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The Influence of the External Environment on Enterprising Behaviour
1. Introduction
This essay mainly analyses and discusses the influence of the external environment on enterprising behaviour and activities. Entrepreneurship has become the driving force for the rapid economic development in the modern society and has attracted more and more people, but not all of the entrepreneurs are successful. Because the external environment is always changing and it has a great impact on enterpreneurial activities. In this essay, the author will critically discuss the role of the political environment, the economic environment, the scientific and technical environment and the talent environment in relation to entrepreneurship, and illustrate their influence on the firm establishment or growth. Taking the United States as an example, the essay will analyze how the political environment influences the enterprising behaviour in the history of America. Then in the case of the economic environment, the author will discuss the entrepreneurial activities in China using Timmons's theory, which includes three basic elements: entrepreneurial opportunity, entrepreneurial resource, and entrepreneurs. After that, it comes to discuss the importance of the science and technical environment and the current applications of the new technologies in entrepreneurial activities. And finally, the article turns to the analysis of the talent environment and explains the significance of the high-quality entrepreneurial teams in the establishment and development of the new corporations.
2. Descriptions of the External Environment for Entrepreneurship
Nowadays, as more and more people join in the ranks of the entrepreneurs, entrepreneurship has become the driving force of the rapid development of the economy all around the world. The entrepreneurial activities can fully promote the innovation (Davidsson & Wiklund 2001) which then enables the economic growth built on the basis of multilevel innovations, thus can effectively promote the social transformation, and create an equal and positive competitive spirit. It is said that the social meaning of the entrepreneurial activity is as significant as an industrial revolution (Drucker 2009). However, on the other hand, entrepreneurship is a complex social phenomenon. That is, the entrepreneurial activity is related to numerous different cross-disciplinary fields, such as psychology, sociology, management, and economics and so on. From the initial identification of the opportunity to the successful management of the firm growth, it involves a variety of the complex skills and expertise to deal with the external environment in entrepreneurial process, since the environment is the soil for the survival of the enterprise and is always in change.
Entrepreneurship cannot be successful only with the support of passion and dreams, it also need a clear analysis and assessment of the changing external environment. The environment research or assessment is one of the key issues for entrepreneurial activities. In general, the entrepreneurial environment (Rose 2000) includes the macro-environment and the industry environment. In detail, the former refers to the political environment, the economic environment, technical environment etc. while the later is mainly about the entry barriers and the like. The environmental analysis is a prerequisite to discover new entrepreneurial opportunity and is also the basis for the feasibility analysis of the entrepreneurship. Since the external environment for entrepreneurship is always changing, it can provide either an opportunity or a threat for entrepreneurs. Thereby, all of the entrepreneurs have to understand the impacts of the various environmental factors and their trends just in order to avoid the serious threat and win success in entrepreneurial activities.
3. The Influence of the Different Entrepreneurial Environment on the Enterprising Behaviour
As is mentioned above, the different external environment plays an important role in the entrepreneurial process. So in the following sections, the essay will discuss the environmental influence on the enterprising behaviour from the perspective of politics, economics, science and technology as well as talents.
3.1. Political Environment
The political environment affecting entrepreneurship includes the political system, political parties and party system, and national policy and political situation of the country. In addition, the laws and regulations established by the state are also of equal importance. The policies, regulations and the direct management of the enterprise by the government can influence the enterprise greatly and directly (Evans & Jovanovi 1989). When the policies or laws and regulations changes, there may be new industries, new markets and new business opportunities. If the entrepreneurs can discover and take full advantage of new opportunities, then they will be able to make a successful business more easily. However, if they do not have a full understanding of the dynamic and uncertain changes of the political environment, then it will retard the enterprising behaviour without doubt. Usually, the government establishes a series of policies or laws, such as tax preference, loan guarantees, venture capital, and the related intellectual property protection system, etc. All of these factors have optimized the external environment in the macroscopic level and will have a certain degree of influence on the enterprising behavior.
For example, in America, with the help of the public finance budget plan, the government provides free funding for the establishment and development of the SEMs (small and medium-sized enterprises) without getting any shares. In 1958, the United States issued the 'Small Business Investment Act'. The Act authorized the federal government to establish the small business administration. Thus, the small and medium-sized entrepreneurial enterprises could get a favorable credit support from the federal government as the start-up capitals. Yet, the precondition is that they should have been reviewed and permitted by the small business administration. This policy had solved the shortage of capital for the entrepreneurs and encouraged them to bravely start the first step of their careers. And all of these measures had directly contributed to the emergence of the first entrepreneurship upsurge in the United States (Baumol 1990). Then throughout the 1970s, faced with the fact that the entrepreneurial activities were at a standstill, the American government decided to reduce the highest capital gains tax from 49.5% to 28% in 1978, and further lowered it to 20% in 1981. Meanwhile, the government had also implemented another new policy, which allowed a certain percentage of the pension funds into the venture capital market (Butler 1991). The two policies of the government had greatly promoted enterprising behaviour, and as a result, formed the second entrepreneurship climax for the United States in the 1980s. After that, the American government further improved its support of the small entrepreneurial companies, and purchased a large number of high-tech products from those companies, which had greatly stimulated the transformation from the technological innovation to high-tech products, and also increased the confidence of the private entrepreneurial companies and their initiatives.
