2.0 LITERATURE REVIEW
Literature is reviewed to cover the under listed areas; what is entrepreneurship?
Definition of Entrepreneurship
Concepts of Entrepreneurship
Characteristics of Entrepreneurs
Environment of Entrepreneurship
Factors influencing Investment in Agribusiness
2.1 Definition of Entrepreneurship,
The term entrepreneurship derives from French verb “entreprendre”, which means to: Undertake” (Hisrich, peters shepherd, 2008:6). One of the earliest reference to the term entrepreneurship has been traced to Richard Cantillion’s work (1734) who was the first to associate entrepreneurship with risk bearing. To contillion entrepreneurship was self-employment with an uncertain return (Lambing & kuehi, 2007:16).
Schumpeter categorically launched the field of entrepreneurship (1947), not only by associating entrepreneurs with innovation, but also by demonstrating the importance of entrepreneurs in “creative destruction” and hence economic development (Venter, Urban & Rwigema, 2008: 13).
In the words of innah and Omodu (2010), defining entrepreneurship as risk – taking neglects other major elements of Entrepreneurship, such as a well developed ability to recognize Unexploited market opportunities. Again, defining entrepreneurship as a stabilizing force limits entrepreneurship to reading markets disequilibria, while entrepreneurship defines as owning and operating a business, denies the possibility of entrepreneurial behaviour by non-owners, employees and managers who have no equity stake in the business.
Therefore, he deduced that the most appropriate definition of entrepreneurship is the one which defines entrepreneurship as a force that mobilizes other resources to meet Unmet market demand”, the ability to create and build something from practically nothing” and the process of creating value by value pulling together a Unique package of resources to exploit an opportunity”.
However, Timomons (1994) defined entrepreneurship as a attempt to create value through recognition of business opportunity, the management of risk or risk-taking appropriate to the opportunity and through the communicative and management skills to mobilize human, financial and material resource necessary to bring project to function.
Defining entrepreneurship has been problematic as academics and researchers fails to come to generally accepted definition of the term entrepreneurship
(Burns, 2007:7). Hisrich et al (2007) believe that the development of the theory of entrepreneurship parallels to a great extent to the development of the term itself and provided below.
At Middle Ages entrepreneurships are known as the actor and person in charge of large-scale projects, in 17th century entrepreneurship are the entrepreneur bear risk of profit/loss-buy at certain price and sell at uncertain price. 18th century, they are known as the person with capital were distinguished from person who needed capital while 19th and 20th century, they recognized as entrepreneurs organizes and operates a business for personal gain. They are viewed as an innovator that develops something unique (Hisrich et al 2008:6-7). Stevenson and Jarillo (1990:23) defines entrepreneurship as the process by which individuals, either on their own or inside organizations, pursuer opportunities without the resources they currently control.
Stighler (2001) defines entrepreneurship as the process through which individuals and teams create value by bringing together unique collection of resources to take advantage of opportunities. It can occur in any organizational context and results in a variety of possible outcomes, services, processes market and technologies.
Entrepreneurship has the ability to see and assess opportunities and more importantly, are able to initiate the appropriate actions to ensure success. Kirby (2003) in his words opined that it is this last factor that distinguishes an entrepreneur from an inventor. He further defines entrepreneurship as the ability to create and build something from practically nothing. It is initiating, doing, achieving and building a business, rather than just watching analyzing or describing one.
Further emphasis to the process notion comes from Rwigema and Venter (2004), that defines entrepreneurship as the process of conceptualizing, organizing lambing and through innovation, nurturing a business opportunity into a potentially high growth venture in a complex, unstable environment. Also, Morris et al (2008) define entrepreneurship as the process of creating value by bringing together a unique package of resource to exploit an opportunity.
Hisrich et al (2008) again, define entrepreneurship as the process of creating something new with value by devoting the necessary time and effort, assuming the accompanying financial, psychic and social risks and receiving the resulting rewards of monetary and personal satisfaction and independence. From as human orientation, Timmons and spinelli (2009) define entrepreneurship as a way of thinking, reasoning and acting that is opportunity obsessed holistic in approach and leadership balanced.
2.2 Concepts of Entrepreneurship
Entrepreneurship involves a process. According to Shane, locke and Collins (2003), this process is manageable, can be broken into steps and is ongoing. Further more, it can be applied in any business context (Collins, Smith and Hannon, 2006).
Entrepreneurship creates value where there was none before. The creation of this value has to have both value to the entrepreneurship (Nieu-wenhwizen 2003) and value to the audience for whom it was developed (Hisrich 2008). Entrepreneurs put together resources in a unique way. Unique combinations of money, people, procedures, technologies, materially facilities, packaging, distribution channels and other resources (Thornbery, 2003). They are opportunity driven (Kirby, 2003). The ability of Entrepreneurs to spot an opportunity arising out of charge or even create it then focus resources on delivering what the market want is the essence of their success (Burns, 2008). Assuming the risk is the final aspect of entrepreneurship.
Risk is inherent in the known future and is enhances by the novelty intrinsic to entrepreneurial behaviour, such as the creation of new products, services or processes (Hirich et al 2008).
Entrepreneurship thus results in the creation, enhancement, realization and renewal of value which encompasses the process of creation and/or recognition of opportunities.
It therefore requires a willingness to take calculated risks and then to do everything possible to reduce the chance of failure. Entrepreneurs, typically, would devise ingenious strategies to marshal and control their limited resources (Temmons and Spinelli, 2009).
2.3 Characteristics of Entrepreneurs.
The firs approach, which focuses on the person of the entrepreneur researcher has tried to identity traints or characteristics of individuals in a effort to differentiate entrepreneur from non-entrepreneurs (Maes, 2003). Personality traints are defined as dispositions to exhibit a certain kind of response across various situations. There fore, it is assumed that personality traits are predictor of entrepreneurial behaviour (Ranch and Frese, 2007) and can be viewed as the psychological underpinnings of the human capital existing in a business, as it refers to the stock of experience, silks and knowledge accumulation by its refers to the stock of experience, skills and knowledge accumulation by its members over time (Marcati, Guido and Peluso, 2008). The characteristics of individual are there fore fundamental to nurture and sustain entrepreneurial behaviour (Hayton and Kelly, 2006). Whether these entrepreneurial tendencies exist at birth or an developed as a person matures, certain characteristics are usually evident in those entrepreneurs who enjoy success (lambing and (Kuehl, 2007)
The characteristics of entrepreneurs are listed below as follows.
(i) High levels of commitment.
Commitment is viewed as more important than any other factor since an entrepreneurs must over come many obstacles and set backs (Kwartko and Hodgelts, 2004). Entrepreneurs therefore show shear determination and an unwavering commitment to succeed often against odds that many people would consider insurmomtable (Rwigema and Venter, 2004). Total commitment is required in nearly all entrepreneurial ventures and almost without exception, entrepreneurs live under constant pressure. A new venture demands top priority for the entrepreneurs time, emotions and loyalty ( Timmons and Spinelli, 2009)
(ii) High levels of creativity innovativeness
Creativity is the soul of entrepreneurship (Morris et al, 2008) whilst innovation is the specific fool of entrepreneurs, the means by which they exploit change as an opportunity for a different business or services (Zhao, 2005). It assumes a willingness and interest to look for new and novel ways of doing thing (Rauch and Frese, 2007). This imagination and ability to envisage alternative scenarios is one of the reasons, according to lambing and Kuehl (2007), why entrepreneurs are successful.
(iii) Ability to take responsibility entrepreneurs willingly put them selves in situations where they are personally responsible for the success or failure of a venture (Kuratko and Hodgelts, 2004), Bessant and Tidd (2007), also argue that the ability to take responsibility is closely associated with need to achieve. Entrepreneurs therefore do not that fate, luck or any other powerful external source will govern the success or failure of their venture (Timmons and Spinelli, 2009).
(iv) Problem- Solving Skills.
Decisionness is a virtue in the running of any business and entrepreneurial thinking therefore demand a high degree of problem solving propensity (Venter et al, 2008). Individuals who are more oriented to word solving problems will always view difficult, unfamiliar and pool structured work tasks as solvable ( Raab, Stedham and Neuner, 2005). Further more, Burns (2008) is of the opinion that where others see problems, entrepreneurs often see an opportunity.
(v) Capacity to Inspire Others.
Entrepreneurs have an uncanny ability to make heroes out of the people they attract to the venture by giving them responsibility and sharing credit for accomplishment (Timmons and Spinelli, 2009). Dynamic business depend upon the commitment and drive of the business members, customers and suppliers (Rwigema and Venter, 2004) and entrepreneurs engage the energies of everyone in their domain, both in side and out side the business.
(vi) Willingness to undertake personal sacrifice
The previously discussed high levels of determination and perseverance that entrepreneurs possess, usually require some form of personal sacrifice such as the willingness to put their own home on the line (Burns, 2008) and through other major sacrifices in lifestyles and family circumstances (Timmons and Spineli, 2009).
(vii) Self – reliance.
Entrepreneurs are self- reliant and prefer a degree of autonomy when accomplishing a task. The perception that they have poor to maneuvers in affecting their own destiny is highly valued (Morris et al 2008). This does not necessary imply that entrepreneurs want to make all the decisions, but they want to make the important ones (Kuratko and Hodgelts, 2004).
(viii) Calculated Risk- Taking
In most instance decision in entrepreneurial ventures are made in uncertain situations. Inevitably risk is at the heart of every venture (Rauch and Frese2007). Managing this risk is however one of the qualities of any successful entrepreneurs (Lambing and Kurchl, 2007).Entrepreneurship thus take calculated risk (Morris, et al 2008). They calculate the risk very carefully and thoroughly odds in their favour (Timmons and Spinelli, 2009).
2.4 Environment of Entrepreneurship
Entrepreneurship begins with the observation of a previously unnoticed profit opportunity, but as the pervious section has been known, profits opportunities are just not wanting for the ordinary person to observe and act upon.
Once the opportunity is created, typically it is acted on rapidly, by those who are in the proximity of the opportunity. It makes sense, for example, that those working in the computer industry are the people most likely to observe on opportunity in that industry. As Hayek (1945) noted, everyone has knowledge specified to their own activities, and the economy will be most productive when the economic system gives on the specified everyone an incentive to act on the specific knowledge they process. Hayek stressed the advantages of a market economy, which allows individuals to act on their own specific knowledge of time and place, and also provides the incentives, in the form of entrepreneurial profits, to act entrepreneurially. Entrepreneurial activity depends to a large degree on allowing entrepreneurs to keep the profits from their entrepreneurial actions.
This is well- recognized. Entrepreneurs also respond to the availability of entrepreneurial opportunities. The more opportunities available, the more alert entrepreneurs will be to word finding them.
Noticing an entrepreneurial opportunity might be compared to finding money on the side walk. A person walks by and is alert to the fact that the money is there, and picks it up and profits from it. few people keep a vigilant lookout for money on the side walk for the simple reason that there is not much lying about to be picked up. If finding money on the sidewalk were a more frequent occurrence, surely people would be walking with their eyes down, more alert to the opportunity. So it is with entrepreneurship.
The entrepreneurs notices an opportunity nobody else has been before, but often it is because the entrepreneur is trying to be alert to up coming opportunities.
And Like the money on the side walk, entrepreneurial opportunities do not lie around for long before they are picked up by some one.
Here the analogy stops, however, once the money is gone, nobody else have the opportunities to find it. However, when entrepreneur’s an entrepreneurs acts, more entrepreneurial opportunities are created, making it more likely that one can find a profitable opportunities by following in the tracks of other entrepreneurs. Entrepreneurship creates more opportunities and gives potential entrepreneurs more of an incentive to look for them.
Potential entrepreneurs can engage in search activities in to increases the probability that they will come upon an entrepreneurial opportunity. In an environment where opportunities frequently arise, remaining alert is profitable, which gives people an incentive to search for and be alert to entrepreneurial opportunities, and creates more entrepreneurial alertness.
Because entrepreneurial activity is the most common source of entrepreneurial opportunities, entrepreneurship tends to be clustered. Certain industries are more entrepreneurial than other, as are certain geographic areas and certain nations. Entrepreneurship creates an environment where more entrepreneurship can thrive. Silicon valley in California provides where entrepreneurship is clustered as some entrepreneurs remain on the look out for opportunities created by past entrepreneurial acts.
If past entrepreneurship used up opportunities rather than creating them, one would expect the most promising opportunities to lie far a field from recent entrepreneurial success. This new of entrepreneurship as the creator of entrepreneurial opportunities completes Kirzner’s model of entrepreneurship.
Kirzer focuses on how entrepreneurs respond to entrepreneurial opportunities, and this arise a result of the actions of entrepreneurs them selves. The act of entrepreneurship creates more entrepreneurial opportunities, initiating a perpetual process of entrepreneurial discovery.
2.5 Institutions and Entrepreneurship.
Scully (1988,1992) has noted the importance of free markets in the creation of an environment conducive to economic growth, and Barro (1996) argues that it is the protection of economic freedom rather than democracy and political freedom that creates a productive economic environment.
In the words of Gwartney, Lawson, and Block (1996) relate economic freedom to economic growth and identify those particular market institution that appear most closely associated with economic growth. Along the same lines, Gwartney, Lawson, and Holcombe (1999) show the close relationship between market institutions and economic growth, holding constant factors such as human and physical capital, and political institution. Those examples are representatives of an extensive literature on the importance of market institution to the production of economic growth.
Entrepreneurship is a key ingredient to a prosperous economy, and while this requires a vibrant private sector, government policies can have a major effect on the amount of entrepreneurship that take place. Government can encourage entrepreneurship by providing a stable economic environment and by protecting property rights. Market institutions are vital as a foundation for entrepreneurial activity, and excessive government interference through taxation, regulation, and redistribution, can kill the incentives for entrepreneurship. Investment and productivity increases follow automatically in a environment that allows entrepreneurship to thrive.
Entrepreneurial acts have a certain amount of mystery surrounding them. But creating an environment within which entrepreneurship thrives is not a mystery.
Stable market institution are the key.