Entrepreneurial Characteristics


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Entrepreneurial Characteristics

  1. 1. MAR015-6 Entrepreneurship and Small Business Management Lecture 2 Entrepreneurial Characteristics Bedfordshire Business School University of Bedfordshire
  2. 2. Entrepreneurship: A Definition The pursuit of opportunity beyond the resources currently controlled. Howard Stevenson (1985) “The Heart of Entrepreneurship” Harvard Business Review , March-April
  3. 3. The Entrepreneur as an individual <ul><li>“ The individual entrepreneur is a person who perceives opportunity , finds the pursuit of opportunity desirable in the context of his or her life situation, and believes that success is possible , and these three elements distinguish the individual entrepreneur from the vast majority of the population.” </li></ul><ul><li>Stevenson (as cited in B&D 2 nd ed.(1996)) </li></ul><ul><li>“ Entrepreneurship is behaviour rather than personality trait. The entrepreneur always searches for change, responds to it , and exploits it as an opportunity”. </li></ul><ul><li>Drucker(1985) </li></ul>
  4. 4. New Venture Creation <ul><li>Founders </li></ul><ul><li>Lead Entrepreneur </li></ul><ul><li>Founding Team </li></ul><ul><li>Relevant Experience </li></ul><ul><li>Education </li></ul>Opportunity Idea v Opportunity Now v Later Risk v Reward Assessing Fit Identifying Gaps BUSINESS PLAN Acquiring Resources Finance / Deal Structure Recruiting Utilisation v Ownership
  5. 5. Different Stages of Enterprise Building REALIZATION OF OPPORTUNITY CONSOLIDATION OF RESOURCES IMPLEMENTATION AND CREATION OF VENTURE RUNNING OF AN ENTER- PRISE SUCCESSFULLY When the entrepreneur scan the environment and select the product. After finalization of the product, the entrepreneur needs to consolidate the resources like finance, land, building, machineries, raw materials and other infrastructure. As this stage all the resources are put together and the entrepreneur starts an enterprise. The entrepreneur manages the enterprise by looking after production, marketing and administration of the unit.
  6. 6. Entrepreneurial Functions Accounts & Record Keeping Money Management Selling Marketing Management Costing & Pricing Production Establishment of the Unit Procurement of Finance, Land Building & Machinery Applying for Loans Business Plan Preparation Resource Mobilisation Market Survey & Feasibility Study Selection of Product
  7. 7. Entrepreneurial Skills High Capacity to: Tolerate uncertainty Build a team Provide leadership Deal with failure Seek and use feedback Persist at problem solving Take a long-term view Not look back (except to learn)
  8. 8. Entrepreneurial Characteristics <ul><li>Sees and acts on opportunity </li></ul><ul><li>Initiative </li></ul><ul><li>Persistence </li></ul><ul><li>Information seeking </li></ul><ul><li>Systematic planning </li></ul><ul><li>Concern for quality and innovation </li></ul><ul><li>Goal Setting </li></ul><ul><li>Influencing and networking </li></ul><ul><li>Risk taking </li></ul><ul><li>Problem-solving </li></ul><ul><li>Self-confidence </li></ul>
  9. 9. Sees and Acts on Opportunities <ul><li>Sees and acts on new or unusual business opportunities. </li></ul><ul><li>Seizes unusual opportunities to obtain financing, equipment, land, work space or assistance. </li></ul>
  10. 10. Initiatives <ul><li>Does things before being asked or forced to by events. </li></ul><ul><li>Takes action that goes beyond job requirements or the demands of the situation. </li></ul><ul><li>Acts to extend the business into new areas, products or services. </li></ul>
  11. 11. Persistence <ul><li>Takes repeated actions to meet a challenge or overcome an obstacle. </li></ul><ul><li>Switches to an alternative strategy to reach a goal. </li></ul>
  12. 12. Information Seeking <ul><li>Takes action on own to get information to help achieve objectives or clarify problems. </li></ul><ul><li>Personally seeks information about clients, suppliers, competitors. </li></ul><ul><li>Uses personal and business contacts or information network to obtain useful information. </li></ul>
  13. 13. Systematic Planning <ul><li>Develops and uses logical, step-by-step plans to reach goals. </li></ul><ul><li>Plans by breaking a large task down into sub-tasks. </li></ul><ul><li>Keeps financial records and uses them to make business decisions. </li></ul>
  14. 14. Concern for Quality, Innovation and Efficiency <ul><li>Looks for or finds ways to do things better, faster or cheaper. </li></ul><ul><li>Acts to do things that meet or extend standards of excellence or improve on past performance. </li></ul>
  15. 15. Goal Setting <ul><li>Articulates long range vision and goals. </li></ul><ul><li>Continuously sets and revises short range objectives. </li></ul>
  16. 16. Persuasion <ul><li>Uses deliberate strategies to influence or persuade others. </li></ul><ul><li>Uses business and personal contacts or agents to accomplish objectives. </li></ul><ul><li>Asserts strong confidence in one’s own companys’ or organizations’ products or services. </li></ul>
  17. 17. Persuasion and Influencing Strategies <ul><li>Uses deliberate strategies to influence or persuade others. </li></ul><ul><li>Uses business and personal contacts or agents to accomplish objectives. </li></ul><ul><li>Asserts strong confidence in one’s own products or services. </li></ul><ul><li>Uses a variety or strategies to influence or persuade others to accomplish own objectives. </li></ul><ul><li>Acts to develop business contracts. </li></ul>
  18. 18. Commitment to Work Contract <ul><li>Places the highest priority on getting a job completed. </li></ul><ul><li>Accepts full responsibility for problems in completing a job. </li></ul><ul><li>Makes a personal sacrifice or expends extraordinary effort to complete a job. </li></ul><ul><li>Pitches in with workers or work in their place to get a job done. </li></ul>
  19. 19. Risk Taking <ul><li>States a preference for situations involving a challenge or moderate risk. </li></ul><ul><li>Deliberately calculates risks. </li></ul><ul><li>Takes action to reduce risks or control outcomes. </li></ul>
  20. 20. Problem-Solving <ul><li>Generates new and potentially unique ideas or innovative solutions to reach goals. </li></ul><ul><li>Switches to an alternative strategy to reach a goal. </li></ul>
  21. 21. Self-Confidence <ul><li>Has a strong belief in one’s own abilities. </li></ul><ul><li>Sticks with own judgements in the face of opposition or early lack of success. </li></ul><ul><li>Expresses confidence in one’s own ability to complete a difficult task or meet a challenge. </li></ul>
  22. 22. Six Dimensions of Entrepreneurship <ul><li>Strategic Orientation </li></ul><ul><li>Commitment to Opportunity </li></ul><ul><li>Commitment of Resources </li></ul><ul><li>Control of Resources </li></ul><ul><li>Management Structure </li></ul><ul><li>Reward Philosophy </li></ul><ul><li> (Stevenson, 2000) </li></ul>
  23. 23. Strategic Orientation Entrepreneurial - Diminishing opportunity streams - Rapid changes in - technology, consumer economics, social values, and political roles Administrative - The social contract - Performance criteria - Planning systems and cycles (Stevenson, 2000)
  24. 24. Commitment to Opportunity Entrepreneurial - Action orientation - Short decision windows - Risk management - Limited decision constituencies Administrative - Negotiation of strategy - Management of fit - Risk reduction - Multiple decision constituencies (Stevenson, 2000)
  25. 25. Commitment of Resources Entrepreneurial - Lack of predictable resource needs - Lack of long-term control - Social needs - International demands Administrative - Personal risk reduction - Incentive compensation - Managerial turnover - Capital allocation & formal planning systems (Stevenson, 2000)
  26. 26. Control of Resources Entrepreneurial - Increased resource specialization - Risk of obsolescence - Increased flexibility Administrative - Power, status and financial rewards - Co-ordination - Efficiency - Inertia and cost of change - Industry structures (Stevenson, 2000)
  27. 27. Management Structure Entrepreneurial - Need for coordination of key resources - Flexibility - Challenge to owner’s control - Employees’ desire for independence Administrative - Need for clearly defined authority and control - Organizational culture - Reward systems (Stevenson, 2000)
  28. 28. Reward Philosophy Entrepreneurial - Individual expectations - Investor demands - Competition Administrative - Social norms - Impacted information - Demands of public shareholders (Stevenson, 2000)
  29. 29. Commitment and Determination <ul><li>Tenacity and decisiveness </li></ul><ul><li>Able to commit/decommit quickly </li></ul><ul><li>Discipline </li></ul><ul><li>Persistence in solving problems </li></ul><ul><li>Willingness to undertake personal sacrifice </li></ul><ul><li>Total immersion </li></ul>
  30. 30. Leadership <ul><li>Self-starter </li></ul><ul><li>High standards but not perfectionist </li></ul><ul><li>Team builder and hero maker; inspire others </li></ul><ul><li>Treat others as you want to be treated </li></ul><ul><li>Sharing of wealth </li></ul><ul><li>Integrity and reliability; builder of trust </li></ul><ul><li>Not a lone wolf </li></ul><ul><li>Superior learner and teacher </li></ul><ul><li>Patience and urgency </li></ul>
  31. 31. Opportunity Obsession <ul><li>Having intimate knowledge of customers’ needs </li></ul><ul><li>Market driven </li></ul><ul><li>Obsessed with value creation and enhancement </li></ul>
  32. 32. Tolerance of Risk, Ambiguity and Uncertainty <ul><li>Calculated risk taker </li></ul><ul><li>Risk minimiser </li></ul><ul><li>Risk sharer </li></ul><ul><li>Manages paradoxes and contradictions </li></ul><ul><li>Tolerance of stress and conflict </li></ul><ul><li>Ability to resolve problems and integrate solutions </li></ul>
  33. 33. Creativity, Self-Reliance and Adaptability <ul><li>Non-conventional, open-minded </li></ul><ul><li>Lateral thinker </li></ul><ul><li>Restlessness with status quo </li></ul><ul><li>Ability to adapt and change </li></ul><ul><li>Creative problem solver </li></ul><ul><li>Ability to learn quickly </li></ul><ul><li>Lack of fear of failure </li></ul><ul><li>Ability to conceptualize and ‘sweat details’ (helicopter mind) </li></ul>
  34. 34. Motivation to Excel <ul><li>Goal and results orientation </li></ul><ul><li>High but realistic goals </li></ul><ul><li>Drive to achieve and grow </li></ul><ul><li>Low need for status and power </li></ul><ul><li>Interpersonally supporting (vs. competitive) </li></ul><ul><li>Aware of weaknesses and strengths </li></ul><ul><li>Having perspective and sense of humour </li></ul>
  35. 35. Social learning (cont.) <ul><li>… and behaviours that are non-entrepreneurial by definition (NB relationship to de Vries) </li></ul><ul><ul><li>Invulnerability </li></ul></ul><ul><ul><li>Being macho </li></ul></ul><ul><ul><li>Dominating </li></ul></ul><ul><ul><li>Impulsive </li></ul></ul><ul><ul><li>Outer control </li></ul></ul><ul><ul><li>Perfectionist </li></ul></ul><ul><ul><li>Know-it-all </li></ul></ul><ul><ul><li>Counter dependency </li></ul></ul>Unnecessary risk taking Irrational battling to prove oneself Not listening to advisers Refusal to analyse Refusal of personal responsibility Paralysis, missing opportunity Turning people & teams off; de-motivating
  36. 36. From tiny acorns, mighty oaks do grow….