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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 1
Mohammad nizamuddin bin abdul rahim
Fakulti keusahawanan & perniagaan
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 2
W hat is entrepreneurship?
Entrepreneurship
Entrepreneur was an individual commissioned to undertake a particular
commercial project by someone with money to invest.
Origin lies in 17th century France :
Entrepreneurial Entrepreneurial process
Concepts derived:
W hat the entrepreneur
does
Is an adjective describing
how the entrepreneurundertakes what they do – particular style to whatentrepreneurs do.
In which the
entrepreneur engages isthe means throughwhich new value iscreated as a result of theproject – entrepreneurial venture
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 3
W hat is entrepreneurship?
Entrepreneurs:
Has economic & social dimension
Is an individual who lives & functions within a social setting
Are not characterized by every action they take, but by a
particular set of actions aimed at the creation of new wealth
with their ventures.
W ealth creation
is a generalmanagerialactivity
Characterized by
a particularapproach towealth creation
Can be considered as:
A manager
undertaking an
activity – i.e. in termsof the particular tasks they perform & theway they undertakethem
An agent of economic
change – i.e. in terms
of the effects they have on economicsystems & the changesthey drive
An individual – i.e. in
terms of their
psychology, personality & personalcharacteristics
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 4
The entrepreneur perspectives
The entrepreneur’s tasks
• Owning organizations
• founding new
organizations• bringing innovations to
market• identification of market
opportunity • application of expertise• provision of leadership• the entrepreneur as
manager
The role of entrepreneur The entrepreneur as aperson
• Combination of
economic factors
• providing marketefficiency
• accepting risk • maximizing investors’
returns• processing of market
information
• The ‘great person’
• social misfit
• personality type• personality trait• social development
approaches• cognitive approaches
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 5
The entrepreneur perspectives
The entrepreneur’s tasks
• Owning organizations
• founding new
organizations• bringing innovations to
market• identification of market
opportunity • application of expertise• provision of leadership• the entrepreneur as
manager
The role of entrepreneur The entrepreneur as aperson
Ownership lies with those who invest in the business & own its shares – the principals – whereas the actualrunning is delegated to professional managers or agents.
Entrepreneur owns & manage their own business – dual
roles.
BUT!!! many people are also recognized as entrepreneur
even if they do not own the venture they are managing.
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 6
The entrepreneur perspectives
The entrepreneur’s tasks
• Owning organizations• Founding new
organizations• bringing innovations to
market• identification of market
opportunity • application of expertise• provision of leadership• the entrepreneur as
manager
The role of entrepreneur The entrepreneur as aperson
General perception – entrepreneur as someone who has
established a new business organization.
Entrepreneur is recognized as the person who undertakesthe task of bringing together the different elements of theorganization (people, property, productive resources, etc.)& giving them a separate legal identity.
BUT!!! They are also entrepreneurs who ‘buy into’
organizations, develop them, or absorb them into existingorganizations.
Entrepreneurs make major changes in their
organizational world.
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The Nature of Entrepreneurship
week 01
Page 7
The entrepreneur perspectives
The entrepreneur’s tasks
• Owning organizations
• Founding new
organizations• bringing innovations to
market• identification of market
opportunity • application of expertise• provision of leadership• the entrepreneur as
manager
The role of entrepreneur The entrepreneur as aperson
Innovation is a crucial part of the entrepreneurial process.
Innovation as fundamental to the entrepreneurial process
of wealth creation.
Innovations encompasses any new way of doing
something so that value is created.
It can mean a new product or service, and can also include
new way of delivering an existing product or service, new
methods of informing the customer about a product & promoting it to them, new ways of organizing the company,or even new approaches to managing relationship with otherorganizations.
Innovation is doing something in a way which is new, different & better.
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The Nature of Entrepreneurship
week 01
Page 8
The entrepreneur perspectives
The entrepreneur’s tasks
• Owning organizations
• Founding new
organizations• bringing innovations to
market• identification of
market opportunity• application of expertise• provision of leadership• the entrepreneur as
manager
The role of entrepreneur The entrepreneur as aperson
An opportunity is a gap in a market where the potential
exists to do something better & thereby to create value.
If they are to be exploited, they must actively sought out.
Entrepreneurs must constantly scan the business
landscape watching for the gaps left by existing players inthe marketplace.
Having identified them, the entrepreneur must pursue them
with a suitable innovation.
The real value is created when that opportunity is exploited
by something new which fills the market gap.
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The Nature of Entrepreneurship
week 01
Page 9
The entrepreneur perspectives
The entrepreneur’s tasks
• Owning organizations
• Founding new
organizations• bringing innovations to
market• identification of market
opportunity • application of expertise• provision of leadership• the entrepreneur as
manager
The role of entrepreneur The entrepreneur as aperson
Entrepreneur are characterized by the way they bring
some sort of expertise to their jobs.
They have a special ability in deciding how to allocate
scarce resources in situation where information is limited.
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The Nature of Entrepreneurship
week 01
Page 10
The entrepreneur perspectives
The entrepreneur’s tasks
• Owning organizations
• Founding new
organizations• bringing innovations to
market• identification of market
opportunity • application of expertise• provision of leadership• the entrepreneur as
manager
The role of entrepreneur The entrepreneur as aperson
One special skill that entrepreneurs would seem to
contribute to their ventures is leadership.
In order to drive their innovation to market, they have to
lead other people, both from within their organization & from people outside such as investors, customers & suppliers..
Leadership is an important factor in entrepreneurial
success & it is often a skill that is exhibited well by theentrepreneur.
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 11
The entrepreneur perspectives
The entrepreneur’s tasks
• Owning organizations
• Founding new
organizations• bringing innovations to
market• identification of market
opportunity • application of expertise• provision of leadership• the entrepreneur as
manager
The role of entrepreneur The entrepreneur as aperson
It would seem that entrepreneurs take on no task that is
fundamentally different from the tasks performed by
ordinary managers at some time or other.
Entrepreneur is a manager!
To distinct entrepreneur from an ‘ordinary manager’, it
must be in terms of what the entrepreneur manages, how they manage, their effectiveness and the effect they haveas a manager.
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 12
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
• Combination of
economic factors
• providing marketefficiency
• accepting risk • maximizing investors’
returns• processing of market
information
3 primary economic
factors: the raw materials that nature offers up, the
physical & mental labor that people provide, andcapital.
Value is created by
combining these 3 thingsin a way which satisfieshuman needs.
Innovation is simply finding new
combinations of economic factors.
Entrepreneurship as a kind of 4th
factor which acts on the other 3 tocombine them in productive ways.
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 13
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
• Combination of
economic factors
• providing marketefficiency
• accepting risk • maximizing investors’
returns• processing of market
information
The most efficient
economic systems is onein which unimpeded
markets determine theprice at which goods arebought & sold.
Efficient means that
resources are distributedin an optimal way, that isthe satisfaction thatpeople can gain fromthem is maximized .
Entrepreneurs provide efficiency
by creating a competitive marketand being willing to accept a
lower profit themselves and offerthe goods at a lower price.
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 14
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
• Combination of
economic factors
• providing marketefficiency
• accepting risk• maximizing investors’
returns• processing of market
information
The lack of knowledge
about the future is calleduncertainty. If we know
the likelihood of variouspossibilities thenuncertainty becomesrisk.
Entrepreneur accept risk
on behalf of otherpeople. They provide aservice by taking this risk off people’s hands.
Entrepreneurs are good at
managing the situations whererisk is high; that is, when faced
with a situation of highuncertainty they are able to keeptheir heads, to continue tocommunicate effectively, & tocarry on making effectivedecisions.
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 15
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
• Combination of
economic factors
• providing marketefficiency
• accepting risk • maximizing investors’
returns• processing of market
information
The role of entrepreneurs
is one of maximizing thereturns that shareholders
get from theirinvestments.
They create & run
organizations which generate long-term
profits on behalf of theinvestors that are higherthan would otherwisehave been the case.
Entrepreneurship takes into
account the interests of a widevariety of stakeholders groups, not
just those of investors.
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• Combination of
economic factors
• providing marketefficiency
• accepting risk • maximizing investors’
returns• processing of market
information
APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 16
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
Entrepreneurs keep an
eye out for informationthat is not beingexploited.
B y taking advantage of
this information, they make markets moreefficient & are rewardedout of the revenues
generated.
E
ntrepreneurs are informationprocessors is which in turnpursue opportunities & providecompetitive efficiency..
This information is
information aboutopportunities.
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• The ‘great person’
• social misfit
• personality type• personality trait• social development
approaches• cognitive approaches
APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 17
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
Entrepreneurs are often
regarded as a ‘great
person’.
Entrepreneurs can
certainly be inspiring, &
may provide motivatingrole models.
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• The ‘great person’
• social misfit•
personality type• personality trait• social development
approaches• cognitive approaches
APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 18
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
Entrepreneurs are social misfits at heart.
As a result the entrepreneur is driven to create his or her ownsituation.
It is this that provides the motivation to innovate &
build new organizations.
Someone is an entrepreneur for an essentially negative reason;
they are unable to fit into existing social situations.
Often they relate their inability to fit into the established firm as a factor in
driving them to start their own venture.
Many entrepreneurs achieved success after comparatively
unhappy & lackluster careers working as professionalmanagers.
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• The ‘great person’
• social misfit•
personality type• personality trait• social development
approaches• cognitive approaches
APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 19
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
Entrepreneurs are often characterized by privation & hardship
which left the person with a lack of self-esteem, a feeling of insecurity & a repressed desire for control.
It provides not only a means of economic survival but also anactivity which enables a reaction against anxiety left by psychological scars.
This leads to rebellious & ‘deviant’ behavior which limits the
person’s ability to fit into established organizations.
Entrepreneurial activity is a way of coming to terms with this.
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• The ‘great person’
• social misfit•
personality type• personality trait• social development
approaches• cognitive approaches
APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 20
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
There is a common impression that entrepreneurs tend to be
flamboyant extroverts who are spontaneous in their approach& rely on instinct rather than calculation.
E.g., introverts are just as likely to be entrepreneurs as are
extroverts.
Detailed studies, however, have shown that all types of
personality perform equally well as entrepreneurs.
Personality type, as measured by personality test does not
correlate strongly with entrepreneurial performance &
success.
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• The ‘great person’
• social misfit•
personality type• personality trait• social development
approaches• cognitive approaches
APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 21
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
David McClelland identified a “need for achievement” as the
fundamental driving trait in the personality of successfulentrepreneurs.
Other factors which have also been viewed as important
include:
• the need for autonomy • the need to be in control of a situation• a desire to face risk
• creativity • a need for independence• the desire to show leadership qualities.
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• The ‘great person’
• social misfit•
personality type• personality trait• social development
approaches• cognitive approaches
APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 22
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
Entrepreneurs are not born, they are made.
A number of factors are seen as significant to the social
development of entrepreneurs. In general, they fall into one of the three broad categories:
• innate – factors such as intelligence, creativity, personality,motivation, personal ambition, etc.
• acquired – learning, training, experience in ‘incubator’
organizations, mentoring, existence of motivating rolemodels, etc.• social - birth order, experiences in family life, socio-
economic group & parental occupation, society & culture,economic conditions, etc.
f
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• The ‘great person’
• social misfit•
personality type• personality trait• social development
approaches• cognitive approaches
APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 23
The entrepreneur perspectives
The entrepreneur’s tasks The role of entrepreneur The entrepreneur as aperson
Cognitive science is the branch of psychology that attempts to
develop an understanding of how we as humans obtain & process information & use it to make sense of the world.
Th N t f E t hi
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APT 3083 – STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 24
Entrepreneurship: a style of management
An entrepreneur is a manager. They are someone who manages in an
entrepreneurial way. Entrepreneurial management is characterized by threefeatures:
A focus on change A focus on opportunity Organization-wide management
Entrepreneurs aremanagers of change
They bring people.
Money, ideas & resources together to
build new organizations& to change existingones.
Entrepreneurs areattuned to opportunity.
They constantly seek the
possibility of doingsomething differently &
better. They innovate tocreate value.
Entrepreneurs are more
interested in pursuingopportunity.
The entrepreneurs manages with aneye to the entire organization.
They benchmark themselves against
organizational objectives.
Th N t f E t hi
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APT 3083–
STRATEGIC ENTREPREURSHIP
The Nature of Entrepreneurship
week 01
Page 25
Entrepreneurship: a style of management
Entrepreneurial managers as venturers
Entrepreneurs as a manager who is willing to venture to create change & to
pursue opportunity rather than just to maintain the status quo & conserveresources.
The effective entrepreneur does all these things when appropriate.
There are times when the status quo is worth sustaining, & times when it is
unwise to expose resources.
Part of the skill of the effective entrepreneur is knowing when not to venture.
However, when the time is right, the entrepreneurial manager is willing to step
forward.
Th N t f E t hi
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APT 3083–
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The Nature of Entrepreneurship
week 01
Page 26
The human dimension: leadership, power & motivation
One characteristic that distinguishes entrepreneurs from their more conventional
colleagues it would likely be found not in their strategies or analytical insights butin the human dimensions; the way in which they use leadership & power & theirability to motivate those around them.
Leadership
Power
Motivation
The power to focus & direct the
organization
The ability to influence the course of
action within the organization
The process of encouraging an
individual to take particular coursesof action
Self motivation
• why am I doing this? • Learning from mistakes • Enjoying the rewards
Motivation of others
• understanding personal drives • Setting goals • Offering support • Using rewards
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Types of Entrepreneur
Page 27Copyright © 2011 by Mohammad Nizamuddin bin Abdul Rahim, UMK
T f E t l if i t
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APT 3083–
STRATEGIC ENTREPREURSHIP
Types of Entrepreneur – classifying entrepreneurs
week 01
Page 28
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
Nascent entrepreneurs
Those planning to start
up an initial venture
Singular entrepreneurs
Those running a singlebusiness
At an early stage of
venture developmentwhen they are stillactively learning arereferred to as novice entrepreneurs.
Opportunist entrepreneurs Craftsmen
W
ho were interested inmaximizing their returnsfrom short-term deals
W
ho attempted to make aliving by privately sellingtheir trade or products.
Were not so much interested
in profits as in being able toearn a stable living from theirspecialist skills.
Types of Entrepreneur classifying entrepreneurs
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APT 3083–
STRATEGIC ENTREPREURSHIP
Types of Entrepreneur – classifying entrepreneurs
week 01
Page 29
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
Nascent entrepreneurs Singular entrepreneurs
Opportunist entrepreneurs Craftsmen
G rowth-orientated I ndependence-
orientated
I ncome-orientated E xpansion-
orientated
Who pursued
opportunities to
maximize thepotential of theirventure.
Whose main
ambition was to
work for themselves. Preferred stability to
growth; willing tolimit the scope of their ventures
Whose main aim is
to secure a steady
income
Who take the risk of
expanding their
business & face thechallenge of changing their rolefrom being craftoperators to beingmanagers of craft
operators
Types of Entrepreneur classifying entrepreneurs
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Types of Entrepreneur – classifying entrepreneurs
week 01
Page 30
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
C antillon
entrepreneur
I ndustry-maker A dministrative
entrepreneur
S mall business
owner
Frederick Webster (1977)
Types of Entrepreneur classifying entrepreneurs
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APT 3083–
STRATEGIC ENTREPREURSHIP
Types of Entrepreneur – classifying entrepreneurs
week 01
Page 31
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
C antillon
entrepreneur
I ndustry-maker A dministrative
entrepreneur
S mall business
owner
Brings people, money & materials together to create an entirely new organizations;
Frederick Webster (1977)
The ‘classic’ type of entrepreneur, who identifies an unexploited opportunity & then
innovates in order to pursue it
Types of Entrepreneur classifying entrepreneurs
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APT 3083–
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Types of Entrepreneur – classifying entrepreneurs
week 01
Page 32
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
C antillon
entrepreneur
I ndustry-maker A dministrative
entrepreneur
S mall business
owner
Goes beyond merely creating a new firm
Frederick Webster (1977)
Their innovation is of such importance that a whole industry is created on the back of it
They develop not only new products, but also a whole technology to produce them
Types of Entrepreneur classifying entrepreneurs
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APT 3083–
STRATEGIC ENTREPREURSHIP
Types of Entrepreneur – classifying entrepreneurs
week 01
Page 33
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
C antillon
entrepreneur
I ndustry-maker A dministrative
entrepreneur
S mall business
owner
A manager who operates within an established firm but does so in an entrepreneurial
fashion
Frederick Webster (1977)
Usually occupying the chief executive or a senior managerial role, they are called upon to
be innovative & to provide dynamism & leadership to the organization, particularly when itis facing a period of change
Administrative entrepreneurs are often referred to as intrapreneurs.
Types of Entrepreneur classifying entrepreneurs
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APT 3083–
STRATEGIC ENTREPREURSHIP
Types of Entrepreneur – classifying entrepreneurs
week 01
Page 34
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
C antillon
entrepreneur
I ndustry-maker A dministrative
entrepreneur
S mall business
owner
Is an entrepreneur who takes responsibility for owning & running their own venture
Frederick Webster (1977)
The business may be small because it is in an early stage of growth, or the owner may
actually wish to limit the size of their business because they are satisfied that it gives them a
reasonably secure income & control over their life
Types of Entrepreneur – classifying entrepreneurs
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Types of Entrepreneur – classifying entrepreneurs
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Page 35
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
Further classifies entrepreneurial venture by the ratio of the amount that is expected to be
received as a result of the venture’s success (the perceived payoff) & the number of investorsinvolved (the principals) .
Large payoff: many participants – i.e. a major venture with the risk spread widely over a
large number of investors.
Frederick Webster (1977)
Small payoff: few participants – i.e. a limited venture with the risk taken on by a few key
investors only.
Large payoff: few participants – i.e. a major venture with the risk taken on by a few key
investors.
Types of Entrepreneur – classifying entrepreneurs
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APT 3083–
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Types of Entrepreneur – classifying entrepreneurs
week 01
Page 36
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
Gambler
Landau’s (1982) classification of entrepreneurial types
Entrepreneur
Consolidator Dreamer
Risk bearing
Innovativeness
L ow
L ow
H igh
H igh
Types of Entrepreneur – classifying entrepreneurs
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APT 3083–
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Types of Entrepreneur classifying entrepreneurs
week 01
Page 37
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
Gambler
Landau’s (1982) classification of entrepreneurial types
Entrepreneur
Consolidator Dreamer
Risk bearing
Innovativeness
L ow
L ow
H igh
H igh Gambler is the entrepreneur
characterized by a low degree of innovation & a high level of risk.
The gamble, of course, arises from the
fact that without a significantinnovation, the entrepreneur is taking abig chance in being better able todeliver value than existing players in
the market.
Types of Entrepreneur – classifying entrepreneurs
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Types of Entrepreneur classifying entrepreneurs
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Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
Gambler
Landau’s (1982) classification of entrepreneurial types
Entrepreneur
Consolidator Dreamer
Risk bearing
Innovativeness
L ow
L ow
H igh
H igh Consolidator is the entrepreneur who
develops a venture based on low levelsof both innovation & risk.
This consolidates in that it is really, at
best, a marginal improvement on whatexisting players are doing. Althoughrisk are low, so too must be expectedreturns.
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Types of Entrepreneur classifying entrepreneurs
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Page 39
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
Gambler
Landau’s (1982) classification of entrepreneurial types
Entrepreneur
Consolidator Dreamer
Risk bearing
Innovativeness
L ow
L ow
H igh
H igh Dreamer is the entrepreneur who
attempts to combine a high level of innovativeness with low risk.
All entrepreneurs would love to operate
here. However, the dream cannot berealized as all innovation, by its nature,introduces risk. The more significant & hence potentially valuable, the
innovation, the greater the risk of theunknown.
Types of Entrepreneur – classifying entrepreneurs
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Types of Entrepreneur classifying entrepreneurs
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Page 40
Two main approaches in entrepreneurs classification
Entrepreneurs themselves Entrepreneurs ventures
Gambler
Landau’s (1982) classification of entrepreneurial types
Entrepreneur
Consolidator Dreamer
Risk bearing
Innovativeness
L ow
L ow
H igh
H igh Entrepreneur combines a high level of
innovativeness with high risk.
This is where true entrepreneurs
operate. They must accept risk, but by understanding their innovation & why it appeals to the market, they minimize& manage the risks.
Types of Entrepreneur – classifying entrepreneurs
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Technology-based entrepreneurs
Landau’s (1982) classification of entrepreneurial types
Jones-Evan (1995) – fourfold categorizations:
- Are specially important in modern business as it is they who are taking
advantage of new scientific developments, especially in the areas of IT,biotechnology & engineering science, & offering their benefits to the wider world.Investors are attracted by the high growth potential of their ventures.
‘R esearch’ technical entrepreneur
‘P roducer’ technical entrepreneur
‘U ser’ technical entrepreneur
‘O pportunist’ technical entrepreneur
P ure research entrepreneur
R esearch-producer entrepreneur
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Technology-based entrepreneurs
Landau’s (1982) classification of entrepreneurial types
Jones-Evan (1995) – fourfold categorizations:
- Are specially important in modern business as it is they who are taking
advantage of new scientific developments, especially in the areas of IT,biotechnology & engineering science, & offering their benefits to the wider world.Investors are attracted by the high growth potential of their ventures.
‘R esearch’ technical entrepreneur
‘P roducer’ technical entrepreneur
‘U ser’ technical entrepreneur
‘O pportunist’ technical entrepreneur
P ure research entrepreneur
R esearch-producer entrepreneur
Those whose incubation has been in
research environment.
W ho have been based in academic
research environments & whohave not had significantcommercial experience
W ho while working in an
academic or industrial researchenvironment have had exposureto commercial decision making
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Technology-based entrepreneurs
Landau’s (1982) classification of entrepreneurial types
Jones-Evan (1995) – fourfold categorizations:
- Are specially important in modern business as it is they who are taking
advantage of new scientific developments, especially in the areas of IT,biotechnology & engineering science, & offering their benefits to the wider world.Investors are attracted by the high growth potential of their ventures.
‘R esearch’ technical entrepreneur
‘P roducer’ technical entrepreneur
‘U ser’ technical entrepreneur
‘O pportunist’ technical entrepreneur
P ure research entrepreneur
R esearch-producer entrepreneur
Those whose incubation has
included an exposure to decisionmaking in a commercial settingalong with experience intechnological development
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Technology-based entrepreneurs
Landau’s (1982) classification of entrepreneurial types
Jones-Evan (1995) – fourfold categorizations:
- Are specially important in modern business as it is they who are taking
advantage of new scientific developments, especially in the areas of IT,biotechnology & engineering science, & offering their benefits to the wider world.Investors are attracted by the high growth potential of their ventures.
‘R esearch’ technical entrepreneur
‘P roducer’ technical entrepreneur
‘ U ser’ technical entrepreneur
‘O pportunist’ technical entrepreneur
P ure research entrepreneur
R esearch-producer entrepreneur An individual whose main experience has
been commercially based but hasinvolved contact with, & the developmentof knowledge about, a technical
development. This may be because they have been employed in its marketing orsales, or perhaps in procuring thattechnology for a business.
Types of Entrepreneur – classifying entrepreneurs
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Technology-based entrepreneurs
Landau’s (1982) classification of entrepreneurial types
Jones-Evan (1995) – fourfold categorizations:
- Are specially important in modern business as it is they who are taking
advantage of new scientific developments, especially in the areas of IT,biotechnology & engineering science, & offering their benefits to the wider world.Investors are attracted by the high growth potential of their ventures.
‘R esearch’ technical entrepreneur
‘P roducer’ technical entrepreneur
‘U ser’ technical entrepreneur
‘ O pportunist’ technical entrepreneur
P ure research entrepreneur
R esearch-producer entrepreneur One who has no previous exposure to
technology but has seen a commercialopportunity in relation to it & has
pursued that with a new venture. Thistype of entrepreneur may call upon a general technical knowledge base & arekeen to develop an understanding of thenew technology & what it offers.
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Technology-based entrepreneurs
Landau’s (1982) classification of entrepreneurial types
Jones-Evan (1995) – fourfold categorizations:
The approach to classifying technical entrepreneurs is useful for two key reasons:
‘ R esearch’ technical entrepreneur
‘P roducer’ technical entrepreneur
‘U ser’ technical entrepreneur
‘O pportunist’ technical entrepreneur
W hile in command of the technical aspects of
what they are doing, may need support withthe commercial management of their
ventures.
May call upon dedicated technical experts to
underpin their commercial moves.
Reason 1
Reason 2
I
t enables investors to judge the managerial balance of the ventures to which they are calledupon to commit themselves. An investor seeks not only a good idea, but also one that has aclear market potential & is backed by a managerial team that can not only invent but alsodeliver that invention to the customer profitably.
Types of Entrepreneur – classifying entrepreneurs
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Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
S enior citizen W orkaholics S wingers I dealists H igh-flyers
Assessment based on:
-Employment - managerial - financial - technical; and- strategic
criteria
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Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
S enior citizen W orkaholics S wingers I dealists H igh-flyers
Undertakes a venture to keep occupied during their retirement.
The business is small & based on personal expertise.
It is privately funded & has no long-term strategic ambitions.
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Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
S enior citizen W orkaholics S wingers I dealists H igh-flyers
Are also retired nut show more ambition for their ventures than do senior citizens
They often possess administrative experience & their business are bigger, drawing
on a wider range of technical skills
Strategic goals may be explicit & employees may be invited to make a personal
investment in the future of the venture
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Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
S enior citizen W orkaholics S wingers I dealists H igh-flyers
Are younger entrepreneurs who aim to make a living from making deals
They may have only limited industrial & technical experience & rely on networks of personal contact
Their ventures may be moderately large, but they tend not to have long-term
strategic goals.
T
he main aim is to maximize short-term profits.Fund is provided through retained earnings, family contributions & personal loans
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Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
S enior citizen W orkaholics S wingers I dealists H igh-flyers
Are also younger entrepreneurs who run moderate-sized ventures
Their motivation is based less on short-term profit & more on the sense of achievement & independence that running their own venture gives them
They serve a variety of end markets & their ventures may be based on high-
technology products
F
inancing is through retained profits, family contributions & private investment
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Technology-based entrepreneurs
Wai-Sum Siu (1996) identifies 5 types of entrepreneur in China
S enior citizen W orkaholics S wingers I dealists H igh-flyers
Are motivated in much the same way as idealists
Their ventures are much larger, reflecting success in the marketplace
A variety of products are offered
Corporate goals & strategy tend to be much more explicit than in the idealist’s
venture
Investment is drawn from a wider variety of sources, including institutional &
international agencies
Types of Entrepreneur – serial & portfolio entrepreneurship
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Entrepreneurs are driven by a desire for autonomy, prestige & a sense of
achievement, as much as, if not more than, by a desire to make money.
This is most evident in that group of entrepreneurs who, having led one business
success, move on to start another.
Such entrepreneurs, called serial entrepreneurs (sometimes referred to as habitual
entrepreneurs), gain their rewards from the establishment & building of businesses, not theirlong-term management.
Serial entrepreneurs, as well as being interested in the start-up & early growth phase of theventure, may also have particular decision-making expertise in these areas of businessdevelopment, & therefore gain their personal competitive advantage in relation to managingthis stage.
An entrepreneur who can point to a record of success will also be a more attractive
proposition to an investor than one who cannot.
The capital generated from an initial venture (retained profits or money made through its
sales) may provide a source of funds to start up a new venture.
Types of Entrepreneur – serial & portfolio entrepreneurship
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The establishment of additional ventures may also reflect the strategic concerns of
the entrepreneur.
It may be that the competitive advantage gained in the initial business can be
successfully transferred to a subsequent one.
Further, several businesses may be a way of diluting risk.
Management buyouts & buy-ins are fruitful area for serial entrepreneurs.
Serial entrepreneurs may be sub-divided into two types:
W ho start new businesses in sequence, only
running one at any time.
S equential entrepreneursP ortfolio entrepreneurs
Those who run several businesses
simultaneously.
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Serial entrepreneurs might be classified in the following way:
Those who undertake subsequent ventures because of a forced exit from anearlier one.
O pportunist serial entrepreneurs
D efensive serial entrepreneurs
Those who undertake serial
entrepreneurship because creating anumber of businesses is fundamentalto the strategy they are pursuing.
G roup-creating serial entrepreneurs
Need not be because of failure, but might be because the venture was sold, or floated on
the stock market to pay off venture capital investment.
Those who undertake subsequent ventures because they perceive the opportunity for
financial gain, perhaps on a short-term entry-exit basis.
Deal-making serials use acquisition
as a major part of gaining the new
businesses.
Organic serials start new businesses
from scratch & grow them.
Types of Entrepreneur – entrepreneurship & small business management: a
di ti ti
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Distinction:
- Serve different economic functions
-Pursue & create new opportunities differently - fulfill the ambitions of their founder & managers in different ways
Usually based on a significant innovation
Innovation
Entrepreneurial venture
Usually involved in delivering an
established product or service.
3 essential characteristics which distinguish them:
Small business
Usually based on a significantly new way
of doing something It is not doing anything essentially in a
global sense
Types of Entrepreneur – entrepreneurship & small business management: a
di ti ti
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Usually has a great deal more potential for
growth
Potential for growth
Entrepreneurial venture
Operates within an established industry & is
unique only in terms of its locality.
3 essential characteristics which distinguish them:
Small business
It is limited in its growth potential by
competitors in adjacent localities.Operates within a given market
Creates its own market
Types of Entrepreneur – entrepreneurship & small business management: a
di ti ti
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Strategic objectives:
- Growth targets- Market development- market share
- market position
Strategic objectives
Entrepreneurial venture
Objectives
3 essential characteristics which distinguish them:
Small business
Types of Entrepreneur – entrepreneurship & small business management: a
di ti ti