1.1 Evolution of Entrepreneurship
Entrepreneurship is from the French “entreprendre,”
meaning “to undertake.”
An entrepreneur is an innovator or developer who
recognizes and seizes opportunities; converts those
opportunities into workable/marketable ideas; adds value
through time, effort, money, or skills; assumes the risks of the
competitive marketplace to implement these ideas; and
realizes the rewards from these efforts.
Characteristics of entrepreneurs:
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Personal initiative
The ability to consolidate resources
Management skills
A desire for autonomy
Risk taking
Aggressiveness
Competitiveness
Goal-oriented behavior
Confidence
Opportunistic behavior
Intuitiveness
Reality-based action
The ability to learn from mistakes
The ability to employ human relations skills
Historical developments in entrepreneurship:
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No single definition of entrepreneur exists.
Recognition of entrepreneurs dates back to eighteenthcentury France.
Until 1950, the majority of definitions and references
came from economists.
Over the decade, writers have continued to modify the
definition.
Robert C. Ronstadt said, “Entrepreneurship is the
dynamic process of creating incremental wealth.”
In the twentieth century, the word entrepreneur
became closely linked with free enterprise and
capitalism.
Entrepreneurs serve as agents for change, provide
creative, innovative ideas for business enterprise and
help businesses grow and become profitable.
In the twenty-first century, entrepreneurs are
considered heroes of free enterprise.
Many people now regard entrepreneurship as
“pioneership” on the frontier of business.
An integrated definition of entrepreneurship recognizes
entrepreneurship as a dynamic process of vision,
change, and creation.
1.2 Myths of Entrepreneurship
Avoiding Folklore: The Myths of Entrepreneurship
Myth 1: Entrepreneurs Are Doers, Not Thinkers
Entrepreneurs have a tendency toward action, but they are
also thinkers.
Myth 2: Entrepreneurs Are Born, Not Made
Traits include aggressiveness, initiative, drive, a willingness to
take risks, analytical ability, and skill in human relations.
Entrepreneurship has models, processes, and case studies
that allow traits to be acquired.
Myth 3: Entrepreneurs Are Always Inventors
This idea is a result of misunderstanding and tunnel vision.
Many inventors or innovators are also entrepreneurs.
Numerous entrepreneurs encompass all sorts of innovative
activities.
Myth 4: Entrepreneurs Are Academic and Social Misfits
This myth results from people who have started successful
enterprises after dropping out of school or quitting a job.
Historically, education and social organizations have not
recognized the entrepreneur. The entrepreneur, no longer a
misfit, is now viewed as a professional.
Myth 5: Entrepreneurs Must Fit the Profile Many books and
articles have presented checklists of characteristics of the
successful entrepreneur. The environment, the venture itself,
and the entrepreneur have interactive effects, which result in
many different types of profiles.
Myth 6: All Entrepreneurs Need Is Money
That a venture needs capital to survive is true. A large number
of business failures occur because of lack of adequate
financing. Failure due to lack of financing indicates other
problems:
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Managerial incompetence
Lack of financial understanding
Poor investments
Poor planning
Myth 7: All Entrepreneurs Need Is Luck
Being in the right place at the right time is always an
advantage. “Luck” happens when preparation meets
opportunity.
What appears to be luck could really be several factors:
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Preparation
Determination
Desire
Knowledge
Innovativeness
Myth 8: Entrepreneurship Is Unstructured and Chaotic
Entrepreneurs sometimes thought of as gunslingers who are
assumed to be disorganized and unstructured, leaving it to
others to keep things on track. Heavily involved in all facets of
their ventures, they tend to have a system to keep things
straight and maintain priorities, which may seem strange to
casual observers but works for them.
Myth 9: Most Entrepreneurial Initiatives Fail
Many entrepreneurs suffer a number of failures before they are
successful. Failure can teach many lessons to those willing to
learn and often leads to future success. The corridor principle
states that with every venture launched, new and unintended
opportunities often arise. The “high failure rate” is misleading,
according to researcher Bruce Kirchoff.
Myth 10: Entrepreneurs Are Extreme Risk Takers
The concept of risk is a major element in the entrepreneurial
process. The public’s perception of the risk most entrepreneurs
assume is distorted. Appearance may be that an entrepreneur
is “gambling” on a wild chance but entrepreneur is usually
working on a moderate or “calculated” risk.
1.3 Approaches to Entrepreneurship
1. Schools-of-Thought Approaches to Entrepreneurship
THE MACRO VIEW
Presents a broad array of factors that relate to success or
failure in contemporary entrepreneurial ventures. Exhibits a
strong external locus of control point of view.
THE MICRO VIEW
Exhibits an internal locus of control point of view.
2. Process Approaches to Entrepreneurship
management, the theories based on combinations can delve
into some of the particular aspects of entrepreneurship with
greater granularity.
A sizeable body of research has developed that supports the
individual frameworks through the schools of thought or
through process models but the integration of previously
disparate aspects of entrepreneurship may be particularly
valuable to advancing the field of entrepreneurship.
1.4 Schools of Entrepreneurial Thought
THE MACRO VIEW
Presents a broad array of factors that relate to success or
failure in contemporary entrepreneurial ventures. Exhibits a
strong external locus of control point of view.
Three schools of entrepreneurial thought take the macro view.
The Environmental School of Thought
Deals with the external factors that affect a potential
entrepreneur’s lifestyle. Focuses on institutions, values, and
morals. Recognizes that friends and family can influence the
desire to become an entrepreneur.
The Financial/Capital School of Thought
Deals with the search for seed capital and growth capital.
Views the entire entrepreneurial venture from a financial
management standpoint.
The Displacement School of Thought
Holds that the group hinders a person from advancing or
eliminates certain factors needed to advance; consequently,
the individual is projected into entrepreneurship in order to
succeed. Frustrated individuals propelled into entrepreneurial
pursuits.
AN INTEGRATIVE APPROACH
Focuses on and includes three factors: inputs, outputs, and
entrepreneurial intensity. Built around the concepts of inputs to
the entrepreneurial process and outcomes from the
entrepreneurial process. Inputs include environmental
opportunities, the individual entrepreneur, the business
concept, the organizational context, and financial and
nonfinancial resources. Outputs include ventures, value
creation, new products and processes, new technologies,
profit, jobs, and economic growth.
Three major types of displacement include:
DYNAMIC STATES APPROACH
Network of relationships (the dynamic state) convert
opportunity tension into value, generating new resources that
maintain the dynamic state.
Exhibits an internal locus of control point of view.
A FRAMEWORK OF FRAMEWORKS APPROACH
Theories or frameworks based on combinations offer a more
dynamic view of the phenomenon of entrepreneurship. Similar
to the “multiple lens” approach that characterizes general
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Political displacement: Deals with government’s policies
and regulations
Cultural displacement: Deals with social groups precluded
from professional fields
Economic displacement: Deals with economic variations
of recession and depression
THE MICRO VIEW
Three schools of entrepreneurial thought take the micro view.
The Entrepreneurial Trait School of Thought
Studies successful entrepreneurs who tend to exhibit similar
characteristics. Four factors usually exhibited by successful
entrepreneurs include:
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Achievement
Creativity
Determination
Technological knowledge
The Venture Opportunity School of Thought
Emphasizes the search for sources of ideas, the development
of concepts, and the implementation of venture opportunities.
Views creativity and market awareness as essentials. Deals
with the ability to recognize new ideas and opportunities and to
implement the necessary steps of action. Preparation meeting
opportunity equals “luck.”
The Strategic Formulation School of Thought
Emphasizes the planning process in successful venture
development. Four major factors in considering the strategic
formulation include:
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Unique markets
Unique people
Unique products
Unique resources
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The United States is a leader in entrepreneurship
education at both undergraduate and graduate levels.
The United States is home to a high percentage of
individuals with professional, technological, or business
degrees, a group that registers at the highest
entrepreneurial activity rate.
1.6 Entrepreneurial Cognition
Cognition is used to refer to the mental functions, mental
processes (thoughts), and mental states of intelligent humans.
Entrepreneurial cognition is about understanding how
entrepreneurs use simplifying mental models to piece together
previously unconnected information that helps them to identify
and invent new products or services, and to assemble the
necessary resources to start and grow businesses.
Metacognitive Perspective
Metacognitive model of the entrepreneurial mind-set integrates
the combined effects of entrepreneurial motivation and context,
toward the development of metacognitive strategies applied to
information processing within an entrepreneurial environment.
1.5 Entrepreneurial Revolution
Who Are Entrepreneurs?
The Entrepreneurial Revolution: A Global Phenomenon
Starting a new business requires more than just an idea; it
requires a special person, an entrepreneur, who combines
sound judgment and planning with risk taking to ensure the
success of his or her own business.
According to GEM (Global Entrepreneurship Monitor) data:
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110 million people between 18 and 64 years old were
actively engaged in starting a business.
140 million were running new businesses they started less
than 3½ years earlier.
250 million people were involved in early-stage
entrepreneurial activity.
The Impact of Entrepreneurial Ventures in the United
States
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During the last ten years, over 400,000 new business
incorporations per year
One of every 150 adults participates in the founding of a
new firm each year.
One in 12 adults is involved in trying to launch a new firm.
The annual birthrate of new firms is 14 to 16 per 100
existing establishments.
During this “Great Recession” (as some have called our
lengthy recessionary period), more Americans have
become entrepreneurs than at any time in the past 20
years.
The United States has a culture that supports risk taking
and seeking opportunities.
Americans are relatively alert to unexploited economic
opportunity and have a relatively low fear of failure.
Characteristics Associated with Entrepreneurial Mind-Set
DETERMINATION AND PERSEVERANCE—More than any
other factor, total dedication to success as an entrepreneur
can overcome obstacles and setbacks. It can also compensate
for personal shortcomings.
DRIVE TO ACHIEVE—Entrepreneurs are self-starters who
appear to others to be internally driven by a strong desire to
compete, to excel against self-imposed standards, and to
pursue and attain challenging goals.
OPPORTUNITY ORIENTATION—One clear pattern among
successful growth-minded entrepreneurs is their focus on
opportunity rather than on resources, structure, or strategy.
PERSISTENT PROBLEM SOLVING—Entrepreneurs are not
intimidated by difficult situations. Simple problems bore them,
unsolvable ones do not warrant their time.
SEEKING FEEDBACK—Effective entrepreneurs are often
described as quick learners.
INTERNAL LOCUS OF CONTROL—Successful
entrepreneurs believe in themselves. They believe that their
accomplishments and setbacks are within their own control
and influence and that they can affect the outcome of their
actions.
A “loss orientation” towards grief recovery, which focuses on
the failure, can sometimes exacerbate negative emotional
reactions to failure.
TOLERANCE FOR AMBIGUITY Successful entrepreneurs
thrive on the fluidity and excitement of such an ambiguous
existence.
A “restoration orientation,” alternatively, enables entrepreneurs
to distract themselves from thinking about the failure. However,
avoiding negative emotions is unlikely to be successful in the
long-run
CALCULATED RISK TAKING—Successful entrepreneurs are
not gamblers. When they decide to participate in a venture,
they do so in a very calculated, carefully thought-out manner.
HIGH ENERGY LEVEL—Many entrepreneurs fine tune their
energy levels by carefully monitoring what they eat and drink,
establishing exercise routines, and knowing when to get away
for relaxation.
CREATIVITY AND INNOVATIVENESS—An expanding school
of thought thinks that creativity can be learned.
VISION—Not all entrepreneurs have predetermined vision for
their firm. In many cases this vision develops over time as the
individual begins to learn what the firm is and what it can
become.
PASSION—A fundamental emotional experience for
entrepreneurs characterized by a discrete emotion that is quite
intense.
TEAM BUILDING—The desire for independence and
autonomy does not preclude the entrepreneur’s desire to build
a strong entrepreneurial team. Most successful entrepreneurs
have highly qualified, well-motivated teams that help handle
the growth and development of the venture.
1.7 Dealing with Failures
Entrepreneurs use failure as a learning experience. They have
a tolerance for failure.
The most effective entrepreneurs are realistic enough to
expect difficulties and failures.
Research indicates that entrepreneurs may recover more
quickly from a failure if they oscillate between a loss and a
restoration orientation.
1.9 Dark Side of Entrepreneurs
Certain negative factors may envelop entrepreneurs and
dominate their behavior. Although each of these factors has a
positive aspect, it is important for entrepreneurs to understand
their potential destructive side as well.
The Entrepreneur’s Confrontation with Risk
Starting or buying a new business involves risk. A typology of
entrepreneurial styles helps describe the risk-taking activity of
entrepreneurs. In this model, financial risk is measured against
the level of profit motive (the desire for monetary gain or return
from the venture).
FINANCIAL RISK—In most new ventures the individual puts a
significant portion of his savings or other resources at stake.
Career risk—A question frequently raised by would-be
entrepreneurs is whether they will be able to find a job or go
back to their old jobs if their venture should fail.
Family and social risk—Entrepreneurs expose their families
to the risk of an incomplete family experience and the
possibility of permanent scars.
psychic risk—The greatest risk may be to the well-being of
the entrepreneur.
Stress and the Entrepreneur
If entrepreneurs deal effectively with grief that emanates from
failure then they will not become disappointed, discouraged, or
depressed. In adverse and difficult times, they will continue to
look for opportunity.
To achieve their goals, entrepreneurs are willing to tolerate the
effects of stress: back problems, indigestion, insomnia, or
headaches.
The Grief Recovery Process
WHAT IS ENTREPRENEURIAL STRESS?
Grief is a negative emotional response to the loss of something
important triggering behavioral, psychological, and
physiological symptoms.
In general, stress can be viewed as a function of discrepancies
between a person’s expectations and ability to meet demands.
The emotions generated by failure (i.e., grief) can interfere with
the learning process.
Lacking the depth of resources, entrepreneurs must bear the
cost of their mistakes while playing a multitude of roles, such
as salesperson, recruiter, spokesperson, and negotiator.
Simultaneous demands can lead to role overload.
Entrepreneurs often work alone or with a small number of
employees and therefore lack the support from colleagues.
A basic personality structure, common to entrepreneurs and
referred to as type A personality structure, describes people
who are impatient, demanding, and overstrung.
SOURCES OF STRESS
Researchers Boyd and Gumpert identify four causes of
entrepreneurial stress.
Loneliness—Entrepreneurs are isolated from persons in
whom they can confide. They tend not to participate in social
activities unless there is some business benefit.
Immersion in Business—Most entrepreneurs are married to
their business. They work long hours, leaving them with little or
no time for civic recreation.
People Problems—Most entrepreneurs experience
frustration, disappointment, and aggravation in their
experience with people.
Need to Achieve—Achievement brings satisfaction. However,
many entrepreneurs are never satisfied with their work no
matter how well it is done.
DEALING WITH STRESS
If stress can be kept within constructive bounds, it can
increase a person’s efficiency and improve performance.
Networking—One way to relieve the loneliness of running a
business is to share experiences by networking with other
business owners.
The Entrepreneurial Ego
Certain characteristics that usually propel entrepreneurs into
success also, if exhibited in the extreme have destructive
implications for entrepreneurs.
Overbearing need for control—Entrepreneurs are driven by
a strong desire to control both their venture and their destiny.
SENSE OF DISTRUST Because entrepreneurs are continually
scanning the environment, it could cause them to lose sight of
reality, distort reasoning and logic, and take destructive action.
Overriding desire for success This can be dangerous
because there exists the chance that the individual will become
more important than the venture itself.
Unrealistic optimism—When external optimism is taken to its
extreme, it could lead to a fantasy approach to the business.
1.10 Ethical Dilemmas
Ethics provides the basic rules or parameters for conducting
any activity in an “acceptable” manner.
Ethics represents a set of principles prescribing a behavioral
code that explains what is good and right or bad and wrong.
Ethics may outline moral duty and obligations. Legality
provides societal standards but not definitive answers to
ethical questions. Because deciding what is good or right or
bad and wrong is situational, instead of relying on a set of fixed
ethical principles, entrepreneurs should an ethical process for
making decisions.
Ethical Rationalizations
Getting Away from It All—The best antidote could be a wellplanned vacation.
Decision makers use one of four rationalizations to justify
questionable conduct:
Communicating with Employees—Entrepreneurs are in
close contact with employees and can readily assess the
concerns of their staff.
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Finding Satisfaction Outside the Company—Entrepreneurs
need to get away from the business occasionally and become
more passionate about life itself; they need to gain some new
perspectives.
Delegating—Entrepreneurs find delegation difficult because
they think they have to be at the business all the time and be
involved in all aspects of the operation.
Exercising Rigorously—Research demonstrates the value of
exercise regimens on relieving the stress associated with
entrepreneurs.
that the activity is not “really” illegal or immoral
that it is in the individual’s or the corporation’s best interest
that it will never be found out
that, because it helps the company, the company will
condone it
Morally questionable acts can be classified as: nonrole, role
failure, role distortion, and role assertion.
The Matter of Morality
Requirements of law may overlap at times but do not duplicate
the moral standards of society.
Some laws have no moral content whatsoever.
Some laws are morally unjust.
Some moral standards have no legal basis.
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Legal requirements tend to be negative; morality tends to be
positive.
Legal requirements usually lag behind the acceptable moral
standards of society
Complexity of Decisions
Corporate entrepreneurship as strategic
entrepreneurship—transformation of organizations via
large-scale or otherwise highly consequential innovations
adopted in the firm’s pursuit of competitive advantage
 Strategic Renewal
 Sustained Regeneration
 Domain Redefinition
 Organizational Rejuvenation
 Business Model Reconstruction
Business decisions, in the context of entrepreneurial ethics are
complex. Why?
The Need for Corporate Entrepreneurship and Innovation
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A company must always be ready and willing to accept
innovations or it will quickly become obsolete. The modern
corporation must develop in-house entrepreneurship or face
stagnation, loss of personnel, and decline.
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Ethical decisions have extended consequences.
Ethical questions have multiple alternatives—the choices
are not always “do” or “don’t do.”
Ethical business decisions often have mixed outcomes.
Most business decisions have uncertain ethical
consequences.
Most ethical business decisions have personal
implications.
This need for corporate entrepreneurship has arisen in
response to a number of pressing problems:
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Online Ethical Dilemmas in E-Commerce
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Slow demise of face-to-face interactions cause
entrepreneurs to find ways to build trust.
Entrepreneurs recognize that online consumer reviews are
used to inform purchasing decisions and are posted to
reputation management systems (Amazon and Yelp).
Entrepreneurs find it far greater to exhibit strong ethical
responsibility in their actions.
2.1 Corporate Entrepreneurship and Innovation
The major thrust of corporate innovation is to develop the
entrepreneurial spirit within organizational boundaries, thus
allowing an atmosphere of innovation to prosper.
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rapid growth in the number of new and sophisticated
competitors
a sense of distrust in the traditional methods of corporate
management
an exodus of some of the best and brightest people from
corporations to become small-business entrepreneurs
(being an entrepreneur is becoming more of a status
symbol; many companies are losing their best people,
who are going out on their own; venture capital is
becoming more widely available for those who wish to go
out on their own, thus making entrepreneurship more
attractive)
international competition
downsizing of major corporations
an overall desire to improve efficiency and productivity.
Obstacles to Corporate Entrepreneurship and Innovation
Defining the Concept of Corporate Entrepreneurship and
Innovation
The obstacles to corporate entrepreneurship are usually due to
ineffective traditional management techniques.
Definitions of corporate entrepreneurship have evolved over 30
years. Examples include:
The adverse effects of traditional management principles
applied to new venture development must be considered and
corrected.
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Corporate entrepreneurship as centering on reenergizing
and enhancing the firm’s ability to acquire innovative skills
and capabilities.
Corporate entrepreneurship as formal or informal activities
that create new businesses in established companies
through product and process innovations and market
developments.
Corporate entrepreneurship as corporate venturing—
adding new business to the corporation
 Internal Corporate Venturing
 Cooperative Corporate Venturing
 External Corporate Venturing
The following factors exist in large corporations that have
exhibited successful innovations:
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Atmosphere and vision
Orientation to the market
Small, flat organizations
Multiple approaches
Interactive learning
Skunk Works
2.2 Corporate Entrepreneurship Strategy
Structuring the Work Environment
A corporate entrepreneurship (CE) strategy is manifested
through the presence of an entrepreneurial strategic vision, a
pro-entrepreneurship organizational architecture, and
entrepreneurial processes and behavior exhibited across the
organizational hierarchy.
CE strategy is about creating self-renewing organizations
through the unleashing and focusing of entrepreneurial
potential that exists throughout those organizations.
Employee perception of an innovative environment is critical
for stressing management’s commitment to innovative
projects. Melding individual attitudes, values, and behavioral
orientations with the organizational factors of structure and
reward is important.
The five critical steps of a corporate entrepreneurship strategy
are:
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Developing the vision
Encouraging innovation
Structuring for an entrepreneurial climate
Preparing individual managers for corporate
innovation
Developing venture teams
Developing the Vision
The first step in planning a strategy of corporate
entrepreneurship is sharing the vision of innovation that
corporate leaders wish to achieve.
The vision must be clearly articulated by the organization’s
leaders; however, specific objectives are developed by
managers and employees.
Encouraging Innovation
Two distinct types of innovation exist:
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Radical innovation—This type of innovation takes
experimentation and determined vision, which are not
necessarily managed.
Incremental innovation—This type of innovation refers to
the systematic evolution of a product or service into newer
markets.
Both types of innovation require vision and support. There
needs to be a champion who has the ability to develop and
share a vision as well as top management support of the
innovative activities.
3M follows a set of innovation rules that encourages
employees to foster ideas, which are as follows:
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Don’t kill a project.
Tolerate failure.
Keep divisions small.
Motivate the champions.
Stay close to the customer.
Share the wealth.
Five factors critical to the internal environment of an
organization seeking to have its managers pursue innovative
activity:
1. MANAGEMENT SUPPORT—the extent to which the
management structure itself encourages employees to
believe that innovation is, in fact, part of the role set for all
organization members
2. AUTONOMY/WORK DISCRETION—the extent to which
workers are able to make decisions about performing their
own work in the way they believe is most effective
3. REWARDS/REINFORCEMENT—the extent to which
rewards are contingent on performance, providing
challenges, increasing responsibilities, and making the
ideas of innovative people known to others in the
organizational hierarchy
4. TIME AVAILABILITY—the extent to which individuals
have time to incubate ideas
5. ORGANIZATIONAL BOUNDARIES—the extent to which
people are encouraged to look at the organization from a
broad perspective
Control versus Autonomy
The encouragement of corporate entrepreneurship can and
often does result in counterproductive, rogue behavior.
Deliberate design and development of organizational systems
reflecting the organizational dimensions for an environment
conducive to corporate innovation is critical.
Preparation for Failure
“Learning from failure” is an axiom in the corporate
entrepreneurial community. Failure in a project may cause
grief; the organization should have social support mechanisms
in place to help with coping with failure.
Better coping skills build self-efficacy in corporate
entrepreneurs and promote continued corporate
entrepreneurial behavior in the future
Preparing Management
Key decision makers must find ways to explain the purpose of
using a corporate innovation process to those from whom
entrepreneurial behaviors are expected.
CE training programs can induce the changes needed in the
work atmosphere to develop more entrepreneurial activity. The
Corporate Entrepreneurship Assessment Instrument (CEAI)
provides an instrument for measuring five key elements of an
organization’s entrepreneurial climate:
of businesses—but questions concerning the extent to which
corporations should be involved in social obligations to society
is open to debate.
Developing I-Teams
Sustainable entrepreneurship includes:
Innovation teams and the potential they hold for producing
innovative results are recognized as a twenty-first century
productivity breakthrough.
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An I-Team is composed of two or more people who formally
create and share the ownership of a new organization. The
unit has a budget plus a leader who has the authority to make
decisions within broad guidelines. If the unit proves successful,
it is later integrated into the larger organization.
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Sustainable Entrepreneurship
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2.3 Social Entrepreneurship
Social Entrepreneurship that exhibits characteristics of
nonprofits, government, and businesses—including applying to
social problem solving traditional, private-sector
entrepreneurship’s focus on innovation, risk-taking, and large
scale transformation.
Defining the Social Entrepreneur
Social entrepreneurs are sometimes referred to as “public
entrepreneurs,” “civic entrepreneurs,” or “social innovators.”
Social entrepreneurs are change agents; they create largescale change using pattern-breaking ideas, they address the
root causes of social problems, and they possess the ambition
to create systemic change by introducing a new idea and
persuading others to adopt. These types of transformative
changes can be national or global. They also can be highly
localized—but no less powerful—in their impact.
Defining the Social Enterprise
There are challenges to the boundaries of what is and what
isn’t a social enterprise.
It is generally agreed that social entrepreneurs and their
ventures are driven by social goals; that is, the desire to
benefit society in some way.
But because the social mission of social entrepreneurs is the
most important criterion, not wealth creation, arguments are
made any social enterprise should be in the world of not-forprofit organizations.
2.4 Social Enterprise and Sustainability
The basic challenge of social enterprise—addressing the
obligations of a business to society—is the same for all types
Ecopreneurship, which refers to environmental
entrepreneurship with entrepreneurial actions contributing
to preserving the natural environment including the Earth,
biodiversity, and ecosystem.
Social entrepreneurship, which encompasses the activities
and processes undertaken to discover, define, and exploit
opportunities in order to enhance social wealth.
Corporate social responsibility, which refers to actions that
appear to further some social good, beyond the interests of
the firm.
Ecopreneurship
The environment stands out as one of the major challenges of
social enterprise.
Entrepreneurs have an enormous challenge to build socially
responsible organizations for the future. Ecovision—attention
to employees, the organization, and the environment—is a
possible leadership style for accomplishing this.
A plan to create a sustainable future through a practical,
clearly stated strategy, as defined by Hawken and
McDonough:
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Eliminate the concept of waste.
Restore accountability.
Make prices reflect costs.
Promote diversity.
Make conservation profitable.
Insist on accountability of nations.
2.5 Shared Value and the Triple Bottom Line
The triple bottom line (sometimes referred to as TBL) is an
accounting framework that goes beyond the traditional
measures of profit, return on investment, and shareholder
value to include environmental and social dimensions.
"Shared value” is an approach to creating economic value that
also creates value for society by addressing its needs and
challenges.
Bottom-Line Measures of Economic Performance
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Personal income
Cost of underemployment
Establishment sizes
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Job growth
Employment distribution by sector
Percentage of firms in each sector
Revenue by sector contributing to gross state product
Diaspora Networks
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Bottom-Line Measures of Environmental Performance
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Hazardous chemical concentrations
Selected priority pollutants
Electricity consumption
Fossil fuel consumption
Solid waste management
Hazardous waste management
Change in land use/land cover
Bottom-Line Measures of Social Performance
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Unemployment rate
Median household income
Relative poverty
Percentage of population with a post-secondary degree or
certificate
Average commute time
Violent crimes per capita
Health-adjusted life expectancy
2.6 Global Market Place
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Diaspora networks are relationships among ethnic groups
that share cultural and social norms.
They represent powerful advantages to global
entrepreneurs because they speed the flow of information
across borders; they create bonds of trust; and they create
connections that help entrepreneurs collaborate within a
country and across ethnicities.
Easy communications technology (Internet and Skype)
and social media (Facebook, LinkedIn, Twitter, etc.), make
the linking together of diaspora networks stronger than
ever.
Global Organizations and Agreements
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They contribute to significant international vehicles that
have developed.
THE WORLD TRADE ORGANIZATION
The WTO is the umbrella organization governing the
international trading system. Its job is to oversee international
trade arrangements.
THE NORTH AMERICAN FREE TRADE AGREEMENT
Like capitalism, entrepreneurship has expanded its reach
across the globe and is now an engine for economic growth
not only in America but elsewhere in the world.
The North American Free Trade Agreement (NAFTA) is an
international agreement among Canada, Mexico, and the
United States that eliminates trade barriers among the three
nations. It created the world’s largest free trade area, with
strong protection for patents, copyrights, industrial design
rights, trade secret rights, and other forms of intellectual
property
Global Entrepreneurs
THE EUROPEAN UNION
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The EU is an economic and political union of 27 member
states which are located primarily in Europe.
Capitalism is the world’s dominant economic system.
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Global entrepreneurs rely on global networks for
resources, design, and distribution.
They rise above nationalistic differences to see the big
picture of global competition without abdicating their own
nationalities.
They confront the learning difficulties of language barriers
head-on, recognizing the barriers such ignorance can
generate.
Global Thinking
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Today’s consumers can select products, ideas, and
services from many nations and cultures.
One of the most exciting and promising avenues for
entrepreneurs to expand their businesses is by
participating in the global market.
Two of the primary reasons for the opportunity of global
markets are the decline in trade barriers and the
emergence of major trading blocs.
Venturing Abroad
As global opportunities expand, entrepreneurs are becoming
more open-minded about internationalizing.
GRADUAL INTERNATIONALIZATION
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Internationalization can be viewed as the outcome of a
sequential process of incremental adjustments to
changing conditions of the firm and its environment. This
process progresses step-by-step as risk and commitment
increase and entrepreneurs acquire more knowledge
through experience.
The traditional expectation regarding internationalization is
that a business must enter the international arena
incrementally, becoming global only as it grows older and
wiser.
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Each country has something that others need, thus
forming the basis of an interdependent international trade
system: resource-rich countries have access to extractive
assets and labor; market-rich countries have purchasing
power.
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Use the resources of the other firms involved in the
venture.
Strategic fit.
Disadvantages of Joint Ventures
INTERNATIONAL AT INCEPTION

Some entrepreneurial businesses are born global. Successful
global start ups have seven characteristics: (1) global vision
from inception; (2) internationally experienced management;
(3) a strong international business network; (4) preemptive
technology or marketing; (5) a unique intangible asset; (6) a
linked product or service; and (7) tight organizational
coordination worldwide.
DIRECT FOREIGN INVESTMENT
Methods of Going International
Methods of going international are importing, exporting,
international alliances and joint ventures, direct foreign
investment, and licensing

IMPORTING
Importing is buying and shipping foreign-produced goods for
domestic consumption.
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EXPORTING
Exporting is the shipping of a domestically produced good to a
foreign destination for consumption.
INTERNATIONAL ALLIANCES AND JOINT VENTURES
Three main types of international alliances: informal
international cooperative alliances; formal international
cooperative alliances (ICAs); and international joint ventures.
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Informal alliances are not legally binding and are limited in
scope and time.
Formal alliances usually require a formal contract with
specifics about what each company contributes and
involve a greater commitment by each company and a
transfer of proprietary information.
Joint ventures occur when firms analyze the benefits of
creating a relationship, pool their resources, and create a
new venture. Joint ventures imply the sharing of assets,
profits, risks, and venture ownership.
Advantages of Joint Ventures
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Combine the strengths of the partners involved and
thereby increase competitive position.
Intimate knowledge of the local conditions and
government where the facility is located.
Fragmented control.
A direct foreign investment is a domestically controlled foreign
production facility. Does not imply that the firm owns a majority
of the operation; can be achieved by acquiring an interest in an
ongoing foreign operation, by obtaining a majority interest in a
foreign company, by purchasing part of the assets of a foreign
firm, or by building a facility in a foreign country.
LICENSING
Licensing is a business arrangement in which the
manufacturer of a product (or a firm with proprietary rights over
a certain trademark or technology) grants permission to some
other group or individual to manufacture that product in return
for specified royalties or other payments.
Three basic types of licensing arrangements revolve around
patents, trademarks, and technical know-how.
Researching Foreign Markets
Important parameters to identify and research include:
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Government regulations
Political climate
Infrastructure
Distribution channels
Competition
Market size
Local customs and culture
INTERNATIONAL THREATS AND RISKS
Dangers of foreign markets include political, economic, and
financial risks, including:
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Ignorance
Uncertainty
Lack of information
Restrictions imposed by the host country
Unstable governments
Changes in tax laws
Rapid rises in costs and raw materials
Fluctuating exchange rates
Repatriation of profits and capital