Entrepreneurship Chap 2

2. 2-2The Intention to ActEntrepreneurially Entrepreneurial intentions - Motivationalfactors that influence individuals to pursueentrepreneurial outcomes. Intention is stronger when an action isperceived to be feasible and desirable. Entrepreneurial self-efficacy - Conviction thatone can successfully execute the entrepreneurialprocess. Perceived desirability - The degree to which anindividual has a favorable or unfavorableevaluation of the potential outcomes. 3. 2-3Entrepreneur Background andCharacteristics Education Provides a background about starting abusiness. Helps in the development of communicationskills and problem-solving skills. Provides individuals with a larger opportunityset. Does not determine whether an entrepreneurwill create a new business to exploit thediscovered opportunity. 4. 2-4Entrepreneur Background andCharacteristics (cont.) Age Most entrepreneurs initiate their entrepreneurialcareers between the ages of 22 and 45. Individuals are more inclined to start anentrepreneurial career at milestone ages everyfive years (25, 30, 35, 40, and 45). Male entrepreneurs tend to start their venturesin their early 30s, while women entrepreneursdo so in their middle 30s. 5. 2-5 Work History The decision to launch a new venture can beinfluenced by: Dissatisfaction with ones job. Previous technical and industry experience. Managerial skills and entrepreneurialexperiences are also important once the venturestarts growing. Previous start-up experience is a relatively goodpredictor of starting subsequent businesses.Entrepreneur Background andCharacteristics (cont.) 6. 2-6Role Models and Support Systems Role models - Individuals influencing anentrepreneurs career choice and style Can be parents, family members, or otherentrepreneurs. Successful entrepreneurs are viewed ascatalysts by potential entrepreneurs. Role models can serve in a supportive capacityas mentors by providing information, advice andguidance. Entrepreneurs need to establish connections andnetworks in the venture formation process. 7. 2-7Role Models and Support System(cont.) Moral-Support Network It is important for entrepreneurs to have acheering squadindividuals who providepsychological support. Friends can provide honest advice,encouragement, understanding, and assistance. Relatives can be strong sources of moralsupport, particularly if they are alsoentrepreneurs. 8. 2-8 Professional-Support Network Entrepreneurs need advice and counselthroughout the establishment of the newventure which can be obtained from: Mentors. Business associates. Suppliers. Trade associations. Personal affiliations. Entrepreneurial activity is embedded in networksof interpersonal relationships.Role Models and Support System(cont.) 9. 2-9Minority Entrepreneurs There has been significant growth in: Female self-employment, with women startingnew ventures at a higher rate than men. The number of Asian, African American,Hispanic, and Native American majority ownedfirms. This growth is likely to be spurred by: Encouragement of entrepreneurship amongminority groups. Increase in the number of role models. 10. 2-10Entrepreneurial Intentions WithinExisting Organizations Top management must create anenvironment that encourages employees tothink and act entrepreneurially. Employees will realize that entrepreneurialaction within the firm is both personallydesirable and feasible. 11. 2-11Managerial Versus EntrepreneurialDecision Making Entrepreneurial management is distinctfrom traditional management in terms of: Strategic orientation. Commitment to opportunity. Commitment of resources. Control of resources. Management structure. Reward philosophy. Growth orientation. Entrepreneurial culture. 12. 2-12Table 2.1 Distinguishing Entrepreneuriallyfrom Traditionally Managed Firms 13. 2-13Managerial Versus EntrepreneurialDecision Making (cont.) Causes for Interest in CorporateEntrepreneurship Increasing interest in doing your own thingand doing it on ones terms. New search for meaning and impatience hascaused more discontent in structuredorganizations. Organizations are encouraging corporateentrepreneurship i.e. stimulating, andcapitalizing on, employees who think thatsomething can be done differently and better. 14. 2-14 Corporate entrepreneurship is most stronglyreflected in the following endeavors: New business venturing (corporate venturing) - Thecreation of a new business within an existingorganization. Innovativeness - Product and service innovation, withemphasis on development and innovation intechnology. Self-renewal - Transformation through renewal of thekey ideas on which an organization is built. Proactiveness - Includes initiative, risk taking,competitive aggressiveness, and boldness.Managerial Versus EntrepreneurialDecision Making (cont.) 15. 2-15Table 2.3 - Characteristics of anEntrepreneurial Environment 16. 2-16Table 2.4 - Leadership Characteristicsof a Corporate Entrepreneur 17. 2-17Establishing CorporateEntrepreneurship in the Organization Step one: Secure a commitment to corporateentrepreneurship in the organization by top,upper, and middle management levels. Establish initial framework and embrace theconcept. Identify, select, and train corporateentrepreneurs. 18. 2-18 Step two: Identify ideas and areas that top management isinterested in supporting. Identify amount of risk money available todevelop the concept. Establish overall program expectations andtarget results of each corporate venture. Establish mentor/sponsor system. Step three: Use of technology to ensure organizationalflexibility.Establishing Corporate Entrepreneurship inthe Organization (cont.) 19. 2-19 Step four: Identify interested managers to train employeesand share their experiences. Step five: Develop ways for the organization to get closerto its customers. Step six: Learn to be more productive with fewerresources.Establishing Corporate Entrepreneurship inthe Organization (cont.) 20. 2-20 Step seven: Establish a strong support structure forcorporate entrepreneurship. Step eight: Tie rewards to the performance of theentrepreneurial unit. Finally: Implement an evaluation system that allowssuccessful entrepreneurial units to expand andunsuccessful ones to be eliminated.Establishing Corporate Entrepreneurship inthe Organization (cont.) 21. 2-21 Problems and Successful Efforts A study found that new ventures started withina corporation performed worse than thosestarted independently by entrepreneurs. Reasons cited: Corporations difficulty in maintaining a long-termcommitment. A lack of freedom to make autonomous decisions. A constrained environment. On average, independent start-ups become: Profitable twice as fast. End up twice as profitable.Establishing Corporate Entrepreneurship inthe Organization (cont.) 22. 2-22 Companies that have adopted their own versionof the implementation process to launch newventures successfully: Minnesota Mining and Manufacturing (3M). Hewlett-Packard (HP). IBM.Establishing Corporate Entrepreneurship inthe Organization (cont.)