Entrepreneurship and the Entrepreneurial Mind-Set Chapter 1 Entrepreneurship and the Entrepreneurial Mind-Set McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

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

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

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

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

Figure 1.1 - Entrepreneurial Action

How Entrepreneurs Think Entrepreneurs should: Think structurally Engage in bricolage Effectuate Cognitively adapt Learn from failures

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

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

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

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

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

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

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

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

Entrepreneur Background and Characteristics Age Chronological age – Usually between the ages 22 and 45 Work history Past work experience of an individual

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

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