Approach to Entrepreneurship
• Causal vs Effectual
• Algorithmic vs Heuristic
• Causal: Based on prediction and control.
Entrepreneurs will determine goals to achieve and
look for the resources to do so (Wikipedia)
• Effectual: Start with the means and look at
possible goals. Entrepreneurs will determine goals
according to the resources in their possession
(Wikipedia)
• Reason is market uncertainty
Entrepreneurial Thought & Action ®
• Central theme of teaching entrepreneurship at
Babson
• Teaches students to be entrepreneurial in behavior;
explore and create opportunities rather than plan
and predict the outcome to every problem
• Predictive: Think-Learn-Do (use historical data to
solve problems)
• CrAactive: Do-Learn-Think
• Practical Example: Jigsaw vs Quilts
Entrepreneurship Definitions
• 17th century, French economist Richard Cantillon coined the
term, “entrepreneur”.
• The literal definition of (entrepreneur) is “to undertake” or “go
between” referring to the position an individual assume when
pursuing an opportunity.
• Knight (1921) Profits from bearing uncertainty and risks
• Cole (1952) Purposeful activity to initiate and develop a
profit-oriented business
• McClelland (1961) Moderate risk taking
3
Entrepreneurship Definitions
• Casson (1982) Decision and judgments about the coordination of
scarce resources
• Stevenson et al (1989) The pursuit of opportunity without
regard to resources currently controlled
• Kuratko & Hodgetts (2004) A dynamic process of vision, change
and creation…
• Allen (2006) A mindset or way of thinking that is opportunity
focused, innovative and growth-oriented. Can be found in large
corporations and socially responsible not-for-profits…
Common elements in definitions
• Creativity and Innovation
• Resource gathering and the founding of an
economic organization
• The chance for gain (or increase) under risk and
uncertainty
5
Common Elements
• Creation: a founding and an origin
• Innovation: a new way of doing something
• Economic Organization: an organization whose purpose is to
allocate scarce resources.
• Risk: variability of outcomes or returns
• Uncertainty: confidence in the estimates of how the world
works; of the causes and effects of the environment
6
Resource Based Theory
• Entrepreneur uses resources that are:
– Rare
– Valuable
– Hard to copy
– Have no good substitutes
to obtain a sustainable competitive advantage
– “The nature and quality of the resources, capabilities
and strategies the entrepreneur possesses and can
acquire can lead to long-term success.”
7
Conditions for Entrepreneurship
• Freedom:
– To establish an economic venture
– To be creative and innovative
• Prosperity:
– Favourable economic conditions
– Gain and grow
8
Wall Street Index of Economic Freedom – 2018
http://www.heritage.org/index/about
1. Hong Kong
2. Singapore
3. New Zealand
4. Switzerland
5. Australia
131. Pakistan 145
130. India
120
110. China
116
• Rule of Law (property rights, government integrity, judicial effectiveness)
• Government Size (government spending, tax burden, fiscal health)
• Regulatory Efficiency (business freedom, labor freedom, monetary freedom)
• Open Markets (trade freedom, investment freedom, financial freedom)
Small Business vs Entrepreneurship
• Amount of wealth created is substantial
• Wealth creation is rapid
• Risk is high
• Innovation is substantial
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New Generation Entrepreneurs
• Technologically savvy
• Easy to become an entrepreneur specially on the
internet
• Passionate, inquisitive, and challenging. Change
and progress is welcomed
• Think differently. Inexperience is the powerful
force
• They are independent. Skills are portable.
New Entrepreneurs
• Academia contribution
• Corporate dropouts
• From downsized companies
• Quest for status
• Control over personal life
• College dropouts
• Local infrastructure improvements
• Globalization Opportunities
12
HEC Endeavors
• Entrepreneurship courses
• Technology Development Fund
• ORICs in every university
• Innovation Steering Committee
NUST Endeavors
NUST Research, Innovation and Commercialization ecosystem
• Center for Innovation and Entrepreneurship
– Technology Incubation Center
• Science & Technology Ventures Ltd
• Professional Development Center
• Research Directorate
• I&C Directorate
• Corporate Advisory Council
• 11 Industries identified
• National Science and Technology Park
14
SEECS Entrepreneurs
Paradoxes of Entrepreneurship
• Intelligence vs Business Success
– ‘If you are so smart, why aren’t you rich?’
• Barriers to Entry
– ‘you don’t want to enter any industry that would
have you’
“There is no law of Entrepreneurship.”
16
Dimensions of Entrepreneurship
• New Venture Creation
1. The Individual
2. The Environment & Opportunity Analysis
3. The Organization
17
Dimensions of Entrepreneurship
• New Venture Creation
1. The Individual
2. The Environment
3. The Organization
18
1. The Individual
• Psychological, sociological and demographic
characteristics
• Personal experience, knowledge, experience and
training
• Personal integrity
19
Entrepreneur – Personality Traits
• Desire for responsibility
• Preference for risk taking – moderate, calculated
• Confidence in ability to succeed
• Desire for immediate feedback
• High level of energy
• Future orientation
• Skill at organizing
• Value of achievement over money
Entrepreneur - Characteristics
• High degree of commitment
• Tolerance for ambiguity
• Flexibility
• Tenacity
Sam Walton’s Ten Best Rules
• Commit to your business and believe in it
• Share your profits with your partners
(employees)
• Motivate your partners, challenge them and
keep score
• Communicate everything
• Appreciate your associates with well
chosen words
• Celebrate your success
23
Sam Walton’s Ten Best Rules
• Listen to everyone and get them talking
• Exceed your customers’ expectations
• Control your expenses
• BREAK ALL THE RULES. Swim upstream. Go
the other way 
24
2. The Environment
• Opportunities:
– In the form of resources:
• Money
• People
• Technology
• Acquire resources and combine them with the
ones already present.
25
2. The Environment
• Constraints or Threats
–
–
–
–
Competition
Government Influences
Political environment
Economy
26
3. Economic Organization
• Something of value to offer
• Form and structure-Functional level strategies
• Entry wedges or points- To penetrate or create a market
• Isolating mechanisms- To protect its positions
• A culture - Determines performance and QUALITY
27
Entrepreneur – The Decision Maker
• Entrepreneur must understand all quality
perspectives to be able to make decisions based
on the current situation
28
action oriented
Course Outcomes
After completing this course, you should be able to:
1. Explain the nature of entrepreneurship
2. Analyze the environment and develop an
entrepreneurial perspective by recognizing
entrepreneurial opportunities
3. Know the components of a business model canvas
and a business plan
4. Identify the sources of capital for a business venture
5. Set up a business organization
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Businessman Versus Entrepreneur
• Difference
–
–
–
–
–
Perspective on profit
Level of risks taken
Innovation versus status quo
Long term orientation versus short term
And a lot more to explore during semester…
• Watch Links
– https://www.youtube.com/watch?v=RbK1hysVl78&t
=71s
Resources and Capabilities
Chapter 2
33
Resources
• Any thing or quality that is useful
– Can help an organization implement its strategy
– Valuable
– May not be available to all competitors
– Rare
– May not be able to be duplicated easily
or expensively
– Hard to copy (Historical Conditions, Causal Ambiguity, Social
Complexity)
– May not be the same as the resources of another firm
– Non-substitutable
34
New Venture Creation
Entrepreneur
• Acquires Resources and Skills at an appropriate
cost
• Transforms resource/skill into product or
service
• Deploys and implements
• Creates Value and generates
Wealth
Types of Resources
• Physical
• Reputational
• Organizational
• Financial
• Intellectual and Human
• Technological
36
Physical Resources
• Tangible property of the organization
– Plant and equipment
– Location and amenities
– Natural resources
• Can these be a source of sustainable competitive
advantage?
37
Reputational Resources
• Perceptions that people in the firm’s
environment have of the company
– Product level – brand loyalty
– Corporate level – global image
• Most important attributes
– Product quality
– Management integrity
– Financial soundness
38
Reputational Resources
"It takes 20 years to build a reputation and five
minutes to ruin it. If you think about that, you’ll
do things differently."
- Warren Buffett
39
Fortune Magazine Criteria
• Quality of management
• Use of corporate assets
• Financial soundness
• Firm’s value as an investment
• Quality of products and services
• Innovativeness
• Ability to attract, develop and retain top people
• Community and environment responsibility
40
Organizational Resources
• Intangible
– Organization’s structure, routines
and systems or
– Formal reporting systems
– information generation & decision making systems
– Formal or informal planning
• Structure that promotes adaptation with speed
can be a valuable resource
• Skills and capabilities of personnel
• Company life cycle is also important
41
Financial Resources
• Most important resource???
• High tech industries rated it 8th out of 11 and
service industries 5th out of 11
• Depends on the state of the economy
• Apple and HP (cash rich)
42
Intellectual and Human Resources
• Entrepreneur and his/her team
– Collective knowledge, training and experience
– Individual: judgment, insight, creativity, vision and
intelligence
– Entrepreneur’s social skills and knack for
recognizing opportunity
– Relationship Capital:
• Not what you know but who you know
43
Technological Resources
• Processes and systems
• Labs, R&D facilities, testing and quality control
• Real resource is knowledge generated by the
above: to be protected by
–
–
–
–
Patents
Licenses
Trademarks
Copyrights
• Technological versus Intellectual capital
44
Strategic Resources Summary
Resources
Valuable
Rare
Hard to Copy
Nonsubstitutable
Physical
Yes
KK
Not usually
KK
Reputational
Yes
Yes
Yes
Yes
Organizational
Yes
Yes
Yes
Yes
Financial
Yes
KK
No
No
Intellectual
Yes
Yes
Usually
KK
Technological
Yes
KK
KK
KK
45