Entrepreneurship & Innovation MGMT8608 Lecture Notes Topic... · Entrepreneurs ” In groups ... Factors Influencing Enterprise Behaviour Stage of Life Childhood Family Class

© Mazzarol 2012 all rights reserved

Entrepreneurship & Innovation MGMT8608

TOPIC 2: THE ENTREPRENEUR – MIND AND ACTION

BUSINESS SCHOOL

The University of Western Australia© Mazzarol 2012 all rights reserved

Learning Outcomes

Examine the psychological and social trait theories of entrepreneurship.

Consider the environmental factors likely to trigger enterprising behaviour.

Complete an entrepreneurial assessment.

Relate theories of entrepreneurship to individual vocational and professional contexts.


The Entrepreneurial Mindset

I put my balls on the line and I thought, I am just going for it…I have self-belief that no matter what happens there will always be opportunities and you don’t always need money to do them, this helps a lot.• Andrew, entrepreneur and

successful property developer


What is an Entrepreneur?


Three questions:

What are the characteristics that define entrepreneurship?

Do all people have these qualities?

Why do some people succeed at entrepreneurship while others don’t?


Case Study Analysis

Individually read the case studies of “Lessons from Entrepreneurs”

In groups address the questions

What do these cases highlight about the entrepreneurial mindset?

Report your group’s findings


Common Characteristics of Entrepreneurs

Commitment & Determination Drive to Achieve Opportunity Orientation Persistence in problem solving Internal locus of control Calculated risk taking Tolerance for failure Creativity and innovativeness Self-confidence and optimism

Team building capacity Initiative and responsibility Seeking feedback Tolerance for ambiguity Integrity & reliability High energy levels Vision Independence

Source: Kuratko & Hodgetts 2004


Psychological Characteristics:• Need for achievement (McClelland, 1961)

• Tolerance of Ambiguity (Schere, 1982)

• Risk taking propensity (Brockhaus, 1980)

• Internal Locus of Control (Brockhaus, 1985)

• Desire for autonomy (Shane, Locke & Collins, 2003)

• Ego drive & self-efficacy (Shane, Locke & Collins, 2003)

• Locus of control (Shane, Locke & Collins, 2003)

• Desire for Control (Greenberger & Sexton, 1988)

Environmental Characteristics: • Career History (Storey, 1982; Ronstadt, 1988)

• Gender (Buttner & Rosen, 1989; Kolvereid, et. al., 1993)

• Family background (Scott & Twomey, 1988; Matthew & Moser, 1995)

• Ethnicity (Aldrich & Waldinger, 1990)

Research into Entrepreneurial Behaviour


A Model of Entrepreneurial Motivation

Source: Naffzinger, Hornsby & Kuratko, 1994

Expectation/Outcome

Comparison

Decisionto behave

Entrepreneurially

Implementation/Outcome

Perception

EntrepreneurialStrategy

Intrinsic/ExtrinsicRewards

FirmOutcomes

EntrepreneurialManagement

BE IDEA

PC PE PG

PC = Personal CharacteristicsPE = Personal EnvironmentPG = Personal GoalsBE = Business Environment


Entrepreneurial Motivations:1. General• Need for achievement• Locus of control• Vision• Desire for autonomy• Passion• Drive

1. Task Specific• Goal setting• Self-efficacy

Cognitive Factors:• Vision• Knowledge• Skills• Abilities

Entrepreneurial Opportunities

Environmental ConditionsOPPORTUNITY RECOGNITION

IDEADEVELOPMENT

EXECUTION:• Resource assembly• Organizational design• Market making• Product development

Model of Entrepreneurial Motivation and the Entrepreneurial Process

Source: Shane, Locke and Collins (2003)


Entrepreneurial Behaviour

Source: Cunningham & Lischeron (1990)


Factors Influencing Enterprise Behaviour

Stage of LifeChildhoodFamily Class

Work

Education

Values & goals

AdolescenceFamily vocational preference

Vocational education choice

Education values & goals

Friends & community

Early AdultFurther education choice

Class ranking

Residual and own family influence

Friends & community

Middle AdultWork & class mobility

Work

Own family & friends

Job satisfaction

Social interaction

Late AdultClass & wealth

Family situation

Work opportunities

Job satisfaction

Retirement facilities

Source: Gibb, 1988


Conceptual Framework of Entrepreneurial Orientation

Characteristics of the Firm’s Management Team

Entrepreneurial Orientation

• Innovative

• Achievement focused

• Autonomy driven

• Risk taking profile

• Proactive & Competitive

• Strategic capacity

Organisational Configuration of the Firm

• size

• structure

• strategy

• strategic planning processes

• resources (e.g. financial & human)

• culture

Task Environment of the Firm

• dynamic & turbulent

• munificent

• complexity

• industry characteristics

Performance of the Firm

• sales growth

• market share

• profitability

• stakeholder satisfaction

Source: Lumpkin & Dess (1996)


Entrepreneurial Orientation

Innovativeness

Pro-activity

Risk Taking Proclivity

1. R&D Leadership

2. New Product Lines

3. Product Changes

4. Competitive Actions

5. New Techniques

6. Competitive Posture

7. Risk Taking Proclivity

8. Environmental Boldness

Three Factor Measure of Entrepreneurial Orientation

Source: Kreiser, Marino & Weaver (1996)


Ambitious Goals

Confidence & Self-Belief

Personal Theory

Known Capabilities

Active Learning

Values & Motivation

TIME

DEVELOPMENT OF ENTREPRENEURIAL

CAPABILITY

Relationships

Achievement

Source: Rae (2000)


Thinking Exercise

What are the common lessons from each of these three successful entrepreneurs?


Jeff Bezos – Advice for Entrepreneurs


Steve Jobs – Advice for Entrepreneurs


Richard Branson – Advice for Entrepreneurs


Discussion

How would you summarise the key messages that each of these three highly successful entrepreneurs have provided as advice for others who wish to become entrepreneurs?


General Enterprise Tendencies

G.E.T TEST


Thinking Exercise

How did you score? What do your scores suggest

about:• Your personal history?• Your professional career?

Write down your own description of what it is to be an entrepreneur


A Measure of Enterprise Tendencies

General Entrepreneurial Tendencies (GET) Test: • (Caird, 1991; 1992; 1993)

Employs 54 item scale to measure:• Need for Achievement• Need for Autonomy• Creative tendency• Propensity for calculated risk taking• Locus of control

Draws upon a range of psychometric scales:• McClelland’s – Thematic Apperception Test (TAT) • Edwards Personal Preference Schedule (EPPS)• Honey & Mumford’s Measure of Learning Styles• Jackson’s Personality Inventory• Myers-Briggs Type Indicator

Source: Caird, 1993

Foundations of the GET Test


GET Test – Comparison of Occupations

Group Need toAchieve

NeedAutonomy

Creative Risktaking

Locus ofcontrol

Total score

Owner-managers

High High High High High 41/54

Teachers Medium Medium High Medium Medium 36/54

Nurses Medium Low Medium Medium Low 33/54

Clerical staff Low Medium Medium Medium Low 29/54

Civil servants Medium Medium Medium Medium Low 33/54

Lecturers Medium High High High Medium 38/54

Source: Caird, 1993


Research Support for GET Test

Study of 194 managers & 661 students (Cromie & O’Donaghue, 1992)

• GET Test has criterion validity• Able to differentiate significant differences between the entrepreneur &

student populations• Suggests it has good validity

Entrepreneurial propensity measured by• High creative tendencies• Above average need for autonomy• High calculated risk taking orientation• High need for achievement• Internal locus of control (Cromie, Callaghan & Jansen, 1992)


MBA Student Study

56 MBA students enrolled in a course in entrepreneurship & innovation were administered the GET Test

• Scores were examined and discussed in class Students then identified a person who profiled as an entrepreneur

• Students read literature on character of entrepreneurs• Students conducted an interview with chosen entrepreneur using Timmon’s

(1999) “visit with an entrepreneur interview guide)– Focus on personal & professional history, triggers for entrepreneurship activity, role

models, opportunity recognition and resource management• Entrepreneur was asked to take the GET Test• Findings compared with those of student & literature

– Triangulation of data and self analysis “Am I an Entrepreneur?”

Source: Mazzarol, 2007


Findings from GET Test

Entrepreneur? N

MaxGET

Score

Average GET

Score

Actual Mean Score Std. Deviation

Sigt-test

(2-tailed )

Achievement Drive yes 56 12 9 10.02 1.657 .037*

no 56 12 9 9.34 1.751 .037*

Autonomy Drive yes 56 6 4 4.05 1.432 .209

no 56 6 4 3.71 1.411 .209

Creativity Drive yes 56 12 8 9.36 1.967 .047*

no 56 12 8 8.63 1.884 .047*

Calculated Risk Taking yes 56 12 8 9.30 2.373 .017*

no 56 12 8 8.25 2.242 .017*

Locus of control yes 56 12 8 10.00 1.991 .143

no 56 12 8 9.48 1.716 .143

Total GET score yes 56 54 30-43 43.05 5.795 .001*

no 56 54 30-43 39.41 5.815 .001*

* p < 0.05



Findings from GET Test


entrepreneur MBA studentClassification

0

2

4

6

8

10

12

Manager

Business Owner

Nurse

Business Owner

Business Owner

Business Owner

Achievement DriveAutonomy DriveCreativity DriveCalculated RiskTakingDrive and Determination

GET Test Average

MBA Case Study

Overall GET Score = 42/54Career history:• Engineer and manager with overseas

work experience.• Part time investor in the stock market.Family background:• Parents owned small manufacturing

business and taught him to work hard.

“My education, training, and experience should give me the necessary entrepreneurial skills needed, more experience would be an advantage. With a family (two young kids) I would need to carefully access the risks of an entrepreneurial venture to ensure we have sufficient money for our future ”

The GET test showed the entrepreneur and I were above average in our tendencies towards being entrepreneurial with scores of 42 and 50, compared to average of 37, and maximum of 54. The results for the entrepreneur support the GET test theory. They suggest that, with an above average score, I am a potential entrepreneur. Thus I shall go and find the right opportunity !”

MBA Case StudyOverall GET Score = 22/54Career history:• Registered nurse.• Nursing does not encourage enterprise tendencies.Family background:• Father was self‐employed engineer but died in his

50s leaving mother to raise the children.• Taught to study hard and get secure career.

“The results of the GET indicate that I have the entrepreneurial tendencies of an inanimate object”

“I believe that my personal background and especially current context impacts highly on my tendencies towards entrepreneurialism. While I did have a positive role model in my father in terms of new venture creation, my chosen profession is one that, in direct patient care, requires conformation to rule with risk taking (even moderate) and creativity not valued attributes.”

Left nursing to become practice manager for her husband who was setting up a new cardiac practice.


Group Discussion

Compare your GET Test results with the people around you.

• Which entrepreneurial traits do you recognise in yourself and your group?

• Which attributes are valued by your employers or organisations?

• Which attributes do you have little chance to develop in your current environment?

• How could entrepreneurship be better encouraged in your organisations?


End of Presentation

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Entrepreneurship & Innovation MGMT8608 Lecture Notes Topic... · Entrepreneurs ” In groups ... Factors Influencing Enterprise Behaviour Stage of Life Childhood Family Class