Entrepreneurship vs Small Business: Key Differences and Self-Efficacy

This essay delves into the realm of entrepreneurship and business management, providing a comparative analysis of entrepreneurs and small business owners. It highlights the key features that distinguish entrepreneurs, such as their pro-risk-taking attitude, ability to identify opportunities, and focus on growth, from small business owners. The essay emphasizes the significance of entrepreneurial self-efficacy (ESE), which is defined as an individual's ability to effectively accomplish entrepreneurial duties. It explores how ESE influences business performance, particularly for entrepreneurs, enabling them to set growth expectations and develop strategies. The essay also touches upon the factors that contribute to entrepreneurial avoidance and suggests ways to encourage entrepreneurship among women and minority groups. The essay concludes by underscoring the impact of ESE on business success and the importance of utilizing it to identify strengths and weaknesses. The essay cites various research papers to support its claims.

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ENTREPRENEURSHIP AND BUSINESS MANAGEMENT
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Although there is no universally accepted definition of an entrepreneur, Hapiro (2016)
suggests that an entrepreneur as an individual who initiates a business enterprise, by
accepting various risks and challenges associated with entrepreneurship with the aim of
making profit. A person who identify an opportunity in a particular area, recognises the needs
and wants of the customers and establishes a business enterprise to satisfy the identified
needs and wants is known as entrepreneur.
Entrepreneurs are known to be people who take financial risks with the aim of making
profit. They tend to be good at identifying new opportunities and coming up with better ways
of operating their businesses in order to satisfy their customers. For example, they are good in
identifying new possibilities and noticing unmet market needs. The high pro-risk-taking
attitude which they possess make them more likely to exploit the possible opportunities they
spot.
According to Yavuz (2014), an entrepreneur can be in control of commercial
activities, directing various factors like production of goods and services, human resources,
financial flows and material resources. In addition to initiating a business, entrepreneurs play
the role of a manager and oversees various factors which favour the growth their businesses.
Most of the entrepreneurs are good in time management and this makes it possible for them
to balance family life and business activities.
According to Valdez (2011), the term entrepreneur refers to the qualities of initiative,
team-building, leadership and innovation in new venture design. Unlike small business
owners, entrepreneurs are focused to growth of their business and always seek to use
technology innovation to establish a change for the sake of maximizing profit. Some key
features which characterize Entrepreneurs comprise of being resourceful, self-motivated,
willing to take risks, and having vision and flair.

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Small business is defined as an enterprise that employs less than 20 members of staff
(Williams, 2015). Although sometimes the word entrepreneur and small business owner are
used interchangeably, they refer to two different things. One of the factor which brings the
difference between the two is the level of their self-efficacy. Comparing the two,
entrepreneurs have strong belief of their capabilities as compared to small business owners.
Entrepreneurs have goals and enjoys seeing their businesses at a different level after
sometime while small business owners enjoy the existence of their businesses more than their
growth.
Entrepreneurs exhibit dynamic forces when planning and launching of new business
enterprises. They handle various issues in their businesses like for example product design,
establishing most efficient production methods, undertaking marketing activities among
others (Rose, 2011). On the other hand, small-business owner is a person who owns a
business enterprise but may not be involved in running the business. Comparing the two,
small business owners plays few roles in running a business as compared to an entrepreneur.
Entrepreneurs and business owners differ in the manner in which they relate to their
business. To start with, entrepreneurs take their businesses as assets, or something that need
to be well managed so that it can enable them to realize better returns (Judith, 2015). On the
other hand, small business owners happen to be more sentimental concerning their
enterprises.
An entrepreneur is an organizer and a person who takes risks, and utilizes available
opportunities to make profit. They introduce new idea after the other, and use innovation to
enhance customer satisfaction (Colleen, 2015). On the other hand, small business owners are
individuals who organize the processes involved in running businesses and experience the
challenges of running an operation-based business opportunity to make a profit. Small

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business owners are also referred as owner-operators because they mostly put much emphasis
on sales than developing their businesses.
According to Beverly (2014), entrepreneurial self-efficacy (ESE) refers to the ability
of an individual to effectively accomplish the duties and responsibilities of an entrepreneur.
He also claims that people slowly develop self-efficacy through social, cognitive and physical
experiences. As a result of this, previous positive outcome of a particular task can impact the
expectations of an individual and also assist in reinforcing his/her self-efficacy.
As it has be utilized in entrepreneurial literature, ESE focuses on one’s belief that
he/she can take undertake entrepreneurial roles based on assessment of their functional,
managerial, supervisory and technical skills (Fotopulos, 2015). In much of the entrepreneurial
literature, scholars have been concentrating on explaining the competencies of entrepreneurs
in terms that are closely related to the duties and responsibilities an effective manager.
ESE can be used to differentiate small business owners from entrepreneurs because of
several facts. Over the past years and even the recent time, self-efficacy has been commonly
related to ones commitment to attain desired goals. Entrepreneurs and small business owners
differ in the manner in which they commit their efforts to attain their goals. Entrepreneurs
have strong desires for their businesses to remain successful and grow. This means they put
more efforts, performing different roles in order to attain this. On the other hand, small
business owners do not struggle too much because they feel fine as long as their business is in
existence.
According to Yavuz (2014), entrepreneurs plan for their businesses and focus on
growth and always identify things that are likely to impact the success of their firms. This
means they utilize ESE to identify all strengths and weaknesses which influence their ability
to successfully run their businesses. On the other hand, small business owners do not put

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much emphasis on growth, they simply enjoy owning a business, meaning they rarely analyse
personal traits that can influence the success of their businesses.
Self-efficacy is known to have an extensive theoretical foundation and pragmatic
support in predicting future performance of businesses (Judith, 2015). Based on the fact that
entrepreneurs focus on growth than small business owners, it means ESE works better for
entrepreneurs than small business owners. Entrepreneurial self-efficacy enables entrepreneurs
to establish growth expectations for their businesses and come up with strategies of attaining
their goals.
Entrepreneurial self-efficacy is closely related to business/ individual performance in
the fact that it assists one to find out if he/she has what it takes to successfully run a business
(Judith, 2015). When making decisions on whether to utilize business opportunity or not,
entrepreneurial self-efficacy assist individuals to identify their strengths and weaknesses so
that they can make a decision that cannot make them to land into pitfalls.
According to Hapiro (2016), entrepreneurial self-efficacy influence performance
because it can be used by companies and individuals to determine areas of strengths and
weaknesses so that they can assess the potential of an entrepreneur. The success of businesses
depends on one’s ability to perform the duties and responsibilities of an entrepreneur
According to Yavuz (2014), entrepreneurial self-efficacy is a rational belief that requires
systematic and constant efforts to be changed.
In the field of entrepreneurship, different empirical studies have identified the
existence of a positive relationship between the general measure of self-efficacy and
performance (Jun, 2010). These studies have also suggested that entrepreneurial self-efficacy
can be used by firms or individuals to identify the major reasons that make an individual or

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organization not to perform well. This means if well utilized, entrepreneurial self-efficacy can
assist individuals and organizations to realize positive performance.
According to Colleen (2015), entrepreneur self-efficacy can be used to identify the
reasons that may make an entrepreneur to avoid utilizing a business opportunity. Many
people avoid entrepreneurial activities or fail to utilize available opportunities not because
they lack what it takes but because they believe they do (Yavuz, 2014). This mostly happens
among women and other minority groups who are perceived to lack the skills and abilities
required to undertake various activities in the society. In order to encourage entrepreneurship,
the society should use entrepreneurial self-efficacy to identify sources of entrepreneurial
avoidance and encourage women and other minority groups to initiate their businesses.
According to Williams (2015), entrepreneurial self-efficacy can assist in minimizing
chances of business failure because it helps in identifying if one can effectively perform the
roles of an entrepreneur. Entrepreneurs have entrepreneurial self-efficacy because they hold
strong beliefs that their abilities can assist them to accomplish various tasks required for the
success of their businesses.

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Bibliography
Hapiro, R. S., 2013. The Real Problem Solvers: Social Entrepreneurs in America. Stanford,
CA: Stanford Business Books.
Yavuz, R. I., 2014. The Outsider Entrepreneurs. El Paso, TX: LFB Scholarly.
Valdez, Z., 2011. The New Entrepreneurs: How Race, Class, and Gender Shape American
Enterprise. Stanford, CA: Stanford University Press.
Williams. T., 2015. Think Agile: How Smart Entrepreneurs Adapt in Order to Succeed. New
York: American Management Association.
Rose, T., 2011. Self-Efficacy and Effort in New Venture Development. Journal of
Management and Organization, 17(1), 78-92.
Judith, G. V., 2015. Female Entrepreneurs and Negotiation Self-Efficacy: A Study on
Negotiation Skill Building among Women Entrepreneurs. Journal of Entrepreneurship
Education, 18(2), 525-589.
Jun, Y., 2010. The Impact of Entrepreneurial Personality Traits on Perception of New
Venture Opportunity. New England Journal of Entrepreneurship, 13(2), 145-168.
Colleen, C. M., 2015. Entrepreneurial Passion as Mediator of the Self-Efficacy to Persistence
Relationship. Entrepreneurship: Theory and Practice, 39(5), 25-58.
Beverly, B. K., 2014. Entrepreneurial Alertness in Opportunity Identification and
Opportunity Development. Journal of Business and Entrepreneurship, 26(2), 12-52.
Fotopulos, D., 2015. Accounting for the Numberphobic: A Survival Guide for Small Business
Owners. New York: AMACOM.