Fluent Essays

Write down the most important thing you learned from the Entrepreneurship class. Which is the best part to apply for work. “400 words with 3 references APA7.0 “ Write down the most important thing that you learned from the Entrepreneurship class, and what you liked the best. Entrepreneurship: Evolutionary Development—Revolutionary Impact © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PowerPoint Presentation by Charlie Cook Part I The Entrepreneurial Mind-Set in the 21st Century C h a p t e r 1 Learning Objectives To examine the historical development of entrepreneurship To explore and debunk the myths of entrepreneurship To define and explore the major schools of entrepreneurial thought To explain the process and framework approaches to the study of entrepreneurship To set forth a comprehensive definition of entrepreneurship To examine the entrepreneurial revolution taking place today To illustrate today’s entrepreneurial environment © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–2 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–3 Entrepreneurs—Breakthrough Innovators Entrepreneurs Recognize opportunities where others see chaos, contradiction, or confusion Are aggressive catalysts for change within the marketplace Challenge the unknown and continuously create breakthroughs for the future 3 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–4 Entrepreneurs versus Small Business Owners: A Distinction Small Businesses Owners Manage their businesses by expecting stable sales, profits, and growth Entrepreneurs Focus their efforts on innovation, profitability and sustainable growth 4 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–5 Entrepreneurship: A Mind-Set Entrepreneurship is more than the mere creation of business: Seeking opportunities Taking risks beyond security Having the tenacity to push an idea through to reality Entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner. 5 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–6 The Evolution of Entrepreneurship Entrepreneur is derived from the French entreprendre, meaning “to undertake.” The entrepreneur is one who undertakes to organize, manage, and assume the risks of a business. Although no single definition of entrepreneur exists and no one profile can represent today’s entrepreneurs, research is providing an increasingly sharper focus on the subject. 6 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–7 A Summary Description of Entrepreneurship Entrepreneurship (Robert C. Ronstadt) The dynamic process of creating incremental wealth. This wealth is created by individuals who assume major risks in terms of equity, time, and/or career commitment of providing value for a product or service. The product or service itself may or may not be new or unique but the entrepreneur must somehow infuse value by securing and allocating the necessary skills and resources. 7 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–8 An Integrated Definition Entrepreneurship A dynamic process of vision, change, and creation. Requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions. Essential ingredients include: The willingness to take calculated risks—in terms of time, equity, or career. The ability to formulate an effective venture team; the creative skill to marshal needed resources. The fundamental skills of building a solid business plan. The vision to recognize opportunity where others see chaos, contradiction, and confusion. 8 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–9 Avoiding Folklore: The Myths of Entrepreneurship Myth 1: Entrepreneurs Are Doers, Not Thinkers Myth 2: Entrepreneurs Are Born, Not Made Myth 3: Entrepreneurs Are Always Inventors Myth 4: Entrepreneurs Are Academic and Social Misfits Myth 5: Entrepreneurs Must Fit the Profile Myth 6: All Entrepreneurs Need Is Money Myth 7: All Entrepreneurs Need Is Luck Myth 8: Entrepreneurship Is Unstructured and Chaotic Myth 9: Most Entrepreneurial Initiatives Fail Myth 10: Entrepreneurs Are Extreme Risk Takers 9 The Entrepreneurial Process Types of people involved with contemporary small businesses: The entrepreneur who invents a business that works without him or her. The manager who produces results through employees by developing and implementing effective systems and, by interacting with employees, enhances their self-esteem and ability to produce good results. The technician who performs specific tasks according to systems and standards management developed. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–10 Source: Adapted from Michael E. Gerber, The E-Myth Revisited: Why Most Businesses Don’t Work and What to Do About It (New York: Harper Collins, 1995, 2001) and personal interview. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–11 1.1 Entrepreneurial Schools-of-Thought Approach Table 11 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–12 Macro View: External Locus of Control The Environmental School of Thought Considers the external factors that affect a potential entrepreneur’s lifestyle. The Financial/Capital School of Thought Based on the capital-seeking process—the search for seed and growth capital. The Displacement School of Thought Alienation drives entrepreneurial pursuits Political displacement (laws, policies, and regulations) Cultural displacement (preclusion of social groups) Economic displacement (economic variations) 12 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–13 1.1 Financial Analysis Emphasis Venture Stage Financial Consideration Decision Start-up or acquisition Seed capital Venture capital sources Proceed or abandon Ongoing Cash management Investments Financial analysis and evaluation Maintain, increase, or reduce size Decline or succession Profit question Corporate buyout Succession question Sell, retire, or dissolve operations 13 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–14 Micro View: Internal Locus of Control The Entrepreneurial Trait School of Thought Focuses on identifying traits common to successful entrepreneurs. Achievement, creativity, determination, and technical knowledge The Venture Opportunity School of Thought Focuses on the opportunity aspect of venture development—the search for idea sources, the development of concepts, and the implementation of venture opportunities. Corridor principle: New pathways or opportunities will arise that lead entrepreneurs in different directions. 14 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–15 Micro View… (cont’d) The Strategic Formulation School of Thought Emphasizes the planning process in successful venture development. Strategic formulation is a leveraging of unique elements: Unique Markets—mountain gap strategies Unique People—great chef strategies Unique Products—better widget strategies Unique Resources—water well strategies 15 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–16 Process Approaches to Entrepreneurship An Integrative Approach Built around the concepts of input to the entrepreneurial process and outcomes from the entrepreneurial process. Focuses on the entrepreneurial process itself and identifies five key elements that contribute to the process. Provides a comprehensive picture regarding the nature of entrepreneurship that can be applied at different levels. 16 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–17 1.2 An Integrative Model of Entrepreneurial Inputs and Outcomes Source: Michael H. Morris, P. Lewis, and Donald L. Sexton, “Reconceptualizing Entrepreneurship: An Input-Output Perspective,” SAM Advanced Management Journal 59, no.1 (Winter 1994): 21–31. 17 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–18 Process Approaches… (cont’d) Dynamic States Approach Stresses dependency of venture on environment and the interaction of: The dominant logic of the firm The business model Value creation 18 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–19 1.3 Dynamic States Approach Source: Jonathan Levie & Benjamin B. Lichtenstein, (2010). “A Terminal Assessment of Stages Theory: Introducing a Dynamic States Approach to Entrepreneurship,” Entrepreneurship Theory and Practice, 34, no. 2 (2010): 332. Reproduced with permission of John Wiley & Sons Ltd.. 19 Process Approaches… (cont’d) A Framework of Frameworks Approach Offers a more dynamic view of entrepreneurship. Allows for the profession to move forward. Identifies the static and dynamic elements of new theories, typologies, or frameworks of importance. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–20 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–21 1.4 A Framework of Frameworks Approach Source: Donald F. Kuratko, Michael H. Morris, and Minet Schindehutte, “Understanding the Dynamics of Entrepreneurship through Framework Approaches,” Small Business Economics, 45, no. 1 (2015): 9. Berlin, Germany; Springer Publishing. 21 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–22 The Entrepreneurial Revolution: A Global Phenomenon Entrepreneurship is the symbol of business tenacity and achievement. Entrepreneurs were the pioneers of today’s business successes. Two perspectives on entrepreneurship: Statistical: numbers that emphasize the importance of entrepreneurs to the economy. Academic: trends in entrepreneurial research and education. 22 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–23 Effects of Entrepreneurship The Global Entrepreneurship Monitor (GEM) Provides an annual assessment of the entrepreneurial environment of over 100 countries. Latest GEM study: the U.S. outranks the rest of the world in important entrepreneurial support. Entrepreneurs lead to growth by: Entering and expanding existing markets. Creating entirely new markets by offering innovative products. Increasing diversity and fostering minority participation in the economy. 23 Phases of Economic Development © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–24 The factor-driven phase The efficiency-driven phase The innovation-driven phase Lessons from the GEM Study © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–25 1 Works best when there is a strong set of basic economic requirements in place to reinforce efficiency enhancers Needs both dynamism and stability for the creation of new businesses and the exit of nonviable ones Entrepreneurship Impacts economic measures for growth, innovation, and internationalization. Requires a variety of business phases and types and different types of entrepreneurs including women and age groups 2 3 4 Flourishes when there is broad societal acceptance of the entrepreneurial mind-set 5 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–26 Predominance of New Ventures in the U.S. Economy Entrepreneurial Activity in the United States: Growth in Small Businesses Entrepreneurs create over 400,000 new businesses each year. 28.2 million small firms provide 49.6 \% of private-sector jobs and make up 99.7 \% of employing firms. Over the past five years, the number of minority-owned firms increased 45.6\% while women-owned businesses increased 20.1\%. 1 of every 150 adults participates in the founding of a new firm each year 26 Entrepreneurial Ventures in the United States Reasons for the exceptional entrepreneurial activity in the U.S. include: A national culture that supports risk taking and seeking opportunities. Americans’ alertness to unexploited economic opportunity and a low fear of failure. U.S. leadership in entrepreneurship education at both the undergraduate and graduate level. A high percentage of individuals with professional, technological or business degrees who are likely to become entrepreneurs. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–27 27 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–28 The Impact of Gazelles A “Gazelle” A business establishment with at least 20\% sales growth in each year for five years, starting with a base of at least $100,000 in annual sales. Gazelles as leaders in innovation: Are responsible for 55\% of innovations in 362 different industries and 95\% of radical innovations. Produce twice as many product innovations per employee as do larger firms. Obtain more patents per sales dollar than do larger firms. 28 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–29 1.2 Mythology Associated with Gazelles Gazelles are the goal of all entrepreneurs. Gazelles receive venture capital. Gazelles were never mice. Gazelles are high-tech. Gazelles are global. Source: NFIB Small Business Policy Guide (Washington, D.C., November 2000), 31. 29 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–30 Gazelles And Survival How many gazelles survive? The simple answer is “none.” Sooner or later, all companies wither and die. The Common Myth of Failure: 85\% of all firms fail in the first year—in actuality, about half of all start-ups last between 5 and 7 years. 30 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–31 Legacy of Entrepreneurial Firms Entrepreneurial components of the U.S. Economy: Large firms have increased profitability by returning to their “core competencies through restructuring and downsizing. New entrepreneurial companies have been blossoming in new technologies and new markets. Thousands of smaller firms established by women, minorities, and immigrants have strengthened the economy. 31 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–32 Entrepreneurial Firms’ Economic Impact Entrepreneurial firms make two indispensable contributions to an economy: They are an integral part of the renewal process that pervades and defines market economies. They are the essential mechanism by which millions enter the economic and social mainstream of society. 32 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–33 21st Century Trends in Entrepreneurship Research Venture Financing Social Entrepreneurship Corporate Entrepreneurship Trends in Entrepreneurship Research Entrepreneurial Cognition Global Entrepreneurial Movement Family Businesses Women and Minority Entrepreneurs Entrepreneurial Education 33 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–34 21st Century Trends in Entrepreneurship Research Major Research Themes: Venture Financing: venture capital and angel capital financing and other financing techniques strengthened in the 1990s. Corporate Entrepreneurship and the need for entrepreneurial cultures has drawn increased attention. Social Entrepreneurship has unprecedented strength within the new generation of entrepreneurs. Entrepreneurial Cognition is providing new insights into the psychological aspects of the entrepreneurial process. Women and Minority Entrepreneurs appear to face obstacles and difficulties different from those that other entrepreneurs face. The Global Entrepreneurial Movement is increasing. 34 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–35 21st Century Trends in Entrepreneurship Research (cont’d) Major Research Themes (cont’d): Family Businesses have become a stronger focus of research. Entrepreneurial Education has become one of the hottest topics in business and engineering schools throughout the world. 35 The Entrepreneurial Process Best Graduate Programs in Entrepreneurship Indiana University–Bloomington** Stanford University Harvard University Massachusetts Institute of Technology University of California–Berkeley** Babson College Best Undergraduate Programs in Entrepreneurship Indiana University–Bloomington** University of Pennsylvania University of Southern California University of Arizona** Babson College © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–36 The Best Business Schools for Entrepreneurship **denotes public university Source: Adapted from “Best Colleges for Aspiring Entrepreneurs,” Fortune Small Business (2007); “Venture Education,” Fortune Magazine (2010); and “Best Business School Rankings” U.S. News & World Report (2007 through 2015); © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–37 Key Entrepreneurship Concepts Entrepreneurship A process of innovation and new-venture creation through four major dimensions—individual, organizational, environmental, and process—that is aided by collaborative networks in government, education, and institutions. Entrepreneur A catalyst for economic change who uses purposeful searching, careful planning, and sound judgment when carrying out the entrepreneurial process. 37 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–38 Key Concepts (cont’d) Entrepreneurial Discipline It matters not who or what the entrepreneur is—a business or a non-business public service organization, whether a governmental or non-governmental institution. The rules are much the same and so are the kinds of innovation and where to look for them. 38 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–39 Key Concepts (cont’d) Entrepreneurial Leadership Combining two capacities of the pursuit of innovation. Capacity to lead Capacity to risk Leadership is measured. Sense of opportunity Drive to innovate Capacity for accomplishment One of the most significant phrases in the twenty-first century. 39 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1–40 Key Terms and Concepts better widget strategies corridor principle displacement school of thought dynamic states model entrepreneur entrepreneurial discipline entrepreneurial leadership Entrepreneurial Revolution entrepreneurial trait school of thought entrepreneurship environmental school of thought external locus of control financial/capital school of thought framework of frameworks gazelle great chef strategies internal locus of control macro view of entrepreneurship micro view of entrepreneurship mountain gap strategies strategic formulation school of thought venture opportunity school of thought water well strategies 40 The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PowerPoint Presentation by Charlie Cook Part I The Entrepreneurial Mind-Set in the 21st Century C h a p t e r 2 Learning Objectives To describe the entrepreneurial mind-set and entrepreneurial cognition To identify and discuss the most commonly cited characteristics found in successful entrepreneurs To discuss the “dark side” of entrepreneurship To identify and describe the different types of risk entrepreneurs face as well as the major causes of stress for these individuals and the ways they can handle stress To discuss the ethical dilemmas confronting entrepreneurs © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–2 2 Learning Objectives (cont’d) To study ethics in a conceptual framework for a dynamic environment To present strategies for establishing ethical responsibility and leadership To examine entrepreneurial motivation © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–3 3 The Entrepreneurial Mind-Set Entrepreneurial Mind-Set Describes the most common characteristics associated with successful entrepreneurs as well as the elements associated with the “dark side” of entrepreneurship. Who Are Entrepreneurs? Independent individuals, intensely committed and determined to persevere, who work very hard. They are confident optimists who strive for integrity. They burn with the competitive desire to excel and use failure as a learning tool. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–4 4 Entrepreneurial Cognition © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–5 The mental functions, processes (thoughts), and states of intelligent humans—attention, remembering, producing and understanding language, solving problems, and making decisions. Cognition Posits that knowledge structures (mental models of cognitions) can be ordered to optimize personal effectiveness within given situations. Social Cognition Theory The knowledge structures that people use to make assessments, judgments, or decisions involving opportunity evaluation, venture creation, and growth. Entrepreneurial Cognition Metacognitive Perspective Cognitive Adaptability The ability to be dynamic, flexible, and self-regulating in one’s cognitions given dynamic and uncertain task environments. Metacognitive Model Describes the higher-order cognitive process that results in the entrepreneur framing a task effectually, and thus why and how a particular strategy was included in a set of alternative responses to the decision task (metacognition). © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–6 Sources of Research on Entrepreneurs © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–7 The Entrepreneurial Mindset Speeches, Seminars and Presentations Direct Observation Research and Popular Publications 7 Sources of Research on Entrepreneurs (cont’d) Publications Technical and professional journals Textbooks on entrepreneurship Books about entrepreneurship Biographies or autobiographies of entrepreneurs Compendiums about entrepreneurs News periodicals Venture periodicals Newsletters Proceedings of conferences The Internet Direct Observation of Practicing Entrepreneurs Interviews Surveys Case studies Speeches, Seminars, and Presentations by Practicing Entrepreneurs © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–8 8 Characteristics of the Entrepreneurial Mind-Set Determination and perseverance Drive to achieve Opportunity orientation Initiative and responsibility Persistent problem solving Seeking feedback Internal locus of control Tolerance for ambiguity Calculated risk taking High energy level Creativity and innovativeness Vision Passion Independence Team building © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–9 9 Outline of the Entrepreneurial Organization © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–10 Imagination Flexibility Willingness to accept risks 10 8 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–11 2.1 Characteristics Often Attributed to Entrepreneurs Source: John A. Hornaday, “Research about Living Entrepreneurs,” in Encyclopedia of Entrepreneurship, ed. Calvin Kent, Donald Sexton, and Karl Vesper (Englewood Cliffs, NJ: Prentice Hall, 1982), 26–27. Adapted by permission of Prentice-Hall, Englewood Cliffs, NJ. Confidence Perseverance, determination Energy, diligence Resourcefulness Ability to take calculated risks Dynamism, leadership Optimism Need to achieve Versatility; knowledge of product, market, machinery, technology Creativity Ability to influence others Ability to get along well with people Initiative Flexibility Pleasant personality Egotism Courage Imagination Perceptiveness Toleration of ambiguity Aggressiveness Capacity for enjoyment Efficacy Commitment Ability to trust workers Sensitivity to others Honesty, integrity Maturity, balance Intelligence Orientation to clear goals Positive response to challenges Independence Responsiveness to suggestions and criticism Time competence, efficiency Ability to make decisions quickly Responsibility Foresight Accuracy, thoroughness Cooperativeness Profit orientation Ability to learn from mistakes Sense of power 11 Entrepreneurship Theory Entrepreneurs cause entrepreneurship. Entrepreneurship is a function of the entrepreneur: Entrepreneurship is characterized as the interaction of skills related to inner control, planning and goal setting, risk taking, innovation, reality perception, use of feedback, decision-making, human relations, and independence. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–12 12 Dealing with Failure: The Grief Recovery Process Loss Orientation Involves focusing on the particular loss to construct an account that explains why the loss occurred. Restoration Orientation Involves both distracting oneself from thinking about the failure event and being proactive towards secondary causes of stress. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–13 The Entrepreneurial Experience Entrepreneurs Create ventures much as an artist creates a painting. Are formed by the lived experience of venture creation. Experiential Nature of Creating a Sustainable Enterprise Emergence of the opportunity Emergence of the venture End emergence of the entrepreneur © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–14 14 The Dark Side of Entrepreneurship The Entrepreneur’s Confrontation with Risk Financial risk versus profit (return) motive varies in entrepreneurs’ desire for wealth. Career risk—loss of employment security Family and social risk—competing commitments of work and family Psychic risk—psychological impact of failure on the well-being of entrepreneurs © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–15 15 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–16 2.1 Typology of Entrepreneurial Styles Source: Thomas Monroy and Robert Folger, “A Typology of Entrepreneurial Styles: Beyond Economic Rationality,” Journal of Private Enterprise 9, no. 2 (1993): 71. 16 Entrepreneurs: Type A Personalities Chronic and severe sense of time urgency. Constant involvement in multiple projects subject to deadlines. Neglect of all aspects of life except work. A tendency to take on excessive responsibility, combined with the feeling that “Only I am capable of taking care of this matter.” Explosiveness of speech and a tendency to speak faster than most people. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–17 17 Stress and the Entrepreneur Entrepreneurial Stress The extent to which entrepreneurs’ work demands and expectations exceed their abilities to perform as venture initiators, they are likely to experience stress. Sources of Entrepreneurial Stress Loneliness Immersion in business People problems Need to achieve © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–18 18 Dealing with Stress Networking Getting away from it all Communicating with employees Finding satisfaction outside the company Delegating Exercising rigorously © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–19 19 The Entrepreneurial Ego Self-Destructive Characteristics Overbearing need for control Sense of distrust Overriding desire for success Unrealistic externalized optimism © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–20 20 Entrepreneurial Ethics Ethics Provides the basic rules or parameters for conducting any activity in an “acceptable” manner. Represents a set of principles prescribing a behavioral code of what is good and right or bad and wrong Defines “situational” moral duty and obligations. Sources of Ethical Dilemmas Pressure from inside and outside interests Changes in societal values, mores, and norms © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–21 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–22 2.2 Classifying Decisions Using a Conceptual Framework Source: Verne E. Henderson, “The Ethical Side of Enterprise,” Sloan Management Review (Spring 1982): 42. 22 Entrepreneurial Ethics (cont’d) Ethical rationalizations used to justify questionable conduct involve believing that the activity: Is not “really” illegal or immoral. Is in the individual’s or the firm’s best interest. Will never be found out. Helps the firm so the firm will condone it. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–23 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–24 Table 2.2 Types of Morally Questionable Acts Type Direct Effect Examples Nonrole Against the firm Expense account cheating Embezzlement Stealing supplies Role failure Against the firm Superficial performance appraisal Not confronting expense account cheating Palming off a poor performer with inflated praise Role distortion For the firm Bribery Price fixing Manipulating suppliers Role assertion For the firm Investing in unethically governed countries Using nuclear technology for energy generation Not withdrawing product line in face of initial allegations of inadequate safety Source: James A. Waters and Frederick Bird, “Attending to Ethics in Management,” Journal of Business Ethics 5 (1989): 494. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–25 2.3 Overlap Between Moral Standards and Legal Requirements Ethical Dilemmas 25 Reasons for Unethical Behaviors Occur © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–26 Greed Distinctions between activities at work and activities at home Survival (bottom-line thinking) A reliance on other social institutions to convey and reinforce ethics Lack of a foundation in ethics Entrepreneurial Ethics (cont’d) Extended consequences Multiple alternatives Mixed outcomes Uncertain ethical consequences Personal implications Complexity of Ethical Decisions © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–27 Entrepreneurial Ethics (cont’d) Online Ethical Dilemmas in E-Commerce Continuing to obtain consumer trust. Protecting their business’s online reputation. Avoiding tactics that betray trust. Continuing to exhibit strong ethical responsibility. Establishing an ethical strategy. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–28 Establishing a Strategy for an Ethical Venture Ethical Code of Conduct Is a statement of ethical practices or guidelines to which an enterprise adheres. Are becoming more prevalent in industry. Are proving to be more meaningful in terms of external legal and social development. Are more comprehensive in terms of their coverage. Are easier to implement in terms of the administrative procedures used to enforce them. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–29 “Always Do the Right Thing” Reasons for management to adhere to a high moral code: It is good business because unethical practices have a corrosive effect not only on the firm itself, but on free markets and free trade which are fundamental to the survival of the free enterprise system. Improving the moral climate of the firm will eventually win back the public’s confidence in the firm. © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–30 Ethical Responsibility © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–31 Establish a strategy for ethical responsibility that encompasses: Ethical consciousness Ethical process and structure Institutionalization Ethical Considerations of Corporate Entrepreneurs Organizational barriers that invite unethical behaviors: Systems Structures Policies and Procedures Culture Strategic Direction People Promote ethical employee behaviors by: Providing flexibility, innovation, and support of initiative and risk taking Removing barriers for entrepreneurial middle managers Including an ethical component to corporate training © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–32 © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–33 2.4 Ethical Challenges for Corporate Entrepreneurship Unethical Consequences Source: Donald F. Kuratko and Michael G. Goldsby, “Corporate Entrepreneurs or Rogue Middle Managers? A Framework for Ethical Corporate Entrepreneurship,” Journal of Business Ethics 55 (2004): 18. 33 Ethical Leadership by Entrepreneurs The value system of an owner/entrepreneur is the key to establishing an ethical organization. A code of ethics provides a clear understanding of the need for: Ethical administrative decision-making Ethical behavior of employees Explicit rewards and punishments based on ethical behavior © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–34 Entrepreneurial Motivation Entrepreneurial Motivation The quest for new-venture creation as well as the willingness to sustain that venture Personal characteristics, personal environment, business environment, personal goal set (expectations), and the existence of a viable business idea Entrepreneurial Persistence An entrepreneur’s choice to continue with an entrepreneurial opportunity regardless of counterinfluences or other enticing alternatives © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–35 Key Terms and Concepts career risk code of conduct cognition cognitive adaptability dark side of entrepreneurship entrepreneurial behavior Entrepreneurial cognition entrepreneurial experience entrepreneurial mind-set entrepreneurial motivation entrepreneurial persistence ethics failure family and social risk financial risk grief recovery metacognitive model psychic risk rationalizations risk role assertion role distortion role failure social cognition theory stress © 2017 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–36 36