APPROACHES TO ENTREPRENEURSHIP

There are various theoretical approaches that underpin the development and nature of entrepreneurship. For example, some scholars (McClelland, 1961; Lanza, 2004) theorize that entrepreneurship is a field of study that involves approaches from the psychological perspective (referring to a person’s psychological and personal attributes), others (Praag, 1999; Daher, 2012) opine the economic perspective (emphasising the coordinating role of the entrepreneur in the production and

distribution of utilities in an economy) whilst Simpeh (2011:2) argues from a sociological perspective (stressing the social dimension in which entrepreneurship takes place). Kuratko (2014:8), on the other hand, provides two general approaches to entrepreneurship namely: the schools of thought approach and the process approach.

3.2.1.1 The schools of thought approach

The schools of thought approach take a macro and micro view of entrepreneurship with both emphasizing the external and internal environments respectively (Katz &

Green, 2014:13; Kuratko, 2014:9).

3.2.1.1.1 The macro-view

According to Kuratko (2014:9) the macro view of entrepreneurship presents a wide range of factors that relate to success and failure in modern entrepreneurial ventures.

Kuratko (2014:9) posits that while taking the external view of entrepreneurship, the macro-view is represented by three schools of entrepreneurial thought, namely:

1. The environmental school of thought: This school of thought looks at all the environmental factors that affect a potential entrepreneur’s lifestyle. In ECFs’

context most emerging contractors in South Africa have often been blamed for lack of passion for the trade, as some have established their businesses on the basis of what they perceive to be a luxury lifestyle made out of State tenders.

2. The financial school of thought: This view focuses on the capital seeking- procedure of the entrepreneur. The search for seed and growth, explain Kuratko and Hodgetts (2007:38), is the main focus of the entrepreneurial process. Most ECFs find it difficult to access the necessary funding, a key requirement in construction to provide the necessary guarantees and insurances for the works. This, perhaps, is a key explanation why most of the small businesses, including ECFs, never succeed beyond the first three years of their existence (Franco & Haase, 2009:507).

3. The displacement school of thought: This school of thought focuses on the negative side of group phenomena, where someone feels out of place or is literally ‘displaced’ from the group. This approach maintains that persons displaced or denied certain opportunities on social, political or economic grounds would seek out entrepreneurship as a solution. Most small businesses (spaza shops, hair salons, Internet cafes, etc.) in South Africa are operated by foreigners. This high influx of foreign-operated small businesses persists despite the harsh treatment meted out to these foreigners by ‘angry’ and ‘bitter’

South Africans. Foreigners persist because they feel they cannot go back home, given a number of social, political and economic conditions that define their respective countries.

3.2.1.1.2 The micro-view

According to Kuratko (2014:10) the micro view of entrepreneurship looks at the factors that are specific to entrepreneurship and are part of the internal locus of control. The micro view appears to coincide with the internal environment of small business and, unlike the macro-view, focuses on looking from the inside outward (Katz & Green, 2014:14; Kuratko, 2014:9).

Kuratko (2014:10) posits that the internal view of entrepreneurship, the micro-view, is also represented by three schools of entrepreneurial thought namely:

1. The entrepreneurial trait school of thought: This school of thought argues that successful entrepreneurs usually demonstrate higher level factors of achievement, passion, creativity, determination and technical knowledge.

Mainstream literature (Kuratko & Hodgetts, 2007:29; Allen, 2012:5) maintains that the passion to pursue entrepreneurial objectives is a critical trait of the entrepreneur. ECFs that continue to thrive beyond their first three years of existence have shown higher levels of determination, passion and creativity.

2. The venture opportunity school of thought: This view postulates that the ability to recognize and develop the opportunity in the right markets and at the right time is key to entrepreneurial success. Successful small businesses are

opportunity driven (Timmons & Spinelli, 2011:49). It is the ability of entrepreneurs to identify market gaps and harness resources to exploit those gaps (opportunities) successfully for economic gain that makes them drivers of economic growth and development (Hisrich, Peters & Shepherd, 2010:99).

ECFs in South Africa are failing to either spot opportunities in the markets or create their own markets which can sustain them.

3. The strategic formulation school of thought: This school of thought focuses on the planning process that is required for successful venture development.

The view posits that the successful venture requires an interdisciplinary approach with characteristics such as unique markets, unique people, unique products and unique resources. For small businesses, strategic planning, which usually is informal and intuitive, enables them to compete against their rivals and make profit (David, 2011:13). In ECFs’ context the ability to plan, and also to decide whether to collaborate and innovate or not, enables ECFs access to such unique markets, unique people, unique products and unique resources.

3.2.1.2 The process approach

This approach, unlike the schools of thought approach that analyses the external and internal environments in understanding entrepreneurship, look at the activities involved in entrepreneurship. van Aardt, Hewitt, Bendeman, van Aardt, Bezuidenhout, van Rensburg, Naidoo, van der Bank and Visser (2011:8) indicate that three approaches are most commonly used:

1. The integrative approach: This view analyses process elements such as the environmental opportunity, the development of new technology or an adaptation to current regulations. In the past (prior to 2000) the construction industry was not regulated, and once regulations were introduced watchdogs such as the National Home Builders’ Registration Council (NHBRC) and the Construction Industry Development Board (CIDB) emerged. As a result, ECFs had to undergo a very rigorous process of adapting to ensure survival.

2. The entrepreneurial assessment approach: This view focuses on the individual entrepreneurial development and his responsibility and accountability for conceptualizing and implementing a new venture. New businesses are created, developed and managed for growth and profitability through the entrepreneurial process (Timmons & Spinelli, 2007:51; Nieman &

Nieuwenhuizen, 2010:9; Venter et al., 2012:5). ECFs in South Africa can only fully emerge and expand if they invest in the development and growth of their businesses by investing in innovative activities.

3. The multidimensional approach: This view looks at interactions between the entrepreneur, the business and the environment and includes the extensive array of financial and non-financial resources that are necessary on an ongoing basis. This approach resonates with the central thesis of the current study. The study contends that when ECFs invest financially, by innovating and relying on other non-financial resources, such as social networks, which are value free, they will enjoy a better firm performance than their rivals.

Although there is no consensus on the definition of entrepreneur or its derivative, entrepreneurship, definitions of Joseph Schumpeter, Israel Kirzner and Frank Knight have become perhaps the most well-known to many scholars in recent decades. The next section reviews some of the most well-known perspectives on the definitions of entrepreneurship.

3.2.2 PERSPECTIVES TOWARDS THE DEFINITION OF ENTREPRENEURSHIP