Nexus Between Entrepreneurship and Personal Environment

Discuss about the Nexus Between Entrepreneurship and Personal Environment.

Entrepreneurship has been identified as one of the forces that drive most of the developed economies. For instance, the start-ups and small businesses have created approximately 70% of new employment opportunities in the US economy (Yallapragada, & Bhuiyan, 2011). In the case of the developing countries, research indicates that the small businesses contribute 30% of GDP in addition to generating employment opportunities (Jasra et al., 2012). However, studies have shown that most of the new ventures do not survive three years after the start of the business (Barringer, 2012). As a result of this many researchers have researched to ascertain the possible cause of the mortality of the new companies. Rogerson & Mushawemhuka (2015) assert that external factors impact the success of a new business start-up and these include particular elements that the enterprise is confined within like the state boundaries, economic and socio-political factors. These conclusions are further cemented by Hopkins (2014) who argues that the same elements have an impact on education and risk levels, market access, general access to resources such as capital, workforce, and professionals.  These factors affect the limited survival chances of the start-up ventures. Based on the existing exploratory study, this report focuses on the personal environment as one contemporary issue affecting the entrepreneurial process of the start-up business.

Entrepreneurship and the success of start-ups are affected by the internal or organization based factors (personal environment) (Zamberi Ahmad, 2012). To explore the full impact of the personal environment of the entrepreneurial process and success, this report considers various elements of the personal environment. These include all business factors that are affected by particular actions of the enterprise such as accessibility of resources, individual aptitudes, and skills for accomplishing the entrepreneurial roles and the efficient exploitation of existing means of the venture. Chittithaworn et al. (2011), suggests that the failure of the SMEs is due to the scarcities in the internal environment, and 65% of the causes of failure being attributed to the organization itself.

The start-up ventures, as well as the small business enterprises (developed ventures), operate in an external environment that is hostile, with the same impairing factors that affect the already established companies in the same industry. The smallness is related to the rate of survival in addition to the scarcity of resources that also proved a significant liability (Aldrich & Yang, 2014).

Age of the venture is a factor that can impact the survival, development and or collapse and death of the start-up (Sarasvathy,  Menon  & Kuechle, 2013). The risk of survival in comparison to the existing and established businesses is associated with the newness of the venture because they do not possess the experience, accessibility, connections, and status of the older firms, thus limiting their access to exogenous resources

The sustainability, growth, and development of the start-ups can be affected by its initial organizational structure, methods of foundation and the strategic decisions (Roomi, 2013).

One of the roles of effects of ethical responsibility to the society is that it develops a positive reputation to the community Besser (2012) which is advantageous to the corporations. In contrast, the small medium enterprises are perceived by the community as capitalists, and thus their chances of survival are lower because their very first target customers are the community members who already have developed a negative attitude towards the business and of course its products or services.

Competitiveness and products and services

According to Soininen et al. (2012), a sustainable competitive edge is a significant factor in the determination of the sustainability, growth, and development of the start-up venture and it is attained by competitive strategies such as product/service differentiation. The everyday challenges of the start-ups include uncompetitive products or services, the absence of track records, limited product offering and unfamiliar brands which prevents them from achieving their sales target.

Human capitals are the approaches, obligation, principles, understanding, expertise, training, competencies and skills that aid the entrepreneur and the team in the initiation, growth, and success of the business. Korunka et al. (2011) suggest that the first internal factors for the business success are the primary resources that are invested in the company including the human capital. Over 50% of all business operations are dependent on the workforce thus the growth and survival of the business are substantially dependent on it. Some research show explicit evidence of the connection between the success of the start-up ventures and their human capital (Unger et al., 2011). Anderson & Eshima (2013) reasons that inadequate needful human resources are a significant aspect of the new ventures that limits them in the execution of their laid out strategies. The human capital aspects that determine the failure or success of the start-ups include the entrepreneurs’ background and activities, their choices, their strategy and leadership style. These elements further identify the motivations of the entrepreneur, the attitudes, capabilities and the kind of employees and managers that s/he engages.

More research has emphasized on the developmental influences of skilled or successive entrepreneurs who are motivated by entrepreneurs because they employ their experience to start and develop some innovative schemes at different times  (Zhang, 2011 and Kitching & Smallbone, 2012). It can, therefore, be said that the centrality of the success of the entrepreneurship process revolves around the entrepreneur. The entrepreneurship process is the appropriate path by which a new start-up is generated by an entrepreneur who decides to undertake an opening to create something unique in the marketplace and to further improve its worth in the case of dynamic competition and unstable market environment

Boyles (2012) assert that the drivers of the entrepreneurial process are the market opportunity, the right, and adequate resources and a leading entrepreneur backed up with the correct organizational structure and inspired group as shown in figure 1.

Both the innovativeness of the entrepreneur and the value, maturity, multiplicity, and expertise of the team are significant factors that determine the survivability and success of the small business enterprise. It is because of this that any strategy or activity that is associated with human capital is likely to affect either positively or negatively the business venture

These comprise of all the current and acquired information that results to specific behaviour and conduct of entrepreneurs that allows them to recognize and assess the existing market prospects; establish practical and achievable objectives; to acquire the necessary resources for establishing new businesses; and to effectively manage any rising conflicts with the aim of achieving the general industrial standard of business operations.

The advancement in years is positively related to work experience, which promotes the growth of entrepreneurial skills to the point where the drawbacks of old age begin. There are benefits and dis-benefits of starting new business ventures at extreme old or young age. Starting a business at an early age of below 22 years will imply a lack of proper schooling, training, and work-related skills (Hashi & Krasniqi, 2011). Whereas beginning at an advanced age suggests the lack of vigor and pliability of the young which the enterprise requires. Therefore, the ideal age to start a business is placed at 22 and 45. Lange, Marram & Bygrave (2012) suggests that a combination of youth and experience due to age leads to successful entrepreneurs.

Existing Research shows that the family background is crucial to the entrepreneurial success. The first family atmosphere comprises of the race, birth order, parents’ prominence and profession, view of prestige and viability (Ward, 2016). A youth growing up in a surrounding that imparts assurance in entrepreneurial success is more prone to initiate a bold step. Parents who are appropriately educated and who inspire self-confidence and independence in their children provide them with early benefits; whereas the wealthy parents can give start-up capital for their children Role models

The role model theory postulates that children are strongly influenced by parents who undertake a given entrepreneurial activity.  According to Fernández?Serrano & Romero (2013) observations, such entrepreneur parents are likely to have descended from entrepreneur parents and thus are expected to be advantageous in business than those that don’t to come entrepreneurial parents.

The capability of the company to compete is dependent on the education level of the entrepreneur which is associated with the information, skills, ability to find solutions to issues, discipline, enthusiasm, confidence and the general conduct of the entrepreneur that permit them to recognize market prospects and collect the necessary means to start up the venture (Pickernell et al., 2011). Knowledge can be acquired through education which consists of schooling, official and casual learning, teaching and coaching people

Entrepreneurs with rich former experience are likely to have more excellent entrepreneurial quality, because they will bring into the business the knowledge they had gained the process of learning which will aid them in the identification of market opportunities, minimize their initial inadequacy  and increase their ability in the successful business operations (Fernández?Serrano & Romero (2013). Prior experience can be in the fields of work, industry, and management of enterprises, as highlighted below (Unger et al., 2011and Fernández?Serrano & Romero, 2013).nd learn from it. Research shows that the entrepreneurs of the most of the successful businesses were individuals who were first employed before they started their firms, and it is therefore probable that they used the acquired skills to recognize market opening and the technical aptitude to create a product or service (Hashi & Krasniqi,  2011 and Marram & Bygrave, 2012). It is more challenging for those people without any work experience to develop an innovative business idea, and thus their business is likely to stagnate, fail or not start (Marram & Bygrave (2012).

Experience of business ownership

Entrepreneurial experience is also perceived as a crucial aspect in the human capital because it can lead to quality knowledge acquired through the direct experience. Such an experience of business ownership can be used to secure resources and assets that are significant in the initial set up of the business and subsequent expansion of the venture (Fernández?Serrano & Romero, 2013). However, some lucky entrepreneurs have started businesses without any former experience in business option, but they have to incur extra costs in the acquisition of entrepreneurial skills while implementing the idea at the same time.

An entrepreneur who ventures into a new business while in possession of higher professional expertise within the similar industry is more likely to perform and survive. Relevant experience in a particular sector is vital for it helps the entrepreneur to respond to specific market needs in addition to creating links in the industry (Hashi & Krasniqi,  2011 and Fernández?Serrano & Romero, 2013). This is the knowledge that is usually implied and expensive to develop, hence those entrepreneurs who lack it will look at the initial stages of the business struggle even to set sales and expenditure targets.

Conclusion

The researcher attempted to find out the most contemporary issue affecting the entrepreneurial process from extant literature and found out that personal environment is the most significant determinant of the success of business start-ups. The report tried to explore all the elements associated with the personal or internal environment of the enterprise and their relative impacts on the success of the start-up ventures. The enterprise characteristics were considered from the perspective of the business age in operations, its size, organizational structure, and product competitiveness. These factors affect the general survivability of the venture. The human capital was also an aspect of the personal environment, and it’s associated with all the skills and expertise of the workforce which affects the quality of product or service delivery. The entrepreneurial characteristics also were found to determine the success of the start-up in that capabilities and skills of the lead entrepreneur assess the level of motivation and courage to step forward. Lastly, the former experience of the entrepreneur was also found to affect the success of the new business venture because the ability to cope with the dynamic of the market was found to be related to the relevance of former work experience to the current industry.

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