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Entrepreneurship Chap 2


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Entrepreneurship Chap 2

  1. 1. HisrichPetersShepherdChapter 2Entrepreneurial IntentionsandCorporateEntrepreneurshipCopyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
  2. 2. 2-2The Intention to ActEntrepreneurially Entrepreneurial intentions - Motivationalfactors that influence individuals to pursueentrepreneurial outcomes. Intention is stronger when an action isperceived to be feasible and desirable. Entrepreneurial self-efficacy - Conviction thatone can successfully execute the entrepreneurialprocess. Perceived desirability - The degree to which anindividual has a favorable or unfavorableevaluation of the potential outcomes.
  3. 3. 2-3Entrepreneur Background andCharacteristics Education Provides a background about starting abusiness. Helps in the development of communicationskills and problem-solving skills. Provides individuals with a larger opportunityset. Does not determine whether an entrepreneurwill create a new business to exploit thediscovered opportunity.
  4. 4. 2-4Entrepreneur Background andCharacteristics (cont.) Age Most entrepreneurs initiate their entrepreneurialcareers between the ages of 22 and 45. Individuals are more inclined to start anentrepreneurial career at milestone ages everyfive years (25, 30, 35, 40, and 45). Male entrepreneurs tend to start their venturesin their early 30s, while women entrepreneursdo so in their middle 30s.
  5. 5. 2-5 Work History The decision to launch a new venture can beinfluenced by: Dissatisfaction with one’s job. Previous technical and industry experience. Managerial skills and entrepreneurialexperiences are also important once the venturestarts growing. Previous start-up experience is a relatively goodpredictor of starting subsequent businesses.Entrepreneur Background andCharacteristics (cont.)
  6. 6. 2-6Role Models and Support Systems Role models - Individuals influencing anentrepreneur’s career choice and style Can be parents, family members, or otherentrepreneurs. Successful entrepreneurs are viewed ascatalysts by potential entrepreneurs. Role models can serve in a supportive capacityas mentors by providing information, advice andguidance. Entrepreneurs need to establish connections andnetworks in the venture formation process.
  7. 7. 2-7Role Models and Support System(cont.) Moral-Support Network It is important for entrepreneurs to have acheering squad—individuals who providepsychological support. Friends can provide honest advice,encouragement, understanding, and assistance. Relatives can be strong sources of moralsupport, particularly if they are alsoentrepreneurs.
  8. 8. 2-8 Professional-Support Network Entrepreneurs need advice and counselthroughout the establishment of the newventure which can be obtained from: Mentors. Business associates. Suppliers. Trade associations. Personal affiliations. Entrepreneurial activity is embedded in networksof interpersonal relationships.Role Models and Support System(cont.)
  9. 9. 2-9Minority Entrepreneurs There has been significant growth in: Female self-employment, with women startingnew ventures at a higher rate than men. The number of Asian, African American,Hispanic, and Native American majority ownedfirms. This growth is likely to be spurred by: Encouragement of entrepreneurship amongminority groups. Increase in the number of role models.
  10. 10. 2-10Entrepreneurial Intentions WithinExisting Organizations Top management must create anenvironment that encourages employees tothink and act entrepreneurially. Employees will realize that entrepreneurialaction within the firm is both personallydesirable and feasible.
  11. 11. 2-11Managerial Versus EntrepreneurialDecision Making Entrepreneurial management is distinctfrom traditional management in terms of: Strategic orientation. Commitment to opportunity. Commitment of resources. Control of resources. Management structure. Reward philosophy. Growth orientation. Entrepreneurial culture.
  12. 12. 2-12Table 2.1 – Distinguishing Entrepreneuriallyfrom Traditionally Managed Firms
  13. 13. 2-13Managerial Versus EntrepreneurialDecision Making (cont.) Causes for Interest in CorporateEntrepreneurship Increasing interest in “doing your own thing”and doing it on one’s terms. New search for meaning and impatience hascaused more discontent in structuredorganizations. Organizations are encouraging corporateentrepreneurship i.e. stimulating, andcapitalizing on, employees who think thatsomething can be done differently and better.
  14. 14. 2-14 Corporate entrepreneurship is most stronglyreflected in the following endeavors: New business venturing (corporate venturing) - Thecreation of a new business within an existingorganization. Innovativeness - Product and service innovation, withemphasis on development and innovation intechnology. Self-renewal - Transformation through renewal of thekey ideas on which an organization is built. Proactiveness - Includes initiative, risk taking,competitive aggressiveness, and boldness.Managerial Versus EntrepreneurialDecision Making (cont.)
  15. 15. 2-15Table 2.3 - Characteristics of anEntrepreneurial Environment
  16. 16. 2-16Table 2.4 - Leadership Characteristicsof a Corporate Entrepreneur
  17. 17. 2-17Establishing CorporateEntrepreneurship in the Organization Step one: Secure a commitment to corporateentrepreneurship in the organization by top,upper, and middle management levels. Establish initial framework and embrace theconcept. Identify, select, and train corporateentrepreneurs.
  18. 18. 2-18 Step two: Identify ideas and areas that top management isinterested in supporting. Identify amount of risk money available todevelop the concept. Establish overall program expectations andtarget results of each corporate venture. Establish mentor/sponsor system. Step three: Use of technology to ensure organizationalflexibility.Establishing Corporate Entrepreneurship inthe Organization (cont.)
  19. 19. 2-19 Step four: Identify interested managers to train employeesand share their experiences. Step five: Develop ways for the organization to get closerto its customers. Step six: Learn to be more productive with fewerresources.Establishing Corporate Entrepreneurship inthe Organization (cont.)
  20. 20. 2-20 Step seven: Establish a strong support structure forcorporate entrepreneurship. Step eight: Tie rewards to the performance of theentrepreneurial unit. Finally: Implement an evaluation system that allowssuccessful entrepreneurial units to expand andunsuccessful ones to be eliminated.Establishing Corporate Entrepreneurship inthe Organization (cont.)
  21. 21. 2-21 Problems and Successful Efforts A study found that new ventures started withina corporation performed worse than thosestarted independently by entrepreneurs. Reasons cited: Corporation’s difficulty in maintaining a long-termcommitment. A lack of freedom to make autonomous decisions. A constrained environment. On average, independent start-ups become: Profitable twice as fast. End up twice as profitable.Establishing Corporate Entrepreneurship inthe Organization (cont.)
  22. 22. 2-22 Companies that have adopted their own versionof the implementation process to launch newventures successfully: Minnesota Mining and Manufacturing (3M). Hewlett-Packard (HP). IBM.Establishing Corporate Entrepreneurship inthe Organization (cont.)