The work under discussion investigates whether the whole entrepreneurial activity truly affects the growth of GDP on the example of certain companies activities through different types of entrepreneurial activity and on the basis of many countries development and growth of their economies per capita. Growth competitiveness index is used as a form of adjustment in terms of achieving economic growth. Many social scientists have pointed out that entrepreneurial activity and nascent entrepreneurs (owners and managers of young businesses) influence the economic growth. However, once again the final effect depends on the per capita level. Entrepreneurship is said to play a different role in nations with different economic stages of development. Another striking result of the whole study is the entrepreneurship’s negative impact on the Gross Domestic Product growth in countries with developing economies.
Thus, the thesis statement of the essay is that poorer countries happen to fail to benefit from all kinds of entrepreneurial activity. However, it does not mean that entrepreneurship has to be discouraged in these countries. It might indicate that the number of large companies should be higher there.
Being an effective entrepreneur is a way towards success for many individuals. Every single day, a lot of new businesses start their existence. However, very few of them manage to stay alive without going bankrupt and losing all their investments and finance within the nearest couple of years. All these facts mean that entrepreneurship is becoming increasingly popular nowadays. Building up one’s career and future life requires from an individual to be responsible, intelligent, and strong in terms of morals. Should one have all these qualities, he/she is to become a successful business person in the nearest future.
Entrepreneurship is defined as the quality of being able to understand the world of enterprise. The notion underlines all kinds of emphasis concerning risks, efforts, and steps that an individual takes in order to make money and assist his/her business in a right way. Economic success stems as the result of entrepreneur’s successful work and diligence.
Entrepreneurships cause revitalization of new organizations. Thus, it turns them into more mature organizations, serving the business demands. New businesses are referred to as startup companies. In the nearest couple of years, these startup companies will include both social and political entrepreneurial activities.
When talking about entrepreneurship in a firm or a big company, one refers to it as intrapreneurship. The following organization comprises corporate ventures. Large entities in these ventures spin off subsidiary organizations.
Paul Reynolds, a scholar of entrepreneurship, came up with an idea of creating a Global Entrepreneurship Monitor. According to Mr. Reynolds, half of the entire working population of the U.S. undergoes a period of self-employment for at least one or more years when they reach their retirement. According to the statistics, at least one in these four works as self-employed for more than a year.
Taking an active role in creating a new business, many U.S. workers resort to working for themselves during the course of working somewhere else. Recently, many writers have described entrepreneurship in their books. David Audretsch, an American and Western European major driver of economic growth, wrote about it. Stevenson described entrepreneurship as the pursuit of opportunity regarding currently controlled resources.
Different activities of entrepreneurial kind substantially depend on the organizational types and their kinds. Entrepreneurship differs from various kinds of solo projects, part-time projects, and major undertakings, which create different job opportunities. High value ventures search venture capital and angel funding.
A lot of entrepreneurial actions and decisions are aimed at obtaining capital and other sources of funding (seed money) for raising capital for the business. In most cases, angel investors look for an annual income return in the amount of twenty to thirty percent. Various organizations consider it as an extensive involvement and strive to support the promising entrepreneurs like government agencies, science parks, incubators, and NGOs. Not so long ago, the term entrepreneurship was widened to imply certain entrepreneurship concepts like mindset. This has resulted in further entrepreneurial initiatives. The term entrepreneurship has become a social and political one, as well as knowledge.
Starting with the year 2008, the newspaper Global Entrepreneurship Week has announced the means of exposing individuals to the entrepreneurship benefits and participating in certain entrepreneurial activities.
Types of Entrepreneurs
Analyzing different types of entrepreneurs, one could single out the following types. They are namely: home-run sluggers, on-base hitters, fact finders, follow-throughs, and implementers.
This type of entrepreneurs expresses strong willingness to be able to change the world they live in. Also, home-run sluggers set before them big and obvious goals, according to social scientist John Warrilow. These types of individuals are not obsessed with any kind of incremental success. They have no trends concerning any kind of serial entrepreneurship. The latter one seems rather unappealing to them. Sluggers prefer making single businesses work for the rest of their life. They also make it big. These types of people are not amendable enough concerning any succession planning or early exits. FedEx’s Fred Smith is the brightest example of a slugger.
On-base hitters are generally business owners who have several successful business start-ups. This happens just like in baseball where one has got a high on-base percentage. Similarly to on-base hitters, all these kinds of entrepreneurs are willing to achieve success on a regular basis in bite-sized bits. They would rather do this than do it in one flourish. Rene Lacarte is the brightest example from this perspective. He is the founder of PayCycle and Bills.com corporation. Also, Rene Lacarte has started many similar businesses in the form of online payment fields. All of them have become a success despite the fact that none of these projects had a bull’s eye.
Fact finders have been best described by the so-called Kolbe personality test. The test demonstrates that entrepreneurs often seek details before making decisions. Every single answer in a fact finder’s opinion gives rise to a set of new questions. That is why, a fact finder tries to find answers to all the questions before he or she makes a decision.
This kind of entrepreneurs adores the system they work in. This conclusion is made according to the same Kolbe test. In reality, any system creations come across confronted reaction after the chaos is created by an unexpected start-up enterprise. Follow-through entrepreneurs keep their mind in linear fashion. First step leads to a second one and this way on. All these companies have a tendency to methodologically operate and reward their employees for prolonged process improvement.
This kind of people, according to the Kolbe test, exists in the physical world. Also, it enjoys creating and fixing things. All of them are usually innovative by nature. In most cases, they are in a constant search of a good mousetrap. Implementers by nature succeed in the environment, which allows them working with their hands. (5 types of entrepreneurial activity, 2013)
Entrepreneurial activity is considered to be the most vital aspect of many industries organizations. It is also thought to be conducive concerning innovative activity and competition on the market.
Bigger companies generally play a vital role in the process starting from a developing economy and ending with a civilized and developed economy. Economies exploitation allows to produce medium-tech products. A lot of local workers are often employed by large companies and therefore are trained for various jobs. Local workers soon become productive in comparison to those running small stores and struggling for survival as entrepreneurs. Furthermore, small firms flourish in the large firms proximity. They become suppliers of large companies.
Another possible explanation concerning the negative effect in developing countries is much lower human capital levels in comparison with entrepreneurs in developed countries. Negative effect reflects the work of many so-called marginal entrepreneurs or shopkeepers. They may be productive in bigger firms as wage-earners. Unlike everything described above, developed countries are able to use innovative entrepreneurs in certain new sectors like software. Human capital levels of the two types of countries cannot be compared. Despite the absence of many people possessing high human capital levels and a great number of large firms in poorer countries, it is wise to encourage many individuals to resort to entrepreneurship in these countries because the alternative to it is unemployment (Van Stel, Carree, & Thurik, 2005).
Even countries with economic development at similar stages are different concerning their entrepreneurial activity rates. Global Executive Reports such as the GEM demonstrate huge differences between countries like Japan, France, and Belgium and other countries with higher entrepreneurial activities like Canada, the U.S., South Korea, and Australia.
Brazil and Mexico as developing countries are marked higher on the list of high entrepreneurial activity. According to many experts, activity in entrepreneurship is correlated with self-employment rate. Still, there are exceptions from the rule. Self-employment rates in certain countries are quite similar (the U.S. and Japan). New entry rate is much smaller in Japan because there are too many inefficient small establishments both in the retail and in the wholesale sectors. The research also shows that countries might not have few self-employed individuals, but once again they might have not many of them. Italy serves well as an example of this.
In case the entrepreneurial activity is vital in terms of economic progress, citizens must look for the countries, which are ranked high and grow relatively fast in terms of their activity. Ceteris paribus condition is applied here because there are many other factors, which explain the progress in the economy. The factors are inflation, schooling, climate, investment in fixed assets, property rights, and institutional quality. Gaining insights is essential in this case if one mentions alternative explanations of economic growth. This is placed next to entrepreneurial activity. Researchers also should be careful comparing countries at different stages of economic development. Economic strength is a less sure sign of economic strength when it is signified by high start-up rates in countries with developing types of economy.
It is also quite essential to investigate to what extent the entrepreneurial activity impact is similar across various stages of economic development. Two key variables are discussed in this case. Total Entrepreneurial Activity (TEA) rate, which captures a more modern view on entrepreneurial energy, is analyzed from this perspective.
All entrepreneurial activity data are taken from GEM (Global Entrepreneurship Monitor) and Adult Population Survey. Various entrepreneurial measures are kept in the database. They are constructed on the basis of survey and an average of 3,000 respondents per country. TEA states that the major percentage of the whole adult population is involved in certain new ventures. Two measures of the average TEA rate (per 100 adults) are compared in this case. Thus, the number is the following in certain world countries: Chile, Thailand, and India (15); United States (10.5); Belgium, Russia, France, Croatia, Russia, and Hong Kong (below 4.). For the majority of countries, TEA rates in 2002 were much lower than in 2001 because of the universal decline in economic growth rates. 28 countries participating in GEM scored 0.8 and had significant 0.01. Thus, total entrepreneurial activity is depicted as structural characteristics and basis of the economy. Therefore, it makes the variable suitable to be included in certain models, which are aimed at explaining structural growth. High rank correlation points out that it makes no difference whether any specific data or test for a specific year are used. The result of TEA measures is what counts the most (Van Stel, Carree, & Thurik, 2004).
- The 5 types of entrepreneurs. (2013). Retrieved from click here
- Van Stel, A., Carree, M., & Thurik, R. (2004). The effect of entrepreneurial activity on national economic: An analysis using the GEM database. Retrieved from click here
- Van Stel, A., Carree, M., & Thurik, A. R. (2005). The effect of entrepreneurial activity on national economic growth. Retrieved from click here