Chapter 1

Entrepreneurship
and the
Entrepreneurial Mind-Set

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Learning Objectives
To introduce the concept of
entrepreneurship and explain the
process of entrepreneurial action
To describe how structural similarities
enable entrepreneurs to make
creative mental leaps
To highlight bricolage as a source of
entrepreneurs resourcefulness
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Learning Objectives
To introduce effectuation as a way
expert entrepreneurs sometimes
think
To develop the notion that
entrepreneurs cognitively adapt
To introduce sustainable
entrepreneurship as a means of
sustaining the natural environment
and communities and developing
gains for others

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The Nature of
Entrepreneurship
Entrepreneurial opportunities
Situations in which new goods, services,
raw materials, and organizing methods:
Can be introduced
Sold at greater than their cost of production

Entrepreneurial action:
Involves creation of new products or
processes
Involves entry into new markets
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The Nature of
Entrepreneurship
May occur through a newly created
organization or within an established
organization

Entrepreneurial thinking
An individuals mental processes of
overcoming ignorance to:
Decide whether a signal represents an
opportunity for someone
Decide whether that opportunity is
applicable to the individual specifically
Process feedback from action steps taken
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Figure 1.1 - Entrepreneurial

Action

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How Entrepreneurs Think

Entrepreneurs should:

Think structurally
Engage in bricolage
Effectuate
Cognitively adapt
Learn from failures

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How Entrepreneurs Think

Think structurally
Superficial similarities: Basic
elements of the technology resemble
the basic elements of the market
Structural similarities: Underlying
mechanisms of the technology resemble
the underlying mechanisms of the
market

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How Entrepreneurs Think

Bricolage
Applying combinations of the resources
at hand to new problems and
opportunities
Taking existing resources and tinkering
and/or reframing them so they can be
used in new ways

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How Entrepreneurs Think

Effectuation
Causal process
Starts with a desired outcome
Focuses on the means to generate that
outcome

Effectuation process
Starts with what one has
Selects among possible outcomes

Entrepreneurial mind-set: Ability to

rapidly sense, act, and mobilize, even
under uncertain conditions
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How Entrepreneurs Think

Cognitive adaptability
Describes the extent to which
entrepreneurs are:
Dynamic, flexible, self-regulating and
engaged in the process of generating
multiple decision frameworks
Focused on sensing and processing changes
in their environments and then acting on
them

Metacognitive awareness - Ability to

reflect upon,understand, and control
ones thinking and learning

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How Entrepreneurs Think

Achieving cognitive adaptability
Comprehension questions
Increase entrepreneurs understanding of
the nature of the environment

Connection tasks
Stimulate thinking about similarities and
differences of current situations with
situations previously faced and solved

Strategic tasks
Identify strategies that are appropriate for
solving the problem or pursuing the
opportunity

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How Entrepreneurs Think

Reflection tasks
Stimulate entrepreneurs to think about their
understanding and feelings as they progress
through the entrepreneurial process

Increasing cognitive ability helps in:

Adapting to new situations
Being creative
Communicating ones reasoning behind a
particular response

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The Intention to Act

Entrepreneurially
Entrepreneurial intentions
Motivational factors that influence
individuals to pursue entrepreneurial
outcomes

Entrepreneurial self-efficacy
Conviction that one can successfully
pursue entrepreneurial outcomes

Perceived desirability
Degree to which a potential
entrepreneurial outcome is evaluated as
favorable or unfavorable

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Entrepreneur Background and

Characteristics
Education
Facilitates integration and accumulation
of knowledge thus providing a larger
opportunity set
Casts a wider net for the discovery or
generation of potential opportunities
Assists entrepreneurs in adapting to new
situations
Does not necessarily determine whether
the individual will create a new business
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Entrepreneur Background and

Characteristics
Age
Chronological age Usually between the
ages 22 and 45

Work history
Past work experience of an individual

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Role Models and Support

Systems
Role models: Individuals whose
example an entrepreneur can aspire
to and copy
Moral-support network:
Individuals who give psychological
support to an entrepreneur
Professional-support network:
Individuals who help the
entrepreneur in business activities
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Sustainable
Entrepreneurship
Preserving nature, life support, and
community in the pursuit of
perceived opportunities to:
Bring future products, processes, and
services into existence for gain

Can generate:
Economic gains
Environmental gains
Social gains
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