MODULE 1MODULE 1THE NATURE AND IMPORTANCE THE NATURE AND IMPORTANCE

OF ENTREPRENEURSOF ENTREPRENEURS

Nature and Development of Nature and Development of EntrepreneurshipEntrepreneurship

Entrepreneur: Individual who takes risks and starts Entrepreneur: Individual who takes risks and starts something newsomething new

Earliest Period(Capitalist&Merchant)Earliest Period(Capitalist&Merchant) Middle Ages(manage the resources,clerics)Middle Ages(manage the resources,clerics) 1717thth Century(person contract with govt, buy @ Century(person contract with govt, buy @

certain sell @uncertain)certain sell @uncertain) 1818thth Century(capital users,venture capitalist) Century(capital users,venture capitalist)

Edison and WhitneyEdison and Whitney 1919thth and 20 and 20thth Century(viewed as economic Century(viewed as economic

perspective, Entrepreneur as an innovator)perspective, Entrepreneur as an innovator)

Today Today A behavior that includesA behavior that includes1.1. Initiative takingInitiative taking2.2. Organizing and reorganizing social and Organizing and reorganizing social and

economic mechanism to turn resources economic mechanism to turn resources and situation to practical accountand situation to practical account

3.3. The acceptance of risk failure The acceptance of risk failure

To an economist(Ms)To an economist(Ms) To a psychologist(Es)To a psychologist(Es) To businessman(Cs)To businessman(Cs)

Today Today

Entrepreneurship is the process of Entrepreneurship is the process of creating something new with value by creating something new with value by devoting the necessary time and effort, devoting the necessary time and effort, assuming the accompanying financial, assuming the accompanying financial, psychic, and social risks, and receiving the psychic, and social risks, and receiving the resulting rewards of monetary and resulting rewards of monetary and personal satisfaction and independence personal satisfaction and independence

ENTREPRENEURIAL DECISION ENTREPRENEURIAL DECISION MAKING PROCESSMAKING PROCESS

Change from present lifestyleChange from present lifestyle Work environment (R&D, marketing)Work environment (R&D, marketing) Disruption (Retired, edu degree)Disruption (Retired, edu degree)Form new enterpriseForm new enterpriseDesirableDesirable PossiblePossible1.1. CultureCulture 1.Govt1.Govt2.2. SubcultureSubculture 2.Background2.Background3.3. FamilyFamily 3.Marketing3.Marketing4.4. TeachersTeachers 4.Financing4.Financing5.5. PeersPeers 5.Role 5.Role

Models Models

Types of Start-upsTypes of Start-ups

Lifestyle firm(30-40 employees,annual revenue Lifestyle firm(30-40 employees,annual revenue $2m)$2m)

Foundation company(40-400 emp,$10-$20m)Foundation company(40-400 emp,$10-$20m)

High potential venture(500 emp,$20-$30m)High potential venture(500 emp,$20-$30m)

Gazelles Gazelles

THE NATURE AND IMPORTANCE THE NATURE AND IMPORTANCE OF ENTREPRENEURSOF ENTREPRENEURS

Increasing per capita output and incomeIncreasing per capita output and income Change in business and societyChange in business and society Developing new products and services Developing new products and services

and stimulating investment interestand stimulating investment interestProduct-evolution processProduct-evolution process

Process through which innovation Process through which innovation develops and commercializes through develops and commercializes through entrepreneurial activity which in turn entrepreneurial activity which in turn stimulates economic growthstimulates economic growth

Role of Entrepreneurship in Role of Entrepreneurship in Economic DevelopmentEconomic Development

Recognition of social need Recognition of social need Initiation of technological InnovationInitiation of technological Innovation Iterative Synthesis leading to invention Iterative Synthesis leading to invention

(pressing toward invention)-(pressing toward invention)-intersection of intersection of knowledge and social need that starts the product knowledge and social need that starts the product development phasedevelopment phase

1.1. OrdinaryOrdinary2.2. TechnologicalTechnological3.3. BreakthroughBreakthrough

Development PhaseDevelopment Phase Industrial PhaseIndustrial Phase

Government as an InnovatorGovernment as an Innovator

technology transfertechnology transfer IntrapreneurshipIntrapreneurship

Entrepreneurship within an existing Entrepreneurship within an existing organization. E.g. SBU organization. E.g. SBU

EntrepreneurshipEntrepreneurship

Entrepreneurial Careers and EducationEntrepreneurial Careers and Education

Life Space Life Space AreasAreas

ChildhoodChildhood Early Early AdulthoodAdulthood

Present Present AdulthoodAdulthood

Work/Work/OccupationOccupation

Edu and Edu and childhood work childhood work exex

Employement Employement historyhistory

Current work Current work situationsituation

Individual/Individual/personalpersonal

Childhood Childhood influences on influences on personality,valpersonality,values n interestues n interest

Adult Adult development development historyhistory

Individual’s Individual’s current current perspectiveperspective

Nonwork/familyNonwork/family Childhood Childhood family family environmentenvironment

Adult Adult family/nonwork family/nonwork historyhistory

Current Current family/nonwork family/nonwork situationsituation

Types of skills requiredTypes of skills required

Technical SkillsTechnical Skills

Business management SkillsBusiness management Skills

Personal Entrepreneurial SkillsPersonal Entrepreneurial Skills

The Future of EntrepreneurshipThe Future of Entrepreneurship

Different things to different peopleDifferent things to different people Risk taking Risk taking CreativityCreativity IndependenceIndependence RewardsRewards Create JobsCreate Jobs Increase Economic OutputIncrease Economic Output Development of the technologyDevelopment of the technology Motivation and public supportMotivation and public support Research and development (R&D)Research and development (R&D)

The Individual EntrepreneurshipThe Individual Entrepreneurship

ENTREPRENEURIAL ENTREPRENEURIAL FEELINGSFEELINGS

Locus of Control: An attribute Locus of Control: An attribute indicating the sense of control that a indicating the sense of control that a person has over life.person has over life.

Feelings about Independence and Feelings about Independence and Need for AchievementNeed for Achievement

Risk TakingRisk Taking

ETREPRENEUR BACKGROUNDETREPRENEUR BACKGROUND&CHARACTERISTICS&CHARACTERISTICS

Childhood family EnvironmentChildhood family EnvironmentEducationEducationPersonal ValuesPersonal ValuesAgeAgeWork HistoryWork History

Childhood family EnvironmentChildhood family Environment

Birth OrderBirth Order

Parent’s OccupationParent’s Occupation

Social StatusSocial Status

EducationEducation

Importance of educationImportance of education

Formal and InformalFormal and Informal

Higher and Quality educationHigher and Quality education

Education b/g from Male and Female Education b/g from Male and Female EntrepreneurEntrepreneur

Personal ValuesPersonal Values

AttitudeAttitude

Diverge from bureaucraticDiverge from bureaucratic

Planning, Rationality and predictabilityPlanning, Rationality and predictability

cont…. cont….

Five characteristics across Five characteristics across consumer and leadership groupconsumer and leadership group

Superior product qualitySuperior product quality Quality service to customersQuality service to customers High caliber managementHigh caliber management Honesty and ethicsHonesty and ethics

AgeAge

Chronological AgeChronological Age

22 and 4522 and 45 Milestone AgeMilestone Age

25,30,35,40 and 4525,30,35,40 and 45

GenderGender Male-25Male-25 Female-35Female-35

Work HistoryWork History

Role in the growth and eventual success Role in the growth and eventual success of the new ventureof the new venture

AreaAreaFinancingFinancingProduct or service developmentProduct or service developmentManufacturingManufacturingDevelopment of Distribution ChannelDevelopment of Distribution ChannelPreparation of a marketing PlanPreparation of a marketing Plan

MOTIVATIONMOTIVATION

What causes people to do somethingWhat causes people to do somethingIndependenceIndependenceMoneyMoneyJob SatisfactionJob SatisfactionAchievementAchievement

Maslow’s Need HierarchyMaslow’s Need Hierarchy

ROLE MODELS & SUPPORT SYSTEMROLE MODELS & SUPPORT SYSTEM

Individuals influencing an entrepreneur’s career Individuals influencing an entrepreneur’s career and choiceand choice

ParentsParents Brothers or sistersBrothers or sisters Other relativesOther relatives Other EntrepreneurOther Entrepreneur

Need ofNeed of MentorMentor

Relationship in the organizationRelationship in the organization

Moral Support NetworkMoral Support Network

Individual who give psychological support Individual who give psychological support to an entrepreneur to an entrepreneur

FamilyFamily FriendFriend SpouseSpouse

Professional Support NetworkProfessional Support Network

Individuals who help the entrepreneur in Individuals who help the entrepreneur in business activitiesbusiness activities

MentorMentorBusiness associatesBusiness associatesTrade associatesTrade associatesPersonal affiliationsPersonal affiliations

Managerial vs Entrepreneurial Managerial vs Entrepreneurial decision makingdecision making

Strategic OrientationStrategic Orientation Commitment to opportunityCommitment to opportunity Commitment of resourcesCommitment of resources Control of resourcesControl of resources Management StructureManagement Structure

Causes for interest in Causes for interest in IntrapreneurshipIntrapreneurship

Social level Social level Cultural levelCultural level Business levelBusiness level

IntrapreneurshipIntrapreneurship

The resistance against flexibility,growth The resistance against flexibility,growth and diversification can,in part, be and diversification can,in part, be overcome by developing a spirit of overcome by developing a spirit of entrepreneurship within the existing entrepreneurship within the existing organization, called intapreneurshiporganization, called intapreneurship

Intrapreneurship is most strongly reflected Intrapreneurship is most strongly reflected in entrepreneurial activities as well as in in entrepreneurial activities as well as in top management orientations in top management orientations in organizations. organizations.

Entrepreneurial endeavors consists of: Entrepreneurial endeavors consists of:

New business venturing New business venturing

InnovativenessInnovativeness

Self renewalSelf renewal

Proactiveness Proactiveness

Corporate vs Intrapreneurial Culture Corporate vs Intrapreneurial Culture

The environment of a particular The environment of a particular organizationorganization

The environment of an entrepreneurial-The environment of an entrepreneurial-oriented organizationoriented organization

Comparisons of Entrepreneur, Intrapreneur and Traditional Comparisons of Entrepreneur, Intrapreneur and Traditional ManagersManagers

TMTM ENTRENTR INTRINTR

Primary Primary motivesmotives

Promotion & Promotion & corp rewardscorp rewards

Independence Independence opportunity to opportunity to create and create and moneymoney

Independence Independence and ability to and ability to advance in advance in the corp the corp rewardsrewards

Time Time orientationorientation

Short termShort term Survival & Survival & achiving 5-10 achiving 5-10 yr growth of yr growth of buzbuz

B/w Entr & B/w Entr & TM,dependinTM,depending on urgency g on urgency to meet self to meet self imposedand imposedand corp timetablecorp timetable

ActivityActivity Delegates Delegates and and supervises supervises more than more than direct direct involvment involvment

Direct Direct involvementinvolvement

Direct Direct invovment invovment more than more than delegationdelegation

Risk statusRisk status CarefulCareful

Concerned Concerned about status about status symbolssymbols

Moderate Moderate risk risk taker.Not taker.Not concerned concerned about status about status symbolsymbol

Moderate Moderate risk risk taker.Not taker.Not concerned concerned about status about status symbolsymbol

Desires Desires independenindependencece

Failure and Failure and mistakesmistakes

Tries to Tries to avoid avoid mistakes mistakes and and surprisessurprises

Deals with Deals with mistakes mistakes and failuresand failures

Attempt to Attempt to hide risky hide risky projects projects from view from view until readyuntil ready

DecisionsDecisions Usually Usually agrees with agrees with those in those in upper upper managememanagement positionsnt positions

Follows Follows dream with dream with decisionsdecisions

Able to get Able to get others to others to agree to agree to help help achieve achieve dreamdream

Who Who servesserves

Others Others Self and Self and customerscustomers

Self,customSelf,customers and ers and sponsorssponsors

Family Family HistoryHistory

Family Family members members worked for worked for large large organizationorganizationss

EntrepreneuEntrepreneurial small-rial small-business, business, professional professional or farm or farm backgroundbackground

EntrepreneuEntrepreneurial small-rial small-business, business, professional professional or farm or farm backgroundbackground

Relationship Relationship with otherswith others

Hierarchy as Hierarchy as basic basic relationshiprelationship

Transactions Transactions and deal and deal making as making as basic basic relationshiprelationship

Transactions Transactions within within hierarchyhierarchy

Climate for IntrapreneurshipClimate for Intrapreneurship Organization operates on frontiers of technologyOrganization operates on frontiers of technology New ideas encouragedNew ideas encouraged Trial and error encouragedTrial and error encouraged No opportunity parametersNo opportunity parameters Resources available and accessibleResources available and accessible Multidiscipline teamwork approachMultidiscipline teamwork approach Long time horizonLong time horizon Volunteer programVolunteer program Appropriate reward systemAppropriate reward system Sponsors and champions availableSponsors and champions available Support of top managementSupport of top management

Intrapreneurial Leadership Intrapreneurial Leadership CharacteristicsCharacteristics

Understands the environmentUnderstands the environment Is visionary and flexibleIs visionary and flexible Creates management options Creates management options Encourage teamworkEncourage teamwork Encourage open discussionEncourage open discussion Builds a coalition of supportersBuilds a coalition of supporters PersistsPersists

ESTABLISHING INTRAPRENEURSHIP IN ESTABLISHING INTRAPRENEURSHIP IN THE ORGANIZATIONTHE ORGANIZATION

Secure a commitment to intrapreneurship Secure a commitment to intrapreneurship in the organization by top,middle,level in the organization by top,middle,level managementmanagement

Idea and general areas that top Idea and general areas that top management are interested in supporting management are interested in supporting should be identified, along with the amount should be identified, along with the amount of risk money that is available to develop of risk money that is available to develop the concept furtherthe concept further

A company needs to use technology to make A company needs to use technology to make itself more flexibleitself more flexible

The org should be a group of interested The org should be a group of interested managers who will train employees as well as managers who will train employees as well as share their experiencesshare their experiences

The org needs to develop ways to get closer to The org needs to develop ways to get closer to its customersits customers

An org that wants to become more An org that wants to become more intrapreneurial must learn to be more productive intrapreneurial must learn to be more productive with fewer resourceswith fewer resources

The org needs to establish a strong The org needs to establish a strong support structure for intrapreneurshipsupport structure for intrapreneurship

Support must also involve tying the Support must also involve tying the rewards to the performance of the rewards to the performance of the intrapreneurial unitintrapreneurial unit

The or needs to implement an evaluation The or needs to implement an evaluation system that allows successful system that allows successful intrapreneurial units to expand and intrapreneurial units to expand and unsuccessful ones eleminitatedunsuccessful ones eleminitated