Types of Entrepreneurial Ventures and their Impact on the Economy

Introduction

The concept of entrepreneurship has gained growing popularity in the contemporary society. Unlike in the past where entrepreneurial ventures were perceived to be created largely out of politics-related motives, the modern society now embraces entrepreneurship as “the engine of the capitalist economy…which…is able to promote the medical and social development” (Rua,  2018 p.21). This is to say that entrepreneurship is a key, if not the sole force behind social development as well as economic growth all over the world. Besides enhancing productivity of economies, entrepreneurial ventures enable people to exercise their autonomy and direct their energies towards fulfilling their potential. In a book that outlines the key features of the contemporary society as a preamble to understanding the value of entrepreneurship, Bjerke (2013, p.47) observes that the contemporary generation values autonomy; they want to be allowed to make decisions without external influence and to pursue their passions. Such observations underscore the fact that entrepreneurship is very important in today’s world. Entrepreneurship may simply be viewed as the process through which opportunities are identified, evaluated and exploited in a way that new services and goods are created (Robert, 2017 p.5). This definition implies that entrepreneurial ventures can take a variety of forms, and that their impact on, or contribution to, economic development varies depending on the size and type of business. In this paper, a critical examination of the various types of entrepreneurial ventures and their impact on national, international and social economy will be provided.

Types of Entrepreneurial Ventures

Evidence that entrepreneurship exists in diverse forms is found in the very definition of the term ‘entrepreneurship’. According to Dilli, Elert and Herrmann (2018, p.295), entrepreneurship simply refers to “the ability and willingness of individuals, both independently and within organisations to discover and create new economic opportunities, to introduce their ideas in the market… [and] to create value”. This suggests that it is within the mandate and liberty of an individual to decide which business to establish. Accordingly, there are no limits or specifications as to the kind of ventures that are acceptable as being entrepreneurial.

Before venturing into the finer details about the various types of entrepreneurial undertakings, it is worth mentioning that entrepreneurship is a continuum involving two extremes: Schumpeterian and non-Schumpeterian. Schumpeterian entrepreneurs are the risk-taking type who embrace and believe in radical innovations. On the other hand, non-Schumpeterian entrepreneurs are risk-averse and largely thrive on imitation (Dilli et al., 2018 p.295). The translation of this is that while some people venture into entrepreneurial activities with the prime motive of creating and delivering a new service, others do it just to copy other people’s business ideas. More precisely, some people are interested in just earning a living out of entrepreneurial ventures, while others seek rapid growth of their new enterprises.

One common category of entrepreneurial ventures is the intrapreneur, also known as corporate entrepreneur. This is described as a person “who acts entrepreneurially inside an existing organisation, which may range from a medium-sized firm to a large corporation, government agency, or charity” (Blundel, Lockett & Wang, 2017 p.17). In other words, an intraprenuer is a person who pursues entrepreneurial activities within an organisation, thereby promoting innovation together with adaptability.

The Vodafone Group offers a good example of intrapreneurship or corporate entrepreneurship as described above. The company, which operates in the communications industry, is credited for the invention of the MPESA service that has gained a lot of popularity across various countries. MPESA is a money transfer service that allows subscribers to send and receive money with a high degree of convenience without having to visit the bank. In addition to funds transfer, MPESA allows users to save money-meaning it acts as a bank of some kind. In an article appearing in The Telegraph, Oliver Balch writes that even though Vodafone does not deal in banking, corporate entrepreneurship has enabled the company to develop the MPESA service. The MPESA project was initiated by Vodafone’s global payment’s head through a grant from an international development agency under the UK government (Balch, 2017 para.2).

The second category of entrepreneurs comprises innovative entrepreneurs, who are described as persons who identify an opportunity and respond to it through the introduction of new techniques, commodities, or services (Viramgami, p.20). This is to say that the distinctive characteristic of innovative entrepreneurs is that they are in constant search for change, which they consider an opportunity.

Some entrepreneurs are opportunistic; they are future oriented and highly flexible. These individuals tend to be highly mindful about the society in which they live, and desire to use their advanced education to respond to the needs of the society (Adu-Gyamfi, Kuada & Asongu, 2018 pp.6-7). An example of opportunistic entrepreneurship is Alan Sugar. Sugar comes from a working-class family. As documented by Stokes et al. (2010, p.50), Sugar had a very tough childhood; he was born during the times of the Second World War. This meant that Sugar had to endure the devastating consequences that the war brought. In addition to the above, Sugar’s father worked in a highly insecure industry that where uncompensated lay-offs were the norm. Such experiences led Sugar to become inclined towards entrepreneurship, and he did not focus on furthering his studies as he did on putting up his own businesses. Sugar’s successes have largely been attributed to his determination to better his life and change the painful experiences of his childhood. Because of their high expertise, opportunistic entrepreneurial ventures often experience higher growth as compared to other types of entrepreneurial ventures.

Opportunistic entrepreneurship can be contrasted with craftsman entrepreneurship, which is defined as an entrepreneurial venture whose focus is both the present and the past, and whose main driving force is the technical education and expertise possessed by the owner (Adu-Gyamfi et al., 2018 p.7). As the name suggests, a craftsman entrepreneur possesses relatively little education. Nonetheless, he/she is endowed with enviable technical abilities and a paternalistic business attitude.

Entrepreneurs can also be classified as being either reactor or prospector. This categorization is based on the Miles and Snow business strategy typology, whose central premise is that the behaviour of organisations is predictable based on how they respond to environmental conditions. Going by this typology, it follows that prospector entrepreneurs are somewhat similar to innovative entrepreneurs in that they are virtually continually searching for new market opportunities. More importantly, prospector entrepreneurs respond to trends emerging in the market environment through experimentation.  For this reason, prospector entrepreneurs often create uncertainties and change in the market, forcing rival firms to respond (Gimenez, p.4). Worth noting, however, is the fact that level of efficiency is relatively low in prospector entrepreneurial ventures, reason being the huge attention given to product as well as market innovation.

In contrast to prospector entrepreneurs whose key feature is swift response to emerging environmental changes and conditions, reactor entrepreneurs will perceive these changes but not respond as effectively as is necessary. According to Gimenez(p.4), a major downside of reactor entrepreneurs is that they lack a consistent relationship between their organizational structure and business strategy. Consequently, it is difficult for such ventures to adjust swiftly and appropriate to market changes unless the environmental pressures are so intense such that the firm must do so.

‘Entrepreneurship’ is one of those words that have varied definitions and dimensions. Frederick, O’Connor and Kuratko (2018, p.18) describe it as a very flexible word, especially in its usage as an English word. Therefore, there are numerous varieties of entrepreneurship. Some of the less talked about types include seniorpreneurs, copreneurs, biopreneurs, and academicpreneurs. In brief, seniorpreneurs are people who start business ventures after they have attained 55years of age, while a copreneur refers to somebody who works along an entrepreneur.  Common examples of copreneurs are accountants, suppliers, and spouses (Frederick et al., 2018 p.18). The meaning of this is that entrepreneurs can be classified depending on a variety of factors, including their demographic characteristics and the environment in which they work.

Entrepreneurships also comprise business enterprises and social enterprises. The difference between a business enterprise and a social enterprise is that the primary motive of the latter is to develop innovative solutions that address the needs and concerns of the society. In the words of Frederick et al. (2018, p.20), social entrepreneurs exist to solve issues that neither the market nor the government can address. In other words, business entrepreneurship is profit oriented wile social entrepreneurship seeks to promote the public good.

In an era where technology has virtually taken over every aspect of life, it would be necessary to understand entrepreneurship from a technological point of view. In addition to social entrepreneurs and the other forms of entrepreneurship described above, there are also e-preneurs who simply are people whose businesses are wholly driven by the Internet (Blundel et al., 2017 p.18). From this definition, e-preneurs include people selling their merchandise online.

Some people venture into lifestyle enterprises-those pursuing personal interests. Such people are referred to as lifestyle entrepreneurs and may include owners of pottery studios or founders of horse-riding holidays. An important point to note about lifestyle entrepreneurs is that to them, quality of life is paramount over common motivations such as profit (Blundel et al., 2017 p.18). This is not to say that lifestyle entrepreneurs do not enjoy earning good income; but commercial gains are not the principal motivation.

The other common types of entrepreneurs are portfolio entrepreneurs, rural entrepreneurs, and serial entrepreneurs. Portfolio entrepreneurship is a term used in reference to an arrangement where an individual runs a number of different enterprises simultaneously. The idea behind this is that diversification of enterprises reduces business risk, besides helping in maintaining a steady income even in times of uncertainties. Portfolio entrepreneurs differ from serial entrepreneurs in that while a serial entrepreneur will try to mitigate business risk through the creation of new ventures from time to time, a portfolio entrepreneur concentrates on his/her existing ventures, managing them as effectively and efficiently as possible (Blundel et al., 2017 pp18-19). In short, portfolio entrepreneurship is about proper management of existing businesses, unlike serial entrepreneurship which is the use of proceeds from existing businesses to fund a new undertaking.

Impact of small businesses on the economy

Entrepreneurship is being encouraged all over the world; it is believed that innovativeness and entrepreneurship is what drives the economy in the 2ist century (Frederick et al., 2018 p.3). In the UK, small businesses have been identified as a vital component of the economy, having a great potential to grow the country’s economy. The significance of small business to the economy is illustrated through statistics showing that 99.9% of all businesses in the UK fall in the category of small businesses (Great Britain Department for Business, Innovation & Skills, p.14). As a result, small businesses in the UK play a very important role in as far as economy building is concerned. For instance, it is reported that more than 50% of private sector employees are found in small businesses (Great Britain Department for Business, Innovation & Skills, 2010 p.14). Clearly, the economic value of small businesses cannot be overlooked.

A small business is defined as any business entity that employs less than 50 workers (Lacy, p.81). In the UK, such entities are very significant as they have absorbed 44% of the people who have not gotten jobs in the government sector. These statistics indicate that the UK economy is propelled by small businesses. In his article ‘The importance of small businesses in the UK economy’, Abby Hardoon states that small businesses drive growth in the UK through the creation of jobs and new markets for goods and services. Such businesses are the innovation seedbeds in the UK; they introduce fresh ideas and encourage competition (Hardoon, 2015 para.1). In short, small businesses act as the stimulus for business incentives that spur economic growth in the UK.

Source: Market Inspector (2019). Available at https://www.market-inspector.co.uk/blog/2017/05/facts-about-small-medium-businesses-in-the-uk

As can be seen from the figure above, 60% of private employers in the UK are small businesses. In simple terms, creation of jobs in the UK is made possible, to a larger extent, by the existence and growth in number of small businesses.

According to Gough (2015, para.1), over 70% of the employment growth that has been witnessed in the UK private sector is generated by small and medium sized enterprises, which employ a remarkable 15,700,000 people across the nation. What this implies is that close to half of the total working population within the UK is found in small businesses. Without doubt, such statistics provide a clear indication that small businesses play a pivotal role in as far as economic growth in the UK is concerned. Based on these statistics, projections show that by the year 2021, the UK national economy will enjoy an additional £1.2 billion, thanks to small businesses. This estimate is based on the forecast that by the year 2012, 25,000 new jobs will have been created in seven cities in the UK (Gough, 2015 para.4).

Source: Gough (2015)

In line with the massive employment opportunities offered by small businesses, a significant percentage of UK’s national income comes from small businesses. In fact, small businesses in the UK have been termed as high growth enterprises, which means that their average growth rate per year is over 20% and that there annual turnover ranges from £1 million to £20 million. According to an LLB reporter (2018, para.4), small businesses in the UK contribute an estimated £62 billion every year. This equates to an amazing £1.2 billion each week. Such impressive statistics provide proof that the economic value of small businesses in the UK is highly significant, and that small businesses are more productive as compared to the average business.

One of the many small businesses that are making a huge impact on the UK economy is Digitavia, a company that deals in the development and provision of expert audio visual gadgets. Its business also entails installing services that are needed for business conferences and similar events. Digitavia is headquartered in Egham, which is in England. Its managing director is Daryl Clarke, and its key competitors include Blue Jeans Network, Lifesize, and Highfive. The company was founded in the year 2012, and over the past few years of its existence, it has grown significantly such that its employee base has reached 68 individuals. Equally important, the company has made sales that exceed £12 million. Despite the challenging, turbulent market conditions that Digitavia is regularly confronted by, the company provides proof that small businesses are very valuable to the economic growth and development of any country. Digitavia has not sourced capital or assistance from external investors, but it has still managed to attract reputable customers that include PayPal, Snap Chart, Google, and Barclay. To these and other customers, Digitavia continues to provide cutting-edge communications solutions to some among the world’s biggest brands.

Another small business with a great impact on the UK economy is Davison Canners Limited, a private limited firm that deals in a variety of businesses. Besides the growing, processing and preservation of fruits together with vegetables, Davison Canners also transacts in real estate, letting property that is either owned or leased. The company was incorporated in the year 1978 and its offices are in Armagh County. At present, the company is managed by seven directors and one secretary. Davison Canners started as a family business but has grown to become one among the leading specialty fruit producers in the UK. The company’s wide range of fruits as well as vegetables is capable of meeting changing customer needs, thus keeping the company ahead of competitors.

Conclusion

Most of the socio-economic problems and challenges facing the world today can be solved or at least minimised by embracing entrepreneurship. Entrepreneurship has been established to play an invaluable role in promoting socio-economic growth in countries. In the UK, for example, the literature reviewed in this paper has shown that most of the country’s economic opportunities are provided by small businesses, which comprise a substantial percentage of the country’s private sector firms. Besides providing jobs, entrepreneurial ventures in the UK greatly contribute towards national income. In view of this, it is recommended that nations and societies across the world embrace entrepreneurship. This recommendation is backed by the fact that there is no limit as to which type of enterprise a person can start; entrepreneurship comes in very many varieties.

References List

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