From the street vendors in Turkey and India to Steve Jobs of Apple Inc., or from the sole proprietor bookkeeping company to the Fairchildren, which are spin-offs from former employees. They all could name as entrepreneurs. However, are there such things as entrepreneurial characteristics? Do entrepreneurs have features that differentiate them apart from other individuals? Moreover, which of those characterizes could lead to entrepreneurial entry? Could potential entrepreneurs learn these features to become a success business man? In the following part, the different academic views to answer these questions are discussed.
Definition
Entrepreneurship is an inherently multi-disciplinary study, thus, it is hard to separate it from other disciplines, such as sociology, economics, psychology, strategic management, industrial economics and social geography. Meanwhile, the entrepreneurship study area also benefits from these subjects. Therefore, it is tough to define this study area. However, many scholars try to do so in many ways.
Initially, in the Venkataraman (1997), entrepreneurship was defined solely regarding ‘who the entrepreneur is and what he/she does?’. However, this is an incomplete definition. Individual stable characteristics cannot be the single explanation to define entrepreneur because entrepreneurship is transitory (Shane & Venkataraman, 2000). The situation, environment, and the particular context matter because they influence the availability of entrepreneurial opportunities (Shane & Venkataraman, 2000). They also shape people's tastes and preferences to choose entrepreneur as a career (Shane & Venkataraman, 2000).
In the Shane & Venkataraman (2000), they stated that (1) entrepreneurial opportunities exist, but not everyone will know them; (2) people have different perceptions of the value of an opportunity both on financial and non-financial side; (3) some people will choose to pursue these opportunities; (4) meanwhile, acting on these opportunities will lead to differing outcomes. Shane and Venkataraman (2000) describe the entrepreneurship as a process of the existence of entrepreneurial opportunities, discover and exploit the opportunities.
The individual and context both necessary to shape and define the entrepreneur. The presence of enterprising individuals, the existence of business opportunities and how individuals utilize the opportunities are all contributed to the entrepreneurship (Shane & Venkataraman, 2000). Therefore, the study of the entrepreneurship involves the sources of opportunities; the process of discovery, and exploitation of opportunities.
First of all, the existence of entrepreneurial opportunities, Shane & Venkataraman (2000) believed that opportunities are an objective phenomenon, but the recognition of the opportunities is a subjective phenomenon; opportunities found in both product market and factor market. Meanwhile, there are different types of opportunities that potential entrepreneur could explore, such as the opportunities arise from the information on unmet demand, exploitation of market inefficiencies resulting from information asymmetry and reaction to shifts in relative costs of alternative uses of resources (Shane & Venkataraman, 2000).
Second, regarding the discovery of the entrepreneurial opportunities, there are several theories such as information corridor which means individuals are heterogeneous in their information load because of previous education and work experience. It creates differences in how individuals experience and view the opportunity. More on this topic will discuss in the opportunity recognition part. Alternatively, the theory of cognitive properties which means even if the individual has obtained the information needed, he or she may not be able to understand or discover the same entrepreneurial possibilities.
Last but not least, the exploitation of entrepreneurial opportunities. Whether individuals exploit the opportunity or not depends on two things. One is the characteristics of the opportunity; another one is individual entrepreneur factor. More attractive of the opportunity with the features such as expected value high, expected demand high and low capital costs, the more likely the entrepreneurial opportunities got exploited. Meanwhile, the lower opportunity costs, better social or professional ties of entrepreneur and minor obstacles to financial capital, the more likely the entrepreneurial opportunities got exploited.
In sum, entrepreneurship involves the study of the presence and sources of opportunities; the process of discovery and exploitation of opportunities; and the individuals that discover, evaluates and exploit these opportunities (Shane & Venkataraman, 2000). In short, the people identify and exploit the opportunities.
Entrepreneurship study helps policy maker, self-employers, and academia to understand several important mechanisms. First, it contributes to understanding the mechanism that drives innovation and technological change. Entrepreneurs, or wild spirits, do new things or do the same thing but in a different way (Schumpeter, 1934). Entrepreneurial spirits sometimes link with the disruptive innovations. Second, it contributes to understanding the mechanism through which temporal, spatial and demographic inefficiency in an economy are discovered and evened out (Kirzner, 1997). Third, it contributes to understanding the mechanism to understand how technical information converted into products and services (Arrow, 1962).
