Challenging the Unknown

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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
Misconceptions About Entrepreneurship

1. Successful entrepreneurship needs

only a great idea
2. Entrepreneurship is easy
3. Entrepreneurship is a risky gamble
4. Entrepreneurship is found only in small
businesses
5. Entrepreneurial ventures and small
businesses are the same thing

4
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.
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.
 Entrepreneurship
(Robert C. Ronstadt) :
– A dynamic process of vision, change, and creation
for 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.
– Requires an application of energy and passion
towards the creation and implementation of new
ideas and creative solutions
Entrepreneurship : 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.
 An Integrative Model of Entrepreneurial
Inputs and Outcomes

Source: Michael H. Morris, P. Lewis, and Donald L. Sexton, “Reconceptualizing Entrepreneurship:

An Input-Output Perspective,” SAM Advanced Management Journal 59, no.1 (Winter 1994): 21–31.
Historical Perspectives on
Entrepreneurship
Small Business and Entrepreneurial Ventures –
The Differences

• Small Business
– Independently owned, operated, and financed
– has fewer than 100 employees
– doesn’t engage in new or innovative practices
– Has relatively little impact on its industry

• Entrepreneurial Ventures
– An organization pursuing opportunities
– Characterized by innovative practices
– Main goals are profitability and growth

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Current Importance
of
Entrepreneurship

1. Innovation
• Process of creating, changing,
experimenting, transforming,
and revolutionizing
2. Number of New Start-ups
• Important because new firms
contribute to economic development
through benefits such as product-
process innovation
3. Job Creation
• Vital to the overall long-term economic
health of communities, regions, and
nations
Aspects of Entrepreneurship
Venture
Financing

Corporate Social
Entrepreneurship Entrepreneurship

Trends in Women
Entrepreneurial
Entrepreneurship and Minority
Cognition
Research Entrepreneurs

Global
Entrepreneurial
Entrepreneurial
Education
Movement
Family
Businesses
 The Entrepreneurial Process
1. Exploring the Entrepreneurial Context
2. Identifying Opportunities and Possible
Competitive Advantage
– Opportunities are positive external
trends or changes that provide unique
and distinct possibilities for innovating
and creating value
– Competitive advantage is what sets an
organization apart; it’s competitive edge
3. Starting the Venture
4. Managing the Venture
 Types of Entrepreneurs
• Novice Entrepreneur
– Has no prior business ownership
experiences as a business founder,
inheritor, or purchaser
• Habitual Entrepreneur
– Has prior business ownership
experience
• Nascent Entrepreneur
– In the process of starting a new
business
– Can be either a novice or a
habitual entrepreneur
Common Characteristics of
Entrepreneurs
• Commitment, determination, and
perseverance
• Drive to achieve
• Opportunity orientation
• Initiative and responsibility
• Persistent problem solving
• Seeking feedback
• Internal locus of control
• Tolerance for ambiguity
• Calculated risk taking
• Tolerance for failure
• High energy level
• Creativity and Innovativeness
• Vision
• Self-confidence and optimism
• Independence
• Team building
 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.
 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.
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
 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 P2r–a2ct4ice (spring 1994): 33.
Opportunity Identification:
The Search for New
Ideas • Opportunity identification is central
to entrepreneurship and involves:
– The creative pursuit of ideas
– The innovation process
• The first step for any entrepreneur
is the identification of a “good idea.”
– The search for good ideas is
never easy.
– Opportunity recognition can lead
to both personal and societal
wealth.
Entrepreneurial
Imagination and
Creativity
• How entrepreneurs do what they do:
– Creative thinking + systematic analysis = success
– Seek out unique opportunities to fill needs and wants
– Turn problems into opportunities
– Recognize that problems are to solutions what
demand
is to supply
The Role of Creative Thinking
• Creativity
– The generation of ideas that result in the improved
efficiency or effectiveness of a system.
• Two important aspects of creativity exist:
– Process
• The process is goal oriented; it is designed to
attain a solution to a problem.
– People
• The resources that determine the solution.
The Critical Thinking Process
 The Creative Climate
• Characteristics of a creative climate:
– A trustful management that does not overcontrol the personnel
– Open channels of communication among all business members
– Considerable contact and communication with outsiders
– A large variety of personality types
– A willingness to accept change
– An enjoyment in experimenting with new ideas
– Little fear of negative consequences for making a mistake
– The selection and promotion of employees on the basis of merit
– The use of techniques that encourage ideas, including suggestion systems and
brainstorming
– Sufficient financial, managerial, human, and time resources for accomplishing
goals
Innovation and the Entrepreneur

• Innovation:
– Is the process by which entrepreneurs
convert opportunities into marketable ideas.
– Is a combination of the vision to create a
good idea and the perseverance and
dedication to remain with the concept
through implementation.
– Is a key function in the entrepreneurial
process.
– Is the specific function of entrepreneurship.
 Process • Sources of Innovation
– Unexpected occurrences
• Types of Innovation – Incongruities
– Invention – Process needs
– Extension – Industry and market
– Duplication changes
– Synthesis – Demographic
changes
– Perceptual
changes
– Knowledge-based
concepts
Type Description Examples
Invention Totally new product, service, Wright brothers—airplane
or process Thomas Edison—light bulb
Alexander Graham Bell—
telephone
Extension New use or different Ray Kroc—McDonald’s
application of an already Mark Zuckerberg—Facebook
existing product, service, Barry Sternlicht—Starwood Hotels &
or process Resorts

Duplication Creative replication of an Wal-Mart—department stores

existing concept Gateway—personal computers
Pizza Hut—pizza parlor

Synthesis Combination of existing Fred Smith—Fed Ex

concepts and factors into a Howard Schultz—Starbucks
new formulation or use
Major Innovation Myths

• Myth 1: Innovation is planned and

• Myth 2: predictable Technical specifications
should be thoroughly prepared
• Myth 3: Creativity relies on dreams and
blue- sky ideas
• Myth 4: Big projects will develop better
innovations than smaller ones
• Myth 5: Technology is the driving force of
innovation success
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