2. Learning Objectives
• To introduce the concept of entrepreneurship and explain the process
of entrepreneurial action
• To describe how structural similarities enable entrepreneurs to make
creative mental leaps
• To highlight bricolage as a source of entrepreneurs’ resourcefulness
• To introduce effectuation as a way expert entrepreneurs sometimes
think
• To develop the notion that entrepreneurs cognitively adapt
• To introduce sustainable entrepreneurship as a means of sustaining the
natural environment and communities and developing gains for others
3. The Nature of Entrepreneurship
• Entrepreneurship plays an important role in the creation and
growth of businesses, as well as in the growth and prosperity of
regions and nations
• Entrepreneurial Opportunities
• Situation in which new goods, services, raw materials, and
organizing methods can be introduced
• Sold at greater than their cost of production
• Entrepreneurial Action
• Creation of new products/services
• Involves entry into new markets
• May occur through a newly created organization or within an
established organization
4. The Nature of Entrepreneurship
• Entrepreneur act on what they believe is an opportunity and because
it exist in high uncertainty, entrepreneurs must use their judgment
about whether or not to act.
• The individual prior knowledge can decrease the amount of
uncertainty and his or her motivation indicates a willingness to bear
uncertainty.
• Entrepreneur act on the possibility that one has identified an
opportunity worth pursuing.
• Entrepreneurial Thinking
• An individuals’ mental processes of overcoming ignorance to:
• Decide whether a signal represents an opportunity for someone
• Decide whether that opportunity is applicable to the individual
specifically
• Process feedback from action steps taken
7. Example of a creative mental
leap is from knowledge
about existing markets to
technology that could lead to
products/services that satisfy
that market
Creative mental leap could
be from knowledge about a
technology to a new market
that could benefit from its
introduction
Making these connection
between a new product and
a target market where it can
be introduced is aided by
superficial and structural
similarities
Superficial Similarities:
Basic elements of the
technology resemble the
basic elements of the market
Structural Similarities:
Underlying mechanisms of
the technology resemble the
underlying mechanisms of
the market
Think Structurally
The entrepreneurial challenge often lies in making creative
mental leap based on structural similarities
8. Engage in
Bricolage
• Entrepreneurs often lack of resources
• As a result they seek resources from others to provide the
‘slack’ necessary to experiment and generate
entrepreneurial opportunities, or engage in bricolage
• Bricolage:
• Entrepreneurs making do by applying combinations of
the resources at hand to new problems and
opportunities
• This involves taking existing resources and experimenting,
tinkering, repackaging and/or reframing them so they can
be used in a way for which they were not originally
designed or conceived
Engage in Bricolage
9. Entrepreneurs do not always think through a problem in a way that starts with desired
outcomes and focuses on the means to generate that outcome
Such process is referred to as causal process
Causal process:
A process that starts with a desired outcome and focuses on
the means to generate that outcome
Entrepreneur sometimes use an effectuation process
Effectuation:
A process that starts with what one has (who they are, what
they know, and whom they know) and selects among possible
outcomes
Effectuate
10. Effectuation helps entrepreneur think in an environment of high
uncertainty. Organization today operate in complex and dynamic
environment that are increasingly characterized by rapid, substantial, and
discontinuous change. Given the nature of this type of environment, most
managers of firms need to take on an entrepreneurial mind-set so that
their firms can successfully adapt to environmental changes
Entrepreneurial Mind-Set:
Involves the ability to rapidly sense, act, and mobilize,
even under uncertain conditions
Effectuate
11. • Describes the extent to which entrepreneurs are:
• Dynamic, flexible, self-regulating and engaged
in the process of generating multiple decision
frameworks
• Focused on sensing and processing changes in
their environments and then acting on them
• Metacognitive awareness:
• Ability to reflect upon,understand, and
control one’s thinking and learning
Cognitive adaptability
Cognitively Adapt
12. • We can achieve cognitive adaptability by asking a
series a questions that relate to:
Cognitively Adapt
Series of
Questions
Comprehension
Questions
Connection Task
Strategic Tasks
Reflection Tasks
13. • Comprehension questions
– Increase entrepreneurs’
understanding of the nature of the
environment
• Connection tasks
– Stimulate thinking about similarities
and differences of current situations
with situations previously faced and
solved
• Strategic tasks
– Identify strategies that are
appropriate for solving the problem
or pursuing the opportunity
14. • Reflection tasks
• Stimulate entrepreneurs to
think about their
understanding and feelings as
they progress through the
entrepreneurial process
15. Adapt to new
situations
Be creative
Communicate one’s
reasoning behind a
particular response
Entrepreneurs who are able to increase cognitive adaptability have an
improved ability to:
16. • Entrepreneurial intentions
– Motivational factors that influence individuals to
pursue entrepreneurial outcomes
• Entrepreneurial self-efficacy
– Conviction that one can successfully pursue
entrepreneurial outcomes
• Perceived desirability
– Degree to which a potential entrepreneurial
outcome is evaluated as favorable or unfavorable
The Intention to Act Entrepreneurially
18. • Education
– Facilitates integration and accumulation of
knowledge thus providing a larger opportunity set
– Casts a wider net for the discovery or generation of
potential opportunities
– Assists entrepreneurs in adapting to new situations
– Does not necessarily determine whether the
individual will create a new business
Education
20. • Work history
– Past work experience of an individual
Work History
21. • Role models: Individuals whose example an
entrepreneur can aspire to and copy
• Moral-support network: Individuals who give
psychological support to an entrepreneur
• Professional-support network: Individuals who help
the entrepreneur in business activities
Role Models and Support Systems
22. • Preserving nature, life support, and community in
the pursuit of perceived opportunities to:
– Bring future products, processes, and services into
existence for gain
• Can generate:
– Economic gains
– Environmental gains
– Social gains
Sustainable Entrepreneurship
23. Group Activity
• Select one organization that practices sustainable
entrepreneurship.
• Describe the product / service offered by the
organization.
• What makes you think the organization practices
sustainable entrepreneurship? Provide examples.
• What else could be done by the organization to
promote sustainable entrepreneurship?
