The foundations of entrepreneurship
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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

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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


How much would it be worth today picture taken in 1997

How much would it be worth today (picture taken in 1997)?


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.


Questions

Questions?


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