Module 9 PDF: Entrepreneurs and Opportunities

Module 9 📚 READINGS Chapter 9: Entrepreneurs and opportunities Define business and the private enterprise systems Business: all-profit seeking activities and enterprises that provide goods and services necessary to an econo...

Module 9 📚 READINGS Chapter 9: Entrepreneurs and opportunities Define business and the private enterprise systems Business: all-profit seeking activities and enterprises that provide goods and services necessary to an economic system Some businesses produce tangible goods, others provide services Drives the economic pulse of a nation Provides the means through which its citizens’ standard of living improves Heart of every business endeavour is an exchange between a buyer and a seller Buyer recognises a need for a good or service and trades money with a seller to obtain that product Seller participates in the process in hopes of gaining profits → main ingredient in accomplishing the goals necessary for continuous improvement in the standard of living Profits: rewards earned by businesspeople who take the risks involved in blending people, technology and information to create and market want- satisfying goods and services Accountants think of profits as the difference between a firm’s revenues and the expenses it incurs in generating those revenues Serve as incentives for people to start companies, expand them and provide consistently high-quality competitive goods and services Quest for profits is a central focus of business because without profits, a company could not survive Module 9 1  Businesspeople recognise their social and ethical responsibilities To succeed, companies must deal with responsibility with employees, customers, suppliers, competitors, government and general public Not-for-profit Organisations: businesslike establishments that have primary objectives other than returning profits to their owners Play important roles in society by placing public service above profits Important to understand that these organisations need to raise money so that they can operate and achieve their social goals Operate in private and public sectors Private: museums, libraries, trade associations, charitable and religious organisations Public: government agenices, political parties, workers’ union Are a substantial part of the economy Secure funding from private soruces, including donations and from govern ment sources Commonly exempt from federal, state and local taxes Although they focus on goals other than generating profits, managers face many of the same challenges as executives of profit-seeking businesses Without funding, they cannot do research, obtain raw materials or provide services Other not-for-profits mobilise their resources to respond to emergencies Example: Red Cross Funds from donations go towards staff and volunteer training, support for communities to prepare for disasters and to help disaster-affected communities recover from emergencies Module 9 2  Some not-for-profits sell merchandise or set up profit-generating arms to provide goods and services for which people are willing and able to pay Private Enterprise System: economic system that rewards firms for their ability to identify and serve the needs and demands of customers Minimises government interference in economic activity Businesses that are adept at satisfying customers gain access to necessary factors of production and earn profits Capitalism: an economic system that rewards firms for their ability to perceive and serve the needs and demands of consumers Invisible hand concept is a basic premise of the private enterprise system Competition among firms would lead to consumers’ receiving the best possible products and prices because less efficient producers would gradually be driven from the marketplace To compete successfully, each firm must find a basis for competitive differentiation Competitive Differentiation: unique combination of organisational abilities, products and approaches that sets a company apart from competitiors in the minds of customers Businesses face critical task of keeping up with changing marketplace conditions Firms that fail to adjust to shifts in consumer preferences or ignore the actions of competitors leave themselves open to failure For capitalism to operate effectively, people living in a private enterprise economy must have certain rights Private Property: most basic freedom under the private enterprise system Right to own, use, buy, sell, and bequeath land, buildings, machinery, equipment, patents, individual possessions and Module 9 3  various intangible kinds of property Right to all profits, after taxes, they earn through their activities Although a business is not assured of earning a profit, its owner is legally and ethnically entitled to any income it generates in excess of costs Freedom of choice means that a private enterprise system relies on the potential for citizens to choose their own employment, purchases and investments Can change jobs, negotiate wages, join workers’ unions and choose among many different brands of goods and services Private enterprise economy maximises individual prosperity by providing alternatives Other economic systems sometimes limit freedom of choice to accomplish government goals (e.g. increasing industrial production of certain items, military strength) Permits fair competition by allowing the public to set rules for competitive activity US has passed laws to prohibit ‘cutthroat’ competition → excessively aggressive competitive practices designed to eliminate competition Has established ground rules that outlaw price discrimination, fraud in financial markets and deceptive advertising and packaging Entrepreneurial spirit beats heart of private enterprise Entrepreneur: person who seeks a profitable opportunity and takes the necessary risks to set up and operate a business Is a risk taker in the private enterprise system Individuals who recognise marketplace opportunities are free to use their capital, time and talents to pursue those opportunities for profit Module 9 4  Willingness of individuals to start new ventures drives economic growth and keeps pressure on existing companies to continue to satisfy customers If no one were willing to take economic risks, the private enterprise system wouldn’t exist Define the various types of entrepreneurs People and organisations must change often and at a rapidly accelerating pace Success in highly competitive business environment depends on entrepreneurship Entrepreneurship: process of creating new enterprises, opportunities and business ventures Used to describe dynamic, creative, risk-taking behaviour that results in the creation of new opportunities for individuals and/or organisations Entrepreneurs create a new enterprise, opportunity or business venture In the business context, an entrepreneur starts new ventures that bring to life new products or services Have been responsible for many innovative and useful products and services in the modern marketplace Many believe entrepreneurs to be high risk takers but in every successful venture these risk are calculated risks Many different terms being used to describe particupar types of entrepreneurs Technopreneurs: involved in high-technology industries Social Entrepreneurs: driven by community needs rather than profit Intrapreneurs: innovate for change from within large organisations Value of entrepreneurs is evident by inclusion government think tanks and awards Module 9 5  Entrepreneurs often participate in programs encouraging other budding entrepreneurs → share success stories and advice on business plans and networking opporunities, and possible identify new markets Researchers are interested in the charcteristics of entrepreneurs Want to know whether and how entrepreneurs are different → what it takes to achieve entrepreneurial success List the roles and characteristics of entrepreneurs 1. Risk Bearer Risk exists when uncertain outcomes can be predicted with some degree of probability An entrepreneur is prepared to accept the remaining risk that cannot be transferred through insurance Entrepreneur’s new venture is in some aspects unique and relative frequences of past events are not sufficient to estimate probabilites of future returns of the venture Uncertainty which cannot be eliminated or insured against, is therefore the source of profit: Profit arises out of the inherent, absolute unpredictability of things, out of the sheer brute fact that the results of human activity cannot be anticipated and then only in o so far as even a probability calculation in regard to them is impossible and meaningless People must rely on their own judgement when facing uncertainty → no outside information to refer to Good judgement that entrepreneurs earn a profit 2. Arbitrageur For other economists, entrepreneur is the key figure in the market economy In a continually changing environment, entrepreneurs move the economy towards equilibrium through speculation and arbitrage Module 9 6  Arbitrage: the action of taking advantage of a discrepancy in value that exists in the marketplace Those who ferret out such discrepancies in value and realise profits by acting on them are arbitrageurs Main function of the entrepreneur is one of price discovyer Motivation for price discovery is the prospect of a temporary monopoly gain if the entrepreneur can benefit from being the first to exploit the price differences Price is the reward for recognising a market opportunity and providing the intermediary function Freedom of entry ensures that the entrepreneur receives only a normal profit once the costs of discovery are allowed for 3. Innovator Carries out new combianations: Introducing a new product or technology Discovering a new export market Developing new business organisations Agent of change is the entrepreneur who undertakes a new venture by implementing an innovative idea 4. Coordinator of Scarce Resources Shifts economic resources out of an area of lower producitivity and into area of higher productivity and great yields May not have all the resources necessary to launch a business venture Convincing resource holders to commit some resource to the new venture and coordinating these scarce resources To achieve this, the entrepreneur must have judgement, perserverance and knowledge of the world of business Characteristics Module 9 7  1. The need for achievement Need for Achievement: a person’s desire either for excellence or to succeed in competitive situations Successful entrepreneurs are highly motivated in what they do Are typically self-starters, internally driven to compete against their own self-imposed standards High achievers take responsibility for attaining their goals, set moderately difficult goals and desire immediate feedback on how well they have performed 2. Internal locus of control Locus of Control: extent to which individuals believe that they can control events that affect them People with a high internal locus of control believe that events result mainly from their own behaviour and actions Believe that powerful others, fate or chance mainly determine events Effective entrepreneurs believe in themselves and have a perception that they can control the events in their lives and can therefore guide their own destiny Attribute is consistent with a high-achievement motivational drive and a need for autonomy What seems to underlie internal locus of controls is concept of ‘self as agent’ Individuals’ thought control their actions → when they realise this executive function of thinking → can positively affect their beliefs, motivation and to a certain extent their performance Degree to which they choose to be self-determining is a function of their realisation of the source of agency and personal control 3. Risk-taking propensity Module 9 8  Although entrepreneurs are not gamblers, they are characteristed by a propensity to take calculated risks Is strongly influenced by cognitive heuristics Entrepreneurs may not think of themselves as being any more likely to take risks than non-entrepreneurs Are predisposed to categorise business situations more positively May view some situations as opportunities, even though others perceive those same situations as having little potential Explain how entrepreneurial opportunities are formed 1. The Discovery Perspective Classic view in entrepreneurship argues that opportunities exist because of inefficiencies in the allocation of resources or competitive imperfections in a market or industry By combining resources in a novel way, entrepreneurs can form new means-end relationships → introducing a previously unseen or unknown good, service or production process in the marketplace Creating potential for economic profit View holds that the inefficiencies that generate entrepreneurial opportunities are primarily caused by external changes to an industry or market From the perspective of those trying to take advantage of them, entrepreneurial opportunities appear as real and objective phenomena Successsful entrepreneur is the once who correctly perceives or discovers these opportunities Discovery perspective typically follows a causal approach to entrepreneurship Once an opportunity has been discovered, the potential entrepreneur assesses the commercial potential of the idea, leading Module 9 9  to the establishment of goals and a plan to exploit the identified opportunity Entrepreneur decides whether or not to start a venture → depending on the magnitude of the opportunity, the potential entrepreneur’s individual characteristics, opportunity costs and prior entrepreneurial experience Investments and actions typically follow the business launch A set of strategic chocies is then made with regard to the business model, patnerships, pricing and product line After product launch, consumer demand either takes places or doesn’t providing the entrepreneurs with feedback on their idea and enabling adjustments 2. The Creation Perspective Is counterpoint to discovery theory for providing an explanation of the actions entrepreneurs take to generate and exploit opportunities Rejects the idea that opportunities are objective phenomena formed by market or industry changes Are created by the actions, reactions and enactment of entrepreneurs whoc proactively delve into innovative ways of producing new products and services Entrepreneurs do not wait for changes in the market to generate their opportunities Act first and then examine how consumers respond to their actions Module 9 10  Opportunities do not exist independtly of the actions taken by entrepreneuers to create them Suggests that entrepreneuership is essentially an effectuation process Begins with a given set of means and allows goals to emerge contingently over time from the varied actions and aspirations of entrepreneurs and the people with whom they interact Entrepreneurs make important decisions by focusing on the resources under their control - asking ‘Who am I?’, ‘What do I know?’, ‘Whom do I know to uncover opportunities?’ Actions consist of thigns they can do and believe are worth doing First thing they do is interact with each other Some of the interactions result in commitments to the new business venture Each stakeholder who comes on board brigns to the venture both new means and new goals Each new commitment sets in motion two concurrent cycles, one expanding and the other converging At each step of the process, entrepreneurs use the following principles to guide their actions: Module 9 11  Bird-in-hand principle: means-driven action Emphasis is on creating something new with existing means rather than discovering new ways to achieve given goals Affordable-loss principle: prescribes committing in advance to what one is willing to lose rather than investing in calculations about expected returns to the project Crazy-quilt principle: involves negotiating with any and all stakeholders who are willing to make actual committements ot htep roject, without worrying abotut opporutnity costs or carrying out elaborate competitive analyses Who comes on board determines the goals of the enterprise Lemonade principle: acknowledging and appropriating contingency by leveraging suprises rather than trying to avoid them, overcome them, or adapt them Pilot-in-the-plane principle: urges relying on and working with human agency as the prime drive of opportunity rather than limiting entrepreneurial efforts to exploiting changes in the market such as technological and socioeconomic trends Key differences between discovery and creation theory Both theories assume that the goal of entrepreneurs is to form and exploit opportunities Also recognise that opportunities exist when competitive imperfections are present in a market or industry Assumption Focus Discovery Theory Creation Theory Opportunites exist, Opportunities do not exist independent of until entrepreneurs Opportunities entrepreneurial actions, engage in an iterative just waiting to be process of action and discovered and exploited reaction to create them Entrepreneurs Discovery of new means- Creation of new means- ends relationship ends relationships - Entrepreneurs are Entrepreneurs may or may Module 9 12  actively looking for not be different than non- opportunities and they are entrepreneurs and may be particularly adept at changed by the recognising opportunities opportunity formation (alertness) process Opportunities may be The possession of unrelated to currently information that is available information Information Conditions appropriate to a particular Extensive new knowledge opportunity leads to may have to be created opportunity discovery from scratch Effectuation: sets of Causation: outcome is means are given goven The entrepreneur selects The entrepreneur selects between possible effects between means to that can be created with achieve that outcome by those means by starting Entrepreneurial Process starting with ends, with means, analysing analysing expected affordable loss, returns, doing competitive establishing and analysis and controlling leveraging strategic the future relationships and leveraging contingencies Discovery theory - competitive imperfections are assumed to arrise from changes in technology, consumer preferences or some other attributes of the context within which an industry or market exists Technological changes, political and regulatory changes and social and demographic changes are examples of events that can disrupt the the competitive equilibrium in a market Is predominantly about search → systematically scanning the environment to discover gaps or imperfections in the market Task of entrepreneur is to become ‘alert’ to the existence of these opportunities and to ‘claim’ those that hold the greatest economic potential Creation theory - entrepreneurial behaviour is not merely a matter of being more alert to static opportunities but of dynamically creating Module 9 13  opportunities and new ventures through actions based on subjective interpretations Entrepreneurs do not recognise opportunities first and then act Act, wait for a response from their actions and thyn readjust and act again Entrepreneurs construct ventures over time, partially through their ability to influence the social and economic system Entrepreneurs and non-entrepreneurs play very different roles in creation theory Creation theory suggests that before entrepreneurs create opportunities, they may or may not be significanlty different than those who do not create opportunities Discovery theory acknowledges that even very small differences between individuals could lead some to form opportunities while others would ignore the same opportunities Even if two individuals are identical in terms of their traits, small variations in their local environment may direct one of them to form and exploit an opportunity From the creation theory perspective, future opportunities may be unrelated to currently available information Theory posits their current industry information may hinder the entrepreneur Extensive new knowledge and information may have to be created from scratch Information required is often obtained as part of the opportunity formation process and only becomes available after actions and decisions of entrepreneurs are executed Decision to exploit entrepreneurial opportunities Entrepreneurs tend to exploit opportuntiies that have a high expected value Module 9 14  Such opportuntiies are likely to generate a profit large enough to compensate for the opporutnity cost of other altneratives, the time and money invested in the development of the project and the risk associated with the project Exploitation is more common when expected damage is large, industry margins are high, the technology life cycle is young and level of compertition in industry is low Individual differences matter too Individuals have different opportuntiy costs Opportunity Cost: the cost of passing up one investment in favour of another Example: a public servant decides to launch a business venture Opportunity cost of the entrepreneuiral profti is the alternative incoem that he/she might receive by remiaining a government employee Since people have different incomes and wages, they are likely to make different decisiosn about whether or not to exploit any given opporutnity Decision to exploit entrepreneurial opportunities is infleunced by individual diferences in risk perception, optimism, tolerance for ambiguity and need for achievement Would be entrepeneurs can use different techniques to decide whether or not they should pursue an opportunity: 1. Risk-return analysis Classic risk-return analysis is often stipulated as the best way to make this decision Decision criteria used in such analyses normally encoruages prospective entrepreneurs to calculate the net present value (NPV) of future riskadjusted returns while taking into account their opportunity costs in relation to the job market value Module 9 15  2. Real Options: an alternative or choice that becomes available with a business investment opportunity Enables decisions makers to more accurately value investment opportunities in instances where investments can be incurred in stages Concerns classes of investments in real assets that are similar to financial options in structure Key issue is not avoiding failure but instead managing the cost of failure by limiting exposure to the downside while preserving access to attractive opportunities and maximising gains 3. Affordable Loss: the estimation by decision makers of what they might be able to put at risk; what they are willing to lose in order to follow a course of action Encrouages individuals to pursue an opportunity based on a loss that is known to be affordable → one that they are willing to bear Estimate of affordable loss does not depend on the opportunity → varies from entrepreneur to entrepreneur and even across an entrepreneur’s life stage and circumstances By allowing estimates of affordable loss to drive their decisions regarding which opportuniteis to pursue, individuals reduce their dependence on predictions In order to calculate expected returns: We have to estimate future sales and possibel risks that constitute our cost of capital, and the nraise neough money to launc the business venture To calcualte affordable loss, we need to know is current financial condition and a psychological estimate of our commitment in terms of the worst-case scenario Define the risks of a career in entrepreneurship and identify relevant performance measures for an entrepreneur Module 9 16  1. Financial Risks Entrepreneurs usually invest large amounts of their own money to launch a new business venture Have to commit part or all of their own savings to the venture and offer some collateral to raise finance After start-up, most of the profits are usually reinvested in the business to expand the activities Risk losing all or part of the money invested in their business if they go bankrupt Different ways to reduce financial risks In order to set-up the business, one strategy is to borrow funds from bankers, venture capitalists or partners Place personal assets in the spouse’s name so that assets cannot be seized if the firm goes bankrupt Legal structure of the business can help minimise financial risks Example: entrepreneurs who operate a business as a sole proprietorship or as a partnership face unlimited liability, whereas for a company the liability of the owners is limited to the unpaid value of the shares they hold 2. Career Risks A question often asked by would-be entrepreneurs is whether they will be able to find a job or go back to their old job if their venture fails Is a major concern, especially or well-paid professionals and people close to retirement age Such people must ask themselves whether they are prepared to accept a lower paid job, not necessarily in their field of expertise, if they have to go back to being an employee One way to minimise career risk is to launch a business on a part-time basis while still retaining the current job Module 9 17  Should attempt fail, the person will have a fall-back position and income 3. Social Risks Starting a new venture uses much of the entrepreneur’s energy and time Family and social commitments may suffer To minimise subsequent reproaches and disappointments, any decision to set up a new business venture should involve the family Might help would-be entrepreneurs to identify potential family problems that can arise from long working hours, reduced holidays and stress Discussing the entrepreneurial project also helps to build commitment within a family Successful entrepreneurs almost invariably recognise the support of their spouses and/or family in their career Another social risk is linked to the image of the failed entrepreneur Some societies have little tolerance for failure Example: kia su or ‘afraid to lose’ attitude that is pervasive in Singaporean culture Typifies a mentality where failure is perceived to be a disgrace and to bring shame on the individual and the family 4. Health Risks Is a rigorous activity → physically and mentally Work and its demands dominate the lives of entrepreneurs A clear separation of work and non-work is generally hard to achieve Normal work day can extend to 10 or 12 hours There is evidence that entrepreneurs experience higher job stress and psychosomatic health problems than people who are not self- employed Module 9 18  Would-be entrepreneurs should make sure that their health can cope with the demands and challenges of starting and running a business Source of many health problems is stress Stems from discrepancies between a person’s expectations and their ability to meet demands Solutions for reducing stress is to create an environment that discourages it (e.g. having a place where everything can be kept organised) Relevant Performance Measures Entrepreneurship is concerned with the discovery and exploitation of profitable opportunities for private wealth and for social wealth May be many motives for starting a business → acquiring higher social status, new lifestyle Financial dimension cannot be ignored A business must generate a profit to stay in the marketplace Entrepreneurs must be able to use a simple standard measure to assess their performance Relevant benchmarks in entrepreneurship are: 1. Absolute level of economic performance that provides a return for enterprising effort 2. Social contribution of the individual effort Superior performance relative to other enterprises is not a sufficient measure of success in the case of entrepreneurship → profit must exceed some minimum threshold in order to compensate opportunity seekers for their efforts Just to break even, profits must compensate for: 1. Bypassed alternatives (opportunity cost) Used to refer to what is given up when a certain course of action is chosen Module 9 19  Example: when choosing to set up a business and become self-employed, entrepreneurs must give up a regular salary and holidays Opportunity costs are particularly high for well-paid professionals and executivies 2. Cash, effort and time invested in the venture (liquidity premium) The entrepreneurial process generally requires substantial investments in order to evaluate and exploit opportunities Most would-be entrepreneurs invest their own money in pre-start-up activities Building a prototype Paying a consultant to conduct professional market research Registering a patent or trademark Spend a considerable amount of their own time and effort in fine-tuning the business concept and convincing various resource holders to take part in the enterprise 3. Covering a premium for risk In economics, risk denotes the possibility of a loss Risk is present when future events occur with measurable probability Is measurable because it relates to situations that have many precedents and where as a consequences, the odds of success can be calculated Demands on the outcome probability of the business venture Example: if the odds of success are relatively high because the entrepreneur has developed a promising product (good trial tests) that can be protected (by a Module 9 20  patent or trademark) and there is a familiar market → relatively low risk premium 4. A premium for uncertainty Uncertainty is not measurable Cannot be quantified ad handled through insurance or other arrangments Occurs in circumstances that cannot be analysed either on rational grounds because they are too irregular or through empirical observation, are unique Is present when the likelihood of future events is indefinite or incalculable Is particularly high if the entrepreneur has no previous experience of the industry in which the business venture is to be established If the venture is based on radical innovation implying emerging technology Explain entrepreneurial behaviour in a social context 1. Stage of life Most societies have developed stable and widespread expectations about the appropriate times for major life events Societal institutions are often organised around these social conventions (e.g. age at which schooling should begin, age of retirement) One critical life event is starting a job → usually occurs immediately after completing an educational program If the decision to become an entrepreneur was a common event for members of society, would not be surprising to find major regularities in its relation to a stage of life Not the case Involves a minority of the population Module 9 21  No general theory indicating the stage of life that is best for launching a business venture Entrepreneurs are more effective at building ventures from scratch once they have attained a certain level of maturity and self-knowledge But can achieve this without spending most of their working lives in corporate jobs 2 main points in favour of leaping sooner rather than later: 1. Long stretches in corporate positions often prevent executives from developing the versatility that new ventures generally require An executive may become used to delegating, leaving the specialists to deal with HR, IT and financial issues A luxury that start-ups can ill afford 2. Employees who linger until they reach senior positions maybe age themselves out of what could otherwise be a satisfying career in start-ups Empirical research has shown that those people most likely to pursue entrepreneurial opportunities are men with post-secondary education, aged between ages of 25-44 and with an established career record Not everyone with these characteristics starts new firms, this set of features is unique and predictable 2. Social networks Social Network: the sum of relationships that a person maintains with other people as a result of social activity A person’s self-image is shaped by his/her network Every tie is unique The networks that entrepreneurs build for themselves and their ventures stand out a number of respects: Module 9 22  The networks are genuinely personal, intertwining business concerns and social commitments in individual ties By way of personal networking, entrepreneurs make their planned venturing career into a way of life Personal resources are mobilised to set-up new ventures that are alien to the market Spatial dimension is relevant For historical, practical and symbolic reasons, many entrepreneurs and their firms are attached to a place Local and regional socioeconomic environment is both a major determinant and a major outcome of entrepreneurial activity Although networks are important to both Western and eastern cultures Are central to many Eastern cultures and particularly in the Chinese Chinese navigate complex networks of connections (guanxi) that expand throughout their lives Everyone is born into a social network of family members As each person grows up, group memberships involving education, occupation and residence provide new opportunities for expanding this network Guanxi philosphy has deep roots Many South-East Asian firms were established by migrant Chinese or their offspring, who built up networks in which extended families and clans did business with each other in order to reduce risk Relative permanence of such social networks contributes to the importance and enforceability of the Chinese conception of reciprocity 3. Ethnicity Ethnic and religious affiliations have historically played an important role in entrepreneurship Module 9 23  Is substantial information about the extent to which various ethnic groups or new immigrants engage in entrepreneurial behaviour in the Asia-Pacific region Main explanation of ethnic entrepreneurship: Response to lack of opportunities in the dominant culture In this situation, entrepreneurship is very often a necessity triggered by a variety of push factors such as: Ethnic discrimination in the host society Lack of recognition of qualifications Poor use of local language Limited opportunities Entrepreneurship can also be a first choice between different career alternatives, might result from different pull factors such as: Presence in the family of entrepreneurs who act as role models High social status given to the entrepreneur in the culture of the immigrant Perception of good entrepreneurial opportunities in the family and ethnic network Availability of resources in the ethnic network Ethnic Chinese entrepreneurs in South-East Asia In South-East Asia, there is substantial evidence that entrepreneurship which is a crucial factor in development has been steadily supplied by an ethnic minority - the expatriate Chinese Historical evidence shows how domestic economies in the region faltered when ethnic Chinese entrepreneurs were not allowed to operate Module 9 24  Usually both push and pull factors have influenced ethnic Chinese entrepreneurship Ethnic Chinese have often been discriminated against For example: being barred from public service positions and land ownership and allowed only limited access to tertiary education As a consequences they have often had no alternative but to become self-employed At the same time, guanxi has provided ethnic Chinese privileged access to entrepreneurial opportunities and to resources Initially, ethnic Chinese entrepreneurs fulfilled an intermediation function, particularly in their role as traders Filled a gap in the existing market by providing goods and services that were not available Today, although many are still engaged in trading and entrepreneurship, considerable numbers of ethnic Chinese have moved to banking and finance, transport, real estate, property development and hotel and travel services Situation in Australasia In multicultural Australia and NZ, the growth of self-employment among ethnic minorities has been a conspicuous feature of entrepreneurial activities In Australia, research has shown that ethnic business creation is positively related to pull and push motivations First-generation ethnic entrepreneurs were more influenced by push motivation as opposed to third-generation ethnic entrepreneurs who were more influenced by pull motivation First-generation ethnic entrepreneurs placed significantly greater importance on economic necessity and unemployment (both push motivators) Module 9 25  Third-generation ethnic entrepreneurs for the most part entered business due to pull motivators such as: Opportunities in Australia Links for doing business in the country of origin Ethnic networks Current trend reveals that ethnic business operators do not enter business activity as a last resort but as a positive choice Module 9 26