Entrepreneurship – some views from the UK Professor Ronald W. McQuaid Malcolm Greig Shandong...
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Transcript of Entrepreneurship – some views from the UK Professor Ronald W. McQuaid Malcolm Greig Shandong...
Entrepreneurship – some views from the UK
Professor Ronald W. McQuaidMalcolm Greig
Shandong University of Finance,
Jinan, P.R. China
March 2005
Employment Research InstituteNapier University
Adam Smith1723-1790
economist from Scotland
Employment Research InstituteNapier University
OUTLINE OF THE TALK
• What is entrepreneurship?
• Types of business start-up entrepreneurs
• Policies to support new businesses
Employment Research InstituteNapier University
Entrepreneurship in Neo-classical Economics
• Output = f(K, L, N)
• Capital
• Labour
• Land
• Entrepreneurship (?)
Employment Research InstituteNapier University
PERSPECTIVES ON ENTREPRENEURSHIP
• Entrepreneurship as starting a new business
• Entrepreneurship as a small business (SME)
owner-manager
Employment Research InstituteNapier University
Changes in Total and Self-Employment (1980 = 100)
Employment Research InstituteNapier University
100
110
120
130
140
150
160
170
1980 1985 1990 1995 1999
Total Employment Self Employment
Entrepreneurship as a function in the economy
Risk
Co-ordination, allocation and use of resources
‘Middleman’
Employment Research InstituteNapier University
Entrepreneurship as a function in the economy
Innovator –
• Products
• methods of production, new markets
• new sources inputs
• or by changing the structure of an organisation
or an industry
Employment Research InstituteNapier University
Registrations and De-Registrations as % of Stock, 1999
Employment Research InstituteNapier University
0 5 10 15 20 25 30 35
All industries
Other Services
Agriculture, fishing
Mining, energy
Manufacturing
Construction
Wholesale, retail, repairs
Hotels, restaurants
Transport
Finance
Business services
Education, health
Registrations De-Registrations
Entrepreneurship as a set of personal characteristics
• Samuel Smiles (1859): the key psychological traits
of an entrepreneur were integrity, self-learning,
courage, conscientiousness, patience,
perseverance, self-discipline and self-respect.
Employment Research InstituteNapier University
Entrepreneurship as a set of personal characteristics
More modern:
Particular qualities or attitude
motivations
their being a ‘great leader’
or social forces
‘Everyman’
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Entrepreneurship as a form of behaviour
What entrepreneurs do, rather than who they are
Employment Research InstituteNapier University
Entrepreneurship as a form of behaviour
PETER DRUCKER, 1985, said:
an entrepreneur is a person who “always searches
for change, responds to it, and exploits it as an
opportunity.”
entrepreneurship “consists in the purposeful and
organised search for changes, and in the
systematic analysis of the opportunities such
changes might offer for economic or social
innovation”
Employment Research InstituteNapier University
Entrepreneurship as a form of behaviour
STEVENSON and SAHLMAN, 1989,
“entrepreneurship is most fruitfully defined as the
relentless pursuit of opportunity without regard to
resources currently controlled”.
So we can have “Enterprising Employees.”
Employment Research InstituteNapier University
Entrepreneurship as starting a new business
Employment Research InstituteNapier University
Who starts an innovative business?
Type 1:
An experienced employee working in an
established company who cannot advance any
further on the career ladder in their current place
of employment. Setting up their own business
allows them to advance both in career and income
terms.
“Pull motivation”
Employment Research InstituteNapier University
Entrepreneur Backgrounds
Type 2:
An experienced worker in an existing company
forced into setting up their own business as a
result of employment insecurity caused principally
by their age.
“Push motivation”
Employment Research InstituteNapier University
Entrepreneur Backgrounds
Type 3:
A younger and well educated person. Motivations
for starting businesses were more complex than in
the other two cases.
Major factors were a desire for independence, a
means of achieving self fulfilment and an intense
interest in a trade.
“Pull motivation”
Employment Research InstituteNapier University
Richard Branson (Virgin)
I never once started a business with the sole
motivation of making money
Employment Research InstituteNapier University
Profile of an EntrepreneurCharacteristic Traits
Self confidence Belief in ability, independence, optimism
Strong will power Persistence and perseverance, determination
Task / result oriented
Achievement-oriented, hard work, initiative
Risk-taker Risk assessment and judicious risk taking ability
Leadership Good communicator, responsive to suggestions, develops other people
Originality Innovative, creative, flexible. resourceful, versatile, knowledgeable
Future-oriented Foresight, vision, perceptiveness
POLICIES
Macro-level policies to promote entrepreneurship
• Stable Economy
• Currency
• Interest rates
• Inflation
• Taxation
• Legal and financial system
• Lack of corruption
Employment Research InstituteNapier University
Change in the Stock of (VAT) Enterprises (1000s)
Employment Research InstituteNapier University
-60
-40
-20
0
20
40
60
80
100
POLICIES
Micro-level policies to promote entrepreneurship
• advice and training
• finance
• technology
• markets
• physical infrastructure
• entrepreneurial culture
Employment Research InstituteNapier University
How to best include dynamic entrepreneurship into
our models?
To improve models
To improve policies
Employment Research InstituteNapier University
The End
http://www.napier.ac.uk/depts/eri/home.htm
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Success Factors in SMEs
Storey (1994) provides a series of factors which
appear common to growth start-up companies.
Successful companies demonstrate an ability to
shift into (usually marginal) different product
markets.
Most growing companies recruit experienced
management from outside.
Marketing expertise is critical for new companies
with new products.
Employment Research InstituteNapier University
Success Factors in SMEs
Human resource management policies should link
different parts of the small firm together, and
encourage team working and flexible management
systems.
Businesses which survive and grow reinvested
heavily in the company and take out few profits for
personal consumption.
Employment Research InstituteNapier University
Success Factors in SMEs
Successful companies must have good, long-term
relationships with banks. This is helped by good
financial management to track performance.
He recommends a shift away from overdrafts to
longer term loans and equity investments by
banks to allow more company stability. Owners of
companies must also be more willing to invite
outside investment from this and other sources.
Employment Research InstituteNapier University
Success Factors in SMEs
Those companies which are successful tend to
seek quality private sector advice from solicitors,
accountants and management consultants.
Employment Research InstituteNapier University