Entrepreneurship:Evolutionary

Development- Revolutionary
Impact

Donald F. Kuratko

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 Entrepreneurs—Challenging the Unknown
• Entrepreneurs
 Recognize opportunities where
others see chaos or confusion
 Are aggressive catalysts for
change within the marketplace
 Challenge the unknown and
continuously create the future

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Types of Entrepreneurs
• Social Entrepreneur-is motivated by a desire to
help. Improve and transform social,
environmental, educational and economic
conditions.
 Driven by an emotional desire to address some of the
big social and economic conditions in the country.
• Serial Entrepreneur- Is one who continuously
comes up with new ideas and starts new
businesses.
 Represented as possessing a higher propensity for
risk, innovation and achievement

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Types of Entrepreneur
• Lifestyle Entrepreneur- places passion before
profit when launching a business in order to
combine personal interests and talent with the
ability to earn a living.

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 Entrepreneurs versus
Small Business Owners: A Distinction
• Small Businesses Owners
 Manage their businesses by expecting stable sales,
profits, and growth
• Entrepreneurs
 Focus their efforts on innovation, profitability and
sustainable growth

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 Entrepreneurship: A Mindset
• Entrepreneurship is more than the mere creation
of business:
 Seeking opportunities
 Taking risks beyond security
 Having the tenacity to push an idea through to reality

• Entrepreneurship is an integrated concept that

permeates an individual’s business in an
innovative manner.

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 The Evolution of Entrepreneurship
• Entrepreneur is derived from the French
entreprendre, meaning “to undertake.”
 The entrepreneur is one who undertakes to organize,
manage, and assume the risks of a business.
 Although no single definition of entrepreneur exists
and no one profile can represent today’s
entrepreneur, research is providing an increasingly
sharper focus on the subject.

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 A Summary Description
of Entrepreneurship
• Entrepreneurship (Robert C. Ronstadt)
 The dynamic process of creating incremental wealth.
 This wealth is created by individuals who assume
major risks in terms of equity, time, and/or career
commitment of providing value for a product or
service.
 The product or service itself may or may not be new or
unique but the entrepreneur must somehow infuse
value by securing and allocating the necessary skills
and resources.

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 1–8

 An Integrated Definition
• Entrepreneurship
 A dynamic process of vision, change, and creation.
• Requires an application of energy and passion towards the
creation and implementation of new ideas and creative
solutions.
 Essential ingredients include:
• The willingness to take calculated risks—in terms of time,
equity, or career.
• The ability to formulate an effective venture team; the creative
skill to marshal needed resources.
• The fundamental skills of building a solid business plan.
• The vision to recognize opportunity where others see chaos,
contradiction, and confusion.

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 1–9

 The Myths of Entrepreneurship
• Myth 1: Entrepreneurs Are Doers, Not Thinkers

• Myth 2: Entrepreneurs Are Born, Not Made

• Myth 3: Entrepreneurs Are Always Inventors

• Myth 4: Entrepreneurs Are Academic and Social Misfits

• Myth 5: Entrepreneurs Must Fit the “Profile”

• Myth 6: All Entrepreneurs Need Is Money

• Myth 7: All Entrepreneurs Need Is Luck

• Myth 8: Ignorance Is Bliss For Entrepreneurs

• Myth 9: Entrepreneurs Seek Success But Experience

High Failure Rates
• Myth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers)

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 1–10

 Key Concepts
• Entrepreneurship
 A process of innovation and new-venture creation
through four major dimensions—individual,
organizational, environmental, process—that is aided
by collaborative networks in government, education,
and institutions.
• Entrepreneur
 A catalyst for economic change who uses purposeful
searching, careful planning, and sound judgment
when carrying out the entrepreneurial process.

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 1–11

 Key Concepts
• Entrepreneurial Management
 The discipline of entrepreneurial management:
• Entrepreneurship is based upon the same principles.
• It matters not who or what that the entrepreneur is—an
existing large institution or an individual, for-profit business or
a public-service organization, a governmental or non-
governmental institution.
• The rules are much the same: things that work and those that
don’t are much the same, and so are innovations and where
to look for them.

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 1–12

 The Entrepreneurial Mind-Set in Individuals

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 2–13

 The Entrepreneurial Mindset
• Entrepreneurial Mindset
 Describes the most common characteristics
associated with successful entrepreneurs as well as
the elements associated with the “dark side” of
entrepreneurship.
• Who Are Entrepreneurs?
 Independent individuals, intensely committed and
determined to persevere, who work very hard.
 They are confident optimists who strive for integrity.
 They burn with the competitive desire to excel and use
failure as a learning tool.

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 2–14

 Sources of Research on Entrepreneurs

Research and Speeches,

Direct
Popular Seminars and
Observation
Publications Presentations

The
Entrepreneurial
Mindset

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 2–15

 Sources of Research on Entrepreneurs (cont’d)
• Publications • Direct Observation of
 Technical and professional Practicing Entrepreneurs
journals  Interviews
 Textbooks on entrepreneurship  Surveys
 Books about entrepreneurship  Case studies
 Biographies or autobiographies
• Speeches, Seminars, and
of entrepreneurs
Presentations by
 Compendiums about
entrepreneurs Practicing Entrepreneurs
 News periodicals
 Venture periodicals
 Newsletters
 Proceedings of conferences
 The Internet

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 Common Characteristics of Entrepreneurs
• Commitment, • Calculated risk taking
determination, and • Tolerance for failure
perseverance
• High energy level
• Drive to achieve
• Creativity and
• Opportunity orientation Innovativeness
• Initiative and • Vision
responsibility
• Self-confidence and
• Persistent problem solving optimism
• Seeking feedback • Independence
• Internal locus of control • Team building
• Tolerance for ambiguity

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 Outline of the Entrepreneurial Organization

Imagination

Acceptance
Flexibility
of Risks

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 Table
2.1 Characteristics Often Attributed to Entrepreneurs

1. Confidence 15. Intelligence 29. Pleasant personality

2. Perseverance, determination 16. Orientation to clear goals 30. Egotism
3. Energy, diligence 17. Positive response to 31. Courage
challenges
4. Resourcefulness 32. Imagination
18. Independence
5. Ability to take calculated risks 33. Perceptiveness
19. Responsiveness to
6. Dynamism, leadership 34. Toleration of ambiguity
suggestions and criticism
7. Optimism 35. Aggressiveness
20. Time competence, efficiency
8. Need to achieve 36. Capacity for enjoyment
21. Ability to make decisions
9. Versatility; knowledge of quickly 37. Efficacy
product, market, machinery,
22. Responsibility 38. Commitment
technology
23. Foresight 39. Ability to trust workers
10. Creativity
24. Accuracy, thoroughness 40. Sensitivity to others
11. Ability to influence others
25. Cooperativeness 41. Honesty, integrity
12. Ability to get along well with
people 26. Profit orientation 42. Maturity, balance
13. Initiative 27. Ability to learn from mistakes
14. Flexibility 28. Sense of power

Source: John A. Hornaday, “Research about Living Entrepreneurs,” in Encyclopedia of Entrepreneurship, ed. Calvin
Kent, Donald Sexton, and Karl Vesper, © 1982, 26–27. Adapted by permission of Prentice-Hall, Englewood Cliffs, NJ.
© 2009 South-Western, a part of Cengage Learning. All rights reserved. 2–19
 Entrepreneurship Theory
• Entrepreneurs cause entrepreneurship.
 Entrepreneurship is a function of the entrepreneur:

E  f (e )
 Entrepreneurship is the interaction of skills related to
inner control, planning and goal setting, risk taking,
innovation, reality perception, use of feedback,
decision making, human relations, and independence.

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 2–20

 The Entrepreneurial Journey
• Entrepreneurs
 Create ventures much as an artist creates a painting.
 Are formed by the lived experience of venture
creation.
• Experiential Nature of Creating a Sustainable
Enterprise
 Emergence of the opportunity
 Emergence of the venture
 End emergence of the entrepreneur

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 2–21

 The Dark Side of Entrepreneurship
• The Entrepreneur’s Confrontation with Risk
 Financial risk versus profit (return) motive varies in
entrepreneurs’ desire for wealth.
 Career risk—loss of employment security
 Family and social risk—competing commitments of
work and family
 Psychic risk—psychological impact of failure on the
well-being of entrepreneurs

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 2–22

 Figure
2.1 Typology of Entrepreneurial Styles

Source: Thomas Monroy and Robert Folger, “A Typology of Entrepreneurial Styles:

Beyond Economic Rationality,” Journal of Private Enterprise IX(2) (1993): 71.
© 2009 South-Western, a part of Cengage Learning. All rights reserved. 2–23
 Stress and the Entrepreneur
• Entrepreneurial Stress
 The extent to which entrepreneurs’ work demands
and expectations exceed their abilities to perform as
venture initiators, they are likely to experience stress.

• Causes of Entrepreneurial Stress

 Loneliness
 Immersion in business
 People problems
 Need to achieve

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 Entrepreneurs: Type A Personalities
• Chronic and severe sense of time urgency.
• Constant involvement in multiple projects subject
to deadlines.
• Neglect of all aspects of life except work.
• A tendency to take on excessive responsibility,
combined with the feeling that “Only I am
capable of taking care of this matter.”
• Explosiveness of speech and a tendency to speak
faster than most people.

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 Dealing with Stress
• Networking

• Getting away from it all

• Communicating with employees

• Finding satisfaction outside the company

• Delegating

• Exercising Rigorously

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 The Entrepreneurial Ego
• Self-Destructive Characteristics
 Overbearing need for control
 Sense of distrust
 Overriding desire for success
 Unrealistic optimism
• Entrepreneurial Motivation
 The quest for new-venture creation as well as the
willingness to sustain that venture.
• Personal characteristics, personal environment, business
environment, personal goal set (expectations), and the
existence of a viable business idea.

© 2009 South-Western, a part of Cengage Learning. All rights reserved. 2–27

 Figure
2.2 A Model of Entrepreneurial Motivation

Source: Douglas W. Naffziger, Jeffrey S. Hornsby, and Donald F. Kuratko, “A Proposed Research
Model of Entrepreneurial Motivation,” Entrepreneurship Theory and Practice (spring 1994): 33.
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