ENTREPRENEURSHIP A PROCESS PERSPECTIVE

Robert A. Baron Scott A. Shane A. Rebecca Reuber

Slides Prepared by:

Sandra Malach, University of Calgary

Copyright 2008 by Nelson, a division of Thomson Canada Limited

1 ENTREPRENEURSHIP: A FIELDAND AN ACTIVITY

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LEARNING OBJECTIVES
1. 2. Define entrepreneurship as a field of business. Explain why the activities of entrepreneurs are so important to the economies of their countries, and why entrepreneurship is an increasingly popular career choice. Describe the process perspective on entrepreneurship, and list the major phases of this process. Explain why entrepreneurship can be viewed as arising out of the intersection of people and opportunities.
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3.
4.

LEARNING OBJECTIVES
5. Explain why certain sources of knowledge about entrepreneurship are more reliable and useful than others. Describe the basic nature of systematic observation, experimentation, and reflection. Explain the role of theory in the field of entrepreneurship.

6. 7.

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A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. (Sir Winston Churchill)

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DEFINITION
Entrepreneurship seeks to understand how opportunities to create something new arise and are discovered or created by specific persons who then use various means to exploit or develop them, thus producing a wide range of effects. (Shane & Venkataraman)
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FURTHER DEFINED

Intersection of opportunities generated by changing economic, technological, and social conditions and enterprising people capable of distinguishing potentially valuable opportunities from less valuable ones and of actively exploiting them.
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KEY ACTIVITIES

Identifying an opportunity Exploiting or developing this opportunity Launching a new venture Running a new business successfully

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INTRAPRENEURS

Persons who create something new inside an existing company Allows them to adapt to changing conditions in the business environment. (Keil) Develop a corporate culture receptive to new ideas and provide concrete rewards for innovation.(Koen & Baron)
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SOCIAL ENTREPRENEURSHIP

Entrepreneurship to benefit humanity Ventures may be for-profit or not-for-profit Most important goals are social

Economic development, Environmental sustainability and Disaster relief.

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ENTREPRENEURSHIP STATISTICS

More than 125,000 new businesses are launched annually (Industry Canada, 2005) Over 2.5 million (15%) individuals are self-employed. (Industry Canada, 2005) Activity is highest for those aged 25-34.
(Riverin et al)

40% of the private sector GDP is produced by SMEs (Industry Canada, 2005).
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TREND TOWARDS ENTREPRENEURSHIP

Media accounts of successful entrepreneurs Change in employment contract Desire for an independent lifestyle

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FOUNDATIONS IN OTHER DISCIPLINES

(1) the economic, technological, and social conditions from which opportunities rise, (2) the entrepreneurs who recognize these opportunities (3) the business techniques and legal structures they use to develop them, and (4) and the economic and social effects produced by such development.
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FOUNDATIONS IN OTHER DISCIPLINES

Economics behavioural science

Psychology, cognitive science

Sociology

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MACRO AND MICRO PERSPECTIVES

Micro Perspective

behaviour and thoughts of individuals or groups Environmental factors

Macro Perspective

Economic, financial, political

Both are key in understanding the entrepreneurial process

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A CONFLUENCE OF FACTORS
Social Change

New Markets/ Channels

Opportunity

Economic Change

Technology

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THE PROCESS

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VARIABLES

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THE ESSENCE OF ENTREPRENEURSHIP

The intersection of valuable opportunities and enterprising individuals is the essence of entrepreneurship.

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There are three principal means of acquiring knowledge: observation, reflection and experimentation. Observation collects facts; reflection combines them; experimentation verifies the result of that combination --Diderot
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SYSTEMATIC OBSERVATION

Observe aspects of the world systematically Generate and test hypothesis Use this information as a basis for conclusions Doesnt resolve question of causation

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EXPERIMENTATION

Determines Causation Systematically changes one variable in order to see if changes affect one or more other variables Involves active intervention Difficult to use in the study of entrepreneurship

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REFLECTION

Combining facts in a careful and systematic way to reach conclusions Central to case method and other qualitative methods of research Qualitative Method

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THEORY

Moves beyond efforts to merely describe phenomena Moves to the point at which we can explain why and how things happen as they do

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DEVELOPING A THEORY

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TWO FINAL POINTS

Theories are never proven in any final, ultimate sense Research should never be undertaken to prove or verify a theory

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Tis a sort of duty to be rich, that it may be in ones power to do good --Lady Mary Montagu

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TO DO GOOD

Entrepreneurs products and services improve the lives of countless millions of persons Entrepreneurs are often extremely generous in their donations to worthy causes

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