PowerPoint Presentation by Charlie Cook The University of West Alabama chapter 2 Part 1: An Enterprising Framework © 2008 Cengage Learning All rights reserved. Enterprisers

© 2008 Cengage Learning. All rights reserved.2–2 Key Concepts 1.Entrepreneurship is a universal social and economic activity in the United States. Because being an enterpriser is more about doing than about being, nearly everyone has the same potential to become an enterpriser. 2.Enterprisers come from all backgrounds, ages, and experiences. Some characteristics (demographic and personal) can increase the likelihood of becoming an enterpriser. Although individuals can’t change demographics—ethnicity, gender, and age—they do have some control over personal characteristics. Education, for example, is a primary driver of entrepreneurship. 3.Successful enterprisers are more likely to think differently from other individuals. They are more likely to view their situations optimistically, focus on ways to leverage their means (current resources and capabilities at hand) to come up with a variety of solutions (ends), and engage in accomplishing “small wins.”

© 2008 Cengage Learning. All rights reserved.2–3 Enterprisers Dispositional CharacteristicsDispositional Characteristics  A person’s natural or acquired habits or characteristic tendencies. Cognitive CharacteristicsCognitive Characteristics  Intellectual rather than physical traits—the ability to think, learn, and remember.  Comprehension, reasoning, perception, decision making, planning, and learning.

© 2008 Cengage Learning. All rights reserved.2–4 Enterprisers (cont’d) The Panel Study of Entrepreneurial Dynamics (PSED)The Panel Study of Entrepreneurial Dynamics (PSED)  Nascent entrepreneurs  Individuals who undertake the efforts necessary to initiate and start new businesses. Focus of the PSEDFocus of the PSED  Who is involved in starting businesses in the U.S.?  How do they go about the process of starting firms?  Which business start-up efforts result in new firms?  Why are some business start-up efforts successful in creating new firms?

© 2008 Cengage Learning. All rights reserved.2–5 Enterprisers (cont’d) Key Findings of the PSEDKey Findings of the PSED  Entrepreneurial activity in the U.S. is widespread.  Men are twice as likely to start businesses as women.  Enterprisers span all adult age groups.  African Americans are about 50% more likely to start a new business than whites.  Education significantly predicts emergent entrepreneurship.  Those with higher incomes are more likely to be involved in starting a business.  Where people live affects entrepreneurial activity— entrepreneurial activity is higher in urban areas.

© 2008 Cengage Learning. All rights reserved.2–6 exhibit 2.1Nascent Entrepreneurs by Age and Gender

© 2008 Cengage Learning. All rights reserved.2–7 exhibit 2.2Nascent Entrepreneurs by Gender and Ethnic Identity

© 2008 Cengage Learning. All rights reserved.2–8 exhibit 2.3Nascent Entrepreneurs by Ethnic Identity and Education (18–54 years old)

© 2008 Cengage Learning. All rights reserved.2–9 exhibit 2.4Reasons for Choosing a Career, Nascent Entrepreneurs vs. Nonentrepreneurs

© 2008 Cengage Learning. All rights reserved.2–10 Cognitive Characteristics: Career Reasons Universal (Cross-Nationality) ValuesUniversal (Cross-Nationality) Values  Individualistic orientation  autonomy, lifestyle, creativity, personal development  Orientation toward self-actualization  ability utilization, altruism, aesthetics  Social orientation  social relations, social interaction, variety, working conditions  Utilitarian orientation  economics, advancement, prestige, achievement  Adventurous orientation  risk, variety, physical activity

© 2008 Cengage Learning. All rights reserved.2–11 Cognitive Characteristics: Optimism Positive ThinkingPositive Thinking  Optimist  A person who believes that good things will happen.  Attributions that characterize the optimistic viewpoint  Is the situation internal or external?  Is the situation stable or variable?  Is the cause global or specific? Believe in YourselfBelieve in Yourself  Giving up, and doing nothing, is not an option for an enterpriser.

© 2008 Cengage Learning. All rights reserved.2–12 exhibit 2.5Coping Tendencies of Optimists and Pessimists Source: M. F. Scheier, C. S. Carver, and A. W. Bridges, “Optimism, Pessimism, and Psychological Well Being,” in E. C. Chang (Ed.), Optimism, Pessimism: Implications for Theory Research and Practice (Washington, DC: American Psychological Association, 2001), Exhibit 9.1, p Reprinted with permission of C. S. Carver.

© 2008 Cengage Learning. All rights reserved.2–13 Cognitive Characteristics: Ends and Means EndsEnds  Entrepreneur’s focus is on a specific goal or desired outcome (end) to the problem.  Means are then developed to achieve the desired goal/outcome. MeansMeans  Entrepreneur’s focus is on using current abilities (means) to solve a particular problem.  Means represent the starting point for further achievement.

© 2008 Cengage Learning. All rights reserved.2–14 exhibit 2.6Ends vs. Means Source: Adapted from S. D. Sarasvathy, “Causation and Effectuation: Toward a Theoretical Shift from Economic Inevitability to Entrepreneurial Contingency,” Academy of Management Review 26 no. 2 (2001), p. 251.

© 2008 Cengage Learning. All rights reserved.2–15 Exploring Ends and Means: Powell’s Books versus Amazon.com GivensGivens  Ends approach:  Amazon.com starts with the desired effect (outcome).  Means approach:  Powell’s Books starts with current capabilities. Decision-makingDecision-making  Ends approach:  Jeff Bezos chooses means based on the desired goals.  Means approach:  Powell’s Books chooses possible effects given the capabilities and resources on hand.

© 2008 Cengage Learning. All rights reserved.2–16 Exploring Ends and Means (cont’d) : Powell’s Books versus Amazon.com CompetenciesCompetencies  Ends approach:  Amazon.com exploits knowledge as an online retailing pioneer.  Means approach:  Powell’s Books, as an established bookseller, exploits contingencies based on its existing capabilities.

© 2008 Cengage Learning. All rights reserved.2–17 Exploring Ends and Means (cont’d) : Powell’s Books versus Amazon.com Unknowns and LogicUnknowns and Logic  Ends approach:  Amazon.com must gather information about its customers to predict the characteristics of an uncertain future in order to control it.  Means approach:  Powell’s Books seeks to control the future by providing multiple alternatives for customers to make purchases so that it does not have to predict the future.

© 2008 Cengage Learning. All rights reserved.2–18 Exploring Ends and Means (cont’d) : Powell’s Books versus Amazon.com OutcomesOutcomes  Ends approach:  Powell’s Books is seeking to increase market share in existing markets on its own.  Means approach:  Amazon.com sought a variety of strategic alliances to pursue new opportunities by allowing any seller to list books on its web site.

© 2008 Cengage Learning. All rights reserved.2–19 Small Wins: Building Blocks of Enterprise Small WinsSmall Wins  Achievable, tangible accomplishments that are within a person’s capabilities and produce visible results. Characteristics of Small WinsCharacteristics of Small Wins  Ability to control actions  Willingness to take action  Activities that stand alone  Communicating an intent  Emphasis on details