Monday, July 23, 2012

DARASA:ENTERPRENEURSHIP(UJASIRIAMALI)SEHEMU YA 3

ENTREPRENEURIAL PROCESS/START UPS
LEARNING OBJECTIVES

1. To identify the basic types of start-up ventures.
2. To explain the role of entrepreneurship in economic development
3. To discuss the ethics and racial responsibility of
TYPES OF START-UPS
Life-Style Firms
A life-style firm exists primarily to support the owners and usually has little growth opportunity.
This type of firm may grow after several years to 30 or 40 employees.
Foundation Companies
A type of company formed from research and development that usually does not go public. This firm can
grow in five to ten years from 40 to 400 employees.
High-Potential Venture
A venture has high growth potential and therefore receives great investor interest. The company may start
out like a foundation company, but its growth is far more rapid. After five to ten years the company could
employ around 500 employees. These firms are also called gazelles and are most important for the
economic development of an area.
ROLE OF ENTREPRENEURSHIP IN ECONOMIC DEVELOPMENT
The role of entrepreneurship in economic development involves initiating change in the structure of
business and society. One theory of economic growth depicts innovation as the key, not only in
developing new products, but also in stimulating investment interest. The new capital created expands the
capacity for growth (supply side), and new spending utilizes the new capacity and output (demand side.)
In spite of the importance of investment and innovation in the economic development of an area, there is
still a lack of understanding of few factors which are as follows:
The product-evolution process is the process through which innovation develops and
commercializes through entrepreneurial activity, which in turn stimulates economic growth. It
begins with knowledge in the base technology and ends with products or services available in the
marketplace.
The critical point in the process is the intersection of knowledge and a recognized social need,
called the iterative synthesis. This point often fails to evolve into a marketable innovation.
Most innovations introduced in the market are ordinary innovations, with little uniqueness.
Technological innovations refer to new products with significant technological advancements.
Breakthrough innovations mean the development of new products with some technological
change.
Regardless of the level of uniqueness or technology, each innovation evolves into and develops towards
commercialization through one of three mechanisms: the government, entrepreneurship, or
entrepreneurship. Entrepreneurship has assisted in revitalizing areas of the inner city. Individuals in innercity
areas can relate to the concept and see it as a possibility for changing their present situation.

GOVERNMENT AS AN INNOVATOR
A government active in commercializing technology is known as an innovative government.
Commercializing technology is frequently called technology transfer.
However, few inventions resulting from government-sponsored research have reached the commercial
market. Most of the by-products from scientific research have little application to any social need. The
government lacks the business skills needed for successful commercialization. Government bureaucracy
and red tape also often inhibit the timely formation of the business. Recently, federal labs have been
required to commercialize some of their technology each year and some are providing entrepreneurial
training.
Entrepreneurship
Entrepreneurship refers to entrepreneurship within an existing organization or business structure.
Entrepreneurship can also bridge the gap between science and the marketplace.
Existing businesses have the financial resources, business skills, and marketing and distribution system to
commercialize innovation successfully. Often the bureaucratic structure, emphasis on short-term profits,
and structured organization inhibit creativity. Some corporations have tried to establish an
Entrepreneurial spirit in their organization, some in the form of strategic business units (SBUs.)
Entrepreneurship
The third method for bridging the gap between the science and the marketplace is via entrepreneurship.
Many entrepreneurs have difficult time bridging this gap and creating new ventures. They may often lack
managerial skills, marketing capabilities, or financial resources. They frequently do not know how to
interface with banks, suppliers, customers, and distributors. Yet, entrepreneurship is the most effective
method for bridging the gap and creating new enterprises, these activities affect an areas economy by
building the economic base and providing jobs.
ENTREPRENEURIAL CAREERS AND EDUCATION
Since 1985 there has been an increased interest in entrepreneurial careers fostered by factors such as
increased media coverage of entrepreneurs and employment shifts.
A conceptual model for understanding entrepreneurial careers views the career stages as interacting with
other stages and events in the individual’s life, the life-cycle approach. This approach conceptualizes
entrepreneurial careers in nine categories.
1. Educational environment
2. The individual’s personality
3. Childhood family environment
4. Employment history
5. Adult development history
6. Adult family/non-work history
7. Current work situation
8. The individual’s current perspective
9. The current family situation
Although there exist a common perception that entrepreneur are less educated than the general
population however studies have found entrepreneurs overall and female entrepreneurs in particular, are
far more educated than the general population. However, this education sometimes does not develop the
specific skills needed in the venture, especially for women entrepreneurs.

Childhood influences have been explored, particularly in terms of values and the individual’s personality
The traits most frequently researched are the need for achievement, locus of control, risk-taking, and
gender identity..
The research on the childhood family environment of the entrepreneur has had more definite results.
Entrepreneurs tend to have self-employed fathers, and many also have entrepreneurial mothers. The
family plays an important role in establishing the desirability of entrepreneurship as a career.
Employment history also has an impact on entrepreneur careers in both positive and a negative sense.
Entrepreneurs tend to have a higher probability of success when the venture created is in their field of
experience. Negative displacement (such as dissatisfaction with various aspects of ones job) also
encourages entrepreneurship.
Although no definite research has been done on the adult development history of entrepreneurs, it
appears to also affect entrepreneur’s careers. One’s development history has somewhat more of an impact
on women, since they tend to start businesses at a later stage in life.
There is a lack of data on adult family/non-work history and the available data adds little understanding
towards entrepreneurial career development.
Entrepreneurs are known for their strong work values, their long workdays, and their dominant
management style. They tend to fall in love with the organization and will sacrifice almost anything in
order for it to survive.
While in college, few future entrepreneurs realize that they will pursue entrepreneurship as their major life
goal. Relatively few individuals will start a business immediately after graduation. Entrepreneurship
education is a fast growing area in colleges and universities. While the courses vary by university, there is a
great commonality, especially in the initial few courses.
The skills required by entrepreneurs can be classified in to three main areas:
1. Technical skills involve such things as writing, listening, oral presentations, coaching, and technical
know-how.
2. Business management skills include those areas involved in starting, developing and managing any
enterprise.
3. Personal entrepreneurial skills differentiate an entrepreneur from a manager and include inner control
(discipline), risk taking, innovativeness, persistence, visionary leadership, and being change oriented.
These skills and objectives form the basis of the modular approach to an entrepreneurship curriculum.
Today entrepreneurs are recognizing the need to learn some of the "science" of management in an MBA
program in order to grow their businesses effectively in the global environment.
ETHICS AND SOCIAL RESPONSIBILITY OF ENTREPRENEURS
The entrepreneur must establish a balance between ethical exigencies, economic expediency, and social
responsibility. A managers attitudes concerning corporate responsibility tend to be supportive of laws and
professional codes of ethics. Entrepreneurs have few reference persons, role models, and developed
internal ethics codes. Entrepreneurs are sensitive to peers pressure and social norms in the community as
well as pressures from their companies.
While ethics refers to the "study of whatever is right and good for humans," business ethics concerns
itself with the investigation of business practices in light of human values. The word "ethics" stems from
the Greek ĂȘthos, meaning custom and usage.
Development of Our Ethical Concepts
Socrates, Plato, and Aristotle provide the earliest writings dealing with ethical conceptions; earlier writings
involving moral codes can be found in both Judaism and Hinduism.
American attitudes on ethics result from three principle influences: Judeo-Christian heritage, a belief in
individualism and opportunities based on ability rather than social status.

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