Wednesday, 8 February 2012

Business Environment and Entrepreneurship



Systemic approach to Entrepreneurship and Entrepreneurial phenomenon reflects itself by taking in consideration of the interferece with the Business Environment involved. Starting points in this approach is generally knowing and understanding the concept of Business Environment. When we talk about Business Environment we designate all the company's exogenous elements of economical nature, managerial, technical, demografics etc. that marks a significant progress and results of the activities.

According to some experts, contemporary Business Environment has 3 main features:
  1. Turbulence, which means numerous, fast and unexpected changes, mostly of low magnitude, that generate many flows and economic, social, technological impacts. The main factors are generated by economic changes, social changes and mutations in the relation between market and customers.
  2. Fast evolution of  Business opportunities that represent at least two major components. The appearance of numerous economic opportunities, appreciably more than the prior periods, which are combined simultaneous with their succession at a reduced time interval compared to the dynamics of earlier decades.
  3. Amplification of uncertainty, which is a result of the many changes that can not be predicted and quantified with sufficient precision. The fact that in the economical activity are involved more local variables, national and international, of very different nature, in an increased proportion of new situations is reflected in multiplying risk and uncertainty, increasing difficulty in collecting, directing and controlling economic actions.


Entrepreneurial enviorenment has a partially different content from the corporate Environment, as we will reveal below. In fact, in recent years there were detected and analyzed two types of entrepreneurial/business Environments: real and perceived.

         Real Business Environment
Real Business Environment designate all the contextual elements that influence the Entrepreneur's efforts in all phases of its activity, inducing change in the decisions, actions, behaviors and performances. Its main characteristics are:
  • incoporates both exogenous and endogenous elements of the organization but only those that singificantly affect the starting and running of the entrepreneurial processes;
  • varies from one Entrepreneur to another, depending on the type of the entrepreneurial initiative, geographic area, location and involved resources;
  • differs for the same entrepreneur over time, depending on the stage of company's life cycle and its economic power; As the company grows the Business Environment field widens and its size increases.
There are a lot of exogenous elements that can influence your Business activity but the elements that usually have a more direct and substantial influence are: taxation, acces to credit, law, inlfation, national economic strategy and population attitude towards Entrepreneurs.

Depending on the parameteres of the mentioned elements and how they combine, it can result for Entrepreneurs, in a particular country, three real Business Environments:
    a) Unfavorable Business Environment that is characterized by the fact that entrepreneurial actions are prohibited or restricted. Therefore, there are no small to medium private firms or their number is very low in the economy.

    b) Permissive Business Environment provides the ability to initiate and carry out entrepreneurial activities, but the actual existing conditions are heterogeneous, some of them having a temporary or inhibitory influence on private initiatives. Economic and administrative initiatives face quite a few difficulties that Entrepreneurs have to overcome.

    c) Favorable Business Environment, which by all or most of his behaviors, stimulate entrepreneurial activity, establishment and development of private enterprises. It is the type of Environment which, from political and cultural elements and ending with the economic and legal elements, aims to create as many as possible strong private companies.

          Perceived Business Environment
The perceived Business Environment designs those elements of real Business Environment which the Entrepreneur appreciates and feels as having a significant influence on its actions and performance. It is specific to individual nature of the Entrepreneur, because each Entrepreneur characteristics are reflected in its ability to perceive the context and define the Environment that he consideres to have a greater impact on his entrepreneurial activities.


The perceived Business Environment has a dual dimension: cognitive and affective.
          a) Cognitive dimension refers to contextual information which the Entrepreneur identified and reviewed in the entrepreneurial processes that he initiates and carries. Cognitive dimension is even more evident if the Entrepreneur has high level of training, a good sense of observation and it invests more time in the entrepreneurial aciton.
          b) Affective dimension reffers to the background information of the Entrepreneur that he considers to be really important with which he gets attached or even afraid, they are significant and deserve a special attention. Also, it is an indirect reflection of the entrepreneurial spirit and native talent that the Entrepreneur possess.
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