proposition of X-Efficiency Theory. American Economic Association , 328-332.

    Leibenstein, H. (1978). X-Inefficiency Xists: Reply to an Xorcist. American Economic Association , 203-211.

    Majumdar, S. K. (1995). X-efficiency in emerging competitive markets: The case of U.S. telecommunications. Journal of
    Economic Behavior and Organization , 129,144.

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  8. DAVID ELANG MALLAM
    DAVID ELANG MALLAM says:

    NASARAWA STATE UNIVERSITY, KEFFI
    FACULTY OF ADMINISTRATION
    DEPARTMENT OF ENTREPRENEURSHIP
    COURSE TITLE: PRACTICE OF ENTREPRENEURSHIP
    NAME: DAVID ELANG MALLAM
    MATRIC NUMBER: NSU/PT/ENT/0011/16/17
    ASSIGNMENT QUESTION:
    Critically analyze the management theory of entrepreneurship support or criticize it with examples
    INTRODUCTION
    Entrepreneurship has been defined as “the creation of new economic activity” (Davidsson et al. 2006:27). It plays a key role in economic growth (Thurik and Wennekers 2004; van Stel 2006), creating jobs and driving innovation. This justifies the increased attention it receives by researchers, as reflected in the number of publications dealing with it (Welter and Lasch 2008); some of which focus exclusively on conceptual debates and research paradigms (Auerswald 2008; Westhead 2008). Low and MacMillan (1988), who define entrepreneurship as the creation of a new enterprise, focus on factors leading individuals or groups to start new organizations, or in other words, decisions to initiate entrepreneurial activity (van Stel 2006).
    Several theories have been put forward by scholars to explain the field of entrepreneurship. These theories have their roots in economics, psychology, sociology, anthropology, and management. The multidisciplinary nature of entrepreneurship is given a close examination
    1. Economic Entrepreneurship Theories
    The economic entrepreneurship theory has deep roots in the classical and neoclassical theories of
    Economics and the Austrian market process (AMP). These theories explore the economic factors that enhance entrepreneurial behaviour.
    Classical Theory
    The classical theory extolled the virtues of free trade, specialization, and competition. The theory was the result of Britain’s industrial revolution which took place in the mid 1700 and lasted until the 1830s.The classical movement described the directing role of the entrepreneur in the context of production and distribution of goods in a competitive marketplace. Classical theorists articulated three modes of production: land; capital; and labour. There have been objections to the classical theory. These theorists failed to explain the dynamic upheaval generated by entrepreneurs of the industrial age.
    Neo-classical Theory
    The neo-classical model emerged from the criticisms of the classical model and indicated that economic phenomena could be relegated to instances of pure exchange, reflect an optimal ratio, and transpire in an economic system that was basically closed. The economic system consisted of exchange participants, exchange occurrences, and the impact of results of the exchange on other market actors. The importance of exchange coupled with diminishing marginal utility created enough impetus for entrepreneurship in the neoclassical movement
    Some criticisms were raised against the neo-classical conjectures. The first is that aggregate demand ignores the uniqueness of individual-level entrepreneurial activity. Furthermore, neither use nor exchange

    2. Psychological Entrepreneurship Theories
    The level of analysis in psychological theories is the individual .These theories emphasize personal characteristics that define entrepreneurship. Personality traits need for achievement and locus of control are reviewed and empirical evidence presented for three other new characteristics that have been found to be associated with entrepreneurial inclination. These are risk taking, innovativeness, and tolerance for ambiguity.
    3. Personality Traits theory
    Coon (2004) defines personality traits as “stable qualities that a person shows in most situations”. To the trait theorists there are enduring inborn qualities or potentials of the individual that naturally make him an entrepreneur. The obvious or logical question on your mind may be “What are the exact traits/inborn qualities?” The answer is not a straight forward one since we cannot point at particular traits. However, this model gives some insight into these traits or inborn qualities by identifying the characteristics associated with the entrepreneur. The characteristics give us a clue or an understanding of these traits or inborn potentials. In fact, explaining personality traits means making inference from behavior.
    Some of the characteristics or behaviors associated with entrepreneurs are that they tend to be more opportunity driven (they nose around), demonstrate high level of creativity and innovation, and show high level of management skills and business know-how. They have also been found to be optimistic, (they see the cup as half full than as half empty), emotionally resilient and have mental energy, they are hard workers, show intense commitment and perseverance, thrive on competitive desire to excel and win, tend to be dissatisfied with the status quo and desire improvement, entrepreneurs are also transformational in nature, who are lifelong learners and use failure as a tool and springboard. They also believe that they can personally make a difference, are individuals of integrity and above all visionary.
    The trait model is still not supported by research evidence. The only way to explain or claim that it exists is to look through the lenses of one’s characteristics/behaviors and conclude that one has the inborn quality to become an entrepreneur.
    5. Sociological Entrepreneurship Theory
    The sociological theory is the third of the major entrepreneurship theories. Sociological enterprise focuses on the social context .In other words, in the sociological theories the level of analysis is traditionally the society. Reynolds has identified four social contexts that relates to entrepreneurial opportunity. The first one is social networks. Here, the focus is on building social relationships and bonds that promote trust and not opportunism. In other words, the entrepreneur should not take undue advantage of people to be successful; rather success comes as a result of keeping faith with the people.
    The second he called the life course stage context which involves analyzing the life situations and characteristic of individuals who have decided to become entrepreneurs. The experiences of people could influence their thought and action so they want to do something meaningful with their lives.
    The third context is ethnic identification. One’s sociological background is one of the decisive “push” factors to become an entrepreneur. For example, the social background of a person determines how far he/she can go. Marginalized groups may violate all obstacles and strive for success, spurred on by their disadvantaged background to make life better. The fourth social context is called population ecology. The idea is that environmental factors play an important role in the survival of businesses. The political system, government legislation, customers, employees and competition are some of the environmental factors that may have an impact on survival of new venture or the success of the entrepreneur.
    6. Anthropological Entrepreneurship Theory
    The fourth major theory is referred to as the anthropological theory. Anthropology is the study of the origin, development, customs, and beliefs of a community. In other words, the culture of the people in the community .The anthropological theory says that for someone to successful initiate a venture the social and cultural contexts should be examined or considered.
    Here emphasis is on the cultural entrepreneurship model. The model says that new venture is created by the influence of one’s culture. Cultural practices lead to entrepreneurial attitudes such as innovation that also lead to venture creation behavior. Individual ethnicity affects attitude and behavior (Baskerville, 2003) and culture reflects particular ethnic, social, economic, ecological, and political complexities in individuals
    Thus, cultural environments can produce attitude differences (Baskerville, 2003) as well as entrepreneurial behavior differences (North, 1990; Shane 1994).
    7. Resource- Based Entrepreneurship Theories
    The Resource-based theory of entrepreneurship argues that access to resources by founders is an important predictor of opportunity based entrepreneurship and new venture growth (Alvarez & Busenitz, 2001).This theory stresses the importance of financial, social and human resources (Aldrich, 1999). Thus, access to resources enhances the individual’s ability to detect and act upon discovered opportunities (Davidson & Honing, 2003). Financial, social and human capital represents three classes of theories under the resource –based entrepreneurship theories.
    Financial Capital/Liquidity Theory
    Empirical research has showed that the founding of new firms is more common when people have access to financial capital (Blanchflower et al, 2001, Evans & Jovanovic, 1989, and Holtz-Eakin et al, 1994). By implication this theory suggests that people with financial capital are more able to acquire resources to effectively exploit entrepreneurial opportunities, and set up a firm to do so (Clausen, 2006). However , other studies contest this theory as it is demonstrated that most founders start new ventures without much capital, and that financial capital is not significantly related to the probability of being nascent entrepreneurs (Aldrich,1999, Kim, Aldrich & Keister, 2003, Hurst & Lusardi, 2004, Davidson &
    Honing, 2003).This apparent confusion is due to the fact that the line of research connected to the theory of liquidity constraints generally aims to resolve whether a founder’s access to capital is determined by the amount of capital employed to start a new venture Clausen (2006). In his view, this does not necessarily rule out the possibility of starting a firm without much capital. Therefore, founders access to capital is an important predictor of new venture growth but not necessarily important for the founding of a new venture .This theory argues that entrepreneurs have individual-specific resources that facilitate the recognition of new opportunities and the assembling of new resources for the emerging firm .Research shows that some persons are more able to recognize and exploit opportunities than others because they have better access to information and knowledge.

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  9. Aduga Esther
    Aduga Esther says:

    Introduction

    In an attempt to assess the management theory of entrepreneurship, there is need to briefly define entrepreneurship. Different definitions of entrepreneurship exist. Reynolds (2005), defines it as the discovery of opportunities and the subsequent creation of new economic activity, often via the creation of a new organization. Eckhardt and Galunic (2000) view it as a business process which includes the identification and assessment of opportunities, the decision to exploit them oneself or sell them, efforts to obtain resources and the development of the strategy and organization of the new business project.

    Management theory of entrepreneurship consist of systematic framework and thoughts about processes of establishing objectives and goals for an enterprise, periodically designing the work system and the organization structure, and maintaining an environment in which individuals, working together in groups, accomplish their aims and objectives and goals of the organization effectively and efficiently (Narayana, 2008).

    Management theory of entrepreneurship consists of ideas which set forth general rules on how to manage a business or grow an organization. It entails practices that facilitate such resource recombinations. Top management can design several aspects of the firm in more or less entrepreneurial ways (Brown & Eisenhardt, 1998; Eisenhardt & Martin, 2000).

    The theory of management entrepreneurship is a good theory in entrepreneurship as it helps explain the conditions under which entrepreneurship takes place: the concept of entrepreneurship as judgment provides the clearest link between entrepreneurship, asset ownership, and economic organization.

    Also, this theory provides a framework that can be develop and addresses the different practices that can contribute to the growth and expansion of a business enterprise.

    It also affects a company’s management practices which range along a spectrum from highly entrepreneurial to highly administrative. A “promoter” characterizes the entrepreneurial side of the spectrum and a “trustee” characterizes the administrative side (Stevenson, 1983; Stevenson and Gumpert, 1985; Stevenson and Jarillo, 1986; 1990). The promoter’s sole intent is to pursue and exploit opportunities regardless of resources currently controlled, while the trustee aims to efficiently use the resources currently controlled. Stevenson’s original description of entrepreneurial management consists of six different dimensions: Strategic Orientation, Commitment to Opportunity, and Commitment to Resources, Control of Resources, Management Structure and Reward Philosophy (Brown et al., 2001).

    One of the main weakness of this theory is that it is based more on theory than empirical practice. Therefore, not widely accepted by some practicing managers.

    Conclusion
    In conclusion, despite the weakness identified against this theory, the management theory of entrepreneurship plays a key role in helping understand both academic and practical aspects of entrepreneurship.

    References
    Brown, S. L. and K. Eisenhardt (1998). Competing on the Edge – Strategy as Structured Chaos. Boston, MA, Harvard Business School Press.

    Eisenhardt, K. M. and D. C. Galunic (2000). “Coevolving: At last, a Way to Make Synergies Work.” Harvard Business Review(January-February).

    Reynolds, P.D. (2005). Creative Destruction: Source or Symptom of Economic Growth. In Z.J. Acs, B. Carlsson & K. Karlsson (Eds.), Entrepreneurship, Small and Medium-sized Firms and the Macroeconomy (pp. 97- 136). Cambridge: Cambridge University Press.

    Stevenson, H. H. (1983) ‘A perspective on entrepreneurship’, Harvard Business School Working Paper, 9-384- 131.

    Stevenson, H. H. and D. Gumpert (1985). ‘The heart of entrepreneurship’, Harvard Business Review, 85, pp. 85- 94.

    Reply
  10. PAUL JONATHAN
    PAUL JONATHAN says:

    NASARAWA STATE UNIVERSITY, KEFFI
    FACULTY OF ADMINISTRATION
    DEPARTMENT OF ENTREPRENEURSHIP
    COURSE TITLE: PRACTICE OF ENTREPRENEURSHIP
    NAME: PAUL JONATHAN
    MATRIC NUMBER: NSU/PT/ENT/0004/16/17
    ASSIGNMENT QUESTION:
    Critically analyze the management theory of entrepreneurship support or criticize it with examples
    INTRODUCTION
    Entrepreneurship refers to the concept of developing and managing a business venture in order to gain profit by taking several risks in the corporate world. Simply put, entrepreneurship is the willingness to start a new business. Entrepreneurship has played a vital role in the economic development of the expanding global marketplace.
    The historical evolution of ideas about the entrepreneur is a wide-ranging subject and one that can be organized in different ways.
    Several theories have been put forward by scholars to explain the field of entrepreneurship. Some of These theories have their roots in management.
    1. Psychological Entrepreneurship Theories
    The level of analysis in psychological theories is the individual .These theories emphasize personal characteristics that define entrepreneurship. Personality traits need for achievement and locus of control are reviewed and empirical evidence presented for three other new characteristics that have been found to be associated with entrepreneurial inclination. These are risk taking, innovativeness, and tolerance for ambiguity.
    2. Personality Traits theory
    Coon (2004) defines personality traits as “stable qualities that a person shows in most situations”. To the trait theorists there are enduring inborn qualities or potentials of the individual that naturally make him an entrepreneur. The obvious or logical question on your mind may be “What are the exact traits/inborn qualities?” The answer is not a straight forward one since we cannot point at particular traits. However, this model gives some insight into these traits or inborn qualities by identifying the characteristics associated with the entrepreneur. The characteristics give us a clue or an understanding of these traits or inborn potentials. In fact, explaining personality traits means making inference from behavior.
    Some of the characteristics or behaviors associated with entrepreneurs are that they tend to be more opportunity driven (they nose around), demonstrate high level of creativity and innovation, and show high level of management skills and business know-how. They have also been found to be optimistic, (they see the cup as half full than as half empty), emotionally resilient and have mental energy, they are hard workers, show intense commitment and perseverance, thrive on competitive desire to excel and win, tend to be dissatisfied with the status quo and desire improvement, entrepreneurs are also transformational in nature, who are lifelong learners and use failure as a tool and springboard. They also believe that they can personally make a difference, are individuals of integrity and above all visionary.
    The trait model is still not supported by research evidence. The only way to explain or claim that it exists is to look through the lenses of one’s characteristics/behaviors and conclude that one has the inborn quality to become an entrepreneur.
    3. Economic Entrepreneurship Theories
    The economic entrepreneurship theory has deep roots in the classical and neoclassical theories of economics, and the Austrian market process (AMP). These theories explore the economic factors that enhance entrepreneurial behaviour.
    Classical Theory: The classical theory extolled the virtues of free trade, specialization, and competition (Ricardo, 1817; Smith, 1776).The theory was the result of Britain’s industrial revolution which took place in the mid 1700 and lasted until the 1830s.The classical movement described the directing role of the entrepreneur in the context of production and distribution of goods in a competitive marketplace (Say, 1803). Classical theorists articulated three modes of production: land; capital; and labour. There have been objections to the classical theory. These theorists failed to explain the dynamic upheaval generated by entrepreneurs of the industrial age (Murphy, Liao & Welsch, 2006).
    Neo-classical Theory: The neo-classical model emerged from the criticisms of the classical model and indicated that economic phenomena could be relegated to instances of pure exchange, reflect an optimal ratio, and transpire in an economic system that was basically closed. The economic system consisted of exchange participants, exchange occurrences, and the impact of results of the exchange on other market actors. The importance of exchange coupled with diminishing marginal utility created enough impetus for entrepreneurship in the neoclassical movement (Murphy, Liao &Welsch, 2006). Some criticisms were raised against the neo-classical conjectures. The first is that aggregate demand ignores the uniqueness of individual-level entrepreneurial activity. Furthermore, neither use nor exchange value reflects the future value of innovation outcomes. Thirdly, rational resource allocation does not capture the complexity of market-based systems. The fourth point raised was that, efficiency-based performance does not subsume innovation and non-uniform outputs; known means/ends and perfect or semi-perfect knowledge does not describe uncertainty. In addition, perfect competition does not allow innovation and entrepreneurial activity. The fifth point is that, it is impossible to trace all inputs and outputs in a market system. Finally, entrepreneurial activity is destructive to the order of an economic system.
    4. Sociological Entrepreneurship Theory
    The sociological theory is the third of the major entrepreneurship theories. Sociological enterprise focuses on the social context .In other words, in the sociological theories the level of analysis is traditionally the society. Reynolds has identified four social contexts that relates to entrepreneurial opportunity. The first one is social networks. Here, the focus is on building social relationships and bonds that promote trust and not opportunism. In other words, the entrepreneur should not take undue advantage of people to be successful; rather success comes as a result of keeping faith with the people.
    The second he called the life course stage context which involves analyzing the life situations and characteristic of individuals who have decided to become entrepreneurs. The experiences of people could influence their thought and action so they want to do something meaningful with their lives.
    The third context is ethnic identification. One’s sociological background is one of the decisive “push” factors to become an entrepreneur. For example, the social background of a person determines how far he/she can go. Marginalized groups may violate all obstacles and strive for success, spurred on by their disadvantaged background to make life better. The fourth social context is called population ecology. The idea is that environmental factors play an important role in the survival of businesses. The political system, government legislation, customers, employees and competition are some of the environmental factors that may have an impact on survival of new venture or the success of the entrepreneur.
    5. Anthropological Entrepreneurship Theory
    The fourth major theory is referred to as the anthropological theory. Anthropology is the study of the origin, development, customs, and beliefs of a community. In other words, the culture of the people in the community .The anthropological theory says that for someone to successful initiate a venture the social and cultural contexts should be examined or considered.
    Here emphasis is on the cultural entrepreneurship model. The model says that new venture is created by the influence of one’s culture. Cultural practices lead to entrepreneurial attitudes such as innovation that also lead to venture creation behavior. Individual ethnicity affects attitude and behavior (Baskerville, 2003) and culture reflects particular ethnic, social, economic, ecological, and political complexities in individuals
    Thus, cultural environments can produce attitude differences (Baskerville, 2003) as well as entrepreneurial behavior differences (North, 1990; Shane 1994).
    6. Resource- Based Entrepreneurship Theories
    Resource- Based Entrepreneurship Theories :The Resource-based theory of entrepreneurship argues that access to resources by founders is an important predictor of opportunity based entrepreneurship and new venture growth (Alvarez & Busenitz, 2001).This theory stresses the importance of financial, social and human resources (Aldrich, 1999). Thus, access to resources enhances the individual’s ability to detect and act upon discovered opportunities (Davidson & Honing, 2003). Financial, social and human capital represents three classes of theories under the resource – based entrepreneurship theories.
    Financial Capital/Liquidity Theory: Empirical research has showed that the founding of new firms is more common when people have access to financial capital (Blanchflower et al, 2001, Evans & Jovanovic, 1989, and Holtz-Eakin et al, 1994). By implication this theory suggests that people with financial capital are more able to acquire resources to effectively exploit entrepreneurial opportunities, and set up a firm to do so (Clausen, 2006). However , other studies contest this theory as it is demonstrated that most founders start new ventures without much capital, and that financial capital is not significantly related to the probability of being nascent entrepreneurs (Aldrich,1999, Kim, Aldrich & Keister, 2003, Hurst & Lusardi, 2004, Davidson & Honing, 2003).This apparent confusion is due to the fact that the line of research connected to the theory of liquidity constraints generally aims to resolve whether a founder’s access to capital is determined by the amount of capital employed to start a new venture Clausen (2006). In his view, this does not necessarily rule out the possibility of starting a firm without much capital. Therefore, founders access to capital is an important predictor of new venture growth but not necessarily important for the founding of a new venture.

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  11. James Samuel
    James Samuel says:

    James Samuel.NSU/ENT/0009/16/17.I firmly support the aspect of management theory because it addresses how managers and supervisors relate to their organisations in the knowledge of its goals.This can also be further explained with the strengths and weakness of each type of management theory-
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    Strengths and
    weaknesses of
    management theories
    4 terms jake_moufarrige
    Classical – Scientific Theory
    Strengths: based on scientific
    priniciples, division of labour, high
    worker productivity, clear chain of
    command, rules and regulations.
    Weaknesses: boredom and
    exploitation, autocratic, job
    satifaction is ignored, alienation
    between employees and managers.
    Political theory
    Strengths: recognises “powerplays”,
    acknowledge coalitions and
    networks highlights the need for
    negotiation and bargaining
    Weaknesses: misuse of power
    (bullying, harassment), internal
    conflict
    Behavioural theory
    Strengths: human needs recognised,
    high morale, empowered
    employees l, motivated team
    members, flatter structures (tend to
    improve communication)
    Weaknesses: difficult to predict
    humans behaviour, slower decision
    making process, no clear chain of
    command
    Contingency Management theory
    Strengths: adapting management
    style to the situation, tall or flat
    structure,
    Weaknesses: lots of change and
    employees can feel unsure of the
    current situation.

    Reply
  12. Uyeme Thomas Oyuo
    Uyeme Thomas Oyuo says:

    NASARAWA STATE UNIVERSITY, KEFFI
    FACULTY OF ADMINSTRATION
    DEPARTMENT OF ENTERPRENEURSHIP STUDIES
    COURSE CODE; ENT211
    COURSE TITLE: THEORY OF ENTREPRENEURSHIP
    NAME; UYEME THOMAS OYUO
    QUESTION: Critically analyze the management theory of entrepreneurship support or criticize it with examples.

    Although the resource-based view has emerged as one of the substantial theories of strategic management, it is said that it has overlooked the role of entrepreneurial strategies and entrepreneurial abilities as one of the crucial sources of the competitive advantage of a firm. Even today, when entrepreneurship research is in demand, most economic research, and consequently much of strategic management research, views entrepreneurship as the “specter which haunts economic model”. The main objective of this paper is to amend the resource based view of strategic management from a dynamic point of view, in order to make up its insufficiency. Many scholars have attempted to investigate into the mechanism of sustainable competitive advantage of a firm through the resource Base view, with original concepts such as ‘core competence’. However, little work in resource based view has been made to grasp the role of entrepreneurship as the crucial source of competitive advantage, despite the abilities of the entrepreneur are undoubtedly the principal human resource possessed by a firm. This paper attempts to incorporate the theory of entrepreneurship into the resource based view of strategic management, while critically dealing with the resources Base view from an entrepreneurial viewpoint.
    Traditional research on strategic management suggests that firms need to seek a strategic fit between the external environment, for example opportunities and threats, and internal resources, for example strengths and weaknesses.
    The mos part of this work in this field is that we constructs a consistent framework for thought so as to examine concrete questions like “how will a firm able to get a competitive advantage over its competitors?” refer to a firm’s capacity to deploy resources, usually in combination, using organizational processes, to produce a desired effect. Hence, the presence of capability enables resources to begin to be utilized, and the potential for
    the creation of output arises.
    The important point of this approach compared to the early
    stage of resource Base view point is that, for the sake of gaining a sustainable competitive advantage, capability is regarded as more important than resources, and this implies that the firm specific way of cooperation and coordination of resources causes the heterogeneity among firms in an industry.
    The important distinction between resources and services is not
    their relative durability; rather it lies in the fact that resources consists of a bundle of potential services and can, for the most part, be define independently of their use, while services cannot be so defined, the very word ‘service’ implying a function, an activity, it is largely in this distinction that we find the source of the uniqueness of each individual.
    The result of this is that the concept of ‘capability’ is the capacity of a firm to convert resources they possess into the ‘service’. The good services might be produced by either ‘good resources’ or ‘average capability’ ‘average resources’ or ‘good capability’, if capability were a type of ‘score’ of capability, particular to each firm, e.g., good firms have a high ‘capability score’). The difference, or possibly the uniqueness, of a firm
    largely comes from these capabilities.

    Reply
  13. Uyeme Thomas Oyuo
    Uyeme Thomas Oyuo says:

    MY CONCLUSION IN SUPPORT OF THE ANALYSIS ON THE MANAGEMENT THEORY I
    Resources ought to be of value to their owner.
    In contrast, from a dynamic point of view, we could find an implied
    possibility in his framework that the competitive advantage may come from ‘imperfections in the factors markets’. Different firms and different owners in these markets will have different expectations about the future value of those resources, which create this imperfection. Therefore, different perceptions toward resources produce the possibility of a competitive advantage. This indicates that the abilities of the entrepreneur lie in discovering how to generate the real economic value with their resources in ways that others cannot anticipate.
    The abilities of the entrepreneur enable capabilities to be performed along the entrepreneur’s vision or strategy, capabilities enable resources to begin to be utilized, and the potential for the creation of output arises. By treating the relationship as such, we concluded that
    one of the objectives of corporate strategy is the function of a firm to obtain an entrepreneurial rent by exploiting the factor markets disequilibrium (i.e., to maximize the difference between exante values of inputs and export values of outputs in a dynamic world) through firm specific capabilities and resources which are directed by the abilities of an entrepreneur (originating from the heterogeneous perception of the entrepreneur).
    And most important entrepreneurial abilities for gaining the competitive advantage is, nothing to say, the firm’s skill or accuracy at perceiving the future value of resources.
    Finally, we suggest two ways for creating entrepreneurial rents,
    i.e., entrepreneurial arbitrage and entrepreneurial innovation. I concluded that the entrepreneurial innovation as an innovation to realize a future value syste through the new combinations of resources in present time and space, while the arbitrage is merely exploiting the unexploited opportunities
    in the present existing market.
    Although many scholars have contributed to identify the mechanism of sustainable competitive advantage of the firm by means of analyzing
    the resource based viewpoint of strategic management, few scholars have paid attention to the role of the entrepreneurial strategic decision process or the entrepreneurship as the source of competitive advantage. In order to deepen the understanding
    of the source of sustainable competitive advantage of a firm, i
    have to pay attention on not only to the expost mechanisms in which a firm manage to assure the realization of certain value, but also to the exante mechanisms in which an entrepreneur attempt to exploit the differences in their perception toward uncertainty.

    Reply
  14. SAMUEL OGA ALI
    SAMUEL OGA ALI says:

    FACULTY OF ADMINISTRATION
    DEPARTMENT OF ENTREPRENEURSHIP
    COURSE TITLE: PRACTICE OF ENTREPRENEURSHIP
    NAME: SAMUEL OGA ALI
    MATRIC NUMBER: NSU/PT/ENT/0002/16/17

    Question : What are the theory of entrepreneurs
    definition: An entrepreneur, as described by the Small Business Association, puts together a business and accepts the associated risk to make a profit. While this definition serves as a simple but accurate description of entrepreneurs, it fails to explain the phenomena of entrepreneurship itself. A number of theories exist, but all of them fall into one of five main categories
    Economic Theories: Economic entrepreneurship theories date back to the first half of the 1700s with the work of Richard Cantillon, who introduced the idea of entrepreneurs as risk takers. The classic, neoclassical and Austrian Market process schools of thought all pose explanations for entrepreneurship that focus, for the most part, on economic conditions and the opportunities they create. Economic theories of entrepreneurship tend to receive significant criticism for failing to recognize the dynamic, open nature of market systems, ignoring the unique nature of entrepreneurial activity and downplaying the diverse contexts in which entrepreneurship occurs.
    Resource-Based Theories: Resource-based theories focus on the way individuals leverage different types of resources to get entrepreneurial efforts off the ground. Access to capital improves the chances of getting a new venture off the ground, but entrepreneurs often start ventures with little ready capital. Other types of resources entrepreneurs might leverage include social networks and the information they provide, as well as human resources, such as education. In some cases, the intangible elements of leadership the entrepreneur adds to the mix operate as resource that a business cannot replace.
    Psychological Theories: Psychological theories of entrepreneurship focus on the individual and the mental or emotional elements that drive entrepreneurial individuals. A theory put forward by psychologist David McCLelland, a Harvard emeritus professor, offers that entrepreneurs possess a need for achievement that drives their activity. Julian Rotter, professor emeritus at the University of Connecticut, put forward a locus of control theory. Rotter’s theory holds that people with a strong internal locus of control believe their actions can influence the external world and research suggests most entrepreneurs possess trait. A final approach, though unsupported by research, suggests personality traits ranging from creativity and resilience to optimism drive entrepreneurial behavior.
    Sociological/Anthropological Theories: The sociological theory centers its explanation for entrepreneurship on the various social contexts that enable the opportunities entrepreneurs leverage. Paul D. Reynolds, a George Washington University research professor, singles out four such contexts: social networks, a desire for a meaningful life, ethnic identification and social-political environment factors. The anthropological model approaches the question of entrepreneurship by placing it within the context of culture and examining how cultural forces, such as social attitudes, shape both the perception of entrepreneurship and the behaviors of entrepreneurs.
    Opportunity-Based Theory: Prolific business management author, professor and corporate consultant, Peter Drucker put forward an opportunity-based theory. Drucker contends that entrepreneurs excel at seeing and taking advantage of possibilities created by social, technological and cultural changes. For example, where a business that caters to senior citizens might view a sudden influx of younger residents to a neighborhood as a potential death stroke, an entrepreneur might see it as a chance to open a new club.

    Though it occupies the center of most definitions of entrepreneurship, the concept of risk-taking and its linkages with other constructs (most notably personal traits) have been difficult to capture. As a result, it has been difficult to explain why entrepreneurs rush in to take advantage of opportunities that others fail to see or act upon. However, research on social cognition may shed new light on these challenging issues (Shaver and Scott 1991), providing useful frameworks that differentiate entrepreneurs from others while predicting differences in risk-taking behavior.
    Within the strategic management literature, Dutton and Jackson (1987) adopted categorization theory as a conceptual framework to explain how decision-makers evoke alternate strategic decision frames. They argue that the attributes of a particular issue cause the decision-maker to categorize that strategic issue in different ways, and this heuristic guides the meaning of a stimulus by directing attention toward some of its elements and away from others. Building upon this work and the knowledge structure literature, Gooding (1989) developed decision frames concerning perceptions of strengths/weaknesses and opportunities/threats. Using distinctive and equivocal data in scenarios, he found that distinctive data tended to evoke the same decision frame in all subjects, whereas equivocal data led to different decision frames among subjects. In other words, in the absence of a particular stimulus (i.e., a scenario is equivocal in nature), individuals tend to resort to a chronic frame of reference when interpreting those data.
    This research produced some revealing results, but these studies were not constructed to investigate the unique responses of entrepreneurs when faced with common circumstances. To extend this area of inquiry, we designed our study using a scenario approach to determine if entrepreneurs exhibit evidence of unique cognitive categorization processes when they are presented with equivocal data. Our findings proved interesting. As predicted, entrepreneurs did not vary significantly in their responses to a risk propensity scale, meaning that they did not perceive themselves as being any more predisposed to taking risks than nonentrepreneurs. This is consistent with previous findings. However, multivariate tests revealed that entrepreneurs categorized equivocal business scenarios significantly more positively than did other subjects, and univariate tests demonstrated that these perceptual differences were consistent and significant (i.e., entrepreneurs perceived more strengths versus weaknesses, opportunities versus threats, and potential for performance improvement versus deterioration). These results have implications for self-report risk propensity scales. Entrepreneurs may not think of themselves as being any more likely to take risks than nonentrepreneurs, but they are nonetheless predisposed to cognitively categorize business situations more positively. This interpretation leads entrepreneurs to view some situations as “opportunities,” even though others perceive them to have little potential (i.e., the latter view these situations as risky ventures that offer disproportionately low returns relative to their associated risks).
    These results offer hope to those who aspire to identify and exploit business opportunities, even when they are distracted by the perceived high risk of these ventures. Unlike personal traits, cognitive processes can be changed. That is, if certain aspects of cognition are different for entrepreneurs, or more successful entrepreneurs, these processes can be learned or mastered through programs such as “frame of reference” training. This approach has successfully increased the assessment accuracy of individuals charged with various assignments, including performance rating (cf. Sulsky and Day 1992). These efforts may be adapted for training in opportunity evaluation, allowing those predisposed to negative framing to increase the frequency of correct categorizations.
    Our results also offer the potential to develop a taxonomy that may help to identify entrepreneurs, a tool that would be useful to firms interested in assessing individuals’ natural potential for entrepreneurial behavior. At the same time, systematic differences in cognitive processes may permit the differentiation of entrepreneurs from small business owners, which would be useful since these groups often cannot be determined from the size of an enterprise (i.e., both tend to be associated with smaller ventures). Finally, such taxonomy would provide the impetus for future research that may further define characteristics of risk-taking and, indeed, the nature of entrepreneurship itself.

    Reply
  15. IDRIS MAIMUNATU NDAKO
    IDRIS MAIMUNATU NDAKO says:

    NASARAWA STATE UNIVERSITY, KEFFI
    FACULTY OF ADMINISTRATION
    DEPARTMENT OF ENTREPRENEURSHIP
    COURSE TITLE: THEORIES OF ENTREPRENEURSHIP
    NAME: IDRIS MAIMUNATU NDAKO
    MATRIC NO: NSU/ADM/ENT/1066/17/18
    ASSIGNMENT QUESTION:
    Critically analyze the management theory of entrepreneurship support or criticize it with examples

    According to Van Praag (1999), Richard Cantillon was the fist economist to acknowledge the entrepreneur as a key economic factor in his posthumous “Essai sur la nature du commerce en general” first published in 1755 (Cantillon, 1959). Cantillon saw the entrepreneur as responsible for all exchange and circulation in the economy. As opposed to wage workers and land owners who both receive a certain or fixed income/rent, the entrepreneur earns an uncertain profit (Hebert and Link, 1988). Cantillon’s entrepreneur is an individual that equilibrates supply and demand in the economy and in this function bears risk or uncertainty. Say (1767-1832) provided a different interpretation of the entrepreneurial task. He regarded the entrepreneur as a manager of a firm; an input in the production process. (Say, 2001). Say saw the entrepreneur as the main agent of production in the economy. Rather than emphasizing the risk-bearing role of the entrepreneur, Say stressed that the entrepreneur‟s principle quality is to have good judgment (Hebert & Link, 1988, p. 38). The entrepreneur acts in the static world of equilibrium, where he assesses the most favorable economic opportunities. The payoff to the entrepreneur is not profits arising from risk-bearing but instead a wage accruing to a scarce type of labor, the role of the entrepreneur is separated from that of the capitalist. In his “Principles of Economics,” the early neo-classical economist, Alfred Marshall, also devoted attention to the entrepreneur. In addition to the risk bearing and management aspects emphasized by Cantillon and Say, Marshall introduced an innovating function of the entrepreneur by emphasizing that the entrepreneur continuously seeks opportunities to minimize costs (Marshall, 1964). An entrepreneur can fulfill different functions (Fiet, 1996). Other researchers distinguish between the supply of financial capital, innovation, allocation of resources among alternative uses and decisionmaking as functions of an entrepreneur. They use the following definition of an entrepreneur which encompasses the various functions: “the entrepreneur is someone who specializes in taking responsibility for and making judgmental decisions that affect the location, form, and the use of goods, resources or institutions” (Hébert and Link, 1989, p. 213). Wennekers and Thurik (1999) Schumpeter defines entrepreneurship from the economics perspective by focusing on the perception of new economic opportunities and the subsequent introduction of new ideas in the market. Entrepreneurs identify opportunities, assemble required resources, implement a practical action plan, and harvest the reward in a timely, flexible way (Sahlman and Stevenson 1991, p. 1). Those in the management world may apply Schumpeter‟s definition: entrepreneurship is a way of managing that involves pursuing opportunity without regard to the resources currently controlled.

    Reply
  16. ALADE NGHARGBU JOHN NSU/ENT/PT/0019/16/17
    ALADE NGHARGBU JOHN NSU/ENT/PT/0019/16/17 says:

    ANSWERS
    INTRODUCTION
    The definition of entrepreneurship involves creation of value through fusion of
    capital, risk taking, technology and human talent. It is a multidimensional concept.
    The distinctive features of entrepreneurship over the years are:
     Innovation,
     A Function of high achievement,
     Organisation building, Group level activities,
     Managerial skills and leadership,
     Gap filling activity
     Entrepreneurship – An emerging class.
    For Scientist, „theory‟ refers to the relationships between facts. In another words,
    theory is some ordering principles. There are various theories of entrepreneurship
    which may be explained from the viewpoints of economists, sociologists and
    psychologists. These theories have been supported and given by various thinkers
    over a period of more than two and half centuries.
    Although the current popularity of entrepreneurial exploits would tend to make you
    think that it is a twentieth or twenty first century phenomenon, but it‟s not like this.
    Early in the eighteenth century, the French term entrepreneur was first used to
    describe a “go between” or a “between-taker.” Richard Cantillon, a noted
    economist and reknowned author in the 1700s, is regarded by many as the

    Reply
  17. NWAIRE FAITH CHIAMAKA
    NWAIRE FAITH CHIAMAKA says:

    NWAIRE FAITH CHIAMAKA
    ENT/PT2/0016/16/17
    CRITICALLY ANALYZE THE MANAGEMENT THEORIES OF ENTREPRENEURSHIP SUPPORT OR CRITICIZE IT WITH EXANPLE

    The organization and coordination of the activities of a business in order to achieve defined objectives. Management is often included as a factor of production along with machines, materials, and money.
    The basic task of management includes both marketing and innovation. Practice of modern management originates from the 16th century study of low-efficiency and failures of certain enterprises.
    Management consists of the interlocking functions of creating corporate policy and organizing, planning, controlling, and directing an organization’s resources in order to achieve the objectives of that policy.
    The chief aim of this study is to review the management theories and paradigms which are capable of incorporating and linking individual and organizational level studies to the external context where entrepreneurs compete and seek opportunities. Traditionally, on each level specific theories and paradigms have been developed to tackle macroeconomic, organizational or individual questions. But because these levels are intimately intertwined results reached on any one level tend to be partial and limited. These reasons justified Low and
    an integration of the different levels in empirical research.
    Conclusions
    Entrepreneurship research has progressed considerably over the last three decades.
    Reality proved more complex than expected and it has been all the power of the cognitive theory has been required to create more abstract and comprehensive constructs such as self-efficacy to cope with the problem. The cognitive model plays a determinant role in understanding all the phases of the entrepreneurial process, and is the cohesive element that permits the inclusion of managerial approaches in individual level analysis in entrepreneurship research.
    The natural extension of the successful individual cognitive theories to the realm of management, using management concepts for each entrepreneurial process phase, rather than combining or merging existing theories, is likely to be the approach that will yield the best results in the near future.
    Entrepreneurship, for it is opportunity grasping that really lies at its core. At the same time, denying a role to innovation in an organizational level framework would subtract explanatory power from the entrepreneurship model.

    Reply

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