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Chapter 1
ENTREPRENEURSHIP
9E
Mathew J. Manimala
Dean A. Shepherd
Robert D. Hisrich
Michael P. Peters
McGraw-Hill/Irwin
1
ENTREPRENEURSHIP AND
THE ENTREPRENEURIAL MIND-SET
LEARNING OBJECTIVES
To introduce the concept of entrepreneurship
and explain the process of entrepreneurial
action
To describe how structural similarities enable
entrepreneurs to make creative mental leaps
To highlight bricolage as a source of
entrepreneurs’ resourcefulness
1-3
Contd…
LEARNING OBJECTIVES
To introduce effectuation as a way expert
entrepreneurs sometimes think
To develop the notion that entrepreneurs
cognitively adapt
To introduce sustainable entrepreneurship as
a means of sustaining the natural environment
and communities and developing gains for
others
1-4
THE NATURE OF
ENTREPRENEURSHIP
Entrepreneurial opportunities
• Situations in which new goods, services, raw
materials, and organizing methods:
• Can be introduced
• Sold at greater than their cost of production
Entrepreneurial action:
• Involves creation of new products or processes
• Involves entry into new markets
• May occur through a newly created organization
or within an established organization
1-5
Contd…
THE NATURE OF
ENTREPRENEURSHIP
Entrepreneurial thinking
• An individuals’ mental processes of overcoming
ignorance to:
• Decide whether a signal represents an opportunity for
someone
• Decide whether that opportunity is applicable to the
individual specifically
• Process feedback from action steps taken
1-6
ENTREPRENEURIAL ACTION
Figure 1.1
1-7
HOW ENTREPRENEURS THINK
Entrepreneurs should:
• Think structurally
• Engage in bricolage
• Effectuate
• Cognitively adapt
• Learn from failures
1-8
Contd…
HOW ENTREPRENEURS THINK
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
1-9
Contd…
HOW ENTREPRENEURS THINK
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
1-10
Contd…
HOW ENTREPRENEURS THINK
Effectuation
• Causal process
• Starts with a desired outcome
• Focuses on the means to generate that outcome
• Effectuation process
• Starts with what one has
• Selects among possible outcomes
• Entrepreneurial mind-set: Ability to rapidly sense,
act, and mobilize, even under uncertain conditions
1-11
Contd…
HOW ENTREPRENEURS THINK
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
• Metacognitive awareness - Ability to reflect
upon,understand, and control one’s thinking and
learning
1-12
Contd…
HOW ENTREPRENEURS THINK
Achieving cognitive adaptability
• Comprehension questions
• Increase entrepreneurs’ understanding of the nature of
the environment
• Connection tasks
• Stimulate thinking about similarities and differences of
current situations with situations previously faced and
solved
• Strategic tasks
• Identify strategies that are appropriate for solving the
problem or pursuing the opportunity
1-13
Contd…
HOW ENTREPRENEURS THINK
Reflection tasks
• Stimulate entrepreneurs to think about their
understanding and feelings as they progress through
the entrepreneurial process
Increasing cognitive ability helps in:
• Adapting to new situations
• Being creative
• Communicating one’s reasoning behind a particular
response
1-14
THE INTENTION TO ACT
ENTREPRENEURIALLY
Entrepreneurial intentions
• Motivational factors that influence individuals to
pursue entrepreneurial outcomes
Entrepreneurial self-efficacy
• Conviction that one can successfully pursue
entrepreneurial outcomes
Perceived desirability
• Degree to which a potential entrepreneurial
outcome is evaluated as favorable or unfavorable
1-15
ENTREPRENEUR BACKGROUND
AND CHARACTERISTICS
Education
• Facilitates integration and accumulation of
knowledge thus providing a larger opportunity set
• Casts a wider net for the discovery or generation
of potential opportunities
• Assists entrepreneurs in adapting to new
situations
• Does not necessarily determine whether the
individual will create a new business
1-16
Contd…
ENTREPRENEUR BACKGROUND
AND CHARACTERISTICS
Age
• Chronological age – Usually between the ages 22
and 45
Work history
• Past work experience of an individual
1-17
ROLE MODELS AND SUPPORT
SYSTEMS
Role models: Individuals whose example an
entrepreneur can aspire to and copy
Moral-support network: Individuals who give
psychological support to an entrepreneur
Professional-support network: Individuals
who help the entrepreneur in business
activities
1-18
SUSTAINABLE
ENTREPRENEURSHIP
Preserving nature, life support, and
community in the pursuit of perceived
opportunities to:
• Bring future products, processes, and services into
existence for gain
Can generate:
• Economic gains
• Environmental gains
• Social gains
1-19