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Functions and Characteristics of Entrepreneurship

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An entrepreneur creates and exploits changes for profits by innovating, accepting risk and moving resources to areas of higher return (Burns, 2016). Knight (1921) suggested that the entrepreneurs were fear with efficiency in the use of economic factors, the can reduce waste, increase saving and create value and news, and they understand the opportunity risk-reward relationship. So, they don’t afraid to take risk and uncertainty situations. Another author noted that entrepreneurs proactively ‘created’ opportunity using ‘innovative combination’ which often included ‘creative destruction’ of passive or lethargic economic markets (Schumpeter, 1911). Every entrepreneur brings capital to their start-up. There are three kinds of capital: financial, human and social capital. Koskinen & Vanharanta (2002) and Lee et al., (2010) are defined these three capitals are generally thought to be facilitators of innovation activity, particularly in high technology firms. But lack of one kind of capital can be compensated for by an abundance of another. Financial capital includes cash, assets and allocate resources to begin any business. Entrepreneurs commit limited resources themselves, they can afford to lose.

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Entrepreneurs know that how much money can and should be increased, when should it be raised and from whom, what is a reasonable valuation of the startup and how should funding contracts and exit decisions be structured. Entrepreneurs also need human capital such as social skills, qualifications, abilities, education level, work experience, creative thinking and knowledge. Creativity can help to innovate new working practices and products. Knowledge and experience can give the insight when they face problem. If they don’t have experience and knowledge, education and qualification can alert to the problems and give skill to overcome them. Entrepreneurs need social capital for personal network of friends and commercial contact. Cross et al., (2005) and Hoppe (2010) said that networking has been found to be one of the most important factors underpinning long-term business performance. It can increase profitability because it generated opportunities for social learning, spotting business opportunity and access to finance [Chan and Foster (2001), Cron et al., (2006)]. They give professional advice and reduce the risk they face. Entrepreneurs have different kinds of character traits. They are need for independence, internal locus of control, creativity, innovation and opportunism and risk takers.

  • Need for independence Entrepreneurs don’t like working for other people. They need high autonomy and independence. They can do things differently, fulfil their potential and control their own destiny (Burns,2016).
  • Internal locus of control Entrepreneurs have a high level of self-confidence and self-motivation. They can get success to finish the job whatever they have stressful conditions. Entrepreneurs don’t think that their idea could be good but they know, it’s good. They realize that they are the only ones to make their idea a reality. They believe that they can control their own destiny and they know that big challenges breed big rewards. Successful entrepreneurs see a possible challenge and allow to spot an opportunity (Smale, 2015)
  • Creativity, innovation and opportunism Entrepreneurs have innovative ideas of doing things and they always think that how they can make them better and difference. They see opportunities and then use creative and innovative to exploit it. By being creative, they come up with ideas that change the world. So, every successful business is built on big ideas, and those big ideas need to come from a place of creativity, a way of thinking that differs from everyone else’s thinking (Patel,2017)
  • Acceptance of measured risk and uncertainty Entrepreneurs are risk takers, they ready to face problems and risks for the future of uncertainty. They look at challenges and risks as opportunities, not as problems (Burns,2016). Bhola et al. (2006) introduced the vision of business creation have two types of dynamics such as push or pull. Reynolds et al. (2002) defined this two that necessity entrepreneurship is related with push motivation and opportunity entrepreneurship is pull motivation. Reynolds et al. (2002) highlights the different between these two dynamics that appears only implicitly in the studies dealing with the decisional factors of new venture creation. According to Uhlaner and Thurik (2007), new venture creation follows to a pull dynamic when it is considered by the individual as a source of profit, be it material or not, and to a push dynamic when the creation results from a conflict between the situation the individual actually finds himself in and the one he looks for. Education Block and Sandner (2009); Block and Wagner (2006) said that education of entrepreneurs cannot see differences between two types of entrepreneurship (opportunity and necessity entrepreneurship). On the other hand, many studies show a positive association between the probability of starting up in business and increase in education attainment (Levie,2007). This may be because education increase their social capital.

In the same way, Bhola et al. (2006) and Robichaud et al. (2006), opportunity entrepreneurs are characterized by a higher level of education. Bergmann and Sternberg (2007) highlighted that the level of education does have any effect for opportunity entrepreneurship only. Age Vivarelli (2004) highlights that opportunity entrepreneurs are predominant and necessity entrepreneurs represent a significant part of potential and actual business founders. Reynolds et al. (2002) show that opportunity entrepreneurs are older (35-44 years) than necessity entrepreneurs (18-24 years). The proportion of the young entrepreneurs is increasing. Youth have creative thinking. But opportunity entrepreneurs bring experience, knowledge and an invaluable network of relationships and contacts. Equally, based on the 2002-2004 GEM data for Canada, Robichaud et al. (2006) associated youth with opportunity entrepreneurship. Family background The studies of Bhola et al. (2006), Levie,2010, Djankov et al. (2004) and Wagner (2005) show that having entrepreneurial parents or having worked in a family business, increases the probability of starting up in business and influences to opportunity rather than necessity entrepreneurship. Gender Different gender between entrepreneurship can effect push-pull dynamics. Orhan and Scott (2001), Hisrich and Brush (1985) defined that push dynamics (dullness, frustration and lack of evolution prospects in the professional life earlier entrepreneurship) have between female entrepreneurs but male entrepreneurs don’t have, push factors seem to predominate pull ones. Building on the work of Duchéneaut (1997), Orhan and Scott (2001) identified the necessity of a flexible job due to family responsibilities as a push factor among women. For these authors, social factors are the ones responsible for the entrepreneurial motivation differences between men and women. They explain that there are two major push factors among women: their role within the household, on one hand, and their position on the job market and more specifically an absence of professional prospects due to a male chauvinist organizational culture, on the other.

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