Three parallel tracks

2. Three parallel tracks Department of Business Studies Engineering physics Art History

3. Structure of the Course • Lectures 21 Jan-15 March • Guests Read Course Syllabus • Cases Attendance 2 miss outs • Take Home Exam Financial statements exl.

4. Examination 1. Classroom participation (20%) 2 class room cases 2. Take-home exam (80%) 1. Classroom participation (20%) 2 class room cases 2. Take-home exam (60%) 3. Group assignment, Spectre Case (20% of final grade)

5. SESSION 1 - ENTREPRENEURSHIP 1. WHO BECOMES AN ENTREPRENEUR? 2. THE FUNDAMENTALS OF ENTREPRENEURSHIP 3. SOME FACTS ABOUT THE START-UP PROCESS 4. YOUR CHANCES OF MAKING IT

6. “We are all entrepreneurs.” Ludwig von Mises (1949) Using different vehicles: New start-up firms Established firms Non-profit organizations Books Art

7. 1. WHO BECOMES AN ENTREPRENEUR?

13. What distinguishes entrepreneurs (from those who don’t start businesses)? 1. Entrepreneurs want financial success. 2. They want to be independent and in control. 3. They want to accomplish something new. 4. They embrace risk. 5. They want self-realization. 6. They want recognition. 7. They follow role models. 8. Entrepreneurs expect success. From Carter et al. (2003), Shaver (2005)

14. It may be about genetics Genetic heritage Personal characteristics Entrepreneurship

15. “Many individuals…become entrepreneurs even though they don’t have the supposedly requisite characteristics or motives … People who have not shown any prior tendency to become entrepreneurial often do so as a result of their experiences and life situations. No test will assure you that an individual will be an entrepreneur before the fact. ” Albert Shapero, Ohio State University

16. Differences between female and male entrepreneurs 1. Trait differences between male and female entrepreneurs are small or insignificant. 2. Women tend to be found more in retail and services, running smaller firms that grow slower than men’s.

17. Differences between female and male entrepreneurs “Across a long range of psychological, attitudinal and other background factors, there were many more similarities between male and female entrepreneurs than there were differences.” “A second observation is the tendency, particularly in the early articles to look for innate gender differences, without finding any significant such. Hopefully this collection [Women and Entrepreneurship: Contemporary Classics] demonstrates the futility of such search…” Ahl (2006)

18. Self-employment entry rates (white men ages 21-65) Age Entry rate (per cent) 21-25 1.7 26-30 2.9 31-35 2.6 36-40 2.8 41-45 2.7 46-50 2.5 51-55 2.4 56-60 2.3 61-65 2.5 Evans & Leighton (1989), U.S. National Longitudinal Survey and Current Population Surveys.

19. Entrepreneurs sometimes come alone, but more often in teams Laura Ashley: Laura Ashley, Bernard Ashley 3M: Henry Bryan, Hermon Cable, John Dwan, William McGonagle, Danley Budd IKEA: Ingvar Kamprad Icon Medialab: Jesper Jos Olsson, Johan Stael von Holstein, Erik Wikström, Magnus Lindahl Ongame: Oskar Hörnell, Claes Lidell

20. 2. THE FUNDAMENTALS OF ENTREPRENEURSHIP

21. Schumpeterian entrepreneurship • The entrepreneur creates new combinations. • 2. The process: creative destruction. • The outcome: fundamental competition that strikes at the heart of firms. • Schumpeter (1934, 1942)

22. Schumpeter’s view on new combinations The introduction of a new product or service. The introduction of a new manufacturing process. The capturing of a new source of supply or raw materials. The opening of a new market (geographical or segment). The creation of a new organizational form.

23. Kirznerian entrepreneurship • The entrepreneur is alert, sees and acts upon • market opportunities. • 2. The process: evolution. • The outcome: formation of prices. • Kirzner (1973, 1985)

24. You don’t have to be (technical) genius “Of the 100 Inc. founders we interviewed, only 6 percent even claimed to have started with unique products or services…58 per cent said that identical or very close substitutes were available for their product or service, and the rest indicated slight to moderate differences between their offerings and those of their competitors.” Bhidé (2000)

25. “I started the business with a simple question: How can we make the process of buying a computer better? The answer was: Sell computers directly to the end customers. Eliminate the reseller’s markup and pass those savings on to the customer. It didn’t occur to me that others hadn’t figured it out. I thought it was pretty obvious.” Michael Dell

26. 3. SOME FACTS ABOUT THE START-UP PROCESS

27. Main motives for starting a firm Dahlqvist & Davidsson (2000), large sample of Swedish new ventures

28. What are the important motives for starting high-technology ventures? Wealth (=100) 100 Stability, personal security 150 Ego, standing out from the crowd 160 Power 208 Contribution, make a difference 221 Lifestyle 229 Leadership, motivating/influencing others 242 Challenge 305 Vision, realize your own ideas 309 Independence 315 Innovation, do something new 317 From Amit et al. (2000)

29. “I have never gone into any business purely to make money. If that is the sole motive, then I believe you are better off not doing it.” Richard Branson, Virgin

30. “If you start a company just to get rich, you will probably fail. If you don’t have money as one of several motives, that’s a mistake too.” Ulf Arnetz, Reforce International

31. Original aspirations Bhidé (2000), Inc. 500 list companies

32. Time from idea to start-up Inc. Magazine (1989)

33. The first venture is not necessarily the last Bikes Disc bars Trampolines Computers (15 years) Ink cartridges Designers revolt Lennart Nyberg, inkClub

34. Mistakes will be made “All entrepreneurs at some point have made poor business decisions.” Björn Örås, founder of Poolia

35. It’s all about how you deal with them “It really was like a nightmare. I had built the best variety store in the whole region and worked hard in the community – done everything right – and now I was being kicked out of town. It didn’t seem fair. I blamed myself for ever getting suckered into such an awful lease and I was furious at the landlord.” Sam Walton, Wal-Mart

36. 4. OK, SO WHAT ARE MY CHANCES OF MAKING IT?

37. Survival rates of new businesses Per cent Year Estimates: Survival rates of UK VAT-registered businesses, Small Business Service (2004), Bygrave (2004)

38. Survival of start-ups by people with academic degrees Per cent Year Civilekonomerna, based on SCB statistics (2007)

39. Survival rates by industry Per cent Year Source: Headd (2000)

40. Said about the chances of making it really big “Growth is rare, high rates of growth are even more so, and the odds of winning are so low that they make lottery tickets look like a sound financial strategy.” Bill Schulze, 2008 Academy of Management Meeting, Anaheim

41. Probabilities in perspective Making it with your own firm: 1 / 10 CEO of PepsiCo: 1 / 285,000 Indra Nooyi

42. WHAT DOES THIS MEAN?

43. It means … • You’ve got what it takes. • 2. It’s very simple (but preparation helps). • 3. There’s no rush. • 4. It requires dedication and hard work. • “Opportunity is missed by most people because it is • dressed in overalls and looks like work.” • Thomas Edison