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For any economy, entrepreneurship is very important because it is regarded as driver of economic growth. In present era, poverty eradication, economic growth and job enhancement has become major areas around which the agenda of contemporary conferences, global meeting, summits and discussion revolves (Armstrong, 2009). Entrepreneurship can be seen as the process of discovering and assessing new business opportunities for achieving personal objectives. Gone are the days when entrepreneurs had a single goal of profit earning because traditional definitions state that major objective of an entrepreneur is to earn profit or drive growth. Today, entrepreneurs may have several objectives including social recognition, personal satisfaction and wealth maximization. However, still entrepreneurs are recognized for their willingness to earn unexpected profit as they operate in the situation of risk and uncertainty.
Risk and uncertainty are closely related to each other as they have many similarities but they do have differences too. Both risk and uncertainty are based on current lack of certainty in future event, outcome or scenario and both include upside and downside potential. In addition to this, both are defined by probabilities and their distributions (Armstrong, 2009). Along with this, there are some differences in both as risk is more subjective than uncertainty as in risky situations more chances to get opportunities can be found. Unlike uncertainty, risk involves exposure to the impact of potential customers. Thus, risk and uncertainty are fundamental dimensions of entrepreneurship which contribute in the success of a business owner (Hirsch, Peters and Shepherd, 2009).
The main objective of carrying out this study is to understand role of uncertainty and risk in success of entrepreneurs as there has always been a controversy as these dimensions can be fruitful or disastrous for entrepreneur. In order to understand and make strong argument on this topic, extensive literature review over the same has been undertaken. Thus, various books, journals and online material has been reviewed and examined to carryout critical study. Various aspects of entrepreneurship such as definition, driving forces, types of entrepreneur, risk and uncertainty relevance and insufficient information handling have been covered in order to create insightful information. The study reveals that entrepreneurship covers appearance of three basic ideas/activities including focus on individual, economic factors and functioning of institutions. In the first activity i.e. individual focus, the entrepreneurial actions is considered as an attribute of human such as taking risk, willingness to face uncertainty, desire for recognition and achievement.
The study also makes an attempt to understand critical resources to a business including financial and non financial of which non financial was found more significant to become entrepreneur. The report reveals that risk and uncertainty cannot be detached from entrepreneurship function and awareness of different situations and ability to make strong predictions can assist owners to take sustainable decisions for long term profitability. However, inadequate information may sometime change the situations as opportunities to businesses become disasters.
In common parlance, entrepreneur can be termed as owner of business who strongly influences the business around the world across countries. It is essential to understand profile of entrepreneur, a character which can be put in a center to a business enterprise. The person who starts up new business, takes risks for the purpose of making profits by identifying different opportunities is known as entrepreneur. Thus, he/she is the person who manages essential/crucial resources in a business which is retrieved from different sources on a power to persuade those who hold them. Littunen, (2000) also recognized entrepreneur as a leader who takes risk or works in a situation of uncertainty for exploiting business opportunities. Thus, entrepreneur can be seen as a personality with leadership skills to lead the business. Nonetheless, it is not necessary for a business owner to have leadership or management skills. Therefore, businesses may have different persons for carrying out, managing and leading business (Littunen, 2000).
According to Cramer and et.al., (2002) entrepreneurship is a process of discovering, assessing, exploiting opportunities for new/innovative products, services, ideas and production processes. Furthermore, this function involves coining up new products and markets that did not exist previously. He further described that entrepreneurship includes appearance of three basic ideas/activities including focus on individual, economic factors and functioning of institutions. In the first activity i.e. individual focus, the entrepreneurial actions is considered as an attribute of human such as taking risk, willingness to face uncertainty, desire for recognition and achievement. The second idea focuses on environmental and economic aspect which motivates and enforces entrepreneurship. It may include dimensions of markets, drastic change of technology and dynamics of demographic structure in particular society. Another important factor includes functioning of institutes (Cramer and et.al., 2002).
Kuratko, (2005) studied the critical resources required by entrepreneurs and stated that money is the most crucial factor in setting up a new venture because other resources can be replaced by financial resources. For example, labor resources can be replaced with capital resources by installation of automatic machines (Kuratko, 2005). However, contrary to this Smith and Chimucheka, (2014) provided that it is general tendency to presume that the entrepreneurial event is money but in fact non financial resources are more crucial for starting up a new business. He provided that critical resources typically require insights, judgments and patience (Smith and Chimucheka, 2014). Thus, it can be said that ownership of financial resources is not prerequisite for an entrepreneur. Nevertheless, in practical world, it is difficult to even think about starting up a venture without initial capital requirements. Thus, critical resource required for new entity can be categorized into financial and non financial resources. Financial resources are required at early stages in the form of money for acquiring other resources such as labor and technological. However, non financial resources are more critical because without a unique business idea, a person cannot become successful entrepreneur.
Shane and Venkataraman, (2000) investigated the major dimensions of entrepreneurship and identified risk and uncertainty as the key dimensions. He studied economic theory of entrepreneurs and revealed that entrepreneurs assume risk in most uncertain environments. As owner’s income, wealth, status, image is dependent on the outcomes of their decisions in uncertain situations therefore; the results may be both positive and negative. In similar fashion, several arguments have been made where some people assume risk and uncertain situations as opportunity whereas other found it threatening elements. He further concluded that innovative and creative are few of the characteristics of entrepreneurs therefore, they can find opportunity in risky situations as all people cannot do so (Shane and Venkataraman, 2000). Nonetheless, risky situations not always provide the opportunity to entrepreneur by decision making. There are certain tools available which can be used by owners for appropriate judgments but they are not necessarily correct in all the situations.
A distinction was made between strategic and non strategic risk by carrying out empirical research on 900 managers/owners by (Brewster, Sparrow and Vernon., 2007) They provided that strategic risk in business covers rivalry and trust aspect of business whereas non strategic risk covers the terms of ambiguity aversion. The study illuminated the fact that most of entrepreneurs were willing to assume strategic risk instead of non strategic. Managers and owners believed that rivalry and trust can be surveyed or predicted easily whereas ambiguous business situations stimulate entrepreneur to take decisions without rationality as no other option is left. Thus, it can be said that being aware of uncertainty can assist business owner to get opportunity whereas in general sense uncertainty always is a threatening element for entrepreneur (Brewster, Sparrow and Vernon., 2007).
Entrepreneurs are idea generators and therefore, they get used to uncertainty because of lack of other alternatives. Uncertainty is a situation where probability of happening of a thing/event cannot be identified therefore, uncertainty is considered more dangerous than risky situations. In the similar context, Cramer and et.al., (2002) provided that entrepreneur is a recipient of profit because of the concept of uncertainty. He also stated that business owner get the profit because of bearing costs for uncertainty. Thus, due to this concept the nature of entrepreneurs has turned to speculative over the time. Hence, the opportunity for profit and growth arises out of uncertainty surrounding change (Cramer and et.a
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