Entrepreneurial Action – Co-Create the Future!administracion.uexternado.edu.co/.../Entrepreneurial_Action...2013.pdf · 1 Prof. Dr. Dietmar Grichnik – Entrepreneurial Action –

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Prof. Dr. Dietmar Grichnik – Entrepreneurial Action – Slide 1 ©

Entrepreneurial Action – Co-Create the Future!

Prof. Dr. Dietmar Grichnik

ITEM-HSG – Institute of Technology Management

University of St. Gallen

Entrepreneurship Forum

Universidad Externado de Columbia

Bogotá, July 2013


Scientific method

Entrepreneurial method

Herbert Simon

Richard Branson

Explain the world!

Make the world!

Experiments

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On the west coast of Europe an American tourist catches sight of a native fisherman, who is lying contentedly in his boat spending his time with daydreams. The tourist is surprised and asks the native why he does not go out for fishing while the weather is still fine. The fisherman answers that he has already been on the sea early this morning and that he has caught such a large quantity of fish that this will be enough for tomorrow and the day after tomorrow. But the tourist insists … If the fisherman sails out a second, a third or even a fourth time he will be able to increase sales considerably. The stranger – not discouraged by the fisherman’s disapproval – goes on with growing enthusiasm. If the fisherman repeats fishing for several times a day, provided that the weather is fine, he will afford buying a motor in the next year, a second ship in two years and perhaps he will manage to buy a cutter with a crew later. He will be able to build a cold store, later a factory producing marinade, he can fly with his own helicopter looking out for shoals, giving instructions to his armada. He will acquire a licence for salmon fishing, open a fish restaurant, export the lobster without broker directly to Paris and then … - the enthusiasm leaves the stranger speechless. “And then what?” the fisherman asks. “Then you can sit here in the harbour, having a look at the wonderful ocean while spending your time with daydreams,” the stranger replies with satisfaction. Thereupon the fisherman answers “But that is what I am already doing.” (Heinrich Böll, 1963)

Entrepreneurship? – in Practice


Individual-Opportunity-Nexus

“Entrepreneurship is an activity that involves the identification, evaluation and exploitation of opportunites to introduce new goods and services, processes and markets.” Shane and Venkataraman, 2000

Entrepreneurship is Action!

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5

Entrpreneurship Today?

(Venkataraman et al., Academy of Management Review, 2012)

– in a Shared Economy


Action-Interaction-Nexus

Entrepreneurship as a science of the artificial in three ways: “Understanding opportunities as made as well as found, moving beyond new combinations to transformations, and developing a new nexus around actions and interactions” Venkataraman et al., 2012

Entrepreneurship is Interaction!

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Study on Nascent Entrepreneurship

Bootstrapping activities rather as a deliberate action than a forced reaction

Beyond environmental scarcity: Human and social capital as driving forces ofbootstrapping activities

Dietmar Grichnik a,⁎, Jan Brinckmann b,1, Luv Singh c,2, Sophie Manigart d,3

a Center for Entrepreneurship, University of St. Gallen, Dufourstrasse 40a, CH-9000 St. Gallen, Switzerlandb ESADE Graduate School of Business, Avenida Pedralbes 60-62, 08034 Barcelona, Spainc WHU, Otto Beisheim School of Management, Vallendar 56179, Germanyd Vlerick Business School and Ghent University, Reep 1, 9000 Ghent, Belgium

a r t i c l e i n f o a b s t r a c t

Article history:Received 1 December 2011Received in revised form 28 February 2013Accepted 28 February 2013Available online xxxx

Field Editor: G. Cassar

Although entrepreneurship scholars highlight bootstrapping as a key resource acquisitionapproach to respond to the inherent resource constraints that nascent ventures face, little isknown about what causes nascent ventures to engage in bootstrapping. Theory highlights theenvironment as an important determinant of bootstrapping activity. Analyzing bootstrappingbehavior of 298 nascent ventures, we find that beyond perceived environmental factors,individual characteristics of the nascent entrepreneurs and factors relating to the embeddednessof the entrepreneurs in the environment determine their venture's bootstrapping behavior. In amore fine-grained analysis we gain insights into how these antecedents shape the use ofparticular bootstrapping strategies. Findings contribute to our understanding of factors drivingresource management approaches in nascent ventures.

© 2013 Elsevier Inc. All rights reserved.

Keywords:BootstrappingHuman capitalSocial capitalEnvironmental munificenceNascent ventures

1. Executive summary

The acquisition of resources to pursue the identified opportunities is a key challenge in the entrepreneurial process.Entrepreneurship scholars highlight the importance of bootstrapping as a key resource acquisition approach to respond to theinherent resource constraints that nascent ventures face. Drawing on extant literature, we view bootstrapping as an alternativeresource management approach directed at avoiding market-based resource transactions (Ebben and Johnson, 2006; Harrison etal., 2004; Venkataraman, 2003; Winborg and Landström, 2001). Hence, bootstrapping can enable nascent firms to pursuebusiness opportunities, which go beyond means/end combinations, that would be achievable based on conventional markettransactions.

However, little is known about what causes nascent ventures to engage in bootstrapping. Extant scholarly work suggests thatenvironmental and organizational antecedents explain bootstrapping activity (e.g., Ebben, 2009; Harrison et al., 2004; Van Auken,2005), as exemplified by initial findings that the utilization of bootstrapping methods decreases when ventures mature (Ebbenand Johnson, 2006). This suggests that bootstrapping is an approach driven by environmental necessities, leaving little room forentrepreneurial agency.

Journal of Business Venturing xxx (2013) xxx–xxx

⁎ Corresponding author. Tel.: +41 71 224 72 01.E-mail addresses: [email protected] (D. Grichnik), [email protected] (J. Brinckmann), [email protected] (L. Singh),

[email protected] (S. Manigart).1 Tel.: +34 93 280 61 62.2 Tel.: +49 151 5801 1267.3 Tel.: +32 9 210 97 11.

JBV-05663; No of Pages 17

0883-9026/$ – see front matter © 2013 Elsevier Inc. All rights reserved.http://dx.doi.org/10.1016/j.jbusvent.2013.02.006

Contents lists available at SciVerse ScienceDirect

Journal of Business Venturing

Please cite this article as: Grichnik, D., et al., Beyond environmental scarcity: Human and social capital as driving forces ofbootstrapping activities, Journal of Business Venturing (2013), http://dx.doi.org/10.1016/j.jbusvent.2013.02.006


Entrepreneurial Action

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§  If you look back in the past - in all that which has made you the person you are now … ... are you the result of goals which you used to set? … totally, partially, not at all?

A Personal and an Impersonal Question

§  How do innovative groundbreaking products and companies arise? … through goal setting or planning?


Entrepreneur of the Year 2005

The Initial Question

How do successful entrepreneurs think, decide and act in situations of high uncertainty?

Josef Zotter

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Herbert Simon Saras Sarasvathy Richard Branson

Findings in Cognition and Entrepreneurship Research

Effectuation – an entrepreneurial method – used by Expert Entrepreneurs – “Super Entrepreneurs” – to successfully found a company – discovered by scientific research …


The Entrepreuneurial Method

Start with the questions „Who I am?“, „What do I know?“ and „Whom do I know?“

Who I am? What do I know? Whom do I know?

(Blekman, 2011)

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Research Policy 42 (2013) 1251– 1273

Contents lists available at SciVerse ScienceDirect

Research Policy

jou rn al hom epage: www.elsev ier .com/ locate / respol

Entrepreneurial talent and venture performance: A meta-analytic investigationof SMEs

Katrin Mayer-Hauga,!, Stuart Readb,1, Jan Brinckmannc,2, Nicholas Dewd,3, Dietmar Grichnike,4

a WHU – Otto Beisheim School of Management, Burgplatz 2, 56179 Vallendar, Germanyb IMD, Chemin de Bellerive 23, P.O. Box 915, CH-1001 Lausanne, Switzerlandc ESADE, Avenida Pedralbes, 60-62, 08034 Barcelona, Spaind Naval Postgraduate School, 1 University Circle, Monterey, CA 93943, United Statese University of St. Gallen, Dufourstrasse 40a, CH-9000 St. Gallen, Switzerland

a r t i c l e i n f o

Article history:Received 19 October 2011Received in revised form 10 February 2013Accepted 2 March 2013Available online 11 April 2013

Keywords:EntrepreneurEconomic growthTalentMeta-analysisSMEPerformance

a b s t r a c t

As the broad link between small and medium-sized firm activity and key policy goals such as employmentor economic growth has become generally accepted, the conversation has focused on a more nuancedunderstanding of the entrepreneurial engines of economic activity. A significant body of research lookingat antecedents to venture performance has identified that entrepreneurial talent variables account formeaningful differences in venture performance and that significant heterogeneity exists across perfor-mance measures. These are important issues for institutions and policy makers seeking to achieve specificeconomic goals (e.g., survival or growth of ventures, employment or revenue). Using meta-analysis, weintegrate this work to view connections between aspects of entrepreneurial talent and different per-formance outcomes. Our investigation includes 50,045 firms (K of 183 studies) and summarizes 1002observations of small and medium-sized firms. Analysis of these data yields an unexpectedly weak con-nection between education and performance. Furthermore, growth, scale (number of employees) andsales outcomes are significantly related to planning skills, while profit and other financial and qualitativemeasures are strongly connected with the network surrounding the firm founders. Moreover, we observethat entrepreneurial talent is more relevant in developing economies.

© 2013 Elsevier B.V. All rights reserved.

1. Introduction

According to the Organisation for Economic Co-operation andDevelopment (OECD) (2006), small and medium-sized enterprises(SMEs) represent over 95% of all businesses and account for 60–70%of all new jobs created in OECD member countries. Coming out ofthe recent recession, startups have historically provided a domi-nant engine of durable new job creation (see e.g., Stangler, 2009)and economic growth (see e.g., Foster, 2010). This emphasizeswhy SMEs are considered to be an economy’s backbone in termsof employment as well as innovation (OECD, 2006). As institu-tions and policy makers have devoted effort and investment to thedevelopment of firms at the diminutive end of the spectrum (seee.g., Audretsch et al., 2009), so have academics devoted research

! Corresponding author. Tel.: +49 175 318 3642; fax: +49 711 255 3643.E-mail addresses: [email protected] (K. Mayer-Haug),

[email protected] (S. Read), [email protected] (J. Brinckmann),[email protected] (N. Dew), [email protected] (D. Grichnik).

1 Tel.: +41 21 618 01 11; fax: +41 21 618 07 07.2 Tel.: +34 93 280 61 62; fax: +34 93 204 81 05.3 Tel.: +1 831 656 3622; fax: +1 831 656 3407.4 Tel.: +41 71 224 72 01; fax: +41 71 224 73 01.

attention to the connection with economic growth (e.g., Audretschet al., 2007; Carree and Thurik, 2010; Naudé, 2011; Schumpeter,1976).

Prior work motivates this paper, as scholars in the area clearlyidentify the supply and allocation of entrepreneurial talent in aneconomy as being central to its vitality (Baumol, 1990, 2010).Moreover, prior work suggests meaningful variance within thedependent level of firm performance outcomes (e.g., Chagantiand Schneer, 1994; Venkatraman and Ramanujam, 1985, 1986;Zou et al., 2010). We expand on this analysis of entrepreneurshipby bringing together empirical data on variance in the nature ofentrepreneurial talent with variance in outcomes of the enter-prises entrepreneurs lead (SMEs). From a policy perspective, abetter understanding of which element of entrepreneurial talentis associated with which venture performance dimension is ofutmost importance in the efficient deployment of scarce resources.If the connections were well understood, funds could be targetedto foster entrepreneurial talent aspects that have the highestimpact on desired venture performance outcomes, since differentoutcome constructs (such as survival, growth, employment andprofit) might not evenly relate to each other (see e.g., investigationof entrepreneurship and different outcomes on a macro-economiclevel by Nyström, 2008). Moreover, prior work suggests that

0048-7333/$ – see front matter © 2013 Elsevier B.V. All rights reserved.http://dx.doi.org/10.1016/j.respol.2013.03.001

§  183 Studies 50.045 Firms (SMEs) 1002 Observations

§  Performance Measures

Survival, Growth – Employees, Revenues, Profit, ...

à High Relevance for Politicians §  Education

Weak Impact on Performance à  High Relevance for Education §  Experience

Partly stronger Impact on Performance à Human Capital (Team, Board) and Social

Capital (Network)

Entreperneurial Talent and Performance

Meta-analysis


The Means-Orientation Principle

Start with the means you have, not with mystical goals

Management Expertise

Goal-driven action Means-driven action

Entrepreneurial Expertise

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The Entrepreuneurial Method

What am I willing to lose?

Worth to do? Doable? Can I do it?

Do I want it?

(Blekman, 2011)


How will you compare entrepreneurship and cooking?

Statement of an Expert Entrepreneur on the Question …

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Expected return

The Affordable Loss Principle

Only invest what you are willing to lose

Affordable loss




Avoid surprises

Consider unpredictable events as chances

Use surprises as chances


The Contingency Principle

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Find the right partner

The Pre-Commitment Principle

Co-create with partners and develop common goals

Negotiate with all who are willing to make pre-commitments



The Process of Causal Management Logic

Management expertise in situations of risk

Environment stable

Fixed goals

Future projectable

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The Process of the Entrepreneurial Method – Effectuation Logic

Entrepreneurial expertise in situations of uncertainity

Environment can be created

Goals can be negotiated

Future is uncertain


Effectual Entrepreneurship in Action – Icehotel (Read et al., 2011)

Means: §  Engineering

experience §  Summer travel

business §  Love for the

nature

Expanding cycles of resources

Converging cycles of transformation

What can I do? Interact with people

Effectual Stakeholder Commitment

New Means

New Goals

New Markets

Effectuation Process

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Effectuation is particularly suitable in early phases of innovative projects

Life Cycle of Innovative Projects


Meta-analysis

Should entrepreneurs plan or just storm the castle?

Should entrepreneurs plan or just storm the castle?A meta-analysis on contextual factors impacting the businessplanning–performance relationship in small firms

Jan Brinckmann a,⁎, Dietmar Grichnik b,1, Diana Kapsa c,2

a School of Business Administration, Loyola University Chicago, Chicago, IL 60611, United Statesb WHU – Otto Beisheim School of Management Vallendar, 56179, Germanyc Witten/Herdecke University (UW/H) Witten, 58448, Germany

a r t i c l e i n f o a b s t r a c t

Article history:Received 18 January 2008Revised 14 October 2008Accepted 15 October 2008

Entrepreneurship research engages in an intense debate about the value of business planning.Prior empirical findings have been fragmented and contradictory. This study contributes insightsto the business planning discussion by following an evidence-based research approach. Weconduct ameta-analysis on the business planning–performance relationship and specifically focuson contextual factors moderating the relationship. Results indicate that planning is beneficial, yetcontextual factors such as newness of thefirms and the cultural environment of firms significantlyimpact the relationship. Based on this evidence,we propose a concomitant and dynamic approachthat combines planning and learning.

© 2008 Elsevier Inc. All rights reserved.

Keywords:Small firmsNew firmsBusiness planningVenture performanceMeta-analysisCultural factors

1. Executive summary

An intense debate emerged recently in entrepreneurship research on the value of business planning for established small andespecially new firms. It concerns the crucial quandary entrepreneurs face whether to plan before embarking on the perilous questfor venture success or if they should just storm the castle. Some researchers belonging to the planning school propose that businessplanning is crucial for the survival and development of both new and established small firms. The planning school argues that asystematic, prediction-oriented, and formal approach leads to superior venture performance. An opposing group of researcherschallenges the value of prediction-oriented strategic approaches for an organization's performance. These researchers proposeinstead to focus on learning, strategic flexibility, and controlling resources, especially when facing high degrees of uncertainty.

With this study, we address this controversy by synthesizing prior empirical findings. Especially we aim to explain divergentfindings by introducing context variables that moderate the planning–performance relationship such as the newness of thesampled firms, the nature of business planning, and cultural variables. In so doing, we intend to foster a contextual and dynamicunderstanding of the business planning–performance relationship. In other words, beyond the question whether a generalplanning-based approach is beneficial for small firms, we aim to uncover empirical evidence relating to contexts when businessplanning shows increased effectiveness.

Journal of Business Venturing 25 (2010) 24–40

⁎ Corresponding author. Tel.: +1 312 915 6077.E-mail addresses: [email protected] (J. Brinckmann), [email protected] (D. Grichnik), [email protected] (D. Kapsa).

1 Tel.: +49 261 6509 261.2 Tel.: +49 0 175 318 5324.

0883-9026/$ – see front matter © 2008 Elsevier Inc. All rights reserved.doi:10.1016/j.jbusvent.2008.10.007

Contents lists available at ScienceDirect

Journal of Business Venturing

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Power to change: Muhammad Yunus and the Grameen Bank

Case 1: Social Entrepreneurship


Case of Starbucks: Schultz‘s decisions and actions

Case 2: Business Entrepreneurship

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The Entrepreneurial Problem Space (Sarasvathy 2008)

§  Knightian uncertainty: It is impossible to calculate probabilities for future consequences.

§  Goal ambiguity: Preferences are neither given or well ordered.

§  Environmental isotropy: It is not clear what elements of the environment to pay attention to and what to ignore.

The Phenomenon


Four Strategies to Make the World

How do you decide? – Which type do you belong to?

Adapter “You have to learn quickly”

Visionary “I build up the world

following my own ideas”

Planer “Well done preparation

is half way”

Effectuator “Let’s negotiate the future

together”

Controllability of the Future

Futu

re P

redi

ctab

ility

low high

low

high

(Read et al., 2011)

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Pilot without a map in uncertain decision making situations

The Miracle on the Hudson River

Entrepreneurial Action: The Entrepreneurial Method

(Blekman, 2011)


Entrepreneurial Action: Co-Create the Future!

Ready for your own entrepreneurial journey?

Prof. Dr. Dietmar Grichnik Chaired Professor of Entrepreneurship Director Institute of Technology Management University of St.Gallen Entrepreneur, Co-Founder, Coach, Investor Contact: [email protected] Connect: LinkedIn

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Entrepreneurial Action – Co-Create the Future!administracion.uexternado.edu.co/.../Entrepreneurial_Action...2013.pdf · 1 Prof. Dr. Dietmar Grichnik – Entrepreneurial Action –