Myths, Theories and Frameworks of
Entrepreneurship
Objectives
• To discuss the main myths about
entrepreneurship.
• To discuss the main theories of
entrepreneurship.
• To discuss the main frameworks related
to entrepreneurship.
Myths about Entrepreneurship
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Entrepreneurs are only doers but not thinkers.
Entrepreneurs are born and not made.
Entrepreneurs are always inventors.
Entrepreneurs are anti-academic and socially misfits.
Entrepreneurs must fit into ideal profile
All Entrepreneurs are money minded people.
Entrepreneurs are badly need the luck.
Ignorance is a bliss for entrepreneurs.
Entrepreneurs seeks success but end with high failure rates.
Entrepreneurs are extreme risk takers.
Entrepreneurs are hating partnership.
Entrepreneurs never succeeds in clusters.
Entrepreneurs must be young.
Entrepreneurs are mainly backed by VCs.
Entrepreneurs need always new products.
Entrepreneurs do not have place in big companies.
Models for Entrepreneurship
• Silicon Valley model - Siliconitis is the most common
example of what is now an almost universal search among
policymakers, local as well as central, for the secrets of
entrepreneurial success. It is also the most instructive. A
few attempts to replicate Silicon Valley, most notably in
Israel, have succeeded. But most are embarrassing failures.
• Anchor-firm model - Alfred Marshall, one of the first
economists to write about entrepreneurship, said that
successful entrepreneurs are like large trees in a forest,
towering over their neighbours and depriving them of light
and air. In fact, the big trees usually produce lots of little
ones. They spin off subsidiaries, provide experience to
employees who then decide to go it alone, and nurture
dozens of suppliers.
Models for Entrepreneurship
• Crisis driven model - People become
entrepreneurs when the economy stops supplying
jobs. This happened in the San Diego region in the
1990s when the end of the cold war threw
hundreds of highly trained military scientists out
of work. Local start-ups such as Qualcomm
hoovered up the talent and put it to new uses.
• local-hero model in which a local entrepreneur
sees an opportunity, starts a business and turns it
into a giant.
Approaches to Entrepreneurship
Macro Entrepreneurial school of thought
• Environmental school of thought
• Financial/Capital school of thought
• Displacement school of thought
Micro Entrepreneurial school of thought
• Entrepreneurial traits school of thought (people
school)
• Venture opportunity school of thought
• Strategic formulation school of thought
Environmental school of thought
Influence of external factors to initiate business
1. Man made environment
2. Natural environment
3. Family and social factors
4. Local economic, social and political environment.
5. Regional economic, social and political
environment.
6. National economic, social and political
environment.
7. International economic, social and political
environment.
Financial/Capital school of thought
The entire focus of this school is capital seeking
process of business start and growth.
•
•
•
•
•
•
•
•
Venture capital
Angel capital
Debt/loans
Equity
Family
Friends
Fools
Luck
Displacement school of thought
People never start business unless they are
prevented or displaced from other activities.
• Political displacement – allowing or not
allowing people to start business in some
areas.
• Cultural displacement – some social groups
are precluded from some professional fields.
• Economic displacement – bad economic times
give many opportunities to start business
people putting out of the work.
Entrepreneurial traits school of thought
(people school)
This school analyses common characteristics or
traits of entrepreneurs.
• Achievement, creativity, determination and
technical knowledge.
• Family background and educational
incubation.
• This school says certain traits developed or
inherited may be the key to entrepreneurship.
Venture opportunity school of thought
This school analyze factors relevant to opportunity
aspects of the venture development.
• Sources of business ideas
• The development of business concept
• Implementation of the venture opportunity
1. Creativity, innovation and market awareness
2. Right business idea, right time for right market
niche.
3. Corridor principle – Whenever new opportunity
emerge ability to capture and materialize them.
Strategic formulation school of thought
This says that strategic planning process help
to be successful venture creators.
• Identification of unique markets
• Identification of unique people
• Identification of unique products
• Identification of unique factors of
production
Process approach for entrepreneurship
Under this various models and methods attempt
to structure entrepreneurship process and its
various influencing factors.
• Integrative approach (Inputs and out puts of
entrepreneurial process)
• Assessment approach (Assessment of venture
and venture environment in various
perspectives)
• Multi-dimensional approach
(Entrepreneurship is analyzed in multidimensional ways and means)
Integrative approach
• Inputs (Environmental opportunities,
Entrepreneurial individuals, An organizational
context, Unique business concept, Resources)
• Entrepreneurial process (Identify the opportunity,
Assess and acquire necessary resources,
Implementation)
• Entrepreneurial intensity (innovation, risk taking,
proactiveness)
• Outcomes (New venture, value creation, new
products, process and services, New technologies,
profits, personnel benefits, employment, asset,
revenue…..)
Assessment approach
This approach analyses venture creation and
its conducive environment under the
following headings:
• Qualitatively
• Quantitatively
• Strategically
• Ethically
• Venture maturity
Multi-dimensional approach
More detailed process approach: analyses various qualities of
entrepreneurs under the headings of individual, environment,
organization and process.
1. Individual factors (need for achievement, locus of control,
risk taking propensity, job satisfaction, previous work
experience, family background, age, education…..)
2. Environment (venture capital availability, presence of
experience entrepreneurs, technically skilled labor force,
accessibility of suppliers, customers and new markets,
government influence, proximity to Universities,
infrastructure availability, attitudes of the people in location,
living conditions….)
3. Organization (type of the firm, partners, strategic variables…)
4. Process (Location, resources accumulation, marketing,
responding to outsiders….)
The Entrepreneur Process
The Entrepreneur Process
1. Motivation to make a difference
2. Ability to create and innovate
3. Opportunity spot and exploit
4. Find the required resources
5. Uses networks extensively
6. Determined in the face of adversity
7. Manage the risks
8. Overcoming obstacles through
9. Control business
10.Putting customer first, creation of overall
capital.) See ppt diagram in next slide.
16
The Entrepreneur Process
4.
5.
Finding the
Using
networks
extensively
Required
Resources
3 .Spotting
and
Overcoming
1.
3. Creativity
innovation
2. Creativity
andand
innovation
Motivation
to make a
difference
Exploiting
Opportunities
Obstacles
GROWING
ENTERPRISE
10.Financial
Social,
aesthetic,
capital
8.Controling the
business
9.Putting the
customer first
THAT SUCSESS
Recognition of
value
6.Showing
determination
in the face of
adversity
7.Managing risk
17
The entrepreneur, the opportunity
spotter and the project champion
The entrepreneur
The inventor
The opportunity- spotter
The projected champion
The enterprising person who realizes
The person who makes things happens.
The opportunity and is minded to
Engage it.
Realizing
The
Idea
Engaging the idea
And opportunity
The
Exploiting the
opportunity to build
something
Of value
Opportunity
18
The entrepreneur, the opportunity
spotter and the project champion
The Opportunity-spotter
The project champion
Idea
Successful
Market gap
business
Opportunity
The entrepreneur
19
Gallup’s Entrepreneur perceiver interview
• This identify various behavioral
characteristics and personnel attributes
of entrepreneur under various themes.
• Most of the Entrepreneurial Centers
around the world use this as guideline to
prepare various tests to check
entrepreneurial abilities.
• These characteristics are outlined as
striving talents, thinking talents and
relating talents.
20
Gallup’s Entrepreneur perceiver interview
Some of these characteristics are
Dedication: consumed by a goal or purpose
Focus: discriminates and target
Profits orientation: advantage focus
Ego drive: wants to make a recognized difference
Urgency: no time to waste and must take action now
Courage: determined in the face of adversity
Activator: wants to make it happen
Opportunity: sees possibilities not problems
Creativity: buzzing with ideas
Expertise orientation: knows own limits and find experts
Team: gets the right people together
Individual perception: see and uses strengths of others.
21
Gallup’s Entrepreneur perceiver interview
• Using entrepreneurial triangle we can explain
this inter-relationship: creating, going for
opportunities, building support and doing. See
ppt diagram in slide.
• Talent, temperament and technique: Gallup
questions can arrange according to talent,
temperament and technique framework. This
gives an another perspective for entrepreneurs.
See ppt diagram in next slide.
• The ‘well of talent’ is another concept to show
how hard to identify people with
entrepreneurial skills and develop them as real
entrepreneurs. See ppt diagram in next slide.
22
Entrepreneurial Triangle
Expertise
Orientation
Ego Drive
Activator
Courage
Doing
Profit
Team
Orientation
Individualized
Urgency
Dedication
Creativity
Perception
Focus
Opportunity
Going for opportunities
Figure…..The Entrepreneurs Triangle
23
Talent, Temperament and Technique
Advantage Orientation
Creativity
Courage
Talent
Abilities
Focus
Networker
Team
Opportunity spotting
Resourcing
TEMPERAMENT
Needs
Competition
Responsibility
Drives
Ego Drive
Activator
Performance Orientation
Urgency
Mission
Dedication
Opportunity taking
TECHNIQUE
The entrepreneur’s
Skill
set
Experience
Techniques to develop
Talents & manage
temperament
24
The Well of Talents
Followers
Operational
managers
Enterprising
managers
I
n
v
e
n
t
o
r
s
En
tre
pr
en
eu
rs
L
e
a
d
e
r
s
Project
champions
25
Questions