What Factors Are Deemed Necessary for Successful Entrepreneurial Activity - Research Proposal Example

What Are Factors Are Deemed Necessary For Successful Entrepreneurial Activity?’ Student’s Name Institutional Affiliation Introduction For a long period now, the topic related to entrepreneurship is deemed to be a fundamental concept in both theory and practice of economic growth and development. Within all circles of human life, whether politically or even socially the importance of entrepreneurship has been lauded as being a significant portion of new employment opportunities that are created by new firms given that it is true these entities bring about productive innovations. Thus, it is indeed a crucial aspect to comprehend the factors that promote or even mitigate possible entrepreneurial activities. An influential set of research indicate that such geographical features as cities and regions acts to inhibit the creativity and innovation and that the notion of human capital factors play a significant role in spurring regional growth (Lee & Peterson, 2001). The main objective of this paper is to ascertain the underlying social attributes of a given region that are associated with entrepreneurship or even new firm formation. To be specific, the paper explores the effect of such factors as creativity and diversity on new firm formation. In doing so, the paper answers the research question ‘what are factors are deemed necessary for successful entrepreneurial activity?’ Literature Review Conventionally, there have been numerous studies conducted in relation to entrepreneurship that has been based on personal attributes of successful entrepreneurs. These studies have continued to focus on role of factors like personality human capital as well as ethnic background (Lee & Peterson, 2001). Personality research studies have shown that successful start-up process is directly related to such attributes as entrepreneurial vision, distinct alertness to business opportunities as well as capacity to be proactive at all times. Studies focused on human capital have shown that entrepreneurship is in fact attributed to ethnic origins of a person so that Jews and Koreans are perceived to be more successful entrepreneurs when compared to such ethnic group like the African Americans since they enjoyed an easier and readily-available access to start-up capital through family or even ethnic networks. In another line of research, it is suggested that such factors as unemployment; population density and readily-availability of finance as being crucial factors that expounded on the regional differences in the levels of new firm formation. Davidsson and Honig (2003) notes formal education is one single component of human capital that can effectively help to ascertain the accumulation of explicit knowledge, which can help avail necessary skills that is useful to all entrepreneurs. In fact, empirical research has been able to show the degree of outcomes that relate to the relationships arises between such important aspects as education; entrepreneurship and success. Further research indicates that human capital relating to formal education does involve experiences and practical learning that takes effect on the job as well as non-formal education and thus, a wider labour market experience as well as particular vocationally-oriented experience is indeed predicted to improve on the aspect of human capital (Krueger & Brazeal, 1994). Despite there being a mixed set of results, a significant number of studies have shown that labour market experiences, management-based experiences and past entrepreneurial experiences have been portrayed to relate to entrepreneurial activity especially in controlling such notable aspects as industry and gender. Method The study will adopt a cross-sectional research methodology whereby the process is initiated by identifying a random sample of budding entrepreneurs or start-up efforts at their beginning phase and follow them for a period of 3-6 months to ascertain their degree of success or failure (Lee, Florida, & Acs, 2004). The data is based on a random sample of preselected individuals of the age between 16 to 70 years, which represents an adult population in the region. Each of the participants underwent a rigorous screening interview with the objective of determining out the nascent entrepreneurs. Of 300 preselected respondents, 230 of them were reached through their phone numbers (Lee, Florida, & Acs, 2004). In examining the effect of creativity and diversity on entrepreneurship at a regional level, the study adopts a Metropolitan Statistical Areas (MSAs) as well as Primary Metropolitan Statistical Areas (PMSAs). Variables for this study include; human capital for which the budding firm owners were asked to indicate their highest level of education that ascertained their explicit level of knowledge that had been attained; social capital that was used to show possible evidence of personal business networks and relations fostered with the assistance of close family and friends; and creativity that is measured using Bohemian Index that has been adopted to measure artistically creative people within the region and, also their intellectual dynamism. Discussion of Findings The findings of the study indicate that new firm formation or rather entrepreneurship is directly associated with creativity as well as human capital. In this regard, it is indicated that the regions, which are considered to be open and creative and attracts human capital will likely benefit a lot from dynamic level of entrepreneurship. These findings seem to postulate that both academicians and policy-makers should focus their attention towards a social platform or even environment for which the activities related to entrepreneurship takes place (Ward, 2004). It is crucial to note at this point in time that this research is just but a very initial phase and for that reason, encourages even more level of research that will focus on social context of entrepreneurship and how such factors as human capital; creativity and social capital affect the entire firm formation process as a whole. In testing the contributions made by social capital in entrepreneurial activity, it is noted that it is directly related to discovery of new firm formations. Social capital is a variable that was noted to have played a more influential role in the determination of the probability of budding entrepreneurship in comparison to human capital attributes (Lee, Florida, & Acs, 2004). In summarizing the aspect related to human capital findings, it is found out that the effects of both tacit and explicit knowledge were all present in ascertaining entrepreneurial discovery. In fact, a larger portion of the budding entrepreneurs were fairly-educated, which is an indication of even more explicit knowledge. Participants that showed greater levels of human capital were more likely to discover unique opportunities that are portrayed to be attractive enough to ensure that they take the initial steps needed for starting their own businesses. In fact, these findings are fairly-similar to previous studies that examined new entrepreneurs. It is assumed that individuals with a higher level of human capital possess a distinctive level of self-confidence, which fosters their ability to make a decision that would result to independent entrepreneurship (Lee, Florida, & Acs, 2004). Consequently, they are likely to feel that the underlying risks involved with the opportunity are lower for them since they are likely more re-absorbed by the underlying labour market in the event that their ventures will fail. It is also notably clear from the study that these upcoming entrepreneurs had both intensive set of work and start-up experiences thereby depicting a greater level of tacit knowledge. The study findings in relation to social capital were specifically rapid and noteworthy. In regards to the discovery of entrepreneurial opportunities, the notion of having parents and close relatives in businesses as well as encouragement from both friends and family were strongly associated with the possibility of entrance into a new venture. Just like previous research studies, there was no form of relationship that could be portrayed by the effects of having immediate contact with a pre-established assistance agency on matters related to budding entrepreneurship. These agencies could not successfully avail any form of assistance or even provide ready access to resources expected of organisational networks. Logistics Regression with Budding Entrepreneurs Dependent Variable Budding Entrepreneur Status Human capital: Educational level Previous start-up experience .127 .563 Social Capital ; Parents/ Close Relatives in business Encouraged by close friends or family Close friends or neighbours in business .437 .623 .156 Control Variables Age -2 log likelihood -.105 985.89 Standard errors are in parenthesis; p Read More