THEORY CONCEPT AND RELATED RESEARCH
2.10.1 Entrepreneurial Orientation and Export Performance
In recent years, the term entrepreneur has been defined based on different purposes. Thus, there is no generally accepted formal definition. In the 18th century,
entrepreneur referred to a self-employed individual. Entrepreneurs purchase goods at the current price and sell it at another price in the future. They bear the risk (Cantillon, 1730). Later in the 19th century, Jean Baptiste Say (1816) defined entrepreneur as the agent "who unites all means of production and who finds in the value of the products...the reestablishment of the entire capital he employs, and the value of the wages, the interest, and rent which he pays, as well as profits belonging to himself."
(Fontaine, 1999) and John Stuart Mill (1848) created a widely used definition in the book entitled Principles of Political Economy. Entrepreneur refers to “a person who assumes both the risk and the management of a business” (Cunningham and Lischeron, 1991). Later in the late 19th century, this entrepreneur definition was given less attention in economics literature. This is because economists have placed their confidence on the neo-classic economy theory, which believes in all consumers equal accessibility to information. People can find goods or services they want at comparable prices. So, the economy plays no role in the entrepreneur‟s obligation of making a different return from the market. The economic mechanism only happens under the nature of perfect market mechanisms. In the 20th century, entrepreneur definitions were varied. Frank Knight initially defined entrepreneur on risk management by distinguishing risk and uncertainty. Risk is defined as something for which its impact can be measured by using historical data and it can be preventable.
Uncertainty, on the other hand, is something for which its outcome cannot be calculated, i.e. a specific event that rarely occurs or occurs just once. Thus, it is uninsurable like market phenomena, which are uncertain. An entrepreneur is the one who predicts and bears the risk of unending market uncertainty, as well as one who manages, supervises, and controls such risk. An entrepreneur who can manage risk must accept the uncertainty, which in return can be worthwhile. In an uncertain market, an entrepreneurkeeps changing deals among industries until an expected good return has been found (Fontaine, 1999). Unlike Knight, Joseph Schumpeter, an Austrian economist, offered a different perspective by disregarding risk, but promoting innovation instead. An entrepreneur is an innovator, not an inventor, who changes the "market" through innovation using present resource combination.
Schumpeter presented five methods of innovation: 1) quality new product offering, 2) new production, 3) new market, 4) new sources of raw materials or new raw
materials, and 5) new venture (Schumpeter, 1934). An entrepreneur, thus, drives the market out of balance. In this sense, established business executives no longer hold entrepreneurs‟ characteristics, since they do not shift the market balance. Schumpeter‟s assumption views an entrepreneur as a person with vision spurred by dream, intention, inspiration for triumph, and enduring of superiority recognition. Entrepreneurs pave the way for new industries via creative destruction of outdated industries. Competitive fighting for labor, materials, and assets leads to prices surging on such factors.
Obsolete products have resulted in the inability to compete in the industry. Customers turn their favor to new products. Expanding investment, the counterfeit industry also expects a good return, but instead faces higher competition due to exceeding supplies.
This renders a halt in investment and an economic downturn. But, if innovation continues, meaning that new invention still goes on, entrepreneurs can be stimulated to create it into a new venture. Therefore, entrepreneurship triggers change in the market structure, growth in the economy, and effects the business cycle. Later, the viewpoint on entrepreneurship has shifted to profitability and new enterprise creation; for example, entrepreneurs‟ activities include new economic opportunities seeking and management capabilities (Penrose, 1963). Entrepreneurs fulfill "market"
limitations by adding up inputs in activities associated with requirements on new enterprise creation, current enterprise renovation for an underdeveloped market, or undetermined production (Leibenstein, 1968). They acknowledge and adopt market opportunities as the seizure of a profit making opportunity (Kirzner, 1979).
Entrepreneurs are creator of new enterprises (Gartner, 1988). As various entrepreneur definitions exist, a comprehensive definition covering nearly all researchers‟ views has described an entrepreneur as a person who captures available market opportunities, procures and utilizes resources, bears risks while seeking opportunities, creates, innovates, as well as manages all activities.
The “entrepreneurship" concept has been developed following the term
"entrepreneur" with a similar meaning. Generally, both words are interchangeable depending on the context. Entrepreneurship is defined because the term entrepreneur only describes an individual perspective with no coverage on the relationship between entrepreneurship and an enterprise. Researchers like Bygrave, Hofer, Amit, and Shane, among others, have changed the study approach to include more than the
entrepreneur meaning. Typically, entrepreneurship focuses on process, responsibility, or consequence of entrepreneurs‟ roles. Bygrave and Hofer (1991) defined entrepreneurship as all duties and activities concerning the seizure of opportunities and pursuit of such opportunities by an organization. Amit et al (1993) view entrepreneurship as a process of profit-making from new resources utilization, which is unique and valuable under an uncertain, vague or unclear environment. While Shane and Venkataraman (2000) regarded entrepreneurship as a convergence of two indispensable phenomena, which are the discovery of profitable business opportunity and the entrepreneurial readiness for operation. Therefore, only the entrepreneur definition is not complete since skepticism about entrepreneurship still remains.
Swedberg (2007) defined entrepreneurship as a process of changes on economics from new resources utilization resulting in a creative destruction of market balance.
Entrepreneurship, therefore, creates changes in condition from static to dynamic.
Although the concept of entrepreneurship has been studied for only three decades, its definition can be summed up as an enterprise‟s process or operation from an entrepreneur‟s roles in seeking of new business opportunities including resources management capability employed to achieve the opportunity on hand.