Marketing Literature Review
Q1: What is/are the market orientation variable that has/have a direct influence to entrepreneurship?
The central cornerstone of marketing is market orientation which is directly related to profitability as market orientation majorly focuses on competitors and customers, as well as other functional elements operating in an organization (Zhang & Bruning 2007). By definition, market orientation is concerned with the generation of market intelligence related to consumers’ current and future needs and expectation. In a study carried by Slater and Narver (2000) showed that market orientation has a direct influence to entrepreneurship. This is because the driving force for entrepreneurs is profit maximization. The major variables of market orientation are competitor orientation, customer orientation, and inter-functional coordination. Zhang and Bruning (2007) observe that business which focus on customer orientation create value for consumers thus creating suitable and conducive environment for entrepreneurship. When an entrepreneur focuses on customer satisfaction, the needs of customers are met thus creating potentially loyal and satisfied customers which boost entrepreneurship. On the other hand, competitor orientation is concerned with understanding of the current and future competitors in the industry. With reference to entrepreneurship, through marketing orientations, business start-ups focus on determining their weaknesses and strengths thus encouraging entrepreneurship. The last variable which is inter-functional coordination is concerned with internal procedural styles and organizational cultural characteristics. Therefore, the culture of entrepreneurship is fostered when collaborative organizational culture is used thus improving business performance. in conclusion, businesses which focus on market orientation are more likely to be profitable thus encouraging entrepreneurship.
Q2: what is/are the business culture variable that has/have a direct influence to entrepreneurship?
Culture is a major perspective which plays an important role in ensuring a successful entrepreneurship. Business culture is described as policies, procedures, beliefs, and values that an organization holds as part of its business strategy (Thurikand & Dejardin 2012). It also refers to the beliefs which significantly affect people’s behaviour, perceptions, basic values, and behaviours. In this line of thought, past research show that some of business culture variables such as beliefs, values and goals have a positive effect on entrepreneurship (Thurikand & Dejardin 2012). For example, the goals and values of an entrepreneurship shape business operation, its management, and employees. All the business structures are pegged on these variables. Therefore, it is imperative to observe that entrepreneurship and culture intervene. The culture of consumerism in most developed economies encourages entrepreneurship as people are attracted to that kind of a business culture. Vohra, Zhang and Arora 2006 (2006) observe that people with a business culture are more likely to develop entrepreneurial backgrounds thus encouraging entrepreneurship.
Q3: What is/are the political climate variables that have a direct influence to entrepreneurship?
Entrepreneurs operate in areas which are influenced by external factors such as political climate variables. For example, laws, regulations, and government policies create room or hinder entrepreneurship. For instance, past research indicates that at macro level, government policies in china in early 1990s encouraged private ownership of business compared to earlier regimes which deterred people from investing in entrepreneurship (Vohra, Zhang, & Arora 2006). Therefore, political climate factors such as regulations and laws may deter or encourage entrepreneurship. Stable political climate/environment which is a major characteristic of developed nations has encouraged rapid growth of entrepreneurship. Kotler and Armstrong (2004) observe that countries which have government policies changing frequently create unstable political conditions which discourage business investors’ thus low level of entrepreneurship. Fear for business safety as a result of unstable political climate drive investors away. War torn countries coupled with civil wars and other factors discourage entrepreneurship as the climate created does not support entrepreneurship. Kotler and Armstrong (2004) observe that nations which has few hurdles to operate a business and economic freedom (such as favorable legislation) as it is in the case of Singapore encourage entrepreneurship. Moreover, high corporate taxes which have effect to business returns normally discourage entrepreneurs while low taxes and business incentives attract business start-ups (Kotler and Armstrong (2004). Other political climate conditions which encourage entrepreneurship are such as government support through infrastructure development and industrial parks, governments’ encouragement and tax breaks (Blanchflower& Oswald1998). Labor laws and work environment suppress or support business entrepreneurship. For example, countries with retrograding labor laws are not only time consuming but also make it difficult for businesses to comply with. These legal hurdles impede entrepreneurship.
Q4: Do economic conditions such as GDP, inflation rate, interest rate have direct/indirect influence to entrepreneurship?
Different economic conditions have significant effect in entrepreneurship. This is because the nature of economy and economic growth defines the success and the failure of entrepreneurship. For example, when there is recession, the inflation rate is very high which translates to declining purchasing power among the consumers. Moreover, it is during economic slowdown when people remain reluctant to invest that affecting entrepreneurship negatively. High inflation as a result of sluggish economic recovery result to reduced rate of lending among financial institutions thus derailing investment by entrepreneur. The economic growth of an economy which is measured in terms of domestic growth product (GDP) has direct effect on entrepreneurship. For example, in their study, Portela, Vázquez-Rozas, Neira and Viera (2010) found that a country with a stable or growing GDP is more likely to invest in entrepreneurship compared to countries with low or unstable GDP. For example, China and other transitional economies have high levels of entrepreneurship because of stable and growing GDP. The rationale behind this that stable economic growth (GDP) creates room for employment, disposable income, increased level of knowledge, and high purchasing power which prompt entrepreneurship (Portela et al. 2010). Interest rate significantly affects the level of entrepreneurship. For example, when the economy growth rate is high the interest rate is low which allow attract willing business people to invest in entrepreneurship.
Blanchflower, D G. & Oswald, A. J 1998, ‘What makes an entrepreneur?’, Journal of Labor Economics, vol. 16, no. 1, pp. 26-60
Kotler, P & Armstrong, G 2004, Principles of Marketing, London, Prentice Hall
Portela, M, Vázquez-Rozas, E, Neira, I & Viera, E 2010, Entrepreneurship and Economic Growth: Macroeconomic analysis and effects of social capital in the EU, University of Santiago de Compostela, Spain
Slater, S F & Narver, J C 2000, ‘The positive effect of a market orientation on business profitability: A balanced replication’ Journal of Business Research, vol. 48, pp. 69–73.
Thurikand, R & Dejardin, M 2012, Entrepreneurship and Culture, Routledge Studiesin Entrepreneurship, pp. 1-10
Vohra, N, Zhang, L & Arora, B 2006, ‘Attitudes of the youth towards entrepreneurs and entrepreneurship: A cross-cultural comparison of India and China, Journal of Asia Entrepreneurship and Sustainability, vol. 3, no. 1, pp. 29-65.
Zhang, D & Bruning, E R 2007, Differential Influences of market and entrepreneurial orientations on firm performance’, ASAC, pp. 134-151