Entrepreneurship Howard Van Auken, PhD Professor of Management Iowa State University Summer 2008

Overview of Course Module 1Introduction and Business Start-Up Module 2Global Entrepreneurship Module 3Competing in the Market Module 4 Module 4Sources of Capital Module 5Raising Capital Module 6Launching the Firm

Module 1 Topics Introduction to Entrepreneurship Definitions Importance Creativity and Innovation Failure Process Entrepreneurship Intensity

Module 1 Introduction and Business Start-up Entrepreneurship is: Value-Producing Activity Individual Goal Process The at-risk organization is not prepared for the entrepreneurial age

Entrepreneurship Is Process of identifying and pursuing business opportunities Process of creating value by bringing together resources to exploit an opportunity Pursuit of opportunity without regard to resources controlled Set of critical thinking skills

Entrepreneurial Perspective Entrepreneurial is being opportunity-driven not resource-constrained Individual Organization Region/Country Government

Why Entrepreneurship? Key to economic development and growth Creates jobs, income, and wealth Source of new technology and products

Entrepreneurship Not about individual business stability Entrants, growth, displacements, failures create dynamic economy Starts and failures signs of economic health

The challenge… -to embed this process into the strategies, culture, structures, procedures, and jobs -this includes organizations (large/small, private/ non-profit/public sectors) and individuals

Five elements for entrepreneurship to happen… The organizational context The entrepreneur The resources The concept The entrepreneurial process The environment 1

Entrepreneurial Orientation Innovativeness Risk-taking Proactiveness

Entrepreneurship as a Process Identify/Evaluation Idea Develop Plan Acquire Resources Launch Manage Exit/Harvest

Why Start a Business Independence Control Over One’s Life Personal Satisfaction Financial Rewards

Risk - Risk - Business Failure Financial Risk Career Risk Family/Social Personal

Small Firm Failure in US 25% within 2 years 52% within 4 years 63% within 6 years

Reasons for Failure Do Not Understand the Market Lack of Planning Lack of Managerial Skills Lack of Capital

Creativity and Innovation Creativity Process of generating new ideas Innovation Process of generating and applying new ideas

Source of New Ideas (Being Creative) Grace Ideas come from nowhere Accident Ideas arise by chance Personality Ideas a human trait of some Association Apply knowledge to new areas Cognition Action stimulates creativity

Obstacles to Creativity/Innovation Need for quick results Rigid rules StressRoutines Strong Beliefs Strong Ego Fear of criticism or failure

Improving Ability to Recognize Opportunities Stay healthy Carefully define the problem Exposure to new ideas Receptive to new ideas Continue learning

Innovation Myths Only small/new companies innovate Only need one great idea Need to stick to what we know Innovation is part-time Innovation is haphazard (just need luck) We know what our customers want Market knowledge is held by specialists

Creativity/Innovation and Society A more innovative society - Values learning - Strong cultural reinforcements (e.g. nurturing family environment) - Builds human capital - Highly specialized to master subfields

Intensity of Entrepreneurship Frequency ofX Innovation X XXX XX X Degree of Innovation

Discussion

Assignment Identify a broad market trend and/or societal change in Portugal What is the trend? What new business might be started? 2. Identify a problem that you experience as a consumer What is the problem? What new business might be started?