Creativity and Entrepreneurship Essay Sample free essay sample

What is creativeness and what is Entrepreneurship? Is at that place any relation between creativeness and Entrepreneurship? If so. what is the relation and what function does creativity play in entrepreneurship? The intent of this essay is to joint the relationship between Creativity and Entrepreneurship. to discourse the deductions of creativeness on the undermentioned entrepreneurial activities – determination devising. concern planning and chance development. Creativity can be defined as the production of novel and utile thoughts in any sphere ( Stein. 1974 ; Woodman. Sawyer A ; Griffin. 1993 ) . Creativity and invention can non be separated from entrepreneurship which in bend is the procedure of making. working and developing an chance. Millard. Pretorius and Kruger ( 2005 ) reference that â€Å"creativity is clearly portion and package of the entrepreneurial accomplishments and is required to successfully get down a venture† ( p. 56 ) . Entrepreneurs and their ven tures are considered to be â€Å"important agents of innovation† ( Bosma A ; Harding. 2007. p. 16 ) . non merely in footings of the merchandises and services they provide. but besides in footings of the engineerings and procedures that they utilise ( Bosma A ; Harding ; Watson et Al. . 1998 ) . Entrepreneurs can be called as kernel of creativeness and invention because of their nature. They nurture creativeness and invention. It can be argued that creativeness is an of import ingredient in the formula for the new merchandise or service any enterpriser would supply and it is non merely indispensable making or developing the new merchandise but besides in every degree of every type of the organisation. Creativity is seen as traveling beyond new merchandises. new services and new and improved procedures ( Cook. 1998 ; Heye. 2006 ) . Creativity can besides be described as a combination of 6 elements. Sternberg’s ‘investment theory of creativity’ briefs the nature of creativeness as a meeting of 6 distinct but interrelated resources – cognition. personality. rational abilities. manner of thought. environment and motive. Harmonizing to Sternberg ( 1995 ) the rational accomplishments required for creativeness constitute 3 accomplishments in peculiar: a m an-made accomplishment to see jobs in a new manner and to get away the bounds of conventional thought ; an analytical accomplishment to acknowledge which of one’s thoughts is deserving prosecuting ; and practical-contextual accomplishment of how to carry others of the value of one’s thoughts. ( Matthews. Judith H. 2007 ) Invention is conventionally defined as the successful execution of originative thoughts ( Stein. 1974 ; Woodman. Sawyer. A ; Griffin. 1993 ) . Creativity is the point of inception for invention ; it is a necessary. but non sufficient. status for invention to happen ( Amabile. Conti. Coon. Lazenby. A ; Herron. 1996 ) . Invention may be conceptualized as either a procedure or an result. As a procedure. invention frequently is depicted as uninterrupted and cyclical. affecting the phases of consciousness. assessment. acceptance. diffusion. and execution ( Damanpour. 1991 ; Poole A ; Van de Ven. 1989 ) . Innovation demands alteration. but non all the alterations are advanced. Harmonizing to Woodman. Sawyer. and Griffin ( 1993 ) creativeness is a subset of invention ( when it is undertaken in complex societal scenes ) and invention is a subset of alteration. Entrepreneurial event is built with creativeness and invention as the base. Entrepreneurship is the willingness and capacity to develop. form. raising and pull off a new concern venture along with any of its hazards and uncertainnesss in order to do net income. Peoples who indulge in the actions that form the footing of entrepreneurship are called Entrepreneurs. These entrepreneurial actions involve happening an chance. working it and making a new merchandise as a consequence. Anything that has the possible to let the user to do it a concern and generate net income out of it can be termed as a possible chance. In this context. entrepreneurial action is defined as any activity enterprisers might take—from ab initio placing chances ( Gaglio A ; Katz. 2001 ; Kirzner. 1979 ; McMullen A ; Shepherd. 2006 ) . in piecing resources to work chances ( Schumpeter. 1939 ) . in bring forthing and allowing the economic net incomes created by working chances ( Alvarez and Barney. 2005 ) —to produce new merchandises or services ( Shane and Venkatraman. 2000: 211 ; Shane. 2003: 4 ) . Different statements have been offered to accommodate the impression of chance to the kingdom of single enterprisers: chances are created endogenously by the actions of enterprisers ( Alvarez A ; Barney. 2007 ) ; an chance represents a watercourse of continuously developed and modified thoughts ( Davidsson. 2003 ; Dimov. 2007b ) ; an chance can non be separated from the person ( Companys A ; McMullen. 2007 ; Dimov. 2007a ; Sarason. Dean. A ; Dillard. 2006 ) ; an chance is intertwined with single beliefs ( McMullen A ; Shepherd. 2006 ; Shepherd. McMullen. A ; Jennings. 2007 ) ; and an chance exists merely in the entrepreneur’s imaginativeness ( Klein. 2008 ; Shackle. 1955 ) . While the elements of chances may be â€Å"recognized† . chances are made. non found ( Ardichvili A. Cardozo R. Ray S. 2000 ) . Careful observation of the market responses and demands. ability to recognize the resources at the right clip may assist entrepreneurs get down to develop the chance. Successful chance development processes creates successful concerns. This procedure starts with the acknowledgment. rating and so development. The development procedure is iterative and enterprisers have to measure their chances many times in the procedure. This perennial rating could take to designation of extra chances which may alter the whole procedure and may ensue in creative activity of new merchandises. Discovery and Creation theories: As Teleological theories. Discovery and Creation theories discuss about the chances and the entrepreneurial actions to work those chances. Though the premises made by the two theories to explicate how chances are found and exploited differ greatly. these two theories co-exist. Harmonizing to Alvarez and Barney. each theory makes three basic premises to explicate the nature of chances and enterprisers. Discovery theory proposes that opportunities pre-exist waiting to be discovered by enterprisers. These chances arise exogenously as a consequence of alterations in consumer penchants and/or some other properties in the market. Since chances are created by exogenic dazes to an industry or market and as these dazes are nonsubjective and discernible. so everyone associated with that industry or market should be cognizant of the chances a daze has created. Of class. if everyone associated with an industry or market knew about the chances created by daze. and were all sufficiently skilled to work these chances. so they could all seek to work them. ( Alvarez and Barney. 2006 ) Hence. to explicate why these chances are exploited merely by a few people and non everyone. find theory assumes that enterprisers are well different from non-entrepreneurs. Kirzner ( 1973: 67 ) summarizes the differences between enterprisers and non-entrepreneurs that enable merely the former to be cognizant of chances with the construct of â€Å"entrepreneurial watchfulness. † Whatever the peculiar beginnings of these differences. Discovery Theory assume that people will non all perceive the being of chances every bit. Some will b e predisposed to see them while others will be blind to their being and still others may see them as menaces non chances ( Murphy. 1996 ) . Even if the chances are seen by many people. harmonizing to find theory there are merely a few people who will be willing to work them. These people who are willing to work the chances take their determination based on hazard rating or on the initial beliefs about the chance. Hazard refers to some sort of danger when the chances of the results are non calculated in the right manner on the footing of an nonsubjective categorization of cases. Whereas uncertainness refers to the state of affairss in which the categorization of aims are non possible. The term uncertainness will be defined loosely as â€Å"any divergence from the unattainable ideal of wholly deterministic cognition of the relevant system† ( Walker. Harremoes et al. 2003. p. 5 ) . Lack of information is non the lone concern with uncertainness. but besides with the facets it that can non be determined. It is of import to observe that uncertainness is non merely caused by deficiency of information. It is sometimes besides caused when the handiness of information is more ( Van Asselt 2000 ; Koppenjan and Klijn 2004 ) . A determination doing context is defined as hazardous when. at the clip a determination is made. the possible results associated with a determination are known along with the chance of each of these results happening ( Dequech. 2003 ; Triola. 2003 ) . This information enables a determination shaper to gauge a chance distribution of results associated with a determination. This chance distribution can so be used to steer determination devising ( Gifford. 2003 ; Wald. 1950 ) . As. all the chances pre-exist. harmonizing to find theory. it is executable to garner adequate information to expect the chance of impact of the determination. But every bit shortly as the exogenic daze occurs ; possible enterprisers will hold merely really limited information about possible new chances. ( Alvarez and Barney. 2006 ) Discovery theory suggests that Entrepreneurs. utilizing this information design tools to analyze the hazard involved in the determination and besides to understand the chance costs that is involved in taking the determination. On the other manus. harmonizing to Creation theory chances are non assumed to be the nonsubjective phenomena that are created by exogenic dazes to an industry or market. Rather. they are created. endogenously . by the actions of persons researching ways to bring forth new merchandises or services ( Baker et Al. . 2005 ; Gartner. 1985 ; Sarasvathy. 2001 ) . Creation Theory proposes that entrepreneur’s actions are the indispensable beginning of these chances. They do non seek for chances ; but alternatively act. and detect how consumers and markets respond to their actions ( Alvarez and Barney. 2006 ) . Entrepreneurship does non necessitate fortune but requires believing and observation. It requires the individual to be on the right topographic point at the right clip and to hold a clear attack on how to prehend the chance. As the entrepreneurial actions are the beginning of chances. harmonizing to creative activity theory. the consequence of the action is unsure until the chance is created. Hence. this procedure is emergent. i. e. the way. continuance. and results of actions designed to bring forth new merchandises or services are non identifiable when this procedure begins. and are merely revealed. measure by measure. as an chance is created over clip ( Mintzberg A ; Waters. 198 5 ) . Rarely will entrepreneurs be able to see â€Å"the terminal from the beginning. † In this position there is no â€Å"end† until the creative activity procedure has unfolded. i. e. . chances can non be understood until they exist. and they merely exist after they are enacted in an iterative procedure of action and reaction ( Berger and Luckmann. 1967 ; Weick. 1979 ) . This creative activity procedure is clearly path dependant. in that little differences in initial determinations and picks made by enterprisers can take to big differences—among enterprisers and between enterprisers and non-entrepreneurs—over clip ( Arthur. 1989 ) . Hence. creative activity theory assumes that before an chance is created enterprisers and non-entrepreneurs may non be different at all. Unlike find theory. Creation theory claims that even really little differences in the life of people could ensue in some people going enterprisers and others staying non-entrepreneurs. It suggests that going an enterpriser is largely circumstantial. The determination doing procedure a ssociated with this is largely unsure. As the chances are being created based on the entrepreneurial action. it is non possible to garner information sing the chance. In peculiar. in this context. it is non possible for possible enterprisers to cipher the chance costs associated with their actions. Hence. alternatively of chance costs. Creation Theory suggests that enterprisers use the construct of â€Å"acceptable losses† to judge the downside associated with prosecuting in entrepreneurial actions ( Sarasvathy. 2001 ) . Creativity in Entrepreneurial procedure Opportunity development: Entrepreneurship is a journey that begins with the designation of the chance. The determinations that an enterpriser takes on if to prosecute the chance and how to prosecute the chance. decides the way of the journey. Whether or non the journey is successful. depends on how the chance is exploited and developed. It is naive to believe that the chances are conceived in the same signifier and form as they originally emerged. The possible chances emerge from an iterative procedure that involves modeling the thoughts and giving the chance a proper signifier and develops it. The procedure of reading. treatment. and modeling. whereby initial thoughts are re?ned. elaborated. modified. or even discarded. is known as chance development. This term represents both a moral force. iterative. and a socially embedded position of how entrepreneurial chances reach their ?nal signifier ( Dimov D. 2007 ) . It can be argued that creativeness is non merely needed to place or recognize the chance but besides needed at every phase of the chance development. As the concern environment is invariably altering and invariably disputing. for the enterprisers to be successful. creativeness is perfectly indispensable. It is indispensable non merely to develop the chance that they have started to venture upon. but besides to work out the freshly originating jobs in the extremely competitory market topographic point. The development procedure begins when entrepreneurial watchfulness exceeds a threshold degree. Watchfulness is likely to be heightened when there is a happenstance of several factors: relevant anterior cognition and experience ; certain personality traits ( creativeness and optimism ) and societal webs. The cognition of single about the market needs and resources besides affects peculiar activities within the procedure ( Ardichvili A et Al. . 2000 ) . Within merchandise market entrepreneurship. Drucker ( 1985 ) has described three different classs of chances: ( 1 ) the creative activity of new information. as occurs with the innovation of new engineerings ; ( 2 ) the development of market inefficiencies that result from information dissymmetry. as occurs across clip and geographics ; and ( 3 ) the reaction to switch in the comparative costs and benefits of alternate utilizations for resources. as occurs with political. regulative. or demographic alterations. Looking at the illustration of the celebrated societal networking site. Facebook. it was launched in 2004 by a Harvard university pupil. Mark Zuckerberg ( CEO and Co-founder ) . Mark Zuckerberg took the thoughts from Cameron Winklevoss. Tyler Winklevoss. and Divya Narendra. three Harvard seniors and converted this construct into an chance. Facebook ab initio started as a little networking site which maps within the Harvard University and subsequently developed into a site that connects one billion people across the universe. Mark evaluated the thought. and developed the thought by adding more characteristics. doing it more sophisticated and user friendly. He made the website creative. and advanced. Even today. new characteristics are being added to the Facebook page about every twenty-four hours. This was an chance to Mark and he was smart plenty to catch that chance. and develop the chance into a successful concern. Though he had to confront many hazards and uncertainnesss in the procedure of development. Mark succeeded in it as he encouraged the function of creativeness and invention in his procedure. Entrepreneurial Decision devising: The enterprisers can non make hazard based ratings all the clip as before execution of the chance as merely a limited information about the chance will be available. In most scenarios. the enterpriser will hold to confront jobs and uncertainnesss after they start their venture. They will hold to come up with executable and appropriate solutions for the jobs and accommoda te harmonizing to the demands. There are a figure of factors hypothesised by the research workers that influences the determination doing procedure of enterprisers. The undermentioned factors are noted to play a major function in the procedure: 1. Prior cognition or experience 2. Research about the chance 3. Personality traits -self-efficacy. optimism. risk-taking ability. creativeness. Shane ( 1999 ) postulated that enterprisers will detect chances because anterior cognition triggers acknowledgment of the value of the new information. In his three-stage survey of chance acknowledgment processes. Shane ( 1999 ) tested and confirmed a figure of hypotheses. which could be summarized as follows: I. Any given entrepreneurial chance is non obvious to all possible enterprisers ( the principle being that all people do non possess the same information at the same clip ; Kirzner. 1997 ) . two. Each person’s idiosyncratic prior cognition creates a ‘‘knowledge corridor’’ that allows him/her t o acknowledge certain chances. but non others ( Hayek. 1945 ; Ronstadt. 1988 ) . Three major dimensions of anterior cognition are of import to the procedure of entrepreneurial find: anterior cognition of markets. anterior cognition of ways to function markets. and anterior cognition of client jobs. These theories suggests that anterior cognition of an single influences the determination doing procedure well. Harmonizing to Sigrist ( 1999 ) when the cognition or sphere of expertness of the person is combined with his/her country of passion leads to creative thoughts in the determination devising procedure. Entrepreneurs seek to garner information about the penchants of clients. sensitiveness in the market. information about the rivals. technological promotions and maintain them up to day of the month. They use this information to analyze the hazard involved in the procedure and take determinations consequently. Personality traits besides play a function in entrepreneurial actions. Entrepreneurs should be optimistic and have high selfefficacy to get the better of the hurdlings and take effectual determinations. Another trait that plays a major function in the determination devising procedure is Creativity. Kay ( 1986 ) concluded that originative factors play a great function in entrepreneurial determination devising. Hills et Al. ( 1997 ) have found that 90 % of those surveyed by them find creativity really of import for chance designation. However. solo enterpriser found it significantly more of import than did the networked enterprisers. They besides viewed themselves as being more originative. and were more likely to put aside clip specifically to be originative. Hills et Al. conclude that enterprisers who are networked to chance beginnings may non necessitate to be every bit originative as those who are non networked ( Ardichvili A et Al. . 2000 ) . Business Planning: For a concern venture to be successful. the enterprisers should maintain using originative actions in the programs or determinations that they make. An efficient concern program scheme is to choose to outclass at either being the high service supplier or low-cost. best merchandise supplier. But. one time a way has been chosen. so it all depends upon executing of the program. As there are so many uncertainnesss in the procedure. sometimes the program should be revised and it might necessitate accommodating a new strategic way which may ensue in altering the merchandise or market itself. Creativity plays a major function on how these determinations are evaluated and pursued. It is creativeness that separates those concern ventures that survive and thrive and those that don’t. If we consider the recorded music industry. music lovers listened to their favorite music recorded on vinyl phonograph record until about 1980. when cassette tapes grew in popularity. The compact size and record ability of the cassette tape caused a monolithic displacement from vinyl records to tapes. By the late eightiess. nevertheless. compact phonograph record ( CDs ) overshadowed cassettes. due to the CD’s better sound quality and instant entree to paths. In bend. the Cadmium concern peaked in 1995 merely as the Internet was deriving impulse in society at big. A few old ages subsequently. peer-to-peer file transportation began to let buccaneering of music. By 2001. Apple had introduced the iPod and iTunes and finally gained a dominating place in the music distribution and gross revenues concern ( Byers et Al. . 2005 ) . In a dynamic economic system. companies need to reinvent their concern agreements or stop up going irrelevant [ Knopper. 2009 ] . Sarasvarthy ( 2001 ) argues that entrepreneurship instead than being a causing procedure is a more emergent procedure relevant to the properties of the person. She named this emergent and synergistic procedure an implementation procedure. The four rules of the implementation theoretical account ( summarized by Davidson 2006 ) are: ? focal point on low-cost loss instead than expected returns ? Strategic confederations instead than competitory analysis ? Exploitation of eventualities instead than preexistent cognition ? Control of an unpredictable hereafter instead than foretelling of an unsure one. Entrepreneurship is a procedure that demands more than creativeness. The clip in which the enterpriser identifies the chance should be favorable for the development. Besides. the resources for peculiar chance should be available and should be sufficient plenty to get down the concern venture. The rivals who are besides seeking to work the same chance should be less or the resources should non be abundant and easy available for the rivals. The enterpriser should be skilled plenty to happen possible employees for his venture. She/he should be able to steer and animate the employees. actuate them and be an inspiring leader. The concern planning and framing should be done in a manner that the enterpriser can convert his investors and creditors to acquire adequate capital for get downing the venture. The market conditions and the civilization of the topographic point should be in favor of the chance development. Entrepreneurship demands awareness about things that are go oning in the sphere and besides first-class networking accomplishments. It demands willingness to take hazards and face uncertainnesss. In drumhead. Entrepreneurs ever revolve around alteration and accept them. These alterations lead to thoughts that are converted into an chance. Entrepreneurs look for a timely. solvable. of import job with a favorable context that can take to profitableness. These responses to the chances direct to the entrepreneurial actions. Entrepreneurial actions are based on the creative activity. development and development of chances. Creativity and Innovation are two major pillars that support the entrepreneurial actions. From the statements made in the essay. it can be concluded that Creativity is an indispensable but non sufficient status for Entrepreneurship. Mentions Alvarez. S. A. . A ; Barney. J. 2006. Discovery and Creation: Alternate theories of Entrepreneurial actions. Alvarez. S. A. . A ; Barney. J. 2005. How entrepreneurs organize houses under conditions of uncertainness. Journal of Management. 31 ( 5 ) : 776-793. 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