Tag: Notes

  • What is Entrepreneurship Theories and Empirical Research?

    Entrepreneurship Theories and Empirical Research

    Entrepreneurship theories and research remain important to the development of the entrepreneurship field. This paper examines six entrepreneurship theories with underlying empirical studies. These are: 1) Economic entrepreneurship theory, 2) Psychological entrepreneurship theory, 3) Sociological entrepreneurship theory, 4) Anthropological entrepreneurship theory, 5) Opportunity-Based entrepreneurship theory, and 6) Resource-Based entrepreneurship theory. These theories offer us a fairly good opportunity to refocus our efforts at integrating the diverse viewpoints.

    Entrepreneurship

    Economic Entrepreneurship Theories

    The economic entrepreneurship theory has deep roots in the classical and neoclassical theories of economics, and the Austrian market process (AMP). These theories explore the economic factors that enhance entrepreneurial behavior.

    Classical Theory

    The classical theory extolled the virtues of free trade, specialization, and competition (Ricardo, 1817; Smith, 1776). The theory was the result of Britain’s industrial revolution which took place in the mid-1700 and lasted until the 1830s.The classical movement described the directing role of the entrepreneur in the context of production and distribution of goods in a competitive marketplace (Say, 1803). Classical theorists articulated three modes of production: land; capital; and labor. There have been objections to the classical theory. These theorists failed to explain the dynamic upheaval generated by entrepreneurs of the industrial age (Murphy, Liao & Welsch, 2006).

    Neo-classical Theory

    The neo-classical model emerged from the criticisms of the classical model and indicated that economic phenomena could be relegated to instances of pure exchange, reflect an optimal ratio, and transpire in an economic system that was basically closed. The economic system consisted of exchange participants, exchange occurrences, and the impact of results of the exchange on other market actors. The importance of exchange coupled with diminishing marginal utility created enough impetus for entrepreneurship in the neoclassical movement (Murphy, Liao & Welsch, 2006).

    Some criticisms were raised against the neo-classical conjectures. The first is that aggregate demand ignores the uniqueness of individual-level entrepreneurial activity. Furthermore, neither use nor exchange value reflects the future value of innovation outcomes. Thirdly, rational resource allocation does not capture the complexity of market-based systems. The fourth point raised was that efficiency-based performance does not subsume innovation and non-uniform outputs; known means/ends and perfect or semi-perfect knowledge does not describe uncertainty. In addition, perfect competition does not allow innovation and entrepreneurial activity. The fifth point is that it is impossible to trace all inputs and outputs in a market system. Finally, entrepreneurial activity is destructive to the order of an economic system.

    Austrian Market Process (AMP)

    These unanswered questions of the neo-classical movement led to a new movement which became known as the Austrian Market process (AMP). The AMP, a model influenced by Joseph Aloi Schumpeter (1934) concentrated on human action in the context of an economy of knowledge. Schumpeter (1934) described entrepreneurship as a driver of market-based systems. In other words, an important function of an enterprise was to create something new which resulted in processes that served as impulses for the motion of market economy.

    Murphy, Liao & Welsch (2006) contend that the movement offered a logic dynamic reality. In explaining this, they point to the fact that knowledge is communicated throughout a market system (e.g. via price information), innovation transpires, entrepreneurs satisfy market needs, and system-level change occurs. If an entrepreneur knows how to create new goods or services, or knows a better way to do so, benefits can be reaped through this knowledge. Entrepreneurs effectuate knowledge when they believe it will procure some individually-defined benefits.

    The earlier neoclassical framework did not explain such activity; it assumed perfect competition, carried closed-system assumptions, traced observable fact data, and inferred repeatable observation-based principles. By contrast, AMP denied assumptions that circumstances are repeatable, always leading to the same outcomes in an economic system. Rather, it held entrepreneurs are incentivized to use episodic knowledge (that is, possibly never seen before and never to be seen again), to generate value.

    Thus, the AMP was based on three main conceptualizations (Kirzner, 1973). The first was the arbitraging market in which opportunities emerge for given market actors as others overlook certain opportunities or undertake the suboptimal activity. The second was alertness to profit-making opportunities, which entrepreneurs discover and entrepreneurial advantage. The third conceptualization, following Say (1803) and Schumpeter (1934), was that ownership is distinct from entrepreneurship. In other words, entrepreneurship does not require ownership of resources, an idea that adds context to uncertainty and risk (Knight, 1921). These conceptualizations show that every opportunity is unique and therefore previous activity cannot be used to predict outcomes reliably.

    The AMP model is not without criticisms. The first of the criticisms is that market systems are not purely competitive but can involve antagonist cooperation. The second is that resource monopolies can hinder competition and entrepreneurship. The third is that fraud /deception and taxes/controls also contribute to market system activity. The fourth is that private and state firms are different but both can be entrepreneurial and fifth, entrepreneurship can occur in non-market social situations without competition. Empirical studies by Acs and Audretsch (1988) have rejected the Schumpeterian argument that economies of scale are required for innovation. The criticisms of the AMP have given impetus to recent explanations from psychology, sociology, anthropology, and Management.

    Psychological Entrepreneurship Theories

    The level of analysis in psychological theories is the individual (Landstrom, 1998). These theories emphasize personal characteristics that define entrepreneurship. Personality traits need for achievement and locus of control are reviewed and empirical evidence presented for three other new characteristics that have been found to be associated with entrepreneurial inclination. These are risk-taking, innovativeness, and tolerance for ambiguity.

    Personality Traits theory

    Coon (2004) defines personality traits as “stable qualities that a person shows in most situations.” To the trait theorists, there are enduring inborn qualities or potentials of the individual that naturally make him an entrepreneur. The obvious or logical question on your mind may be “What are the exact traits/inborn qualities?” The answer is not a straightforward one since we cannot point at particular traits. However, this model gives some insight into these traits or inborn qualities by identifying the characteristics associated with the entrepreneur. The characteristics give us a clue or an understanding of these traits or inborn potentials. In fact, explaining personality traits means making an inference from behavior.

    Some of the characteristics or behaviors associated with entrepreneurs are that they tend to be more opportunity was driven (they nose around), demonstrate the high level of creativity and innovation, and show the high level of management skills and business know-how. They have also been found to be optimistic, (they see the cup as half full then as half empty), emotionally resilient and have mental energy, they are hard workers, show intense commitment and perseverance, thrive on competitive desire to excel and win, tend to be dissatisfied with the status quo and desire improvement, entrepreneurs are also transformational in nature, who are lifelong learners and use failure as a tool and springboard. They also believe that they can personally make a difference, are individuals of integrity and above all visionary.

    The trait model is still not supported by research evidence. The only way to explain or claim that it exists is to look through the lenses of one’s characteristics/behaviors and conclude that one has the inborn quality to become an entrepreneur.

    Locus of Control

    Locus of control is an important aspect of personality. The concept was first introduced by Julian Rotter in the 1950s. Rotter (1966) refers to Locus of Control as an individual’s perception about the underlying main causes of events in his/her life. In other words, a locus of control orientation is a belief about whether the outcomes of our actions are contingent on what we do (internal control orientation) or on events outside our personal control (external control orientation). In this context, the entrepreneur’s success comes from his/her own abilities and also support from outside. The former is referred to as internal locus of control and the latter is referred to as external locus of control. While individuals with an internal locus of control believe that they are able to control life events, individuals with an external locus of control believe that life’s events are the result of external factors, such as chance, luck or fate. Empirical findings that internal locus of control is an entrepreneurial characteristic have been reported in the literature (Cromie, 2000, Ho and Koh, 1992; Koh, 1996; Robinson et al., 1991). In a student sample, internal locus of control was found to be positively associated with the desire to become an entrepreneur (Bonnett & Furnham, 1991).

    Rauch and Frese (2000) also found that business owners have a slightly higher internal locus of control than other populations. Other studies have found a high degree of innovativeness, competitive aggressiveness, and autonomy reports (Utsch et al., 1999). The same is reported of protestant work ethic beliefs (Bonnet and Furnham, 1991), as well as risk taking (Begley & Boyd, 1987).

    Need for Achievement theory

    While the trait model focuses on enduring inborn qualities and locus of control on the individual’s perceptions about the rewards and punishments in his or her life, (Pervin, 1980,), need for achievement theory by McClelland (1961) explained that human beings have a need to succeed, accomplish, excel or achieve. Entrepreneurs are driven by this need to achieve and excel. While there is no research evidence to support personality traits, there is evidence for the relationship between achievement motivation and entrepreneurship (Johnson, 1990).  Achievement motivation may be the only convincing phonological factor related to new venture creation (Shaver & Scott, 1991).

    Risk taking and innovativeness, need for achievement, and tolerance for ambiguity had the positive and significant influence on entrepreneurial inclination Mohar, Singh and Kishore (2007). However, a locus of control (LOC) had the negative influence on entrepreneurial inclination. The construct locus of control was also found to be highly correlated with variables such as risk-taking, need for achievement, and tolerance for ambiguity. The recent finding on risk taking strengthens earlier empirical studies which indicate that aversion to risk declines as wealth rises, that is, one’s net assets and value of future income (Szpiro, 1986).

    In complementing Szpiro’s observation, Eisenhauer (1995) suggests that success in entrepreneurship, by increasing wealth, can reduce the entrepreneur’s degree of risk aversion, and encourage more venturing. In his view, entrepreneurship may, therefore, be a self-perpetuating process. Further evidence suggests that some entrepreneurs exhibit mildly risk-loving behavior (Brockhaus, 1980). These individuals prefer risks and challenges of venturing to the security of stable income.

    Sociological Entrepreneurship Theory

    The sociological theory is the third of the major entrepreneurship theories. Sociological enterprise focuses on the social context. In other words, in the sociological theories, the level of analysis is traditionally the society (Landstrom, 1998).

    Reynolds (1991) has identified four social contexts that relate to entrepreneurial opportunity. The first one is social networks. Here, the focus is on building social relationships and bonds that promote trust and not opportunism. In other words, the entrepreneur should not take undue advantage of people to be successful; rather success comes as a result of keeping faith with the people.

    The second he called the life course stage context which involves analyzing the life situations and characteristic of individuals who have decided to become entrepreneurs. The experiences of people could influence their thought and action so they want to do something meaningful with their lives.

    The third context is ethnic identification. One’s sociological background is one of the decisive “push” factors to become an entrepreneur. For example, the social background of a person determines how far he/she can go. Marginalized groups may violate all obstacles and strive for success, spurred on by their disadvantaged background to make life better. The fourth social context is called population ecology. The idea is that environmental factors play an important role in the survival of businesses. The political system, government legislation, customers, employees, and competition are some of the environmental factors that may have an impact on survival of new venture or the success of the entrepreneur.

    Anthropological Entrepreneurship Theory

    The fourth major theory is referred to as the anthropological theory. Anthropology is the study of the origin, development, customs, and beliefs of a community. In other words, the culture of the people in the community. The anthropological theory says that for someone to successful initiate a venture the social and cultural contexts should be examined or considered.

    Here the emphasis is on the cultural entrepreneurship model. The model says that new venture is created by the influence of one’s culture. Cultural practices lead to entrepreneurial attitudes such as innovation that also lead to venture creation behavior. Individual ethnicity affects attitude and behavior (Baskerville, 2003) and culture reflects particular ethnic, social, economic, ecological, and political complexities in individuals (Mitchell et al., 2002a). Thus, cultural environments can produce attitude differences (Baskerville, 2003) as well as entrepreneurial behavior differences (North, 1990; Shane 1994).

    Opportunity–Based Entrepreneurship Theory

    The opportunity-based theory is anchored by names such as Peter Drucker and Howard Stevenson. An opportunity-based approach provides a wide-ranging conceptual framework for entrepreneurship research (Fiet, 2002; Shane, 2000).

    Entrepreneurs do not cause change (as claimed by the Schumpeterian or Austrian school) but exploit the opportunities that change (in technology, consumer preferences etc.) creates (Drucker, 1985). He further says, “This defines entrepreneur and entrepreneurship, the entrepreneur always searches for change, responds to it, and exploits it as an opportunity.” What is apparent in Drucker’s opportunity construct is that entrepreneurs have an eye more for possibilities created by change than the problems.

    Stevenson (1990) extends Drucker’s opportunity-based construct to include resourcefulness. This is based on research to determine the differences between entrepreneurial management and administrative management. He concludes that the hub of entrepreneurial management is the “pursuit of opportunity without regard to resources currently controlled.”

    Resource-Based Entrepreneurship Theories

    The Resource-based theory of entrepreneurship argues that access to resources by founders is an important predictor of opportunity-based entrepreneurship and new venture growth (Alvarez & Busenitz, 2001). This theory stresses the importance of financial, social and human resources (Aldrich, 1999). Thus, access to resources enhances the individual’s ability to detect and act upon discovered opportunities (Davidson & Honing, 2003). Financial, social and human capital represents three classes of theories under the resource – based entrepreneurship theories.

    Financial Capital/Liquidity Theory

    Empirical research has shown that the founding of new firms is more common when people have access to financial capital (Blanchflower et al, 2001, Evans & Jovanovic, 1989, and Holtz-Eakin et al, 1994). By implication, this theory suggests that people with financial capital are more able to acquire resources to effectively exploit entrepreneurial opportunities, and set up a firm to do so (Clausen, 2006).

    However , other studies contest this theory as it is demonstrated that most founders start new ventures without much capital and that financial capital is not significantly related to the probability of being  nascent entrepreneurs (Aldrich,1999, Kim, Aldrich & Keister, 2003, Hurst & Lusardi, 2004, Davidson & Honing, 2003).This apparent confusion is due to the fact that the line of research connected to the theory of liquidity constraints generally aims to resolve whether a founder’s access to capital is determined by the amount of capital employed to start a new venture Clausen (2006). In his view, this does not necessarily rule out the possibility of starting a firm without much capital. Therefore, founders access to capital is an important predictor of new venture growth but not necessarily important for the founding of a new venture (Hurst & Lusardi, 2004).

    This theory argues that entrepreneurs have individual-specific resources that facilitate the recognition of new opportunities and the assembling of new resources for the emerging firm (Alvarez & Busenitz, 2001). Research shows that some persons are more able to recognize and exploit opportunities than others because they have better access to information and knowledge (Aldrich, 1999, Anderson &Miller, 2003, Shane 2000, 2003, Shane & Venkataraman, 2000).

    Social Capital or Social Network Theory

    Entrepreneurs are embedded in a larger social network structure that constitutes a significant proportion of their opportunity structure (Clausen, 2006). Shane and Eckhardt (2003) says “an individual may have the ability to recognize that a given entrepreneurial opportunity exists, but might lack the social connections to transform the opportunity into a business startup. It is thought that access to a larger social network might help overcome this problem.”

    In a similar vein, Reynolds (1991) mentioned social network in his four stages in the sociological theory. The literature on this theory shows that stronger social ties to resource providers facilitate the acquisition of resources and enhance the probability of opportunity exploitation (Aldrich & Zimmers, 1986).Other researchers have suggested that it is important for nascent founders to have access to entrepreneurs in their social network, as the competence these people have represents a kind of cultural capital that nascent ventures can draw upon in order to detect opportunities (Aldrich & Cliff, 2003., Gartner et al, 2004., Kim, Aldrich & Keister, 2003).

    Human Capital Entrepreneurship Theory

    Underlying the human capital entrepreneurship theory are two factors, education, and experience (Becker, 1975). The knowledge gained from education and experience represents a resource that is heterogeneously distributed across individuals and in effect central to understanding differences in opportunity identification and exploitation (Anderson & Miller, 2003, Chandler & Hanks, 1998, Gartner et al, 2005, Shane & Venkataraman, 2000).

    Empirical studies show that human capital factors are positively related to becoming a nascent entrepreneur (Kim, Aldrich & Keister, 2003, Davidson & Honing,2003, Korunka et al, 2003), increase opportunity recognition and even entrepreneurial success (Anderson & Miller, 2003, Davidson & Honing,2003).

    The conclusion of Entrepreneurship Theories

    The purpose of this paper was to examine the theories and research outcomes of entrepreneurship. From the above discussions, it is clear that the field of entrepreneurship has some interesting and relevant theories (ranging from economic, psychological, sociological, anthropological, opportunity-based, to resource based) which are underpinned by empirical research evidence. This development holds a rather brighter future for the study, research, and practice of entrepreneurship.

  • Staffing Definition Examples Advantages

    Staffing Definition Examples Advantages

    Staffing is the important function of management that involves employing the right number of people at the right place with right skills and abilities.

    Processes of Scientific Management Staffing

    It also involves training and development of the people so that organizational objectives and goals can achieved successfully. It comprises the activities of selection and placement of competent personnel.

    Definition

    “Staffing is the process of hiring, positioning and overseeing employees in an organization”.

    In addition to selection, training, development of personnel, it also comprises of promotion of best persons, a retirement of old persons, performance appraisal of all the personnel, and adequate remuneration of personnel. The success of any enterprise depends upon the successful performance of the staffing function.

    Meaning

    Staffing is the process within an organization that involves the careful selection, training, development, and placement of competent individuals in appropriate roles. This ensures that the organization achieves its objectives efficiently and effectively.

    Examples

    1. Recruitment: Finding suitable candidates and encouraging them to apply for positions within the organization. This can be done through advertisements, referrals, and placement agencies.
    2. Training Programs: Offering training programs to new hires to help them understand their roles and enhance their skills.
    3. Performance Appraisals: Regularly evaluating employees’ performance to ensure they meet the organization’s standards and identifying areas for improvement.
    4. Promotion and Transfers: Moving employees to higher positions or different roles within the organization based on their performance and skills.

    Importance

    • Efficient Operations: By placing the right people in the right roles, organizations can ensure smooth and effective operations.
    • Employee Development: Ongoing training and development help employees stay current with industry standards and improve their performance.
    • Retention: Proper staffing measures can help retain talented employees by providing growth opportunities and fair remuneration.
    • Organizational Success: Successful staffing practices lead to an overall improvement in organizational performance and help achieve business goals.

    Advantages

    • Talent Acquisition: Effective staffing helps in acquiring skilled and competent employees that add value to the organization.
    • Better Productivity: Well-staffed organizations typically experience higher productivity levels as employees are well-trained and motivated.
    • Reduced Turnover: By selecting and nurturing the right candidates, staffing can significantly reduce turnover rates.
    • Enhanced Employee Morale: Adequate staffing and fair promotion practices contribute to high employee morale and job satisfaction.

    Disadvantages

    • High Costs: The staffing process, which includes recruitment, training, and development, can be costly.
    • Time-Consuming: Finding the right candidates and adequately training them is a time-consuming process.
    • Potential for Bias: Improper staffing practices can lead to biases in hiring and promotions, which may affect the organization’s diversity and inclusivity.
    • Mismatch: There is always a risk of hiring individuals who do not fit well with the organizational culture or their roles, which could lead to inefficiencies.

    Understanding the intricacies of staffing can help organizations optimize their human resources for improved performance and longevity.

    The staffing function involves

    • Determining human resource requirements of the organization.
    • Recruiting individuals with required skills and competence.
    • Providing placement and orientation to individuals
    • Providing training and development programs to individuals.
    • Evaluating the performance of individuals.
    • Transferring, promoting, laying off individuals.

    The example of the process: Recruitment is the process of finding proper candidates and inducing them to apply for the jobs in the organization. The recruitment should be sound one. If it is not so, the morale of the staff will be very low and the image of the company will tarnished.

    Recruitment is done through advertisements, word of mouth publicity and with the help of placement agencies.

    The success of any recruitment depends upon policies and procedures followed by the company while recruiting the staff members.

    Jobs with low salary, uninteresting and difficult jobs are challenging to be filled up easily.

    Recruitment means the discovery of the staff members for the present and future jobs.

    Notes: You will come to know the definitions of all the seven Processes of Scientific Management; Planning, Organizing, Staffing, Directing, Coordinating, Motivating, Controlling.

  • Organization in Types of Risk

    Organization in Types of Risk:

    Risk refers to sudden unplanned events which cause major disturbances in the organization and trigger a feeling of fear and threat amongst the employees.

    Organization in Types of Risk; Following are the types of Risk:

    1. Natural Risk
      • Disturbances in the environment and nature lead to natural Risk.
      • Such events are generally beyond the control of human beings.
      • Tornadoes, Earthquakes, Hurricanes, Landslides, Tsunamis, Flood, Drought all result in natural disaster.
    2. Technological Risk
      • Technological Risk arises as a result of the failure in technology. Problems in the overall systems lead to technological Risk.
      • Breakdown of machine, corrupted software and so on give rise to technological Risk.
    3. Confrontation Risk
      • Confrontation crises arise when employees fight amongst themselves. Individuals do not agree with each other and eventually depend on non-productive acts like boycotts, strikes for indefinite periods and so on.
      • In such a type of Risk, employees disobey superiors; give them ultimatums and force them to accept their demands.
      • Internal disputes, ineffective communication and lack of coordination give rise to confrontation Risk.
    4. Risk of Malevolence
      • Organizations face Risk of malevolence when some notorious employees take the help of criminal activities and extreme steps to fulfill their demands.
      • Acts like kidnapping company’s officials, false rumors all lead to Risk of malevolence.
    5. Risk of Organizational Misdeeds
      • Crises of organizational misdeeds arise when management takes certain decisions knowing the harmful consequences of the same towards the stakeholders and external parties.
      • In such cases, superiors ignore the after effects of strategies and implement the same for quick results.

    Organization in Types of Risk; A risk of organizational misdeeds can be further classified into following three types:

    • Risk of Skewed Management Values
      • A risk of Skewed Management Values arises when management supports short-term growth and ignores broader issues.
    1. Risk of Deception
      • Organizations face Risk of deception when management purposely tampers data and information.
      • Management makes fake promises and wrong commitments to the customers. Communicating wrong information about the organization and products lead to Risk of deception.
    2. Risk of Management Misconduct
      • Organizations face Risk of management misconduct when management indulges in deliberate acts of illegality like accepting bribes, passing on confidential information and so on.
    3. Risk due to Workplace Violence
      • Such a type of Risk arises when employees are indulged in violent acts such as beating employees, superiors in the office premises itself.
    4. Risk Due to Rumor’s
      • Spreading false rumors about the organization and brand lead to Risk. Employees must not spread anything which would tarnish the image of their organization.
    5. Bankruptcy
      • A Risk also arises when organizations fail to pay its creditors and other parties.
      • Lack of fund leads to Risk.
    6. Risk Due to Natural Factors
      • Disturbances in environment and nature such as hurricanes, volcanoes, storms, flood; droughts, earthquakes etc. result in Risk.
    7. Sudden Risk
      • As the name suggests, such situations arise all of a sudden and on an extremely short notice.
      • Managers do not get warning signals and such a situation is in most cases beyond any one’s control.
    8. Smoldering Risk
      • Neglecting minor issues, in the beginning, lead to smoldering Risk later.
      • Managers often can foresee Risk but they should not ignore the same and wait for someone else to take action.
      • Warn the employees immediately to avoid such a situation.

    Note: “Reading simple notes Organization in Types of Risk, also know about Risk Management and Risk Management Model“

  • Risk Management Model

    Risk Management Model:

    Risk refer to unplanned events which cause harm to the organization and lead to disturbances and major unrest amongst the employees.

    Risk gives rise to a feeling of fear and threat in the individuals who eventually lose interest and trust in the organization.

    Gonzalez-Herrero and Pratt proposed a Risk Management Model which identified three different stages of Risk management.

    According to Gonzalez-Herrero and Pratt, Risk management includes following three stages:

    • Diagnosis of Risk: The first stage involves detecting the early indicators of Risk. It is for the leaders and managers to sense the warning signals of a Risk and prepare the employees to face the same with courage and determination. Superiors must review the performance of their subordinates from time to time to know what they are up to.

    The role of a manager is not just to sit in closed cabins and shout on his subordinates. He must know what is happening around him. Monitoring the performance of the employee regularly helps the managers to foresee Risk and warn the employees against the negative consequences of the same. One should not ignore the alarming signals of Risk but take necessary actions to prevent it. Take initiative on your own. Don’t wait for others.

    • Planning: Once a Risk is being detected, Risk management team must immediately jump into action. Ask the employees not to panic. Devise relevant strategies to avoid an emergency situation. Sit and discuss with the related members to come out with a solution which would work best at the times of Risk. It is essential to take quick decisions. One needs to be alert and most importantly patient. Make sure your facts and figures are correct. Don’t rely on mere guess works and assumptions. It will cost you later.
    • Adjusting to Changes: Employees must adjust well to new situations and changes for the effective functioning of an organization in near future. It is important to analyze the causes which led to a Risk at the workplace. Mistakes should not be repeated and new plans and processes must be incorporated into the system.

    Simple Risk Management Model Chat:

    Risk Management Model Chat

    Structural Functions Systems Theory:

    According to structural functions systems theory, communication plays a pivotal role in Risk management. The correct flow of information across all hierarchies is essential. Transparency must be maintained at all levels. Management must effectively communicate with employees and provide them the necessary information at the times of Risk. Ignoring people does not help, instead, makes situations worse. Superiors must be in regular touch with subordinates. Leaders must take charge and ask the employees to give their best.

    Diffusion of innovation Theory:

    Diffusion of innovation theory proposed by Everett Rogers supports the sharing of information during emergency situations. As the name suggests during Risk each employee should think out of the box and come out with something innovative to overcome tough times. One should be ready with an alternate plan. Once an employee comes up with an innovative idea, he must not keep things to himself. Spread the idea amongst all employees and departments. Effective communication is essential to pass on ideas and information in its desired form.

    Unequal Human Capital Theory:

    An unequal human capital theory was proposed by James. According to unequal human capital theory, inequality amongst employees leads to Risk at the workplace. Discrimination on the grounds of caste, job profile as well as salary lead to frustrated employees who eventually play with the brand name, spread baseless rumors and earn a bad name for the organization.

  • What is Risk Management?

    What is Risk Management?

    Risk Management: What is Risk? A sudden and unexpected event leading to major unrest amongst the individuals at the workplace is called organization Risk. In other words, Risk is defined as an emergency situation which disturbs the employees as well as leads to instability in the organization. Risk affects an individual, group, organization or society on the whole.

    Know and Understand the Risk Management.

    Definition of Risk management: The identification, analysis, assessment, control, and avoidance, minimization, or elimination of unacceptable risks. An organization may use risk assumption, risk avoidance, risk retention, risk transfer, or any other strategy (or a combination of strategies) in proper management of future events.

    Characteristics of Risk:

    • The risk is a sequence of sudden disturbing events harming the organization.
    • Risk generally arises on short notice.
    • Risk triggers a feeling of fear and threat amongst individuals.

    Risk can arise in an organization due to any of the following reasons:

    • Technological failure and Breakdown of machines lead to Risk. Problems in the internet, corruption in the software, errors in passwords all result in Risk.
    • Risk arises when employees do not agree with each other and fight amongst themselves. Risk arises as a result of the boycott, strikes for indefinite periods, disputes and so on.
    • Violence, thefts, and terrorism at the workplace result in organization Risk.
    • Neglecting minor issues, in the beginning, can lead to major Risk and a situation of uncertainty at the workplace. The management must have complete control of its employees and should not adopt a casual attitude at work.
    • Illegal behaviors such as accepting bribes, frauds, data or information tampering all lead to organization Risk.
    • Risk arises when the organization fails to pay its creditors and declares itself a bankrupt organization.

    The art of dealing with sudden and unexpected events which disturb the employees, an organization as well as external clients refer to Risk Management.

    The process of handling unexpected and sudden changes in organizational culture is called Risk management.

    Need for Risk Management:

    • Risk Management prepares individuals to face unexpected developments and adverse conditions in the organization with courage and determination.
    • Employees adjust well to the sudden changes in the organization.
    • Employees can understand and analyze the causes of Risk and cope with it in the best possible way.
    • Risk Management helps the managers to devise strategies to come out of uncertain conditions and also decide on the future course of action.
    • Risk Management helps the managers to feel the early signs of Risk, warn the employees against the aftermaths and take necessary precautions for the same.

    What is Risk Management
    What is Risk Management? #Pixabay.

    Essential Featured of Risk Management:

    • Risk Management includes activities and processes which help the managers as well as employees to analyze and understand events which might lead to Risk and uncertainty in the organization.
    • Risk Management enables managers and employees to respond effectively to changes in the organizational culture.
    • It consists of effective coordination amongst the departments to overcome emergency situations.
    • Employees at the time of Risk must communicate effectively with each other and try their level best to overcome tough times. Points to keep in mind during Risk
    • Don’t panic or spread rumors around. Be patient.
    • At the time of Risk, the management should be in regular touch with the employees, external clients, stakeholders as well as media.
    • Avoid being too rigid. One should adapt well to changes and new situations.

    Risk management is the identification, assessment, and prioritization of risks (defined in ISO 31000 as the effect of uncertainty on objectives) followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities. Risk management’s objective is to assure uncertainty does not deflect the endeavor from the business goals.

    Risks can come from various sources including uncertainty in financial markets, threats from project failures (at any phase in design, development, production, or sustainment life-cycles), legal liabilities, credit risk, accidents, natural causes and disasters, deliberate attack from an adversary, or events of uncertain or unpredictable root-cause. There are two types of events i.e. negative events can be classified as risks while positive events are classified as opportunities.

    Several risk management standards have been developed including the Project Management Institute, the National Institute of Standards and Technology, actuarial societies, and ISO standards. Methods, definitions, and goals vary widely according to whether the risk management method is in the context of project management, security, engineering, industrial processes, financial portfolios, actuarial assessments, or public health and safety.

  • Types of Business

    Types of Business:

    There are three major types of businesses:

    1. Service Business

    A service type of business provides intangible products (products with no physical form). Service type firms offer professional skills, expertise, advice, and other similar products.

    Examples of service businesses are schools, repair shops, hair salons, banks, accounting firms, and law firms.

    1. Merchandising Business

    This type of business buys products at wholesale price and sells the same at retail price. They are known as “buy and sell” businesses. They make the profit by selling the products at prices higher than their purchase costs.

    A merchandising business sells a product without changing its form. Examples are grocery stores, convenience stores, distributors, and other resellers.

    1. Manufacturing Business

    Unlike a merchandising business, a manufacturing business buys products with the intention of using them as materials in making a new product. Thus, there is a transformation of the products purchased.

    A manufacturing business combines raw materials, labor, and factory overhead in its production process. The manufactured goods will then be sold to customers.

    Hybrid Business

    Hybrid businesses are companies that may be classified in more than one type of business. A restaurant, for example, combines ingredients in making a fine meal (manufacturing), sells a cold bottle of wine (merchandising), and fills customer orders (service).

    Nonetheless, these companies may be classified according to their major business interest. In that case, restaurants are more of the service type – they provide dining services.

    Forms Types of Business Organization:

    These are the basic forms of business ownership:

    1. Sole Proprietorship

    A sole proprietorship is a business owned by only one person. It is easy to set-up and is the least costly among all forms of ownership.

    The owner faces unlimited liability; meaning, the creditors of the business may go after the personal assets of the owner if the business cannot pay them.

    The sole proprietorship form is usually adopted by small business entities.

    1. Partnership

    A partnership is a business owned by two or more persons who contribute resources into the entity. The partners divide the profits of the business among themselves.

    In general partnerships, all partners have unlimited liability. In limited partnerships, creditors cannot go after the personal assets of the limited partners.

    1. Corporation

    A corporation is a business organization that has a separate legal personality from its owners. Ownership in a stock corporation is represented by shares of stock.

    The owners (stockholders) enjoy limited liability but have limited involvement in the company’s operations. The board of directors, an elected group of the stockholders, controls the activities of the corporation.

    In addition to those basic forms of business ownership, these are some other types of organizations that are common today:

    Limited Liability Company:

    Limited liability companies (LLCs) in the USA, are hybrid forms of business that have characteristics of both a corporation and a partnership. An LLC is not incorporated; hence, it is not considered a corporation.

    Nonetheless, the owners enjoy limited liability like in a corporation. An LLC may elect to be taxed as a sole proprietorship, a partnership, or a corporation.

    Cooperative:

    A cooperative is a business organization owned by a group of individuals and is operated for their mutual benefit. The persons making up the group are called members. Cooperatives may be incorporated or unincorporated.

    Some examples of cooperatives are water and electricity (utility) cooperatives, cooperative banking, credit unions, and housing cooperatives; This is simple types of business read and understanding, around world many many types of business run.

  • What is the Concept of Management Notes?

    What is the Concept of Management Notes?

    Concept of Management Notes; To satisfy his/her wants, a person has to perform numerous activities. An individual alone cannot perform all the necessary activities. Therefore, human beings join or cooperate in the form of groups and organizations. Also, Every organization is a group of people seeking to attain some common objectives. A central organ or agency is required to coordinate the activities and efforts of various individuals working together in an organization so that they can work collectively as a team, such an organ is called management. So, the question is – What is Management and Concept of Management?

    What is Management and Concept of Management Notes?

    What is Management: The term “Management” conveys different meanings depending upon the context in which it is useful. Also, Some of the important notes concepts of Management:

    Now, explain; Some information Concept of Management, what they are:

    Management as an Economic Resource:

    Like land, labor, capital, and entrepreneurship, management is a vital factor in production. Also, It is management that coordinates various factors of production.

    Management as a Team:

    As a team or a group of persons, management consists of all those individuals who guide; and, Also, direct the efforts of other individuals to achieve specified objectives.

    Management as an Academic Discipline:

    It has become a very popular subject of study as is evident from the great rush for admissions into institutes; and, Also, universities imparting education and training in management.

    Management as a Process:

    Defining the aims or objectives of the organization, bringing together men, money, materials, machinery and other factors of production.

    Management as a Human Process:

    Effective motivation and democratic managerial leadership are the keys to sound management, management by participation, management by objectives or results; and, Also, management by delegation help get things done through others.

    Related Types of Question:-

    A) What is Management?, B) What is the Concept of Management?, C) What is the Meaning of Management?, and, Also, D) What do you mean about Management?

    Types of Management:

    The following types below are;

    Top-Level Management:

    The top-level managers include boards of directors, presidents, vice-presidents, CEOs, general managers, and senior managers, etc. Also, Upper-level managers are responsible for controlling and overseeing the entire organization.

    Rather than direct the day-to-day activities of the firm, they develop goals, strategic plans, and company policies; as well as make decisions about the direction of the business.

    Middle-Level Management: 

    Most organizations have three management levels: first-level, middle-level, and top-level managers. Also, These managers are classified according to a hierarchy of authority and perform different tasks. In many organizations, the number of managers at each level gives the organization a pyramid structure.

    Middle management is the intermediate leadership level of a hierarchical organization, being subordinate to the senior management but above the lowest levels of operational staff. For example, operational supervisors may be considered middle management; they may also be categorized as non-management staff, depending upon the policy of the particular organization.

    Front-line Management:

    Most organizations have three management levels: first-level, middle-level, and top-level managers. Also, These managers are classified according to a hierarchy of authority and perform different tasks. Front-line managers belong to the first level of management. Front-line managers are managers who are responsible for a work-group to a higher level of management.

    They are normally in the lower layers of the management hierarchy, and the employees who report to them do not themselves have any managerial or supervisory responsibility. Also, Front-line management is the level of management that oversees a company’s primary production activities.

    Front-line managers provide critical value to a company’s success because they must motivate employees who perform essential production duties. They also must generate efficient productivity and control to minimize costs. Front-line managers are most often involved in operations (as opposed to marketing, accounting, finance, etc.).

    Functional vs. General Management: 

    Functional management and general management represent two differing responsibilities sets with an organization. Also, Functional managers are most common in larger organizations with many moving parts; where different business functions are led by managers within those respective fields (i.e. marketing, finance, etc.).

    General management is more common in smaller, more versatile, environments where the general manager can actively engage in every facet of the business.

    Management in Different Types of Business: For-Profit, Non-Profit, and Mutual-Benefit. All Things about Management, Concept of management, and Types of Management.

    What is Management and Concept of Management
    What is Management and Concept of Management Notes? Image credit from #Pixabay.