Entrepreneurship and New Product Development

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Entrepreneurship and New Product Development

• Introduction to Entrepreneurship

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Objectives

• Why is Entrepreneurship a subject worth studying?
• Understand the typical character traits of an
  entrepreneur
• Differentiate between owner-managers, managers
  and entrepreneurs
• Understand basic theoretical entrepreneurial
  behaviour
• Understand Entrepreneurial Culture
• Understand the benefits of being an Entrepreneur
• Understand why Entrepreneurship is considered
  risky

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Why Study Entrepreneurship?

• Knowledge of process of starting a business
• Basic principles applicable to any business
  environment
• Entrepreneurs drive the economy, contributing
  significantly to the well-being of society in
  general
• The entrepreneurial process and entrepreneurial
  management is becoming increasingly relevant to
  the way business is done today
• Entrepreneurs shape society

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What is an Entrepreneur?

• An Entrepreneur uses innovation to exploit or
  create change or opportunity for the purpose of
  making a profit
• They do this by shifting economic resources from
  an area of lower productivity to an area of
  higher productivity and greater yield, accepting
  a high degree of risk and uncertainty in doing so

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Are Entrepreneurs Born or Made?
Personal Character Traits
Influences on Owner-Managers and Entrepreneurs
Culture of Society
Antecedent Influences
Situational Factors
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Influences on Entrepreneurs

• Entrepreneurs do have certain personal character
  traits that they are born with, they are also
  shaped by their history and experience of life
• Antecedent influences - the social environment
  they find themselves in
• The culture of the society some encourage
  entrepreneurial activity, others discourage it
• The situations they find themselves in such as
  employment

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Character Traits of an Entrenpreneur

• Risk Taker
• Opportunist
• Inventor
• Commercialiser
• Trader
• Innovator
• Flexible
• Need for Achievement
• Internal Locus of Control
• Opportunistic
• Self Confident
• Pragmatic

• Proactive
• Visionary
• Ambiguity Tolerance
• Desire for Independence
• High Energy
• Ability to bounce back
• Results Oriented
• All Rounder
• Decisive
• Self Motivated
• Flair

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Success and Failure Factors Which do You Have?

• Hard Work
• Perseverance
• Motivation
• Social Skills
• Leadership
• Good Management
• Integrity
• Guts

• Good Health
• Common Sense
• Luck
• Support of Family
• Clear Initial Goals
• Creativity
• Ability to Accept Uncertainty

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The only place success comes before work is in
a dictionary ANON
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Antecedent Influences on the Entrepreneur

• Well-educated
• Starts business because of positive motivations
• Leaves managerial job to start business
• Middle Aged (or very young?)
• Willing to share ownership of business

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Manager vs Entrepreneur
Entrepreneur Growth Firm Pursuit of growth
and personal wealth important Owner
Manager Lifestyle Firm Often trade or craft
based. Will not grow to any size Manager Manages
a business belonging to someone else Will
build an organisation putting in appropriate
controls similar to a large firm
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Classical Viewpoint of the Entrepreneur
Manager
Risk-taker
New Product Combinations
Entrepreneur
Uncertainty
Decision-maker
Market Opportunities
Capitalist
Organises Production
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Austrian School of Thought

• Kirzner
• Alert to profitable opportunities of exchange
• Act as the intermediary
• Opportunities exist due to imperfect knowledge
  the entrepreneur knows something that others do
  not
• Schumpeter
• Innovator
• Change through the introduction of new
  technological processes
• Only certain extraordinary people can be
  entrepreneurs

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Austrian School of Thought

• Knight
• Calculated risk-taker
• Profit is the reward for bearing risk
• Shackle
• Creative and imaginative
• Imagines opportunities
• Original
• Casson
• Co-ordinates scarce resources
• Judgemental decisions which re-allocate resources
• Must have power over resources in order to
  re-allocate personal wealth / access to
  capital is important

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Entrepreneurial Culture

• The collective programming of the mind which
  distinguishes one group of people from another
• An entrepreneurial culture is one that fosters
  positive social attitudes towards
  entrepreneurship
• Many consider the culture in the USA to be the
  most entrepreneurial in the world

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Entrepreneurial Culture The American Dream

• Always seeking something new
• Restless, constantly on the move
• Strong preference for freedom of choice for the
  individual
• The individual is always free to compete against
  established institutions
• Rebellious non-conformist youth is the accepted
  norm

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Entrepreneurial Culture The American Dream

• The American Dream is that even the humblest of
  individuals can become the greatest of people
  (measured in monetary terms)
• Achievement is prized and lauded throughout
  society
• Individuals believe that they control their
  destiny

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Entrepreneurial Culture The American Dream

• Americans think big
• Nothing is impossible
• They prefer the new or at least the improved
• They worship innovation
• They are tolerant of those who make mistakes
• Things need to get done quickly rather than
  always get done perfectly

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Hofstedes Dimensions of Culture

• Individualism vs Collectivism
• The degree to which people prefer to act as
  individuals rather than groups
• Power Distance
• The degree of inequality among people that a
  community is willing to accept
• Uncertainty Avoidance
• The degree to which people prefer to avoid
  ambiguity, resolve uncertainty and prefer
  structured rather than unstructured situations
• Masculinity vs Femininity
• This defines quality of life issues. Masculine
  virtues are those of assertiveness, competition
  and success. Feminine virtues are those such as
  modesty, compromise and cooperation

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Hofstedes Dimensions of Culture
High (upper quartile countries)
Low (Lower quartile countries)
USA, Australia, New Zealand, UK, Canada, France,
Germany
South America, Pakistan
Individualism
Malaysia, Philippines, France, South America
UK, USA, Scandinavia, Germany
Power Distance
Greece, Portugal, Uruguay, Guatemala, France
Uncertainty Avoidance
Hong Kong, Singapore, UK, USA
Japan, Austria, Italy, UK, USA, Germany
Masculinity
North Europe
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Benefits of Being an Entrepreneur

• Do what you enjoy
• Control your own destiny
• Contribute to society
• Potentially huge financial rewards

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Some Statistics

• The average working week for a self employed
  person is 64 hours
• Most people do not increase their income by
  becoming self employed
• 1 in 5 Entrepreneurs do not earn anything within
  the first 12 months
• Support of the spouse or partner is critical
• 50 of all businesses in Europe Fail

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Entrepreneurship is risky because..?

• Few entrepreneurs actually know what they are
  doing
• They lack the methodology
• Management incompetence
• Poor financial control
• Failure to develop a plan
• Uncontrolled growth
• Improper inventory control

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Entrepreneurship is risky because..?

• Entrepreneurs who start out with the idea that
  they will make it big - and in a hurry - can be
  guaranteed failure

Drucker pg31
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Entrepreneurship

• Entrepreneurship is behaviour rather than
  personality trait (Drucker pg23)
• Entrepreneurs see change as the norm and as
  healthy
• The entrepreneur always searches for change and
  responds to it
• Entrepreneurship does not have to be high risk!!

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Entrepreneurship

• Entrepreneurship is not the sole reserve of small
  or new businesses
• Entrepreneurship is practised by companies and
  organisations of all sizes, ages, market segment
  or discipline