Understanding Entrepreneurs Roles, According to Iranian Entrepreneurs (Case Study: Shiraz Industrial Town)

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1 International Journal of Social and Economic Research Vol. 2, Issue 1, January-June 2012 pp A product of Diva Enterprises Pvt. Ltd. Understanding Entrepreneurs Roles, According to Iranian Entrepreneurs (Case Study: Shiraz Industrial Town) Amir Forouharfar and Milad Gouran ABSTRACT Entrepreneurs play different roles according to the economists and academicians, and the priority of these roles are different in the academic settings and the entrepreneurs real setting.this survey have been done among 15 Iranian entrepreneurs in Shiraz Industrial Town, to understand their idea about the roles that they play. Iranian entrepreneurs believe that they play the roles of firm owner, employer, and manager. Keywords: Role, Iranian Entrepreneurs, Priority INTRODUCTION The person, whom we call him/her entrepreneur, plays some tangible and intangible roles to run its business and firm efficiently and successfully, although sometimes the opposite happens. These roles are the necessary parts that the entrepreneur must play to be called so. Many traditional and modern authors have connected these roles with economy and economic activities.therefore, from the beginning the roles of the entrepreneurs have been defined in economic terms. Martin et al. (2009) mention entrepreneur as economic agent who has economic agent s behaviors. And Weber (1978, 1988), discuses about the characteristics of entrepreneurs in his book The Protestant Ethic and the Spirit of Capitalism, which one of them is the religion of the entrepreneurs(called ascetic Protestantism by him)that has a positive attitude towards moneymaking. The entrepreneurs have been the main source of employment and income in the first decade of last century (Thurik and Carree, 2005), so these roles were the significant roles in that era, which inherently could emphasis the priority of the common roles from era to era. Entrepreneurs mostly play the same roles, but the social environment could prioritized some of these roles in the entrepreneurs eyes, as the most important ones in respect to the other roles that they play, since, our social and economic needs form our definition of the entrepreneurial prominent roles. Although, establishing and running a firm, mostly have prominent economic advantageous for the country and society, there are some subtle noneconomic roles that the entrepreneurs play day in and day out. These roles could be showed up in social outcomes, like the figure, which decreases the crime rates by making new job opportunities that could have some impacts over wiping out some anti-social jobs like selling drugs, and so on. These subtle and abstract roles are not discussed in this article. In this article the traditional and modern roles, which the relevant literature have in common, are localized to be able to be prioritized according to the Iranian entrepreneurs. All of the investigated roles are somehow the economic ones. Master s student of Entrepreneurship Management, University of Sistan and Baluchestan, Zahedan, Iran

2 Understanding Entrepreneurs Roles, According to Iranian Entrepreneurs (Case Study: Shiraz Industrial Town) LITERATURE REVIEW In the history of economic thought, different roles have been presumed for the entrepreneurs. The most relevant ones have been summarized in Table1. In the history of economics, one finds a variety of notions of entrepreneurship, proposed by a variety of classical and Austrian economists: Adam Smith, Marshall, Cantillon, Say, Bentham, Thünen, Mangoldt, Menger, von Mises, and von Hayek and, later, Kirzner. In more recent literature, discussions and surveys have been provided by among others, Kets de Vries (1977), Stanworth & Curran (1973), Scase & Goffee (1980), Casson (1982), Hébert & Link (1982), Chell (1985), and Weinberg (1990), Chell et al. (1991), Thurik (1996), Van Praag (1996) and Blaug (1997). The following entrepreneurial roles have been identified (Noteboom): - Innovation (Bentham), Thünen, Schumpeter and perhaps Say) - Creative destruction by novel combinations (Schumpeter) - Arbitrage: the identification and utilization of opportunities for matching supply and demand (Cantillon, Smith, Menger, Mizes, Hayek, Kirzner) - The provision of capital (Marshall) - Creating or entering new markets (Mangoldt, Schumpeter) - The configuration and management of production factors for efficient production (Say, Marshall, Mizes) Entrepreneur, also plays the role of investor. Martin et al. (2009) mention entrepreneurship implies among other things, that someone discovers the possibility to obtain some profits and then decide to invest. Wennekers and Thurik (1999), following the ideas exposed by Herbert and Link (1989), Bull Table 1: Main roles of the entrepreneur according to main authors Main Authors The Entrepreneur is a... Cantillon, Cole, Hawley, Knight, Mill, Mises, San Bernardo de Risk Taker Siena, Shackle, Thtinen Bohn-Bawerk, Mises, Pigou, Smith Contributor to Financial Resources Bentham, Schmoller, Schumpeter, Shakle, Sombart, Thtinen, Weber Innovator Cantillon, Cole, Keynes, Marshall, Menger, Mises, Schultz, Decision-Maker A. Walker, F. Walker, Weber, Wieser Marshall, Jenofonte, Saint-Simo, Say, Shumpeter, Sombart, Sector s Leader A.Walker, F.Walker, Weber and Wieser Marshal, Menger, Mill and Say Manager and Supervisor Clark, Coases, Davenport, San Bernardino de Siena, Say, Orgenizer and Coordinator of the Schumpeter, Sombart, Weber, Wieser economic Resources Keynes, A.Walker, F.Walker, Wieser User of the Production Factors Hawley, Pigou, Quesnay and Weiser Firm Owner Bentham Trader Cantillon, Schultz Allocator of Resources Source: Herbert and Link (1982), Nijkamp (2000) and Galindo and Mendez (2008) Vol. 2, Issue 1, January-June

3 Amir Forouharfar and Milad Gouran Table 2: The demographical data of the respondents Sex Age (Average) Education Experience(Average) Position 15-male 48 3-Bachelor, 12-high school Diploma 15 years 15-Manager and Willard (1993) and Lumpkin and Dess (1996) define entrepreneurship as the manifested capacity and desire of the individuals to create new business opportunities. Therefore in this role entrepreneur as the creator of new business opportunities, introduce new procedures, processes, products, methods, etc. This aspect have been seen as the entrepreneur s role of innovation in other researchers point of view. Hagedoorn (1996), mentions that in a large part of the literature on Schumpeter one finds that attention is paid to his early contributions, with reference to the role of the entrepreneur as the personification of innovation. In stressing the role of entrepreneur by Schumpeter as innovator and debter (Hagedoorn, 1996), he presents a definition of the entrepreneur in which risk-taking is less essential as compared to other well-known classical theories of entrepreneurship, in particular those in the tradition of say and Knight (Marco, 1985). According to Schumpeter, successful entrepreneurs might become capitalists but they stop being entrepreneurs once they fail to continue to innovate and return to capitalist routines (Schumpeter, 1934). McMillan and Woodruff (2002), accentuate the role of the entrepreneurs as reformers in the transition economies. They believe that much of the task of devising the new ways of doing business in transition economies has been taken on by entrepreneurs. Moreover, Shane and Venkataraman (2000) believe that an entrepreneur s role is to combine resources to exploit a market opportunity. Design of Questionnaire The prioritized list of entrepreneurial roles was compiled and simplified, as mostly summarized in Table 1. Two other roles (employer and investor) based on the literature review were added to Table 1. This list was the basis of questions on entrepreneurial roles. Then 30 questionnaires were filled and the reliability of the questionnaire was calculated by Cronbach s Coefficient in SPSS, which was , and more than 0.7, so it was acceptable The omission of none of the questions helped the increase of the coefficient, so no question was omitted. METHODOLOGY 15 questionnaires were distributed among the firm owners of Shiraz Industrial Town, which is an industrial zone in the suburb of Shiraz, Iran. The demographical data have been shown in Table 2. Then, the questionnaires were collected and analyzed by SPSS. CONCLUSION As mentioned before, this study s main goal is to understand the entrepreneurs role according to themselves (Iranian entrepreneurs). So, the frequency (mean) of the respondents answers, were shown in Fig. 1. Three roles are more outstanding in comparison to the other roles. Iranian entrepreneurs know themselves as firm owner, employer, and manager. These roles show that they know entrepreneurship as establishing and running a business, which is really far from the multivalent concept of entrepreneurship. This could be traced back in the educational back ground of these entrepreneurs. International Journal of Social and Economic Research 24

4 Understanding Entrepreneurs Roles, According to Iranian Entrepreneurs (Case Study: Shiraz Industrial Town) Fig. 1: The frequency of the Iranian entrepreneurs roles according to themselves According to Table 2, 12 entrepreneurs out of 15, which have chosen randomly, have high school diploma. This fact beside, the employment crisis in Iran, have made the entrepreneurs to accept that they are employer and firm owner, and these roles have priority to them.even, the word entrepreneurship in Persian translated as karafarini, which in Persian means: the generation of work. Since they are mostly uneducated, they know themselves as employers. REFERENCES Blaug, M. (1996). The concept of entrepreneurship in the history of economics. In P. Boettke and M. Rizzo, Liberty Fund Conference on Entrepreneurship. Bull, I. and Willard, G.E. (1993). Toward a Theory of Entrepreneurship. Journal of Business Venturing, 8: Carree, M. and Thurik, R. (2005). Understanding the Role of Entrepreneurship for Economic Growth. Germany : Max Plank Institute for Research into Economic Systems. Casson (1982). Casson M The entrepreneur: An economic theory, Oxford: Martin Robertson. Chell, E. (1985). The entrepreneurial personality: A few ghosts laid to rest? Chell, E., Haworth, J. and Brearley, S. (1991). The entrepreneurial personality, London: Routledge. Galindo, M.A. and Mendez, M.T. (2008). Emprendedores objectovos de politica economica.informacion Comercial Espanola. No. 841, March-April: Vol. 2, Issue 1, January-June

5 Amir Forouharfar and Milad Gouran Hagedoorn, J. (1996). Innovation and Entrepreneurship: Schumpeter revisited.oxford University Press. Hébert, R.M. and Link, A.N. (1982). The entrepreneur, New York: Praeger. Kets de Vries, M.F.R. (1977). The Entrepreneurial Personality : A Person at the Crossroads. Journal of Management Studies, February, pp Lumpkin, G.T. and Dess, G.G. (1996). Calarifying the Entrepreneurial Orientation Construct and Linking it to Performance. Academy of Management Review, 21: McMillan, J. and Woodruff, C. (2002). The Central Roles of Entrepreneurs in Transition Economies. Journal Economic Perspectives,16(3) Martin, G.M, Cuevas J. and Soriano, R.D. (2009). Entrepreneurship and Business : A regional Perspective. Germany : Springer, pp Marco, L.V.A. (1985). Entrepreneur et Innovation: Les Sources Francaises de Joseph Schumpeter. Economics et Societes, 19: Nijkamp, P. (2000). Entrepreneurship in a modern network economy. Research Memorandum Vrije Universitiet, Amesterdam. Nooteboom, B. (2005). Entrepreneurial Roles Along a Cycle of Discovery, No Shane, S. and Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review 25: Stanworth and Curran (1986). The role of small firms in technological innovation. In: J. Curran (ed.): The Survival of the Small Firm, Gower. Scase and Goffee (1980). The real world of the small business owner, London: Croom Helm. Schumpeter, J.A. (1934, 1980). The Theory of Economic Development. Oxford University Press: London. Thurik, A.R. (1996). Small firms, entrepreneurship and economic growth. In P.H. Admiraal (ed.), Small business in the modern economy, Oxford: Basil Blackwell, pp van Praag, C.M. (1996). Determinants of successful entrepreneurship, Tinbergen Institute Research Series, Amsterdan: Thesis publishers. International Journal of Social and Economic Research 26