IPPTChap001

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Chapter 1
Entrepreneurship
and the
Entrepreneurial Mind-Set
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document
McGraw-Hill/Irwin
Copyright
© 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or
part.
Learning Objectives
• To introduce the concept of entrepreneurship
and explain the process of entrepreneurial
action
• To describe how structural similarities enable
entrepreneurs to make creative mental leaps
• To highlight bricolage as a source of
entrepreneurs’ resourcefulness
1-2
Learning Objectives
• To introduce effectuation as a way expert
entrepreneurs sometimes think
• To develop the notion that entrepreneurs
cognitively adapt
• To introduce sustainable entrepreneurship as
a means of sustaining the natural environment
and communities and developing gains for
others
1-3
The Nature of Entrepreneurship
• Entrepreneurial opportunities
• Situations in which new goods, services, raw
materials, and organizing methods:
• Can be introduced
• Sold at greater than their cost of production
• Entrepreneurial action:
• Involves creation of new products or processes
• Involves entry into new markets
1-4
The Nature of Entrepreneurship
• May occur through a newly created organization
or within an established organization
• Entrepreneurial thinking
• An individuals’ mental processes of overcoming
ignorance to:
• Decide whether a signal represents an opportunity for
someone
• Decide whether that opportunity is applicable to the
individual specifically
• Process feedback from action steps taken
1-5
Figure 1.1 - Entrepreneurial Action
1-6
How Entrepreneurs Think
• Entrepreneurs should:
•
•
•
•
•
Think structurally
Engage in bricolage
Effectuate
Cognitively adapt
Learn from failures
1-7
How Entrepreneurs Think
• Think structurally
• Superficial similarities: Basic elements of the
technology resemble the basic elements of the
market
• Structural similarities: Underlying mechanisms of
the technology resemble the underlying
mechanisms of the market
1-8
How Entrepreneurs Think
• Bricolage
• Applying combinations of the resources at hand to
new problems and opportunities
• Taking existing resources and tinkering and/or
reframing them so they can be used in new ways
1-9
How Entrepreneurs Think
• Effectuation
• Causal process
• Starts with a desired outcome
• Focuses on the means to generate that outcome
• Effectuation process
• Starts with what one has
• Selects among possible outcomes
• Entrepreneurial mind-set: Ability to rapidly sense,
act, and mobilize, even under uncertain conditions
1-10
How Entrepreneurs Think
• Cognitive adaptability
• Describes the extent to which entrepreneurs are:
• Dynamic, flexible, self-regulating and engaged in the
process of generating multiple decision frameworks
• Focused on sensing and processing changes in their
environments and then acting on them
• Metacognitive awareness - Ability to reflect
upon,understand, and control one’s thinking and
learning
1-11
How Entrepreneurs Think
• Achieving cognitive adaptability
• Comprehension questions
• Increase entrepreneurs’ understanding of the nature of
the environment
• Connection tasks
• Stimulate thinking about similarities and differences of
current situations with situations previously faced and
solved
• Strategic tasks
• Identify strategies that are appropriate for solving the
problem or pursuing the opportunity
1-12
How Entrepreneurs Think
Reflection tasks
• Stimulate entrepreneurs to think about their
understanding and feelings as they progress through
the entrepreneurial process
• Increasing cognitive ability helps in:
• Adapting to new situations
• Being creative
• Communicating one’s reasoning behind a particular
response
1-13
The Intention to Act Entrepreneurially
• Entrepreneurial intentions
• Motivational factors that influence individuals to
pursue entrepreneurial outcomes
• Entrepreneurial self-efficacy
• Conviction that one can successfully pursue
entrepreneurial outcomes
• Perceived desirability
• Degree to which a potential entrepreneurial
outcome is evaluated as favorable or unfavorable
1-14
Entrepreneur Background and
Characteristics
• Education
• Facilitates integration and accumulation of
knowledge thus providing a larger opportunity set
• Casts a wider net for the discovery or generation
of potential opportunities
• Assists entrepreneurs in adapting to new
situations
• Does not necessarily determine whether the
individual will create a new business
1-15
Entrepreneur Background and
Characteristics
• Age
• Chronological age – Usually between the ages 22
and 45
• Work history
• Past work experience of an individual
1-16
Role Models and Support Systems
• Role models: Individuals whose example an
entrepreneur can aspire to and copy
• Moral-support network: Individuals who give
psychological support to an entrepreneur
• Professional-support network: Individuals
who help the entrepreneur in business
activities
1-17
Sustainable Entrepreneurship
• Preserving nature, life support, and
community in the pursuit of perceived
opportunities to:
• Bring future products, processes, and services into
existence for gain
• Can generate:
• Economic gains
• Environmental gains
• Social gains
1-18
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