1. 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.

2. 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

3. 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

4. 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

5. 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

6. Figure 1.1 - Entrepreneurial Action

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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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

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

17. 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

18. 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