Entrepreneurship Midterm Notes

• What is Entrepreneurship?
1. Entrepreneurship is the process of creating something new
2. of value by devoting (giving) the necessary time and effort.
3. By accepting and acknowledging the necessary financial,
4. psychological, and social risks, and
5. Finally receiving the resulting rewards be it monetary and
6. personal satisfaction and freedom to do what you want.
Simple Definition:
• Process of creating something new and assuming the risks and rewards.
• What is an entrepreneur: He or she is an individual who actively form or lead
their own business and nurture them for growth and prosperity.
• What are the different outcomes of engaging in entrepreneurship?
1. Innovation or newness – product or service.
2. Organizing resources – finance, people, physical and information
3. resource.
4. Creating new product or service.
5. Generating wealth
6. Taking risk in a business venture.
7. Prepared to face uncertainty.
8. Create job opportunity
9. Increase the abundance of wealth generation for the nation.
Key Entrepreneurial Characteristics:
1. Initiative
2. Opportunity recognition and action
3. Persistence
4. Information seeking
5. Commitment to quality and productivity
6. Contractual commitment
 7. Efficiency
8. Systematic planning
9. Problem-solving
10.Self-confidence
11.Assertiveness in negotiations
12.Persuasiveness with peers and stakeholders
13.Inspiration for employees
14.Effective communication internally and externally.
The Role of Entrepreneurship in Economic Growth:
1. Increases per capita output and income.
2. Drives change in business and society structures, leading to growth
and wealth distribution.
3. Generates innovation for new products and services.
4. Improves existing products to meet market needs.
5. Creates self-employment and reduces reliance on government jobs.
6. Modernizes private sector with less labor-dependent technology.
7. Boosts national output and economic growth.
8. Cultivates new entrepreneurs in emerging technologies like
biotechnology, medicine, nanotechnology, and new materials.
This primarily involves the:
1. Nurturing intrapreneurs and corporate entrepreneurs.
2. Government grants and subsidies for entrepreneurs.
3. Providing business loans for small and medium enterprises (SMEs).
4. Engaging both bumiputra and non-bumiputra in entrepreneurship
schemes.
5. Offering knowledge through seminars, conferences, and e-portals.
6. Providing financial and information support from government
agencies and national corporations.
Benefits of Entrepreneurship:
1. Opportunity to shape one's destiny.
2. Business ownership offers independence and the chance to pursue
personal goals.
3. Entrepreneurs use their businesses to turn their desires into reality.
4. Opportunity to make a Difference.
5. Opportunity to reach your full potential.
6. Opportunity to reap extraordinary (luar biasa) profits: Entrepreneurs'
profits drive motivation and performance, leading to greater
achievement and success.
7. Societal Responsibility and Recognition.
8. Opportunity to engage in work of their choice.

The Drawbacks of Entrepreneurship:

1. Uncertainty of Income.
2. Risk of losing your entire Investment.
3. Long Hours and Hard Work.
4. Lower Quality of Life until the business gets established.
5. High level of stress.
6. Complete Responsibility.
7. Discouragement.
An entrepreneurial opportunity could stem from:
1. A new market.
2. A new product for an existing market.
3. A new product for a new market.
The McMullen-Shepherd model explains how knowledge and
motivation influence two stages of entrepreneurial action:
Stage 1 is the realization an opportunity exists for someone.
Stage 2 is determining whether it is an opportunity for themselves.
Acting on and pursuing the identified opportunity involves
entrepreneurial thinking
Bricolage: Refers to taking existing resources and experimenting,
tinkering, repackaging, and/or reframing them to be used in a
way they were not originally designed or conceived.
Effectuation: A causal process involves thinking of a desired outcome and then
coming up with a plan to achieve that outcome.
To develop this mindset, managers must:
 attempt to make sense of opportunities,
 constantly question their dominant logic, and
 revisit what they think true about markets and firms.
Cognitive Adaptability:
1. The extent entrepreneurs are dynamic, flexible, self-regulating, and
2. engaged in sensing and acting on changes in their environments.
3. Reflected in an entrepreneur’s ability to reflect upon, understand, and
4. control their thinking and learning
Learn to be more cognitive by asking questions in four areas:
• Comprehension questions.
• Connection tasks.
• Strategic tasks.
• Reflection tasks
The Intention to Act Entrepreneurially:
1. Entrepreneurial self-efficacy refers to the conviction that one can
successfully execute the behavior required.
2. Perceived desirability refers to an individual’s attitude toward
entrepreneurial action.
Entrepreneur Background and Characteristics:
Education:
• A broad knowledge allows for the discovery of potential opportunities
and assists adaptability.
• Provides transferable knowledge, skills, and problem-solving abilities.
Age:
• Entrepreneurial age reflects the entrepreneur’s experience.
• Most entrepreneurs are between 22 and 45 when starting their career.
Work History:
• Work history plays a role in the growth and success of a new venture.
• Experience in financing, product development, manufacturing,
• distribution, and marketing are particularly important.
Role Models and Support Systems:
A role model is an important factor influencing an entrepreneur’s
career path.
• Can be relatives or successful community entrepreneurs.
• Can serve as mentors before and after launch of the venture
Networks:
Entrepreneurial activity is embedded in networks of
interpersonal relationships.
These networks offer:
• Access to resources.
• Assistance in discovering and exploiting new opportunities.
• Opportunities to exchange goods and services.
• Perceived feasibility that strengthens entrepreneurial intentions.
Sustainable Entrepreneurship: Entrepreneurial action can both sustain and
develop. Sustainable entrepreneurship is focused on preserving nature,
supporting life and community in the pursuit of opportunities to
bring future products and services into existence for gain.
 Entrepreneurial Impact: Entrepreneurs can generate economic wealth for
themselves, but their impact on development can be far greater.
• They can generate economic, environmental, and social gains for others
including job opportunities or revenues for the government.
• Environmental gains could be reduced air pollution, increased drinking-
water quality, and other improved living conditions.
• Social gains include improved child survival rates, longer life expectancy,
superior education, equal opportunity, and so on.
Causes for Interest in Corporate Entrepreneurship:
1. Desire for independence and autonomy.
2. Discontent with rigid organizational structures.
3. Encouragement from organizations to capitalize on employees'
innovative ideas and initiatives.
Entrepreneurial Intentions Within Existing Organizations:
1. Top management must foster an environment conducive to
entrepreneurial thinking and action.
2. Employees should perceive entrepreneurial actions within the
organization as personally desirable and achievable.
Corporate entrepreneurship is evident in:
1. New business venturing (corporate venturing): Creating new
businesses within existing organizations.
2. Innovativeness: Emphasizing product and service innovation,
especially in technology.
3. Self-renewal: Transforming by renewing key organizational ideas.
4. Proactiveness: Taking initiative, risks, and competitive action boldly.
Entrepreneurial management is distinct from traditional management in terms of:
1. ▪ Strategic orientation.
2. ▪ Commitment to opportunity.
3. ▪ Commitment of resources.
4. ▪ Control of resources.
5. ▪ Management structure.
 6. ▪ Reward philosophy.
7. ▪ Growth orientation.
8. ▪ Entrepreneurial culture.
Strategic orientation: refers to those factors that are inputs into the formulation of
the firm’s strategy.
Entrepreneurial orientation: toward opportunity A commitment to taking action
on potential opportunities.
entrepreneurial orientation toward commitment of resources: A focus on how to
minimize the resources that would be required in the pursuit of a particular
opportunity.
entrepreneurial orientation toward control of resources: A focus on how to access
others resources.
Entrepreneurial orientation favors an organic management structure: is
characterized by minimal bureaucratic layers between top management and
customers, and often includes multiple informal networks.
Entrepreneurial philosophy towards rewards: involves compensating employees
based on their contributions to discovering, generating, and exploiting
opportunities.
entrepreneurial orientation toward growth: A focus on rapid growth.
entrepreneurial orientation toward culture:A focus on encouraging employees to
generate ideas, experiment, and engage in other tasks that might produce
opportunities.
Problems and Successful Efforts:
▪ A study found that new ventures started within a corporation performed worse
than those started independently by entrepreneurs.
▪ Reasons cited:
▪ Corporation’s difficulty in maintaining a long-term
commitment.
▪ A lack of freedom to make autonomous decisions.
▪ A constrained environment.
▪ On average, independent start-ups become:
▪ Profitable twice as fast.
▪ End up twice as profitable
Companies that have adopted their own version of the implementation process to
launch new ventures successfully:
1. ▪ Minnesota Mining and Manufacturing (3M).
2. ▪ Hewlett-Packard (HP).
3. ▪ IBM.
Loss orientation: is a method for dealing with negative emotions by actively
processing aspects of the loss experience, ultimately leading to the detachment of
emotional bonds with the lost object.
Restoration orientation: involves addressing negative emotions through a
combination of avoidance and proactive efforts to deal with secondary stressors
stemming from a significant loss.
New entry refers to:
1. Offering a new product to an established or new market. ▪ Offering an
established product to a new market.
2. Creating a new organization. New entry refers to:
3. Offering a new product to an established or new
4. market.
5. Offering an established product to a new
6. market.
7. Creating a new organization.
Entrepreneurial strategy : The set of decisions, actions, and reactions that first
generate, and then exploit over time, a new entry.
Resources are fundamental to a firm's operations and performance, serving as
inputs for production. They can be combined in various ways, forming a bundle
that enables superior performance. For a resource to contribute to competitive
advantage, it must be valuable, rare, and difficult to imitate.
Assessing the attractiveness of a new entry opportunity: depends on the available
information and the willingness to make decisions with imperfect information.
Information on a New Entry:
1. Prior knowledge and information search are crucial.
2. More knowledge leads to a more efficient search.
3. Search costs encompass both time and money.
4. The viability of a new entry can be assessed in terms of a window of
opportunity.
Window of opportunity: refers to the period when environmental conditions are
favorable for entrepreneurs to capitalize on a specific new entry.
Comfort with making decisions under uncertainty involves:
 navigating the trade-off between acquiring more information and the risk of
the opportunity window closing.
 Entrepreneurs face dilemmas such as the error of commission, resulting
from acting on perceived opportunities, and the error of omission,
stemming from not seizing new entry opportunities.
Assessment of a new entry's attractiveness: involves evaluating whether the
entrepreneur believes they can make the proposed entry successful.