1. Chapter2Chapter2 PowerPoint Presentation by Charlie Cook © Copyright The McGraw-Hill Companies, Inc., 2004. All rights reserved. Who Are Managers and Entrepreneurs?

2. © Copyright 2004 McGraw-Hill. All rights reserved.2–22–2 Learning Objectives After studying the chapter, you should be able to:After studying the chapter, you should be able to:  Distinguish between entrepreneurship and management.  Describe the various personality traits that affect how managers and entrepreneurs think, feel, and behave.  Understand the personal characteristics of entrepreneurs.  Explain what values, attitudes, and moods and emotions are, and describe their impact on managerial action.  Define organizational culture, and explain the role managers and entrepreneurs play in creating it.

3. © Copyright 2004 McGraw-Hill. All rights reserved.2–32–3 EntrepreneurshipEntrepreneurship EntrepreneurshipEntrepreneurship  The mobilization of resources to take advantage of an opportunity to provide customers with new and improved goods and services.  Entrepreneurship differs from management: Management encompasses all the decision making necessary to plan, organize, lead, and control resources.Management encompasses all the decision making necessary to plan, organize, lead, and control resources.

4. © Copyright 2004 McGraw-Hill. All rights reserved.2–42–4 EntrepreneursEntrepreneurs EntrepreneursEntrepreneurs  Individuals who notice opportunities and take the responsibility for mobilizing the resources necessary to produce new and improved goods and services. Entrepreneurs start new businesses and carry out all of the management functions.Entrepreneurs start new businesses and carry out all of the management functions. Entrepreneurs assume all of the risks for losses and receive all of the returns (profits) from their ventures.Entrepreneurs assume all of the risks for losses and receive all of the returns (profits) from their ventures.

5. © Copyright 2004 McGraw-Hill. All rights reserved.2–52–5 Entrepreneurship (cont’d) IntrapreneursIntrapreneurs  Individuals (managers, scientists, or researchers) who work inside an existing organization and notice an opportunity for product improvements and are responsible for managing the product development process. Intrapreneurs frustrated with the lack of support or opportunity at their firm often leave and form their own new ventures.Intrapreneurs frustrated with the lack of support or opportunity at their firm often leave and form their own new ventures.

6. © Copyright 2004 McGraw-Hill. All rights reserved.2–62–6 Personality Traits Personality TraitsPersonality Traits  Enduring tendencies to feel, think, and act in certain ways  Characteristics that influence how people think, feel and behave on and off the job  The personalities of managers account for the different approaches that managers adopt to management.  Traits are viewed as continuums (from high to low) along which individuals fall.

7. © Copyright 2004 McGraw-Hill. All rights reserved.2–72–7 The Big Five Personality Traits Figure 2.1

8. © Copyright 2004 McGraw-Hill. All rights reserved.2–82–8 The Big Five Personality Traits (cont’d) ExtroversionExtroversion  The tendency to experience positive emotions and moods and to feel good about oneself and the rest of the world. Managers high on this trait are sociable and friendly.Managers high on this trait are sociable and friendly. Negative AffectivityNegative Affectivity  The tendency to experience negative emotions and moods, to feel distressed, and to be critical of oneself and others. Managers high on this trait are often critical and feel angry with others and themselves.Managers high on this trait are often critical and feel angry with others and themselves.

9. © Copyright 2004 McGraw-Hill. All rights reserved.2–92–9 The Big Five Personality Traits (cont’d) AgreeablenessAgreeableness  The tendency to get along well with other people. Managers high on this trait are likable, and care about others.Managers high on this trait are likable, and care about others. ConscientiousnessConscientiousness  The tendency to be careful, scrupulous, and persevering. Openness to ExperienceOpenness to Experience  The tendency to be original, have broad interests, to be open to a wide range of stimuli, be daring, and take risks.

10. © Copyright 2004 McGraw-Hill. All rights reserved.2–10 A Measure of Negative Affectivity Figure 2.2 Source: Tellegen, Brief Manual for the Differential Personality Questionnaire (unpublished manuscript, University of Minnesota, 1982).

11. © Copyright 2004 McGraw-Hill. All rights reserved.2–11 Traits and Managers Successful managers vary widely on the “Big Five”.Successful managers vary widely on the “Big Five”.  It is important to understand these traits since it helps explain a manager’s approach to planning, leading, organizing, and controlling.  Managers should also be aware of their own style and try to tone down problem areas.

12. © Copyright 2004 McGraw-Hill. All rights reserved.2–12 Other Personality Traits… Internal Locus of ControlInternal Locus of Control  The tendency to locate responsibility for one’s own fate within oneself. People believe they are responsible for their fate and see their actions as important to achieving goals.People believe they are responsible for their fate and see their actions as important to achieving goals. External Locus of ControlExternal Locus of Control  The tendency to locate responsibility for one’s fate within outside forces and to believe that one’s own behavior has little impact on outcomes. People believe external forces decide their fate and their actions make little difference.People believe external forces decide their fate and their actions make little difference.

13. © Copyright 2004 McGraw-Hill. All rights reserved.2–13 Other Personality Traits… (cont’d) Self-EsteemSelf-Esteem  The degree to which people feel good about themselves and abilities. High self-esteem causes a person to feel competent, and capable.High self-esteem causes a person to feel competent, and capable. Persons with low self-esteem have poor opinions of themselves and their abilities.Persons with low self-esteem have poor opinions of themselves and their abilities. Need for AchievementNeed for Achievement  The extent to which an individual has a strong desire to perform challenging tasks well and meet personal standards for excellence.

14. © Copyright 2004 McGraw-Hill. All rights reserved.2–14 Other Personality Traits… (cont’d) Need for AffiliationNeed for Affiliation  The extent to which an individual is concerned about establishing and maintaining good interpersonal relations, being liked, and having other people get along. Need for PowerNeed for Power  The extent to which an individual desires to control or influence others.

15. © Copyright 2004 McGraw-Hill. All rights reserved.2–15 Who are Entrepreneurs? Characteristics of entrepreneurs—most share these common traits:Characteristics of entrepreneurs—most share these common traits:  Open to experience: they are original thinkers and take risks.  Internal locus of control: they take responsibility for their own actions.  High self-esteem: they feel competent and capable.  High need for achievement: they set high goals and enjoy working toward them.

16. © Copyright 2004 McGraw-Hill. All rights reserved.2–16 Values, Attitudes, and Moods and Emotions ValuesValues  Describe what managers try to achieve through work and how they think they should behave. AttitudesAttitudes  Capture managers’ thoughts and feelings about their specific jobs and organizations. Moods and EmotionsMoods and Emotions  Encompass how managers actually feel when they are managing.

17. © Copyright 2004 McGraw-Hill. All rights reserved.2–17 Values: Terminal and Instrumental Terminal ValuesTerminal Values  A personal conviction about life-long goals A sense of accomplishment, equality, and self- respect.A sense of accomplishment, equality, and self- respect. Instrumental ValuesInstrumental Values  A personal conviction about desired modes of conduct or ways of behaving Being hard-working, broadminded, capable.Being hard-working, broadminded, capable. Value SystemValue System  The terminal and instrumental values that are the guiding principles in an individual’s life.

18. © Copyright 2004 McGraw-Hill. All rights reserved.2–18 Terminal and Instrumental Values Figure 2.3 Source: Rokeach, The Nature of Human Values (New York: Free Press, 1973).

19. © Copyright 2004 McGraw-Hill. All rights reserved.2–19 AttitudesAttitudes AttitudesAttitudes  A collection of feelings and beliefs. Job SatisfactionJob Satisfaction  A collection of feelings and beliefs that managers have about their current jobs. Managers high on job satisfaction have a positive view of their jobs.Managers high on job satisfaction have a positive view of their jobs. Levels of job satisfaction tend increase as managers move up in the hierarchy in an organization.Levels of job satisfaction tend increase as managers move up in the hierarchy in an organization.

20. © Copyright 2004 McGraw-Hill. All rights reserved.2–20 Sample Items from Two Measures of Satisfaction Figure 2.4 Source: R.B. Dunham and J. B. Herman, “ Development of a Female Face Scale for Measuring Job Satisfaction.” Journal of Applied Psychology 60 (1975): 629–31.

21. © Copyright 2004 McGraw-Hill. All rights reserved.2–21 Attitudes (cont’d) Organizational Citizenship BehaviorsOrganizational Citizenship Behaviors  Behaviors that are not required of organizational members but that help the firm in gaining a competitive advantage. Managers with high satisfaction are more likely perform these “above and beyond the call of duty” behaviors.Managers with high satisfaction are more likely perform these “above and beyond the call of duty” behaviors. Managers who are satisfied with their jobs are less likely to quit.Managers who are satisfied with their jobs are less likely to quit.

22. © Copyright 2004 McGraw-Hill. All rights reserved.2–22 Attitudes (cont’d) Organizational CommitmentOrganizational Commitment  The collection of feelings and beliefs that managers have about their organization as a whole Committed managers are loyal to and are proud of their firms.Committed managers are loyal to and are proud of their firms. Commitment can lead to a strong organizational culture.Commitment can lead to a strong organizational culture. Commitment helps managers perform their figurehead and spokesperson roles.Commitment helps managers perform their figurehead and spokesperson roles. The commitment of international managers is affected by job security and personal mobility.The commitment of international managers is affected by job security and personal mobility.

23. © Copyright 2004 McGraw-Hill. All rights reserved.2–23 A Measure of Organizational Commitment Figure 2.5 Source: L. W. Porter and F. J. Smith, “Organizational Commitment Questionnaire,” in J. D. Cook, S. J. Hepworth, T. D. Wall, and P. B. Warr, eds., The Experience of Work: A Compendium and Review of 249 Measures and Their Use (New York: Academic Press, 1981), 84–86.

24. © Copyright 2004 McGraw-Hill. All rights reserved.2–24 Moods and Emotions MoodMood  A feeling or state of mind. Positive moods provide excitement, elation, and enthusiasm.Positive moods provide excitement, elation, and enthusiasm. Negative moods lead to fear, distress, and nervousness.Negative moods lead to fear, distress, and nervousness. Current situations and a person's basic outlook affect a person’s current mood.Current situations and a person's basic outlook affect a person’s current mood.  A manager’s mood affects their treatment of others and how others respond to them. Subordinates perform better and relate better to managers who are in a positive mood.Subordinates perform better and relate better to managers who are in a positive mood.

25. © Copyright 2004 McGraw-Hill. All rights reserved.2–25 A Measure of Positive and Negative Mood at Work Figure 2.6 Source: A. P. Brief, M. J. Burke, J. M. George, B. Robinson, and J. Webster, “ Should Negative Affectivity Remain an Unmeasured Variable in the Study of Job Stress?” Journal of Applied Psychology 73 (1988): 193–98.

26. © Copyright 2004 McGraw-Hill. All rights reserved.2–26 Emotional Intelligence Emotional IntelligenceEmotional Intelligence  The ability to understand and manage one’s own moods and emotions and the moods and emotions of other people. Assists managers in coping with their own emotions.Assists managers in coping with their own emotions. Helps managers carry out their interpersonal roles of figurehead, leader, and liaison.Helps managers carry out their interpersonal roles of figurehead, leader, and liaison.

27. © Copyright 2004 McGraw-Hill. All rights reserved.2–27 Organizational Culture Organizational CultureOrganizational Culture  The set of shared values, norms, standards for behavior, and shared expectations that influence the way in which individuals, groups, and teams interact with each other and cooperate to achieve organizational goals. Attraction-Selection-Attrition FrameworkAttraction-Selection-Attrition Framework  A model that explains how personality may influence organizational culture. Founders of firms tend to hire employees whose personalities that are to their own, which may or may not benefit the organization over the long-term.Founders of firms tend to hire employees whose personalities that are to their own, which may or may not benefit the organization over the long-term.