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Influences on Entrepreneurship – Influences of Entrepreneurship

Influences on Entrepreneurship – Influences of Entrepreneurship. Congress on Enterprise Creation, Innovative Culture, and Change in the University UPC Barcelona, March 13-14 2003 Erkko Autio, Professor Institute of Strategy and International Business Helsinki University of Technology.

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Influences on Entrepreneurship – Influences of Entrepreneurship

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  1. Influences on Entrepreneurship – Influences of Entrepreneurship Congress on Enterprise Creation, Innovative Culture, and Change in the University UPC Barcelona, March 13-14 2003 Erkko Autio, Professor Institute of Strategy and International Business Helsinki University of Technology

  2. Take-Home Messages • It is not entrepreneurship per se that is at issue – it is entrepreneurial growth • Growth-oriented entrepreneurship responds to policy measures • Entrepreneurial decision is not based on perception of skills – it is based on inspiration • High-potential entrepreneurs react to opportunities, life-style entrepreneurs do it anyways

  3. Thailand: 18,9% India: 17,9% Chile: 15,7% South Korea: 14,5% … China: 12,3% Iceland: 11,3% USA: 10,5% Ireland: 9,1% Total Entrepreneurial Activity 2002 (Source: Global Entrepreneurship Monitor GEM) Spain: 4,6% Finland: 4,5% France: 3,2% Belgium: 3,0% Japan: 1,8%

  4. Iceland: 3,97%New Zealand: 3,15% Chile: 2,93% South Korea: 2,11%Canada: 1,67% … US: 0,81% Finland: 0,71% ’High-Potential’ Activity 2002 (Source: Global Entrepreneurship Monitor GEM) > 20 jobs in 5 years at least some market creation > 1% exports Spain: 0,64% Japan: 0,16% Russia: 0,12% India: 0,04% South Africa: 0%

  5. South Korea: 0,97%Israel: 0,73%Canada: 0,41% US: 0,40% Singapore: 0,36% Spain: 0,13% Finland: 0,12% Classic Domestic VC 2001 Per GDP (Source: Global Entrepreneurship Monitor GEM) NZ: 0,04%Japan: 0,035%Switzerland: 0,033% … China: 0,01%

  6. www.gemconsortium.orgIn Spain:Instituto de Empresa, Madridwww.ie.eduAlicia Coduras Martinez Rachida Justo Julio DeCastroJoseph PistruiAlicia Coduras

  7. Entrepreneurial Growth is Highly Concentrated Our Study of Finnish Gazelles • 5 Gazelles (1%) generated 35% of the employment of the entire population, 44% of sales • Gazelles also appear to be concentrated in few growth agglomerations, notably in the Helsinki region • TBNFs were not over-represented in terms of numbers but were so in terms of sales

  8. Few Gazelles Generate the Bulk Impact

  9. What Explains Growth Entrepreneurship?

  10. Explaining High-Potential E...

  11. Explaining High-Potential E...

  12. Explaining Entrepreneurial Intent • Motivation (prospect) theories • Intent = ƒ(subjective norm, perceived behavioral control, attitude toward behavior) • “entrepreneurship ascalculatedoption” • “I start a firm because I believe that I can succeed” • Cognitive theories • intent = ƒ(role models, perceived behavioral logic, social norm) • “entrepreneurship as acooloption” • “I start a firm because I will be respected”

  13. Motivation Approach to E Support • Focus on teaching business skills & theories • Business planning • Opportunity recognition • New venture finance • New venture strategy • New venture growth • Emphasis on lectures and cases • Invest in support facilities • Science parks • Soft loans, subsidies • Venture capital

  14. Cognition Approach to E Support • Focus on teaching social norms and culture • Emphasis on team assignments • Emphasis on company assignments and participative, ‘shadowing’ projects • Emphasis on realistic and relevant role models • Emphasis on ‘non-teaching’ activities • New venture clubs • Business plan competitions • Invest in support software • Network building • Social activities

  15. Optimal Mix Balances Cognition and Motivation • Cognition • Provision of role models, E culture • Enhances individual’s willingness to see and create opportunity • Enhances individual’s willingness to jump at opportunity • Creates entrepreneurial environment • Motivation • Provision of skills and competencies • Enhances individual’s ability to evaluate opportunity • Enhances individual’s ability to capitalize on opportunity • Is important for growth

  16. NO: formal planning emphasis project-based goals small business management understanding small business focus on product, technology ”small is beautiful” YES: enacting the future time-paced planning velocity-based metrics venture management ”living the rhythm” of the business focus on market, value potential “small is ugly”:Growth is Good Our Philosophy

  17. Firms to Which HUT ISIB Has Actively Contributed =€0,2Bn Firms started by HUT ISIB students or graduates €0,1Bn + €0,1Bn Value Created: HUT ISIB helps organize the VentureCup Finland with McKinsey & Company, Helsinki School of Econ- omics, and the Swedish School of Economics in Helsinki

  18. The Business Plan Pipeline 1 Academic Year NVF$ Spring Spring NVD Fall EF European Business Plan Competition with LBS, Insead, IESE, Stockholm, Koblenz, Imperial, Cranfield, etc

  19. Venture Cup is a 3-Stage, Open, Business Plan Competition From an Idea... …to a Firm Stage 1 Business Idea Stage 2 Business Plan Draft Stage 3 Full Business Plan September -November November -January February -May Focus Awards Product orserviceconcept Customerbenefit 10*€ 1000 Marketingstrategy 10*€ 3000 Full scale plan Financing € 30 000 € 20 000 € 10 000 Total FIM 100 000

  20. To Repeat... • It is not entrepreneurship per se that is at issue – it is entrepreneurial growth • Invest in both skills and motivation • Growth-oriented entrepreneurship responds to policy measures • Active, long-term policy should emphasize both support and socialization • Entrepreneurial decision is not based on perception of skills – it is based on inspiration • Promote an image of coolness • High-potential entrepreneurs react to opportunities, life-style entrepreneurs do it anyways • Demonstrate a path to riches

  21. http://www.tuta.hut.fi/isibwww.tuta.hut.fi/persons/etautioerkko.autio@hut.fihttp://www.tuta.hut.fi/isibwww.tuta.hut.fi/persons/etautioerkko.autio@hut.fi

  22. Appendices

  23. Institute of Strategy and International Business • Leading institute in Finland in Entrepre-neurship, Venturing, Strategy, International Business • Recently, increasing focus on mCommerce • Knowledge-creation initiatives with McKinsey&Company, Durlacher, and others • B2B mCommerce • 3G Opportunity Space

  24. Fostering Entrepreneurial Activity at HUT Education Outreach Research

  25. Entrepreneurship Teaching at HUT • Enterprise Forum since 1975 • New Business Creation since 1990 • link with the Spinno incubator program • Current courses transplanted from LBS, including content and teacher • Currently New Venture Development, New Venture Finance, Enterprise Forum, Principles of Strategic Management, Strategic Management of Technology and Innovation, Telecommunications Management • Major in Telecommunications Venturing since 1998

  26. US: 10695k Hong Kong: 7068k Singapore: 3540k Italy: 3066k Spain: 2319k VC Per Receiving Firm 2001 (kUSD) (Source: Global Entrepreneurship Monitor GEM) China: 665k Japan: 627k Finland: 469k South Africa: 442k Iceland: 400k

  27. Iceland: 7%Mexico: 6% Thailand: 5% US: 5% South Korea: 5% Norway: 5% Spain: 3% Finland: 3% Micro Angels 2002 (Source: Global Entrepreneurship Monitor GEM) Japan: 1% Russia: 1% France: 1%

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