Entrepreneurship

SESSION 2
ALEENA SHUJA
 Evolution of the Concept of Entrepreneurship
Originated from a French word meaning someone who undertakes a difficult task
Both an actor and a person managing large production projects
A person bearing risks of profit or loss in a fixed contract with the government
Conscious decision about resource allocation to yield high money from
investment; non-fixed income earners with known cost of production but
uncertain incomes, therefore operating at risk (Richard Cantillon)
Create effective capitalist system, individuals pursue both selfish and social
interest (Adam Smith)
Evolution of the Concept of Entrepreneurship (Cont.)
Insight to fulfill society’s need through the process of taking risks, recognizing
opportunities and managing them effectively (Jean-Baptiste Say)
A person that makes profit through managerial capabilities; a pioneer, a
leader and a captain of a firm (Francis Walker)
Entrepreneur is different from a manager due to inclusion of importance of
innovation; an innovator playing a role of dynamic businessman (Joseph
Schumpeter)
Who is an Entrepreneur?
“take on the risk” between buyers and seller
“undertake” a task such as starting a venture
A person who starts or organizes a commercial enterprise involving a
financial risk
Entrepreneurship: an ability to create and build something from practically
nothing
A dynamic process of creating incremental wealth
The product or service may not be unique but “value” must somehow be
infused by the entrepreneur through receiving and locating necessary skills
and resources
Entrepreneurial Opportunity
“those situations in which new goods, services, raw materials, and organizing
methods can be introduced and sold at greater than their cost of production.”
Example
1) An entrepreneurial opportunity could stem from introducing an existing
technological product used in one market to create a new market
(Uber/Careem/Airbnb)
2) An entrepreneurial opportunity could be creating a new technological
product for an existing market or creating both a new product/service and a
new market. (FinTechs)
Recurring theme: an entrepreneurial opportunity represents something new
Entrepreneurial Action
For seeking such opportunities, enterprising individual or a group of
enterprising individuals need to:
1. recognize,
2. evaluate, and
3. exploit these situations as possible opportunities through entrepreneurial
actions

“the creation of new products/processes and/or the entry into new markets,
which may occur through a newly created organization or within an
established organization”
Entrepreneurial Thinking
To be an entrepreneur is to act on the possibility that one has identified an
opportunity worth pursuing

It involves entrepreneurial thinking—

“individuals’ mental processes of overcoming ignorance to decide whether a
signal represents an opportunity for someone and/or reducing doubt as to
whether an opportunity for someone is also an opportunity for them
specifically, and/or processing feedback from action steps taken”
How Entrepreneurs Think
Entrepreneurs think differently from non-entrepreneurs.
Entrepreneurs must often make decisions in highly uncertain environments
where the stakes are high, time pressures are immense, and there is
considerable emotional investment.
Given the nature of an entrepreneur’s decision-making environment, he or
she must sometimes
(1) think structurally,
(2) engage in bricolage,
(3) effectuate, and
(4) cognitively adapt.
Think Structurally
Forming opportunity beliefs often requires creative mental leaps.
In the case of entrepreneurial opportunities, an example of a creative mental
leap is from knowledge about existing markets to a new technology that could
lead to products/services that satisfy that market.
Alternatively, the creative mental leap could be from knowledge about a
technology to a new market that could benefit from its introduction.
Making these connections between a new product (or new service, new
business model, or new technology) and a target market where it can be
introduced is aided by the superficial and structural similarities between the
source (e.g., the market) and the destination (e.g., technology).
Engage in Bricolage
Entrepreneurs often lack resources.
As a result, they either seek resources from others to provide the “slack”
necessary to experiment and generate entrepreneurial opportunities or they
engage in bricolage.
Bricolage means that some entrepreneurs make “do by applying combinations
of the resources at hand to new problems and opportunities.”
This involves taking existing resources (those at hand) and experimenting,
tinkering, repackaging, and/or reframing them so they can be used in a way for
which they were not originally designed or conceived.
 Effectuation
Causal Process:
“A process that starts with a desired outcome and focuses on the means to generate that outcome”
E.g. Imagine a chef assigned the task of cooking dinner. There are two ways the task can be organized.
In the first, the host or client picks out a menu in advance. All the chef needs to do is list the ingredients needed, shop for
them, and then actually cook the meal. This is a process o causation. It begins with a given menu and focuses on selecting
between effective ways to prepare the meal.
Effectuation Process:
“A process that starts with what one has (who they are, what they know, and whom they know) and selects among possible
outcomes”
In the second case, the host asks the chef to look through the cupboards in the kitchen for possible ingredients and utensils
and then cook a meal. Here, the chef has to imagine possible menus based on the given ingredients and utensils, select the
menu, and then prepare the meal. This is a process of effectuation. It begins with given ingredients and utensils and focuses
on preparing one of many possible desirable meals with them.
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”
Entrepreneur possess meta-cognitive awareness i.e. the ability to reflect
upon, understand, and control one’s thinking and learning
a higher-order cognitive process that serves to organize what individuals know
and recognize about themselves, tasks, situations, and their environments to
promote effective and adaptable cognitive functioning in the face of feedback
from complex and dynamic environments.
Contribution of Entrepreneurship
Entrepreneurs have altered the direction of national economies, industries
and markets:
1. Contribution to GNP and per capita income
2. Employment generation
3. Balanced regional development
4. Promotion of export and trade
5. Improvement in standard of living
6. Increased innovation
7. Overall development of the country
Intentions for Entrepreneurship
If you intend to start you own new business, you must possess these
capabilities
1) Entrepreneurial Intentions
2) Entrepreneurial Self-efficacy
3) Entrepreneurial Desirability
Sustainable Entrepreneurship
Entrepreneurship focused on preserving nature, life support, and community
(sustainability) in the pursuit of perceived opportunities to bring future
products, processes, and services into existence for gain (entrepreneurial
action) where gain is broadly includes economic and noneconomic benefits to
individuals, the economy, and society (development)
For example, individuals who were knowledgeable about cooking practices in
developing countries were able to recognize opportunities for hybrid stoves
that substantially reduced particle pollutants in households but were
consistent with traditional recipes.
It is not just the natural environment that can be sustained, though;
communities also need to be preserved.
How Can You Become an Entrepreneur
Step 1: Generating business ideas and identifying business opportunities:
1) Observing trends
2) Finding gaps in the market
Step 2: Conducting a feasibility analysis (market, technical, financial,
economic and ecological analysis)
Step 3: Making a business plan (what venture tends to accomplish)
Step 4: Arranging funds (equity/debt financing ratio)
Step 5: Setting up an enterprise and building a venture team (people who
transform idea of venture into fully functional firm)
Important Things to Ensure for Setting Up Venture
Smooth management of enterprise
Nurturing Organic (internal e.g. product development, increasing customer
base, department expansion) and Inorganic (external e.g. mergers and
acquisitions) growth
Exit strategies
Advantages of Being an Entrepreneur
Ability to make ones own decisions and act on them
Having an enough scope for innovation
Opportunity of realizing dreams and achieving excellence and contributing to
welfare of society
Having high level job satisfaction
Ensuring socioeconomic transformation of a region though employment
generation
Significant contribution to economic development of country
Types of Entrepreneurs
Innovative entrepreneurs
Imitative or adoptive entrepreneurs
Fabian entrepreneur (passive and reactive)
Drone entrepreneur (unworried and conservative to maintain status quo)
 Intrapreneurship (Corporate Entrepreneurship)
Intrapreneurship focuses on employees of a company that have many of the
attributes of entrepreneurs
A process by which teams within an established company conceive, foster, launch and
manage a new business
Business is distinct from parent company but controls parent’s assets, capabilities,
market position
A top-down approach, top management facilitates and empowers employees to
efficiently and effectively utilize resources and try out new ideas
An intrapreneur is someone within a company that takes risks in an effort to solve a
given problem
Employees who use their entrepreneurial spirit to introduce new products, processes,
methods within the corporation
Entrepreneur vs Intrapreneur
Criteria Entrepreneur Intrapreneur
Dependency Independent in his operations Dependent on
company/entrepreneur
Fund raising Raises funds Funds not raised
Risk taking Fully bears risk Risk not fully borne
Operation Operates from outside Operates within organization
Primary motive Goal orientation, self reliance, self Access to corporate resources,
motivation response to corporate rewards and
recognition
Competencies of an Entrepreneur
Creativity and innovation
Leadership and teambuilding
Opportunity seeking and initiative
Risk taking and decision making
ability
Tolerance of ambiguity and
uncertainty
Motivation to excel
Problem solving
Goal orientation
Self efficacy and adaptability
Internal locus of control
Persistence, persuasion and
networking
https://www.youtube.com/watch?v=DPR3p3EJADo