Much More Than Meets the Eye: Unveiling the Challenges Behind Nascent Entrepreneurship

Much More Than Meets the Eye: Unveiling the Challenges Behind Nascent Entrepreneurship

Alexandra França (University of Vigo, Spain), Silja Frankenbach (University of Aveiro, Portugal), Vanda Vereb (University of Minho, Portugal), Alexandra Vilares (University of Minho, Portugal) and António Carrizo Moreira (University of Aveiro, Portugal)
DOI: 10.4018/978-1-7998-4826-4.ch003
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Abstract

Nascent entrepreneurship plays an important role in the study of entrepreneurship. It has been studied from different angles, especially from the psychological and sociological perspective as nascent entrepreneurs have distinctive traits and competencies. Other important foci of research are the investigation of the environment in which nascent entrepreneurs operate, as well as the way both the identification and exploitation of entrepreneurial opportunities have emerged. The main objective of this chapter is to address (1) the main individual characteristics that entrepreneurs have in common; (2) the environmental factors contributing to new venture creation; and (3) the steps in the creation process. The chapter departs from the fundamental process of nascent entrepreneurship, which is centered on opportunity recognition, evaluation, and exploitation, and is complemented by the way how contextual factors and personal characteristics and competencies influence the new venture creation process.
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Introduction

Entrepreneurship has been deeply studied over time as a driver of job creation, human wellbeing and economic development (Schumpeter, 1934; Dantas, Moreira, & Valente, 2015; 2017a; 2017b; Moreira, Dantas, & Valente, 2017; Bosma et al., 2020; Hamdana, Almubarak, & Sarea, 2020).

National governments and other authorities and experts are abandoning their traditional approach to measure economic development based on the analysis of the results of large companies with different financial and fiscal inducements; they are relying instead on the macro-economic growth induced by small and medium-sized enterprises (SMEs) and new ventures (Martínez-Rodriguez, Callejas-Albiñana, & Callejas-Albiñana, 2020; Stoica, Roman, & Rusu, 2020). This outcome is the result of entrepreneurship being more recognized throughout the world not only as “a good solution to creating jobs and enhancing per capita income growth” but also as “a key mechanism for enhancing economic development” (Shane, 2005, p. 1), and as primary driver of industrial dynamism and economic growth (Hamdana, Almubarak, & Sarea, 2020).

Entrepreneurship has been traditionally associated to the creation of new ventures (Gartner, 1989; Bosma et al., 2020). Moreover, an entrepreneur was traditionally defined by a set of personality traits and exceptional qualities. However, just as a basketball player is not only something one is, it is something one does (Gartner, 1989), an entrepreneur is an individual who exploits market opportunity through technical and/or organizational innovation leading to the creation of new ventures and/or strategic renewal of an existing organization (Schumpeter, 1934; França, et al., 2017). As such, as supported by Agarwal et al. (2010) and Bosma et al. (2020), one can also support that entrepreneurial activities structure the birth, growth and demise not only of organizations, but also of industries, regions, and economies.

There is no single concept attributed entrepreneurship, although it is related to how individuals manage uncertainty and innovation – namely the creation of new business opportunities, new markets and new economic development – and sense new business opportunities.

There are various factors that have been used to explain entrepreneurial behavior. For example the personality traits have been used to explain why some are more entrepreneurs than others (Nicolaou et al., 2008). Human capital has also been used to explain the positive effect in firms’ survival (Gimeno et al 1997), i. e. the entrepreneur’s human capital influences the capacity in assessing the industry and the proper entry of the firm into the market. Social is also important for entrepreneurship, as entrepreneurs use social ties to materialize business opportunities that eventually otherwise could not be obtained (Mesquita et al., 2007). Innovation is also important because it allows entrepreneurs to differentiate from competition and to create the foundations of a competitive market that goes beyond the typical price-based competition (Schumpeter, 1934).

From an economic point of view, entrepreneurship is seen as an outcome, where countries and regions can be distinguished by new business creation indexes (e.g. Bosma et al., 2020). There is a clear macro perspective where the individual characteristics of entrepreneurs are hidden and are not analyzed, i.e. what matters is economic performance in terms of growth, firm survival, job creation, cultural differences, among others (Dantas et al., 2017a; 2017b).

From a macro perspective, however, we can witness that countries as Nigeria, Ghana, Ecuador or Malawi (Bosma et al., 2020) are among the most entrepreneurial countries. However, some of the most developed ones, as Japan, Italy and France are among the least entrepreneurial ones. Clearly this indicates that we are before two different kinds of entrepreneurship necessity-driven entrepreneurship – motivated by self-employment, with a very low impact on economic growth – as opportunity-driven entrepreneurship – motivated by perceived market opportunities, in which new ventures have more room to growth successfully and to create wealth (Dantas et al., 2017a; 2017b). The former type of entrepreneurship is normally associated to less developed economies, whereas the latter is associated to more developed countries (Mohan, Watson, & Strobl, 2018).

Key Terms in this Chapter

Epigenetic: It deals with the stable and inheritable changes in gene expression patterns, due to en-vironmental influences and individual life experiences.

Nascent Entrepreneurship: It is closely associated to individuals who are actively engaged in creat-ing new own or co-owned ventures. This venture has not paid salaries, wages, or any other payments to the owners for more than three months.

Entrepreneurial Behavior: It is the capacity of the individuals to spot opportunities in the market and to turn them into profitable businesses. For that individuals need to adopt a risk-taking behavior and to deploy all necessary resources to develop, organize and manage the new business venture profitably.

Creativity: It is the process of bringing something new into being. It is an essential part of entre-preneurs to drive new opportunities into the market. As creativity requires passion and commitment, it is believed to be part of the entrepreneurial behavior that is necessary to mobilize resources and imple-ment new projects.

Opportunity-Driven Entrepreneurship: It is understood as motivated by perceived market op-portunities (i.e., entrepreneurs are pulled to entrepreneurship out of a choice).

Opportunity Development: It is a necessary process so that individuals develop new competitive businesses in the market.

Necessity-Driven Entrepreneurship: It is understood as the type of entrepreneurship motivated by self-employment, or as a result of absent or unsatisfactory work options, normally with a very low impact on economic growth.

Entrepreneurship: There are several understandings about this concept. It is known as the capacity and willingness to develop, organize and manage new business ventures profitably. The concept it is normally associated to an innovative, risk-taking behavior, which is essential to spot new opportunities in the market and to adapt to an ever changing and increasingly competitive global marketplace. Economi-cally, it has been associated to the creation of new jobs, the enhancement of per capita income growth, and as primary driver of industrial dynamism.

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