Computer exam
90 minutes exam
Lectures + Mandatory readings
Chapters 1,2,3,4,5,7,8,9,15 + article
Week 1: chapter 1 and 2 of the book
The economic tradition – economic impact and mechanisms
The social-psychological tradition – human and psychological aspects
The emergence tradition – creating new opportunities
Newer theories have focused on understanding entrepreneurship as an organising process that leads
to a particular output, namely the formation of a new organisation. By defining entrepreneurship as a
process of organisational formation, entrepreneurship becomes synonymous with the building of new
structures, because organisations are characterised by having a certain degree of formal policy,
administrative structures and goals.
The opportunity tradition – discovering existing opportunities
the opportunity tradition defines entrepreneurship as: ‘discovery, evaluation and exploitation of
opportunities to introduce new goods and services, ways of organising, markets, processes and raw
materials’. The focus is thus on the minority of organisations, either new or existing, which bring new
products, processes, markets and reorganisations with them.
2: Who is the entrepreneur?
Paradox: born or made?
Types of entrepreneurs
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‘Novice’ entrepreneur (a person with no entrepreneurial experience).
‘Habitual’ entrepreneur (a person with previous entrepreneurial experience).
‘Serial’ entrepreneur (a person who is constantly establishing and selling organisations).
‘Portfolio’ entrepreneur (a person who owns several organisations simultaneously).
‘Hybrid’ entrepreneur (a person who is simultaneously self-employed and employed).
‘Nascent’ entrepreneur (a person who is in the process of considering the establishment of a
new organisation – he or she can be either a ‘novice’, ‘habitual’, ‘serial’ or ‘portfolio’
entrepreneur). Nascent entrepreneurship, or the nascent entrepreneur, is thoroughly
discussed in Chapter 6.
‘Intrapreneur’ (a person acting entrepreneurially within an existing organisation). This type of
entrepreneurship is discussed, thoroughly, in Chapter 11.
The entrepreneurs is born – about character traits, special individuals
Some economists stress the importance of the entrepreneur’s character traits and personality.
Overall, he sees the entrepreneur as a particularly innovative individual – ‘A Great Man’ who through
creative destruction creates new waves of change in the economy. This distinguishes the
entrepreneur from the ‘ordinary’ people who are more ‘routine’ in their activities. Entrepreneurial
activity comes from special individuals who have the: desire to establish a private kingdom, will to
conquer, joy of creating
The entrepreneur is made- focusing on upbringing and demography
The interaction between the entrepreneur’s market and life situation, network characteristics, type of
organisation, access to resources, demography, etc. has a bearing on who will become entrepreneurs
and who will not.
Identity and the entrepreneur
Identity thus takes the form of a continuous social process in which the entrepreneur is trying to
create meaning and understanding of: who I am, what I do and what I experience. According to this
research, all people can potentially develop an entrepreneurial selfunderstanding. as intention is
referred to as the crystallisation of three variables:
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perceived behavioural control: how difficult or simple the individual perceives the
entrepreneurial project;
subjective norms: the extent to which individuals perceive a social pressure to perform or not
perform the entrepreneurial action;
attitude towards the behaviour: the degree to which individuals will choose the
entrepreneurial action, rather than another action – view of the action’s favourability (Ajzen
Entrepreneur: born or made?
Lecture
Entrepreneurs are challenged to overcome
liability of newness and smallness to realise
economic & societal potential
In result, majority of new entrepreneurial projects
remain small or fail entirely by failing to overcome
critical junctures (and scale), and hence, the
potential tech, economic and societal impact is lost
The VUCA world – in result – creates increasingly
challenging (PESTEL) environment where ALL
stakeholders are forced to shape their practices
accordingly
Science – in result of high-quality research – is
expected to address these issues and develop
(sustainable) solutions
Why should we care about entrepreneurship in a global context?
DEFINITION:
Entrepreneurship is defined as the initial emergence of new opportunities being evaluated and
utilised through organising.
Process:
Entrepreneurial process = movement from discovering or creating an opportunity, evaluating it and
finally exploiting it through organising
Entrepreneur:
Individual who initiates, pursues and creates entrepreneurship
Entrepreneurship is becoming an increasingly complex theoretical construct
It consists of eight factors: the entrepreneurs, innovation, organization creation, creating value, profit
or nonprofit, growth, uniqueness, the owner management
Four traditional perspectives on entrepreneurship
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The economic tradition: from using discrepancies in supply-demand to dealing with
uncertainties to creative destruction
The emergence tradition: exploring entrepreneurial activities during the process of creating a
new organisation.
The social-psychological tradition: the need to achieve among the actors in a given society.
The role of personal traits & external societal environment on entrepreneurial behavior. (+
risk propensity)
The opportunity tradition: discovery, evaluation & exploitation of opportunities to introduce
(new, creative) products/services.
Who is a successful entrepreneur and how do we make them? (born or made?)
Born:
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A ‘SPECIAL INDIVIDUAL’ WITH A STRONG DESIRE TO PROVE HERSELF, & A DREAM TO CHANGE
THE WORLD
HAS A STRONG SENSE OF BUSINESS OPPORTUNITIES & LACK OF FEAR OF RISKY DECISIONS
WILLINGLY ACCEPTS LEADERSHIP & LIKES TO BE IN CONTROL OF VUCA SITUATIONS
Made:
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19 YEARS OLD
STANFORD STUDENT & STRONG R&D CONNECTIONS
PALO ALTO – FOSTERING PESTEL CONDITIONS
STRONG NETWORK & POLITICAL LOBBYING
AVOIDS THE LIABILITY OF NEWNESS & SMALLNESS
GAINS CREDIBILITY
PUBLIC EXPOSURE
There is a positive relationship between passion for developing and venture growth
Week 2: chapter 3 and 4 of the book
3: Emergence of opportunities
An opportunity is an idea that is believed will create value for others. Ideas come before
opportunities, but not all ideas grow and turn into opportunities.
Theories of entrepreneurship
Paradox: discovered or created?
The criteria for the evaluation are whether the idea is:
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anchored: bound to a product, a service or an experience that creates value for others;
attractive: others are willing to pay for the value that represents the idea;
at the right time and place: the environment is mature enough to receive the entrepreneur
and his or her idea;
capable of being done: the opportunity is practically feasible
The extent of intentions and capabilities
In the first path, the entrepreneurial process starts with the
individual intending to start an organisation and then looking for an
opportunity. In the second path, the entrepreneurial process begins
with the individual, more or less randomly, discovering or creating
an opportunity, after which the intention to exploit it develops.
Types of opportunities
In discussions about what an opportunity is and how it arises, two
theorists are frequently referred to: Schumpeter (1934) and Kirzner
(1973). the core of Schumpeterian theory is that opportunities will emerge through new
combinations of existing resources. They are also characterised by the fact that they break with the
existing perceptions and ways of doing things.
On the other hand, Kirznerian opportunities are characterised
by the entrepreneur’s use of existing market information to see
whether there are ‘holes’ in the market in terms of resources
that can be used more efficiently than they are currently. Here,
the entrepreneur focuses on optimising and making the existing
market effective.
While Schumpeterian opportunities create imbalance in the
market, Kirznerian opportunities bring the market back into
equilibrium.
Discovering opportunities - Kirznerian
The Kirznerian opportunity can be said to be objective in nature. It is simply a part of our
environment (profit gaps in the market) just waiting to be discovered.
Creating opportunities - Schumpeterian
Instead, opportunities are something created by humans: ‘opportunities and markets have to be
invented, fabricated, constructed, made’ Without human intervention, there would be no
opportunities.
Opportunities: discovered or created?
4: evolution of opportunities
Paradox: instrumental or legitimate?
The first and most familiar perspective emphasises how opportunity evaluation is a means to achieve
a particular result or goal. Thus, evaluation is perceived to be an instrumental and decisive action.
Conversely, we find the ‘legitimacy perspective’, which emphasises that the creation of legitimacy is
essential for the evaluation of options.
What is evaluation?
The evaluation aims to determine whether the concept represents a future attractive option in a
market that may not even exist yet and this makes the idea’s evaluation and development difficult to
predict. Within entrepreneurship we are therefore faced with a challenging, forward-looking
evaluation (ex-ante), not a retrospective evaluation (ex-post).
The instrumental evaluation
In other words, the instrumental perspective seeks to give the entrepreneur control over the
evaluation process with the entrepreneur’s own situation as a starting point.
They suggest that the entrepreneur should specifically focus on four areas:
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product/service;
the market/industry;
organisation;
financing
He refers to the importance of assessing the possibilities of its potential in light of the ‘scale’, ‘scope’
and ‘span’. The first refers to the opportunity’s size and ‘scope’ to the value that it provides in the
short and long term. ‘Span’ refers to the opportunity’s durability over time – is it a one-hit wonder or
does it have lasting potential
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product = the essence of the idea, which may be a product, service, experience or process;
market = the group of clients and organisations who are interested in the idea and have the
resources to acquire the product or service that the idea represents;
industry = organisations offering the same or substitute products, services, experiences or
processes;
people = the entrepreneur/the entrepreneurial team;
money = the financial dimension
Evaluation through the creation of legitimacy
As an alternative to the instrumental perspective, evaluation can also be seen as an integral part of
everyday entrepreneurial processes. Only by acting on the idea, confronting others with the idea and
testing its attractive aspects, negative aspects, capacity development, etc. in a social context, is it
possible to get an understanding of whether the idea represents an opportunity. What is legitimacy?
In short, something is legitimate if it complies with the norms, values, beliefs, practices and
procedures that are accepted by a particular social group.
Lecture:
Why we should care about creating & detecting entrepreneurial opportunities
Opportunity refers to a way of generating value (i.e. economic, tech, societal) through unique, novel,
or desirable products, services, processes that have not been previously exploited
Businesses operate in an increasingly Volatile, Uncertain, Complex and Ambiguous (VUCA) world
NEW VENTURES ARE CHALLENGED→ TO OVERCOME LIABILITY OF NEWNESS & SMALLNESS → TO
REALISE ECONOMIC & SOCIETAL POTENTIAL
Real opportunity:
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ANCHORED: bound to a product, a service or an experience that creates
value for others.
ATTRACTIVE.
AT THE RIGHT TIME & PLACE
CAPABLE OF BEING DONE
Why should we care about sensing entrepreneurial opportunities
DISCOVERY APPROACH – KIRZNERIAN TYPE
Kirznerian opportunites are characterised by the entrepreneur’s use of existing market information
to see whether there are ‘holes’ in the market. Hence alert ‘Kirznerian’ entrepreneurs recreate
equilibrium in the market.
CREATION APPROACH – SCHUMPETERIAN TYPE
Schumpeterian opportunities are based on innovative ideas which violate existing markets and
disrupt equilibrium. The opportunity arises because existing knowledge is recombined, creating
development in the light of the known market
Discovery
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The discovery perspective sees opportunities as objective, as given objects in the
environment.
Alert entrepreneurs discover these opportunities based on their awareness of current market
information.
The opportunity remains the same over time.
Creation
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The creation perspective sees opportunities as being closely linked to individual’s action and
creativity.
The individual is again rooted in a social context, which is why he or she interacts with other
individuals and the environment in general.
Since the creation process is the result of interacting elements, the opportunity is constantly
changing
SENSING = detecting weak signal before they form trends
SEIZING = reacting on opportunities in timely ways by successfully
innovating & implementing new systems taking advantage of external
changes
TRANSFORMING = reshaping themselves & entire ecosystems to reap
full advantage of new business models ; periodic organizational renewal
It is of crucial importance to evaluate the potential impact of opportunity BEFORE major
commitments & investments are made. And to avoid lost opportunities
The liability of newness and smallness
Many problems in the early stage occur before of this.
In reality you will need to combine:
1) Rational, analytical and systematic approach with
2) Championing & legitimation
Market opportunity navigator
1. WHICH MARKET OPPORTUNITIES EXIST FOR US?
2. WHAT ARE THE MOST ATTRACTIVE MARKET OPPORTUNITIES FOR US?
3. WHAT MARKET OPPORTUNITIES SHOULD WE FOCUS ON?
Solid framework with 3 steps to adress these questions: market opportunity set, attractiveness map,
agile focus strategy.
How?
STEP 1 - UNDERSTAND YOUR BUILDING BLOCKS
STEP 2 - CONSTRUCT DIFFERENT TOWERS
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KEEPING OPEN
PLACING IN STORAGE
Final outcome The 3 steps of the Market Opportunity Navigator will successfully..
1. SUPPORT YOUR DECISION-MAKING
2. PROVIDE A SHARED LANGUAGE
3. OFFER GUIDANCE OVER TIME
Week 3: Chapter 5, 9 and 15 of the book
5: Organisation of opportunities
Theories of entrepreneurship
Paradox: planning or improvising?
What is an organisation?
Organisations are thus organised communities consisting of actors, resources, knowledge, etc., where
the glue that holds it all together is commonly held and generally accepted opinions and perceptions
among stakeholders about why they appear as objective structures, systems, norms and logics.
In the process of moving from a primitive to an elaborated organisation, individuals come together
through a series of processes that establishes:
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more formalisation
more complexity
clarification of objectives
What does organising involve?
As the five stages are described here, the entrepreneurial
process appears as a linear and progressive process. However
there may be feedback from later phases to earlier ones.
The figure illustrates that the organisation requires resources in terms
of raw materials, capital, human and social resources, information,
knowledge, customers, etc.
Organsing is not always a success
The barriers, which the entrepreneur meets in the process towards a
‘stable’ organisation are divided into two main categories: personal
challenge (getting suitable health insurance, balancing time and lack of mentors) and social
challenges (being taken seriously and receiving support).
Organising can be planned – intentional, rational, considered
The perspective suggests that the organising is intentional, rational and considered, and the process
of organising can be driven by analysis. a causal process in which the entrepreneur has to ask him/herself the question: ‘What must I do to achieve the desired goal – a successful organisation?’
Organising is all about improvisation – unpredictability, give up control, do it with available
resources
Entrepreneurs are, however, rarely faced with predictable environments. This perspective emphasises
that an entrepreneur needs to give up control and build on the often-limited resources that he or she
has available right now. make use of what you have when organising instead of starting with the
ultimate goal. According to the effectuation-mind the organising is
characterised by the entrepreneur asking him-/herself: ‘What effects can I
achieve with the resources I have? .
Organising: planning or improvisation?
9: The business plan
Paradox: Management tool or creativity curb?
Written documents or thought process
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The written plan ensures critical thinking.
It can be used in both internal and external communication.
It can serve as internal control of company development.
However, there are also people who argue that the very act of writing down the plan is often
unnecessary and that the important thing is the right thought process. Market conditions,
technological possibilities, regulatory and numerous other factors related to the organisation’s
environment change so fast today that the written business plan becomes out- dated
Planning
One way the complexity and unpredictability can be overcome, especially in the first part of the
‘planning’ process, is by making use of the Business Model Canvas. customers and sales: value
proposition, customer segments, revenue streams, channels, customer relationships. business: Key
activities, key resources, partners, cost structure.
The business plan as a management tool
we argue that planning helps firm founders to make decisions more quickly than with trial- and-error
learning; and to turn abstract goals into concrete operational activities more efficiently.
Essentially, it is a vehicle to: 1) Assess the current and future state of an organization and its
environment; 2) Delineate long- range and short- range objectives based on this assessment; and 3)
Develop appropriate action guidelines to achieve these objectives.
The business plan as a creativity curb
However, some people think that the business plan has an inhibiting effect on the entrepreneur’s
creativity. They argue that when entrepreneurs start working with business plans, they are squeezed
into a structured and logical form of thinking that spoils creativity. It is strategic thinking that is
important in the planning process, and this requires a much higher degree of creativity than the
logics of consequentiality and rationality. Successful
planning requires that the entrepreneur thinks ‘out of
the box’ and breaks with the existing dominant
paradigms in the market. It requires creativity and
lateral thinking (De Bono 1992), and creativity and
structure do not go together.
Management tool or creativity curb?
15: synthesis and recap
As an entrepreneur you must be prepared to run the gauntlet between
paradoxes.
The book’s paradoxes
Where the left - hand side of the table above can be summarised as an
objectivist approach, the right side is likely to be summarised as a
subjectivist approach. The former suggests that there exists an objective world independent of
humankind and their actions, where the outside world, in terms of human action, can be known,
described and predicted. In the subjectivist approach reality is not externally given, but is internal and
based on the individual’s subjective understanding. Reality is created through human actions,
experiences and understanding: social reality is thus created rather than discovered.
An objectivist approach
individuals and groups of people behave in as economically rational a manner as possible. The
connection on the left - hand side is that entrepreneurs discover an opportunity, evaluate it through
the use of instrumental tools and start organising it. The process is deliberate, systematic, and
controlled through planning towards the achievement of a specific and predictable. This approach
assumes that there are optimal recipes for how one or more entrepreneurs should approach the
entrepreneurial process. Through planning, control of machinery, coordination and analysis the
entrepreneur is able to steer the machine in the desired direction.
A subjectivist approach
Here, the entrepreneur is motivated by, and acts from, many different logics that do not always fit
into a traditional rational economic logic. The entrepreneurial is an entity created by the actions,
thoughts, feelings, desires and experiences of the entrepreneur. Another foundation of the
subjectivist approach is scepticism about the value of planning and closely defined objectives. It is
also crucial to let innovation occur bottom- up, because the creation and design of new things can
sometimes be a chaotic process, where objectives and planning do not always make sense and add
value. The business plan is often seen as a curb on creativity and design thinking is important to
countervail the planned way of thinking.
Sometimes the balance leans towards the objectivist approach and at other times towards the
subjectivist approach.
Lecture:
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Causation processes take a particular effect as
given and focus on selecting between means to
create that effect.
Effectuation processes take a set of means as
given and focus on selecting between possible
effects that can be created with that set of means.
Successful & impactful entrepreneurs need to accumulate
these 3 competencies (in a team) to reach the credibility
threshold:
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Opportunity development competency
the ability of an entrepreneur or a manager to
identify, develop, and shape business opportunities.
Understanding trends and needs.
Championing competency
is about advocating for and driving forward a new
idea, project, or innovation within an organization.
Ability to inspire others, overcome resistance an
mobilize resources
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Resource acquisition competency
An individual with this competency is adept at identifying what resources are needed, where
to find them, and how to access them effectively and efficiently.
Red ocean: Existing market, Battle from market segments, expand existing demand
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Compete in existing market space
Beat the competition
Exploit existing demand
Make the value-cost trade off
Blue ocean: Newer market, producing market segmants without competition,
Create and attract new demand
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Create uncontested market space
Make the competition irrelevant
Create the capture new demand
Break the value-cost trade-off
Align with whole system of firm’s activities in pursuit of differentiation and low cost
The strategy canvas serves two purposes:
1. It captures the current state of play in the known market space, which allows users to clearly
see the factors that an industry competes on and invests in, what buyers receive, and what
the strategic profiles of the major players
are.
2. It propels users to action by reorienting
their focus from competitors to alternatives
and from customers to noncustomers of the
industry and allows you to visualize how a
blue ocean strategic move breaks away from
the existing red ocean reality.
Create a blue value curve using  the eliminateraise-reduce-create grid (ERRC)
To seize your
opportunities and
avoid risks, you
need a fitting
structure:
The industry life cycle is an important tool enabling us to
determine how organisations are positioned in terms of the
development of its markets and identify the impact upon
competitive conditions.
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Introduction stage: slow growth in sales, demand is unclear,
high costs as a result of limited production
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Growth stage: sales increase rapidly, market is growing & expanding
Maturity stage: slowing in sales growth &
Decline stage: fall in sales and profitability, consumers shift to new product/service offerings.
Yet, according to impressive experience of Steve Blank (2013):
1. ‘Business plans rarely survive first contact with customers.
2. No one besides venture capitalists and the late Soviet Union requires five-year plans to
forecast complete unknowns.
3. Start-ups are not smaller versions of large companies.
The Lean startup framework had five primary building blocks:
a)
b)
c)
d)
e)
Finding and prioritizing market opportunities in startups
Designing business models
Validated learning
Building minimum viable product
Learning whether to persevere with or pivot from the current course of action
Week 4: book chapter 7-8
7: resources
Paradox: In other words, should the entrepreneur focus on exploiting existing resources or on
exploring new resources in the entrepreneurial process?
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By exploiting existing resources, the entrepreneur focuses on the effective implementation of
his or her existing resource base to evaluate and organise the opportunity
Conversely, the entrepreneur chooses to explore new resources. Here, the benefit is that new
resources and combinations of resources can be a catalyst for creative development of the
opportunity
it is primarily divided into two types of argument: the ‘inside-out argument’ and the ‘outside-in
argument’. The latter argument maintains that creating sustained competitive advantage comes
through better positioning in the market and differentiation from your competitors. On the other
hand, the inside-out argument claims that sustained competitive advantage is best established within
the organisation through its unique combination of resources
Resource theory
resource theory is built on two basic assumptions. First is the
assumption that the actors in an industry are heterogeneous and
therefore have unequal control over strategic resources. The second
assumption is that resources are not perfectly transferrable between actors
A three-way split of resources
Some of the resources are reduced when used, while
others actually multiply with increased use. It is
interesting that the various resources can be transformed
from one type to another. You can buy advice on
marketing (human resources), through use of your
financial resources.
Resource exploitation
the entrepreneur uses the existing resource position through rational and systematic consideration of
how he or she can most effectively select and deploy those resources so that they best support the
opportunity. The challenge is to maximise efficient use of existing resources to achieve the goal.
Further, the perspective assumes that the entrepreneur knows, in advance, the value of a resource in
terms of the entrepreneurial process.
Resource exploration
the entrepreneur starting from a position of limited resources
must explore and perhaps even create new resources.
exploration is about expansion, flexibility, experimentation and
expression, which may lead to the creation or discovery of new
opportunities and countless new ways of evaluating and
organising.
8: Networks
These may be people closely connected to the organisation, including customers, suppliers, investors,
auditors, etc. However, it might also include people who have a less visible, but equally crucial role in
the entrepreneur’s success.
Theories of entrepreneurship
One perspective discusses whether entrepreneurs can regard the network as a rational tool for
deliberate and calculated use in order to succeed in their efforts to discover or create, evaluate and
organise. The second perspective sees the network as a result of the entrepreneur’s past.
Paradox: rational or embedded?
Theory of entrepreneurship and networks
Networks can help to:
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provide people with information that can be applied to the situations they face;
influence other people in the network;
create social legitimacy for people within a network structure;
develop and enhance personal identities;
The hetrogeneity argument
The dissimilarity – or heterogeneity – argument suggests that
differences among individuals in the entrepreneur’s network and weak
relationships between these are the most efficient network. The
argument takes place at two different levels:
1. The relational level, which focuses on the relationship between
the individual entrepreneur and his/her contacts.
2. In contrast, the network level includes all contacts the
entrepreneur has in his/her entire network.
The homogeneity argument
Here it is argued that dense networks are the best, where as many
people as possible in the network know each other, and where the
relationship between the entrepreneur and these people is strong.
1. The rational level; the entrepreneur needs contacts that he or she
has strong and close relations with.
2. The network level; When individuals are strongly associated in a
dense network there is an increase in the likelihood that they will act
as a whole and with a common goal in mind.
Effective networking is situation dependent
Networks seen as a rational tool
According to the rational perspective, the relationship between
entrepreneurs and the people involved will often be concrete (i.e.
supportive), emotionally neutral, quasi-contractual and shortsighted. People are selected with care, but are also carefully
dropped again once they no longer support the process in the best possible way.
Embedded in networks
The embedded perspective focuses on the network being something that is carried forward from the
past. According to this perspective, the entrepreneur cannot actively select a network in relation to
the problems he or she faces without there being consequences. networking is regarded as
something that is created and maintained through all life’s activities, and it cannot be identified and
isolated in relation to specific challenges. The embedded perspective describes relationships as
broader (both supportive and obstructionist), emotional, trusting, mutually binding and long term.
Network: rational or embedded?
The rational perspective describes the entrepreneur as a focused and rational actor who considers
the network as a tool. The relationship between the entrepreneur and the people in his/her network
are concrete, emotionally neutral, quasi-contractual and
short term. The rational perspective gives low priority to the
social context compared to the embedded perspective. The
main criticism of the rational perspective from the view of the
embedded perspective is that the entrepreneur is
undersocialised. While the rational perspective can be criticised
for being under-socialised, the embedded perspective is
criticised for the opposite, namely being over-socialised.
Lecture:
The quest of balancing the ‘inside out’ and ‘outside in’
perspectives 
In order to achieve competitive advantage, resources
must satisfy several conditions:
V – value: do an organization’s capabilites allow it to
exploit environmental opportunities and neutralize
environmental threats? (why it’s better)
R – rarity: Are capabilites possessed by only a few
competitors? (original)
I – imitability: Are capabilites costly for other organizations to
acquire or imitate?
O – organisation: is the company organized to allow it to
exploit the valuable, rare, and difficult to imitate capabilities it
possesses?
RBV & VRIO: Limitations & further extensions
VRIO CRITICISMS:
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TAKES ‘INSIDE-OUT’ PERSPECTIVE AND LACKS EXTERNAL & DYNAMIC ELEMENS
LACKS INSIGHTS INTO HOW CORE RESOURCES/COMPETENCES ARE DEVELOPED AND
CHANGED OVER TIME
CANNOT EXPLAIN HOW SUSTAINABLE COMPETITIVE ADVANTAGE IS ACHIEVED IN TURBULENT
& RAPIDLY CHANGING (VUCA) ENVIRONMENT
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THE ROLE OF MANAGERS/LEADERS REMAINS UNCLEAR
Strategic groups & key implications
‘Strategic group is the group of firms in an industry following the same or a similar strategy’. By
mapping players into strategic groups, organization can determine – their direct competitors and
extent of competitive rivalry, viability of mobility barriers, track competitor developments.
What do you need to launch a product (from a competence perspective)?
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1st order competences:
o You need a consistent ability to produce a physical product with certain features by
means of technically-related resources and meeting all the feasibility requirements
o You need a consistent ability to serve your customers with a product that is meeting
their needs, preferences and is delivered via relevant channels
But how do you scale your product to remain competitive?
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2nd order competences:
o You can fully expoit your position, leverage it, or explore entirely new dimensions
o But to scle  you need higher order (2nd) r&d and marketing competences
How to understand and measure competence (capability)?
Competence is an ability to achieve something by means of material (e.g. machinery, equipment) and
immaterial resources (e.g. production know-how, knowledge of customer needs).
Leveraging technological competence: Use existing high-tech
abilities to approach new customer groups
Leveraging customer competence: Use existing customers to
introduce a new tech to them
Towards ambidexterity in innovation – Key insights:
exploration and exploitation are viewed as distinct innovation
strategies.
EXPLOITATION
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Characterised as routinized learning
Firms search for opportunities primarily in their surrounding landscape & retain basic search
activities
Exploitation includes: refinement, choice, production, efficiency, selection, implementation,
execution
Exploitation is based on existing knowledge & reinforces existing skills, processes, structures.
Exploitative innovations are improvements of existing products/services or efficiency
enhancements
EXPLORATION
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Entails breaking with an existing dominant search logic
Firms move beyond domestic search to overcome limitations of internal search
Exploration includes: search, variation, risk taking, experimentation, play, flexibility, discovery
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Exploration requires new knowledge or departure from existing knowledge to allow novel
Schumpeterian combinations
Explorative innovations potentially make existing products/services obsolete or noncompetitive
Ambidextrous firms can synchronise exploration and exploitation and simultaneously pursue both
trajectories.
Tackle tech- and market- uncertainty like a pro: manage your innovative project portfolios
Average less than 3: low; average between 3-5: medium; average higher than 5: high
Positioning = level of tech uncertainty is high due to lack of insights into
feasibility, or lack of dominant design, yet there is confidence about which
markets/segments to address. Make small low-cost probes to generate
knowledge or buy time, flexibility before finding the best option.
Launches = Uncertainty is low, so the best is making an outright launch without
further delay. Enhancement focus on incremental improvements in existing
products within existing business model, while platform – focuses on creating
substantial basis for business or competitiveness using next-generation
platforms.
Stepping-stone = small, exploratory acts into less challenging market niches to
gain experience to be used as stepping- stone to build new tech in increasingly
challenging markets. The goal is to evaluate each milestone and decide on the
best next course of action, keeping investments low in each stage.
Scouting = you are confident that technology can be developed, but there is lack of insights which
combination of attributes the market will eventually prefer. Aim is to get feedback from customers
and capturing market opportunities.
THEN, IT IS NECESSARY TO DISTRIBUTE THE LIMITED RESOURCES STRATEGICALLY:
MAP YOUR CURRENT INNOVATIVE PROJECTS AND ESTIMATE
AVAILABLE/PLANNED CAPACITY
TAKE ACTION: CONTINUE OR DROP THE PROJECTS!
(Co)creating value in ecosystems
SINGLE FIRM CAN NO LONGER OFFER ALL THE ELEMENTS OF CUSTOMER NEED!
“The essential characteristics of business ecosystems are the following:
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They are multi-entity
They involve networks of shifting
The relationships combine aspects of competition and collaboration
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Finally, in ecosystems, players coevolve as they redefine
their capabilities and relations to others over time”
(MODERN) DIGITALLY-DRIVEN BUSINESS ECOSYSTEM
"A business ecosystem is a purposeful business arrangement
between two or more entities (the members) to create and share in
collective value for a common set of customers. Every business
ecosystem has participants, and at least one member acts as the
orchestrator of the participants”
FIVE KEY STRATEGIC DECISIONS IN ECOSYSTEM THINKING
Its success depends on collaboration with other firms in a designed ecosystem spanning
multiple sectors.
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CAN YOU HELP OTHER FIRMS CREATE VALUE?
WHAT ROLE SHOULD YOU PLAY?.
WHAT SHOULD THE TERMS BE?
Who can access the ecosystem, and how
exclusively attached your partners will be. 3
options: open (basic criteria), managed (clear
criteria), closed (strict, controlled quality
thresholds)
CAN YOUR ORGANIZATION ADAPT?
HOW MANY ECOSYSTEMS SHOULD YOU MANAGE?
Further choosing between 3 types of ecosystem strategies
→ Obviously, choosing one of these types has a major
implications, yet there is no one best strategy for all!
Week 5: Article: definition of international entrepreneurship
Abstract:
This article provides a reformulated definition of international entrepreneurship. Consistent with the
new definition, a model is presented of how the speed of entrepreneurial internationalization is
influenced by various forces.
Our definition: (1) focuses on opportunities, (2) permits but does not require the formation of new
organizations, (3) allows for corporate entrepreneurship, (4) renders unnecessary a debate over how
many dimensions entrepreneurial orientations include; and (5) highlights entrepreneurial activity
across national borders. International entrepreneurship is the discovery, enactment, evaluation, and
exploitation of opportunities—across national borders—to create future goods and services.
Most important, our model shows that the speed of entrepreneurial internationalization is
determined by four types of forces: (1) enabling, (2) motivating, (3) mediating, and (4) moderating.
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Enabling: Advancements in transportation, communication, and digital technology have
significantly lowered costs and improved efficiency
Motivating: Competition motivates faster internationalization, pushing entrepreneurs to
preemptively seize technological opportunities abroad
Meditating: The entrepreneurial actor, central to international business dynamics, mediates
international exploitation through their personal characteristics and psychological traits.
Moderating: Knowledge intensity of the opportunity and the entrepreneur's existing knowhow, along with their international network, are key moderating forces determining
internationalization speed.
In summary, networks help entrepreneurs identify
international opportunities, establish credibility, and
often lead to strategic alliances and other cooperative
strategies. The knowledge block in our model refers to
both market knowledge and the intensity of knowledge
in the product or service offering. As highlighted by our
model, knowledge moderates the speed at which
perceived opportunity is exploited internationally.
Results of their study showed that the more
knowledge–intensive a firm, the more rapidly the firm
grew in international sales, thus increasing its speed of
commitment to internationalization.
Lecture:
Globalisation = the continuous integration of the countries in the world towards a liberalised and
unified global market – impacts on all national economies.
How globalisation shapes our business practices?
Local markets can be constraining especially in small economies where the potential of high-quality
innovative products remains untapped at this scope.
Increasing globalisation and internationalisation trend fostered a development of venture type:
Born globals
Due to: relationships with other firms via partnership &
their business models → born-globals help to create
more jobs in other companies. → thus, fostering positive
impact.
BUILDING INTERNATIONAL ENTREPRENEURIAL
CAPABILITY
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ARTICULATE A GLOBAL PURPOSE
IDENTIFY INTERNATIONAL MARKET
OPPORTUNITY
BRIDGE INSTITUTIONALLY
BUILD STRATEGIC ALLIANCE & SUPPLY CHAIN NETWORK
SEEK INSTITUTIONAL/POLICY SUPPORT
SPEED OF ENTREPRENEURIAL INTERNATIONALISATION DEPENDS ON 3 FACTORS:
1. Time - between discovery/enactment of opportunity & first foreign market entry
2. Speed – with which country scope is increased = how quick do foreign entries accumulate &
are being entered distant from home country
3. Speed – of international commitment = how quick % of foreign revenue increase
DEVELOPING GLOBAL VENTURING STRATEGY 
Global ambition = what role your venture will play in the world
marketplace & what are your future distribution of sales/assets?
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GLOBAL PLAYER – aims to achieve a sustainable
competitive position in key global markets
REGIONAL PLAYER – strong competitive advantage in one
of the key regions, whilst being relatively weak in others
REGIONAL DOMINANT GLOBAL PLAYER – reaches beyond
regional scope, but is not yet able to access global market
GLOBAL EXPORTER – venture selling to key global markets
from home. Might have foreign operations to support
exporting (Boeing, Airbus)
GLOBAL OPERATOR – concentrates sales in domestic market
whilst buying resources from global key markets. Managing
though requires similar competences to global players
Global positioning = concerns (a) the choice and role of the venture in
key countries  depends on your industry. AND (b) value proposition
in terms of: value attributes, customer segments, degree of
standardisation.
Global business system = investments in resources, assets and
competence – to create a global value chain and global capabilities via
alliences and acquisitions.
MODERN) DIGITALLY-DRIVEN BUSINESS ECOSYSTEM "A business ecosystem is a purposeful business
arrangement between two or more entities (the members) to create and share in collective value for
a common set of customers. Every business ecosystem has participants, and at least one member
acts as the orchestrator of the participants”
GLOBAL ORGANISATION =
Concerns the fit between competition in the industry
& its lifecycle, and hence, needed organizational
structure Strategic positioning
When the stategy is set, how do we decide which
foreigh market to enter?
Selecting strategic foreigh markets is of crucial
importance  use detailed multi-stage market
selection process with comprehensive feasibility
studies with primary and secondary data.
e.g. Only after an extended team visit you realise that the Baltics
can offer advanced logistic infrastructure with a competitive
advantage → the port is not freezing in winter, even in very cold
temperatures.
Entrepreneurial leaders need to decide: What levels of resources
commitments to make & what levels of control they need
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Exporting: firm makes goods/services in the home
country & sells in other countries  helping to acquire
international experience with limited risks and resources
commitments
Licencing: in return for a fee, the firm grants other parties
the right to use its IP  Also, giving access to overseas
markets avoid large resource commitments
Franchising: Firm agrees to transfer a package of products, systems, services for a fee. The
franchisee provides local market knowledge and entrepreneurship, whilst the firm works on
product improvements, quality, brand promotion  to succeed, parties need trust and good
collaboration
Strategic alliance: provides access to knowledge and insights
Joint venture: when two form a new venture to combine their resources & competences, and
to develop new tech or gain access to new markets
Wholly owned subsidiary: when the firm needs a total control over its operations abroad, this
is the used entry mode, either in (1) greenfield = where the firms set up a new operation, or
(2) M&A with existing organization abroad. This option involves the greatest
commitment/investment and hence, the greatest risks. Yet, whilst generating the greatest
returns.
There is no one ideal option. Entrepreneurial leaders will have to choose based on: strategy pursued,
country risks & opportunities, capabilities, timing and (government) other constraints.
Possible market expansion patterns
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WATERFALL MODEL = A slow sequence of entries to
new, increasingly heterogeneous markets depending on
receptivity. Uses experience gained in each prior
country dealing with increasing differences (and,
occasionally - reducing tech advancement)
SPRINKLER MODEL = Simultaneous entry to all relevant
markets (e.g. triad region – EU, North America, Asia).
Goal is to leverage competitive strategy as quickly as
possible to gain critical mass for product with shortlifecycle, or platforms with users as tipping factor.
SELECTIVE HYBRID MODEL = Gradual concentration of
resources on developing & adapting to specific foreign
markets, whilst other markets are approached
simultaneously – depending on business conditions
Possible test questions
(yellow = definetly)
Causing imbalance on the market by generating new opportunities based on novel combinations of
resources can be referred to as
Creative destruction
Entrepreneurship tradition focussing on better understanding of new venture creation belongs to
Emergent tradition
The entrepreneurs congnitive processes can help us to explain why some individuals find or create
opportunities and pursue them, while others not
True
Schumpeterian vs. kirznerian opportunties (see slide)
Entrepreneurship tradition focusing on better understanding of new venture creation belongs to:
Emergence tradition
(opportunity tradition is the other one)
Entrepreneurial actions aimed to utilise available resources in a more efficient business setting
leading to equilibrium on the market – can be referred to as:
Kirzerian opportunity
Opportunities seen as social constructs, which are created in everyday life through entrepreneurs’
interaction with others, their context and themselves belongs to:
Opportunity creation perspective
Difficulties of new organizations to compete effectively against estabilshed organizations – can be
defined as:
Liability of newness
Entrepreneurial actions focused on creating trust among key stakeholders that will provide the
entrepreneur with access to knowledge and resources can be considered as part of:
Legitimacy approach
Slide successful & impactful entrepreneur needs to … these 3 competences
Entrepreneurial processes take a set of means as given and focus on selecting between possible
effects that can be created with that set of means – belongs to:
Effectuation perspective
Ability to discover opportunities based on scientific research and to further refine these opportunities
into a viable business concept belongs to:
Opportunity development competence
During VUCA business environment in a growing market it is optimal to be:
Effective entrepreneurial firm
To create competitive advantage organization resources should meet VRIO criteria. Yet, this approach
is often criticized. What is an example of VRIO criticisms?
The role of entrepreneurial leadership is unclear
Implementation of new customer competence and new technology competence refers to?
Pure exploration
A process of – small, exploratory acts into less challenging market niches to gain experience and to
builde new tech in increasingly challenging markets refers to?
Stepping-stone option
Come up with example of company  choose entry model and explain what happens and why you
chose this model (waterfall or sprinkler or selective model)
Who is an entrepreneur?
Someone who runs a new business
What is not true regarding business models?
They offer valuable insights of potential markets
What is true about business models?
They can help to structure opportunity quickly
They can be used as a tool to focus on the customer side
As they are state of the art, they can assist in stakeholder communication
What is no true about crowdfunding
All information about the projects is kept strongly confidential
What is true about crowdfunding
It helps to get first market feedback
There exist a variety of platforms
It enables funding for projects, which are not attractive for other investors
To create competitive advantage organizational resources should meet VRIO criteria. Yet, this
approach is often criticized. What is an example of VRIO criticisms:
The role of entrepreneurial leadership is unclear
Implementation of new customer competence and new technology competence refers to:
Pure exploration
The origin of entrepreneurship can be traced back to:
Warfare
Entrepreneurial actions focused on creating trust among key stakeholders that will provide the
entrepreneur with access to knowledge & resources can be considered as part of:
Legitimacy approach
One of the forces influencing the speed of venture internationalization is – enabling technology.
Which factor is not an example of it:
Government support
Which capability that is aimed to enhance the customer value is related to cost leadership strategy?
Economies of scale
Which of these activities is part of blue ocean strategy?
Making competition irrelevant
When considering a possible market expansion, usually entrepreneurs can select between 3 types of
models: waterfall model, sprinkler mode. Selective hybrid model
a. Please summarise the key differences between these three models
b. Please provide an example of your potential venture that can be internationally expanede.
Choose only one best model and critically elaborate 2-3 reasons why you apply it.
During your studies, you decide to launch a new venture based on your research findings, so you
become a new academic entrepreneur. You are aware that reaching credibility threshold is crucial in
order to stabilize and scale your venture.
a. Elaborate by using constructs from the course, how you would benefit form an access to the
local entrepreneurship ecosystem
Whivh strategic actions would you implement