TOPIC 3: Classification of Entrepreneurs.

TYPES OF ENTREPRENEURS. Literature on entrepreneurship is paying greater attention to the diversity of Entrepreneurs. Certain characteristics of the firms and the entrepreneurs who own them can be more easily and clearly understood if we group and classify certain types of entrepreneurs differently. The following are some of the distinctions that can be used to classify entrepreneurs. Motivation to engage in entrepreneurial activity. Push (Forced) and Pull entrepreneurs. Push entrepreneurs are those whose dissatisfaction with their current position for reasons unrelated to their entrepreneurial characteristics, pushes them to start a venture. Dissatisfaction may be as a result of dissatisfaction with current job, unemployment, lack of marketable job skills, loss of a bread earner, forced migration, premature retirement etc 'Pull" entrepreneurs are those who are lured by their new venture idea and initiate venture activity because of the attractiveness of the business idea and its personal implications. Attraction of entrepreneurship that could attract an individual include a promise of high profits, prestige, conforming to group pressures, a need for independence, and a chance to put their ideas in practice. Levels of Creativity and Innovation: Innovative entrepreneurs assemble a large variety of information and combine a range of factors experimentally to produce new possibilities in terms of markets, techniques, or products. Countries with a very underdeveloped industrial base hardly produce this type of entrepreneur, because of lack of the necessary infrastructure. Imitative (Adoptive) entrepreneur they imitate and adopt the technology and techniques innovated by others. They are particularly important in underdeveloped countries although not highly regarded in more developed economies. However, imitative entrepreneurs also need to be creative in order to modify innovations to suit their special conditions. Opportunistic Entrepreneurs: They constantly look for and exploit serial opportunities because of their wide skills and knowledge accumulated from a wider educational background,
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experience or exposure. They start by exploiting small opportunities seeking and exploiting a series of, often varied, opportunities as they grow. Their ambitions involve building large organizations and are not afraid of borrowing to achieve this growth. They usually find it easy to delegate and hire competence. Visionary Entrepreneurs: They have almost similar characteristics to the opportunistic entrepreneurs however, while opportunistic entrepreneurs pursue, serial business opportunities, the visionary entrepreneurs concentrate on the unwavering pursuit of a single, powerful opportunity. In practice, this fixation may represent a false opportunity that is ahead of its time or fails to consider significant obstacles to implementation. Craftsman Entrepreneurs: They own the businesses in which they operate, but tend to restrict their business to their individual skills and experiences usually accumulated from limited education and exposure. They have minimal growth ambitions, keeping their enterprises small as a means of maintaining control. Control is normally autocratic, with little delegation and strong paternalistic attitudes towards their workers. They avoid risk and the use of loan money. Normally, they are not marketing oriented, preferring to build very strong with their existing customer. Drone Entrepreneurs: At some instant in their business, craftsman-entrepreneurs are so comfortable with their achievements that they decide not to tamper with what they consider a winning formula. Those entrepreneurs that will not change under any circumstances are referred to as drone entrepreneurs. Slowly but surely, this entrepreneur will be forced to close. Fabian Entrepreneurs are also reluctant to change, but are sometimes forced by circumstances to change. They respond very slowly to changes in the market, and this affects their growth and competitiveness. However, by following a proven path, these entrepreneurs are protected from the uncertainty of new innovations; they are therefore likely to survive for a long-time. They however grow very slowly or do not grow at all because they fail to exploit new innovations that are normally more profitable. Level of organization: Differences between entrepreneurs who developed their business ideas on their own (solo entrepreneurs) vs. those who got their ideas from their social networks, and develop them using the networks (network entrepreneurs) are found. The solo entrepreneur is limited to his means
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and capabilities while the network entrepreneur can draw from the means and capabilities within the network to supplement his individual means and capabilities. The network entrepreneur is therefore more likely to grow better and faster. Copreneurs: are entrepreneurial couples who work together as co-owners of an enterprise. Although some scholars consider business co-ownership a recipe for divorce, some researchers have described it as an exciting proposition that involves nurturing and growing a business with someone you love much like raising a child. It is important, however, to first build a successful relationship before launching the enterprise. Individual and Institutional entrepreneurs most start-up firms are dominated by entrepreneurs acting individually, or coming together individually. However, as the business grows and becomes more complex, it becomes imperative to develop the entrepreneurial skills through a corporate body. 1.4 Other types

Part-time entrepreneurs: starting business on a part-time basis is a popular gateway to entrepreneurship that allows one to get the best of both worlds by getting the benefits of entrepreneurship and the security of a regular salary. It also allows part-timers to hedge against the risks of a venture flop, and test the waters before making the final commitment. Part-time entrepreneurs are normally suited for young enterprises because as enterprises grow, they tend to take up more time until the entrepreneur decides to become full time. Corporate cast offs and drop outs: Are produced by retrenched and retiring employees and have become an important source of entrepreneurial activity. Armed with adequate experience, severance packages, knowledge of the industry, and a network of connections; these former employees will normally have better start-up options and a higher chance of entrepreneurial success. For more detailed study of entrepreneurship, entrepreneurs have also been classified according to: Male or female entrepreneurs Rural or urban entrepreneurs Small and large-scale entrepreneurs First, second and third generation entrepreneurs
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Topic: 4 Entrepreneurial environments.

The concept of entrepreneurial environment is central in studying the impact of the environment on entrepreneurship and entrepreneurial behaviour of an individual. Entrepreneurial environment refers to those environmental attributes that have an impact on entrepreneurial behavior and that interact with the entrepreneurial process (i.e the regional, physical, psychological, and social environment of the entrepreneur). The aspects that characterize the entrepreneurs environment include venture capital availability, presence of experienced entrepreneurs, technically skilled labour force, accessibility of suppliers, accessibility to customers and/or new markets, etc. It is important to consider the crucial role of the entrepreneurs subjective interpretation when considering the environmental characteristics, i.e. subjective versus objective characteristics of environments.

Affective and rational environmental factors The entrepreneurial environment can be categorized into two different categories: 1. Affective factors - are attributes of the social environment that include social identification, role models, and social norm. Social identification considers how individuals relate themselves to social environment, when they perceive themselves as being entrepreneurs e.g. is one appreciated as an entrepreneur. Role models refer to the amount of successful entrepreneurs in the environment that the person knows, and impact on entrepreneurial behaviour and intentions. They may occur within the family (entrepreneur parents) or other social contexts. Social norm represents the attitude of fellow-men, like members of the family, colleagues, friends, etc. towards entrepreneurship and entrepreneurial occupation.

2. Rational factors - refer to rational and calculating thinking of individuals, and include financial expectations, perceived opportunity, and perceived availability of five types of resources: technology-related, financial, social capital, access to market, and human resources. These factors are linked to the environmental variables and perceptions are important here when the impact of these factors on entrepreneurial process is concerned. Financial expectations, i.e. expectations and beliefs concerning the return on investment in entrepreneurial activity, constitute one of the most relevant issues of
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the rational factors. It is important to notice that the concepts of financial resources and financial expectations are not connected. Financial expectations refer to wealth creation, which is commonly held as a powerful motivation for all kinds of different individual behaviors. This factor is assumed to be dependent on the given environment. E.g. the taxation of entrepreneurial income, capital gains and dividend. Since these vary across different environments, states and countries, financial expectations can also be linked to environmental attributes. Opportunity emergence and recognition is a central phenomenon in the field of entrepreneurship. This can be linked to environment and differs from one environment to another. The perception of opportunity is assumed to affect entrepreneurial intentions. Perceived resource availability is also of central interest. The interpretations of the entrepreneur are of importance when resource availability is considered. The perceived resource availability is more important than actual resource availability. The concept of resource availability is related to the concept of resource munificence. Resource availability can be broken down in to availability of different types of resources that include technology and respective know-how, financing, social capital (contact networks), market access, and human resources and skills. Both the affective factors and the rational factors are assumed to affect entrepreneurial intentions through attitudes towards entrepreneurship. Affective factors are expected to affect entrepreneurial intentions through perceived desirability and respectively rational factors through perceived feasibility.

BARRIERS TO ENTREPRENEURSHIP. Barriers to entrepreneurship are factors that hinder the development of entrepreneurship. They hinder people from acquiring and practicing entrepreneurial skills, but also prevent practicing entrepreneurs from achieving the full benefits that entrepreneurship has to offer. Many of these barriers are mainly perceptual obstacles, rather than any concrete, objective obstructions in the way of making the entrepreneurial decision. Barriers can arise from the social, economic and political environment with which the individual interacts. They can also be caused by the adverse conditions within the organisation with which the individual works. However, most barriers are a direct result of an individuals failures and weaknesses. Barriers at the Individual Level Individual weaknesses pose the biggest threat to entrepreneurship in Uganda. Such barriers are ignored, as focus is normally on the environmental factors. Since one can easily act to remedy these weaknesses they usually form the main focus of entrepreneurship training programmes. Barriers at the individual level would include: Poor entrepreneurial skills: Most entrepreneurs and potential entrepreneurs are short on entrepreneurial skills. They are risk averse, lack creativity, innovation, endurance, flexibility, and other entrepreneurial characteristics. This means that many people will start business that are images of existing businesses resulting in very intense competition in very narrow fields that provide little returns for the investors. Entrepreneurial characteristics can help business people to look for and exploit new opportunities. Lack of Business and technical skill: Business skills in marketing, accounting, management, etc are required by all practicing entrepreneurs to effectively manage their entrepreneurial ventures. Many ventures also require specialised technical know how to set up, operate and manage. Lack of such skills many times limits the capacity of entrepreneurs to effectively exploit the full potential of their ventures. Moreover, owing to the high rate of illiteracy, many enterprising individuals even lack the capacity to appreciate and acquire these skills. Low mobility and Exposure: Mobility and exposure normally offers the biggest revelation for new ideas that shape creativity and innovations that shape entrepreneurship. However, Ugandans generally do not travel widely, do not read widely and do not explore, ask or
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investigate. As a result, even highly educated people remain largely narrow minded. This limits the creativeness and innovativeness of Ugandas potential and practising entrepreneurs. Lack of Role Models in Entrepreneurship: Uganda is seriously short of role models in the field of entrepreneurship, which limits the number of people who willingly aspire for a career in entrepreneurship. Many people have a very low opinion of struggling entrepreneurial upstarts, while they consider the few successful entrepreneurs to be super lucky individuals who can only be admired but not be emulated. As a result, very few people are attracted to entrepreneurship as a career of choice. Most are forced into entrepreneurship as a last resort, without enough interest and commitment. Inspiration is a key characteristic of entrepreneurship. New entrepreneurs need to be inspired entrepreneurs that they admire. Lack of Business ethics: Many entrepreneurs have failed, or been compromised, because of unethical behaviour. Unpaid loans, unpaid or highly exploited employees, unpaid suppliers, substandard goods, tax evasion, corruption, smuggling etc characterise many business ventures in Uganda today. While such tendencies may sometimes result in a quick profit, many times these ills come back to haunt the entrepreneur, many times crippling them completely. Complacency Lack of Motivation: Because of lack of role models and limited exposure, entrepreneurs in Uganda tend to be satisfied with relatively small and modest achievements. They tend to have little motivation for higher or extraordinary achievements. The tendency to prematurely celebrate success limits the growth of many entrepreneurial ventures. Lack of Continuity: Very few firms in Uganda are known to survive the death of their founders. Very few entrepreneurs have the opportunity to pass on their enterprises to new generations and watch from the side as the enterprises continue to prosper. Moreover, many firms are known to change business or diversify very fast before gaining he required experience. Lack of continuity affects the learning cycle of the firm and the entrepreneur and therefore the long-term competitiveness of the enterprise. Career Dependency: Ugandans especially the educated have long been dependent on their careers to provide for their livelihoods. Entrepreneurship has for long been regarded as a last

resort effort mainly reserved for the under-educated. Although this mindset is rapidly changing, its effect is still a big barrier to entrepreneurship in Uganda. 1.5 Barriers arising from the Environment

The environment also presents numerous barriers to practicing and prospective entrepreneurs in Uganda. Some of these barriers are discussed below:

The politico-Legal Environment Political Instability: Political instability has dogged different regions of Uganda for the past 40 years. This state of affairs has robbed Uganda of many entrepreneurs, and many more entrepreneurs have lost lifetime savings and business assets, while others have been forced by instability to close. This affects continuity and experience and resource accumulation that are essential in todays competitive environment. Business Administrative Procedures: In many cases, the business environment is dominated by complex and burdensome regulations, favouritism, corruption, and weak enforcement mechanisms. As a result, businesses are forced into the informal economy, countries are unable to attract investment, and participation of the private sector in the decision-making process is limited. As a result, businesses are forced into the informal sector, and the country is unable to attract investment, and the participation of the private sector in decision making is limited. Government economic policy: The formulation and delivery of business policy is based on a narrow conception of conventional big businesses and a consequent lack of specific attention to the circumstances and needs of entrepreneurs. Moreover, the bulk of governments monetary and fiscal policies are aimed at appeasing the donor agencies and multilateral financial institutions, many times at the expense of business in general and entrepreneurs in particular. Insensitive Government Institutions and departments: Entrepreneurs blame government institutions and departments for having little qualification and a minimal appreciation and understanding of the importance of business and business formation among entrepreneurs. This limits entrepreneurs access to these institutions as support mechanisms or potential
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clients. Arbitrary interpretation of regulations by officials has cost many entrepreneurs much time and money. Excessive, Complex, and Arbitrary Taxation: The tax system in Uganda is complicated, voluminous, confusing, changes rapidly and in most cases beyond the comprehension of the entrepreneur. The tax administration is arbitrary and many times misunderstood, resulting in Ad hoc tax administrative solutions which foster rampant corruption. Very high taxes also serve to discourage potential entrepreneurs. 1.5.1 Economic environment: Lack of access to Finance: Banking System and Practices in Uganda impose impossible demands on entrepreneurs. Banks have little incentive to extend credit. The terms of credit are unreasonable, requiring difficult collateral and guarantee to secure the loan. Borrowers default on their loans, resulting in high interest rates which are a very heavy burden to could be entrepreneurs. Additional burdens include unreasonable demands for audits, inspections, and documentation; and the incompetence and insensitivity of most banking staff. Low Purchasing Power: Low incomes and a high rate of unemployment limit the purchasing power of a relatively small Ugandan population. This makes it hard for businesses in general and entrepreneurs in particular to acquire the necessary economies of scale. Poor Infrastructure: Uganda is still plagued with a very poor physical and social infrastructure in terms of roads, electricity, water, bridges, schools and hospitals. These hinder business development in many parts of the country, and act as barriers to entrepreneurship. Economic Instability: Due to over reliance on donor assistance, borrowing, the import bill that far outweighs the export earnings, and over reliance on imports, the Ugandan economy is very fragile and easily destabilised by any small shocks in the international environment

Social Barriers to entrepreneurship The social environment may also have certain aspects that act as hindrances to entrepreneurship. Such hindrances include the following: Lack of adequate social support groups to support entrepreneurs and innovators who are out to challenge the status quo. Many socio-cultural settings get stuck in the traditional ways and norms they are not willing to change these norms. This situation discourages people from trying anything new and acts as a barrier to creativity innovation and entrepreneurship. In many of our communities, there is a stigma attached to failure. People look down upon failed attempts, preferring those that do not try at all. This works to discourage experimentation and entrepreneurship.

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Barriers arising from the employing Firm

There are also issues internal to the organizations that serve to block entrepreneurial tendencies within the firms. When entrepreneurship within the firms is obstructed, it has a negative on the general level of entrepreneurship within the community. Barriers within the firms include: Too much bureaucracy. Inadequate communication and consulting within the organization Slow decision making resulting from bureaucracy and lack of effective communication are familiar to many who work in large organization Little readiness to change within the organizations Strong and rigid punishments for those who make mistakes and those who divert from the accepted norms create an aversion to risk and failure. People become to timid to make bold decisions and stand out from the crowd. Employees fear that they will be blamed if things go wrong and that it is better to keep their heads down. Lack of resources Poor and inequitable reward for entrepreneurial effort tends to kill the enterprising spirit.

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IMPORTANCE OF ENTREPRENEURS They bring technology intensive, often risky, innovations to the commercial market - and in the process, even help to develop whole new industries. Entrepreneurs are driving a revolution that is transforming and renewing economies worldwide. While in Uganda we still depend on the same commercial products introduced almost a century ago for our economic growth, the USA gets more than half of its economic growth from industries that barely existed a decade ago. Entrepreneurs are the source of innovation, which is believed to be, the heart of economic progress. Innovation is the very basis of any nation and communitys economic progress. Entrepreneurship is the catalyst that enables a country to compete more favourably in the global marketplace. It enables nations to compete in the global marketplace as respectable stakeholders and not beggars at the mercy of others. Entrepreneurial innovation raises the prospects for more productive and satisfying lives by supplying new effective tools and methods, and solutions to problems and inconveniences. Entrepreneurship is the essence of free enterprise because the birth of new businesses gives a market economy its vitality. New ideas alter the fabric of society and keep the world fresh and moving forward. New and emerging businesses create a very large proportion of innovative products and services that transform the way we work and live, such as personal computers, software, the Internet, and drugs. Entrepreneurs are creators of jobs. It is a fact that entrepreneurship and employment go hand in hand. As new products and services are introduced, more staff will be required to produce, sell, and deliver them. An important aspect of entrepreneurship is social entrepreneurship. In this case, the objective is not to make profits per se, but to achieve social good through the similar process of identifying opportunities, exercising creativity, and building new structures. It is no accident that business entrepreneurs are also well equipped to play a role to champion social causes.

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Entrepreneurs, in an effort to market and promote their enterprises support churches, schools, and communities, produce goods, feed a hungry world, and keep their homes and families, while they invest in the future to build a better community.

Entrepreneurial success comes when they can anticipate and deliver what the consumers want and do it in a way that satisfies them. Entrepreneurs understand that making money begins with giving. Entrepreneurship works best and creates the greatest wealth and human progress for all when it aims at satisfying customers.

Entrepreneurs turn worthless waste, weeds, rocks and other undesirables into coveted riches. Oil was worthless until entrepreneurs with ideas and the freedom and faith to take risks managed to locate it, extract it, and put it to work for humanity.

Governments balance their budgets by stimulating new wealth, wealth from investments attributed to entrepreneurs.

Entrepreneurs are and have always been leaders in communities and nations. Entrepreneurs help to keep industries relevant by creating the necessary timely innovations. They help the industry to evolve slowly, maintaining stability and measured change at the same time. They help to maintain the industry at "the edge of chaos," where the components of a system never quite lock into place, and yet never quite dissolve into turbulence either.

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