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ENTREPRENEURIAL RESOURCE MANAGEMENT



Kirjoittanut: Saniat Amin - tiimistä Crevio.

Esseen tyyppi: Yksilöessee / 2 esseepistettä.

KIRJALÄHTEET
KIRJA KIRJAILIJA
Syed Saniat Amin
Esseen arvioitu lukuaika on 8 minuuttia.

The main goal of any new business is to produce value for clients and wealth for entrepreneurs in the current economy, where prospective entrepreneurs need a clever idea, a dynamic web page, and a memorable name to establish a new firm. Considering the vital role that resources play in creating value, an entrepreneur’s resource selections play a major influence in explaining the success of a new enterprise. Resources are crucial for entrepreneurial enterprises not just during the “emergence” (i.e., startup) phase but also as they drive growth, competitive advantage creation, product development, and long-term viability.

Prior research has challenged the resource-based view (RBV) framework for its simplistic and static perspective of resources, even though it has supplied the fundamental rationale to relate resources to new ventures viability. In other words, the RBV fails to explain the relationship between various resources and the methods that new ventures choose. Furthermore, studies on new enterprises that used RBV as the underlying theory examined resources separately, and the data about the efficacy of any resource is unimpressive. Testing which particular resource developments result in profitability and if other resource development tactics are equally successful in creating a competitive advantage utilizing RBV have also proven to be challenging.

Thus, having resources does not ensure the emergence of competitive advantages; rather, we think that resources are fully utilized when they are packed, organized, and leveraged correctly. Put differently, the resource bundles of entrepreneurial endeavors are not an assemblage of discrete attributes but rather intricate combinations, or gestalts. The important distinctions 53 between resources, procedures, and capacities are reflected in this idea. According to Kraaijenbrink, Spender, & Greon (2010) and Ray, Barney, & Muhanna (2004), processes are the associated acts that set the scene for a given purpose, whereas resources are the factors of production that entrepreneurs control. Capabilities are how entrepreneurs manage these processes. Furthermore, as the RBV is silent on variables related to the external environment, more research is required to determine how the external environment of entrepreneurial endeavors affects the resource management process.

 

Success in Entrepreneurial Ventures

People who start actions with the goal of creating a successful new business are known as nascent entrepreneurs (Reynolds, 1994). Though knowledge of many variables supporting or limiting entrepreneurship has grown throughout time, researchers have only lately begun to explore the topic of why some new enterprises succeed while others fail.

Furthermore, while there is a wealth of research on the establishing (i.e., creating and incorporating a business plan), financing (i.e., acquiring initial capital), and formation (i.e., completing organizing activities) activities of successful new ventures, there is relatively little research on the creation of value, which is the main goal of any business entity, as the primary predicate of new ventures’ success.

The study that has already been written about value creation acknowledges that developing a competitive advantage is crucial to success since it fosters the growth and total market value of new ventures. While prior studies have indicated a favorable correlation between the development of skills and the success of new enterprises, there are additional potential expenses associated with capability development that are even more significant for startups (Kreiser, Marino, Kuratko, & Weaver, 2013). Think about high-tech businesses, for instance, where resource expenditures are frequently significant upfront due to technical innovation. Given the resource limitations associated with this stage of the endeavor, such resource allocation may be difficult in the early stages of the venture’s life cycle. Furthermore, in order to stand out from the competition, startups need to acquire a variety of skills (Branzei & Vertinsky, 2006). This implies that new businesses have the best chance of succeeding once they start to produce positive cash flow—that is, after they start making more money than they spent by using their resources wisely. Similarly, in order to take advantage of possibilities, new businesses need to gather the necessary resources, arrange them to form capabilities that will enable them to better understand how client demands will evolve in the future, and use those skills to challenge the status quo in the industry in order to turn a profit.

 

Resource Allocation for Successful Entrepreneurial Ventures

According to Sirmon et al. (2007), resource management is the complete process of organizing, combining, and utilizing a company’s resources to provide value for its clients. The process of developing a competitive advantage differs greatly from typical RBV reasoning for established enterprises due to the distinct type of resources needed for entrepreneurial endeavors (Edelman & Yli-Renko, 2010). First, different entrepreneurs have different perspectives on the availability of resources, as evidenced by the concepts of opportunity discovery and exploitation, which serve as the foundation for the development of new ventures. Furthermore, the atmosphere of the company has a critical influence in the development of various competencies, especially for new endeavors.

Because of this, the emerging company needs a different theoretical framework than what conventional RBV logic suggests.

We define entrepreneurial resource management as the entire process of organizing resources, combining resources into capabilities, and using the resultant capabilities to take advantage of the identified niche. This definition is consistent with the resource management approach. Resource management is a procedure that deals with essential skills for individual enterprises. For a number of reasons, we think that these three competencies are crucial to the success of entrepreneurial endeavors. First and foremost, the goal of entrepreneurial resource management is to make the best use of the 57 resources available to the new venture in order to accomplish a particular goal, such as obtaining the necessary initial legitimacy, proving viability in the market, interacting with stakeholders, and growing the venture’s operations to attain growth. Secondly, the outcomes of resource management-related empirical testing are promising (Sirmon, Hitt, Ireland, Gilbert, 2008). As an illustration, prior research not only recognizes the major impacts of linkages across resource management procedures, but also validates the significance of resource bundling in a firm’s success.

Thus, by gaining a competitive edge, entrepreneurs greatly moderate the resource-performance relationship, just like managers play a crucial role.

Resource Allocation & Successful Entrepreneurial Ventures. An innovative concept is the foundation of every entrepreneur’s journey. Usually, this concept is a supposition of a better way to do things or a significant new product or service market potential.

A portfolio of resources is necessary for each entrepreneur to take advantage of opportunities and add value. The total of all firm-controlled resources is known as the resource portfolio.

Resources may be broadly divided into two categories for ease of understanding: tangible and immaterial resources. Simple, property-based resources are those that are tangible. These resources can be used straight to the process of production or used to create new resources. According to Amit and Shoemaker (1993), intangible resources are knowledge-based, methodical, and complicated. These resources, as the more sophisticated components of production, are harder to modify, combine, or use to your benefit.

The entrepreneur must choose which resources to generate or purchase, as well as their sequence, time, and kind, in order to create their resource portfolio. The success of the new business is closely linked to each of these procedures. The latter is crucial because, even while entrepreneurs may utilize their own finances to launch their new business, they frequently lack the resources—money, materials, or knowledge—needed to take full advantage of the opportunity. In other words, early financial resources are typically insufficient for new companies. One method used by businesses to build their resource portfolio is the structuring of the resources bundle. Entrepreneurs not only put together their resource bundle throughout the structuring phase, but they also decide which resources are more or less important. The entrepreneur’s aspirations for the company’s future are reflected in these choices. Entrepreneurs typically weigh the pros and cons of several resources before making a decision. This trade-off has a favorable impact on gaining a competitive edge and achieving more success provided it is founded on reasonable expectations. In summary, in order to create a sustainable business, founders need to test several experimental resource structuring strategies that provide their company a competitive edge. Entrepreneurs need to either acquire or collect resources in order to structure the core resource bundle. While accumulating refers to the internal growth of resources, acquiring refers to the purchase of resources from factor markets . For example, new businesses need to hire people with technical skills, obtain outside funding, and maybe assemble a management team. In terms of the new venture’s success, internal accumulation of the proprietary resources—often referred to as the hidden vital ingredient—can lead to the venture’s success. Furthermore, the market’s availability, pricing, and the pace at which the items are launched all influence the decision to purchase resources. As a result, occasionally entering the market first justifies the acquisition expenses and grants one the advantage of being the first mover. This is crucial since developing the new resources internally runs the risk of taking staff members away from other crucial duties. The success of a new business is also influenced by how the initial resource bundle is structured, since this portfolio serves as the basis for successive resource bundles that create the venture’s core competencies. In general, resource structuring elements play a key role in giving a new business a competitive edge and, ultimately, success.

 

Combining Resources & Successful Entrepreneurial Ventures. Every venture starts with a portfolio of resources, and while resource availability is unrelated to the decision of how to combine various resources, it does have a direct impact on the venture’s future performance.

Transferring and combining resources is necessary to turn basic resources into distinctive resources. This process is essential for entrepreneurial businesses since it will limit the ability of new initiatives to create value if they can’t go from depending just on basic resources to organizational capabilities. Entrepreneurial resource bundling, the second aspect of resource management, so focuses on how resources are merged and reorganized within a new company to generate capabilities. As Sirmon et al. (2008) point out, bundling really refers to a process that creates capabilities. They view the possibility of combining or transforming resources to produce value differently, which is similar to the many routes chosen by entrepreneurs to organize the resource bundle. Similar to this, integrated resources must be merged and institutionalized in order for the company to successfully create a competitive advantage and enable it to execute certain activities.

According to Brush, Greene, and Hart (2001), new companies usually feature pockets of excellence that provide the foundation for long-term value generation and growth. That is to say, each venture specializes in some areas (e.g., technical competence, efficiency methods). Entrepreneurs have the option to prolong or preserve these initial endowments. Resource enrichment, resource pioneering, and resource stabilization are all included in resource bundling. It has been demonstrated that resource bundling has a major impact on firm-level outcomes in terms of innovation and the realization of competitive advantage.

Resource stabilization is the process of gradually enhancing and modifying an already-existing collection of resources. These modifications strengthen the already-existing core parts rather than adding any new ones to the available resources. Stabilizing is a tactic used by entrepreneurial businesses with an established competitive strategy to hold onto their advantage over time. For example, a new venture’s founder could require staff members to attend training sessions to maintain the ir skills current and relevant. Sustaining a distinct edge over rivals is essential for ongoing existence and expansion.

By expanding and improving on current capabilities through the acquisition of new skills or adoption of complementary resources, resource enrichment goes beyond resource upkeep. Resource enrichment produces a more extensive alteration of the resource than does resource stabilization. By adapting and translating the new enterprises’ capabilities to new market expectations and business models, resource enrichment helps new ventures succeed. For example, a non-profit organization’s founder may utilize their marketing expertise to create web-based advertisements for public museums, exposing potential customers to a wider range of products for purchase. Entrepreneurs can also increase the capabilities of their new business by picking up new talents or bringing in new complementing resources.

 

Leveraging Resources and Successful Entrepreneurial Ventures.

Every market is made up of several sectors and specializations. Because of the ensuing variety and complexity, entrepreneurial endeavors have several chances to take use of their unique strengths. The third and last element of efficient resource management is entrepreneurial resource leveraging, which includes procedures for utilizing new enterprise capabilities to both enhance customer service and generate income for individuals. Through efficient use of the firm’s resources, new initiatives acquire the necessary learning capacities to support their deployment in various market situations.

Unless the entrepreneur determines where (i.e., which markets) and how (i.e., which products) to leverage the capabilities to adequately satisfy the needs of the greatest number of customers and develop the greatest amount of value, even the most critical and integrated configurations are worthless. Accordingly, the success of entrepreneurial enterprises is closely linked to entrepreneurial resource leveraging, which refers to matching the skills of new ventures to the demands of consumers.

Sirmon and colleagues (2007) distinguish three primary leveraging tactics, notwithstanding the fact that most leveraging strategies are unique. Initially, the term “resource advantage strategy” refers to the use of capacity configurations that generate a distinct and unique competence to offer consumers value that surpasses that of rivals. These business endeavors utilize the same promising capacity for a variety of items. What matters most in this situation is that the leveraged skill results in a unique expertise. This idea is comparable to the idea of utilizing skills from many sectors through related or unrelated diversification.

Uber, for instance, leveraged its capacity configurations in marketing and operational efficiency when it launched Uber Eat, its foray into the food delivery business. When this feature is used, new products that cater to distinct client wants are introduced into the same market. As a result, the novelty of the product adds value for consumers and helps emerging businesses develop their competitive strategies.

 

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