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The Foundations of Entrepreneurship. Sergey Anokhin, Ph.D. Kent State University January 12, 2009. Presentation highlights. Introduction Definitions of entrepreneurship Entrepreneurial revolution Leadership vs. Management vs. Entrepreneurship Pros & Cons of Entrepreneurship

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the foundations of entrepreneurship

The Foundations of Entrepreneurship

Sergey Anokhin, Ph.D.

Kent State University

January 12, 2009

presentation highlights
Presentation highlights
  • Introduction
  • Definitions of entrepreneurship
  • Entrepreneurial revolution
  • Leadership vs. Management vs. Entrepreneurship
  • Pros & Cons of Entrepreneurship
  • Ethics and leadership
  • Q&A
elements of entrepreneurship
Elements of entrepreneurship
  • Opening example: Bill Gates, Michael Dell, Sergey Brin
    • Innovative opportunity
    • Growing industry
    • Individual characteristics
  • Individual-opportunity nexus
  • New venture creation
  • Risks
opportunities
Opportunities
  • Opportunities are associated with changes in the external environment:
    • Political/legal
    • Economic
    • Socio-cultural
    • Demographic
    • Technological (innovative)
  • Importance of industry
understanding innovation
Understanding innovation
  • New product or service
  • New way of organizing
  • New market
  • New method of production
  • New raw material
towards the definition
Towards the definition
  • Entrepreneurship is about:
    • Individuals exploiting new value-creating opportunities via various means to produce a wide range of effects
  • Baron-Shane definitional exercise
what entrepreneurship is not
What entrepreneurship is not
  • Being small does not make you entrepreneurial automatically
  • Being a young company is not necessarily entrepreneurship
  • Being a business owner does not by itself make you an entrepreneur
types of entrepreneurial ventures
Types of entrepreneurial ventures
  • Hisrich’s classification:
    • Lifestyle: 30-40 employees, $2M sales
    • Foundational: 40-400 employees, $10-20M sales
    • High potential (gazelles): about 500 employees, $20-30M sales
why people do it
Why people do it?
  • Money
  • Lifestyle
  • Independence
  • Necessity
do people get what they want
Do people get what they want?
  • Money: entrepreneurship vs. corporate career
  • Lifestyle: working hours, family responsibilities
  • Independence: employers vs. employees
  • Net balance: drive
what kind of people do it
What kind of people do it?
  • Independence/Need for achievement
  • Locus of control
  • Risk-taking
  • Tolerance for ambiguity
  • Focus: promotion, prevention
  • Skills: technical, business management, personal entrepreneurial skills
exercise
Exercise
  • How good are your ideas about entrepreneurship? Hisrich, p. 30-31, explanation p. 32, 34
  • Do you have what it takes to become an entrepreneur? Hisrich, p. 33, explanation p. 32
  • Test yourself: locus of control, independence, risk taking. Hisrich, p. 66-69.
entrepreneurial revolution babson
Entrepreneurial revolution (Babson)
  • New management paradigm
    • Flat, fast, flexible, innovation-driven
    • Principle- and value-based management
    • Opportunity- and customer-focused
    • Resource parsimonious (which eliminated loyalty)
    • Living with and managing chaos/change
    • People- and team-centered management
  • New education paradigm
  • Not-for-profit world
  • Beyond business schools
leadership management entrepreneurship
Leadership, management, entrepreneurship
  • Leadership is essential for both management (top management) and entrepreneurship (founder team):
    • Determining strategic direction
    • Establishing organizational control
    • Effectively managing resource portfolio
    • Sustaining an effective organizational culture
    • Emphasizing ethical practices
  • Leadership and followership
  • Unique question for entrepreneurial firms: leadership succession
management vs entrepreneurship
Management vs. entrepreneurship
  • Entrepreneurship: exploration and growth
  • Management: optimizing, exploitation, and efficiency
  • Dimensions on which they differ:
    • Strategic orientation
    • Commitment to opportunity
    • Commitment of resources
    • Control of resources
    • Management structure
  • Management begins where entrepreneurship ends: stages of evolution
managers entrepreneurs intrapreneurs
Managers, entrepreneurs, intrapreneurs
  • Important dimensions
    • Primary motives
    • Time orientation
    • Activity
    • Risk
    • Status
    • Failure and mistakes
    • Decisions
    • Who serves
    • Family history
    • Relationship with others
pros and cons of entrepreneurship
Pros and Cons of Entrepreneurship
  • Pros
    • Job creation
    • Creative destruction (radical innovation) – 95% are introduced by new firms
    • Entrepreneurship and economic development
    • May become a billionaire, own boss
  • Cons
    • Risk (failure; culture specific)
    • Emotional toll
    • “Chronically entrepreneurial” industries: scale argument
    • Ethical considerations
entrepreneurship and ethics
Entrepreneurship and Ethics
  • There are a number of specific ethical issues facing small companies
  • Entrepreneurs routinely report having to make decisions based on their judgment of what’s right and wrong. Disturbing statistics.
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