Proceedings of 26th International Business Research Conference
7 - 8 April 2014, Imperial College, London, UK, ISBN: 978-1-922069-46-7
Factors Affecting Entrepreneurial and Economic Growth: The
Namibian Case
Nico Schutte and Nicolene Barkhuizen
It is a known fact that entrepreneurship is closely associated with
responsiveness and innovation, two factors that have gained
new
significance as a source of competitiveness in an increasingly
globalized world economy. With technological change
and
the
intensified global competition brought about by globalization and
economic independence, the assumption that nurturing entrepreneurship
means raising a country's competitiveness today appears more valid
than ever.
Keywords: Economic Development, Entrepreneurship, Innovation
I. Introduction
It is a known fact that entrepreneurship is closely associated with responsiveness and
innovation, two factors that have gained new significance as a source of
competitiveness in an increasingly globalized world economy. With technological
change and the intensified global competition brought about by globalization and
economic independence, the assumption that nurturing entrepreneurship means
raising a country's competitiveness today appears more valid than ever.
Notwithstanding the fact that we have a better understanding of the building blocks of
dynamic processes, economics-based theories and models largely fall short of
dealing with the nexus between the self-sufficient entrepreneur and the subsequent
economic growth outcomes. The increase of factors of production, i.e., knowledge,
human and/or physical capital, cannot alone explain economic development.
Innovation and entrepreneurship are needed to transform these inputs in profitable
ways, an insight advocated already by Adam Smith`s argument about the size of the
market and the scope for specialization. (Andersson and Tollison 1982).
Cook (1989) in his article called Third World Economic Development contended that
the countries who failed when it came to economic development are the ones that
gave only a small role, if any, to private enterprises and did not embrace a market
responsive approach to economic policy. He further stated that there is no lack of
entrepreneurship in the Third World …
_________________________________________________________________
Nico Schutte, Department of Public Administration, North-West University, Mafikeng Campus, South
Africa, 2745, Email: nico.schutte@nwu.ac.za
Nicolene Barkhuizen, Department of Industrial Psychology, North-West University, Mafikeng Campus,
South Africa, 2745 email: nicolene.barkhuizen@nwu.ac.za
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Proceedings of 26th International Business Research Conference
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“to release its huge potential, government’s first need to do much less. Above all,
they must stop trying to micromanage the process of industrialization, whether
through trade policy, industrial licensing, or direct control of state-owned enterprises”.
Furthermore, Reynolds et al., in the Global Entrepreneurship Monitor (GEM) 2002 Executive
Report, established that countries with high levels of entrepreneurship have been able to
stimulate high-levels of economic growth. This was supported through further research which
demonstrates that there is a positive relationship between levels of entrepreneurial activity and
economic growth across countries (Zacharakis, Bygrave, and Shepard, 2000).
According to Porter (1990:125) entrepreneurship is ‗at the heart of national advantage’. Visà-vis the role of entrepreneurship in fuelling economic growth, numerous linkages to verify
this fact has been discussed by academics and alike. For any country the role that
entrepreneurship plays in their economic development is of obvious importance, leading
towards innovations and stimulating positive competition. There is sufficient evidence that
economic activity moved away from large firms (post WWII era) to small firms in the 1970s
and 1980s. Evident of this aspect is the employment share of the 500 largest American firms
also known as the Fortune 500 companies. Their employment share dropped from 20 % in
1970 to 8.5 % in 1996 (Carlsson, 1992 and 1999).
2. LITERATURE REVIEW
A literature review shows that, historically, several disciplines have contributed to the
development of entrepreneurship and have identified entrepreneurs as rational decision
makers and/or capitalists willing to undertake risk by doing things ‗differently‘. This literature
review examines how entrepreneurship and economic development has been previously
addressed theoretically and empirically. Economic growth studies and Entrepreneurship are
two fields with their own distinct literatures. The purpose of this systematic literature review
is to provide a comprehensive overview of the landscape of an interdisciplinary field; show its
evolution and progress over the past decades and synthesize its findings by combining the
insights of the two literatures.
The literature analysis aimed at reviewing local and international research to identify the set of
competence (knowledge, skills and attitude) that are important for entrepreneurial success and
economic growth. It starts with a brief discussion of all the factors that have been identified as
crucial for entrepreneurial success and subsequent economic growth, in order to give a
background to the importance of competences in entrepreneurship. The article defines those
competencies identified in literature as likely to influence entrepreneurial survival and growth,
as well as how the lack of competencies can constrain entrepreneurial development and
ultimately lead to the failure of entrepreneurship and economic growth. Based on the
exploratory literature review a model will be presented on needed competencies that might
lead to entrepreneurial success.
Given the vast amount of literature on venture success/survival/failure (Gartner et al,
1999:216), this article should not be regarded as a comprehensive review but merely as
serving to highlight the importance of matters relating to the research topic. To determine the
concepts to be included in the theory of the analysis, a comprehensive number of text books
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and articles were reviewed. The relevant literature is in leading academic journals and annual
conference proceedings in such disciplines as new venture creation, entrepreneurship,
management, social psychology, economics, organizational behaviour and organization
theory.
This article limits itself to factors specific to aspects of the functions of entrepreneurship and
its subsequent role towards economic growth; it attempts to identify those factors with strong
empirical links to entrepreneurial success. The factors identified were divided into the
following:
 Factors recorded in published articles and books that list competencies factors from other
studies.
 Factors noted in published articles that show strong evidence linking the competencies
factor to entrepreneurial success and subsequent economic growth.
 Factors listed in published articles that link education and training as well as the stated
proficiencies factors.
 Factors that are cited by experts in entrepreneurship models, theories and principles.
 Factors noted in general by experts that might be affecting entrepreneurial success and
economic growth.
3. THE RELATIONSHIP TO ECONOMIC GROWTH AND THE NAMIBIAN
CONTEXT
There is a great entrepreneurship enthusiasm in African countries such as Namibia but there
is little solid evidence that entrepreneurship promotes economic growth in Sub-Saharan
Africa and many other developing countries. A main reason is that many do not become
entrepreneurs by choice or because they take advantage of an opportunity but out of survival
because they cannot find wage employment and do not have any other source of income.
They are forced to start a business and become self-employed. The renewed interest in recent
years on research and development and innovation seems to increase the interest in the nexus
between entrepreneurship and economic growth. However, it was only recently that
economists began to synthesize the knowledge about entrepreneurship and analyse its impact
on economic growth.
From 1884, Namibia was a German colony, known as SüdWest Afrika, occupied by
Germany until 1915. When the German troops surrendered during World War 1, South
Africa obtained an allied mandate. The League of Nations gave responsibility to the Union
of South Africa to administer the land, which was known as South West Africa (Dana, 1993:
90). The Republic of Namibia gained independence from South Africa on 21st March 1990,
following the Namibian War of Independence.
Namibia's economy is closely tied to that of South Africa through a number of institutional
relationship's - in particular the Southern African Custom's Union and the Common
Monetary Area - as well as through extensive trade and financial flows. Namibia has
abundant natural resources, good infrastructure and access to markets, but contrary to
potential, the economy is not well diversified. Economic activity is concentrated in primary
sector activities - the extraction and processing of minerals for export which accounts for
20% of GDP, large scale commercial livestock farming, and fishing. The economy is highly
vulnerable to world market price fluctuations of diamonds and uranium, prices and demand
remaining crucial to the country‘s economic prospects.
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While Namibia appears to be a prosperous, middle-income country, the estimated GDP per
capita of US$ 1,800 camouflages huge income disparities, presenting Namibia one its main
economic problems. The majority of the population is poor, with limited access to social
services in certain areas. Furthermore, the historic pattern of land ownership means the
majority of Namibians are landless or small-scale subsistence farmers.
The local currency value of Namibia's principal exports in the first three-quarters of 2000
was 8% higher than in the same period of 1999, but because of the fall in the value of the
Namibian dollar, export earnings declined slightly from US$875m to US$861m.
3.1.
Labour market and unemployment
Unemployment, including underemployment, is estimated at around 30-40%. Labour
force by occupation - agriculture 47%; industry and commerce 20%; services 33%. There
has been a contraction in mining employment of almost two-thirds over the past 15 years.
3.1.2. Namibian National Development Framework 3 (NDP3)
Notwithstanding the fact that entrepreneurship could enable a society such as Namibia to
recognise opportunities (Schumpeter, 1934 and Zahra, 1999) and as such could most
groups within the Namibian society benefit. It could also create a more egalitarian
society; and enhance Namibia`s national development and growth (Wennekers and
Thurik, 1999).
In 2004, the Government of the Republic of Namibia launched a document that will see
the country as an industrialised nation. This document is known as Namibia Vision 2030
and it states that ―Namibia will be transformed into a knowledge-based society‖ by 2030
(2004, p. 10). However, the document does not mention how this will be achieved.
Namibia faces many challenges regarding the transformation and implementation of
entrepreneurship programmes (NDP 3, 2008: 195-201). To deal with these challenges
facing the Namibian nation, the development initiatives of the country are guided by
NDP3 which looks at where Namibia sees itself as a nation in the next two decades.
The Government of Namibia has an important role to play, but is only able to provide
assistance to a certain extent because the country‘s resources are limited. Furthermore, as
socially responsible professionals, entrepreneurs do have specific roles to play within
their particular societies. Entrepreneurs could be regarded as change agents in any
community, and creating a culture of entrepreneurship and innovation within a particular
community will require entrepreneurs to discover or rediscover the various
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responsibilities they have to play and the contributions they can make (NDP 3, 2008:
219-226).
Subsequently, the need for Namibia to institute a knowledge economy becomes more
important than ever, Thompson et al.: (2000, p. 122) argue that a knowledge economy is
one where economic value is found more in the intangibles, such as new ideas, software,
services and relationships, and less in the tangibles like physical products, tons of steel or
acres of land. The Organization for Economic Co-operation and Development (1996, p.
7) defines knowledge-based economies as ―economies which are directly based on the
production, distribution and use of knowledge and information‖.
However, one cannot talk about entrepreneurship without its connection to the SME
sector. The important contribution of a vibrant SME sector to economic growth has been
widely acknowledged (Timmons, 1999:17; Henning, 2003:1; McPherson, 2000:514;
Baron, 1998:275; Dreisler, Blenker & Nielsen, 2003:383). It is believed that SME`s are
the crucial drivers of many economies (Miller, Besser, Gaskill & Sapp, 2003:215;
Joubert, Schoeman & Blignaut, 1999:23; GEM, 1999:5).
Therefore, most governments, bilateral and multilateral agencies as well as nongovernmental organizations worldwide have policies in place to assist entrepreneurship
development (Rogerson, 2001a:115; Honig, 1998:372; Robertson, Collins, Medeira &
Slater, 2003:308; Lange, Ottens & Taylor, 2000:5; Luiz, 2001:53).
CORPORATE ENTREPRENEURSHIP CONTEXTUALIZED
Scholars and researchers are in agreement that, corporate entrepreneurship is all about
renewing and stimulating current businesses. It became a contemporary theory to provide
a mechanism for business growth, profits increase, enrichment and innovative
development of new products, services and processes (Kuratko et al., 1990; Lumpkin &
Dess, 1996; Miles & Covin, 2002; Zahra, 1991; Zahra & Covin, 1995; Zahra et al.,
1999b).
Deliberate and intentional in nature, CE is concerned with various forms of newness
(e.g., organizational renewal, innovation, and establishing new ventures) and has its
consequences for organizational survival, growth, and performance (Kazanjian, Drazin &
Glynn, 2001).
Increasingly,CEis found to affect firm performance (Zahra&Covin, 1995;
Zahra&Nielsen, 2002). From a resource-based perspective, CE is a key means of
accumulating, converting, and leveraging resources for competitive purposes (Floyd &
Wooldridge, 1999) such as developing and using product, process, and administrative
innovations to rejuvenate and redefine the firm and its markets or industries (Covin &
Miles, 1999).
An intangible resource vital to 21st century organizations (Hitt&Ireland, 2002; Ireland&
Hitt, 1999), knowledge can be created through effective CE (Kuratko, Ireland & Hornsby,
2001). In fact, Zahra et al. (1999: 169) argue that, ―. . . formal and informal CE activities
can enrich a company‘s performance by creating new knowledge that becomes a
foundation for building new competencies or revitalizing existing ones.‖ Embedded
primarily within the firm‘s human capital (Lepak & Snell, 1999), knowledge is
information that is laden with experience, judgment, intuition, and value (Nonaka &
Takeuchi, 1995). Both explicit and tacit in nature, knowledge is mutable and can be
thought of as true justified belief (von Grogh, Ichijo & Nonaka, 2000).
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Given its centrality to forming competitive advantages that often are the path the firm
travels to outperform its rivals (Coff, 2002; Grant, 1996), today‘s firms benefit by
facilitating the development and management of knowledge stocks and flows between
people and organizational units (Ireland, Hitt, Camp & Sexton, 2001).We argue that
through effective CE, firms develop knowledge and use it as a continuous source of
innovations to outperform competitors (Kazanjian et al., 2001). In this context, CE is a
knowledge enabler as it forms and subsequently uses or applies knowledge (von Grogh et
al., 2000)—knowledge that at its best, is valuable, new, unique, and competitively
relevant (Zahra et al., 1999).
ENTREPRENEURSHIP CONTEXTUALIZED
It is believed by scholars and researchers that entrepreneurship is considered to be a
critical factor in the process of economic growth and development and in this case the
Namibian economy for several reasons. It is a method by which the Namibian people
could transforms technological information into products and services (Shane &
Venkataraman, 2000). They further argue that, entrepreneurship reveals and alleviates
not only technological, but also time-based and spatial wastefulness in an economy
(Shane & Venkataraman, 2000).
In addition, for the Namibian people, it would important to acknowledge the fact that,
there are several peculiar characteristics, cognitions, and social conditions that might
shape an individual‘s choice to follow entrepreneurial activities (Carter, Gartner,
Gatewood and Shaver，2003).
Moreover, the roots of the concept of entrepreneurship emerged in the thirteenth century,
and originated from a French word, ―entreprendre‖, which refers to the taking of ‗one‘s
own hand‘, or to do something (Landstrőm, 2005: 8).
According to Chell, Haworth and Brearley, (1991: 13), the first one to take up thinking
about the role of entrepreneurs in economy was Cantillon (1680's - 1734). He classified
economic agents into three groups: (1) landowners (2) entrepreneurs and (3) hirelings
Additionally, Cantillon brought the concept of entrepreneurship under the intention of
academia and expanded to his original definition with the risk factor. They further
postulated that Baudeau broadened the concept of the entrepreneur by classifying the
entrepreneur as an innovator. Baudeau (1771) suggested that the function of the
entrepreneur as an innovator and thus brought invention and innovation into the debate.
Furthermore, he emphasized the capacity to process knowledge and information as that
which makes the entrepreneur a lively and active economic agent.
This is in accordance with the subsequent work of Schumpeter (1934) an Austrian
economist who associated entrepreneurship with the concept of innovation applied to a
business context:
‘The entrepreneur is the innovator who implements change within markets through the
carrying out of new combinations. The carrying out of new combinations can take several
forms; 1) the introduction of a new good or quality thereof, 2) the introduction of a new
method of production, 3) the opening of a new market, 4) the conquest of a new source of
supply of new materials or parts, 5) the carrying out of the new organization of any
industry.’
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A third French economist Jean-Baptiste Say, came to the forefront during the late 1700s
as he theorizes that entrepreneurship also include behavioural aspects and that it should
get more attention (Chell, Haworth and Brearley, 1991: 14-15). Ever since,
entrepreneurship has played a pivotal role in the development of business as a distinct
academic and research topic.
Earlier research about entrepreneurship mostly emphasised the ways in which the
establishments of capitalism and industrialism emerged, probable due to the lack of
agreement between the French approach and that of the English economist, Adam Smith
(1723-90). ―From the time of the publication of Smith‘s seminal work ―The Wealth of
Nations‖, the function of the entrepreneur has been combined with that of the capitalist;
profits were regarded solely as a reward for risking capital‖ (Chell, Haworth and
Brearley, 1991: 14-15).
Schumpeter phrased his analysis in an initial state of general ―equilibrium‖. He viewed
the market process as a dynamic process driven by creative destruction: ―It [referring to
the market process] must be seen in its role in the perennial gale of creative destruction; it
cannot be understood irrespective of it…‖ (1950: 83). Schumpeter linked the market
process of creative destruction – which he associated with ―new combinations‖ – and
therefore economic development and progress, to innovation and distinguished the
entrepreneur as the prime innovator.
In addition to being an innovator, the entrepreneur is a leader. His actions channel the
means of production into previously unexploited markets and other producers follow him
into these new markets (1960: 89).
Kirzner best described the market impact of Schumpeter‘s entrepreneur when he wrote:
―…for Schumpeter the essence of entrepreneurship is the ability to break away from
routine, to destroy existing structures, to move the system away from the even, circular
flow of equilibrium‖ (1973: 127).
Although not the emphasis of his analysis, Schumpeter recognized that the entrepreneur
(in addition to all economic actors) would have to adapt to his surrounding institutional
environment: …the field of individual choice is always, though in very different ways
and very different degrees, fenced in by social habits or conventions and the likes: it still
remains broadly true that, within the circular flow, everyone adapts himself to his
environment so as to best satisfy given wants….as best he can (1960: 91).
However, Kirzner recognized the role that the entrepreneur would play in economic
development. ―In economic development, too, the entrepreneur is to be seen as
responding to opportunities rather than creating them; as capturing profit opportunities
rather than generating them…Without entrepreneurship, without alertness to the new
possibility, the long-term benefits may remain untapped‖ (1973: 74). So, for Kirzner, the
competitive market and entrepreneurship are inseparable – the competitive process is in
essence entrepreneurial (1973: 15-16).
For Kirzner, entrepreneurship does not just involve alertness, but also the exploitation of
the opportunity realized through alertness: It follows, then, that for opportunities for
social improvement to be more rapidly discovered and exploited, these opportunities
must be translated into opportunities that are not merely encountered…but into
opportunities that are to the advantage of these potential entrepreneurs, and that most
effectively excite their interest and alertness… (ibid, 149).
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In accordance Mises an Austrian economist wrote:
In any real and living economy, every actor is always an entrepreneur and speculator…
Economics, in speaking of entrepreneurs, has in view not men, but a definite function.
This function is not the particular feature of a particular special group or class of men; it
is inherent in every action and burdens every actor…The term entrepreneur as used in
catalectic theory means: acting man exclusively seen from the aspect of the uncertainty
inherent in every action (1949, 252-3).
Conversely, it is essential to remember that Kirzner‘s entrepreneur need not own any
resources to fulfill his function: The pure entrepreneur…proceeds by his alertness to
discover and exploit situations in which he is able to sell for high prices that which he
can buy for low prices…It is not yielded by exchanging something the entrepreneur
values less for something he values more highly. It comes from discovering sellers and
buyers of something for which the latter will pay more that the former demand. The
discovery of a profit opportunity means the discovery of something obtainable for nothing
at all. No investment is required; the free ten-dollar bill is discovered to already be
within one’s grasp (1973: 48).
McClelland (1961: 65) defines an entrepreneur as someone who exercises control over
production that is not just for his or her personal consumption.
The characteristics of entrepreneurs from a behaviourist perspective are that they are
social beings and products of their environment. Numerous scholars have shown that
entrepreneurs reflect the characteristics of the period and the places, in which they live
(Ellis, 1983; Fillion, 1991; Gibb and Ritchie, 1981; Newman, 1981; Toulouse, 1979).
Looking at the behaviourist perspective, it is clear that a scientific profile for
entrepreneurs has not yet been established with certainty (Nieman et al. 2003).
 Perspectives on entrepreneurship
PERIOD
EMERGENT THEMES
AUTHORS
What entrepreneurs do: 1700
- 1950
The entrepreneur personal
characteristics: 1960 - 1980
What entrepreneurs do: 1980
onwards
What support is needed by
entrepreneurs: 1985 onwards
An economic Perspective
A behaviourist perspective
Cantillon, Say and
Schumpeter
Weber, McClelland
A managerial perspective
Drucker, Mintzberg
Social perspective , including Gartner,
economists, geographers and Bygrave,
sociologists
Timmons
What entrepreneurial activities An entrepreneurship perspective
are and competencies needed:
1990 onwards
Dana,
Source: Amended from Nieman et al. (2003).
5.1.
THE EVOLUTION OF ENTREPRENEURSHIP THEORY A SYNTHESIS
Adam Smith (1776) - An entrepreneur is a person who acts as agent in transforming
demand into supply.
Jean Babtiste Say (1803) - An entrepreneur is a person who shifts resources from an area
of low productivity to high productivity.
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John Stuart Mill (1848) - An entrepreneur is a prime mover in the private enterprise. The
entrepreneur is the fourth factor of production after land, labor and capital.
Carl Menger (1871) - The entrepreneur acts as an economic agent who transforms
resources into products and services. The entrepreneur transforms and gives added value.
Joseph Aloysius Schumpeter (1934) - An entrepreneur is an innovator. The economy
moves through leaps and bounds and the prime mover is the entrepreneur through the
process of creative destruction.
Alfred Marshall (1936) - The process of entrepreneurship or business development is
incremental or evolutionary. It evolves from sole proprietorship to a public company.
David McClelland (1963) - The entrepreneur is a person with a high need for
achievement. This need for achievement is directly related to the process of
entrepreneurship.
MODELS OF ENTREPRENEURSHIP
Timmons‘ model of the entrepreneurial process is based on the work of Timmons and
Bygrave. They were the initiators of Global Entrepreneurship Monitor (GEM), and have
been involved in helping economies measure their entrepreneurial activity.
According to Chell and Haworth (1987), in Furnham (1992: 175), Timmons‘ model of
the entrepreneurial process is one of the most advanced approaches in understanding
entrepreneurship to date because it emphasises capitalising on opportunities, rather than
only on mobilising resources. The key factors in the Timmons model are the opportunity,
the entrepreneur and the resources required to start a new organisation.
Uncertainty refers to conditions over which the entrepreneur has little or no control, such
as turbulence in markets. The Timmons model bases itself on the entrepreneur. The
entrepreneur searches for an opportunity, and on finding it, shapes the opportunity into a
high-potential venture by drawing up a team and gathering the required resources to start
a business that capitalizes on the opportunity. In the process of starting the business, the
entrepreneur risks his or her career, personal cash flow and net worth. The model bases
itself on the premise that the entrepreneur earns rewards in commensuration with the risk
and effort involved in starting or financing the business.
According to Timmons and Spinelli (2007: 88) the driving forces behind a successful
new venture creation can be illustrated by the following Timmons Model: Figure 1: The
Timmons Model of the Entrepreneurial Process
According to
three visible
components
new
depicted in
figure 1 are there,
crucial
for a successful
business
as
the model above
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6.1.
namely: the opportunity, the entrepreneur (management team) and the resources needed
to start the venture and make it grow. Out of these three crucial components the Timmons
Model of the Entrepreneurial Process starts with an opportunity. (Timmons and Spinelli,
2007: 88).
The Opportunity Factor
The shape, size and depth of this opportunity form the shape, size and depth of both the
team and the resources as per model. Furthermore, Timmons (1990: 17) argues that, any
single spark which ignites an explosion of entrepreneurship can be regarded as an
opportunity. Timmons emphasises that at the centre of an opportunity is always an idea;
however, not all ideas should be regarded as opportunities. If individuals are able to
understand that entrepreneurship is a market driven process, they will also opportunities
are generally created due to the changing nature of the current conditions, chaos,
inconsistencies, information gaps and a variety of other vacuums, because there are
entrepreneurs who are easily able to recognise them and pursue them (Timmons, 1990:
19).
Similarly, Timmons are also of the opinion in that if an entrepreneur has the right
resources, he or she will deliberately search for an opportunity and, on finding it, develop
it so that it has the potential to become a high potential venture (Timmons, 1989).
In support, Bygrave (2004: 12) states that in order to recognise an opportunity, an
individual must be prepared, as in any other profession. ―... Luck is where preparation
and opportunity meet‖. Bygrave notes that the biggest misconception people have about
starting a new enterprise is that the idea must be unique, and too many entrepreneurs have
an obsession about having a unique idea. Once entrepreneurs recognise their unique idea,
they believe that people are going to steal their ideas. As a result, they become secretive
and are unwilling to share their knowledge and wisdom. Being secretive makes it
impossible to evaluate the idea, whether it will be feasible or not. For example, Bygrave
(2004: 13) recalls that: ...a computer programmer telephoned and said he had a fantastic
idea on a new piece of software. Eventually after I assured him that, I was not going to
steal his idea, he told me his ware was for managing hairdressing salons. He was
completely floored when I told him in less than a month previously another entrepreneur
had visited my office and showed me the exact same idea.
According to Timmons and Spinelli (2007: 118) superior business opportunities have
four fundamental anchors:
i. They create or add significant value to a customer or end-user;
ii. They achieve this by solving a significant problem, removing a serious pain-point, or
meeting a significant pain or need for which someone is willing to pay a premium;
iii. They have robust market, margin and money making characteristics;
iv. They are a good fit with the founder and management team at the time and market
place, along with an attractive risk reward balance.
An entrepreneur is responsible for scanning the business landscape for unexploited
opportunities. Identifying and evaluating an opportunity is not an easy task. An
entrepreneur must deliberately search for creative ideas that can be converted into new
business venture. Converting ideas into opportunities requires one to evaluate each idea.
This can be achieved through a viability and feasibility study (Nieuwenhuizen, 2003: 20).
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6.2.
Further, in identifying and evaluating ideas to determine good opportunities, it is
important for entrepreneurs to realise that there are characteristics of good opportunities
(Timmons and Spinelli, 2007, 90):
i. Market demand is a key ingredient to measuring an opportunity,
ii. Market structure and size help define an opportunity, and
iii. Margin analysis helps differentiate an opportunity from an idea.
When determining the risks and rewards it is very important for an entrepreneur to
consider the market size and the length of the window of opportunity. In this instance the
window of opportunity refers to the time period available for creating the new venture.
When markets grow more and more opportunities arise, but as markets matures the
window of opportunity starts to close and as a result opportunities decline
(Nieuwenhuizen, 2003: 20).
Shapero's model of new-venture initiation posits that the decision to initiate a new
venture requires two things. First, founders should perceive that starting a new venture is
"credible" (i.e., they have intentions toward entrepreneurship). Starting a new venture
must be a believable opportunity.
Second, new-venture initiation requires some kind of precipitating (or "displacing")
event. In turn, credibility requires at least a threshold level of perceptions of feasibility
and desirability plus some propensity to act upon the opportunity.
Shapero suggests that the process of forming intentions may prove complex. Propensity
to act is likely to also have indirect influences on relationships in the model, thus we
should test for moderating effects by propensity to act. Shapero also suggests that
intentions may depend on only a threshold level of feasibility and desirability
perceptions, thus we may also want to attempt identification of threshold effects
The Entrepreneurial Factor
Mill (1984) suggested that risk taking is a key factor in distinguishing
entrepreneurs from managers. It is believed that entrepreneurs take greater degree of
risk especially in areas where they have control or competencies in realizing the profit.
It appears that, numerous studies have included risk taking as a major entrepreneurial
characteristic. Mitton (1989) confirmed that entrepreneurs eagerly undertake the
unknown and uncertain circumstances, thus the entrepreneurial inclined individuals
are expected to display more tolerance of ambiguity than others. As far as
innovativeness is concerned, Mitton suggested that it is the focal point of
entrepreneurship and an essential entrepreneur characteristic. In actual fact,
entrepreneurial literatures confirm that entrepreneurs are significantly more innovative
than non-entrepreneurs (Ho & Koh, 1992; Robinson & Sexton, 1994).
An entrepreneur forms the fundamental focus of an enterprise, regardless of how right the
opportunity appears to be. The enterprise will not be a success unless it is established by
an individual with strong entrepreneurial and managerial competence. In line with this
does Timmons (1990: 15) maintain, ―The research which was conducted on hightechnology firms in the United States since 1967 indicated that the elegance of these high
venture firms was based on the great entrepreneurs who appeared to show greater
importance than technology‖. With regard to the ―entrepreneur‖, Bygrave (2004: 16)
noted that starting a business venture is a very demanding task, and therefore there is not
enough time for on-the job training. If an individual wants to start his/her own business
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6.3.
6.4.
venture, he or she must therefore possess the right skills and experience. If they do not,
then they should ‗exit‘, and obtain proper training before starting a business venture.
The Resources Factor:
There are three visible crucial components for a successful new business as depicted in
the Timmons model above. One of these is resources. According to Van Aardt et al
(2008: 122) resources can be divided into four broad categories namely: 0
i.
Operating resources – these refer to the buildings, assets, equipment and
stock that will be needed to achieve the goals and objectives of the new
business venture;
ii. Human resources – this include all personnel who are directly and indirectly
involved in rendering the service;
iii. Financial resources – here the entrepreneur determines what financial
resources are available, whether it is own capital, loan capital or investment
capital and;
iv.
Technological resources – it is virtually impossible for a business to exist
without technological resources such as computers, telephones access to
internet and e-mail.
In order for an entrepreneur to realize an opportunity one needs initially be able to
identify, attract and manage the available resources effectively. The mindsets of
entrepreneurs are quite different when it comes to the managing of resources. This is
mainly because to get an enterprise started, an entrepreneur must manage to get as much
as possible from a minimum investment of resources. In order for an entrepreneur to get
more out of less, they work very hard and, in some instances, use customer advances and
barters (Timmons, 1990: 18). Thereafter, the entrepreneur gathers the resources required
to start the business to capitalize on his or her opportunity. It is explicit in Timmons
framework that the capital provided by the entrepreneur will be rewarded with profits,
and that both are commensurate with risks and effort in starting a business and financing
and building the business (Timmons, 1989).
In support, Bygrave (2004: 18) noted that it is also critical for the entrepreneur to assess
what resources are important for the enterprise to succeed in the marketplace. The
assessment of the most important resources is critical because it gives an indication of
what distinctive advantage an enterprise could have over its competitors. For example, if
the company is producing a particular ‗high-tech‘ product, technological know-how will
be important. The primary resource will be engineers and the designs produced.
Moreover, Bygrave, (2004: 12) contends that, at the centre of the model is a business plan
(‗fits and gaps‘), in which the three key factors are integrated into a complete strategic
plan for the business. All parts must fit well together, as there is no point in having a
first-rate idea for a new business, if you have a second-rate management team. It is also
important to emphasise that neither ideas nor management are any good without the
appropriate resources).
The Entrepreneurial Team
It is well understood today that the entrepreneurial team is a key to the success of a
higher potential venture. This calls for a lead entrepreneur with an ability to lead and
communicate effectively so as to build an effective entrepreneurial team. Clearly, a new
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venture requires a lead entrepreneur with the following characteristics (Timmons and
Spinelli, 2007, 91):
i.
An entrepreneur that learns and teaches faster;
ii. That deals with adversity and is resilient;
iii. That exhibit integrity, dependability and honesty;
iv.
That builds entrepreneurial culture and organisation.
It is important to notice that, a high potential venture also requires interpersonal skills to
foster communications and team building. Most investors now concentrate on the creative
brilliance of the lead entrepreneur. Teams should be formed and led by a capable lead
entrepreneur, because the lead entrepreneur will always be central to the team as both player
and coach. With the creative brilliance of the lead entrepreneur, the team should exhibit these
qualities (Timmons and Spinelli, 2007, 91):
i. The team should have relevant experience and track record;
ii. They should be motivated to excel;
iii. They should be committed, determined and persistent;
iv. Creative;
v. Opportunity obsessed;
vi. Have leadership and courage;
vii. Be able to adapt to different situations;
viii. Be able to communicate effectively;
ix. Tolerance of risk, ambiguity and uncertainty.
Therefore, investors will look for a lead entrepreneur who is capable of building a
management team that possesses the above qualities. Timmons and Spinelli (2007, 91)
state that a leader should adapt a philosophy that rewards success and support honest
failure, shares the wealth with those who help create it and sets high standards for both
performance and conduct.
6.5.
Carol Moore’s Entrepreneurial Model
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6.5.1. Moore’s model of the entrepreneurial process
Unlike Timmons‘ model, rewards are not explicit in the Moore model. Moore‘s model is
important because it argues that there is always a triggering event that gives birth to a
new organisation. The model focuses on personal attributes, environmental factors (role
models) and other sociological factors (family) (Bygrave, 2004), while the Timmons
model only focuses on opportunity, entrepreneur and resources.
According to Bygrave and Hofer (1991), the entrepreneurial process in this model
involves all the functions, activities and actions associated with perceiving opportunities
and creating organisations to pursue them. This was explained in Moore‘s model (1986)
in Pearce and Robinson (1986); however, it was embellished by Bygrave (1995), where
the entrepreneurial process seemed to follow a predictable sequence.
6.5.1.1 Personal Attributes
Nowadays, it seems that entrepreneurs have a higher locus of control than nonentrepreneurs. For that reason, it appears that entrepreneurs have a great determination to
be in control of their own destiny. Many surveys have confirmed that entrepreneurs seek
independence, this become a main reason for starting their business (Bygrave and
Zacharakis, 2004: 5). Personal attributes can be considered as the driving force behind
the motivation to embark in the entrepreneurial journey. As important as personal
attributes are environmental factors that positively influence a prospective entrepreneur.
6.5.1.2 Environmental Factors
External factors have a noticeable impact on a would-be entrepreneur. It‘s no accident
that some parts of the world are more entrepreneurial than others. Role models are very
important in terms of playing an influential role to prospective entrepreneurs. Knowing a
successful entrepreneur makes the act of aspiring to be an entrepreneur seems much more
credible. Prospective entrepreneurs come into contact with role models primarily in the
home or at work. The study conducted to undergraduate students studying
entrepreneurship reveals that most of them come from families that own business
(Bygrave and Zacharakis, 2004: 7). This is a clear indication that environmental factors
as per Carol Moore‘s model influence prospective entrepreneurs‘ decision to strive to
become an entrepreneur. Besides role models, entrepreneurs are also influenced by other
sociological factors.
6.5.1.3 Sociological Factors
Family responsibilities play an important role in the decision whether to start a new
business venture. It is a relatively easy career decision to start a business when a
prospective entrepreneur is single and without any dependents. It is a much harder
decision when a prospective entrepreneur is married and has children, a hefty mortgage
and a secure well-paying job. Another factor that plays an important role in the decision
to start a business is the trade-off between the experience that comes with age and the
optimism and energy of the youth. As one grows older he or she gains experience in the
industry that can manifest itself into pessimism about a chance of succeeding in business
(Bygrave and Zacharakis, 2004: 7). Clearly social factors play a crucial role in the
decision making of a potential entrepreneur.
6.5.2. The 10 D`s of William Bygrave
William Bygrave10 summarised the important characteristics of successful entrepreneurs
in everyday words.
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Dream:
7.
8.
Entrepreneurs have a vision and the ability to implement their
dreams.
Decisiveness:
They make decisions swiftly, their swiftness is a key factor in their
success.
Doers :
Once they decide on a course of action, they implement it as
quickly as possible.
Determination
They implement their ventures with total commitment.
Dedication
They are totally dedicated and work tirelessly
Devotion
Entrepreneurs love what they do
Details
The entrepreneur must be on top of the critical details
Destiny
They want to be in charge of their own destiny
Dollars
Getting rich is not the prime motivator, but the measure of success
Distribute
Entrepreneurs distribute ownership of the business with key
employees
WHY IS ENTREPRENEURSHIP IMPORTANT FOR DEVELOPMENT?
Brinkman points out that economic development implies ―a process of structural
transformations‖ leading to an overall higher growth trajectory ([7], p.1183).
For
Namibia,
Per capita income growth requires shifts from less productive to more productive
techniques per worker, the creation or adoption of new commodities, new materials, new
markets, new organizational forms, the creation of new skill, and the accumulation of
new knowledge…the entrepreneur as gap filler and input-completer is probably the
prime mover of the capacity creation part of these elements in the growth process. ([55],
p.77)
Again, economic development involves change and the entrepreneur becomes the best
agent for this change. Indeed, entrepreneurship matters for developing countries because
markets matter. Hayek recognized that knowledge was ―dispersed‖ throughout society
(p.520) with each person having a unique stock of information (p.521).
CONCLUSION
Various definitions have been put forward by different authors. For instance, Hellriegel
and Slocum (1996:708) describe the entrepreneur as the trademark that is usually given to
someone who creates new business activity in the economy. Another viewpoint is that the
awareness and utilization of an opportunity as well as the formation of an
organisation are of utmost importance to entrepreneurs (Reitan, 1997: 3; Drucker,
1985: 25 & Timmons, 1999: 41). It became clear through this article that successful
entrepreneurs do not just emanate from the good knowledge of one or two elements
of business, but they require well-rounded management competence together with
some hands-on experience of a particular type of business. Thus, the potential
entrepreneur appears when an opportunity emerges and takes the initiative to initiate a
profitable and viable industry. However, the seizure of the opportunity must coincide
with the willingness and the ability to take advantage of the opportunity. For Wickham
(1998: 22), the motive behind entrepreneurial activities goes beyond a desire to make
money. They have an urge to create a new and better world.
A review of the literature on entrepreneurship, explaining not only the perspectives of
entrepreneurship literature and the distinctive forms of entrepreneurship, but also
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illustrating clearly how both the literature and the phenomenon of entrepreneurship may
improve our understanding of the practical application of entrepreneurship and its role
towards economic growth.
The entrepreneurship literature looked at the definition and models of entrepreneurship, it
also give an overview of some factors that needs to be addressed by nations to be able to
successfully employ entrepreneurship as an economic stimulating strategy. Some models
of entrepreneurship were also discussed to highlight certain compelling factors that
individuals must be considering becoming entrepreneurs. It is also important to take note
of the fact that human beings, especially indigenous communities, live and survive within
a different cultural context compared to some Western nations. However, the ―persistent
importance‖ of innovative and modernized models should not be underestimated. The
modernized model may be questioned amongst authors but might remain on in the minds
of the older generation of business leaders and economists in global institutions.
It also became clear that community‘s needs to appreciate the fact that, entrepreneurs are
not robots blindly fulfilling an economic function, like all individuals do entrepreneurs
also operate within communities that define and are defined by culture. Subsequently,
the so called entrepreneur is an individual who should be able to perform numerous
activities within an empowering environment.
Furthermore, it is also evident that research consistently come to an agreement that
entrepreneurship happens to be the channel through which most nations such as Namibia
drive their economy (Pretorius and Van Vuuren, 2003:1; Isaacs, Visser, Friedrich and
Brijlal, 2007:613; Fatoki, 2009: 87). It is for this reason in accordance with Kroon
(2002:215) that the United Nations General Assembly, in 1994, passed a resolution
sanctioning and urging all emerging and developed nations such as Namibia to pursue
entrepreneurship as a policy matter.
The study has to a great extent uncovered the key factors which seem to influence the
success of entrepreneurship resilience that might lead to economic growth. This was seen
as a key area of intervention to address the difficulty of entrepreneurship. Giving
attention to these underlying factors, prior to the roll out of entrepreneurial programmes,
can ensure higher success rates, higher, contributing in the long run to the establishing of
sustainable opportunity-based new ventures.
Therefore, understanding the role of the entrepreneur in economic development and
growth entails an understanding of the role that the entrepreneur played in Namibia, in
the transition from stagnation to growth, in transforming the Namibian economy
structurally from a traditional, agricultural based economy to a modern industrial
economy, and finally in sustaining growth based on innovation (knowledge capital).
According to Murphy et al. (2006:12) it was the ‗advent of entrepreneurship‘ that allowed
per capita income to grow exponentially in the West from the 1700s.
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