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Subject: ENTREPRENEURSHIP

Preceptor: Sir Aiman Shabbir

Name of Student: Asma Maryam

Reg No: 2019-CH-424

University of Engineering and Technology, Lahore
(FSD Campus)
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THE ENTREPRENEURIAL MIND-SET

DISCUSSION QUESTION

Q: 1 Some of the characteristics attributed to entrepreneurs include

persistent problem solving, continuous seeking of feedback and internal locus
of control. What does this mean?
Ans: Entrepreneurs attribute are following:
❖ Persistent problem solving:
Entrepreneurs are not intimidated by difficult situations. In fact, their self-confidence and
general optimism seem to translate into a view that the impossible just takes a little longer. Yet
they are neither aimless nor foolhardy in their relentless attack on a problem or an obstacle that is
impeding business operations. If the task is extremely easy or perceived to be unsolvable,
entrepreneurs oft en will give up sooner than others. Simple problems bore them; unsolvable
ones do not warrant their time. Moreover, although entrepreneurs are extremely persistent they
are realistic in recognising what they can and cannot do and where they can get help in solving
difficult but unavoidable tasks.

❖ Seeking feedback:
Effective entrepreneurs oft en are described as quick learners. Unlike many people,
however, they also have a strong desire to know how well they are doing and how they might
improve their performance. In attempting to make these determinations, they actively seek out
mentors and use their feedback. Feedback is also central to their learning from their mistakes and
setbacks.

❖ Internal locus of control:

Successful entrepreneurs believe in themselves. They do not believe the success or failure
of their venture will be governed by fate, luck, or similar forces. They believe their
accomplishments and setbacks are within their own control and influence and that they can affect
the outcome of their actions. This attribute is consistent with a high-achievement motivational
drive, the desire to take personal responsibility and self-confidence.

Q: 2 How do the following traits relate to entrepreneurs: desire to achieve,

opportunity orientation, initiative and responsibility?
Ans: Entrepreneur’s traits are following:
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❖ Drive to achieve:
Entrepreneurs are self-starters who appear to others to be internally driven by a strong desire to
compete, to excel against self-imposed standards and to pursue and attain challenging goals. This
drive to achieve has been well documented in the entrepreneurial literature beginning with David
McClelland’s pioneering work on motivation in the 1950s and 1960s. McClelland suggested that
the key to entrepreneurial behaviour lies in the drive to excel, to achieve a goal in relation to a set
of standards. High achievers take calculated risks. They examine a situation, determine how to
increase the odds of winning and then push ahead. A high-risk decision for the average
businessperson is oft en perceived as a moderate risk decision for the well-prepared high
achiever.

❖ Opportunity orientation:
One clear pattern among successful, growth-minded entrepreneurs is their focus on opportunity
rather than on resources, structure, or strategy. Opportunity orientation is the constant awareness
of the opportunities that exist in everyday life. Successful entrepreneurs start with the
opportunity and let their understanding of it guide other important issues. They are goal oriented
in their relentless pursuit of opportunities. Setting high but attainable goals enables them to focus
their energies, selectively to sort out opportunities and to know when to say ‘no’. Their goal
orientation also helps them to define priorities and provides them with measures of how well
they are performing.

❖ Initiative and responsibility:

Entrepreneurs are independent and highly self-reliant. Most researchers agree that effective
entrepreneurs actively seek and take the initiative. They willingly put themselves in situations
where they are personally responsible for the success or failure of the operation. They like to
take the initiative in solving a problem or in filling a vacuum where no leadership exists. They
also like situations where their personal impact on problems can be measured. This is the action
oriented nature of the entrepreneur expressing it.

Q: 3 Entrepreneurs have a tolerance for ambiguity, are calculated risk takers

and have a high regard for integrity and reliability. What does this mean?
Ans:
❖ Tolerance for ambiguity:
Start-up entrepreneurs face uncertainty multiplied by constant change. This introduces ambiguity
and stress into every aspect of the enterprise. Setbacks and surprises are inevitable; lack of
organization, structure and order is a way of life. Yet successful entrepreneurs thrive on the
fluidity and excitement of such an ambiguous existence and generally have a high tolerance for
ambiguity. Job security and retirement generally are of no concern to them.
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❖ Calculated risk taking:

Successful entrepreneurs are not gamblers – if they decide to participate in a venture, they do so
in a very calculated, carefully thought-out manner. They do everything possible to get the odds
in their favour and they oft en avoid taking unnecessary risks. These strategies include getting
others to share inherent financial and business risks with them – for example, by persuading
partners and investors to put up money, creditors to offer special terms and suppliers to advance
merchandise.

❖ Integrity and reliability:

Integrity and reliability are the glue and fibre that bind successful personal and business
relationships and make them endure. Investors, partners, customers and creditors alike value
these attributes highly. Integrity and reliability help build and sustain trust and confidence.
Small-business entrepreneurs, in particular, find these two characteristics crucial to success.

Q: 4 Entrepreneurship has a dark side. What is meant by this statement?

Ans: The Dark Side of Entrepreneurship includes Depression; Stress which at times leads to
Mental and health issues Asymptomatic entrepreneurs (having no mental health issues) with
asymptomatic families constituted only 24% of the entrepreneur participants. . In examining this
dual-edged approach to the entrepreneurial personality, Kets de Vries has acknowledged the
existence of certain negative factors that may envelop entrepreneurs and dominate their
behaviour. Among entrepreneurs there are those who have failed and were exposed as well as
those who have destroyed something that was important to others. For some it was an error of
judgment – we call them failed entrepreneurs. But some entrepreneurs exhibit criminal
behaviour. It is no accident that many people associate the word ‘entrepreneur’ with rogues and
wheeler-dealers. In Entrepreneurs, Bolton and Thompson even have an entire chapter entitled
‘Entrepreneurs in the shadows’. They examine:
❖ Opportunist entrepreneurs who either adopt a fl awed strategy or fail to deliver
❖ Inventors who become failed entrepreneurs as they lack key project championing
capabilities
❖ Empire-builders who grow too quickly and lose control – sometimes involving a creative
cover-up strategy
❖ Entrepreneurs who make mistakes, or whose business fails, but who determinedly make a
comeback
❖ Entrepreneurs who attract controversy
❖ Dishonest entrepreneurs

Q: 5 What are the four specific areas of risk that entrepreneurs face?
Describe each.
Ans: Entrepreneurs face a number of different types of risk. These can be grouped into four
basic areas:
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(1) financial risk, (2) career risk, (3) family and social risk and (4) psychic risk

❖ Financial risk:
In most new ventures the individual puts a significant portion of their savings or other resources
at stake, which creates a serious financial risk. This money or these resources will, in all
likelihood, be lost if the venture fails. The entrepreneur also may be required to sign personally
on company obligations that far exceed their personal net worth. The entrepreneur is thus
exposed to personal bankruptcy. Many people are unwilling to risk their savings, house, property
and salary to start a new business.

❖ Career risk:
A question frequently raised by would-be entrepreneurs is whether they will be able to find a job
or go back to their old job should their venture fail. This career risk is a major concern to
managers who have a secure organizational job with a high salary and a good benefits package.

❖ Family and social risk:

Starting a new venture uses much of the entrepreneur’s energy and time. Consequently, their
other commitments may suffer and there is increased family and social risk. Entrepreneurs who
are married, especially those with children, expose their families to the risks of an incomplete
family experience and the possibility of permanent emotional scars. In addition, old friends may
vanish slowly because of missed get-togethers.

❖ Psychic risk:
The psychic risk may be the greatest risk to the wellbeing of the entrepreneur. Money can be
replaced; a new house can be built; spouse, children and friends usually can adapt. But some
entrepreneurs who have suffered financial catastrophes have been unable to bounce back, at least
not immediately. The psychological impact has proven too severe for them.

Q: 6 What are four causes of stress among entrepreneurs? How can an

entrepreneur deal with each of them?
Ans: Boyd and Gumpert have identified four causes of entrepreneurial stress.
❖ Loneliness:
Although entrepreneurs are usually surrounded by others – employees, customers, accountants
and lawyers – they are isolated from persons in whom they can confide. Long hours at work
prevent them from seeking the comfort and counsel of friends and family members. Moreover,
they tend not to participate in social activities unless they provide a business benefit. A sense of
loneliness can set in because of inner feelings of isolation.
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❖ Immersion in business:
One of the ironies of entrepreneurship is that successful entrepreneurs make enough money to
partake of a variety of leisure activities, but they cannot take that exotic cruise, fishing trip, or
skiing vacation because their business will not allow their absence. Most entrepreneurs are
married to their business. They work long hours, leaving little time for civic organisations,
recreation, or further education.

❖ People problems:
Entrepreneurs must depend on and work with partners, employees, customers, bankers and
professionals. Most experience frustration, disappointment and aggravation in their experiences
with these people. Successful entrepreneurs are to some extent perfectionists and know how they
want things done. Oft en they spend a great deal of time trying to get lackadaisical employees to
meet their performance standards and, frequently, because of irreconcilable conflict, many
partnerships are dissolved.

❖ Need to achieve:
Achievement brings satisfaction. During the Boyd and Gumpert study, however, it became clear
that a fine line exists between attempting to achieve too much and failing to achieve enough.
More oft en than not, the entrepreneur was trying to accomplish too much. Many are never
satisfied with their work no matter how well it is done. They seem to recognize the dangers (for
example, to their health) of unbridled ambition, but they have a difficult time tempering their
achievement need. They seem to believe that if they stop or slow down a competitor is going to
come from behind and destroy everything they have worked so hard to build.

Q: 7 Describe the factors associated with the entrepreneurial ego.

Ans: In addition to the challenges of risk and stress, the entrepreneur also may experience the
negative effects of having an ego, especially in countries that value modesty and circumspection.
In other words certain characteristics that usually propel entrepreneurs into success also can be
exhibited to their extreme. We examine four of these characteristics that may hold destructive
implications for entrepreneurs.

❖ An overbearing need for control:

Entrepreneurs are driven by a strong need to control both their venture and their destiny. This
internal focus of control spills over into a preoccupation with controlling everything. An
obsession for autonomy and control may cause entrepreneurs to work in structured situations
only when they have created the structure on their terms. This, of course, has serious
implications for networking in an entrepreneurial team since entrepreneurs can visualize the
external control by others as a threat of subjection or infringement on their will. Thus the same
characteristic that entrepreneurs need for successful venture creation also contains a destructive
side.
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❖ Sense of distrust
To remain alert to competition, customers and government regulations, entrepreneurs are
continually scanning the environment. They try to anticipate and act on developments that others
might recognize too late. This distrustful state can result in their focusing on trivial things
causing them to lose sight of reality, to distort reasoning and logic and to take destructive
actions. Again, distrust is a dual-edged characteristic.

❖ Overriding desire for success:

The entrepreneur’s ego is involved in the desire for success. Although many of today’s
entrepreneurs believe they are living on the edge of existence, constantly stirring within them is a
strong desire to succeed in spite of the odds. Thus the entrepreneur rises up as a defiant person
who creatively acts to deny any feelings of insignificance. The individual is driven to succeed
and takes pride in demonstrating that success. Therein lay the seeds of possible destructiveness.
If the entrepreneur seeks to demonstrate achievement through the erection of a monument – such
as a huge office building, an imposing factory, or a plush office – then the danger exists that the
individual will become more important than the venture itself. Losing perspective like this can,
of course, is the destructive side of the desire to succeed.

❖ Unrealistic optimism:
The ceaseless optimism that emanates from entrepreneurs (even through the bleak times) is a
key factor in the drive towards success. Entrepreneurs maintain a high enthusiasm level that
becomes an external optimism, which allows others to believe in them during rough periods.
However, when taken to its extreme, this optimistic attitude can lead to a fantasy approach to the
business. A self-deceptive state may arise in which entrepreneurs ignore trends, facts and reports
and delude themselves into thinking everything will turn out fine. This type of behaviour can
lead to an inability to handle the reality of the business world.

Q: 8 What are the differences in mind-set between social and business

entrepreneurs?
Ans: Bornstein believes that social entrepreneurs do the same things as business entrepreneurs
and have the same skills and temperament. But there are some differences.
❖ Social entrepreneurs also tend to be more educated and financially better off. They are
not as positive and confident as mainstream entrepreneurs. They are more likely to fear
failure than their business counterparts and are more likely to say that lack of finance will
stop them.
❖ Social entrepreneurs are generally thought to be driven, motivated and focused
individuals who are motivated by a desire to make a real social change. In the UK, for
example, Global Entrepreneurship Monitor found that women and people from ethnic
minorities are more likely to become social than business entrepreneurs.
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Q: 9 Identify and describe the three major sources of information that supply
data related to the entrepreneurial mind-set.
Ans: The best source of information about the entrepreneurial mind-set is direct observation of
practising entrepreneurs.
1. Through the use of interviews, surveys and case studies, the experiences of individual
entrepreneurs can be related. Analysis of these experiences can provide insights into the
traits, characteristics and personalities of individual entrepreneurs and leads to the
discovery of commonalities that help explain the perspective.
2. The second major source of information about the entrepreneurial mind-set is direct
observation of practising entrepreneurs. The experiences of individual entrepreneurs can
be related through the use of interviews, surveys and case studies. Have a look at the
Harvard cases at the end of each chapter in this book. Analysis of these experiences can
provide insights into the traits, characteristics and personalities of individual
entrepreneurs and leads to the discovery of commonalities that help explain the mind-set.
3. The final source of entrepreneurial information is speeches and presentations (including
seminars) by practising entrepreneurs. This source may not be as in-depth as the others,
but it provides an opportunity to learn about the entrepreneurial mind-set. Entrepreneur-in
residence programs at various universities illustrate the added value oral presentations
may have in educating people about entrepreneurship.