ESBM

LECTURE 1
Entrepreneurship:
Concept, Scope and
Importance

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WHAT IS ENTREPRENEURSHIP?

 Academic Definition (Stevenson & Jarillo)

 Entrepreneurship is the process by which individuals pursue
opportunities without regard to resources they currently control.
 Venture Capitalist (Fred Wilson)
 Entrepreneurship is the art of turning an idea into a business.
 Explanation of What Entrepreneurs Do
 Entrepreneurs assemble and then integrate all the resources needed
–the money, the people, the business model, the strategy—needed
to transform an invention or an idea into a viable business.

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 WHO ARE
 Entrepreneurs are:
ENTREPRENEURS?
 A person who starts and/or operates a business.
 Individuals who discover market needs and launch new firms to
meet those needs.
 Risk takers who provide an impetus
for change, innovation, and
progress.
 All active owner-managers
(founders and/or managers
of small businesses).

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WHY BECOME AN ENTREPRENEUR?

The three primary reasons that people become

entrepreneurs and start their own firms

Desire to be their own boss

Desire to pursue their

own ideas

Financial rewards

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CHARACTERISTICS OF SUCCESSFUL
ENTREPRENEURS
1 OF 3
Four Primary Characteristics

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CHARACTERISTICS OF SUCCESSFUL
ENTREPRENEURS
2 OF 3

 Passion for the Business

 The number one characteristic shared by successful
entrepreneurs is a passion for the business.
 This passion typically stems from the entrepreneur’s belief
that the business will positively influence people’s lives.
 Product/Customer Focus
 A second defining characteristic of successful
entrepreneurs is a product/customer focus.
 An entrepreneur’s keen focus on products and customers
typically stems from the fact that most entrepreneurs are,
at heart, craftspeople.

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CHARACTERISTICS OF SUCCESSFUL
ENTREPRENEURS
3 OF 3

 Tenacity Despite Failure

 Because entrepreneurs are typically trying something new,
the failure rate is naturally high.
 A defining characteristic for successful entrepreneurs’ is
their ability to persevere through setbacks and failures.
 Execution Intelligence
 The ability to fashion a solid business idea into a viable
business is a key characteristic of successful
entrepreneurs.

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TYPES OF START-UP FIRMS

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THE CONTRIBUTIONS OF SMALL
BUSINESS
 Small Businesses:
 Produce 14 times as many patents per employee than do large
companies, and are twice as likely to turn them into market
successes.
 Account for half of the private gross domestic product.
 Create more than 60% of net new jobs annually.
 Pay 44.3% of private payrolls.

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WHAT IS A SMALL BUSINESS?

 Criteria for Defining Smallness in Business

1. Financing supplied by one person or small group
2. Localized business operations (except marketing)
3. Business’ size small relative to larger competitors
4. Fewer than 100 employees

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1-2 ENTREPRENEURIAL INCENTIVES

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 WHY PEOPLE BECOME
ENTREPRENEURS

 Reluctant Entrepreneur
 A person who becomes an entrepreneur as a result of some severe
hardship.
 Refugee
 A person who becomes an entrepreneur to
escape an undesirable situation.

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THE MANY VARIETIES OF
ENTREPRENEURSHIP
 Founder (“Pure” Entrepreneur)
 A person who brings a new firm into existence.
 Administrative Entrepreneur
 An entrepreneur who overseas the operations of a ongoing business.
 Franchisee
 An entrepreneur whose power is limited by the contractual
relationship with a franchising organization.
 Entrepreneurial Team
 Two or more people who work together as entrepreneurs.

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SMALL BUSINESS GROWTH
POTENTIAL AND PROFITS
 High-Potential Venture (Gazelle)
 A small firm that has great prospects for growth.
 Attractive Small Firm
 A small firm that provides
substantial profits to its owner.
 Microbusiness
 A small firm that provides
minimal profits to its owner.
 Lifestyle Business
 A microbusiness that permits the owner to follow a desired pattern
of living.

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ARTISAN ENTREPRENEURS

 Artisan Entrepreneur
 A person with primarily technical skills and little business knowledge
who starts a business.
 Characteristics:
 Technical training
 Paternalistic approach
 Reluctance to delegate
 Few sources of capital
 Narrow view of strategy
 Personal sales effort
 Short planning horizon

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OPPORTUNISTIC
ENTREPRENEURS
 Opportunistic Entrepreneur
 A person with both sophisticated managerial skills and technical
knowledge who starts a business.
 Characteristics:
 Broad-based education
 Scientific approach to problems
 Willing to delegate
 Broad view of strategy
 Diversified marketing approach
 Longer planning horizon
 Sophisticated accounting
and financial control

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WOMEN ENTREPRENEURS

 More Women Entrepreneurs

 The number of women-owned firms grew nearly twice as fast as that
of all firms from 1997 to 2016.
 Females owned 30% of all businesses as of 2006.
 Women are moving into nontraditional industries.
 Problems Facing Female Entrepreneurs
 Newness of entrepreneurial role
 Lack of access to credit
 Lack of networking
connections
 Discrimination

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 THE WINNING HAND OF
ENTREPRENEURSHIP
Customer
Focus

Special Competitive Quality

Niche Advantages of Performance
Entrepreneurial
Firms

Integrity and
Innovation
Responsibility

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 ENTREPRENEURIAL CHARACTERISTICS
(TIMMONS AND SPINELLI)

Commitment and
Determination

Motivation to
Excel Leadership
Attitudes and
Behaviors of
Entrepreneurs
Creativity, Self-
Opportunity
Reliance, and
Obsession
Adaptability

Tolerance of Risk,
Ambiguity, and
Uncertainty

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ECONOMIC IMPACT OF
ENTREPRENEURIAL FIRMS

 Innovation
 Is the process of creating something new, which is central to
the entrepreneurial process.
 Small firms are twice as innovative per employee as large
firms.
 Job Creation
 In the past two decades, economic activity has moved in the
direction of smaller entrepreneurial firms, which may be due
to their unique ability to innovate and focus on specialized
tasks.

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ENTREPRENEURIAL FIRMS’ IMPACT
ON SOCIETY AND LARGER FIRMS

 Impact on Society
 The innovations of entrepreneurial firms have a dramatic
impact on society.
 Think of all the new products and services that make our
lives easier, enhance our productivity at work, improve
our health, and entertain us in new ways.
 Impact on Larger Firms
 Many entrepreneurial firms have built their entire business
models around producing products and services that help
larger firms become more efficient and effective.

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