Entrepreneurship

Chapter 1

Entrepreneurship
and the
Entrepreneurial
Mind-Set

McGraw-Hill/Irwin – 10th Edition

Copyright © 2013 by The McGraw-Hill Companies, Inc. All
rights reserved
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may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
 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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 Entrepreneurship
and the
Entrepreneurial Mind-Set

1.3
1.1 1.2 Role of
Nature & Development How Entrepreneur Entrepreneurship in
of Entrepreneurship Think Economic
Development

1.5
1.4 1.6
Entrepreneur
The Intention to Act Background and Role Model & Support
Entrepreneurially characteristics system

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 1.0 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
• Recognised, evaluate and exploit situation as possible
opportunities
• Entrepreneurial action:
• Involves creation of new products or processes
• Involves entry into new markets

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 1.0 The Nature of Entrepreneurship
• May occur through a newly created organization or within
an established organization
• Knowledge of marketing and technology and motivation
(willingness to bear uncertainty) –influence decision
whether or not to act
• 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
(Mc Mullen-Shepherd model)

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 Entrepreneurial Action – Mc
Mullen-Shepherd Model
• Explain how knowledge and motivation
influence 2 stages of entrepreneurial action:
1. Attention stage: radical uncertainty
(ignorance)
2. Evaluation stage: action specific uncertainty

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 1.2 How Entrepreneurs Think
• Entrepreneurs should:
• Think structurally
• Engage in bricolage
• Effectuate
• Cognitively adapt
• Learn from failures

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 1.2 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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 1.2 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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 1.2 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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 1.2 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 one’s thinking and
learning

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 1.2 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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 1.2 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 one’s reasoning behind a particular
response

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 1.3 Role of Entrepreneur in Economic
Development

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1.4 The Intention to Act Entrepreneurially
• Entrepreneurial intentions
• Motivational factors that influence individuals to
pursue entrepreneurial outcomes
• Perceive to be Feasible and desirable
• Entrepreneurial self-efficacy
• Conviction that one can successfully pursue
entrepreneurial outcomes (relate to perception of
feasibility)
• Perceived desirability
• Degree to which a potential entrepreneurial
outcome is evaluated as favorable or unfavorable
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 1.5 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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 1.5 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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 1.6 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
https://www.youtube.com/watch?v=9e_mqibZc-Q Jack ma ‘s 10 rules to success
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