Concept of entrepreneurship - part 2

The drivers of entrepreneurship based on the McClelland’s Theory are the need for power and achievement (Chen, Su & Wu, 2012). People who usually do things better than others and makes decisions during times of uncertainty tend to be successful entrepreneurs. This is contrary to Schumpeter’s “theory of entrepreneurship because entrepreneurs do not have to disturb the economy to become entrepreneurs. McClelland’s experiment showed hat motivation for achievement orientation is required to be an entrepreneur. This disputes the observation by Schumpeter that entrepreneurs are deviant. The need for achievement theory by McClelland (1961) only explains the driving force for people to accomplish, achieve, or excel. Entrepreneurs are motivated to undertake entrepreneurial ventures. However, the theory shares some of characteristics of entrepreneurship which are tolerance, need for achievement, innovativeness, and risk taking (Chen, Su, & Wu, 2012).  The theory does not support Schumpeter’s views because its major focus is sustaining equilibrium, while Schumpeter's conceptualizes on capitalism and using innovation to achieve an entrepreneur's destructive creation.

The Drucker’s Theory of Entrepreneurship holds that the role of an entrepreneur is to get and use resources (Littunen, 2000). The theory is different from Schumpeter (1934) because one has to have the resources for allocation to the opportunities at hand. In the latter case, an entrepreneur capitalizes on available ideas and does not need ownership of resources. Thus, when entrepreneurs direct their resources towards progressive opportunities, entrepreneurship is conducted. According to Drucker, an entrepreneur looks for change, exploits it and takes appropriate action in a bid to pursue the opportunity. Innovation entails the combination of knowledge and new ideas to develop into new value. Its absence in entrepreneurship makes a business obsolete and non-functional. Drucker (1993) on innovation and entrepreneurship contended that when entrepreneur innovates based on ideas and creates resources required to develop a business.  Both Drucker and Schumpeter share the view that it is not a must that entrepreneurs own both resources and their business. Drucker’s theory thus shares the concept of deviance in entrepreneurship. According to Drucker (1993), entrepreneurship involves: (1) creation of new values, (2) combination of resources; and (3) increasing value as well as satisfaction to the customer. This view supports Schumpeter argument that entrepreneurs are deviant because they can effectively use opportunities available to create and generate new products.

Schumpeter’s Innovation Theory is based on innovation and economic need to produce new products which are innovative. Drucker (n.d.) pointed out that Schumpeter has focused on innovation, which he considers as the basis for entrepreneurship. This is because innovation allows movement of resources from obsolescent and old to new, thus creating productive employments. This can explain the essence of the modern economy, and certainly economics. This kind of perception is derived from Marx’s view that economic development is driven by change, which is doing things in innovate and different ways (van Praag & Versloot, 2007). Innovation to Schumpeter is creative destruction because “it makes obsolete yesterday's capital equipment and capital investment” (Drucker, n.d, p. 3). Thus, for entrepreneurship to be successful and profitable, the Schumpeter's "innovator" is applicable. The center of this theory is social control which regulates behavior limit the extent to which one is ready to participate in “deviant” innovative entrepreneurial actions (Goss, 2005). Schumpeter casts the concept of entrepreneurship on innovation and deviance, which are evident in modern economies and enterprises.

The concept of deviance in entrepreneurship is applicable in the modern business world and is shared by the theories discussed above. For instance, innovation at a strategic level is a positive deviance, and it is at the center of the concept of entrepreneurship. Schumpeter (1934) contends that “the different employment of the economic system’s existing supplies of productive means is central to the concept of new combinations” (p. 68). The function of entrepreneurs is to undertake new combinations and create innovative instead of purely incremental types of existing enterprises. Schumpeter thus perceives these new combinations, as necessary and only derived by new, rather than established firms (Fuller & Warren, 2006). Successful entrepreneurs in the modern world conform to the descriptions provided in the different entrepreneurship theories, which makes them deviants. They employ their imaginations to envisage and symbolize new possibilities. In essence, the new possibilities nonetheless are often observed and applied at a strategic, instead of ethical, levels.

Julian Rotter introduced the Locus of Control orientation in the 1950s. Rotter (1966) has referred to Locus of Control as a person’s perception relating to the underlying primary causes of actions in their life. The locus of control orientation is based on internal control orientation external control orientation (Littunen, 2000; Kippenberger, 1997). According to Rotter (1966), an individual is seen as either external or internal. An internal control expectation implies the control over one’s life, while external controls focuses on the type of attitude which emphasizes on other people’s actions, chance, or luck. The theory of internal control expectations focuses on learning which motivates people to undertake an action such as entrepreneurship (Harrison & Leitch, 2005). The Internal-External Locus of Control Scale provides reasonable opportunities of change and success (Fuller & Warren, 2006). Personal influence which is a characteristic for entrepreneurship is represented under the Rotter’s (1996) theory.

Israel Kirzner has identifies spontaneous learning and alertness as the two primary characteristics of entrepreneurship. Thus, entrepreneurship entails the process of transforming spontaneous learning to motivation. Kibler (2013) noted that the Kirzner theory is based on the supposition that improvement in the technique of production results to change in the market. When there is a shift in the market as a result of production, the entrepreneur can create and provide new products which are innovative. Like other theories earlier discussed, profit opportunities attract entrepreneurs who capitalize in ensuring that products they offer are competitive and when the market is flooded, disequilibrium is created again. Kirzner (1997) stated entrepreneurial room lacks when there are no profit opportunities in the market. Kirzner's concept of entrepreneurship has identified a disequilibrium is solved via by alert entrepreneurs whose role is to produce as well exchange. Based on Schumpeter’s Innovation Theory the concept of deviance is applicable in this theory because the entrepreneur uses innovative was to bring the market to equilibrium. The entrepreneurs are risk takers and certain skills and knowledge about the market is required to be a successful entrepreneur. Thus, according to this theory, the meaning of entrepreneurship has changed to involve risk taking and need for achievement to enhance economic development. Atherton (2004) noted that ability to recognize opportunity in a market promotes entrepreneurship more than innovation.

The entrepreneurial process is a primary factor that contributes to economic development, while entrepreneurs are the key drivers of economic growth based on the views of Schumpeter (van Praag & Versloot, 2007). Moreover, small firms which are source of new innovations (Drucker 1985) can be developed to contribute positively to the economy. For instance, under the Kirzner theory the ability to recognize opportunity an entrepreneurship characteristic which is highly valued than innovation in defining entrepreneur (Martin & Wilson, 2010). In the modern world, entrepreneurs are deviant because they subconsciously discover new opportunities to earn money by producing a good. This can be exemplified by entrepreneur financing whereby entrepreneurship ventures borrow money from a capitalist, invests in the new opportunity, makes revenue, pays back the capitalist, and retains the pure entrepreneurial profit. Thus, just like Schumpeter and McClelland, entrepreneurship is about noticing new opportunities and using new combination, which is different from traditional way of operations to make new products (Atherton, 2004). Thus, an entrepreneur has to perceive an opportunity, pursue it through new organizations (Bygrave & Hofer, 1991).

Over the years, the roles of the entrepreneurs have changed and they can play in significant roles in developing economy today. Chell (2000) noted that the need by countries to remain competitive and increase the level of wealth has resulted to changes in entrepreneurship. For instance, as a result of the changes in the business environment, including harsh global, local competition, the rapid technological development, unexpected and sudden alteration of the demand, and increased business risks have resulted to changes in how entrepreneurs operate. As a result of these rapid changes, entrepreneurs have embraced innovation supported by entrepreneurial behaviour can promote survival of the businesses (Chell, 2000). In accordance to Rotter (1966) theory, entrepreneurship has shifted from the opportunities to personal influence. For instance, most innovative entrepreneurs have been driven by innovation and personal influence for businesses to be successful (Chell, 2000). The Schumpeterian notion of ‘creative destruction’ explains that entrepreneurship patterns break the old patterns, while new combinations introduce changes and dominant patterns of behavior within a period of time.

McClelland’s, Drucker’s, Schumpeter’s, Rotter’s, Kirzner's, and Schultz' theories all share the same view that entrepreneur capitalizes on new opportunities to develop an enterprise (Bygrave & Hofer, 1991). Thus, the meaning of entrepreneur has shifting to an individual who discovers business opportunities. Under Kirzner's and Schultz' disequilibrium supposition, the make produces opportunities and persons react to the opportunities through change of behaviour and acting. This process is comparable to the Schumpeterian innovative process which compels individuals to do things differently. In order to contribute to economic development, entrepreneur has changed over time and their roles have also changed. For instance, instead of waiting for resources, they can approach capitalists for financing. People have become innovative in the way they conduct business and this has resulted from limited resources (Alsaaty, 2011). Schumpeter’s 1934 view of the world is relevant today because entrepreneurs have to deviate from the social conformation set in order to be successful entrepreneurship. They must have the will to see new opportunities, act on the ideas, change the market, and risk in order to make profits.


The role of the entrepreneur has changed over time and they deviate from the conventional ways of operations to contribute to the economy. For instance, entrepreneurs are driven by the will to achieve when new opportunities present themselves. They use innovation and creativity to be successful. In addition, entrepreneurs shift the market from equilibrium through combination of new means of production and products. Thus, the view of entrepreneurs as deviants exists today. McClelland’s, Drucker’s, Schumpeter’s, Rotter’s, Kirzner's, and Schultz' theories in general have the ability to cooperate, to manage business, ,market their ideas to venture capitalists, are knowledgeable about the market, embrace innovation, and have the ability to take risks.





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