Chapter 1 Entrepreneurship And The Entrepreneurial Mind 464b1f

CHAPTER 1 ENTREPRENEURSHIP AND THE ENTREPRENEURIAL MIND-SET The Nature of Entrepreneurship 1. Entrepreneurial actions begin at the nexus of a lucrative opportunity and en enterprising individual. 2. Entrepreneurial opportunities are those situations in which new goods, services, raw materials and organizing methods can be introduced and sold at greater than their cost of production. 3. An entrepreneurial opportunity could be creating a new technological product for an existing market or creating both a new product/service and a new market. 4. Theme = entrepreneurial opportunity represents something new. 5. Entrepreneurial action through the creation of new products and the entry into new markets, through a newly created organization or within an established organization. 6. A key to understanding entrepreneurial action is being able to asses the amount of uncertainty perceived to surround a potential opportunity and bear that uncertainty. Act on what they believe is an opportunity. 7. Individuals with knowledge of markets and technology are more capable of detecting changes in the external environment.

8. Stage 1 is an individual realization of an opportunity exists 9. Determine whether represents an opportunity for Stage 2 10. This involves assessing whether it is feasible to exploit the opportunity given one’s knowledge. 11. To be an entrepreneur is to act on the possibility that has been identified an opportunity worth pursuing. 12. Involves entrepreneurial thinking, means, an individuals’ mental processes of overcoming ignorance to decide whether a signal represents opportunity for someone as to opportunity for someone is an opportunity for them too.

How Entrepreneur Think Think Structurally 1. Forming opportunity requires creative mental leaps. 2. A creative mental leap is from knowledge about existing markets to a new technology that could lead to products/services that satisfy market. 3. Making these connections between a new product and a target market where it can be introduced is aided by the superficial and structural similarities between the source and the destination. 4. Superficial similarities exist when the basic elements of the technology resemble the basic elements of market. 5. Structural similarities exist when the underlying mechanisms of the technology resemble the underlying mechanisms of the market. 6. Entrepreneurial challenge often lies in making creative leaps based on structural similarities. Bricolage 1. Entrepreneurs seek resources from others to provide the slack necessary to experiment and generate entrepreneurial opportunities. 2. Bricolage mean that some entrepreneurs make do by applying combinations of the resources of hand to

new problems and opportunities. 3. This involves taking existing resources and experimenting, tinkering, repackaging and reforming, so they can be used in a way for which they were not originally designed or conceived. 4. From this process of making do, entrepreneurs can create opportunities. Effectuation 1. Casual process means entrepreneurs do not always think through a problem in a way that starts with a desired outcome and focuses on the means to generate that outcome. 2. Effectuation process means they take what they have and select among possible outcomes. 3. Kotler defines a market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want. 4. STP – segmentation, targeting and positioning process.  Analyze long-run opportunities in the market  Research and select target markets  Identify segmentation variables and segment the market  Develop profiles of resulting segments

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Evaluate the attractiveness of each segment  Select the target segments  Identify possible positioning concepts for each target segment  Select, develop and communicate the chosen positioning concept  Design marketing strategies  Plan marketing programs  Organize, implement and control marketing effort. 5. Effectuation helps entrepreneurs think in an environment of high uncertainty. 6. Entrepreneurial mind-set involves the ability to rapidly sense, act and mobilize even under uncertain conditions. 7. In developing an entrepreneurial mind-set, an individual must attempt to make sense of opportunities in the context of changing goals, constantly questioning the dominant logic in the context of changing environment and revisiting deceptively simple questions.

Cognitive Adaptability 1. Cognitive adaptability describes the extent to which entrepreneurs are dynamic, flexible, selfregulating and engaged in the process of generating multiple decision frameworks focused on sensing and processing changes in their environments and then acting on them. 2. Cognitive adaptability reflected in an entrepreneur’s metacognitive awareness, which, the ability to reflect upon, understand and control one’s thinking and learning. 3. Metacognition describes a higher-order cognitive process that serves to organize what individuals know and recognize about themselves, tasks, situations and their environments to promote effective and adaptable cognitive functioning in the face of from complex and dynamic environments. 4. You can learn to be more cognitively adaptable by asking yourself a series of questions :  Comprehension questions to increase entrepreneurs’ understanding of the nature of the environment before they begin to address an entrepreneurial challenge.

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Connection tasks to stimulate entrepreneurs to think about the current situation in of similarities to and differences from situations previously faced and solved.  Strategic tasks to stimulate entrepreneurs to think about which strategies are appropriate for solving the problem or pursuing the opportunity.  Reflection tasks to stimulate entrepreneurs to think about their understanding and feelings as they progress through the entrepreneurial process. 5. Entrepreneurs who increase the cognitive adaptability have an improved ability to :  Adapt to new situation  Be creative  Communicate one’s reasoning behind a particular response.

The Intention to act Entrepreneurially 1. the perception of feasibility has much to do with an entrepreneur’s self-efficacy. 2. Entrepreneurial selfefficacy refers to the conviction that one can successfully execute the entrepreneurial process. 3. High self-efficacy leads to increased initiative and persistence and improved performance. 4. People with high selfefficacy think differently and behave differently than people with low selfefficacy. 5. Perceived desirability refers to an individual’s attitude toward entrepreneurial action. 6. The degree to which individual has a favorable or unfavorable evaluation of the potential entrepreneurial outcomes. 7. The higher the perceived desirability and feasibility, the stronger the intention to act entrepreneurially.

Entrepreneur Background and Characteristics Education 1. A formal education is not necessary for starting a new business but it does provide a good background, especially when related to the field of venture. 2. Entrepreneurs have cited an educational need in the areas of finance, strategic planning, marketing and management. 3. The ability to communicate with both written and spoken word is also important. 4. General education is valuable because it facilitates the integration and accumulation of new knowledge, providing individuals with a larger opportunity set and assists entrepreneurs in adapting to new situations. 5. General education can provide knowledge, skills and problem solving abilities that are transferable across many different situations. Age 1. In of chronological age, most entrepreneurs initiate their entrepreneurial careers between the ages of 22 and 45. 2. As long as the entrepreneur has the necessary experience and financial , and the high energy level needed to launch and manage a new venture successfully. 3. Milestone ages every five years when an individual is more inclined to start an entrepreneurial career. 4. Male entrepreneur tend to start their first significant venture in the early 30s.

5. Women entrepreneurs tend to do so in their middle 30s. 6. Entrepreneurial career is quite popular later in life when the children have left home and fewer financial concerns. Work History 1. Work history can influence the decision to launch a new entrepreneurial venture. 2. It also plays a role in the growth and eventual success of the new venture. 3. Experience in the following areas is particularly important : Financing, product development, manufacturing and development of distribution channels. 4. When venture becomes established, managerial experience skills become increasingly important. 5. Entrepreneurial experiences, like start-up process, making decisions and managing high growth are also important. 6. Previous start-up experience can provide entrepreneurs with expertise in running an independent business as well as benchmarks for judging the relevance of information that can lead to an understanding of the real value of the new opportunities, speed up the business creation process and enhance performance. 7. Previous start-up experience is relatively good predictor of starting subsequent business.

Role Models and Systems 1. Role models are individuals whose exampled an entrepreneur can aspire to and copy. 2. Role models can also serve in a ive capacity as mentors during and after the launch of a new venture. 3. An entrepreneur needs a strong and advisory system in every phase of the new venture. 4. Entrepreneurship is a social role embedded in social context, it is important that an entrepreneur establish connections and eventually networks early in the new venture formation process. 5. The strength of the ties between the entrepreneur and individual in network is dependent upon the frequency, level and reciprocity of the relationship. Moral- Network 1. Moral- network is individual who give psychological to an entrepreneur. 2. Plays a critical role during the many difficult and lonely times that occur throughout the entrepreneurial process. 3. Entrepreneurs can confide in friends without fear of criticism. 4. Relatives also can be strong sources of moral , particularly if they are also entrepreneurs. Professional- Network 1. Professional- network is an individual who help the entrepreneur in business activities. 2. An entrepreneur can start the mentor-finding process by preparing a list of experts in various field and who can provide the practical how-to advice.

3. A good source of advice can be cultivated by establishing a network of business associates, like, self-employed individuals who have experienced starting a business. 4. A new venture needs to establish a solid track record with suppliers to build a good relationship and to ensure the adequate availability of supplies. 5. Suppliers provide good information on the nature trends and competition in the industry. 6. Trade association can help keep the new venture competitive by keep up with the new developments and can provide overall industry data. 7. Affiliations developed with individuals through shared hobbies and school alumni groups are excellent sources of referrals, advice and information.

Sustainable Entrepreneurship 1. Sustainable entrepreneurship is focused on preserving nature, life and community in the pursuit of perceived opportunities to bring future products, processes and services into existence for gain, where gain is broadly construed to include economic and non economic benefits to individual, the economy and society. 2. Those with greater knowledge of the natural environment more likely to notice changes in an environment that form opportunity. 3. For entrepreneurial actions that preserve nature to be considered sustainable entrepreneurship, they must also develop gains for the entrepreneur and society. 4. Entrepreneurs can generate economic wealth themselves but their impact on development can be far greater. 5. It is not just the natural environment that can be sustained, the communities also need to be preserved.