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Discuss whether readiness and restraint factors are likely to be more relevant in influencing the start-up decision of a potential small business owner more than the other characteristics Peacock (2004) is discussing.
Peacock suggests that entrepreneurial characteristics formulate a high need for achievement and the inner locus of control to try something uncertain (Peacock 2004, p. 43). Liles theorizes that entrepreneurs start out like many other ambitious individuals, however become people apart due to the external factors of readiness and restraint. (Peacock 2004, p. 46). Burns concludes that few people start up their own business due to the lack of capital and self-doubt, therefore a trigger such as unemployment or the desire to make money is needed (Burns 2002, p. 93). Therefore, readiness and restraint factors must be complimented with the cognitive characteristics identified by Peacock to define entrepreneurship.
A person’s readiness requires a ...view middle of the document...
Restraint factors such as financial obligations increase for men over a life cycle, and the expenses of a mortgage, and raising a family provide financial reasons for maintaining status quo in current employment (Peacock 2004, p. 44). Burns argues that influences on the initial start up decision can be antecedence such as family, economic conditions, and resources (Burns 2002, p. 94). Establishing a new a firm requires working long hours and a high tolerance to risk (Burns 2002, p. 94). Family commitments and life cycle reduces freedom and flexibility, and creates a barrier to the initial start up decision.
The entrepreneurial personality described by Peacock exhibits an inner locus of control, and an internal need for achievement. Many individuals with this trait fail to start a business, and Burns suggests that a ‘trigger’ or a precipitating event is needed, drawing upon the self-confidence derived from experience and exposure to specific skills to ‘take the leap’. Liles argues that if an individual has a degree of ambition and ability, experience and situations become the determinants of whether or not they become an entrepreneur (Liles 1974, cited in Peacock 2004, p. 46). Therefore it can be said that readiness and restraint factors must be incorporated with Peacocks characteristics to achieve entrepreneurial behavior. This is supported by Druckers’ concept of entrepreneurship as a behavior rather than the result of personalities, and validates that these factors are more relevant in influencing the start-up decision of a potential business owner (Drucker 1986, cited in Peacock 2004, p. 42).
Burns, P 2002, Entrepreneurship and Small Business, Palgrave Macmillan, Great Britain
De Clercq, D, & Arenius, P 2006, ‘The role of knowledge in business start-up activity’, International Small Business Journal, Vol. 24, no. 4, pp. 339-358
Gatewood, E, Shaver, K, Gartner, W 1995, ‘A longitudinal study of cognitive factors influencing start-up behaviors and success at venture creation’, Journal of Business Venturing, vol. 10, no. 5, pp. 371-391
Peacock, R 2004, Understanding small Buisness: practice, theory and research, Scarman, Adelaide