1a perspectives on entrepreneurship

7/31/2019 1a Perspectives on Entrepreneurship

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WHAT IS

ENTREPREURSHIP ?

THE CREATION ORRECOGNITION AND PURSUIT

OF OPPORTUNITY WITHOUTREGARD TO THERESOURCES CURRENTLYUNDER ONES CONTROL OR

INFLUENCE.(Timmons, 1994)

This involves:

THE DEFINITION, CREATIONAND DISTRIBUTION OF VALUEAND AND BENEFITS TOINDIVIDUALS, GROUPS,ORGANIZATIONS AND

SOCIETY.


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MAIN TRAITS AND

CHARACTERISTICS

(a)A NEED FOR ACHIEVEMENT

THEY ARE DRIVEN BY

CHALENGES. BY SUCCEEDINGFROM THIS THEY GAINRECOGNITION, PRESTIGE, andESTEEM.

(b)RISK TAKING PROPENSITY

TO SUCCEED THEY ARE WILLINGTO TAKE RISKS BOTH PERSONALAND FINANCIAL.

DRUCKER CALCULATED RISK TAKER


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( c ) LOCUS OF CONTROL

most entrepreneurs believe success of

their enterprise depends on their

contribution - they have have a high

internal locus of control

they make things happen

alternatively some people believe

there lives are mainly controlled by

others or other forces external to them

- a high external locus of control

THIS CAN LEAD TO APATHY OR

ALTERNATIVELY TO A

TENDENCY TO TAKE BIG RISKS

WITHOUT EVALUATION


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OTHER TRAITS

(d) NEED FOR AUTONOMY

people often become an

entrepreneur out of a desire tobe independent of others - theyoften feel they are surrounded byincompetence - they can do

better. Alternatively, they do notlike to conform and want to do ittheir way or move away from thesituation they are in.

(e) CREATIVITY

entrepreneurs are viewed asbeing very creative - they areoften successful as a result of

creative solutions to problems.


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CONTEMPORARY

PSYCHOLOGICAL RESEARCH

TWO STRANDS

1) ATTEMPT TO ESTABLISH A

LINK BETWEEN PERSONALITYTRAITS AND PROPENSITY TOSTART AN ENTREPRENEURIAL

VENTURE.

2) ESTABLISH A LINK BETWEENPERSONALITY TRAITS ANDSUCCESS

The link between entrepreneurialcharacteristics and success cannot

be identified simply because it does

not exist.

(Chell and Hawthorne,1991)


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RISK TAKING AND

ENTREPRENEURSHIP

ENTREPRENEURSHIP IS RISKY

BECAUSE SO FEW SO CALLED

ENTREPRENEURS ACTUALLYKNOW WHAT THEY AREDOING.

Drucker, P. (1985)Innovation and Entrepreneurship.

Pan Books


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I CAN SMELL THEFERRARI


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THE POPULAR VIEW

WHEN THE GOING GETS

TOUGH -THE TOUGH GET

SELF- EMPLOYED

Mandel, M. (1991) Business Week

RISK

The possibility of adverseeffect. OR

The willingness to commit to

a course of action which may

result in rewards or penalties

associated with success or

failure. Palmer, M. California

Management Review (1971)


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RISK AND THEENTREPRENEUR (CONTD)

THE POPULAR IDEA OF

THE ENTREPRENEUR IS

ONE BASED ON THETOTALLY SELF-MADE

MAN (MAINLY) LACKINGIN FORMAL

QUALIFICATIONSI left school at 14 and

look at me now

The concept of RISK through

the: e.g. a lack education -the entrepreneur MADEnot just by experience.


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PROPENSITY TO TAKE RISKS

Entrepreneurs take calculated

risks. They are not gamblers.

(Timmons, 1994)

Risk Versus Reward

Entrepreneurs avoid low-risk

situations because there is a lack

of challenge.

They avoid high risk situations

because they want to succeed.

(Meredith et al. 1982)

What is a calculated risk?


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Calculated Risks

Three types of RISK

1. RATIONAL

2. NON -RATIONAL

3. IRRATIONAL

RATIONAL RISK TAKING IS

BASED ON

FINANCIAL CALCULATIONS

MARKET RESEARCH THATIS QUANTITATIVE BASED


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CLASSIFICATION OF RISK (contd)

Non-Rational RISK TAKING is based

mainly on:

Qualitative judgements

Experience Your own observations

Past examples

Irrational RISK TAKING is based on:

gut feel

personal belief

nothing to lose - go for it

life is short


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PERSONAL RISK TAKING

THE DECISION TO BE A STUDENT

OR TO GO TO A PARTICULAR

UNIVERSITY - HOW DID YOU

DECIDE?

Cost - benefit analysis.

Debt versus possible return.

Opportunity cost.

Image of the University

Family pressure.

Friends recommendation.

The nearest.

The only one who would have

me?


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RISK MINIMISATION

HOW CAN THE

ENTREPRENEUR MINIMISE

RISK?

1. KNOW YOURSELF

2. DEVELOP THE COMPETENCIES

YOU NEED.

3. SEEK INFORMATION ANDHELP.

4. DO THE FINANCIAL

CALCULATIONS PREFERABLY

YOURSELF.

5. DO MARKET RESEARCH.

6. BE CLEAR ABOUT YOUR

OBJECTIVES - GOALS.

7. THINK BIG BUT THINK!


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THE ENTREPRENEURIAL

PROCESS

People+Opportunity+Resources+Context= FIT

Long term value creation and

Realization.

Recognizing, creatingopportunity regardless ofresources currently at hand.

New Venture, entrepreneurialmanagement and innovation.

Entrepreneurship can occur in large

companies and small ones, old

firms and new ventures, fast and

slow growing companies, the private,

public and not-for-profit sectors ; and

it can fail to occur in each of these

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