Difference Between Entrepreneurship and Management

Entrepreneurship vs Management
 

Though entrepreneurship and management are closely related terms in business, there is a considerable difference between both processes. Management encompasses the large spectrum of organizational studies. Putting it simple, management explains each aspect of organizations and it discusses organization and coordination of activities in order to achieve a desired set of objectives. The scholar Harold Koontz, once highlighted management as an art that talks about how to get things done from people. He emphasized the importance of formal groups in this process. Therefore, management discusses overall organizational function in order to achieve desired objectives. Provided that, the interconnection between management and entrepreneurship is set as entrepreneurship proceeds to management. Because in entrepreneurship, entrepreneurial opportunity recognition is highlighted as predecessors of business formation. But, in general, entrepreneurship highlights business creation and thus management is required to achieve objectives of an entrepreneurial venture.

What is Entrepreneurship?

In fact, entrepreneurship as a discipline does not have an accepted definition. Some scholars accept business formation as entrepreneurship (see, Low & MacMillan 1988). But Shane & Venkataraman (2000) highlighted the entrepreneurial opportunity recognition dimension as the heart of entrepreneurship and this definition is accepted by almost every researcher. This opportunity recognition dimension is formed either in two ways. Barringer & Ireland (2008) wrote that entrepreneurial opportunities are either internally stimulated or externally stimulated. As the terms imply, internal stimulation refers to and entrepreneurial opportunity that is identified by the entrepreneur by him/herself. Whereas, external stimulation refers to opportunity recognition based on the external environment.

Also, entrepreneurship is known as a process. First, the entrepreneurial opportunity dimension comes. After that, the feasibility of the opportunity is required to be assessed. The feasibility means the worthiness of the proposed business. If the opportunity is not feasible, the entrepreneur has to rethink the idea or he should drop it. Once the opportunity is identified as feasible, the entrepreneur proceeds to draft the business plan. The business plan refers to the draft that talks about how the identified opportunity is implemented in practice. Once the business plan is constructed, the entrepreneur proceeds to run the business. Running this business is also a part of entrepreneurship.

Identifying the importance of entrepreneurial opportunity recognition, Dissanayake & Semasinghe (2015) highlighted the model of levels of entrepreneurial opportunities. They proposed that, every entrepreneur (regardless of the scale of the business) identify some level (degree) of opportunities for business formation. But when ensuring the success and survival of the business, identified entrepreneurial opportunity’s newness is important. However, contemporary entrepreneurship includes, social entrepreneurship, venture growth, entrepreneurial cognition, international entrepreneurship, etc.

Difference Between Entrepreneurship and Management

What is Management?

All organizations operate under scarce resources. And each organization has different objectives to achieve. In this regard, however, all organizations operate under scarce resources and thus effective allocations of resources, coordination, planning, etc. are important to achieve those objectives. So, in this regard, management comes into play. As mentioned above, management refers to ways and means of getting things done from the people in the organization in order to achieve objectives. This entire process has theorized into four management functions today. They are namely, planning, leading (directing), organizing and controlling.

Planning refers to determining what the company’s current position is, what the company’s projected state is, and how the company achieves the projected state. All those activities involve with the planning function. Leading refers to the leadership role. Managers and owners perform leadership roles, and one’s ability to influence others is a key attribute of good leadership. Organizing refers to the structuring of the company. How to allocate departments, authority distribution, etc. are determined by this function. Finally, the controlling function states the assessment of whether the plans have been achieved or not. If plans have not been met, the manager has to see what has gone wrong and implement corrective actions. These are all involved in controlling. Under contemporary management practices, delegation of authority, flexible organizations, team management are acknowledged.

Entrepreneurship vs Management

What is the difference between Entrepreneurship and Management?

• Definitions of Entrepreneurship and Management:

• Entrepreneurship, to some, is the creation of enterprises. But the accepted definition of entrepreneurship highlights the opportunity recognition as the heart of entrepreneurship.

• Management refers to the overall organizational activity that defines the coordination activity and effective utilization of scarce resources to achieve final objectives.

• Processes:

• The entrepreneurial process includes the steps such as entrepreneurial opportunity recognition, feasibility analysis, business planning, and running the business.

• The management process includes the steps of planning, leading, organizing, and controlling.

• Contemporary Aspects:

• Contemporary entrepreneurship includes, social entrepreneurship, venture growth, entrepreneurial cognition, international entrepreneurship, etc.

• Contemporary management practices includes, delegation of authority, flexible organizations, and team management.

• The Extent of Disciplines:

• Management is a wide spectrum of organizational studies. It includes all.

• Entrepreneurship is one part of management.

 

References:

  1. Barringer , B., & Ireland , D. (2008). Entrepreneurship: Successfully Launching New Ventures (Global edition of 4th revised ed.). Pearson Education.
  2. Dissanayake, D., & Semasinghe, D. (2015). Is Culture a Restraining Force or a Driving Force for Entrepreneuship in Sri Lanka. African Journal of History and Culture, 7(1), 8-15
  3. Low, M.B. & MacMillan, I.C., 1988. Entrepreneurship: past research and future challenges. Journal of Management, 35, pp.139–161.
  4. Shane, S. & Venkataraman, S., 2000. The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), pp.217–226.

 

Images Courtesy:

  1. Entrepreneurship by Michael Lewkowitz (CC BY-SA 2.0)
  2. Management process via Wikicommons (Public Domain)