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CHAPTER 7 NEW VENTURES

CHAPTER OUTLINE I. INDEPENDENT ENTREPRENEURS A. Why become an independent entrepreneur? 1. Entrepreneurs start their own firms because of the challenge, the profit potential, and the enormous satisfaction they hope lies ahead. 2. Entrepreneurship can also be great fun. 3. Limited opportunities elsewhere can inspire people to become independent entrepreneurs. 4. New immigrants may find existing paths to economic success closed to them. B. The role of the business environment 1. Business incubators are protected environments for new, small businesses. 2. The most amazing region for start-ups is Silicon Valley, in California, however other regions include Boston, North Carolina, and Austin and Seattle. C. What business should you start? 1 The idea a great product, an untapped market, and good timing are essential ingredients in any recipe for success. Personal inspiration is a great source of ideas. 2. The opportunity entrepreneurs spot, create, and exploit opportunities in a variety of ways. 3. The next frontiers where do they lie? Biotech, Eastern Europe, nanotechnology, oceanography etc. a. One fascinating opportunity for entrepreneurs is outer space. b. Other new ventures in space include satellites for automobile navigation, tracking trucking fleets, and monitoring flow rates and leaks in pipelines. c. Testing designer drugs in the near-zero-gravity environment. d. Using remote sensing to monitor global warming, spot fish concentrations, and detect crop stress for precision farming. 4. Side streets trial and error. D. What does it take to be successful? 1. Commitment and determination -- successful entrepreneurs are decisive, tenacious, disciplined, willing to sacrifice, and able to immerse themselves totally in their enterprises. 2. Leadership -- self-starters, team builders, superior learners, and teachers. 3. Opportunity obsession -- intimate knowledge of customers needs, market driven, and obsessed with value creation and enhancement. 4. Tolerance of risk, ambiguity, and uncertainty calculated risk takers, risk minimizers, tolerant of stress, able to resolve problems. 5. Creativity, self-reliance, and ability to adapt open-minded, restless with the status quo, able to learn quickly, highly adaptable, creative, skilled at conceptualizing, and attentive to details.

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6. Motivation to excel clear results orientation, set high but realistic goals, strong drive to achieve, know your own weaknesses and strengths, and focus on what can be done rather than on the reasons things cant be done. E. Planning 1. The business plan a. The first step is to do an opportunity analysis, which includes a description of the product or service, an assessment of the opportunity, an assessment of the entrepreneur, specification of activities and resources needed to translate your idea into a viable business, and your sources(s) of capital. b. A business plan is a formal planning step in starting a new business that focuses on the entire venture and describes all the elements involved in starting it. 2. Key planning elements a. People should be energetic and have skills and expertise directly relevant to the venture. b. Opportunity should allow a competitive advantage that can be defended. c. Identify current competitors and their strengths and weaknesses, predict how they will respond to the new venture, indicate how the new venture will respond to the competitors responses, identify future potential competitors, and consider how to collaborate with actual or potential competitors. d. Context should be favorable, regulatory and contain economic perspectives. e. Risk must be understood and addressed as fully as possible. 3. Selling the plan a. The goal is to get investors to agree on and back up the written plan. b. The plan should be marketed in order to obtain the necessary funding for the business. F. Nonfinancial Resources 1. 2. 3. 4. Networks Top management teams Advisory boards Partners

G. Entrepreneurial hazards 1. Mortality a. A long-term measure of an entrepreneurs success is the fate of the venture after the founders death. b. Organization can survive if the company has gone public, or if the entrepreneur has planned an orderly family succession. 2. Inadequate delegation This managerial flaw leads to lose opportunities and failure of the organization and its employees to develop. 3. Misuse of funds a. Entrepreneurs can apply financial resources to the wrong uses. b. Entrepreneurs may fail to maintain inadequate control over their resources.

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4. Poor planning and controls Inadequate record keeping, poor control measures, and improper cash management methods may lead to business failure. 5. Global start-ups a. It is a new venture that is international from the very beginning. b. Several questions must be answered to determine whether you should begin with a domestic or global outlook. 1. Where are the best people? 2. Where is the financing easiest and most suitable? 3. Where are the targeted customers? 4. When global operators learn about your venture, will they go head-to-head with your? II. SPIN-OFFS A. Spin-offs occur frequently and may take place with the original employers approval. Spinoffs occurs when the established company senses an opportunity but does not pursue the opportunity with internal resources B. The spin-off process 1. Early stage spin-offs occur most often in the early stages of the product life cycle as real demand often outstrips supply, promising excellent opportunities. 2. Industry types new industries and mature industries that are fragmented or undergoing change and declining industries also generate significant spin-off activity. 3. Types of industries that cause spin-offs: a. Fragmented industry has few barriers to entry and therefore has many competitors. b. Mature industry undergoing change, new competitors may have an advantage over established competitors. c. Declining industries are established industries frustrated by stagnant conditions in their industry, often seek opportunity in new industries. 4. Attracting management teams and capital Attracting capital is the greatest challenge for spin-off owners. C. Change in industry structure Once the entrepreneur builds a management team and obtains capital, the spin-off faces the hazards of competition and change. III. INTRAPRENEURSHIP A. Building support for your idea capitalize on a market opportunity. 1. The first step involves clearing the investment with your immediate boss or bosses. You explain the idea and seek approval to look for wider support. 2. Making cheerleaders people who will support the manager before formal approval from higher levels. 3. Horse-trading begins you offer promises of payoffs from the project in return for support, time, money, and other resources that peers and others contribute. 4. Finally, getting the blessing of relevant higher-level officials.

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1. Skunkworks are project teams designated to produce a new product. 2. Bootlegging refers to informal efforts by managers and employees to create new products and new processes. C. Organizing new corporate ventures 1. For large-scale innovation, strategic alliancescooperation among different organizationscan be a useful route. D. Hazards in intrapreneurship 1. The most dangerous risk is the risk of over-reliance on a single project. 2. Organizations also cause failure when they spread their intrapreneurial efforts over too many projects. E. Entrepreneurial orientation 1. Entrepreneurial orientation is the tendency of an organization to engage in activities designed to identify and capitalize successfully on opportunities to launch new ventures by entering new or established markets with new or existing goods or services. 2. Entrepreneurial orientation is determined by five tendencies: a. b. c. d. e. allow independent action innovate take risks be proactive be competitively aggressive.

F. 3M: A prototype LEARNING OBJECTIVES After studying Chapter 7 you will know: 1. The activities of entrepreneurship. 2. How to find and evaluate ideas for new business ventures. 3. What it takes to be a successful entrepreneur. 4. How to write a great business plan. 5. The important management skills, resources, and strategies needed to avoid failure and achieve success. 6. Key criteria for deciding whether your start-up should be global from the outset. 7. The process of spinning off new ventures. 8. How to foster intrapreneurship and an entrepreneurial orientation in large companies. DISCUSSION QUESTIONS FOR SETTING THE STAGE 1. What are the traits of the successful entrepreneur, Ron Vos? Some of the successful traits of Ron Vos include: idea generator, risk taker, and a high achiever. His motives include the challenge of starting his own firm, the profit potential, and the enormous satisfaction that hope lies ahead. Entrepreneurship can also be great fun. To Ron this was a real challenge; he had an idea and was willing to pursue it by requiring very little start-up capital. The probability of success was a long shot; however, his business plans to market across the country and utilize college students required very little investment. There

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was a tremendous incentive for students to market this opportunity and be able to capitalize by the non-financial rewards that were being offered. This was attractive to motivate college students because they could identify with the music and liked the opportunity to have backstage exposure to musical groups. 2. Distinguish intrapreneurship from entrepreneurial and which one was Ron? An intrapreneur is an idea generator and will continue with a firm as it begins to produce and market a product or service. In working for a company and creating a new product or business venture, intrapreneurs have to be consistent with the firms mission to pursue and implement the plan. A step in building support for a project idea involves clearing the investment with immediate boss or bosses. At this state, explain the idea and seek approval to look for wider support. Higher executives often want evidence that peers back the project before committing to it. This involves making cheerleaderspeople who will support the manager before approval from higher levels. Next, horse-trading begins. Offer promises of payoffs from the project in return for support, time, money, and other resources that peers and others contribute. Getting the blessing of relevant higher-level officials. This usually involves a formal presentation. Guaranteeing or granting some reassurance the projects will have technical and political feasibility. Entrepreneurial orientation is determined by five tendencies: to allow independent action, innovate, take risks, be proactive, and be competitively aggressive. Independent action is to grant to individuals and teams the freedom to exercise their creativity. Innovativeness requires the firm to support new ideas, experimentation, and creative processes that can lead to new products or processes. Risk taking comes from a willingness to commit significant resources, and perhaps borrow heavily, to venture into the unknown. Proactive is to act in anticipation of future problems and opportunities. Competitive aggressiveness is the tendency of the firm to directly and intensely challenge competitors in order to achieve entry or improve its position. Ron Vos displays entrepreneurial traits by starting his own business and taking the associated risk. He had an idea and was competitively aggressive in taking this concept into fruition and has enjoyed the rewards of becoming a successful business entrepreneur. SUGGESTED RESPONSES TO THE END-OF-CHAPTER DISCUSSION QUESTIONS 1. What is your level of personal interest in becoming an independent entrepreneur? Why did you rate yourself as you did? Each student should be instructed to rate his or her level of interest in becoming an independent entrepreneur on either a high-medium-low scale or on a 1 to 10 scale. Then, they should each list three reasons for their rating. 2. How would you assess your capability of becoming a successful entrepreneur? What are your strengths and weaknesses? How would you increase your capability? Refer the students to the section entitled, What Does it Take to be Successful? and have them rate themselves on each of the six characteristics. (High-medium-low scale should be sufficient although it could be done on a numerical basis.)

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Have the students make a listing of their strengths and weaknesses and rank them in order of importance relative to starting a business. Then, ask them to take their two top weaknesses and have them identify the training that would improve them in this area.

3. Which of the four entrepreneurial personalities describes you most accurately? Which least? What are the implications for your entrepreneurial strategies? 1. 2. 3. 4. Personal achievers Empathic supersalespeople Real managers Expert idea generators

Some of the implications for each type are: 1. Students possessing the specific qualities of one of the personalities may not have considered entrepreneurial outlets for their talents until now. 2. Students considering entrepreneurial ventures may realize they lack some of the characteristics of the most prevalent personality and 1) abandon the venture, 2) work to gain or improve upon those specific deficiencies, or 3) ignore the somewhat different profile all together. 3. Students looking for partners for a venture may use the profiles to decide what type of personality traits to look for in a partner. 4. Identify and discuss new ventures that fit each of the four cells in the entrepreneurial strategy matrix. High innovation/Low risk new products, without competition, that are backed by large firms with an abundance of loss-absorbing capital or new products that are relatively inexpensive to make, such as Leggo blocks. High innovation/High risk new products produced at great expense, such as automobiles and drugs. Low innovation/High risk ventures in well-established industries, such as restaurants, that require a large initial outlay. 5. Brainstorm a list of ideas for new business ventures. Where did the ideas come from? Which ones are most and least viable, and why? Divide the class into a number of small groups to facilitate the brainstorming process. The text suggests that opportunities arise from technological discoveries, demographic changes, life-style and taste changes, etc., and business probably generates many of their ideas in this manner. Students without business experience will generally indicate that their ideas arose from a personal interest (collecting baseball memorabilia) or a problem they have experienced with a product (not being able to find their keys) or a service (not being able to pick up groceries). In order to help the students determine which ideas are the most and least viable, refer them to Table 7.4 and have them rate the ideas against the first two items: the "fit with your skills and experience and the fit with the market. 6. Identify some businesses that have recently opened in your area. What are their chances of survival, and why? How would you advise the owners or managers of those businesses to enhance their success?

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Most students will be able to identify one or more retail businesses that have recently opened in the area. They will recognize that their chances for survival will depend on a number of factors including the nature of the business, the target market relative to the local population, its location, and its ability to attract walk-in trade. By contrast, students will find it more difficult to evaluate the likely success of nonretail businesses (manufacturing or wholesaling operations) since they normally depend on attracting business from a far wider geographic market for their success. Location and local business are far less important. Among the steps that students might suggest a recently opened (retail) business could take to enhance the likelihood of success would be advertising in the local press, special promotions and discounts, direct mailings to potential customers, etc. Signs and billboards might also help as might advertise on radio or television. 7. Assume you are writing a story about what its really like to be an entrepreneur. To whom would you talk, and what questions would you ask? The ideal person to talk to would be an individual who started a business at about the same age as the students with very little money and who had experienced a number of ups and downs before building a very successful business. Among the questions one might ask are: What motivated you to start the business? Where did you get the idea? What were the major problems you experienced in starting up the business? Which individuals were most helpful in the early stages of the business? What, in your opinion, are the keys to success?

8. Conduct interviews with two entrepreneurs, asking whatever questions most interest you. Share your findings with the class. How do the interviews differ from one another, and what do they have in common? Many students may not be personally familiar with any entrepreneurs, and thus the simplest way of handling this question may be to invite two local entrepreneurs to the class and have the students ask their questions in class. 9. Read Table 7.1, some myths about entrepreneurs. Which myths did you believe? Do you still? Why or why not? Interview two entrepreneurs by asking each myth as a true-orfalse question. Then ask students to elaborate on their answers. What did they say? What do you conclude from their answers? This exercise could be handled by handing out a sheet listing the nine myths and asking students whether they agree or disagree with the statements. One might also ask students whether or not they think myth #2 is, in fact, a myth. Many will argue that it is a true statement. Anyone can start a business. If one considers the incorporation of a company as its starting point, then one can start numerous businesses in a single hour. The problem, as pointed out, is surviving. The vast majority of new businesses are out of business within a year.

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10. With your classmates, form small teams of skunkworks. Your task is to identify an innovation that you think would benefit your school, college, or university, and to outline an action plan for bringing your idea to reality. The term skunkworks is used to describe a project team designated to produce a new product within a specified time frame. This exercise will test the students creativity, and it may be useful to have them walk around the campus as a group looking at areas and activities that might be improved or problems that might be resolved. Some topics that might be raised (since they cause problems on most campuses) are registration, advisement, job hunting, etc. Once the group has identified its new product, it should then specify what steps will be taken, by what date they will be taken, and who will be responsible for ensuring that the steps are taken by the specified date. 11. Identify some bootlegging activities, in which you have been engaged or have seen others engage. What resulted from the activities? Were the efforts successful? Why or why not? Bootlegging, in this context, refers to the informal efforts on the part of managers and workers to create new products and new processes (outside their formal activities). It is likely that only those students who have worked in companies or other formal organizations will relate to this questionand not all of these will have been involved in such efforts. It may be more effective, therefore, to have a small number of students present their own personal experiences or to invite a local business person, with considerable experience in bootlegging to visit the class and discuss the experience. 12. Identify a business that recently folded. What were the causes of the failure? What could have been done differently to prevent a failure? This exercise can be approached in two ways. The first involves a search of publications (such as Business Week) and the local presses to identify a company that folded and see what reasons were stated in the press for its demise. The other way is to identify a retail store that used to be in business, track down its owner, and interview that individual to determine why it folded. Students will find that businesses that failed during the first year of operations do so usually for lack of financial resources and an inability to develop sales volume. Poor management is often stated as a reason for failure in more mature companies as is the strength of the competition. SUGGESTED RESPONSES TO THE CONCLUDING CASE QUESTIONS 1. How many ideas for new businesses can you and your classmates generate? Student responses to business ideas will vary from industry to industry, which can be analysts to production, wholesaling, retailing, and the service sector. Many entrepreneurs and observers say that in contemplating a business one must start with a great idea. A great product, an untapped market, and good timing are essential ingredients in any recipe for success. Some ideas could include Sound MicroSystems, Chemdex, ZEFER, LocalRewards.com, or eBricks.com. 2. Which are the best ideas? How did you assess their value?

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The best ideas must be assessed and evaluated to develop and implement the right business idea. The following characteristics contribute to entrepreneurs success: (1) commitment and determination, (2) leadership, (3) opportunity obsession, (4) tolerance of risk, ambiguity, and uncertainty, (5) creativity, self-reliance, and ability to adapt, and (6) motivation to excel. New research suggests that there are four different personality profiles. 1. Personal achievers are the classic entrepreneurs who enjoy the hard work required growing a company. 2. Empathic supersalespeople enjoy social interaction, are good listeners, are warm toward others, and use persuasion to get things done. 3. Real managers want an organization that is big enough to really manage. 4. Expert idea generators are inventors who go into business for themselves. In assessing your best ideas, it would be depicting ventures along two dimensions: innovation and risk. The new venture may involve high or low levels of innovation or the creation of something new and different. It can also be characterized by low or high risk. Risk refers primarily to the probability of major financial loss. This matrix helps entrepreneurs think about their ventures and decide whether they suit their particular objectives. It helps identify effective and ineffective strategies. Successful companies do not always require a cutting-edge technology or an exciting new product. Even companies offering the most mundane products can gain competitive advantage by doing basic things differently from and better than competitors. 3. Choose one or more ideas and develop the outline of a business plan. An entrepreneur would develop a business plan for a restaurant and would include the following steps to present investors, commercial bank or small business administration. The first step would be to do an opportunity analysis, which includes a description of the product or service, an assessment of the opportunity, an assessment of the entrepreneur, a specification of activities and resources needed to translate the idea into a viable business, and the sources of capital. A restaurant must go in an area having a unique product or service to stimulate product demand. The restaurant market must not be saturated in a growth area and have a good location. The sources of capital will require an equity investment by the owner. Leverage will be utilized through the use of debt capital. The entrepreneur must present this business plan to a commercial bank and present pro forma financial statements. This would include a balance sheet and income statement for the first three years of operation. The financial statements must reflect growth and the ability of the business to pay back investors and service the debt capital to the commercial bank. The second step would include describing all the elements involved in starting the new venture. A market plan incorporating marketing research, market analysis, and potential market share must be developed. A financial analysis incorporating the financial mix launch a successful small business is required. The future direction of a restaurant must be incorporated demonstrating a growth strategy the business will undertake during the first few years of operation. The next step is the ability to present the business plan to would be investors and/or a commercial if debt capital must be utilized. A step in the business plan would include non-financial resources. This would include the people that will be a part of the management team and operative employees. Also included would be the name of the business form of ownership and control or the restaurant. The next step would include entrepreneurial hazards, which would entail the risk associated in going into this type of business. The risk should include the discussion of start-up capital, working capital, and how long term finance will be arranged for expansion. Other hazards

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would include a SWOT analysis highlighting external threats and internal weaknesses of the restaurant. An outline detailing each step would be a part of the business plan that should be done by the entrepreneur.

4. What do you think of the philosophy at Suppliermarket.com? How does it relate to the chapter? What will be the underpinnings of your business? Suppliermarket.com offers tremendous potential and promise for many business customers. Their opportunities provide a one-stop shopping for industrial buyers. The buyers post requests for price quotes on materials and suppliers register at the site. Suitable matches are made between suppliers and prospective buyers, and online bidding occurs. Buyers can find the best deal, suppliers gain access to valuable customers, and Suppliermarket.com earns a percentage of each sale. The foundation or support of this small business venture is derived from the idea, innovativeness and uniqueness of its operations. The underpinnings will depend upon the management skills, startup capital, and the marketing strategies deployed in launching this business. The entrepreneurship entails risk, however the returns will be tremendous assuming the business meets the aforementioned criteria of launching a successful small business operation. OBJECTIVES AND TEACHING TIPS FOR THE EXPERIENTIAL EXERCISES 7.1 TAKE AN ENTREPRENEUR TO DINNER Objectives 1. To get to understand what an entrepreneur does, how she or he got started, and what it took to succeed. 2. To interview a particular entrepreneur in depth about her or his career and experiences. 3. To acquire a feeling for whether you might find an entrepreneurial career rewarding. Teaching Tips 1. It may be easier to invite an entrepreneur to visit the classroom for the interview than having each student attempt to identify an entrepreneur. If you do, it may be useful to have the students prepare their questions in advance so that you can provide a degree of structure to the interview. 2. Ask the students prior to the interview to rate themselves (on a 1 to 10 scale) as to whether or not they feel they might find an entrepreneurial career rewarding. Ask the question again following the interview to determine if any students scores changed dramatically. If it did, in which direction? And why? 7.2 STARTING A NEW BUSINESS Objectives 1. To introduce you to the complexities of going into business for yourself. 2. To provide hands-on experience in making new-business decisions. Teaching Tips

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1. Designate a general location for each of the five businesses. For example, the XYZ shopping center for the submarine shop or the city of ABC for the chimney sweep services. 2. At the end of the exercise, ask each team to evaluate what they feel is the likelihood that the business will be a success. LECTURETTE 7.1 THE ENTREPRENEUR ENTREPRENEURSHIP DEFINED 1. The concept of corporate entrepreneurship is one of the hottest topics in todays management literature. Because the task of entrepreneurship is so complex, a simple definition of it is difficult to articulate. 2. Originally, entrepreneurship was defined in such economic terms as the buying, selling, and bringing together of the factors of production. 3. One does not have to sell or buy or bring together the factors of production to be an entrepreneur. More recently, entrepreneurship has been associated with the creation of new business enterprises. 4. The modern definition holds entrepreneurship to be a mental propensity to identify opportunities and threats that lie in the future and to take action now to exploit those opportunities and defend against the threats. 5. The entrepreneur is innovatively future-oriented toward market opportunities and willing to take chances to exploit those market opportunities. 6. Thus, the modern manager perceives entrepreneurship to be both a property and a process associated with innovative enterprises. ENTREPRENEURSHIP AS A PROPERTY 1. Entrepreneurship can be viewed, as a property possessed by the entrepreneur. 2. Some of the psychological properties that tend to be shared by entrepreneurs are as follows: Entrepreneurs have a future-oriented attitude, a way of examining events and cause-and-effect relationships in the business environment in order to identify opportunities that can be exploited. Entrepreneurs have an others-oriented focus on the needs of others in order to identify needsatisfying opportunities to be exploited. Entrepreneurs have a change-oriented focus and understand that success lies in change. Entrepreneurs have an action-oriented focus, realizing that recognizing opportunity is not enough; action must be taken now to exploit opportunities. Entrepreneurs have a risk-taking propensity that allows them to take appropriate action to exploit opportunities, even when risk is involved. There is always an element of risk in business, and the greatest opportunities often demand the greatest risktaking. Entrepreneurs have a high tolerance for ambiguity. Taking innovative, risky action in the marketplace requires making decisions with less-than-clear information. In order to make such risky decisions; the entrepreneur needs to cultivate a high tolerance for ambiguity. Entrepreneurs have a propensity toward Type A behavior they must work fast, think fast, demand high quality work, and expect the same from others. Entrepreneurs have an internal locus of control believing that it is their own behavior and not luck or fate that controls their lives. Entrepreneurs have high need-achievement. 3. Some of the surveyed characteristics of entrepreneurs are as follows: Entrepreneurs tend to be mavericks and dreamers. Entrepreneurs tend to be uncompromising, insisting on doing things their way. Entrepreneurs are more apt to be expelled from college, to be fired often, and to jump from job to job.

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Entrepreneurs have worked and have been self-supporting since childhood and tend to work very long hours. Entrepreneurs tend not to be joiners or team players.

ENTREPRENEURSHIP AS A PROCESS 1. Entrepreneurship may be seen as a process of change in three basic stages. Recognition of some change in the marketplace. The change may be in buyer behavior, buyer need, buyer ability to pay, a technological breakthrough, or some major event, such as war, oil embargo, material shortage, etc. For this stage, the entrepreneur must be alert to a change that he or she can convert into an opportunity. Perception of the idea of how this change can be successfully exploited by a product change, a unique service, a bitter package, a bitter delivery, etc. Action the need to get out of the planning and R&D stages and into the marketplace before someone else beats you to it or before the opportunity goes away.1 LECTURETTE 7.2 INTRAPRENEURSHIP IN SMALL BUSINESSES CONCEPT OF INTRAPRENEURSHIP 1. It is difficult to agree on a generally accepted definition of entrepreneurship. 2. New definitions of the concept have emerged, introducing new aspects such as risk taking and the creation of independent units. 3. Entrepreneurship necessarily ends when the venture creation stage is complete. 4. Entrepreneurship as a source of innovation is not the exclusive province of new venture creation. 5. What essentially distinguishes intrapreneurhship from entrepreneurship in most works, if not all, is first and foremost the context in which the entrepreneurial act takes place. Entrepreneurs innovate for themselves, while intrapreneurs innovate on behalf of an existing organization. 6. Despite the lack of a clearly accepted definition of the term, an analysis of the literature on intrapreneurship reveals two main trends in the research. 7. The first of these trends is concerned principally with the individuals who implement innovations in the firms that employ them. 8. The second main trend identified in the intrapreneurship literature is concerned with the intrapreneurial process, the factors leading to its emergence, and the conditions required. MOTIVATORS AND FACTORS GOVERNING EMERGENCE 1. 2. 3. 4. Simplicity of organizational structures. Easy/difficult to identify intrapreneurs. Ability of owner-manager to trust employees and delegate. The right of employees to make mistakes

MOTIVATORS IDENTIFIED DIVIDED INTO FOUR MAJOR CATEGORIES 1. Motivators related to the demands and constraints of the external environment (especially the competition). 2. Motivators related to the perception of an individual as an intrapreneur and that individuals availability.
1

Adapted from T. Begley and D. Boyd, Psychological Characteristics Associated with Performance in Entrepreneurial Firms and Smaller Businesses, Journal of Business Venturing, 2, 1987, 79-93: E. Graham, The Entrepreneurial Mystique, The Wall Street Journal, May 30, 1985, 1, 4, 6-7; J Higgins, The Management Challenge (New York; Macmillian Publishing Company, 1991), 732-736; J. Stoner and R. Freeman, Management, 5th ed. (Englewood Cliffs, NJ: Prentice Hall, 1992), 164170; A. Welsh and J. White, Converging Characteristics of Entrepreneurs, in K. Vesper, ed., Frontiers of Entrepreneurship Research (Wellesley, MA: Babson Center for Entrepreneurial Studies, 1981(, 504-515.

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3. Motivators related to the firms growth objectives. 4. Motivators related to the management or production problems encountered in the internal environment. SIX POSTULATES SUPPORTING THE NEED TO RECONCILE THE CONCEPTS OF INTRAPRENEURSHIP AND SMALL BUSINESS 1. Intrapreneurial characteristics are not the exclusive property of employees of large firms. 2. Intrapreneurs can be first-class allies for owner-managers of growing small businesses. 3. The fact that intrapreneurs are absent from the small business literature does not mean that they have no fight to be there. 4. The loss of an intrapreneur will have more serious consequences for small firms than for large firms. 5. Small firms are potential incubators for intrapreneurs. 6. Small business provides a favorable environment for innovation.2 SUGGESTED READINGS 1. INVESTIGATING THE EXISTENCE OF THE LEAD ENTREPRENEUR by Michael D. Ensley, James W. Carland, and JoAnn Carland, Journal of Small Business Management, October 2000, Vol. 38, No. 4. What sets apart lead entrepreneurs from the other types of individuals who launch successful small businesses?

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This research involves an attempt to verify the existence of lead entrepreneurs or alpha heffalumps and to examine their impact on venture performance, if they do exist. The authors used two samples drawn from owner/managers of the inc. 500 list of the fastest growing firms in the United States. Respondents completed the Datz/Herron Skill Typology and the Carland Entrepreneurship Index (Carland, Carland, and Hoy 1992), modified and expanded for the purposes of this research. The results empirically confirmed the existence of lead entrepreneurs among macro-entrepreneurial firms and suggested that the strength of their strategic or entrepreneurial visionthe ability to see what is not thereand their selfconfidence set them apart from other entrepreneurial team members. 2. JAPANESE SEMS AND INDEPENDENCE: A DIFFERENT VIEW by David Evans, Journal of Small Business Management, October 1999, Vol. 37, No. 4. What are the unique advantages of Japanese small businesses when compared to U.S. small businesses? The contention is that the strong inclination of Japanese firms to for linkages has resulted in a unique small business sector, which plays a more prevalent part and employs a much larger percentage of the workforce that in the United States. Such linkages are consolidated by means of business alliances, notable among which are diversified enterprise groups, groupings of small firms in similar business lines, cooperatives of small firms, and subcontracting arrangements. 3. HOW TO PLAN AS A SMALL SCALE BUSINESS OWNER: PSYCHOLOGICAL PROCESS CHARACTERISTICS OF ACTION STRATEGIES AND SUCCESS by Michael Frese, Macro van Gelderen, and Michael Ombach, Journal of Small Business Management, April 2000, Vol. 38, No. 2.

Carrier, Camille, Entrepreneurship; Small Business, Entrepreneurship: Theory & Practice, Fall 1996, Vol. 21, Issue 1, p 5, 16

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Why is a proactive strategy recommended over a reactive strategy for business planning of a small business? A theoretical analysis of individual-level planning and action strategies used by small business owners/managers distinguishes five different strategic approaches: Complete (top-down) Planning, Critical Point, Opportunistic, Reactive, and Routine/Habit. Research on 80 owners of small start-up firms in the Netherlands showed that, as hypothesized, a Reactive Strategy was negatively related to firm success, while a Critical Point Strategy was positively related. The combination of Critical Point and Opportunistic strategies appeared most successful and the combination of Opportunistic and Reactive was found to be least successful.

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