Programme: BA (Hons) International Business with Foundation Year Module: Understanding the Entrepreneurial Spirit Module level : Level 4 Resources Essential Resources Rae, D. (2015). Opportunity-Centred Entrepreneurship. (2nd ed.). London: Macmillan International Higher Education. Recommended Resources Bygrave, W.D. and Zacharakis, A. (2019). Entrepreneurship. (5th ed.). Hoboken, New Jersey: John Wiley & Son. Burns, P. (2018). New venture creation: a framework for entrepreneurial start-ups. (2nd ed). Basingstoke, Hampshire: Palgrave Macmillan. Bessant, J. and Tidd, J. (2015). Innovation & Entrepreneurship. (3rd ed.). London: Wiley Stokes, D., Wilson, N. and Mador, M. (2010). Entrepreneurship. London: Cengage Learning. Pervaiz, A. and Shepherd, C. D. (2010). Innovation Management: Context, Strategies, Systems and Processes. New York: Prentice Hall. Trott, P. (2021). Innovation management and new product development. 7th ed. Harlow: Prentice Hall. Wickham, P. (2006). Entrepreneurship. London: Prentice Hall. Week 1 – Lecture Opportunity-centered entrepreneurship Topics for today’s session • Introduction to the Module • Assessment Brief • Introduction: Opportunity-centred entrepreneurship • The changing perspectives in entrepreneurship theory • Who or what is an entrepreneur? • Entrepreneurship: key ideas • Are opportunities discovered or created? • The role of entrepreneurship in society Introduction to the module AIMS Through the completion of this module, you will: 1. Gain an understanding of the theoretical and practical frameworks that underline entrepreneurship and intrapreneurship development. 2. Obtain knowledge and understanding of key aspects of business planning, financing, evaluating risk and how innovation creates competitive advantage 3. Develop marketing knowledge and skills, including the role of marketing and marketing processes 4. Understand how entrepreneurial marketing contributes to business startup and growth. 5. Develop entrepreneurial skills that foster engagement with various stakeholders for business development. LEARNING OUTCOMES On successful completion of this module, you will be able to: 1. Recognise and assess the scope and characteristics of entrepreneurship and intrapreneurship 2. Demonstrate a critical understanding of entrepreneurship and entrepreneurs. 3. Present the differences between business activity and entrepreneurial activity, including notions of risk assessment 4. Demonstrate knowledge of the significance of marketing to entrepreneurial activities. 5. Develop personal entrepreneurial skills and behaviour to individually be able to establish a business, interact with and convince various stakeholders. 6. Evaluate how different national cultures will influence the effectiveness of different entrepreneurial policies. Assessment ▪ Assignment Deadlines and weight: Deadline Component number Form of assessment Learning Assessment Weighting outcomes size (%) assessed Late Subn Core or noncore 26/03/2023 1 2 Essay Portfolio 1,500 words 1,500 words 50% 50% 1, 2, 3 4, 5, 6 19/03/2023 Yes Core Yes Core Assessment ▪ Component One: Refer to Assignment Brief posted on Brightspace ▪ Component Two: Refer to Assignment Brief posted on Brightspace Opportunity-centred entrepreneurship Opportunity-centred entrepreneurship refers to the process of how people learn whilst exploring and working on opportunities. This includes four clusters of activities: ➢ Personal enterprise – connecting opportunities with goals and identity ➢ Creating and exploring opportunities ➢ Planning to realise opportunities ➢ Acting on opportunities Creating & & Using contacts Networking Effective Communication Learning from experience Planning: objectives What is success? How- to? Who with? Resources? What do I want? Personal goals Skills & Strengths Confidence & self efficacy Value & motivations Opportunity-centred entrepreneurship (adapted from Rae, 2015) Seeing needs as opportunities Creative thinking Exploring Ideas Taking initiative The changing perspectives in entrepreneurship theory ➢ Entrepreneurship is vital for economic growth – creates innovation, demand, wealth and jobs ➢ It creates higher value-added activity through innovation, technology and knowledge. ➢ Reducing costs and timescales for transferring data and materials increase competitive opportunities. ➢ Big organisations control the most valuable resources ➢ Many big organisations (both private and public sector) do not work effectively in providing entrepreneurial opportunities. ➢ Entrepreneurs create opportunities, capture resources, and start and grow business ventures. Locating entrepreneurship as a subject (adapted from Rae, 2015) Who or what is an entrepreneur? ➢ What do entrepreneurs do? ➢ What are the essential skills? ➢ How do they work? ➢ Can anyone be one? ➢ Can entrepreneurial behavior be learned? ➢ What do you think? Have a look into the below video: https://www.youtube.com/watch?v=92ZmzD70sOU Employee vs Entrepreneur (Source: Marr, 2016) Who or what is an entrepreneur? Defining the entrepreneur An entrepreneur creates a new business in the face of risk and uncertainty to achieve profit and growth by identifying opportunities and assembling the necessary resources to capitalize on them. Opportunities You An entrepreneur… …takes on the risk of starting their own enterprise or investing in other start-ups Unlocking value Resources Successful entrepreneurs are known for… ..finding innovation and market gaps for new products and services Who or what is an entrepreneur? The antecedence of modern entrepreneurship Date Author Concept of entrepreneur 1755 Cantillon Introduced the concept of entrepreneur from ‘entreprendre’ (ability to take charge). 1893 Ely and Hess Attributed to entrepreneurs the ability to take integrated action in the enterprise as a whole, combining capital, labour, enterprise and entrepreneur. 1911, 1928, Schumpeter 1942 Envisioned that entrepreneur proactively ‘created’ the opportunity using ‘innovative combinations’ which often included ‘creative destruction’ of passive economic markets. 1921 Suggested that entrepreneurs were concerned with ‘efficiency’ in the use of economic factors by continually reducing waste, increasing savings and thereby creating value, emphasizing their ability to cope with risk uncertainty effectively and implicitly understanding the opportunity risk-reward relationship. Knight 1973, 1979, Kirzner 1999, 2009 Attributed to entrepreneurs a sense of ‘alertness’ to identify opportunities and exploit them accordingly. 1974 Drucker Attributed to entrepreneurs the capacity to ‘foresee’ market trends and make timely response. 1975, 1984, Shapero 1985 Attributed a ‘judgement’ ability to entrepreneurs to identify ‘credible opportunities’ depending on two critical antecedents- perceptions of ‘desirability’ and ‘feasibility’ from both personal and social viewpoints. Who or what is an entrepreneur? Static and processual definitions of an entrepreneur Static definitions of entrepreneur Processual definitions of entrepreneur ➢ The person who supplies financial capital ➢ A manager or superintendent ➢ The owner of an enterprise ➢ An employer of factors of production ➢ Risk-taking/ Innovating ➢ Decision-making ➢ Leading an industry ➢ Organising economic resources ➢ Contracting ➢ Arbitrage (market-maker) ➢ Allocating resources Enterprise, Entrepreneur and Entrepreneurship ➢ An enterprise is a business organisation that is formed, and which provides goods and services, creates jobs, contributes to national income, imports, esports, and more than this, provides sustainable economic growth. In a more concise way, an enterprise is a business venture. ➢ An entrepreneur is nothing else than the person who starts the enterprise, identifying and acting on opportunities. ➢ Entrepreneurship is the process of creation, including originality, capabilities, skills and difficulties. The 3Es-Enterprise, Entrepreneur and Entrepreneurship (Adapted from Leonelli et. al., 2022) How do people become entrepreneurs? The influence of personality and learning The Nonentrepreneurial Attributes DESIRABLE ATTRIBUTES Being ‘macho’ Invulnerability Outer Control Intelligence Capacity to Inspire CORE ATTRIBUTES Values Commitment & Determination Leadership Opportunity Obsession Tolerance of Risk Ambiguity & Uncertainty Creativity, Self-Reliance and Adaptability Motivation to Excel Knows it all Creativity & Innovativeness Counter- dependency Entrepreneurial Mind (Adapted from Timmons (1989) cited in Burns, (2018)) Perfectionist Energy, Health, and Emotional Stability Impulsiveness Being authoritarian Entrepreneurs: Advantages and Disadvantages There are undoubtedly benefits of being an entrepreneur but there are also a number of challenges. Advantages Disadvantages ➢ Independence and relative freedom from constraints ➢ including decision-making ➢ Change, risk, uncertainty of income and the requirement to make many decisions in new ‘unknown’ areas ➢ Able to use many skills, abilities and talents ➢ Many skills and abilities required, complete responsibility ➢ Accountable to oneself and control over own destiny ➢ Lower quality of life in early stages with notable potential or failure ➢ Status, achievement and chance to reach one’s full potential ➢ Long hours and ‘hard work’ ➢ Potential for greater financial rewards Entrepreneurial Thinking Process Entrepreneurs think differently than nonentrepreneurs. Entrepreneurs must often make decisions in highly uncertain environments, manage risk, face time pressures and a considerable emotional investment. Given the entrepreneur’s decision-making environment, there are two approaches to reasoning: Causation and Effectuation Causation Effectuation Causation aims to predict behaviour by conducting scenario planning, usually by analysing data Effectuation does not use predication tools, however, this approach uses the principle of ‘affordable loss’(what the entrepreneur is prepared to lose) Conduct competitive analysis to position the new venture in a specific market This approach deals with competition by formulating strategic alliances Relies significantly on prior knowledge and knowledge acquired through experience Effectuations ‘exploit contingencies’, meaning that this way of thinking embraces unexpected events and turns these events into opportunities This approach deals with uncertainty by assessing the risk in a attempt to predict an uncertain future. The main focus is on the business plan with the means to attain the business goal Effectuation starts with the means available and in this way tries to control the uncertainty Activity- Reflective practice Q Can you think of a famous entrepreneur or someone you know who would be recognized as an entrepreneur? To what do you attribute their success? Luck, skill, talent, propensity for risk-taking, leadership ability or a combination of them? Successful Entrepreneurs Four Main Characteristics of Successful Entrepreneurs: ➢ Passion for their Business → e.g. John Wood/Room to Read ➢ Product/Customer Focus → e.g. Steve Jobs/Apple ➢ Tenacity despite Failure →e.g. Kyle Smitley/ Barley & Birch- Organic Clothing ➢ Execution Intelligence → e.g. Jeff Bezos/Amazon Ideas are easy, it is execution that’s hard! The case of Steve Jobs: Apple Entrepreneurial process ➢ Using our above definition and type, entrepreneurs and entrepreneurship may now be understood as a certain individual or individuals (‘copreneurs’) engaged in the process of creating a new business venture as shown in the below figure. ➢ A key element here is the entrepreneur as the person who identifies an opportunity. The propensity for being able to spot a gap in the market is a difficult and complex area to describe. So too is identifying a sustainable competitive advantage setting the idea apart from the competition. Entrepreneurial process of creating a new business venture (Adapted from Scheper and Volery, 2004) Entrepreneurship: key ideas Key idea 1: ➢ Defining entrepreneurs is difficult as they are a composite of variables. These include personal traits, characteristics and environmental enablers. ➢ Some argue that entrepreneurial success stands or falls by the right person being in the right place at the right time. ➢ ’Good’ opportunities involve choosing valuable opportunities that: • Satisfy specific needs or wants of a specified group of people→ the more defined their needs or wants the better the opportunity. ➢ Suitable strategic plans for your idea must include : • Value Propositions → Compelling, preferably unique, features of your idea intended to make your product attractive to your targeted customers. Entrepreneurship: key ideas Key idea 2: ➢ Entrepreneurial Activity is about executing your chosen opportunity by developing a suitable strategic plan for commercialising your idea (as a profit or not-for-profit enterprise). ➢ Typically, entrepreneurial activity is initiated by push or pull factors. • Push factors include, being made redundant, low level of income or general unhappiness with current employment. • Pull factors include the chance of increasing personal wealth, chance to be own boss and status. Entrepreneurial motivation Push and Pull Factors- Theory of Entrepreneurship (Adapted from Mkubukeli et. al., 2018). Are opportunities discovered or created? Entrepreneurs specialise in entrepreneurial opportunities. Defining the Opportunity An Entrepreneurial Opportunity is a lucrative business idea; a situation in which new goods, services, raw materials, and organizing methods can be introduced and sold at a profit i.e. at prices greater than their cost of production (Casson, 1982). Types of Entrepreneurial Opportunities: ➢ Recognising Opportunities (safest & most common)→in this case, both supply and demand exist (yet another restaurant). ➢ Discovering Opportunities (market issues), in this case, either supply or demand exists & the non-existent side has to be created (e.g. space food, electric cars). ➢ Creating Opportunities (toughest to pull off), in this case neither demand nor supply currently exists & both have to be constructed (e.g. robotic dogs). Are opportunities discovered or created? Strategy Intended & emergent initiatives to use resources and enhance performance What is a “Good” Opportunity? ➢ Have clear marketing features: What? ➢ Have great management fit: In what ways? Know-how Skills & knowledge for extending existing competencies ➢ Create or add significant value: Who is interested? ➢ Solve a significant problem, want and/or need: How? Entrepreneurship How opportunities to create value are identified, evaluated & developed Innovation Novel ways of creating & adding value VALUE Creating & Sustaining Value Are opportunities discovered or created? The recognition of opportunities can be seen as a creative process. Opportunity Recognition Process: Creativity Based Model of Entrepreneurial Opportunity recognition (Lumpkin et al., 2003) Influencing Aspects: The theory of human motivation (Maslow, 1970). Also called: The hierarchy of needs 1. Preparation 2. Incubation 3. Insight Discovery Process 4. Evaluation 5. Elaboration Formation Process Opportunity Recognition Growth Needs Basic Needs 1. Physical Needs 2. Safety Needs 3. Social Needs 4. Esteem Needs 5. Cognitive Needs 6. Aesthetic Needs 7. Self-Realisation Need 8. Transcendence Activity Q Are entrepreneurs only those that think ‘outside of the box’? Justify your answer. Thinking outside and inside the box Myth: Entrepreneurs are those that only think ‘outside of the box’: Let’s reflect by using Amibile’s creativity model Expertise: knowledgetechnical, procedural, and intellectual Creative-thinking skills determine how flexibly and imaginatively people approach problems. Do their solutions upended the status quo? Not all motivation is created equal. An inner passion to solve the problem at hand leads to solutions far more creative then do external rewards, such as money. Intrinsic motivation is more important that extrinsic motivation Thinking outside and inside the box Reality: An entrepreneur needs to think both inside and outside the box.. Creative thinking draws on both: ➢ Convergent thinking - enables selection between alternatives (finding the answer to the problem): 5 + 5 = 10 ➢ Divergent thinking generates new associations & possibilities (multiple answers or means to achieve a goal): ? + ? =10 (negative numbers, fractions and so on) Lots of ideas The best solution Activity Q ’Entrepreneurs are born, not made.’ Do you agree with this statement? Justify your answer. Have a look into the below video: 10 Myths of Entrepreneurship https://www.youtube.com/watch?v=G8gRkJ9cnzo The role of entrepreneurship in society Entrepreneurs and Social Progress ➢ Due to the increased concerns over the inequality, sustainability and overall social impact, a significant number of entrepreneurs have become more aware and particularly interested in the consequences of their economic activity. ➢ In fact, entrepreneurship is used to create a more sustainable and unbiased world, by making use of the significantly increased social awareness. The role of entrepreneurship in society Social entrepreneurship ➢ Refers to a particular category of entrepreneurship that’s aims at solving the social problems of the world while pursuing for profit. ➢ It is a common way of pushing and demanding social changes, particularly in terms of social justice and entrepreneurial frameworks. The entrepreneurship spectrum illustrating the boundaries of social entrepreneurship (Source: Abu-Saifan, 2012) Activity- creative teamwork Q Form a team of 2 or 3 people and brainstorm for 20 minutes to list ideas & opportunities for a business – think creatively! What needs and opportunities do you see? Narrow down the options and select the best business idea. SUMMARY • Introduction to the Module • Assessment Brief • Introduction: Opportunity-centred entrepreneurship • The changing perspectives in entrepreneurship theory • Who or what is an entrepreneur? • Entrepreneurship: key ideas • Are opportunities discovered or created? • The role of entrepreneurship in society Assignment guideline • Component One and Component 2 • General and basic guideline: • All assignment questions contained in each of the assignment briefs are to be addressed. • Tick each question whenever it is completely addressed. • Read and understand each of the questions carefully before conducting the respective research. • One of the purposes of doing an assignment is to show to your lecturer what you have learnt from the lectures. How to do it? Always refer to the core textbook and the lecture notes before answering the questions. Cite all the relevant materials and apply them to your assignment whenever required. • Always refer to and follow the CRAAP Test. See table. Assignment guideline • Component One and Component 2 • General and Assignment-specific guideline: • Refer to the Marking Guidance table stipulated in the assignment brief. • Address each sub-topic logically and whenever appropriate. • Quantitative measurement (word count) is one of the requirements but qualitative work is equally required for each part of the assignment. • In general, if you have addressed those points in the table, you’ll be fine. Yet, high quality of work is always what we are looking for. • Respective topics in the table should be sufficiently covered in the lecture notes. • Your lecturer will walk you through with it during various lectures, before the submission date or whenever appropriate. Any questions? Thank You References Abu-Saifan, S. (2012). Social entrepreneurship: definition and boundaries. Technology innovation management review, 2(2). Biography (2017) Steve Jobs. Available at: https://www.biography.com/business-figure/steve-jobs (Accessed: 06 December 2022). Burns, P. (2018). New venture creation: a framework for entrepreneurial start-ups. (2nd ed). Basingstoke, Hampshire: Palgrave Macmillan. Deloitte (2018) The rise of social enterprise. Available at: https://www2.deloitte.com/content/dam/insights/us/articles/HCTrends2018/2018HCtrends_Rise-of-the-social-enterprise.pdf (Accessed: 06 December 2022). Forbes (2022) The 4 Types Of Entrepreneurs -- Which Are You?. Available at: https://www.forbes.com/sites/georgedeeb/2014/11/07/the-4-types-ofentrepreneurs-which-type-are-you/?sh=3b1e3613e9ea (Accessed: 06 December 2022). Gibb, A.A. (1987) Enterprise culture—its meaning and implications for education and training. Journal of European industrial training. 11(2), 2-38. Hébert, R.F. and Link, A.N. (1988) The entrepreneur: mainstream views & radical critiques. Greenwood. Leonelli, S., Masciarelli, F. and Fontana, F. (2022). The impact of personality traits and abilities on entrepreneurial orientation in SMEs. Journal of Small Business & Entrepreneurship, 34(3), pp.269-294. References Marr, C. (2016) The big problem with comparing employees and entrepreneurs. Available at: https://www.linkedin.com/pulse/big-problem-comparingemployees-entrepreneurs-chris-marr (Accessed 6 December 2022). McCline, R.L., Bhat, S. and Baj, P. (2000). Opportunity recognition: An exploratory investigation of a component of the entrepreneurial process in the context of the health care industry. Entrepreneurship Theory and Practice, 25(2), pp.81-94. Mkubukeli, Zandisile & Cronje, Johannes. (2018). Pull and Push Elements of Entrepreneurship in South Africa: A Small-Scale Mining Perspective. Journal of Entrepreneurship & Organization Management. 07. 10.4172/2169-026X.1000252. Rae, D. (2015). Opportunity-Centred Entrepreneurship. (2nd ed.). London: Macmillan International Higher Education. Saebi, T., Foss, N. J., & Linder, S. (2019). Social Entrepreneurship Research: Past Achievements and Future Promises. Journal of Management, 45(1), pp.70–95. The Guardian (2011) Steve Jobs quotes: the man in his own words. Available at: https://www.theguardian.com/technology/2011/oct/06/steve-jobs-quotes (Accessed: 06 December 2022). Zacharakis, A. and Bygrave, W.D., (2019). Entrepreneurship. (2nd ed.). John Wiley & Sons.
