Approaches to Entrepreneurship

Schools of entrepreneurial Thought Approach Process Approaches

Entrepreneurial Schools-of-Thought Approach

Macro View

Environmental School of Thought Financial School of Thought Displacement School of Thought Entrepreneurial Trait School of Thought (People School) Venture Opportunity School of Thought Strategic Formulation School of Thought

Micro View

Macro View
(External locus of control)

The Environmental School of Thought The Financial/Capital School of Thought The Displacement School of Thought
1. Political Displacement 2. Cultural Displacement 3. Economic Displacement

The Micro View

(internal locus of control)

The Entrepreneurial Trait School of Thought The Venture Opportunity School of Thought The Strategic Formulation School of Thought

Ronstadt Views Strategic Formulation as a Leveraging of Unique Elements

Unique Markets: mountain gap strategies Unique People: great chef strategies Unique Products: better widget strategies Unique Resources: water well strategies

Process Approaches
Integrative Approach Entrepreneurial Assessment Approach Multidimensional Approach

An Integrative Model of Entrepreneurial Inputs and Outcomes

Inputs
Environmental opportunities Entrepreneurial individuals An organizational context Unique business concepts Resources The Entrepreneurial Process Identify Opportunity Assess and acquire necessary resources Implementation

Outcomes
Entrepreneurial Intensity Number of events (and) degree of entrepreneurship
Innovation Proactiveness

Risk taking

A going venture Value creation New products, services Processes Technologies Profits and/or personal benefits Employment, asset, and revenue growth

Entrepreneurial Assessment Approach

Type of Venture Qualitative, Quantitative, Strategic, and Ethical ASSESSMENTS

Type of Entrepreneur

Type of Environment

Do the Results of the Assessments Make Sense Given: Stage of Entrepreneurial Career

Prior Experience and Education

Early Career

Mid Career

Late Career

Multidimensional Approach
Individual(s)

Environment

Organization

Process

Entrepreneurial Management
The underlying theme of this book is the discipline of entrepreneurial management:
Entrepreneurship is based upon the same principles, whether the entrepreneur is an existing large institution or an individual starting his or her new venture singlehanded. It makes little or no difference whether the entrepreneur is a business or a nonbusiness public-service organization, nor even whether the entrepreneur is a governmental or nongovernmental institution. The rules are pretty much the same, the things that work and those that dont are pretty much the same, and so are the kinds of innovations and where to look for them. In every case there is a discipline we might call Entrepreneurial Management.

What is an entrepreneur?
Two broad schools of thought
Attributes
An entrepreneur is someone who possesses attribute X

Behavioral/functional
An entrepreneur is someone who does Y

So what are X and Y?

Attribute Approach
Psychological Traits
Intelligence, extraversion, locus of control, need for achievement, social competence, creativity, risktaking

Demographics
Social networks, age, marital status, parental influences, work experience, education, income level, social status

Are these attributes necessary?

Founding vs. Success

Behavioral/Functional Approach
Cantillon Knight

Schumpeter
Kirzner Gartner Stevenson Phelan

One who works for uncertain wages One who buys factors at certain prices and sells them in the future at uncertain prices (1921) One who creates new products, processes, inputs, markets, or organizations (1911) One who is alert to profit opportunities One who creates a new venture One who pursues opportunities regardless of resources currently controlled One who seeks to earn entrepreneurial profits

Exhibit 1.2

The Entrepreneurial Mind in Action

Successful entrepreneurs have a wide range of personality types
Research has considered genetics, family, education, career experience, etc., but no psychological model of entrepreneurship has been supported.

Acquired skills are more important that specific inherent traits

Converging on the Entrepreneurial Mind

Desirable and Acquirable Attitudes, Habits and Behaviors Six Dominant Themes
1. 2. 3. 4. 5. 6. Commitment and Determination Leadership Opportunity Obsession Tolerance of Risk, Ambiguity and Uncertainty Creativity, Self-Reliance, and Adaptability Motivation to Excel