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Entrepreneurial Behavior

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Page 1: Entrepreneurial Behavior
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Has concept, vision, dream Ability to translate dream into products

and people within an organizational context

Able to champion the concept to a wide range of publics and partners

Adapt concept to reflect realities in environment

Persevere in overcoming obstacles

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Fill multiple roles Demonstrate multiple characteristics:

◦ Visionary◦ Leader and promoter◦ Risk-taker◦ Leverager of resources◦ Networker and adapter

Responsible for adopting a business concept within an organizational context◦ Sole proprietorship, franchise, venture team, etc.

Fit between business concept and opportunity

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Willingness and ability to assume and manage risks ◦ more critical with new-to-the-world products

Political skills important in large corporate settings

Adaptability and persistence are bigger factors in turbulent environments

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Immigrant populations produce more entrepreneurship per capita than non-immigrant populations – opportunistic mindset?

Birth order – first-born – given more responsibility, confront more discipline, deal with more ambiguity

Age correlated with education and experience

Entrepreneurs tend to have more education than managers

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1. Motivation – driven by range of factors◦ Necessity (survival)◦ Dissatisfaction (can’t stand job)◦ Curiosity (What if…?)◦ Material gain (We could make a killing…)

Achievement oriented more than anything else Driven by the task, challenge, opportunity Money as a by-product, but scorecard 2. Strong internal locus of control – change

agents Believe they can change their environments

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3. Calculated risk-takers◦ Pursuit of a course of action with a reasonable

chance of costly failure◦ Attempt to estimate likelihood and magnitude

of key risk factors and manage or mitigate them through good planning or decisions

4. High tolerance of ambiguity◦ Process can be loose, messy, shift directions

Prize their independence – self-motivated, self-reliant, prefer autonomy, have perseverance

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Versatile Persuasive Creative Well-organized Hard-working Competitive

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Excessive need for control◦ Tendency to micromanage

Suspicious – others will steal their idea Impatience Need for applause Defensive Externalize internal problems

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Traits are product of specific developments in social, economic and family environments

Role models inside or outside of the family also play some role in entrepreneurship.

Gender does not have strong influence in entrepreneurial orientation.

Support system available from the family and financial and other institutions also plays role in entreprneurship.

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Craftsmen◦ Narrow in education/training

Opportunists◦ Breadth in education/training, wide experiences

Technical entrepreneur◦ Come up with own inventions and product

modifications, work experience in technology environment, more formal technical education

◦ Make greater use of teams

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Can be categorized as:◦ Personal achiever◦ Super salesperson◦ Real manager◦ Expert idea generator

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Within organizations as well, it is the freedom granted to individuals and teams who can exercise their creativity and champion promising ideas that is needed for entrepreneurship to occur. Thus, an important impetus for new-entry activity is the independent spirit necessary to further new ventures. As such, the concept of autonomy is a key dimension of an entrepreneurial orientation.

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Entrepreneurship has flourished because independently minded people elected to leave secure positions in order to promote novel ideas or venture into new markets, rather than allow organizational superiors and processes to inhibit them.

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Schumpeter was among the first to emphasize the role of innovation in the entrepreneurial process. He outlined an economic process of "creative destruction," by which wealth was created when existing market structures were disrupted by the introduction of new goods or services that shifted resources away from existing firms and caused new firms to grow.

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The key to this cycle of activity was entrepreneurship: the competitive entry of innovative "new combinations" that propelled the dynamic evolution of the economy. Thus "innovativeness" became an important factor used to characterize entrepreneurship.

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The early entrepreneurship literature equated the idea of entrepreneurship with working for oneself (i.e., seeking self-employment rather than working for someone else for wages). Along with this type of work came the idea of assuming personal risk.

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Cantillon, who was the first to formally use the term entrepreneurship, argued that the principal factor that separated entrepreneurs from hired employees was the uncertainty and riskiness of self-employment. Thus, the concept of risk taking is a quality that is frequently used to describe entrepreneurship.

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Economics scholars since Schumpeter have emphasized the importance of initiative in the entrepreneurial process. Penrose argued that entrepreneurial managers are important to the growth of firms because they provide the vision and imagination necessary to engage in opportunistic expansion. Lieberman and Montgomery emphasized the importance of first-mover advantage as the best strategy for capitalizing on a market opportunity.

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By exploiting asymmetries in the marketplace, the first mover can capture unusually high profits and get a head start on establishing brand recognition. Thus, taking initiative by anticipating and pursuing new opportunities and by participating in emerging markets also has become associated with entrepreneurship. This fourth characteristic of entrepreneurship is often referred to as proactiveness.

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Entrepreneurship is a bottom-up process – it begins with people

There is no single prototype of the entrepreneur◦ Some general traits that entrepreneurs tend to

have more in common with each other than corporate managers, government administrators or other groups

◦ General categories emerge for entrepreneurs