Chapter 1 Entrepreneurship and the Entrepreneurial MindSet 2014

Chapter 1 Entrepreneurship and the Entrepreneurial Mind-Set © 2014 by Mc. Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may Mc. Graw-Hill/Irwin Copyright © 2013 by The Mc. Graw-Hill Companies, Inc. All rights reserved. not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Learning Objectives • To introduce the concept of entrepreneurship and explain the process of entrepreneurial action • To describe how structural similarities enable entrepreneurs to make creative mental leaps • To highlight bricolage as a source of entrepreneurs’ resourcefulness 1 -2

Learning Objectives • To introduce effectuation as a way expert entrepreneurs sometimes think • To develop the notion that entrepreneurs cognitively adapt • To introduce sustainable entrepreneurship as a means of sustaining the natural environment and communities and developing gains for others 1 -3

The Nature of Entrepreneurship • Entrepreneurial opportunities • Situations in which new goods, services, raw materials, and organizing methods: • Can be introduced • Sold at greater than their cost of production • Entrepreneurial action: • Involves creation of new products or processes • Involves entry into new markets 1 -4

The Nature of Entrepreneurship • May occur through a newly created organization or within an established organization • Entrepreneurial thinking • An individuals’ mental processes of overcoming ignorance to: • Decide whether a signal represents an opportunity for someone • Decide whether that opportunity is applicable to the individual specifically • Process feedback from action steps taken 1 -5

Figure 1. 1 - Entrepreneurial Action 1 -6

How Entrepreneurs Think • Entrepreneurs should: • • • Think structurally Engage in bricolage Effectuate Cognitively adapt Learn from failures 1 -7

How Entrepreneurs Think • Think structurally • Superficial similarities: Basic elements of the technology resemble the basic elements of the market • Structural similarities: Underlying mechanisms of the technology resemble the underlying mechanisms of the market 1 -8

How Entrepreneurs Think • Bricolage • Applying combinations of the resources at hand to new problems and opportunities • Taking existing resources and tinkering and/or reframing them so they can be used in new ways 1 -9

How Entrepreneurs Think • Effectuation • Causal process • Starts with a desired outcome • Focuses on the means to generate that outcome • Effectuation process • Starts with what one has • Selects among possible outcomes • Entrepreneurial mind-set: Ability to rapidly sense, act, and mobilize, even under uncertain conditions 1 -10

How Entrepreneurs Think • Cognitive adaptability • Describes the extent to which entrepreneurs are: • Dynamic, flexible, self-regulating and engaged in the process of generating multiple decision frameworks • Focused on sensing and processing changes in their environments and then acting on them • Metacognitive awareness - Ability to reflect upon, understand, and control one’s thinking and learning 1 -11

How Entrepreneurs Think • Achieving cognitive adaptability • Comprehension questions • Increase entrepreneurs’ understanding of the nature of the environment • Connection tasks • Stimulate thinking about similarities and differences of current situations with situations previously faced and solved • Strategic tasks • Identify strategies that are appropriate for solving the problem or pursuing the opportunity 1 -12

How Entrepreneurs Think Reflection tasks • Stimulate entrepreneurs to think about their understanding and feelings as they progress through the entrepreneurial process • Increasing cognitive ability helps in: • Adapting to new situations • Being creative • Communicating one’s reasoning behind a particular response 1 -13

The Intention to Act Entrepreneurially • Entrepreneurial intentions • Motivational factors that influence individuals to pursue entrepreneurial outcomes • Entrepreneurial self-efficacy • Conviction that one can successfully pursue entrepreneurial outcomes • Perceived desirability • Degree to which a potential entrepreneurial outcome is evaluated as favorable or unfavorable 1 -14

Entrepreneur Background and Characteristics • Education • Facilitates integration and accumulation of knowledge thus providing a larger opportunity set • Casts a wider net for the discovery or generation of potential opportunities • Assists entrepreneurs in adapting to new situations • Does not necessarily determine whether the individual will create a new business 1 -15

Entrepreneur Background and Characteristics • Age • Chronological age – Usually between the ages 22 and 45 • Work history • Past work experience of an individual 1 -16

Role Models and Support Systems • Role models: Individuals whose example an entrepreneur can aspire to and copy • Moral-support network: Individuals who give psychological support to an entrepreneur • Professional-support network: Individuals who help the entrepreneur in business activities 1 -17

Sustainable Entrepreneurship • Preserving nature, life support, and community in the pursuit of perceived opportunities to: • Bring future products, processes, and services into existence for gain • Can generate: • Economic gains • Environmental gains • Social gains 1 -18