SLIDE 78

We shall now be presenting Entrepreneurship and Corporate Entrepreneurship

We shall answer these questions:

 Why become an Entrepreneur?
 What Does it Take to Succeed?
 What Business Should You Start?
 What Does it Take, Personally?

And will discuss:

 Success and Failure
 Common Management Challenges
 Increasing Your Chances of Success
In Entrepreneurship

And
 Building Support for Your Idea
 Building Intrapreneurship
 Management Challenges
 Entrepreneurial Orientation
In Corporate Entrepreneurship

SLIDE 79

To begin with, here’s a definition of Entrepreneurship.

(Read Slide)

SLIDE 80
There are several myths about entrepreneurship – but let me just highlight a few here.
(Read Slide)

SLIDE 81

Why become an entrepreneur?

So why do entrepreneurs do what they do?

Entrepreneurs start their own firms because of the challenge, the profit potential, and
the enormous satisfaction they hope lies ahead.

People starting their own businesses are seeking a better quality of life than they might
have at big companies. They seek independence and a feeling of being part of the
action. They feel tremendous satisfaction in building something from nothing, seeing it
succeed, and watching the market embrace their ideas and products.

People also start their own companies when they see their progress or ideas blocked at
big corporations. When people are laid off, they often try to start businesses of their
own. And when employed people believe they will not receive a promotion or are
frustrated by bureaucracy or other features of corporate life, they may quit and become
entrepreneurs.

Immigrants also may find conventional paths to economic success closed to them and
turn to entrepreneurship. For example, the Cuban community in Miami has produced
many successful entrepreneurs, as has the Asian community (including Filipinos)
throughout the United States. Sometimes the immigrant’s experience gives him or her
useful knowledge about foreign suppliers or markets that present an attractive business
opportunity.

Examples of successful entrepreneurs are these 3 conglomerates (Microsoft, Apple and

Facebook).

(Read Table)

SLIDE 82

Let me just share with you an example of an Entrepreneur that I personally know, my
tita, Eva Dimapindan. Here’s her personal journey..

She spent most of her career in the corporate world until 2020 – mainly working in the
logistics industry in various executive positions.

After her stint with DHL in Hongkong and Singapore, she moved to Cebu and whilst
building their house, set-up Far East Habitat with some friends, a real estate company,
realizing the growing real estate market in Cebu then.

After their house was built, they opened a portion of it for bed and breakfast as there
was so much space available – inorder to maximize its potential.

During the pandemic, as their place was up in the mountains, with open space and fresh
air, they saw the opportunity for people wanting to dine in open space as people were
scared of enclosed spaces and at some point, most establishments were closed then.
They set-up a coffee shop & restaurant, The Dales at Terracotta Manor.

SLIDE 83

Here’s a brief advertisement of the place for some entertainment.

Play video.

After the video:

So next time you visit Cebu, please call my tita and have a taste of Cebu’s mountain life.

SLIDE 84

What does it take to succeed?

What can we learn from the people who start their own companies and succeed? What
talents enable entrepreneurs to succeed?

Successful entrepreneurs are innovators and also have good knowledge and skills in
management, business, and networking.
In contrast,

Inventors may be highly creative but often lack the skills to turn their ideas into a
successful business.

Manager-administrators may be great at ensuring efficient operations but aren’t

necessarily innovators.
Promoters have a different set of marketing and selling skills—useful for entrepreneurs,
but those skills can be hired, whereas innovativeness and business management skills
remain the essential combination for successful entrepreneurs.

SLIDE 85

What business should you start?

To start a business, you need a good idea, and you need to find or create the right
opportunity.

The Idea

(Read the Slide:

In contemplating your business, you must start with a great idea. A great product, a
viable market, and good timing are essential ingredients in any recipe for success.

Many great organizations have been built on a different kind of idea: the founder’s
desire to build a great organization, rather than to offer a particular product.)

As an example, let’s look at a well-known company, Sony.

Masaru Ibuka had no specific product idea when he founded Sony in 1945. Sony’s first
product attempt, a rice cooker, didn’t work, and its first product (a tape recorder) didn’t
sell. The company stayed alive by making and selling crude heating pads. And we know
now how successful they are with their electronic products, amongst others.

Many now-great companies had early failures. But the founders persisted; they believed
in themselves and in their dreams of building great organizations. Be prepared to kill or
revise an idea, but never give up on your company—this has been a prescription for
success for many great entrepreneurs and business leaders.

Think about companies like Sony. Their founders’ greatest achievements—their greatest
ideas—are their organizations.
SLIDE 86

The Opportunity

Entrepreneurs spot, create, and exploit opportunities in a variety of ways.

Entrepreneurial companies can explore domains that big companies avoid and introduce
goods or services that capture the market because they are simpler, cheaper, more
accessible, or more convenient.

To spot opportunities, think carefully about events and trends as they unfold. Consider,
for example, the following possibilities:

Technological discoveries. Start-ups in biotechnology, microcomputers, and nano

technology followed technological advances.

Demographic changes. All kinds of health care organizations have sprung up to serve an
aging population.

Lifestyle and taste changes. Start-ups have capitalized on new clothing and music
trends, desire for fast food, and growing interest in sports.

Economic dislocations, such as booms or failures. In recent years, rising oil prices have
spurred a variety of developments related to alternative energy or energy efficiency. As
an example, a number of people have now switched to solar energy.

Calamities such as wars and natural disasters. The terrorist attacks spurred concern
about security, and entrepreneurs today are still pursuing ideas to help government
agencies prevent future attacks. The more recent hurricanes raised awareness of the
importance of preparing for emergencies.

Government initiatives and rule changes. Deregulation spawned new airlines and
trucking companies. Whenever the government tightens energy-efficiency requirements,
opportunities become available for entrepreneurs developing ideas for cutting energy
use.

SLIDE 87

New Opportunities are in Franchises, the Next Frontiers and the Internet

SLIDE 88

Franchises One important type of opportunity is the franchise – which has been
discussed by one of my colleagues earlier.

Franchising is an entrepreneurial alliance between two organizations, the franchisor and

the franchisee.

The franchisor is the innovator who has created at least one successful store and seeks
partners to operate the same concept in other local markets.

For the franchisee, the opportunity is wealth creation via a proven (but not failureproof)
business concept, with the added advantage of the franchisor’s expertise.
For the franchisor, the opportunity is wealth creation through growth.

The partnership is manifest in a trademark or brand, and together the partners’ mission
is to maintain and build the brand.

If you are contemplating a franchise, consider its market presence (local, regional, or
national), market share and profit margins, national programs for marketing and
purchasing, the nature of the business, including required training and degree of field
support, terms of the license agreement, capital required, and franchise fees and
royalties.

SLIDE 89

The Next Frontiers

According to prominent investors in new businesses, the best ideas for a new start-up
includes:

New Innovations

- next-generation batteries with enough juice to power cars after a seconds-long

charge
- longer-lasting tiny batteries to keep cell phones and cameras running for more
hours
- implantable wireless devices that can monitor heartbeats or blood sugar levels,
and online social networking sites that focus on allowing artists and musicians to
share and promote their works.

One fascinating opportunity for entrepreneurs is Outer Space. Historically, the space
market was driven by the government and was dominated by big defense contractors
such as Boeing and Lockheed Martin. But now, with demand for satellite launches and
potential profits skyrocketing, smaller entrepreneurs are entering the field.

Some of the most dramatic headlines involve space tourism.

Other recent ventures in space have included using satellites for automobile navigation,
tracking trucking fleets, and monitoring flow rates and leaks in pipelines; testing
designer drugs in the near-zero-gravity environment; and using remote sensing to
monitor global warming, spot fish concentrations, and detect crop stress for precision
farming.

Homeland security is another newly burgeoning industry. A vast number of companies in

a wide range of industries are attempting to benefit—for example, baggage screening,
smallpox vaccines, capturing arrival and departure information on travelers, explosives
detection systems, and sensors for airborne pathogens.
SLIDE 90

The Internet.

At least five successful business models have proven successful in the e-commerce
market:

In the transaction fee model, companies charge a fee for goods or services.
Amazon.com and online travel agents are prime examples.

In the advertising support model, advertisers pay the site operator to gain access to
the demographic group that visits the operator’s site.

The intermediary model has eBay as the premier example, bringing buyers and sellers
together and charging a commission for each sale.

With the affiliate model, sites pay commissions to other sites to drive business to their
own sites. Examples are companies selling custom decorated gift items such as mugs
and T-shirts. Designers are the affiliates; they choose basic, undecorated products (such
as a plain shirt) and add their own designs, creating the customized products offered to
consumers.

Finally, Web sites using the subscription model charge a monthly or annual fee for site
visits or access to site content. Newspapers and magazines are good examples.

SLIDE 91

What does it take, personally?

Many people assume that there is an “entrepreneurial personality.” No single personality
type predicts entrepreneurial success, but you are more likely to succeed as an
entrepreneur if you exhibit certain characteristics:
1. Commitment and determination: Successful entrepreneurs are decisive,
tenacious, disciplined, willing to sacrifice, and able to immerse themselves in their
enterprises.

2. Leadership: They are self-starters, team builders, superior learners, and

teachers.

3. Opportunity obsession: They have an intimate knowledge of customers’ needs,

are market driven, and are obsessed with value creation and enhancement.

4. Tolerance of risk, ambiguity, and uncertainty: They are calculated risk

takers and risk managers, tolerant of stress, and able to resolve problems.

5. Creativity, self-reliance, and ability to adapt: They are open-minded,

restless with the status quo, able to learn quickly, highly adaptable, creative,
skilled at conceptualizing, and attentive to details.

6. Motivation to excel: They have a clear results orientation, set high but realistic
goals, have a strong drive to achieve, know their own weaknesses and strengths,
and focus on what can be done rather than on the reasons things can’t be done.
SLIDE 92

Making Good Choices

Success is a function not only of personal characteristics but also of making good choices
about the business you start.

The figure here presents a model for conceptualizing entrepreneurial ventures and
making the best possible choices. It depicts ventures along two dimensions: Innovation
and Risk.

The new venture may involve high or low levels of innovation, or the creation of
something new and different. It can also be characterized by low or high risk. Risk refers
primarily to the probability of major financial loss. But it also is more than that; it is
psychological risk as perceived by the entrepreneur, including risk to reputation and ego.

The upper-left quadrant, high innovation/low risk, depicts ventures of truly novel ideas
with little risk. As examples, the inventors of Lego building blocks and Velcro fasteners
could build their products by hand, at little expense.

In the upper-right quadrant, high innovation/high risk, novel product ideas are
accompanied by high risk because the financial investments are high and the
competition is great. A new drug or a new automobile would likely fall into this category.

Most small business ventures are in the low innovation/high risk cell (lower right). They
are fairly conventional entries in well-established fields. New restaurants, retail shops,
and commercial outfits involve high investment for the small business entrepreneur and
face direct competition from other similar businesses.

Finally, the low innovation/low risk category includes ventures that require minimal
investment and/or face minimal competition for strong market demand. Examples are
some service businesses having low start-up costs and those involving entry into small
towns if there is no competitor and demand is adequate.

This matrix helps entrepreneurs think about their ventures and decide whether they suit
their particular objectives. It also helps identify effective and ineffective strategies. You
might find one cell more appealing than others.

SLIDE 93

Success and Failure

Success or failure lies ahead for entrepreneurs starting their own companies, as well as
for those starting new businesses within bigger corporations. Entrepreneurs succeed or
fail in private, public, and not-for-profit sectors; in nations of all stages of development;
and in all nations, regardless of their politics.

Estimated failure rates for start-ups vary. Most indicate that failure is more the rule than
the exception. The failure rate is high for certain businesses like restaurants and lower
for successful franchises. Start-ups have at least two major liabilities: newness and
smallness

New companies are relatively unknown and need to learn how to be better than
established competitors at something that customers value.
To understand further the factors that influence success and failure, we’ll consider risk,
the economic environment, various management-related hazards, and initial
public stock offerings (IPOs).

Risk
It’s a given: Starting a new business is risky. Entrepreneurs with plenty of business
experience are especially aware of this.

Successful entrepreneurs are realistic about risk. They anticipate difficulties and cushion
their business to help it weather setbacks.

The Role of the Economic Environment

Entrepreneurial activity stems from the economic environment as well as the behavior of
individuals. For example, money is a critical resource for all new businesses. Increases in
the money supply and the supply of bank loans, real economic growth, and improved
stock market performance lead to both improved prospects and increased sources of
capital. In turn, the prospects and the capital increase the rate of business formation.
Under favorable conditions, many aspiring entrepreneurs find early success.

But economic cycles soon change favorable conditions into downturns. To succeed,
entrepreneurs must have the foresight and talent to survive when the environment
becomes more hostile. Although good economic times may make it easier to start a
company and to survive, bad times can offer an opportunity to expand.

SLIDE 94

Common Management Challenges

As an entrepreneur, you are likely to face several common challenges that you should
understand before you face them, and then manage effectively when the time comes.
We next discuss several such challenges.

You Might Not Enjoy It

Some managers and employees can specialize in what they love, whether it’s selling or
accounting. But entrepreneurs usually have to “do it all,” at least in the beginning. If you
love product design, you also have to sell what you invent. If you love marketing, get
ready to manage the money, too.

Survival Is Difficult
Companies without much of a track record tend to have more trouble lining up lenders,
investors, and even customers. When economic conditions cool or competition heats up,
a small start-up serving a niche market may have limited options for survival.

Growth Creates New Challenges

Just one in three in 500 companies keeps growing fast enough to make this list of fastest
growing companies two years running. The reason: They are facing bigger challenges,
competing with bigger firms, stretching the founders’ capacities, and probably burning
cash

The transition is particularly complex for entrepreneurs who quickly face the possibility of
expanding internationally. Whether a firm should expand internationally soon after it is
created or wait until it is better established is an open question. Entering international
markets should help a firm grow, but going global is also likely to create challenges that
make survival more difficult, especially when the company is young.
It’s Hard to Delegate
As the business grows, entrepreneurs often hesitate to delegate to other people work
that they are used to doing. Leadership deteriorates into micromanagement, in which
managers monitor too strictly, to the minutest detail. For example, during the Internet
craze many company founders with great technical knowledge but little experience
became “instant experts” in every phase of business, including branding and advertising.
Turns out, they didn’t know as much as they thought, and their companies crashed.

Misuse of Funds
Many unsuccessful entrepreneurs blame their failure on inadequate financial resources.
Yet failure due to a lack of financial resources doesn’t necessarily indicate a real lack of
money; it could mean a failure to properly use the available money.

A lot of start-up capital may be wasted—on expensive locations, great furniture, and
fancy stationery. Entrepreneurs who fail to use their resources wisely usually make one
of two mistakes: they apply financial resources to the wrong uses, or they maintain
inadequate control over their resources.

Poor Controls
Entrepreneurs, in part because they are very busy, often fail to use formal control
systems. One common entrepreneurial malady is an aversion to record keeping.
Expenses mount, but records do not keep pace. Pricing decisions are based on intuition
without adequate reference to costs. As a result, the company earns inadequate margins
to support growth. Sometimes an economic slowdown provides a necessary alarm,
warning business owners to pay attention to controls.

Even in high-growth companies, great numbers can mask brewing problems. Blinded by
the light of growing sales, many entrepreneurs fail to maintain vigilance over other
aspects of the business. In the absence of controls, the business veers out of control.

Mortality
One long-term measure of an entrepreneur’s success is the fate of the venture after the
founder’s death. Founding entrepreneurs often fail to plan for succession. When death
occurs, estate tax problems or the lack of a skilled replacement for the founder can lead
to business failure.

SLIDE 95

Going Public
Sometimes companies reach a point at which the owners want to “go public.” Initial
public stock offerings (IPOs) offer a way to raise capital through federally registered and
underwritten sales of shares in the company. You need lawyers and accountants who
know current regulations.

The reasons for going public include raising more capital, reducing debt or improving the
balance sheet and enhancing net worth, pursuing otherwise unaffordable opportunities,
and improving credibility with customers and other stakeholders—“you’re in the big
leagues now.”

Disadvantages include the expense, time, and effort involved; the tendency to become
more interested in the stock price and capital gains than in running the company
properly; and the creation of a long-term relationship with an investment banking firm
that won’t necessarily always be a good one. Many entrepreneurs prefer to avoid going
public, feeling they’ll lose control if they do.
SLIDE 96

Increasing Your Chances of Success

Aside from financial resources, entrepreneurs need to think through their business idea
carefully to help ensure its success.

Planning
Once you have identified a business opportunity and have the personal potential to make
it a success, what’s next?

Your excitement and intuition may convince you that you are on to something. But they
might not convince anyone else. You need more thorough planning and analysis. This
effort will help convince other people to get on board and help you avoid costly mistakes.

The first formal planning step is to do an opportunity analysis.

An opportunity analysis includes a description of the good or service, an assessment

of the opportunity, an assessment of the entrepreneur, a specification of activities and
resources needed to translate your idea into a viable business, and your source(s) of
capital.

The table here shows the questions you should answer in an opportunity analysis.

The opportunity analysis, or opportunity assessment plan, focuses on the opportunity,

not the entire venture. It provides the basis for making a decision on whether to act.

SLIDE 97

Then, the business plan describes all the elements involved in starting the new
venture.

The business plan describes the venture and its market, strategies, and future
directions. It often has functional plans for marketing, finance, manufacturing,] and
human resources.

The table here shows an outline for a typical business plan. The business plan
(1) helps determine the viability of your enterprise,
(2) guides you as you plan and organize, and
(3) helps you obtain financing. It is read by potential investors, suppliers, customers,
and others.

Key Planning Elements

Most business plans devote so much attention to financial projections that they neglect
other important information—information that matters greatly to astute investors. In
fact, financial projections tend to be overly optimistic. Investors know this and discount
the figures. In addition to the numbers, the best plans convey—and make certain that
the entrepreneurs have carefully thought through—five key factors: the people, the
opportunity, the competition, the context, and risk and reward.

The people should be energetic and have skills and expertise directly relevant to the
venture. For many astute investors, the people are the most important variable, more
important even than the idea.
a switch.” 87
The opportunity should provide a competitive advantage that can be defended.
Customers are the focus here: Who is the customer? How does the customer make
decisions? How will the product be priced? How will the venture reach all customer
segments? How much does it cost to acquire and support a customer, and to produce
and deliver the product? How easy or difficult is it to retain a customer?

It is also essential to fully consider the competition. The plan must identify current
competitors and their strengths and weaknesses, predict how they will respond to the
new venture, indicate how the new venture will respond to the competitors’ responses,
identify future potential competitors, and consider how to collaborate with or face off
against actual or potential competitors.

The environmental context should be a favorable one from regulatory and economic
perspectives. Such factors as tax policies, rules about raising capital, interest rates,
inflation, and exchange rates will affect the viability of the new venture. The context can
make it easier or harder to get backing and to succeed.

The risk must be understood and addressed as fully as possible. The future is always
uncertain, and the elements described in the plan will change over time. Although you
cannot predict the future, you must contemplate head-on the possibilities of key people
leaving, interest rates changing, a key customer leaving, or a powerful competitor
responding ferociously. Then describe what you will do to prevent, avoid, or cope with
such possibilities.

SLIDE 98

Nonfinancial Resources

Also crucial to the success of a new business are nonfinancial resources, including
legitimacy in the minds of the public and the various ways in which other people can
help.

Legitimacy An important resource for the new venture is legitimacy —people’s

judgment of a company’s acceptance, appropriateness, and desirability. When the
market confers legitimacy, it helps overcome the “liability of newness” that creates a
high percentage of new-venture failure. Legitimacy helps a firm acquire other resources
such as top managers, good employees, financial resources, and government support.

A business is legitimate if its goals and methods are consistent with societal values. You
can generate legitimacy by visibly conforming to rules and expectations created by
governments, credentialing associations, and professional organizations; by visibly
endorsing widely held values; and by visibly practicing widely held beliefs.

Networks The entrepreneur is aided greatly by having a strong network of people.

Social capital —being part of a social network, and having a good reputation—helps
entrepreneurs gain access to useful information, gain trust and cooperation from others,
recruit employees, form successful business alliances, receive funding from venture
capitalists, and become more successful.

Top-Management Teams The top-management team is another crucial resource.

in companies that have incorporated, a board of directors improves the company’s
image, develops longer-term plans for expansion, supports day-to-day activities, and
develops a network of information sources.

Advisory Boards Whether or not the company has a formal board of directors,
entrepreneurs can assemble a group of people willing to serve as an advisory board.
Board members with business experience can help an entrepreneur learn basics such as
how to do cash-flow analysis; identify needed strategic changes; and build relationships
with bankers, accountants, and attorneys.

Partners Often, two people go into business together as partners. Partners can help
one another access capital, spread the workload, share the risk, and share expertise.

Despite the potential advantages of finding a compatible partner, partnerships are not
always marriages made in heaven.

To be successful, partners need to acknowledge one another’s talents, let each other do
what they do best, communicate honestly, and listen to one another. Partners also must
learn to trust each other by making and keeping agreements. If they must break an
agreement, it is crucial that they give early notice and clean up after their mistakes.

SLIDE 99

CORPORATE ENTREPRENEURSHIP

(Read Slide)

SLIDE 100

Large corporations are more than passive bystanders in the entrepreneurial explosion.

Even established companies try to find and pursue new and profitable ideas—and they
need in-house entrepreneurs (sometimes called intrapreneurs) to do so.

If you work in a company and are considering launching a new business venture, the
table here can help you decide whether the new idea is worth pursuing.

SLIDE 101

Building Support for Your Idea

A manager who has a new idea to capitalize on a market opportunity will need to get
others in the organization to buy in or sign on. In other words, you need to build a
network of allies who support and will help implement the idea.

If you need to build support for a project idea, the first step involves clearing the
investment with your immediate boss or bosses. At this stage, you explain the idea and
seek approval to look for wider support.

Higher executives often want evidence that the project is backed by your peers before
committing to it. This involves making cheerleaders —people who will support the
manager before formal approval from higher levels.

Next, horse trading begins. You can offer promises of payoffs from the project in return
for support, time, money, and other resources that peers and others contribute.

Finally, you should get the blessing of relevant higher-level officials. This usually
involves a formal presentation. You will need to guarantee the project’s technical and
political feasibility. Higher management’s endorsement of the project and promises of
resources help convert potential supporters into an enthusiastic team. At this point, you
can go back to your boss and make specific plans for going ahead with the project.
SLIDE 102

Building Intrapreneurship

Building intrapreneurship derives from careful and deliberate strategy.

Two common approaches used to stimulate intrapreneurial activity are skunkworks

and bootlegging.

Skunkworks are project teams designated to produce a new product. A team is formed
with a specific goal within a specified time frame. A respected person is chosen to be
manager of the skunkworks. In this approach to corporate innovation, risk takers are not
punished for taking risks and failing—their former jobs are held for them. The risk takers
also have the opportunity to earn large rewards.

Bootlegging refers to informal efforts—as opposed to official job assignments—in which

employees work to create new products and processes of their own choosing and
initiative. Informal can mean secretive, such as when a bootlegger believes the company
or the boss will frown on those activities. But companies should tolerate some
bootlegging, and some even encourage it.

SLIDE 103

Management Challenges

Organizations that encourage intrapreneurship face an obvious risk: the effort can fail.

There is considerable history of internal venture development by large firms, and it does
not encourage optimism. However, this risk can be managed. In fact, failing to foster
intrapreneurship may represent a subtler but greater risk than encouraging it. The
organization that resists entrepreneurial initiative may lose its ability to adapt when
conditions dictate change.

The most dangerous risk in corporate entrepreneurship is the risk of overreliance on a

single project. Many companies fail while awaiting the completion of one large,
innovative project. The successful entrepreneurial organization avoids overcommitment
to a single project and relies on its entrepreneurial spirit to produce at least one winner
from among several projects.

Organizations also court failure when they spread their entrepreneurial efforts over
too many projects. If there are many projects, each effort may be too small in scale.
Managers will consider the projects unattractive because of their small size. Or those
recruited to manage the projects may have difficulty building power and status within
the organization.

The hazards in intrapreneurship, then, are related to scale. One large project is
a threat, as are too many underfunded projects. But a carefully managed
approach to this strategically important process will upgrade an organization’s
chances for long-
term survival and success.
SLIDE 104

Entrepreneurial Orientation
(Read Slide)
SLIDE 105

Entrepreneurial orientation is determined by five tendencies:

to allow independent action, innovate, take risks, be proactive, and be competitively
aggressive. Entrepreneurial orientation should enhance the likelihood of success and
may be particularly important for conducting business internationally.

To allow independent action is to grant to individuals and teams the freedom to

exercise their creativity, champion promising ideas, and carry them through to
completion.

Innovativeness requires the firm to support new ideas, experimentation, and creative
processes that can lead to new products or processes; it requires a willingness to depart
from existing practices and venture beyond the status quo.

Risk taking comes from a willingness to commit significant resources, and perhaps
borrow heavily, to venture into the unknown. The tendency to take risks can be assessed
by considering whether people are bold or cautious, whether they require high levels of
certainty before taking or allowing action, and whether they tend to follow tried-and-true
paths.

To be proactive is to act in anticipation of future problems and opportunities. A

proactive firm changes the competitive landscape; other firms merely react. Proactive
firms are forward thinking and fast to act, and are leaders rather than followers.
Proactive firms encourage and allow individuals and teams to be proactive.

Finally, competitive aggressiveness is the tendency of the firm to challenge

competitors directly and intensely to achieve entry or improve its position. In other
words, it is a competitive tendency to outperform one’s rivals in the marketplace. This
might take the form of striking fast to beat competitors to the punch, to tackle them
head-to-head, and to analyze and target competitors’ weaknesses.

What makes a firm “entrepreneurial” is its engagement in an effective

combination of independent action, innovativeness, risk taking, proactiveness,
and competitive aggressiveness.