Wikipedia defines Entrepreneurship as the process of designing, launching and running a business venture along with any of its risks in order to make profit (Online). Fernandes, a writer who contributes to the Business News Daily further quoted MJ Pedone, founder and CEO of Indra Public Relations who believes entrepreneurship as being able to take action and having the courage to commit and persevere through all of the challenges and failures (2018 Online). While this definition serves as a simple but accurate description of entrepreneurs, it however, fails to explain the phenomena of entrepreneurship itself. The concept is however explained and discussed broadly through the various theories it coexist in and its core values to the entrepreneurs. Following is a discussion of the various theories which explains entrepreneurship and their implication to the entrepreneurial development in Kenya.
Discussion
Entrepreneurship is very crucial for the growth of a country’s economy. One of the entrepreneurial theories which have strongly facilitated entrepreneurial development in our country, Kenya is Economic theory. In this theory, entrepreneurship and economic growth take place when economic conditions are favorable (Kumar, Online). According to Kumar, economic incentives such as technology and source of finance and raw material are the main motivators of entrepreneurial activities. One of the theories which best support Economic theory is Richard Cantillon’s theory. The founder of this theory, Richard Cantillon, was a French economist who greatly contributed to both the economy and other social areas in the late 17th and early 18th century (UKEssays, 2015 Online). This Economist was the first to coin the term entrepreneur and he was able to come up with this theory in the year 1755. In his theory, Cantillon introduced the concept of entrepreneurs from entreprendre, a French word which means the ability to take charge or simply to undertake or do something. According to his theory, entrepreneurs are regarded as the professional in solving on their tasks who hire employees by paying for their labor prior to finish producing the product and testing it in the market first so as to see whether or not the goods will sell. According to Cantillon’s theory, the unpredictability of the consumers’ behaviors and responses to quality and prices of entrepreneur’s products can be classified as a risk (UKEssays, 2015 Online). The theory further emphasizes that entrepreneur ought to be a real risk taker on his/her business and he/she needs to be evaluated by the consumers in competitive market. In order for them to pay the wage for employees and land usage, the entrepreneur have to earn the profit much more than his/her expenses and if, in any case, makes an uncertain profit due to an uncertain selling price, the entrepreneur should come forward and maximize their selling quantities. In regard to this theory, entrepreneurs ought to consider capital and labor, both of which are the greatest challenges facing entrepreneurial development in Kenya. They, entrepreneurs, should, however, accept and take the risk in training on how they can access alternative capital beyond bank and listed equities (Soko Directory Team, 2016 Online). Furthermore, Kenyan entrepreneurs should seek relevant training on how to package a story for investors as they can’t access them randomly since investors would like to see a business plan, a viable strategy, a strong management team and the ultimate exit plan to return their capital. On the issue of labor, since the country already have got a vigorous education system that produces numerate and literate graduates, the curriculum, nevertheless ought to improve on areas like problem solving, initiative and navigating ideas to execution. This move will enable the system to produce graduates who aren’t looking for employment mainly for what they can get out of a company, but mainly for what they can create and share in the success (Soko Directory Team, 2016 Online). According to Cantillon, an entrepreneur should be an individual who is able to balance between supplies and demands in the economy. There being, entrepreneurs in Kenya ought to too balance in the economy so as to help our country in its entrepreneurial development.
During its initiative, entrepreneurship is also likely to get a boost in a particular social culture. This is enhanced through the sociological/Anthropological theory of entrepreneurship. Society’s values, religious beliefs, customs and taboos normally influence the behavior of individuals in a society. An entrepreneur, however, is normally a role performer who performs according to the role expectations by the society (Kumar, Online). One of the best example which summarizes the relationship between entrepreneurship and the sociological theory is Say’s Law, also referred to as theory of markets. This law was founded by Jean-Baptiste Say, who by then happened to be an industrialist and economist, in the year 1803. In his theory of markets, Say emphasized the ability of an entrepreneur to ‘marshal’ resources in order to respond to unfulfilled opportunities (McFarlane, Online). He regarded an entrepreneur as someone who combines the land for one, the labor of another and the capital of yet another so as to produce a product. According to his law, the production, or supply, of commodities leads to the consumption of, or demand for, commodities (Sechrest, 2000 Online). However, this production can be overproduced or under-produced, but as with the Say’s law, such “maladjusted production results from some violent means…a political or natural convulsion”. In his theory, Say further argues that reinvesting production income in productive employment ensures that there’s no decreases in production, income or consumption, and even if the entrepreneur hoards or buries the income, the ultimate object is always to employ it in a purchase of some kind and so there still can’t be deficient demand as long as real economic values are being produced. Regarding his theory, one of the aspect that can improve entrepreneurial development in Kenya is reduction of corruption by the government and also instill reasonable taxation for ease of doing business. Moreover, entrepreneurs need to have the ideal entrepreneurial skill set and orientation such that they are able to pick the right partners and team, putting in the requisite hard work and recovering from the inevitable setbacks which is the key ingredient to entrepreneurship.
Another entrepreneurial theory which can be of great importance to economy development in Kenya is Entrepreneurship Innovation Theory. This theory was presented by Joseph Schumpeter in the year 1911 and it mainly emphasizes on innovation, risk taking and organizing abilities of entrepreneur (Kumar, Online). According to him, consumer preferences are already given and do not undergo spontaneously and thus can’t be cause of economic change. In his theory, he further stated that the various ways in which innovation theory can be used to drive entrepreneurial development include launching of a new product or a new species of already known product; application of new methods of production or sales of a product; opening of a new market; and instilment of new industry structure such as creation or destruction of a monopoly position (Śledzik, 2013 Online). This economist also argued that any entrepreneur seeking profits ought to innovate as innovation is believed to be an essential driver of competitiveness and economic dynamics. Relating with Schumpeter Innovation theory, entrepreneurs seeking to enhance entrepreneurial development of Kenya ought to involve innovation using either dimension of invention whereby s/he’ll have to come up with a new product with new objectives; dimension of innovation whereby already existing product will be modified and improved so as to offer more objectives than the previous one; dimension of diffusion whereby new technological and other advancements will be spread throughout societies from introduction to wider-adoption; and or the entrepreneur introduce the dimension of imitation by creating products similar to those already existing in the markets.
As part of the developing world, Kenya stands to gain a lot by embracing a culture of entrepreneurship. It is this realization that has seen an increase in the emphasis placed on entrepreneurship, which is now part of the Kenyan education curriculum. However, a lot is yet to be done in the entrepreneurial development, but if the knowledge of the three economists; Cantillon, Say and Schumpeter, is put into consideration, our Kenya will definitely expand its economy and it will be able to join the rest of the world in the competition.
References
Wikipedia. Entrepreneurship. [Online] Available at < https://en.wikipedia.org/wiki/Entrepreneurship > {Accessed on 21st June 2018}
Fernandes p., 2018. Entrepreneurship Defined: What It Means to Be an Entrepreneur. (Updated February 19, 2018) [Online] Available at < https://www.businessnewsdaily.com/7275-entrepreneurship-defined.html > {Accessed on 21st June 2018}
Kumar A. Theories of Entrepreneurship. [Online] Available at < http://www.authorstream.com/Presentation/anupamkr-1643046-theories-entrepreneurship/ > (UKEssays, 2015. Entrepreneurship Theories and Contributions of Entrepreneurship Business. (Updated December 6th, 2017) [Online] Available at < https://www.ukessays.com/essays/business/the-theories-and-contributions-of-entrepreneurship-business-essay.php > {Accessed on 21st June 2018}
Soko Directory Team, 2016. Entrepreneurship in Kenya. (Updated February 22, 2016) [Online] Available at < http://sokodirectory.com/2016/02/entrepreneurship-in-kenya/ > McFarlane J. Economic Theories of Entrepreneurship. [Online] Available at < https://www.goodfellowpublishers.com/free_files/Chapter%202-7c6e7512c631bffc209229a2ea323204.pdf > {Accessed on 21st June 2018}
Sechrest L, 2000. ARTICLES OF INTEREST: Jean-Baptiste Say; Neglected Champion of Laissez-Faire. (Updated July 15, 2000) [Online] Available at < https://mises.org/library/jean-baptiste-say-neglected-champion-laissez-faire-0 > {Accessed on 21st June 2018}
Śledzik K., 2013. Schumpeter’s View on Innovation and Entrepreneurship. (Updated October 12, 2015) [Online] Available at < https://www.researchgate.net/profile/Karol_Sledzik/publication/256060978_Schumpeter%27s_View_on_Innovation_and_Entrepreneurship/links/561bff6908aea8036724359b/Schumpeters-View-on-Innovation-and-Entrepreneurship.pdf?origin=publication_detail > {Accessed on 21st June 2018}