Chapter 9 Learning Objectives

After studying this chapter, you should be able to:

1. Define entrepreneurship, entrepreneurs, and entrepreneurial firms

2. Understand how institutions and sources affect entrepreneurship

3. Identify the three characteristics of a growing entrepreneurial firm

4. Differentiate international strategies that enter foreign markets and that stay in domestic markets

5. Participate in three leading debates on growing and internationalizing the entrepreneurial firm

6. Draw implications for action

ENTREPRENEURSHIP ANDENTREPRENEURIAL FIRMS

small and medium-sized enterprises (SMEs) - generally defined in the US as firms with fewer than 500 employees

entrepreneurship – identification and exploitation of previously unexplored opportunities

entrepreneurs - founders and owners of new businesses or managers of existing firms

international entrepreneurship - combination of innovative, proactive, and risk seeking behavior that crosses national borders and is intended to create wealth in organizations

GROWING THE ENTREPRENEURIAL FIRM

growth - an entrepreneurial firm can be viewed as an attempt to more fully utilize currently underutilized resources and capabilities

innovation - heart of entrepreneurship and allows for a more sustainable basis for competitive advantage

financing - start-ups need to raise capital; “4F” sources of entrepreneurial financing: founders, family, and friends, and fools

microfinance - lending institutions provide tiny loans ($50–$300) to entrepreneurs in developing countries that would lift them out of poverty

INTERNATIONALIZINGTHE ENTREPRENEURIAL FIRM

There is a myth based on historical stereotypes that only large MNEs do business abroad and that SMEs mostly operate domestically Transaction costs may seem so high that

many firms may choose not to pursue international opportunities

Some born global start-ups attempt to do business abroad from inception

Many venture investors look for a global view in candidate organizations

International Strategies for Stayingin Domestic Markets

indirect exports - SMEs reach overseas customers by exporting through domestic-based export intermediaries

export intermediaries - perform an important

“middleman” function by linking sellers and buyers overseas that otherwise would not have been connected: export trading companies (ETCs), export management companies (EMCs)