Myths, Theories and Frameworks of Entrepreneurship

1. Myths, Theories and Frameworks of Entrepreneurship Objectives • To discuss the main myths about entrepreneurship. • To discuss the main theories of entrepreneurship. • To discuss the main frameworks related to entrepreneurship.

2. Myths about Entrepreneurship • Entrepreneurs are only doers but not thinkers. • Entrepreneurs are born and not made. • Entrepreneurs are always inventors. • Entrepreneurs are anti-academic and socially misfits. • Entrepreneurs must fit into ideal profile • All Entrepreneurs are money minded people. • Entrepreneurs are badly need the luck. • Ignorance is a bliss for entrepreneurs. • Entrepreneurs seeks success but end with high failure rates. • Entrepreneurs are extreme risk takers. • Entrepreneurs are hating partnership. • Entrepreneurs never succeeds in clusters. • Entrepreneurs must be young. • Entrepreneurs are mainly backed by VCs. • Entrepreneurs need always new products. • Entrepreneurs do not have place in big companies.

3. Models for Entrepreneurship • Silicon Valley model - Siliconitis is the most common example of what is now an almost universal search among policymakers, local as well as central, for the secrets of entrepreneurial success. It is also the most instructive. A few attempts to replicate Silicon Valley, most notably in Israel, have succeeded. But most are embarrassing failures. • Anchor-firm model - Alfred Marshall, one of the first economists to write about entrepreneurship, said that successful entrepreneurs are like large trees in a forest, towering over their neighbours and depriving them of light and air. In fact, the big trees usually produce lots of little ones. They spin off subsidiaries, provide experience to employees who then decide to go it alone, and nurture dozens of suppliers.

4. Models for Entrepreneurship • Crisis driven model - People become entrepreneurs when the economy stops supplying jobs. This happened in the San Diego region in the 1990s when the end of the cold war threw hundreds of highly trained military scientists out of work. Local start-ups such as Qualcomm hoovered up the talent and put it to new uses. • local-hero model in which a local entrepreneur sees an opportunity, starts a business and turns it into a giant.

5. Approaches to Entrepreneurship Macro Entrepreneurial school of thought • Environmental school of thought • Financial/Capital school of thought • Displacement school of thought Micro Entrepreneurial school of thought • Entrepreneurial traits school of thought (people school) • Venture opportunity school of thought • Strategic formulation school of thought

6. Environmental school of thought Influence of external factors to initiate business • Man made environment • Natural environment • Family and social factors • Local economic, social and political environment. • Regional economic, social and political environment. • National economic, social and political environment. • International economic, social and political environment.

7. Financial/Capital school of thought The entire focus of this school is capital seeking process of business start and growth. • Venture capital • Angel capital • Debt/loans • Equity • Family • Friends • Fools • Luck

8. Displacement school of thought People never start business unless they are prevented or displaced from other activities. • Political displacement – allowing or not allowing people to start business in some areas. • Cultural displacement – some social groups are precluded from some professional fields. • Economic displacement – bad economic times give many opportunities to start business people putting out of the work.

9. Entrepreneurial traits school of thought (people school) This school analyses common characteristics or traits of entrepreneurs. • Achievement, creativity, determination and technical knowledge. • Family background and educational incubation. • This school says certain traits developed or inherited may be the key to entrepreneurship.

10. Venture opportunity school of thought This school analyze factors relevant to opportunity aspects of the venture development. • Sources of business ideas • The development of business concept • Implementation of the venture opportunity • Creativity, innovation and market awareness • Right business idea, right time for right market niche. • Corridor principle – Whenever new opportunity emerge ability to capture and materialize them.

11. Strategic formulation school of thought This says that strategic planning process help to be successful venture creators. • Identification of unique markets • Identification of unique people • Identification of unique products • Identification of unique factors of production

12. Process approach for entrepreneurship Under this various models and methods attempt to structure entrepreneurship process and its various influencing factors. • Integrative approach (Inputs and out puts of entrepreneurial process) • Assessment approach (Assessment of venture and venture environment in various perspectives) • Multi-dimensional approach (Entrepreneurship is analyzed in multi-dimensional ways and means)

13. Integrative approach • Inputs (Environmental opportunities, Entrepreneurial individuals, An organizational context, Unique business concept, Resources) • Entrepreneurial process (Identify the opportunity, Assess and acquire necessary resources, Implementation) • Entrepreneurial intensity (innovation, risk taking, proactiveness) • Outcomes (New venture, value creation, new products, process and services, New technologies, profits, personnel benefits, employment, asset, revenue…..)

14. Assessment approach This approach analyses venture creation and its conducive environment under the following headings: • Qualitatively • Quantitatively • Strategically • Ethically • Venture maturity

15. Multi-dimensional approach More detailed process approach: analyses various qualities of entrepreneurs under the headings of individual, environment, organization and process. • Individual factors (need for achievement, locus of control, risk taking propensity, job satisfaction, previous work experience, family background, age, education…..) • Environment (venture capital availability, presence of experience entrepreneurs, technically skilled labor force, accessibility of suppliers, customers and new markets, government influence, proximity to Universities, infrastructure availability, attitudes of the people in location, living conditions….) • Organization (type of the firm, partners, strategic variables…) • Process (Location, resources accumulation, marketing, responding to outsiders….)

16. The Entrepreneur Process The Entrepreneur Process • Motivation to make a difference • Ability to create and innovate • Opportunity spot and exploit • Find the required resources • Uses networks extensively • Determined in the face of adversity • Manage the risks • Overcoming obstacles through • Control business • Putting customer first, creation of overall capital.) See ppt diagram in next slide.

17. 4. Finding the Required Resources 5. Using networks extensively 3 .Spotting and Overcoming 10.Financial Social, aesthetic, capital 1. Motivation to make a difference 3. Creativity and innovation 2. Creativity and innovation Exploiting Opportunities Obstacles Recognition of value 7.Managing risk GROWING ENTERPRISE 6.Showing determination in the face of adversity 8.Controling the business 9.Putting the customer first THAT SUCSESS The Entrepreneur Process

18. The entrepreneur The opportunity- spotter The projected champion The enterprising person who realizes The opportunity and is minded to Engage it. The person who makes things happens. The inventor Realizing The Opportunity Engaging the idea And opportunity Exploiting the opportunity to build something Of value The Idea The entrepreneur, the opportunity spotter and the project champion

19. Idea The Opportunity-spotter The project champion Successful business Market gap Oppor- tunity The entrepreneur The entrepreneur, the opportunity spotter and the project champion

20. Gallup’s Entrepreneur perceiver interview • This identify various behavioral characteristics and personnel attributes of entrepreneur under various themes. • Most of the Entrepreneurial Centers around the world use this as guideline to prepare various tests to check entrepreneurial abilities. • These characteristics are outlined as striving talents, thinking talents and relating talents.

21. Gallup’s Entrepreneur perceiver interview Some of these characteristics are Dedication: consumed by a goal or purpose Focus: discriminates and target Profits orientation: advantage focus Ego drive: wants to make a recognized difference Urgency: no time to waste and must take action now Courage: determined in the face of adversity Activator: wants to make it happen Opportunity: sees possibilities not problems Creativity: buzzing with ideas Expertise orientation: knows own limits and find experts Team: gets the right people together Individual perception: see and uses strengths of others.

22. Gallup’s Entrepreneur perceiver interview • Using entrepreneurial triangle we can explain this inter-relationship: creating, going for opportunities, building support and doing. See ppt diagram in slide. • Talent, temperament and technique: Gallup questions can arrange according to talent, temperament and technique framework. This gives an another perspective for entrepreneurs. See ppt diagram in next slide. • The ‘well of talent’ is another concept to show how hard to identify people with entrepreneurial skills and develop them as real entrepreneurs. See ppt diagram in next slide.

23. Expertise Orientation Ego Drive Activator Courage Building Suport Doing Profit Orientation Team Creating (Ideas) Individualized Perception Urgency Dedication Creativity Focus Opportunity Going for opportunities Figure…..The Entrepreneurs Triangle Entrepreneurial Triangle

24. Advantage Orientation Creativity Courage • Talent Abilities Networker Focus Team Opportunity spotting Resourcing TEMPERAMENT Needs Drives Responsibility Competition Ego Drive Activator Performance Orientation Urgency Mission Dedication Opportunity taking TECHNIQUE The entrepreneur’s Skill set Techniques to develop Talents & manage temperament Experience Talent, Temperament and Technique

25. Followers Operational managers Enterprising managers Project champions Leaders Entrepreneurs Inventors The Well of Talents

26. Questions