Enterprise and Small Business Management - Coursework Example

Enterprise and Small Business Management - Consider critically why the trait approach to entrepreneurial behaviour may not provide adequate explanation of the growing number of ethnic entrepreneurs within the United Kingdom. Discuss why this growth may be more appropriately explained through cultural and cognitive models of entrepreneurship rather than through trait theory. 1. Introduction The development of small enterprises in Europe as well as in the international market has been radical the last years. The need of people in order to be involved in autonomous efforts within the commercial market has been regarded as the main reason for the increase of the percentage of small businesses around the world. In this context, the development of appropriate theories referring to entrepreneurship and its role on the success of commercial initiatives has been increased the last years in order to respond to the needs of the market. The above issue has been examined by Mitchell et al. (2002, 93) who noticed that ‘recently, the application of ideas and concepts from cognitive science has gained currency within entrepreneurship research, as evidenced by the growing accumulation of successful studies framed in entrepreneurial cognition terms’. The theories of entrepreneurship used in order to explain the commercial activities of individuals in each particular market can be differentiated in accordance with the trends of the local market and the social and cultural characteristics of the state involved. However, common elements could be observed in entrepreneurship theories applied around the world in terms that these theories can be used in order to interpret the decisions and the initiatives of entrepreneurs within each particular market. Current paper focuses on the examination of the role of specific theories: i.e. of the trait theory and the cognitive model in the explanation of the increase of the number of ethnic entrepreneurs in Britain. The particular aspects of entrepreneurship in the specific country regarding especially the ethnic entrepreneurs that participate in the British commercial market will be also analytically presented. 2. Ethnic entrepreneurs in Britain Generally, it could be stated that the number of ethnic entrepreneurs in Britain is significant. The particular issue has been examined by Phizacklea et al. (1996, 319) who stated that ‘many of these choices are shaped by a hostile environment which operates in very similar ways in the two countries despite very different political cultures’. The above study was based on data revealed from UK and France. It was proved that despite the fact that the presence of ethnic entrepreneurs in Britain (as in France also) is strong, they seem to face problems in their adaptation at the local social and cultural context. Another issue that should be mentioned here is the fact that most of the businesses of ethnic entrepreneurs in UK are hold by families. This means that there is a strong support of the specific commercial initiative which could be regarded also as a factor for the success of the specific enterprise in the long term. Regarding this issue, it is noticed by Basu (2004, 12) that ‘despite the importance of the family in their businesses, ethnic minority entrepreneurs have diverse aspirations; it is possible to distinguish between those with business-first, family-first, money-first and lifestyle-first aspirations; their educational and family background affects entrepreneurs aspirations, as does their stage on the family life cycle’. In accordance with the above when trying to be established within the British market, an ethnic entrepreneur has to focus on a series of issues while the environment (mainly the family but also the social environment in terms of the ethnic community to which the particular entrepreneur belongs) in any case will affect the decisions made by the ethnic entrepreneur (whether the family is involved in the business or not). It should be mentioned that the role of ethnic entrepreneurs in the financial development of Britain seems to be significant. A relevant study made by Javed et al. (2007, 455) showed that ‘a considerable proportion of the growth in new venture creation can be attributed to ethnic minority graduates, who increasingly embark on entrepreneurship as a rewarding and fulfilling alternative to paid employment’. In other words, the development of small business sector in Britain should be considered as mostly related with the commercial activities of ethnic entrepreneurs who prefer to be engaged in their own business plans rather than work under a common ‘scheme of work’ (9-5) to a large corporation. However, their involvement in business cannot lead to the assumption that ethnic entrepreneurs in Britain are not educated. In fact, it has been proved that most of them are educated at a high level however it seems that ‘the main contribution of higher education for these graduate entrepreneurs was in the area of knowledge and skills acquisition while the main motivational factors seem to included lack of satisfaction in working for others, the need to be their own boss and achieve more, and the prospect of higher earnings’ (Javed et al., 2007, 455). The above findings have been retrieved through a survey made by the above researcher among young ethic entrepreneurs in UK. While many of them have chosen to study a subject related with business, in fact they proceeded to the above initiative mostly to increase their knowledge. On the other hand, the funds available for the beginning of a new business by ethnic entrepreneurs in UK seem to have a significant role for the development of this business in the future. In any case, the support provided by the government and the financial institutions could be increased focusing on the enhancement of new business ventures and the development of entrepreneurship across the country. 3. Explanation of the presence of ethnic entrepreneurs in Britain 3.1 General approach As already stated above, the increase of the numbers of ethnic entrepreneurs in UK can be explained using many different approaches. One of the most commonly accepted approach is the one based on the fact that ethnic entrepreneurs in UK are actively involved in business activities since their adolescence and for this reason they can easily respond to the demands of the market and the difficulties appeared during the business’ operation. On the other hand, it is supported by Rae (2007, 415) that ‘the development of entrepreneurial management skills by owner-managers of existing small firms has been neglected in comparison with the attention paid to new venture entrepreneurs; many small businesses are vulnerable in the period after start-up, or when faced with changes in the market, competition or technology’ (Rae, 2007, 415). The above assumption is related with the issues stated before that the financial support from government and financial institutions in UK towards ethnic entrepreneurs would be higher. However, the use of specific business plans and concepts (like the incorporation of Web as a tool for the promotion of the specific business activity) could help the specific business to be developed within the British market even if the financial support from the state or the financial institutions is limited. The specific issue was examined by Gatewood et al. (2002, 187) who made a relevant research and found that ‘individuals receiving positive feedback about their entrepreneurial abilities had higher entrepreneurial expectancies than individuals receiving negative feedback; males had higher expectancies regardless of experimental condition than females’. In other words, the success of business efforts of ethnic entrepreneurs in Britain can be depended on specific factors, especially on the views and the reactions of their environment which is proved to have a critical power in order to promote or eliminate the presence of a specific business (that operates within the borders of a specific ethic minority framework) within the market. From another side of view, business activities of ethnic entrepreneurs in UK have been also related with the skills/ experiences of these entrepreneurs in terms of the working experience within the market in which a specific business is going to operate. As stated above ethnic entrepreneurs in UK are likely to be involved in the business sector (through many roles) since their adolescence. This offers to them a unique experience of the relevant sector which they can use afterwards in order to set up their own business. The above assumption is supported by the views of Ram et al. (2001, 353) who found that ‘rather than co-ethnic ties, workers labour market experiences highlight the importance of the ‘opportunity structure’ in shaping employment choices; the goal of self-employment was not widely held; and although many workers did move around to acquire better paid work, this was not part of a strategic route to becoming an entrepreneur’. In other words, the efforts made by young entrepreneurs in UK market are considered as appropriate in terms of the target set but they are not always achievable mostly because the sector involved is already well developed and there are no much chances for other entrepreneurs who are possible interested in entering the specific area. This issue was examined by Henreckson (2006) who stated that ‘There are a number of measures that can be implemented to strengthen entrepreneurial incentives within extensive welfare states, but their implementation is unlikely because there are strong vested interests, including the incumbent business elite’ (Henrekson, 2006, 579). In accordance with the above even if entrepreneurial activities related with small businesses are well structured, there is always the risk of failure especially in case that a powerful enterprise enters the specific area. 3.2 Cultural and cognitive models of entrepreneurship As already noticed above many theories have been stated in the past in order to explain the success of entrepreneurs that have been involved in the small businesses’ sector. In accordance with Luthans et al. (2000, 95) ‘in the former planned economies, a major result of the economic reform programs has been the resurgence of private entrepreneurship; as these countries have struggled to make the transition to a market-based economy over the past decade, the environment has played an important structural role in entrepreneurial development’. The above assumptions could be regarded as most appropriate in states where entrepreneurship was limited because the commerce was conducted mainly by state-owned enterprises (like in most countries of East Europe). On the other hand, the development of business activities by ethnic entrepreneurs could be explained using different parameters as in the particular case the commercial attempts are made by people that do not belong in the same cultural background with the rest of the citizens but they are likely to belong to specific ethnic minorities living in specific areas across UK. In order to explore the above issues, the study of Werbner (1999, 548) lead to the following conclusion: ‘only by understanding the organisation of mass cultural production, on the one hand, and relativity of cultural value, on the other, can we arrive at a more subtle understanding of what motivates ethnic entrepreneurs’. The above assumptions refer especially to the potential explanation of success and failure in relation with the business activities in a specific market. In accordance with the above views, the success or the failure of an ethnic entrepreneur in the British market will be based on a series of factors; the support offered by the relevant community is proved to be inadequate if taking into account the current conditions of the specific market where the competition is extremely strong and the turbulences in the financial sector is a common phenomenon. Under these terms, no reference to stabilization can be made while the failure or the success of any ethnic entrepreneurs that activate in the particular market will be based on specific criteria – common for all the firms that operate within this market. 3.3 Trait theory In accordance with the views of Gartner et al. (1988, 11) ‘in the trait approach, the entrepreneur is assumed to be a particular personality type, a fixed state of being (once an entrepreneur, always an entrepreneur) while the behavioural approach focuses primarily on the organization, and views the individual in terms of activities (behaviour), or a role undertaken to enable the functioning of the organization’. Both the above approaches can be used in order to explain the increase of number of ethnic entrepreneurs in UK; however the second has more chances to be effective under the current conditions of the British market. On the other hand, Cromie (2000, 7) stated that ‘entrepreneurship is a process that often leads to the creation of new enterprises; while it is recognized that entrepreneurs and entrepreneurship are the products of various societal, organizational, and individual factors there can be also inherent personal traits of individuals that dispose them to engage in entrepreneurial acts’. The above explanation can be possibly used in order to support the choices made by ethnic entrepreneurs within the British industry as well as why the particular efforts are more likely to be succesful.Towards the same direction, the study of Holt (2007, 40) led to the conclusion that ‘contextual and process variables influenced corporate entrepreneurship while the individual characteristics did not; corporate entrepreneurship did mediate the relationship between these antecedents and job satisfaction, affective commitment, and performance’. Other suggestions could be also made regarding the ethnic entrepreneurship in UK; they could be all applied under the terms that appropriate preparation of the firms involved would be made in advance. 4. Conclusion As it is explained above the number of ethnic entrepreneurs in UK has been increased the last years. Indeed, the study of Love et al. (2006, 429) showed that ‘there has been an increasing level of interest in diversity in small business enterprises; this diversity has been largely focused on female and ethnic minority entrepreneurs’. On the other hand, the study of Basu (2004, 12) led to the conclusion that ‘differences in aspirations are related to the nature of business, the way in which it is managed, the recruitment of professional managers and entrepreneurial performance’. It seems that the cognitive approach would be most appropriate in order to explain the success of ethnic entrepreneurs within the British market. The support offered by the family and the community and the personal attitudes should be considered as playing the major role towards their success within the specific market. References Javed, H., Millman, C. (2007) Ethnic minority graduate entrepreneurs in the UK Characteristics, motivation and access to finance. Industry and Higher Education, 21(6): 455-463 Love, N., Lim, L. (2006) Female and ethnic minority entrepreneurship. The International Entrepreneurship and Management Journal, 429-439 Luthans, F., Stajkovic, A. (2000) Environmental and psychological challenges facing entrepreneurial development in transitional economies. Journal of World Business, 35(1): 95-110 Rae, D. (2007) Achieving business focus: promoting the entrepreneurial management capabilities of owner- managers. Industry and Higher Education, 21(6): 415-427 Ronald K. Mitchell, Lowell Busenitz, Theresa Lant, Patricia P. McDougall, Eric A. Morse, J. Brock Smith (2002) Toward a Theory of Entrepreneurial Cognition: Rethinking the People Side of Entrepreneurship Research. Entrepreneurship Theory and Practice 27 (2): 93–104 Elizabeth J. Gatewood, Kelly G. Shaver, Joshua B. Powers, William B. Gartner (2002) Entrepreneurial Expectancy, Task Effort, and Performance. Entrepreneurship Theory and Practice 27 (2): 187–206 Read More