13 Entrepreneurial Competencies
Chaman Lal
1. Learning Outcome:
After studying this module the learners will be able to:
- Understand the concept of competence and competencies;
- Differentiate between competence and competencies;
- Enlist the various elements of competency;
- Describe the various types of entrepreneurial competencies;
- Explain the implications of competencies in the field of entrepreneurship; and
- Describe the process of developing entrepreneurial competencies.
2. Introduction
Due to globalisation, liberalisation, and privatization, entrepreneurs are facing many challenges and hurdles for the survival of the enterprise in the globalized era. Many entrepreneurs have started their own enterprise due to lucrative benefits of entrepreneurship. But, only few run their business successfully while many other suffer huge losses due to various problems. Now questions arise, why few entrepreneurs are successful and others are not? Is there any difference between the successful and unsuccessful entrepreneurs? The obvious answer is yes. The success of business depends on the attitude of entrepreneurs and the qualities she or he possesses. The skills, knowledge, and other personal traits that an entrepreneur possesses are called entrepreneurial competencies. Due to these competencies, entrepreneurs are able to perform their business tasks better than others. To run any entrepreneurial activity successfully, competencies are very essential. For modern era entrepreneur, it is very important to have understanding of entrepreneurial competencies. Along with understanding, it is also very crucial to identify the in-born competencies and required competencies so as to develop full range of entrepreneurial competencies. Now, next question arises, whether these competencies can be injected or developed?There are various arguments for this question. Let us try to understand in detail about the term competence and competencies and other related issues in this module.
3. Concept of Competence and Competency
To understand the meaning or concept of competency, it is important to have knowledge about the term ‘Competence’ because the term competency has originated from the word competence. Understanding of competence concept will help to develop the clear idea about competency. Various academicians defined these terms differently. Boyatzis describe competence as the characteristics of an entrepreneur which results in the form of superior or effective performance in the business activity. On the basis of this definition, we can describe that competence is the underlying characteristics of an entrepreneur through which she/he performs well. These underlying characteristics include personal traits such as knowledge, skills, personality, and attitude etc.On the basis of this definition, Hogg has defined competency as demonstration of characteristics include skills and abilities, which result in superior business performance. United Nation Industrial Development Corporation (UNIDO) has defined competency as skills, knowledge, and other attributes which helps an entrepreneur to perform task in an effective and efficient manner.We can say entrepreneurial competence is the mix of skills, knowledge, and behavioural attributes of an entrepreneur that effect the performance of one’s. Due to these attributes, few entrepreneurs perform really well while others lack. Competency helps an entrepreneur in effective and efficient functioning of an enterprise. Competency is the application of skill set, knowledge, and attitude for better performance of the job. It is the major differentiator between the successful and unsuccessful entrepreneurs. In practical, competency means, how an entrepreneurs is using his acquired knowledge and skills. For example, if an entrepreneur is having B.Tech (Computer Science) degree, and he is using his knowledge and skills in automation of the enterprises, it is his competency.Generally the attributes of competency are not known to individual concern and that is the reason behind the poor performance of the business.
4. Competence Versus Competency
Most of the times, people use competence and competency interchangeably, which means both are the same. Now, question arises, if both are same then why there is a need to discuss both theterms separately. Famous academicians McClelland describes that both the terms i.e. competence and competency are not the same and have different meaning. The basic difference between the two is that competence is underlying characteristics of an entrepreneur and competency is the behavioural aspect of the characteristics. The difference between both can be understood with the help of following points:
1. Competence is skill-based while competency is behaviour-based
2. Competence covers the standard attained in one’s life whereas competency is manner of behaviour.
3. Competence means what is measured and competency means how the standard is achieved.
On the basis of above points, we can describe that competence means what people can do while competency means how people do it. We can also describe competence as skills and the performance standard achieved, while competency refers the behavioural aspect through which performance standard achieved.Above description implies that there is relationship or interface between competence and competency and this interface is application of skills in a competent manner which results in superior business function. From above points, it is clear that to be successful in entrepreneur world, it is important to have both competence and competency. In other words, without having both i.e. competence and competency, no one can achieve superior performance.
5. Attributes of Entrepreneurial Competency
In above section, we have discussed the difference between competence and competency, and also understand that both are complementary to each other. In this section, you will learn about the main elements or attributes of entrepreneurial competency. Following are the three major attributes or components of entrepreneurial competency:
1. Knowledge
2. Skill
3. Motive
Let us try to understand these three attributes of entrepreneurial competency in detail with the help of examples.
Knowledge: Knowledge means gathering information and retention of gathered information for further application to complete task. Knowledge is very important to complete any task but not sufficient. For example, an individual can understand the process of setting an enterprise by reading various books and further she/he can describe the various aspects of business. But, mere reading and description will not enable the individual to establish the enterprise. We see in real world that many entrepreneurs having full knowledge of business failed miserably during actual performance of the business tasks. This failure of entrepreneurs suggests that entrepreneurs also require something else to perform task well. And this something extra is skills to use or translate the knowledge into application.
Skill:Skill simply means demonstration ability of knowledge which results into something that can be observed or seen. In other words, we can say it is sequence of behaviour through which an entrepreneur apply his knowledge and create a system that can be observed by others. For example, when an entrepreneur applies his gathered information to create and run a successful enterprise, it is her/his skill. Knowledge can be acquired by reading and gathering information while skill is acquired by practice. This implies that both knowledge and skill are important to run an enterprise successfully.
Motive: Third important element of competence is motive. We can define motive as one’s attitude and behaviour to achieve goal. Famous behavioural scientist McClelland termed motive as ‘Achievement Motivation’. An entrepreneur can achieve success in his venture only he has motivation to achieve success. Continuous motive of success achievement directs an entrepreneur to perform job successfully. If we continue above example, we can say, an entrepreneur can achieve success only if he has motivation to set and run an enterprise.
Hence, in order to set and run an enterprise successfully, entrepreneur require to possess all above discussed attributes i.e. knowledge, skills, and motivation which together called entrepreneurial competencies.
5.1 Features of Entrepreneurial Competencies
After discussing attributes of entrepreneurial competencies, we can enlist the features of competencies which are as follow:
i. Entrepreneurial competencies are the underlying characteristics of an entrepreneur.
ii. It leads to demonstration of knowledge which can be observed.
iii. Competencies must lead to superior performance.
iv. Entrepreneurial competencies can be acquired through information and practice.
5.2 Model of Competency
Khanka (2012) suggest a model of entrepreneurial competency through mathematical equation by using above discussed attributes of entrepreneurial competency.
Competency = Competence + Commitment
Where:
Competence = Knowledge * Skills
Commitment = One’s deep motivation/belief/attachment to the job
Khanka (2012) further enlists the detailed elements of entrepreneurial competence and commitment which are given below:
a) Detailed components of competence:
- Technical Skills
- Basic Operational Information
- Business Knowledge
- Communication Skills
- Interpersonal Skills
- Leadership Quality
- Team spirit and Team Building Skills
- Decision Making Skills
- Time Management Skills
- Work-Coordination Skills
b) Components of commitment:
- Self Belief and Confidence
- Motivation
- Hardworking Spirit, Honesty, and Integrity
- Dedication and Determination
- Positive Attitude
- Winning Attitude
- Learning Attitude
- Perseverance
- Enterprising Nature
- Result Oriented
Above discussed components are the contributors of superior performance and if an entrepreneur wants to succeed in his venture, s/he has to work on acquisition of all above components of entrepreneurial competency.
6. Entrepreneurial Competencies
This is a long lasting debate that whether entrepreneurs are born or made? Most of the people believe that only those entrepreneurs succeed those have family background in business. This belief supports the myth that entrepreneurs are born but there are so many examples that contradict this myth and support another fact that entrepreneurs are made not born. Entrepreneurs can become successful by acquiring knowledge and skill set through education and experience. Entrepreneurship Development Institute of India (EDI), Ahmadabad and many other researchers conducted research studies on this debatable topic. Following are the major entrepreneurial competencies identified by researcher which make a successful entrepreneur or results in superior performance:
i) Initiation is the first and foremost competency of an entrepreneur.
ii) Entrepreneur must be vigilant.
iii) Learn from mistakes and make efforts to overcome hurdles.
iv) Try to gather as much information from researches and individuals as information helps to achieve goals.
v) Quality consciousness is the key to achieve success and beat existing standards.
vi) Full dedicationanddetermination to complete tasks.
vii) Efficiency is the key to success in business.
viii) Formulation of realistic and well researched plans.
ix) Proper and effective implementation of plans.
x) Never give up attitude and look for solution of problems.
xi) Self-confidence and self-belief.
xii) Convincing and persuasive personality.
xiii) Efficient Manager.
xiv) Always consider employees as family member and try to work in team.
xv) Growth oriented attitude and enterprising person.
xvi) Consider others opinion and suggestion.
xvii) Proper utilization of resources.
xviii) Will to take risk and adaptive nature.
xix) High motivation and high need achievement.
Other than above discussed competencies, following are also very important to perform task successfully and get desired results:
Strategic Competencies: Entrepreneurs must develop ability to operate his business according to competitors’ plan of action to counter the possible competition.
Full Commitment: Should possess strong motivation to complete and run enterprises successfully and look to make dent in old traditions.
Concept Developer: Entrepreneurs must develop analytical competency to face complex situations and try to develop new concept to run business in most difficult situations. Entrepreneurs should be analytical, prompt decision-maker, innovative, and creative.
Opportunity Seeker: Entrepreneurs should try to identify opportunities in every challenge, recognize and capture opportunities, and understand customers need to deliver superior customer value than competitors.
Relationship Manager: Relationship competency describes the ability to possess and use interpersonal and communications skills, convincing power, and support from others. Relationship competency further includes building and maintaining good relations with employees, customers, business partners, and other stake holders.
Organisational Competency: This competency includes knowledge and skills to lead, direct, motivate, and control work force. Further it covers planning, budgeting, and implementing the strategies.
Learning Attitude: Successful entrepreneurs always strive to learn from others opinion, experience and also form own mistakes. Learning competency also empowers entrepreneurs to acknowledge others contribution and work.
Competitive Competency: It includes the ability to adopt and use new means of business such as technology adaptation, positive attitude towards change, and skills to use new technology. This also includes the ability to use and handle new instruments and tools of business operations.
Social Competency: Entrepreneurs are social animals and always live in society so it is their responsibility to serve the society. They must meet their social obligations and always try to run enterprise which is beneficial for the society. Social responsibility competence enables entrepreneurs to get competitive advantage and survive in the competitive global world.
7. How to Develop Entrepreneurial Competencies?
We have already discussed that entrepreneurial competency which is combination of competence and commitment results in superior performance. Competence and commitment are underlying characteristics and behavioural aspects of one’s personality. EDI Ahmadabad in collaboration with D. McClelland; famous behavioural scientist, conducted the famous Kakinada experiment and found that entrepreneurial competency can be developed and injected in entrepreneurs mind through proper mentoring, education, and training. Kakinada experiment suggests following four tools or methods to sharpen entrepreneurs’ competencies:
1. Competency Identification and Recognition
2. Competency Assessment
3. Competency Mapping
4. Development Intervention
Let us discuss each method in brief to understand how one can develop entrepreneurial competencies.
Competency Identification and Recognition: Before developing competencies it is important to understand the meaning of competency and what are the attributes of competency? Competency begins with the conceptual knowledge of entrepreneurship, its behaviour and attributes. First step in competency development is identifying and recognising the set of elements needs to complete the task effectively and successfully. You have already gone through the attributes of entrepreneurial competencies. Attributes of competency may vary from business to business. For example to run a manufacturing enterprise basic element is production process whereas to run a automobile service centre, key to success is service delivery and relationship management.
Competency Assessment: After identification and recognition of entrepreneurial competencies, next step is assessment of competency. This step includes assessing the already possessed competency of an entrepreneur so that these can be compared with standards. At this step, one’s possessed competencies are enlisted and examined. This is done to analyse where one’s stand and what are the additional requirements so that it can be decided whether an individual is ready to start an enterprise or something extra is required. This process is completed by asking various types of questions from a prospective entrepreneur. Questions may include basics of business, enterprises, individual personality, likes, dislikes, knowledge, skills, and his level of motivation. This exercise helps to ascertain one’s entrepreneurial competency level.
Competency Mapping:After identification and recognition of competency and assessingthe level of possessed competency, next step is competency mapping. At this step, already possessed competencies are compared with the required set ofcompetencies which are important to be a successful entrepreneur. During the competency mapping, gap analysis is done and remaining important competencies are identified. Competency mapping is a process of identifying the deficiencies in comparison with standard. Complete list of competencies are compared with possessed competencies so as to develop the successful entrepreneur. A popular tool to map the entrepreneurial competency is skill to do/will to do chart. Skill to do mean the ability of entrepreneur to perform enterprise task or job and will to do mean entrepreneurs’ desire, motivation, achievement to do the job. On the basis of this chart of skill to do/will to do, competency deficiencies are identified. After deficiencies identification, necessary competencies are injected or developed through proper education and training to become a successful entrepreneur. After developing the required competencies, entrepreneurs practice these competencies in day to day business life.
Development Intervention: After identifying, recognising, assessing, mapping, injecting, and finally practicing of competencies, next step is to make one’s introspection of the practice to sharpen and strengthening the competencies. Whole process is called review analysis or feedback. During review analysis entrepreneurs’ new behaviour is analysed. New behaviour implies the behaviour after injecting the requisite competencies. Development intervention helps an entrepreneur to assess his strengths and weaknesses. During this process, entrepreneur knows how the new competencies have been proving its worth. This helps entrepreneurs to sustain or give up the particular behaviour in his future action of entrepreneurship so he can adapt the changing environment to perform his tasks effectively.
8. Summary
Entrepreneurial competency is required to perform any entrepreneurial task effectively and get desired results. Entrepreneurial competencies are the main difference between successful and unsuccessful entrepreneurs. Entrepreneur may acquire competence which is underlying characteristics of an entrepreneur but it is not enough to perform task successfully. To perform task successfully, an entrepreneur need commitment along with competence. Commitment is one’s deep attachment to the job or enterprise and this commitment leads application of acquired knowledge and skills into superior performance. Basic difference between competence and competency is; former is what an entrepreneur can do and later is how he does. Three major attributes of entrepreneurial competency are knowledge, skills, and motives. These three attributes together form entrepreneurial competencies. Few major entrepreneurial competencies are initiation, opportunity seeker, quality conscious, self-confidence, etc. Few entrepreneurs have some of above discussed competencies while others lack in few areas butif these competencies are not inherent then these can also be acquired through various training and practice. To develop entrepreneurial competencies, one can follow the process discussed in this module and can succeed in his entrepreneurial initiative. Without competencies it is very hard to survive in the world of competitive entrepreneurship so one has to work hard for the development of entrepreneurial competencies.