ENTREPRENEURIAL COMPETENCIES, COGNITION, BEHAVIOUR AND KNOWLEDGE CREATION

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CHAPTER 2: ENTREPRENEURSHIP THEORY

Introduction

The research field of entrepreneurship covers a wide spectrum of perspectives, dimensions, scopes, and contexts ranging from the personalities and traits of entrepreneurs to behavioural characteristics and entrepreneurial activities at an individual level, businesses of different sizes as well as corporate, social, and public institutions. This chapter provides an overview of the domain, definition and scope of entrepreneurship, as well as research trends, perspectives, dimensions, the entrepreneurial process and the concept of an entrepreneurial spiral that are related to entrepreneurial knowledge creation and performance at both the individual and firm/institutional level.

Definitions of entrepreneurship

Several definitions of entrepreneurship exist in literature that cover perspectives ranging from a specific type of person, certain behaviours or a particular strategy to a way of management, aimed at the introduction of new goods, markets, products or services, reorganisation and creation of growth or wealth.
According to Wickham (2004:115) the following sub-fields that are more focussed can be identified:-

  • Process

Process refers to the series of actions taken by, and elucidated by, the entrepreneur in the identification of and pursuit of new opportunities.

  • Context

Context refers to the situation within which entrepreneurs work.

  • Outcomes

Outcomes refer to the performance of the entrepreneur in financial, organisational and human terms.
Wickam (2004:15,19) mentions that an entrepreneur can be defined as a specific type of person with certain personality traits, but entrepreneurship is also regarded as a style of management aimed at pursuing opportunity and driving change. Venkataraman, cited by Low (2001:6), points to the fact that “Entrepreneurship as a field seeks to understand how opportunities to bring into existence ‘future’ goods and services are discovered, created, and exploited, and with what consequences.” Low (2001:5) posits entrepreneurship as the process of identifying, valuing, and capturing opportunity. Carland, cited by Gartner (1989:60), ties the state of being an entrepreneur to innovative behaviour and strategic management practices and identifies five innovative ‘strategic postures’ for entrepreneurship, namely:

  • Introduction of new goods;
  • Introduction of new methods of production;
  • Opening up new markets;
  • Opening up new sources of supply; and
  • Industrial reorganisation.

Biemans, cited by Frese, Chell and Klandt (2000:8-9), views entrepreneurship as an innovation strategy of which the active nature is regarded as of specific importance, while Morris and Kuratko (2002:23) identify the following key perspectives on the nature of entrepreneurship:-

  • Creation of wealth
  • Creation of enterprise
  • Creation of innovation
  • Creation of change
  • Creation of employment
  • Creation of value
  • Creation of growth.

According to Drucker, cited by Frese et al. (2000:8-9), innovation is the major tool of entrepreneurship, which is defined as a systematic search for the changes that are occurring in society with a view to exploit those changes as opportunities for new markets, products, or ideas. Entrepreneurship is therefore concerned with economic growth through recognition and exploitation of opportunities in economic and social arenas, according to the authors.
In essence the primary perspectives adopted to define and describe the domain and key purpose of entrepreneurship relate to the identification and exploitation of opportunities to innovate; create wealth, value, growth, new ventures; pursue enterprise, change and re-organisation; and to introduce new markets, goods, products, services, sources of supply, new methods and processes.
With reference to the behavioural dimension of entrepreneurship, Gartner (1989:47) asserts that the difference between entrepreneurs and non-entrepreneurs lies in the fact that entrepreneurs create organisations while non-entrepreneurs do not. An entrepreneur is thus regarded as a set of activities involved in organisation creation, while in terms of trait approaches an entrepreneur is a set of personality traits and characteristics. For Chell (2000:63), entrepreneurship is a process in which the owner-manager’s actions are contextually embedded.
Wickam (2004:22) asserts that “… the idea of an ‘entrepreneurial personality’ which predisposes people to business success is far from clear and controversial”. The author mentions that there is no agreed definition of entrepreneurship and summarises key behavioural aspects of entrepreneurship by highlighting the following:-

  • The entrepreneur as a manager undertaking particular tasks;
  • The entrepreneur as an economic agent generating particular economic effect, and
  • The entrepreneur as an individual of a particular personality.

Biemans, cited by Frese et al. (2000:8-9), is of the opinion that organisations and individuals can react to changes around them or proactively allocate resources to identify and seize opportunities. This is regarded as an entrepreneurial innovation strategy that emphasises the active nature of entrepreneurship.
Different views on the contexts in which entrepreneurship applies are also expressed with related objectives and variables. Gartner (1989:63) postulates that organisation creation separates entrepreneurship from other disciplines and in order to encourage growth, the focus needs to be placed on the process by which new organisations are created. Chell (2000:72), however, disagrees and indicates that business founding is not a necessary condition of entrepreneurship. The author reasons that “… the key skill of entrepreneuring may be widely distributed in the population and may manifest itself during the life of a business (not only start-up).” It is further argued that it might be evident in ‘not-for-profit’ organisations. According to Chell, “… ‘Ownership of the means of production’ is neither a necessary nor sufficient condition for entrepreneurship.
Fox and Maas (1997:2-3) regard entrepreneurship as one of the instruments able to generate prosperity in a rapidly changing environment and assert that as an instrument, it does not exist in a vacuum but incorporates several values and subsystems, including the characteristics of the organisation, the environment, the processes used and entrepreneurial dynamics. Morris and Paul, cited by Frese et al. (2000:9), regard entrepreneurial firms as tending to “… actively scan their environments, constantly seek innovative solutions to problems, and tend to be aggressive in searching for growth opportunities for the business”. It is further suggested by Donaldson and Morgan, cited by Frese et al. (2000:10), that “In a world where the pace and complexity of change is increasing, entrepreneurship must be practised in many sections of organizations, not just at the top.” The authors are of the opinion that corporate entrepreneurs must be willing to “… move beyond received wisdom to combine ideas from different sources and to welcome change as an opportunity to look for new directions.
With respect to the organisational context of entrepreneurship, Wickam (2004:22) indicates that entrepreneurial management may be distinguished from conventional management by:

  • a focus on change rather than continuity;
  • a focus on new opportunities rather than resource conservation; and
  • an organisation-wide approach rather than specific function management.
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As referred to in Chapter 4, Kuratko et al. (2005:701) adopted the Sharma and Chrisman (1999) definition of CE as being “… the process whereby an individual or a group of individuals, in association with an existing organization, create a new organization or instigate renewal or innovation within that organization.”
This definition of the entrepreneurship domain relates to that of Chell (2000:63), who regards entrepreneurship as a process in which the owner-manager’s actions are contextually embedded, and allows further aligned divisions in terms of different dimensions, such as behaviour, personality, cognition, attitudes, skills or management and business competencies; perspectives such as value/venture creation, organisation creation/renewal as well as process/system dynamics; and contexts such small business, private corporate institutions, public and social institutions.
In terms of the literature, authors hold several different viewpoints about the objective, field of study and dimensions of entrepreneurship. Agreement does not exist on a generic universal definition that can consistently be applied in different contexts while acknowledging the existence of different dimensions within a broader perspective and definition. Key perspectives of entrepreneurship that are, however, consistently highlighted by a variety of authors are the focus on the exploitation of opportunities to innovate; to create wealth, value, growth, new ventures and to introduce new markets, goods, products, services, sources of supply, new methods and processes. The ‘ownership’ of the means of production is not regarded as a necessary condition for entrepreneurship and in essence the critical distinction with other disciplines may lie in the prominent focus on creativity, innovation and venturing, as well as opportunity, wealth and value creation (Chell, 2000; Fox & Maas, 1997; Gartner, 1989; Kuratko, 2005; Low, 2001; Morris & Kuratko, 2002; Wickham, 2004).
In addition, it is agreed that a behavioural dimension of entrepreneurship exists that relates to specific actions that are undertaken by role-players as well as a ‘management’ dimension in the context of formal organisations. Authors also accept in essence that entrepreneurship applies to a variety of contexts that include ‘not-for-profit’ organisations.
The variety of views and perspectives about the domain and definition of entrepreneurship necessitates the development of a proper baseline framework whereby critical components and concepts can be categorised in accordance with an agreed hierarchy that defines a primary domain, central perspectives, key dimensions and applicable contexts and methodologies. Such a framework would allow researchers to address different predefined dimensions or contexts while maintaining an overall generic definition related to the primary domain and perspective of entrepreneurship. The current primary perspectives of entrepreneurship in literature share similar key themes that are all related to the creation and promotion of prosperity in a variety of contexts.

Entrepreneurship research perspectives and trends

Researchers have struggled for a long time to determine critical factors that promote entrepreneurial performance for individuals, businesses, institutions, or large corporate organisations, with limited success. Research trends spanned a variety of fields covering economics, psychology, sociology and managerial sciences and are directed by the relevant definition that is accepted. The core perspective of a definition of entrepreneurship that is adopted constitutes the framework for the delineation of specific dimensions to guide the achievement of research objectives. It is therefore essential to evaluate research trends that relate to the applicable definitions, as addressed in paragraph 2.2.
Luke (2009:11), Nieman, Hough and Niewenhuizen (2004:8), Stevenson and Jarillo (1990:18) and Ucbasaran et al. (2001:57), all indicate that entrepreneurs and entrepreneurship have been examined from a number of perspectives such as economics, psychology studies which focussed on personality traits and patterns of behaviour, as well as the fields of sociology and managerial sciences. Authors are, however, in agreement that studies which focussed on entrepreneurs’ personalities, backgrounds, early experiences and traits have been widely criticised and have produced disappointing findings, with the result that behavioural approaches are currently finding strong support (Aldrich & Martinez, 2001:41; Stevenson & Jarillo, 1990:21; Ucbasaran et al., 2001:57).

ACKNOWLEDGEMENTS 
ABSTRACT 
TABLE OF CONTENT
LIST OF FIGURES 
LIST OF TABLES 
GLOSSARY OF ABBREVIATIONS
CHAPTER 1: RESEARCH OVERVIEW 
1.1 Introduction
1.2 Background: Local government in South Africa
1.3 Problem statement
1.4 Entrepreneurship and public management
1.5 Defining concepts, constructs and variables
1.6 Research objectives and questions
1.7 Hypotheses
1.8 Key constructs
1.9 Measurement of constructs
1.10 Hypotheses testing
1.11 Research methodology
1.12 Importance/benefits of the study
1.13 Outline of study
CHAPTER 2: ENTREPRENEURSHIP THEORY
2.1 Introduction
2.2 Definitions of entrepreneurship
2.3 Entrepreneurship research perspectives and trends
2.4 The entrepreneurial process
2.5 The entrepreneurial cycle/spiral
2.6 Context of entrepreneurship
2.7 Conclusion
CHAPTER 3: ENTREPRENEURIAL COMPETENCIES, COGNITION, BEHAVIOUR AND KNOWLEDGE CREATION
3.1 Introduction
3.2 Entrepreneurial success factors, skills and competencies
3.3 Entrepreneurial cognition
3.4 Entrepreneurial behaviour
3.5 Intuition
3.6 Creativity and innovation
3.7 Knowledge creation
3.8 Entrepreneurial learning
3.9 Conclusion
CHAPTER 4: ENTREPRENEURSHIP IN AN INSTITUTIONAL CONTEXT 
4.1 Introduction
4.2 Public entrepreneurship
4.3 Reforms and corporatisation of public and local government services
4.4 Corporate entrepreneurship
4.5 The individual/collective interface in an institutional context of entrepreneurship
4.6 Strategic management and entrepreneurship
4.7 Organisational learning
4.8 Performance assessment/management
4.9 Conclusion
CHAPTER 5: RESEARCH DESIGN AND METHODOLOGY 
5.1 Introduction
5.2 Research problem
5.3 Research objectives
5.4 Research questions
5.5 Integration of literature review findings and empirical study design
5.6 Hypotheses
5.7 Research methodology
5.8 Conclusion
CHAPTER 6: RESEARCH FINDINGS 
6.1 Introduction
6.2 Descriptive statistics
6.3 Factor analysis
6.4 Entrepreneurial performance, characteristics and key business dimensions of departments and Agencies
6.5 Knowledge creation dimension (learning styles) (Section A)
6.6 Association and correlation between individual and organisational variables (Pearson Correlation Coefficient)
6.7 Summary and conclusion
CHAPTER 7: SUMMARY, CONCLUSION AND RECOMMENDATIONS 
7.1 Introduction
7.2 Research objectives and questions
7.3 Overview of literature study
7.4 Empirical research results
7.5 Research conclusions
7.6 Contribution to science
7.7 Limitations of study..
7.8 Recommendations
7.9 Summary
8. LIST OF REFERENCES
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