Chapter 1

Entrepreneurship
and the
Entrepreneurial Mind-Set
Hisrich
Peters

McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. Shepherd
The Nature of Entrepreneurship

 Entrepreneur – An individual who takes

initiative to bundle resources in
innovative ways and is willing to bear the
risk and/or uncertainty to act.

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The Nature of Entrepreneurship
Entrepreneurial
Opportunities
 Those situations in which  Action through the
new goods, services,
raw materials, and
organizing methods can
be introduced and sold at
greater than their cost of
production.
 Examples: E-Learning,
Online Gaming,
Management Consulting etc
Entrepreneurial Action
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
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How Entrepreneurs Think

 Entrepreneurs in particular situations may

think differently when faced with a different
task or decision environment.

 Given the nature of their decision-making

environment, entrepreneurs need to
sometimes:
1. Think structurally
2. Bricolage
3. Effectuation
4. Cognitive Adaptability
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How Entrepreneurs Think (cont.)

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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Structural similarities Example:

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How Entrepreneurs Think (cont.)

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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Bricolage – Activity

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How Entrepreneurs Think (cont.)

 Causal process
 Starts with a desired outcome.
 Focuses on the means to generate that
outcome.
 Effectuation process
 Starts with what one has (who they are, what
they know, and whom they know).
 Selects among possible outcomes.
 Entrepreneurial mind-set involves the
ability to rapidly sense, act, and mobilize,
even under uncertain conditions.
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Cooking Example:

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How Entrepreneurs Think (cont.)

 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.
 It reflects in an entrepreneur’s
metacognitive awareness.

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How Entrepreneurs Think (cont.)

 Achieving cognitive adaptability

 Comprehension questions – Aids understanding of
the nature of the environment before addressing an
entrepreneurial challenge.
 Connection tasks – Stimulates thinking about the
current situation in terms of similarities and differences
with situations previously faced and solved.
 Strategic tasks – Stimulates thoughts about which
strategies are appropriate for solving the problem (and
why) or pursuing the opportunity (and how).
 Reflection tasks – Stimulates thinking about their
understanding and feelings as they progress through
the entrepreneurial process.

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How Entrepreneurs Think (cont.)

 Entrepreneurs who are able to increase cognitive

adaptability have an improved ability to:
 Adapt to new situations.
 Be creative.
 Communicate one’s reasoning behind a particular
response.

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The Intention to Act Entrepreneurially

 Entrepreneurial intentions The

motivational factors that influence
individuals to pursue entrepreneurial
Outcomes

 Entrepreneurial self- efficacy The

conviction that one can successfully execute
the entrepreneurial process

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Entrepreneur Background and
Characteristic

1. Education
2. Age
3. Work History
4. Role Model
5. Moral Support
6. Professional Support

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