Entrepreneurial Behaviour in Family Education Families have the economic function as expressed by Sudjana D.

, (2004:59), namely: give meaning to that family is the economic activities related to efforts to make a living, foster and develop the family business, revenue and expenditure planning a family. In turn, activities and family economic status affects the expectations of parents and children about the future of their lives conomic function in the family becomes a factor that could affect the economic activities of other family members, if the household has the entrepreneurial activity, then it becomes a factor that can foster entrepreneurship activities for family members, or other family members learn to people in the family and the environment so it became a hobby for life experience and entrepreneurial behavior. A. Pekkala, and Pakkanen TR., Cited by Kyro P., and K. Ristimakki, (nd: 7) write an article on Generating entrepreneurship and new learning environment from students free time activities and hobbies, explaining that one of them influenced the behavior of entrepreneurs by family members, it is described in the article serve targeted, namely: growth to entrepreneurs through the process of life experiences trianggulation Such as free-time activities and hobbies, entrepreneur education, socialization within ones family, student learning environment create Their Own, and teaching practices . Experience of living in a family environment that have
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entrepreneurial activity, that among the family members who have a business and distribution, called for a look, and taught him to other family members or entrepreneurial economic activity has become an important factor for individuals or groups of people in developing behavior entrepreneurship. Because the experience of living within ones family, to bring the impact of efforts to develop entrepreneurial behavior through the time-time and run free to indulge his hobby in entrepreneurial activities. Wirasuaha behaviors that exist in the family environment can diakatakan as a family-owned organization that can give birth to the dynamics (Leaning organization), although the pattern is simple to do but have a large effect on entrepreneurial behavior of other family members. Abdulhaq I., (1999:202) explanation of entrepreneurial behavior are applied in the management approach and organizational learning paradigm in essence stated: organizational learning (learning organization) is a learning process that is realized through the experience and behavior of individuals, with expectations of an increase in knowledge, creativity, and entrepreneurial ladies abi (= entrepreneurship) and the economic and organizational performance (= family), the pattern of organizational learning is also developed in learning that is innovative in terms of learningBehavior of entrepreneurial families with a tradition of small businesses in the household environment, family norms in the form of economic activity habits of the family, ranging from aspects of production, consumption and
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distribution. The third aspect of the implications for the behavior of family and entrepreneurial life into matter content of entrepreneurial learning in family education. Entrepreneurial behavior in family learning is identical with, the learning process refers to the application of the principles of Andragogy either the planning, implementation, methodology, time, materials and evaluation, together with experience, or life tasks and its role as a (= a family member). (Abdulhaq.I, 1999:207). Behavior entrepreneurial family characteristics is not very consumptive, meaning the income derived from activities of daily living are not looking directly spent on studying the daily necessities of life, but the fathers mother or other family members tried to suppress the expenditures of families living anggara used or played to the interests of businessThe main purpose of entrepreneurship in the family is to maintain the economic conditions of families in addressing the needs of everyday life. Defense, (1997:62) stated that: the familys economic resilience lies in the dynamics of the potential and conditions to maintain continuity perkeonomian akeluarga, the more equitable distribution of income and participation in the production of income showed the economic resilience of the better The characteristics of entrepreneurial families in running their business activities are as follows: a. Trying to suppress the income only keperluas consumptive. b. Always open communication with others, because it is considered as a relation that can improve their business. c. Coined the family-scale productive independent
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business (small and micro). d. Utilizing a home environment where he lives or elsewhere for business. e. Harness the potential that exists around the household environment as the production of materials that can add to family incomeSudarmanto G., et al., (1998:33) menggaambarkan situation of farm families who have a business, it is said that: opening a business should be around in the yard so you can easily control and can be interspersed with other kegiata home such as cooking, keeping house, raising children, because my husband also has activities outside the home are not the same activities Entrepreneurial family is also indicated by the Womens Labor Force in the informal sector in the research report Suryadi ET., Wiyono, and Sofiarini A., (1997:10) stated: urban informal sector women are generally engaged in trade, especially food, as pnjual (eg vegetables), street vendors, or shop keepers (eg, food vendors, along with other food koi), they are also involved with the processing of food at home, for later sale . Dikekola diner migrant women also amelayani shuttle bachelor who works in the field of informal transport and also provides other services to the informal sector Psychological conditions such as social environment affects behavior of entrepreneurs all family members in the household, especially if the parents (father and mother) do not manage the business as a sideline and therefore contributes to social change, especially the behavior of individuals within a family or a group (community) in surrounding areas due to the influence of
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parents. Zaltman et al., (1972:22) stated that social change is: as a planed attempt to modify the attitude and behavional of the target individuals or groups by agencies of change seeking to introduce ideas, Innovations in to a social system in order to Achieve the Gols of the agencies or contituencies. Family as an educational fathers mother is an agent of the main changes that have aspirations to shape the behavior and attitudes of their children in accordance with the vision and the existing pattern of life. Basics of Measuring Behavior
The challenge is to know what kinds of behavior describes the work of entrepreneurs. In fact, it is wrong to use behavior theory concepts used for managers and leaders, because entrepreneurs are in a distinct field. In measuring behavior, two approaches can be used: theoretical, and empirical.

Theoretical Approach to Behavior Measurement

One can use general theories to describe human behavior, such as Skinnerian behaviorism, but the best kind of theories to use are the middle range theories. These middle range theories are good because they were not made specifically for certain disciplines in business. We can tweak and augment these theories to have a set of useful, measurable, and specific behaviors describing entrepreneurship. The author suggests the dramaturgical approach of Role theory, a mid-range theory, which studies social setting behavior. This theory uses concepts such as props, front stage and backstage, and another theory by Katz & Kahn about models and roles can be used to reinforce the use of this theory.

Empirical Approach to Behavior Measurement

This approach is closest to what was used for this study. A process that was modeled from Stogdill & Coons, 1957, was used. In this model, a measurement of leadership behavior was made, called the LBDQ, or Leader Behavior Description Questionnaire. This is composed of 150 items, each of which links to 9 dimensions which were formulated by Ohio scholars after they figured out which behavior dimensions linked to leadership theories. Furthermore, empirical studies eventually lead to just two dimensions for leadership behavior, which were Consideration and Initiating Structure.

Chunk Size
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Aside from the concern of knowing the right dimensions for entrepreneurs behavior, chunk size is also important. This means, what behaviors are entrepreneurs observed to be doing always, frequently, sometimes, etc. The following theories in psychology are used to determine this chunk size: Taxonomic structure of events, Event perception theory, and Construal level theory. Taxonomic structures are used to classify behaviors in terms of kind-of relationship (a dog is a kind of animal), and this theory can be used in this study to determine basic level behaviors for the start up of entrepreneurs as they go into new ventures. Event perception theory uses a partof relationship, and psychologists use this theory to define events, which are time segments that begin and end in specified times. This has several uses in the model of describing activities related to entrepreneurship experiences. The problem of course is that not all behavior stops or ends in specified times, but it is suggested that shorter time frames can be used, because they tend to have better memories of events. The characterization of behavior in this theory is based on hierarchy levels. The higher levels ask the more abstract questions of why, and the lower levels are specified to answer how questions. For example, increasing security in a building is high level, while shutting the building door is low level. In studying behavior, scholars analyze behavior in different segments which follow a hierarchical model similar to the Construal theory.

Summary
To summarize, measuring an entrepreneurs behavior can be achieved by beginning with several categories based from observational methods. We also need to have a set of behaviors that apply to entrepreneurs as they start their entrepreneurship. We need to use the right theories from psychology, and behavior should be a function of time. EPRENEURIAL BEHAVIOR: A preference for changing the status quo over maintaining it based on relatively greater satisfaction generated by novel information over redundant information. Entrepreneurial behavior underlies the inclination to undertake invention and innovation, including the creation of something new as well as the distribution and adoption of the new throughout society. It is the behavior most likely exhibited by entrepreneurship. An alternative is managerial behavior, which is a preference for maintaining the status quo over changing it. Entrepreneurial behavioral is one of two behavioral alternatives underlying the desire to undertake innovations and to change the status quo. The other is managerial behavior. Entrepreneurial behavior embraces innovation, is motivated to seek changes in the status quo, draws satisfaction from institutional changes. In contrast, managerial behavior is a preference for maintaining the status quo. The underlying source of entrepreneurial behavior is a relative preference for novel information over redundant information. Both types of information are important to the fight or flight response to a threat. Novel information reveals potential threats that results in automatic physiological responses, which is more satisfying to some than it is to others. Entrepreneurial behavior is a preference for innovation and a change in existing institutions and the status quo. It can be as simple as the willingness to buy a new electronic gadget or as
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involved as rebelling against the existing political regime and starting a new nation. It often surfaces in the form of an entrepreneur undertaking the risk of organizing production and launching a new business venture.

Fight or Flight
An understanding of entrepreneurial behavior requires a look at the fundamental, physiological response to potential threat, what is called fight or flight. The human body automatically prepares itself to fight off a potential threat to flee away from it. Respiration increases. Pupils dilate. Brain wave activity increases. Adrenalin is pumped through the body. Heart rate increases. The human body is primed and ready to recognize the threat and to respond. The key to this automatic response is achieved by distinguishing between what's new and different and what's old and familiar. The old and familiar is less threatening that the new and different. The human brain sorts between two different types of information that comes through the five senses (sight, hearing, touch, taste, and smell), attempting to discern the potential for danger -- novel information and redundant information.

Novel: This is new information. An unusual sight. A strange sound. An unexpected touch. A bizarre taste. An uncommon smell. The human brain takes immediate note of this information. Because it is unfamiliar, it might be threatening. This is information that needs to be identified quickly. It needs to stand out from the ordinary and familiar. A self-preservation reaction (fight or flight) might be needed. Redundant: This is familiar information. A common sight. A routine sound. A ordinary touch. A recognized taste. An everyday smell. The human brain is wired to largely ignore this information. Because it is familiar, it is not threatening. It is the background canvas upon which novel information is displayed.

Redundant and novel information are both intrinsically satisfying. A little bit of excitement is satisfying (think a roller coaster ride). But so too is a little bit of piece and quiet (think resting after a hectic vacation). However, nothing but redundant information is incredibly boring and not particularly satisfying. And nothing but novel information is anxiety inducing, and also not very satisfying. Too much of one or the other is not a pleasant situation. A combination of the two is most enjoyable. It can maximize satisfaction. However, different people have different preferences over the proper mix of novel and redundant information. Some prefer relatively more new and less old. Others prefer relatively more old and less new. These individual differences give rise to entrepreneurial and managerial behavior. Those who prefer relatively more redundant information and relatively less novel information tend to pursue managerial behavior. Others who prefer relatively more novel information and relatively less redundant information tend to pursue entrepreneurial (and innovative) behavior.
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A Preference for Change

Entrepreneurial behavior is a preference for changing the status quo over maintaining it. Entrepreneurial types embrace innovation. A change in institutions generates satisfaction for the entrepreneurially inclined. Keeping things structured and orderly is not nearly as satisfying. Entrepreneurial behavior has a relative preference for novel information over redundant information. Entrepreneurial behavior surfaces in a number of ways throughout society:

Entrepreneurship: One notable manifestation of entrepreneurial behavior is entrepreneurship, the scarce resource that undertakes the risk of organizing production. In many cases, not all but many, entrepreneurs are motivated by the desire to produce something new, to change the status quo. Entrepreneurship might be engaged in the innovation of a new product. It might be utilizing a different method of production or marketing. However, it's also possible that the entrepreneur is doing nothing more than launching a new business to sell an existing product using existing production techniques. Nothing new, nothing novel, no change in the status quo. Innovation: Entrepreneurial behavior is also key to innovation, the process of applying and disseminating new products, ideas, and institutional changes throughout society. The entrepreneurial desire for change goes hand in hand with the innovation process. It's seen both with those who initially launch the innovations (the sellers) as well as those who are first to adopt the innovations (the buyers). Both sides need the inclination to change the status quo to be part of the innovation process. Invention and Creation: The starting point for most innovation is invention, the act of creating the something new. The invention is perhaps the purest form of entrepreneurial behavior. Creating something new just for the sake of creating something new. The act of invention includes the standard creation of a new product (think a device that automatically ties your shoe strings), as well as the creation of a new idea, scientific theory, painting, poem, song, novel, computer program, or video game. Many artists, writers, musicians, and computer programmers have a strong entrepreneurial inclination. Fashion Trendsetters: Another common example of entrepreneurial behavior is those at the forefront of the latest fashions and fads. Trendsetters are commonly motivated by the desire for change, the need to be different, the inclination to break away from the status quo. The fashion in question is not just clothing, but also includes home furnishings, automobiles, electronic gadgets, and entertainment, to name a few. Political Revolution: Changes in existing social and political orders are perhaps among the most historical manifestations of entrepreneurial behavior. The creation of the United
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States in the late 1700s is a prime example. So too is the Russian revolution of the early 1900s. The revolutionaries behind both, and many others, exhibited a significant amount of entrepreneurial behavior.

Life: Entrepreneurial behavior also surfaces in assorted nonspecific actions that make up daily life. The desire to periodically take a new route to work is an example. Another is the compunction to rearrange furniture. A third example is to occasionally try a different restaurant or sample a new cuisine. The changes can be seemingly trivial parts of an otherwise unchanging status quo life.

The Managerial Alternative

The alternative to entrepreneurial behavior is managerial behavior. Managerial behavior is a preference for maintaining the status quo over changing it. Managerial types resist innovation. A change in institutions does not generate satisfaction. On the contrary, satisfaction is best achieved from keeping things structured and orderly. Managerial behavior displays a relative preference for redundant information over novel information. This behavioral alternative is well suited for keeping an existing business running smoothly and efficiently. As the name suggests, managerial types are inclined to manage, to administer, to apply existing rules and procedures. They are not absolutely opposed to change, but the change needs to be orderly and within the rules. While managerial behavior is not conducive to creating an invention or launching an innovation throughout society, once the innovation has taken hold and becomes part of the fabric of society, it takes hold. It promotes the now "old" innovation, getting the most benefit possible. Those who are managerial inclined might not favor product innovations (new products), but process innovations (new ways of making existing products) are acceptable.

A Continuum
Like much of life, the inclination toward managerial or entrepreneurial behavior is seldom one or the other. Most people have a combination of each and few exhibit either in the extreme or in all aspects of their lives. One person might be entrepreneurial in business, but managerial at home. Another person might be just the opposite. Each might fulfill the desire for in one activity, then be satisfy with the status quo in other activities. NTREPRENEURSHIP: A special sort of human effort that takes on the risk of bringing labor, capital, and land together and organizing production. This is one of four basic categories of resources, or factors of production. The other three are labor, capital, and land. Entrepreneurship is the factor of production that assumes the risk and faces the uncertainty of combining the other three resources and engaging in production. Without entrepreneurship, the other resources remain idle and unproductive.
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A Risky Job
The real world runs rampant with risk and uncertainty. Except for a few psychics, no one knows what the future holds. Life is a risky proposition for all resource owners. Injury or sickness might befall a worker. Fires or angry mobs might destroy capital. Floods or natural disasters might decimate land. Such events threaten the productivity of these resources. Risk and uncertainty, however, take center stage for entrepreneurship. In that production necessarily occurs before consumption, an entrepreneur who organizes production never knows for certain that the goods produced will be desired by potential consumers. Herein lies the risk and uncertainty of entrepreneurship. A successful entrepreneur, one who guesses public preferences correctly, is very likely to make oodles of profit. However, the entrepreneur who guesses wrong runs the risk of great loss.

The Prospect of Profit

This dangling carrot of profit provides entrepreneurship with the incentive to produce goods, organize production, and seek ways to satisfy wants and needs. This is one of the key driving forces behind economic growth and a higher standard of living. It also helps drive resources to an efficient allocation. The prospect of a reward for undertaking the risk and uncertainty of organizing production is only one type of profit. Consider these assorted types:

Monopoly Profit: This is the profit obtained due to market control, or monopoly power, which means a firm can charge a price that exceeds the opportunity cost of production. A firm with market control, especially a monopoly, faces little risk. Normal Profit: This is the profit entrepreneurship foregoes from one production activity by engaging in another. This is the "going rate of profit" earned by entrepreneurship. In a sense, this can be consider the baseline profit that entrepreneurship can earn without undertaking any exceptional risk. Innovation Profit: This is the profit entrepreneurship receives as compensation for undertaking innovative activity, especially developing new types of products or production techniques. Innovation profit is closely related to profits obtained due risk and uncertainty, but specifically aimed at the development innovations.

Organizers Not Owners

The role that entrepreneurship plays in production is frequently misunderstood. Some folks erroneously equate entrepreneurship with the ownership of capital. The two essential ingredients of entrepreneurship are risk and organization. The ownership of other resources (labor, land, and especially capital) is not necessary for entrepreneurship.
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Clearly the entrepreneurial task can be eased if the entrepreneurship also happens to own the other resources. An entrepreneur who owns the necessary capital equipment, material inputs, and provides personal labor has a distinct advantage over another entrepreneur who must acquire those resources from others.

Manny Mustard, for example, is the owner and proprietor of Manny Mustard's House of Sandwich. He owns the entire operation, including all capital and land inputs. He supplies his own labor to the restaurant. More to the point, he is also the entrepreneur who takes on the risk of organizing the entire production operation. In contrast, Roland Nottingham is a retired businessman with a sizeable stock portfolio, including a number of shares of OmniConglomerate, Inc. This gives him ownership of a fraction of the OmniConglomerate capital assets. While he is a capital owner, he is by no means an entrepreneur. He does not organize production and he faces about the same risk as placing his investment funds in a bank.

Entrepreneurship or Labor?
In theory, entrepreneurship is the risking-taking organizer of production. However in practice, entrepreneurship can be difficult to distinguish from labor. That is, a person can be labor today and entrepreneurship tomorrow. Entrepreneurship is commonly found operating small businesses, like Manny Mustard's House of Sandwich. A proprietor such as Manny Mustard is both entrepreneurship and labor. Part of the time--time spend making sandwiches, cleaning utensils--Manny is acting as labor. And part of the time--time spent ordering supplies, scheduling employees--Manny is acting as entrepreneurship. Entrepreneurship can also surface in other productive pursuits. Risk-taking organizers might emerge in large corporations, government agencies, universities, and even households. Jonathan McJohnson, a middle-manager at OmniConglomerate, Inc., assumes the risk of developing, producing, and marketing a new product by organizing corporate resources (at the risk of getting fired). Jonathan McJohnson's efforts are entrepreneurship.

George Grumpinkston, a professor at Ambling Institute of Technology, develops a new computer-based method of instruction (at the risk of receiving no raises and being ostracized by colleagues). Professor Grumpinkston's efforts are entrepreneurship.

In neither case does the entrepreneurship require ownership of the resources organized nor are they likely rewarded for their efforts with profit, but the activities they perform are entrepreneurship nonetheless. They are risk-taking organizers.Introduction

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There are literally dozens and dozens of different definitions of the entrepreneur and the concept of entrepreneurship. Researchers and writers often seem to pick the definition that best fits the area they are discussing. We have explicitly linked entrepreneurship to the capability for exploiting successfully innovative ideas in a commercially competitive market. Leaving to one side the fact that individuals working in the public and non-profit sectors can be very enterprising, in historic and policy making terms entrepreneurship refers to business behaviour related to innovation and growth. For our purposes, entrepreneurs may be broadly defined as people who manage a business with the intention of expanding that business by applying some form of innovation and with the leadership and managerial capacity for achieving their goals, generally in the face of strong competition from other firms, large and small. The overall aim of this unit, therefore, is to provide you with opportunities to consider and reflect on the personal aspects involved in transforming an innovative idea into an entrepreneurial product. To get the most out of this unit you will need to make notes throughout. This material is from our archive and is an adapted extract from Entrepreneurial behaviour which is no longer taught by The Open University. If you want to study formally with us, you may wish to explore other courses we offer in this subject area.

Learning outcomes
After studying this unit you should:

understand the nature of entrepreneurship; understand the function of the entrepreneur in the successful, commercial application of innovations; confirm your entrepreneurial business idea; identify personal attributes that enable best use of entrepreneurial opportunities; explore entrepreneurial leadership and management style; identify the requirements for building an appropriate entrepreneurial team.

1 Economic function of the entrepreneur

Broadly, entrepreneurs have two vital roles to play in the economy (1) to introduce new ideas and (2) to energise business processes. Strictly speaking, the term entrepreneur, which derives from the French words entre (between) and prendre (to take), referred to someone who acted as an intermediary in undertaking to do something. The term was originally used to describe the activities of what today we might call an impresario, a promoter or a deal maker. The entrepreneur first made an appearance as a distinct economic concept in France, twenty years before the father of economics, Adam Smith published his Wealth of Nations in 1776. Richard
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Cantillon, an Irishman living in France, suggested in 1756 that the entrepreneur was someone prepared to bear uncertainty in engaging in risky arbitrage buying goods and services at a certain (fixed) price in one market to be sold elsewhere or at another time for uncertain future prices, usually in other market (though, throughout economic history, hoarders or traders who try to corner a market have sought super-profits in the same markets when short supplies send prices rocketing upwards). This concept of entrepreneur as arbitrager is still relevant today but was clearly influenced by the dominance at that time of trade as the chief means for accumulating new wealth and capital. Manufacturing and trade dominated Britain's heyday in Victorian times whereas today, as the case studies show, it is technology, knowledge and services that provide most, though by no means all, new entrepreneurial opportunities. In other words, entrepreneurship exists in its context as Figure 1.

Here, the role of the entrepreneur is to conceive a business idea in terms of an innovation to be brought successfully to the market and to find the wherewithal to make this happen. The entrepreneur does not necessarily need to have the design, production or delivery skills (this is the function of the firm) nor to shoulder all or most of the risk (this is often assumed by the providers of finance or investors). Indeed, the notion of the entrepreneur as a risk-taking trader, began to be challenged early on by the view of the entrepreneur as an adventurous self-employed manager capable of combining, to personal advantage, capital and labour. It is interesting to note that in France today the entrepreneur is a more generic term mainly referring to small property developers and owners of small construction firms. It would be wrong to state that the element of risk-bearing has completely disappeared from the modern concept of the entrepreneur. The successful management of risk is an important entrepreneurial attribute. However, it does seem true that a swift perception of opportunities and the ability to coordinate the activities of others emerge as the more central economic skills of the modern entrepreneur. Austrian economist Joseph Schumpeter (1934), who has had a seminal influence on entrepreneurship, as well as innovation, placed the entrepreneur at the centre of his theory of economic development. Schumpeter defined the entrepreneur simply as someone who acts as an agent of change by bringing into existence a new combination of the means of production. New combinations include process, product and organisational innovations. The means of production includes capital, equipment, premises, raw materials, labour and, in recent times, information. Currently, knowledge has been added to the list as the indispensable ingredient for business success in the new millennium. The essence of Schumpeter's approach is that entrepreneurs are competitive and always strive to gain an edge over their competitors. When they begin to consolidate and slow down, they revert to being ordinary managers and, in Schumpeter's terms, are no longer entrepreneurial. Thus attitudes to growth and the actual attainment of growth are essential elements of the concept of entrepreneurship. The attainment part of the concept, of course, implies a high level of
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managerial competence in all the five stages in Figure 1 and a high competence in social and commercial interactions outside the firm with other firms, regulators and, above all, customers and consumers. This implies that entrepreneurial firms that innovate successfully and encourage new innovations are likely to be different from most other firms. They appear to be more open and supportive of different opinions and ideas. If you are developing your own idea as part of an organisation (or if you feel that your idea will need the combined efforts of a firm for its implementation), Activity 1 will help you identify where you need to develop and negotiate support both inside and outside the firm. The art of negotiation is a key entrepreneurial skill.

Activity 1
Referring to the characteristics of successful innovation, complete the Characteristics of the entrepreneurial firm checklist. Before starting this activity you should determine where you are going to record your notes. You may choose to maintain a paper notebook. You may, however, prefer to record your thoughts electronically by using a word processing program. Consider the ideal firm for bringing your idea to market (or if your ideas have not yet crystallised, an enterprising group or firm of at least two other people you know). Make a note about the purpose of the firm or team before you answer the questions. Try to answer the following questions (pausing for reflection if you need to.) If the answer is Yes write a brief example. If the answer is No, write the main reason. If you are uncertain about the question click the question mark and an additional explanation of what is being asked will be revealed. Reveal answer The characteristics of entrepreneurial firms that are successful at launching innovations have been widely studied and are reflected in the questions asked in Activity 1. However, at this stage you may be a long way off starting, or helping to start, your own firm. The checklist should serve as a useful tool for gauging the innovative support from your current situation and as a guideline for the sort of atmosphere that needs to develop in a firm in order to maximise its entrepreneurial potential. When faced with very real resource constraints, maintaining motivation to set up and run such a firm can be very tough. The main motivation for entrepreneurs to overcome the barriers of economic pressure and uncertainty, according to Schumpeter (who was writing in the 1930s), were the prospects of upward social mobility into the capitalist class. At the start of the 21st century, with the almost universal dominance of market-based economic systems and a hugely increased middle class, the need to cope with the direct and indirect threats of globalisation is now often cited as the spur to innovation. For others, economic survival or the chance to create something of value are the driving motivators. Whatever the personal ambitions of entrepreneurial small firm owners, their role in introducing innovations and in improving overall economic development and efficiency is important.

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Basically, the concept of development from an economic viewpoint means the growth of goods and services in an economy usually measured in total or per capita rates of growth in all goods and services, known as the Gross Domestic Product (GDP) or the Gross National Product (GNP) when nationally owned overseas goods and services are included. In advanced industrial economies such as Britain, France, Germany and so on, policy objectives tend to be targeted on improving economic performance rather than development per se. As an alternative to an economic approach, one of the best known psychologically based economic development models that is still very influential, David McClelland's achievement motivation model, pays less attention to structural factors while the psychological determinants of economic behaviour are more strongly emphasised: Some wealth or leisure may be essential to development in other fields the arts, politics, science, or war but we need not insist on it. However, the question why some countries develop rapidly in the economic sphere at certain times and not at others is in itself of great interest, whatever its relation to other types of cultural growth. Usually, rapid economic growth has been explained in terms of external factors favourable opportunities for trade, unusual natural resources, or conquests that have opened up new markets or produced internal political stability. But I am interested in the internal factors in the values and motives men have that lead them to exploit opportunities, to take advantage of favourable trade conditions; in short, to shape their own destiny. (McClelland 1968, p. 74) McClelland's preferred entrepreneurial motivator, the need for achievement or nAch as it is usually abbreviate a desire to do well, not so much for the sake of social recognition or prestige, but to attain an inner feeling of personal accomplishment is a more psychologicallybased theory. McClelland himself summarised an alternative economic development theory as a society with a generally high level of nAch will produce more energetic entrepreneurs who, in turn, produce more rapid economic development. However, McClelland was quite disparaging about the profit motive as the mainspring of entrepreneurial activity: Since businessmen had obviously shifted their concern from intrinsic worth to money worth, Marx and other economists endowed man with a psychological characteristic known as the profit motive. The capitalist, at any rate, was pictured as being driven by greed, by the necessity of making money or keeping up his rate of profit. That such an assumption is a typical oversimplification of rational or armchair psychology has recently begun to be realised by historians in particular who have studied the lives of actual business entrepreneurs in the nineteenth century. Oddly enough, many of these men did not seem to be motivated by a desire for money as such or by what it would buy. (McClelland 1961, p. 233)

Box 1 Wall Sreet (1987) Gordon Gekko: Address to Teldar Paper Stockholders
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Teldar Paper has 33 different vice presidents, each earning over $200,000 a year. Now, I have spent the last two months analyzing what all these guys do, and I still can't figure it out. One thing I do know is that our paper company lost $110 million last year, and I'll bet that half of that was spent in all the paperwork going back and forth between all these vice presidents. The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated. In the last seven deals that I've been involved with, there were 2.5 million stockholders who have made a pre-tax profit of $12 billion. Thank you. I am not a destroyer of companies. I am a liberator of them! The point is, ladies and gentleman, is that greed for lack of a better word is good. Greed is right. Greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms greed for life, for money, for love, knowledge has marked the upward surge of mankind. Copyright 20012004.American Rhetoric.HTML transcription by Michael E. Eidenmuller.All rights reserved.

Activity 2
1. Do you think that profit maximisation is the main motivation to entrepreneurial behaviour? 2. Does profit have to be the main motivation of a successful business owner? What alternatives or additional motives can you identify

Entrepreneurial

qualities
It is now widely accepted that, apart from the start up phase, most small firms in Europe are more concerned about survival rather than growth and relatively few are especially entrepreneurial (Gray 1998). Consequently, a lot of research in this field has focused on finding the characteristics that set entrepreneurs and their firms apart from others. Elizabeth Chell (1985, 1999), a social psychologist, has examined numerous psychological trait-based approaches and concluded that, whilst psychological aspects such as entrepreneurial intention and the ability to recognise opportunities are strongly linked to entrepreneurial behaviour, the context in which the entrepreneur operates is also very important. Entrepreneurship reflects complex interactions
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between the individual and the situation, which has to be dynamic because business situations are always changing. Perceptions and judgement are, therefore, key elements in this process. Indeed, more than 20 years ago, Mark Casson (1982) identified judgement as one of the qualities that distinguishes the successful entrepreneur from the much larger group of non-entrepreneurial SME owners. As mentioned before, business judgement can reflect an innate ability but most frequently it directly derives from experience (or, more accurately, learning from experience). However, past experience can also filter out our ability to spot new opportunities or threats. Cultural effects related to family, locality and friends can help us interpret the world but they can also colour what we see. The same may be true of the influences from various networks that business owners often belong to (ranging from business associations such as Chambers of Commerce, business clubs and so on, to more social links related to, say, sport or leisure activities). And, of course, our own expectations and motivations of what we hope for in life, at work and in terms of a career will affect both judgement and business behaviour. The Open University Business Schools (OUBS) has conducted research in this area over the years. The findings from many different entrepreneurial firms, which reveal various influences and feedback loops on the owner-manager's decision-making, are summarised in Figure 2. Apart from the effects of the various influences that can affect business judgements, the main points to note are: 1. Business situations consist of real challenges, constraints and opportunities that directly impact on the business performance of a firm. 2. However, it is how entrepreneurs perceive these that guide their judgments and actions (which is why accurate market information, the ability to learn and experience are so important). 3. Business perceptions are also influenced by personal and business motivations, peer pressures and cultural influences (it could be argued that entrepreneur's perceptions are more closely aligned with reality). 4. Entrepreneurial behaviour is guided by the entrepreneur's expectations rather than a rigid set of strategic objectives (again, it may be that the entrepreneur's expectations are more realistic and, maybe, more ambitious than those of other business managers). 5. The process is not static but very dynamic with feedback and signals from the market consciously and indirectly affecting later decisions and actions. As each context and set of market signals reflect industry, regional and life-cycle influences, it is difficult to believe that each entrepreneur needs the same set of skills in order to achieve success. The model in Figure 2 reflects the uniqueness of the business situation facing each entrepreneur and the key areas where superior judgement will make a difference.

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View larger image Figure 2 Model of entrepreneurial decision making The influences and processes depicted in the model are complex but so too is the reality of entrepreneurial business. To date, researchers have not been able to identify a core and necessary bundle of attributes, characteristics or qualities that mark out successful entrepreneurs unerringly from the large crowd of business owners. However, a commonly quoted empirical and desk research study of new venture start-ups, that has stood the test of time over the past quartercentury, was conducted through the Massachusetts Institute of Technology by Jeffrey Timmons and colleagues (Timmons et al. 1977). They identified 14 important entrepreneurial characteristics of successful enterprise owners (see Box 2) which still frequently crop up in entrepreneurship research.

Box 2 Behavioural charcteristics of entrepreneurs

drive and energy self-confidence high initiative and personal responsibility internal locus of control
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tolerance of ambiguity low fear of failure moderate risk taking long-term involvement money as a measure not merely an end use of feedback continuous pragmatic problem solving use of resources self-imposed standards clear goal setting.

Timmons admitted that few entrepreneurs would possess all traits but felt that strengths in one might compensate for weaknesses in others. Many of these characteristics are self-explanatory (such as high personal drive and energy, self-confidence and setting clear goals) and some appear to be linked. Others may be less obvious or well-known, such as money and profits being used as a measure of success compared with others but less as an end in itself. Helping you to develop the last quality in the list, the ability to set clear goals, is the ultimate objective of this Perhaps a little less familiar is the quality that successful small business owners are said to have high internal locus of control. This means that they believe that their behaviour determines what happens to them and that they can control their own behaviour. This is linked to the need for autonomy and personal independence expressed by many entrepreneurs as their prime motivation for setting up their own firms (Gray 1998). Internal locus of control has featured fairly consistently in studies on the psychological characteristics of entrepreneurs. Essentially the concept implies three separate beliefs on the part of individuals that: 1. the outcome of events and situations are susceptible to intervention 2. individuals can intervene and influence the outcome of situations positively from their perspective 3. they themselves have the skills and capacity to intervene effectively in certain situations or to influence certain events. The self-confidence, energy flexibility and opportunism associated with entrepreneurial behaviour suggests that entrepreneurs are individuals who are accustomed to getting involved and that they expect positive results from their involvement. In other words, they are prepared to expend energy and mental effort because they expect and often receive appropriate or, in their terms, valuable rewards. Also, they are flexible and opportunistic because they believe they have the capacity to become involved across a broad range of situations. Internal locus of control beliefs are essential to the success of self-motivated behaviour and form a central core of the
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entrepreneur's self-concept. However, it is equally clear that entrepreneurs will not be the only people sharing these beliefs. Most reasonably successful students at all levels realise that their own efforts in studying have a lot to do with passing. Most people for whom sport is more than just an occasional leisure activity know the value of expending their own efforts on training and the importance of selfconfidence. And in business, most chief executives and reasonably able mid-level to senior managers will be accustomed to obtaining positive responses from their personal interventions. It seems clear that people who believe that outcomes basically depended on their own behaviour and that they can control their own behaviour will generally believe that the control of events of importance to them ultimately rested internally in themselves. This is clearly linked to selfconfidence and the ability to self-motivate. However, people with internal locus of control beliefs are in the minority. For many people, their lives are deeply affected by the decisions of people in more powerful positions than themselves which, in business, can include strong partners, customers and suppliers (as Porter's five-forces model has identified). Even more pervasive than the belief that powerful others exert a determining control or influence are widespread beliefs that events are determined by chance or luck. Activity 5 provides you with an opportunity to see where you currently stand (but note that locus of control beliefs are also influenced by context and can vary over time, especially if success breeds success).

Activity 5
Complete the Entrepreneurial attributes: locus of control questionnaire (clicking on 'Launch in a separate player' will allow you to enlarge text). This will give you an estimate of your own locus of control belief profile and what dominates internal, external or chance. Click on one of the three choices, depending on whether you agree or disagree with each statement, and your scores for Internal, External and Chance will appear in the respective boxes. These concepts have been found to be useful in analysing the behaviour and beliefs of successful entrepreneurs. If you feel you scored too low for your own liking, this is another indication that a team approach may be best. Indeed, Activity 5 could also be useful in developing a balanced entrepreneurial team (not everyone can be leader with a firm belief in their ability to control destiny; opportunity often springs from being open to luck and chance happenings and most good teams rely on some members being prepared to follow more powerful others). If you want to boost your feeling of internal locus of control, one suggestion would be to set yourself attainable objectives and push yourself to achieve them. However, it is important to bear in mind that psychological scales and tests of this kind only ever measure tendencies (not absolute and immutable behaviour that holds in all circumstances) and never attain anything like 100 per cent accuracy. And, in any case, personal belief and motivation is only one part of the entrepreneurial equation.

3 Entrepreneurial work style

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The need for supportive, open and communicative policies, structures and cultures in effective entrepreneurial firms as the optimal crucible for successful innovations comes through very strongly from studies of innovation and successful entrepreneurship. However, the strong internal locus of control of successful entrepreneurs suggests there may be a difficulty in accepting the influence of others, powerful or not. And, the strong need for autonomy does not suggest a personality open to sharing of ideas or knowledge. Indeed, the popular image of a successful entrepreneur can sometimes be that of a determined autocrat who lets nothing stand in the way of success. How can these two conflicting pictures of successful entrepreneurship be reconciled? The answer is that, just as there is no one entrepreneurial personality and people have different styles of learning, so too are there different management and leadership styles that vary between particular entrepreneurs, in their particular firms facing their own particular set of circumstances.

Figure 3 Course learning cycle Looking more closely at learning styles based on the Lewin/Kolb experiential learning cycle (Figure 3) that underlies this unit, it is likely that individuals will be drawn more strongly to one of the four stages than to others. David Kolb's model (1973) suggests that entrepreneurial success should be mainly determined by the individual's ability to adapt and dominate continual changes in the business environment through exploring new opportunities and learning from past successes and mistakes. In the context of business, the cycle starts with a concrete experience (say, the launch of a new product, landing or losing a major customer, unexpected poor staff performance, a delivery failure, and so on); moves on to the stage of observation and reflection on what has happened and why; then onto making sense of what has happened in the form of a rule or guide for repeating successes or avoiding similar mistakes; and, finally setting up a new situation to test the new insights or rules (thus creating a new experience for the cycle to start again). In practice, Kolb observed that most people display skills along a concrete abstract dimension and an action reflection dimension. This suggested to Kolb that there were basically four learning styles (outlined in Figure 4).

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Figure 4 Kolb's learning styles Following the flow of the cycle, the learning style in upper right quadrant Kolb labelled the diverger. The diverger is able to see concrete experience from different perspectives and to pull different meanings from experience. Kolb saw people who tend to this style of learning as inventive and creative. This could include entrepreneurs in the creative industries such as design and the media. In the lower right quadrant, the assimilator is attracted to creating models and concepts, an approach that would be a strength in consultancies and marketing firms. The converger in the lower left quadrant has the learning style that prefers to apply rules and to test them. Kolb saw this as a style that appeals to engineers and technical people. It is also useful in innovations based on R&D. In the final quadrant accommodators are at ease in working with other people. They like to plan and carry out new activities. According to Kolb, accommodators are more prepared to accept risks and this may be the most entrepreneurial learning style. However, Kolb was at pains to point out that these are not pigeon-holes because people can move from one style to another depending on circumstances or context. Nevertheless, for many people there is a preferred dominant style.

Activity 6
1. Which style best reflects your own? 2. Where would you place yourself on Kolb's grid? 3. What sort of balance of learning styles do you think would best fit your needs? Reveal answer Most definitions of the entrepreneur also stress the ability to organise and combine as the key distinguishing features. This would emphasise the converger's learning style, a conclusion that should find support from influential management writer Peter Drucker (1985). He maintains that innovation no longer results from chance activities but needs to be managed whether in a big or small firm as an organised and systematic process. This suggests that preferred learning styles will be directly related to the learning and skills needs perceived at the time and where they work
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in the enterprise value-cycle. Thus, learning styles are also likely to be linked to preferred management and leadership styles. Generally, management-orientation can be described in terms of three very broad, but not mutually exclusive areas structure (organisational and bureaucratic), people (social and motivational) and change (entrepreneurial and innovative) (Ekvall, 1991). Management styles reflect the influences of the management orientation (the requirements of where they manage in the value chain and individual personality). Very broadly, two main categories are often used to distinguish the main approaches task-focused and people-focused and the associated leadership styles contrast directive with participative styles. In fact, a basic two-way classification is far too simple. The brief discussion above suggests at least five broad management behavioural styles structured (rules and procedures), delegative (happy for subordinates to take some direct responsibility for their own work) standards (set or agree quality and performance standards), merit (praise and reward good work) and supportive (helpful and enjoy the team's trust). Completing Activity 7 will automatically give you scores on each of these styles (with scores around 50 per cent representing the average, so that a score of above 60 per cent on structured would indicate you like managing by rules or on delegative shows you are comfortable in delegating responsibility).

Activity 7
Complete the Management styles questionnaire, noting your score on each of the five styles. (Clicking 'Launch in a separate player' will allow you to enlarge the text.) Remember, there is no correct answer, only an answer that is right for you. Reveal answer To get a better understanding of the sort of management style that might be the most suitable for the business that is to launch your idea, we need to go beyond different types of management and look to the role of the entrepreneur as leader. Many managers are mainly administrators or specialists in bounded areas whereas one of the key functions of an entrepreneur is to motivate and coordinate the firm in achieving its goals. Accepting that the main management orientation of the entrepreneur must be to manage change and innovation, in some circumstances this means that the entrepreneur also has to be an extremely efficient manager of the day-to-day challenges of competition while, in other cases, administrative functions are delegated and the entrepreneur is required to be an ambassador and leader, with a longer-term perspective. Plotting against the other two management orientations task and people we can identify the five leadership styles in Figure 5. The firm that best fits the focus of this course clearly has an innovative leadership style where there is a high focus on both people and tasks. The firm is generally seen as a team and is open to collaborating and sharing with external firms or sources of capabilities. However, research conducted over the years among small firm owners suggest that most like to see themselves in command (especially very small firms with, say, less than ten employees) and having a directive style. Interestingly, growth-oriented small firms that have a history of growth, and slightly larger
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small firms, are much more likely to see themselves as being one happy family (paternalistic style) or having a participative style. The firms that are governed by external rules and procedures, have a comparatively low people and task focus and generally have a structured management style that does not encourage innovation (though in some professions there can be a strictly limited delegation).

View larger image Figure 5 Leadership styles

Activity 8
1. Which leadership style best reflects your own? 2. Taking your scores on Activity 7 and your own reflections into account, where would you place yourself on the leadership grid? 3. Considering the needs of the firm that will launch your entrepreneurial idea, where do you feel you should be on the grid? 4. If they are different points on the grid, what do you think needs to be done in order to move you to where you feel you should be? In looking ahead to the launch of a successful entrepreneurial idea, we have already highlighted the importance of social process in innovation so it is important to avoid getting too fixated only on the role and capabilities of the entrepreneur. As Figure 2 (Entrepreneurial decision-making) in Section 2 implies, it is the overall capacity of firms, real and perceived, rather than just the individual abilities of their owners, managers or employees that determine the scope of their activities. Perceptions of their own and their staff's capabilities plus their perceptions of competitors capabilities has an important part to play in determining small firm owners expectations of success. However, there are also likely to be cultural factors of a more general nature which influence perceptions of desired abilities, resources and skills. Entrepreneurs may well be able to identify crucial skills and tasks more accurately than other small business
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managers. Entrepreneurs can also be defined in terms of their ability to perceive and to respond to these changes more quickly than other business managers. With reasonable feedback, it is relatively straightforward to discuss opportunities and to identify the gaps between reality and perception. However, customer and consumer needs are often ill defined, hidden from view and difficult to quantify Certainly, the perception of many lower level needs (either the needs of entrepreneurs or of customers) are even more strongly determined socially through broad cultural or more immediate occupational influences. It seems reasonable to hold that effective business judgement reflects the correspondence of an individual's perceived capacities, opportunities and threats to their objective possibilities and the individual's ability competence) to act upon that information (as in Figure 2). It is not too difficult to then interpret the list of common entrepreneurial behavioural characteristics in Box 2 in terms of business competence. The successful entrepreneurial firm needs the right balance of competences in the team as a whole rather than seeking them in a single individual. Modern management theory is certainly moving in this direction and away from older hierarchical, scientific management or management-by-objectives models. In reality, your leadership and management styles will be determined by what you feel most comfortable with and what you feel is the norm in the circumstances (but remember that the people you are dealing with also have their feelings about what is a normal management or communications style for the circumstances). By now we shall assume that you have worked out many of these issues to your own satisfaction but, if you need more help, the following activity on teamwork issues may help you consider them more systematically.

Activity 9
Complete the Teamworking ability checklist. Consider the last time you worked with or managed a group of at least two other people (preferably but not necessarily one related to business or work). Write a brief 12 line description of the group or team. Try to answer the following questions (pausing for reflection if you need to). If the answer is Yes, write a brief example. If the answer is definitely No, write the main reason but if you are uncertain about the question or answer Don't know click the question mark to read an additional explanation of what is being asked. Reveal answer Previous: 2 Entrepreneurial qualities Next: 4 Key points

4 Key points
The important points this unit has covered include:
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Defining the entrepreneur in terms of economic function and role. Identifying the key characteristics of successful entrepreneurs and entrepreneurial firms. Considering the role of entrepreneurial motivation in decision making and business behaviour. Identifying leadership and management styles appropriate to an entrepreneurial firm Considering the entrepreneurial team needed to support your idea.

Key research questions for the study of the entrepreneurial process Key research
questions for the study of entrepreneurship Focused on
the entrepreneur Focused on the entrepreneurial process 1. Who become entrepreneurs? 2. Why do people become entrepreneurs? 3. What are the characteristics of successful entrepreneurs? 4. What are the characteristics of unsuccessful entrepreneurs? 1. Whats involved in perceiving opportunities effectively and efficiently? 2. What are the key tasks in successfully establishing new organisations? 3. How are these tasks different from those involved in successfully managing ongoing organisations? 4. What are the entrepreneurs unique contributions to this process? From: Bygrave and Hofer (1991)

Entrepreneurial

behaviour
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