Entrepreneurship and SME: A Comprehensive Analysis

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ENTREPRENEURSHIP AND SME
Name of Student:
Name of University:
Learner's Note:
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ENTREPRENEURSHIP AND SME
Glossary
Entrepreneur: An entrepreneur is defined as a business person who implements an innovative
and unique business model of operation in his or her own business venture. The entrepreneur
bears all the risks associated with the business
SME: SME, or small and medium size enterprise, has small amount of business capital and
mainly operates in proprietorship or partnership model.
Entrepreneurial venture: Entrepreneurial ventures are the businesses operated by
entrepreneurs, and these can be private, public or social ventures.
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ENTREPRENEURSHIP AND SME
Table of Contents
Activity 1.........................................................................................................................................4
Introduction..................................................................................................................................4
Various types of entrepreneurial ventures...................................................................................4
Similarities of entrepreneurial ventures.......................................................................................5
Difference of entrepreneurial ventures........................................................................................5
Public sector entrepreneurship.....................................................................................................6
Corporate sector entrepreneurship...............................................................................................7
Scope, development and growth of entrepreneurial ventures......................................................7
Impact of micro and small business on economy........................................................................8
Difference between small, medium and large business...............................................................8
Importance of small business and startups for growth of social economy..................................9
Impact of small business on various level of the business world..............................................10
Conclusion.................................................................................................................................10
References......................................................................................................................................11
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ENTREPRENEURSHIP AND SME
Activity 1
Introduction
In the modern environment of business industry, the value of entrepreneurship is gradually
increasing due to the innovative ideas used in an entrepreneurial venture. On the contrary,
entrepreneurs bear a high amount of risk in their business operations and usually invest a
significant amount of money in their business. In this study, the various aspects of
entrepreneurship and entrepreneurial ventures will be analysed.
Various types of entrepreneurial ventures
The entrepreneurial ventures are categorised into several categories, which are private ventures,
public ventures and social ventures.
Private ventures: According to DeSantola and Gulati (2017), these are the most
common type of entrepreneurial ventures, which are initiated and run by private entities
such as corporate bodies and private personnel. These entrepreneurial ventures are
identified by their profit-oriented goals and ambition to continuously expand their
businesses over new and fresh business markets. The entrepreneurial ventures of
restaurants, retail stores and other private businesses fall into this category, an example of
it being the Chicken Cottage International restaurant in the UK.
Public ventures: This type of entrepreneurial ventures is run by the government bodies,
where they aim to serve the public by delivering various services to them. For instance,
Morris et al. (2018) argued that the various government services like rural and urban
development, police, healthcare and others fall into this category, an example being the
community police of the UK.
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ENTREPRENEURSHIP AND SME
Social ventures: This category is unique, as social ventures are basically non-profit
ventures aimed to conduct welfare of the societies. Naturally, it can be understood that
the most common examples of social ventures are the NGOs and various other charitable
organisations operating to build the societies as better places, an example of it being
Amnesty International in the UK.
Similarities of entrepreneurial ventures
Between these entrepreneurial ventures, there are various similarities that are mainly related to
the key characteristics that are common for all entrepreneurial ventures. For instance, all of these
entrepreneurial ventures exhibit some level of innovation in their business operations. In fact,
AlvarezGarrido and Dushnitsky (2016) argued that it is because of these innovative business
plans and operations, that all categories of entrepreneurial ventures face some amount of risk in
their business profitability. On the other hand, the entrepreneurs behind the entrepreneurial
ventures does not need to be the owner of the venture. In fact, they can be employees or
managers of those businesses, in which case they are called intrapreneurs, and this is seen in
almost all categories of entrepreneurial ventures.
Difference of entrepreneurial ventures
On the contrary, the differences between the various entrepreneurial ventures are also quite
prominent, such as:
Private entrepreneurial
venture
Public entrepreneurial
venture
Social entrepreneurial
venture
1. These ventures and owned
by private business personnel
1. These ventures are owned
by government bodies, and are
1. These ventures are usually
owned by private corporate
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ENTREPRENEURSHIP AND SME
and are aimed towards making
maximum profit.
aimed towards serving the
public, disregarding the profit.
bodies or philanthropists, and
are aimed towards welfare of
society, disregarding the profit
(Chen, Saarenketo and
Puumalainen, 2016).
2. These ventures aim to
quickly expand in market
using their innovative business
operations.
2. These ventures usually do
not aim to expand in the
market. Rather, they aim to
serve the people living in a
fixed region.
2. These ventures aim to
expand, but they only consider
social welfare and disregards
business.
Table 1: Difference of entrepreneurial ventures
(Source: Learner)
Public sector entrepreneurship
The public entrepreneurship is part of the non-profit sector of entrepreneurship, where these are
carried by either the government bodies, or the various private bodies who get assistance from
the government. For instance, Brown et al. (2018) opined that the various entrepreneurial
organisations that are undertaken by the government fall under the public sector
entrepreneurship. Moreover, the various entrepreneurial organisations that get subsidies or
donations from the government on a regular basis, or the entrepreneurial organisations that run in
a public-private partnership (PPP) model, fall in the category of public sector entrepreneurship as
well. An example of it is the National Blood Donation Program in the UK.
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ENTREPRENEURSHIP AND SME
Corporate sector entrepreneurship
On the contrary, Thies et al. (2018) argued that the corporate sector entrepreneurship has some
fundamental dissimilarities with public sector, in the sense that corporate sector entrepreneurial
ventures always aim to earn maximum profit from their businesses, and they display extreme
ambition in growing larger as business organisations. For instance, the various business sector
organisations that utilise innovative ideas to attract a large number of customers at once fall
under this category. The start-up organisations are considered part of it. However, these
organisations have to bear significant amount of risk for their business in the form of rejection by
potential customers. An example is the Virgin Atlantic airlines founded by entrepreneur Richard
Branson.
Scope, development and growth of entrepreneurial ventures
Entrepreneurial ventures have excellent scope, since their innovative business models can give
them an edge over their competitors in business, gaining them a large customer segment quickly.
Entrepreneurial ventures flourish their businesses in a variety of ways. For instance, according to
Brem (2017), start-up ventures get financial and administrative supports from the government,
and the big and experienced entrepreneurs bear the financial risk of a new venture on their
existing business capital. Moreover, investors can also be attracted towards an entrepreneurial
venture due to its high market demand and profitability, which reduces its business risk.
Entrepreneurial ventures can grow quickly if their innovative products or services are accepted
by majority of consumers (Cheung and Kwong, 2017). Otherwise, their growth may be halted.
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ENTREPRENEURSHIP AND SME
Impact of micro and small business on economy
According to Phillipson et al., (2017) which states about the fact that micro and small business
has significant impact and is considered as the major driving force for bringing success in the
economy of the UK. This type of business has evolved after the financial disaster that has struck
the region of the UK and made the economy very weak in nature. The main highlights of micro
and small business is that it has helped in creation of new job opportunities and created several
market through which business can be conducted and the GDP can easily rise. Thus, it has
created several new opportunities through which innovative ideas of doing business can be
utilized. This has led the small and micro business to attract foreign direct investments of around
50% and created job opportunities of around 5 million. This is quite visible in the private sectors,
which has created more than 60% of this type of job (Hillary, 2017). Further, the sector is being
backed by several government regulations and provided several loans, which ultimately helped
in the emergence of more than 5 million businesses. Thus, small and micro business constitutes
more than 30% share of the business world in the UK and increased the turnover by 18% each
year. An economic growth rate of 7% can be observed and helped in the increase of 3% overall
GDP. Therefore, micro and small business is dominating the overall economy of the UK for
increasing its efficiency.
Difference between small, medium and large business
Small Business Medium business Large business
Mainly follows proprietorship
model
Mainly follows partnership
model
Mainly follows management
board and investors model.
Small customers segment Medium customer segment Large customer segment
Little amount of business Average amount of business Significant amount of business
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capital capital capital
Little career development
opportunities
Moderate career development
opportunities
High career development
opportunities
Table 2: Difference between small, medium and large business
(Source: Learner)
Importance of small business and startups for growth of social economy
The importance of small business and startups is very much high for the growth of the social
economy. This is mainly because of the fact that development of social economy helps in
fulfilling the requirements of the customers and brings in much needed sustainability with the
growth of the economy. Generally, it follows a third sector model only and eradicates the main
problem of the economy. This is backed by Goss, (2015) which states that startups are
transforming the business community of the UK and helping in the betterment of the economy.
These startups are being backed by the government through sanctioning loans and bringing
innovation in the business. For instance, these types of developments are helping to increase the
revenue of the export industry and have increased by £1.15 (Burns and Dewhurst, 2016). Further,
this has helped the non-performing companies to increase their performance rate significantly. It
has increased by 5%, which has helped the startups to expand their business on the globalized
platform. The man importances are stated below:
- It has helped in the creation of employment and job opportunities and as of now it is
standing to 60% employment of the private sector
- There is a stable increase of income and profits i.e. an increase of turnover of around 18
trillion pounds (Storey, 2016)
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- Lastly, it has helped in balance of payment which is the crucial part of the economy
Image 1: Growth of SME’s in the UK
(Source: Phillipson et al., 2017)
Impact of small business on various level of the business world
According to Spigel (2017), small and medium business (SME) is considered to the pillar of any
economy, where their business mostly runs the urban and semi-urban economy. Small business
contributes to approximate 82.8% of the economy of London in the UK. The UK government
provides various supports to SMEs, such as short-term business loans in minimal interests,
various subsidies, huge tax rebates and much more, which allows the SMEs to develop their
business and strengthen the environment of the business world.
Conclusion
The above study has critically evaluated the various aspects of the different entrepreneurial
ventures, and it has also analysed the various growth possibilities of SMEs. It has been seen that
entrepreneurial ventures are initiated and run by both public and private bodies, and the private
SMEs heavily contribute in the development of a business environment.
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ENTREPRENEURSHIP AND SME
References
AlvarezGarrido, E. and Dushnitsky, G., 2016. Are entrepreneurial venture's innovation rates
sensitive to investor complementary assets? Comparing biotech ventures backed by corporate
and independent VCs. Strategic Management Journal, 37(5), pp.819-834.
Brem, A., 2017. Creativity and routine: Conceptual considerations on managing organisational
ambidexterity in entrepreneurial ventures. International Journal of Entrepreneurship and
Innovation Management, 21(3), pp.261-273.
Brown, R., Mawson, S., Rowe, A. and Mason, C., 2018. Working the crowd: Improvisational
entrepreneurship and equity crowdfunding in nascent entrepreneurial ventures. International
Small Business Journal, 36(2), pp.169-193.
Burns, P. and Dewhurst, J. eds., 2016. Small business and entrepreneurship. Macmillan
International Higher Education.
Chen, J., Saarenketo, S. and Puumalainen, K., 2016. Internationalization and value orientation of
entrepreneurial ventures—a Latin American perspective. Journal of International
Entrepreneurship, 14(1), pp.32-51.
Cheung, C.W.M. and Kwong, C., 2017. Path-and place-dependence of entrepreneurial ventures
at times of war and conflict. International Small Business Journal, 35(8), pp.903-927.
DeSantola, A. and Gulati, R., 2017. Scaling: Organizing and growth in entrepreneurial
ventures. Academy of Management Annals, 11(2), pp.640-668.
Goss, D., 2015. Small Business and Society (Routledge Revivals). Routledge.
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Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Morris, M.H., Neumeyer, X., Jang, Y. and Kuratko, D.F., 2018. Distinguishing Types of
Entrepreneurial Ventures: An IdentityBased Perspective. Journal of Small Business
Management, 56(3), pp.453-474.
Phillipson, J., Gorton, M., Maioli, S., Newbery, R., Tiwasing, P. and Turner, R., 2017. Small
rural firms in English regions: analysis and key findings from the UK Longitudinal Small
Business Survey, 2015. Newcastle upon Tyne: Newcastle University Centre for Rural Economy
and Business School.
Spigel, B., 2017. The relational organization of entrepreneurial ecosystems. Entrepreneurship
Theory and Practice, 41(1), pp.49-72.
Storey, D.J., 2016. Understanding the small business sector. Routledge.
Thies, F., Huber, A., Bock, C., Benlian, A. and Kraus, S., 2018. Following the Crowd—Does
Crowdfunding Affect Venture Capitalists’ Selection of Entrepreneurial Ventures?. Journal of
Small Business Management.
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