3 Types of entrepreneurs

3 Types of entrepreneurs

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3 types of entrepreneurs

The 3 types of entrepreneurs can be classified based on:

  1. The opinion of different discipline
  2. Self-definition of their role
  3. Their patterns of behaviour

Classification based on Opinion of Different Disciplines

According to Karl H. Vesper (1969) the role of entrepreneurs can be seen in many forms and be drawn from different perspectives an entrepreneur:

a)     To an economist:

An entrepreneur is a person who brings the factors of production (material, labour, capital) together to produce economic value (goods and services) and also one who originates changes, innovations and new ideas.

b)     To a psychologist:

He is someone whom is being driven by some forces such as needs to obtain, to attain, to experiment, to accomplish something or to escape being under the authority of others.

c)      To a businessman:

He is seen as a threat, an aggressive competitor on one side and yet an ally, a source of supply, a customer and someone with an investment opportunity.

d)     To a politician:

He is somebody that is devious and hard to control or a person who discovers an effective way of doing things.

e)     To a communist philosopher:

He may be seen as a predator, someone who usurps the authority of others and an exploiter of other people’s resources.

f)       To a capitalist philosopher:

He is a creator of wealth or a person that discovers a better way to use resources, reduce waste and create jobs for others.

Karl H. Vesper (1969) further maintained that an entrepreneur could be one of these:

3 types of entrepreneurs

  1. Sole self-employed individual: these are sole proprietors of different fields of endeavours such as; the insurance brokers, mechanical engineers, proprietors of schools, executive directors of companies etc. they are their own boss and adviser with few workers as employees.
  2. Team builders: these are self- employed entrepreneurs who start business in a small way but as sales increase they expand gradually or they could start with somebody else but later break off to start their own business and expand rapidly or gradually. A new or better way of doing things can be discovered to meet up with increase in demand resulting from a new technology, new resources of finance, new material usage and a new potential discovered. To them, it is the exploitation of untapped potential or discovery of a better way of doing a particular thing. These types of entrepreneurs are known for honesty, diligence, excellence and intelligence. They believe in team work and sharing of ideas with employees and friends and also take advice from professionals.
  3. Independent innovators: There are entrepreneurs who go out of their way to discover new ways of doing an old thing or discover a new idea and independently develop it. As long as product or technology innovation is concerned, the idea originates from them; they are forerunners of the industries and are mainly into electronic, automobile and telecommunications businesses, among others. Close to these types of entrepreneurs are pattern multipliers.
  4. Pattern-multipliers: Pattern-multipliers discover an effective way of modelling because that originates from somebody else to multiply or enhance it for profit.
  5. Speculators: These are entrepreneurs, especially investors in shares, bonds and real estate (land and property). Before investing in these commodities, they would have foreseen the rising tendency of the value of these products. They will buy them today (because their prices are low) to sell them tomorrow (when their price increase). This is possible as long as these products do not decrease in value.
  6. Conglomerates: These are large business organizations consisting of different companies producing goods of different kinds and often consist of a parent company and subsidiaries. The price-earning ratio of their subsidiaries are usually low and when merged with that of the parent company, increases the market value for both the parent and the subsidiary companies.
  7. Buy/sell entrepreneurs: They specialize on buying and selling already existing companies for a profit. They are also known as turnaround investors. They buy and improve on such businesses and then ell them off.
  8. Acquirers: There are entrepreneurs who capitalise on business failures to buy over already established businesses rather than start new ones. In most cases, they buy ailing businesses to restructure and run it more effectively in terms of finance and management.
  9. Capital aggregators: These are entrepreneurs that pool their resources together for the purpose of financing other ventures. Ordinarily, the business involved will be for one person to transact. Such businesses include banks, insurance companies, trust funds, loan schemes. Etc.
  10. Economies of scale exploiters: These are entrepreneurs who discover how to reduce the cost per unit of a product as volume increases. They discover ways of reducing operating expenses and if possible, reduce their product prices to make them lower than their competitors to gain competitive advantage. They create a market niche in new technology, new distribution channel, use of advertising media, financial engineering. Etc.
  11. Apparent-value manipulators: these could be any of the above mentioned entrepreneurs. Their mode of operation is to change or restructure businesses to give it a different look, mainly to attract investors. A good example of this is renegotiating with the business creditors for a long term payment making the current ratio appropriate and attractive for investors.

3 types of entrepreneurs

Classification based on Self-Definition of Role

Entrepreneurs can also be classified ion accordance with the self-definition of their roles. There are three identities of entrepreneurs in relation to the role they play in business. These are:

  1. The artisan identity: This type of entrepreneur sees himself as a personal autonomy achiever. His role concentrates on satisfaction of intrinsic desires such as employing the best personnel he feels he can work with (especially the people he knows cannot easily challenge him), choosing his own sources of income from which he may not likely be exposed to the world. These types of entrepreneurs are usually specialists in their fields.
  2. The classical entrepreneur identity: This is the classical economist view of entrepreneurship. The entrepreneur’s definition under this identity is based on earnings and profit associated with the business. The major objective of his business centre on how to maximise his returns through rational decision towards survival.
  3. The managerial identity: This is the entrepreneurial role usually based on managerial excellence. He can achieve this by using managerial techniques.

Classification based on their Pattern of Behaviour

Two patterns of entrepreneur behaviour have been identified:

  1. Craftsman entrepreneurs
  2. Opportunist entrepreneurs.
  Craftsman entrepreneur Opportunist entrepreneur
Education Largely technical Liberal
Experience Essentially technical; trade union model as their role model Essentially managerial. Managers are role model
Employment

system

Informal method, paternal relationship with employee Formal method based on competence
Structure Rigid Flexible and adaptive
Marketing

strategies

Depends on product quality and are customer-oriented Adopts modern marketing methods
Financial

arrangement

Personal savings, loan from friends and relations Loans from financial institutions
Growth

orientation

May not want much growth continuity Embraces growth and wants continuity.

The above table shows the types of entrepreneurs can further be differentiated in terms of their reactions to: education, experience, structure, employment system, marketing strategies, financial arrangement and growth orientation.

3 TYPES OF ENTREPRENEURS

There you have it on the types of entrepreneurs and different views based on popular belief and it is my believe that you had a proper understanding.

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