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The Evolution of Entrepreneurship

‡ Entrepreneur is derived from the French

V
VV V, meaning ³to undertake.´
± The 
  is one who undertakes to
organise, manage, and assume the risks of a
business.
± Although no single definition of entrepreneur
exists and no one profile can represent
today¶s entrepreneur, research is providing an
increasingly sharper focus on the subject.
An Integrated Definition

‡ Entrepreneurship
± A dynamic process of vision, change, and creation.
‡ Requires an application of energy and passion towards the
creation and implementation of new ideas and creative
solutions.

± Essential ingredients include:

‡ The willingness to take calculated risks²in terms of time,
equity, or career.
‡ The ability to formulate an effective venture team; the
creative skill to marshal needed resources.
‡ The fundamental skills of building a solid business plan.
‡ The vision to recognise opportunity where others see chaos,
contradiction, and confusion.
Entrepreneurs Vs. Small Business Owners

‡ Small Businesses Owners

± Manage their businesses by expecting stable
sales, profits, and growth.

‡ Entrepreneurs
± Focus their efforts on innovation, profitability
and sustainable growth.
The Myths of Entrepreneurship

Ñ

‡ The term "myth" is often used colloquially to
refer to a false story.
‡ A widely held but false belief.
‡ An exaggerated conception of a person or
thing
The Myths of Entrepreneurship

‡ Myth 1: Entrepreneurs Are Doers, Not Thinkers

‡ Myth 2: Entrepreneurs Are Born, Not Made
‡ Myth 3: Entrepreneurs Are Always Inventors
‡ Myth 4: Entrepreneurs Are Academic and Social Misfits
‡ Myth 5: Entrepreneurs Must Fit the ³Profile´
‡ Myth 6: All Entrepreneurs Need Is Money
‡ Myth 7: All Entrepreneurs Need Is Luck
‡ Myth 8: Ignorance Is Bliss For Entrepreneurs
‡ Myth 9: Most entrepreneurial initiatives fail
‡ Myth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers)
The Myths of Entrepreneurship

‡ Myth 1: Entrepreneurs Are Doers, Not Thinkers

‡ Entrepreneurs have a tendency toward action, but they are also

thinkers.
‡ Emphasis today is on the creation of clear and complete
business plans.

‡ Myth 2: Entrepreneurs Are Born, Not Made

‡ Like all disciplines, entrepreneurship has models, processes, and

case studies that allow the topic to be studied and the traits
acquired.
‡ Traits include aggressiveness, initiative, drive, a willingness to
take risks, analytical ability, and skill in human relations.
The Myths of Entrepreneurship

‡ Myth 3: Entrepreneurs Are Always Inventors

‡ Numerous entrepreneurs encompass all sorts of profit-seeking

activity.
‡ For example, Ray Kroc did not invent the fast-food franchise, but
his innovative ideas made McDonald¶s the largest fast-food
enterprise in the world.

‡ Myth 4: Entrepreneurs Are Academic and Social Misfits

‡ This myth results from people who have started successful

enterprises after dropping out of school or quitting a job.
‡ Today the entrepreneur is considered a hero: socially,
economically, and academically.
‡ No longer a misfit, the entrepreneur is now viewed as a
professional.
The Myths of Entrepreneurship

‡ Myth 5: Entrepreneurs Must Fit the ³Profile´

‡ Many books and articles have presented checklists of

characteristics of the successful entrepreneur.
‡ These lists were neither validated nor complete.
‡ Today we realise that a standard entrepreneurial profile is hard to
compile.
‡ The environment, the venture itself, and the entrepreneur have
interactive effects, which result in many different types of profiles.
The Myths of Entrepreneurship

‡ Myth 6: All Entrepreneurs Need Is Money

‡ Venture needs capital to survive.

‡ A large number of business failures occur because of lack of
adequate financing.
‡ Failure due to lack of financing indicates other problems.
o Ñ
V   V
V V
o 
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The Myths of Entrepreneurship

‡ Myth 7: All Entrepreneurs Need Is Luck

‡ Being in the right place at the right time is always an advantage.

‡ ³Luck´ happens when preparation meets opportunity.
‡ What appears to be luck could really be several factors.
o V 

o V
V

o VV
o  V
V
o  
 V V
The Myths of Entrepreneurship

‡ Myth 8: Ignorance Is Bliss For Entrepreneurs

(A myth that entrepreneurship is unstructured and chaotic)

‡ Entrepreneurs are assumed to be disorganised and unstructured.

‡ The reality is that they are typically well-organised, in order to get
done all the duties and responsibilities inherent in building and
running a business.
‡ Key factors in successful entrepreneurship
o Identifying the strengths and weaknesses of a venture
o Setting up clear timetables with contingencies for handling
problems
o Minimising problems through careful strategy formulation
‡ Careful planning is the mark of an accomplished entrepreneur.
The Myths of Entrepreneurship

‡ Myth 9: Most entrepreneurial initiatives fail

‡ Many entrepreneurs suffer a number of failures before they are

successful.
‡ In fact, failure can teach many lessons to those willing to learn
and often leads to future successes.
‡ The ³Corridor Principle´ states that with every venture launched,
new and unintended opportunities often arise.

Ë  

‡ The corridor principle simply suggests that there are open doors
you can only see when you are walking down the corridor.
‡ They are not visible from your starting point at the end of the hall.
‡ The "Corridor Principle" involves entrepreneurs being able to see
venture opportunities not visible to them before entering usiness.
The Myths of Entrepreneurship

‡ Myth 10: Entrepreneurs Are Extreme Risk Takers (Gamblers)

‡ Public¶s perception of the risk assumed by most entrepreneurs is

distorted.
‡ While it may appear that an entrepreneur is gambling on a wild
chance, the fact is that the entrepreneur is usually working on a
moderate or ³calculated´ risk.
Effects of Entrepreneurship

‡ The Global Entrepreneurship Monitor (GEM)

± Provides an annual assessment of the entrepreneurial
environment of 42 countries.
± Latest GEM study: the U.S. outranks the rest of the world
in important entrepreneurial support.
± http://www.gemconsortium.org/

‡ Entrepreneurs lead to growth by:

± Entering and expanding existing markets.
± Creating entirely new markets by offering innovative
products.
± Increasing diversity and fostering minority participation in
the economy.
Current Trends in
Entrepreneurship Research

u

   

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Current Trends in
Entrepreneurship Research
‡ Major Research Themes:
± uV
V  
: venture capital and angel capital
financing and other financing techniques
strengthened in the 1990s.
± 
V 
VV V and the need for
entrepreneurial cultures has drawn increased
attention.
±   
VV V has unprecedented strength
within the new generation of entrepreneurs.
± 
VV V  

 is providing new insights
into the psychological aspects of the entrepreneurial
process.
 Current Trends« (cont¶d)

‡ Major Research Themes (cont¶d):

± ´V  Ñ 
 
VV V appear to face
obstacles and difficulties different from those that
other entrepreneurs face.
± The   
VV V  Ñ VV
is increasing.
±    VV have become a stronger focus of
research.
± 
VV V  
 has become one of the
hottest topics in business and engineering schools
throughout the world.
Key Concepts

‡ Entrepreneurship
± A dynamic process of vision, change, and creation
requiring an application of energy and passion toward
the creation of and implementation of new ideas and
creative solutions.
Key Concepts

‡ Entrepreneur
± An innovator or developer who recognises and seizes
opportunities; converts those opportunities into
workable/marketable ideas; adds value through time,
effort, money, or skills; and assumes the risks of the
competitive marketplace to implement these ideas.

± an entrepreneur can exist in an existing large

institution or can be an individual starting his or her
own new venture single-handedly.
Key Concepts

‡ Entrepreneurial Management
± the practice of taking entrepreneurial knowledge and
utilising it for increasing the effectiveness of new
business venturing as well as small and medium-
sized businesses.