Chapter 2 Entrepreneurial Intentions and Corporate Entrepreneurship

Learning Objectives To introduce the importance of perception of feasibility and desirability in explaining entrepreneurial intentions To understand the role on individuals back ground characteristics Demonstrate that management can influence the intentions if those within establish organization Discuses how established firms can develop an entrepreneurial culture

What is Intention in general An aim that guides action Synonyms: intention, intent, purpose, goal, end, aim, object, objective Ex: It is my intention to take a vacation next month Entrepreneurial action is most often intentional. He intend to purse certain opportunities enter new market and offer new product.

The Intention to Act Entrepreneurially Entrepreneurial intentions – is a Motivational factors that influence individuals to pursue entrepreneurial outcomes. Intention is stronger when an action is perceived to be Feasible (possible) & Desirable (wanted)

The Intention to Act Entrepreneurially Feasible Entrepreneurial: Is a self-efficacy - Conviction that one can successfully execute the entrepreneurial process. Desirable Perceived : Is the degree to which an individual has a positive or negative evaluation of the potential outcomes.

Entrepreneur Background and Characteristics 1. Education Provides a background about starting a business. Helps in the development of communication skills and problem-solving skills. Provides individuals with a larger opportunity set. Does not determine whether an entrepreneur will create a new business to exploit the discovered opportunity.

Entrepreneur Background and Characteristics (cont.) 2. Age Most entrepreneurs initiate their entrepreneurial careers between the ages of 22 and 45. Individuals are more inclined to start an entrepreneurial career at milestone ages every five years (25, 30, 35, 40, and 45). Male entrepreneurs tend to start their ventures in their early 30s, while women entrepreneurs do so in their middle 30s.

Entrepreneur Background and Characteristics (cont.) 3. Work History The decision to launch a new venture can be influenced by: Dissatisfaction with one’s job. Previous technical and industry experience. Managerial skills and entrepreneurial experiences are also important once the venture starts growing. Previous start-up experience : is a relatively good predictor of starting subsequent businesses.

Minority Entrepreneurs There has been significant growth in: Female self-employment, with women starting new ventures at a higher rate than men. The number of Asian, African American, Hispanic, and Native American majority owned firms. This growth is likely to be spurred by: Encouragement of entrepreneurship among minority groups. Increase in the number of role models.

4-Role Models and Support Systems Role models - Is an Individuals influencing an entrepreneur’s career choice and style. Role models one of the most important factor influencing entrepreneurs in their career path for example it : Can be parents, family members, or other entrepreneurs. Successful entrepreneurs are viewed as catalysts by potential entrepreneurs.

Role Models and Support System (cont.) Entrepreneurs need to establish connections and networks in the venture formation process.

5.Moral-Support Network :Individuals who give psychological use support to entrepreneurs It is important for entrepreneurs to have a someone who they can get close to (Good friend) Friends or family can provide honest advice, encouragement, understanding, and assistance. Relatives can be strong sources of moral support, particularly if they are also entrepreneurs

6.Professional-Support Network: individuals who help the entrepreneur in business activity. Entrepreneurs need advice and counsel throughout the establishment of the new venture which can be obtained from: Mentors. Business associates. Suppliers. Trade associations. Personal affiliations. Entrepreneurial activity is embedded in networks of interpersonal relationships.

Entrepreneurial Intentions Within Existing Organizations Top management must create an environment that encourages employees to think and act entrepreneurially. Employees will realize that entrepreneurial action within the firm is both personally desirable and feasible.

Managerial Versus Entrepreneurial Decision Making Entrepreneurial management is different from traditional management in terms of: Strategic orientation: it focuses on those factors that are input to the ST Plan. Commitment to opportunity. Commitment of resources. Control of resources. Management structure. Reward philosophy. Growth orientation. Entrepreneurial culture.

Table 2.1 – Distinguishing Entrepreneurially from Traditionally Managed Firms

Managerial Versus Entrepreneurial Decision Making (cont.) Causes for Interest in Corporate Entrepreneurship Increasing interest in “doing your own thing” and doing it on one’s terms. New search for meaning and impatience has caused more discontent in structured organizations. Organizations are encouraging corporate entrepreneurship i.e. stimulating, and capitalizing on, employees who think that something can be done differently and better.

Managerial Versus Entrepreneurial Decision Making (cont.) Corporate entrepreneurship is most strongly reflected in the following endeavors: New business venturing (corporate venturing) - The creation of a new business within an existing organization. Innovativeness - Product and service innovation, with emphasis on development and innovation in technology. Self-renewal - Transformation through renewal of the key ideas on which an organization is built. Pro-activeness - Includes initiative, risk taking, competitive aggressiveness, and boldness.

Table 2.3 - Characteristics of an Entrepreneurial Environment

Table 2.4 - Leadership Characteristics of a Corporate Entrepreneur

Establishing Corporate Entrepreneurship in the Organization (8 steps) Top management commitment: managers are strongly supporting the business of entrepreneurship.- BY establish initial framework and Identify, select, and train corporate entrepreneurs. Step 2: Identify ideas and areas that top management is interested in supporting. Identify amount of risk money available to develop the concept.

Step 3: Step 4: Step 5: Step 6: Establishing Corporate Entrepreneurship in the Organization (cont.) Step 3: Use of technology to ensure organizational flexibility. Step 4: Identify interested managers to train employees and share their experiences. Step 5: Develop ways for the organization to get closer to its customers. Step 6: Learn to be more productive with fewer resources.

Establishing Corporate Entrepreneurship in the Organization (cont.) Step 7: Establish a strong support structure for corporate entrepreneurship. Step 8: Tie rewards to the performance of the entrepreneurial unit. Finally: Implement an evaluation system that allows successful entrepreneurial units to expand and unsuccessful ones to be eliminated.