Approaches to Entrepreneurship

• Schools of entrepreneurial Thought Approach

• Process Approaches

Entrepreneurial Schools-of-Thought Approach

Environmental School of ThoughtFinancial School of ThoughtDisplacement School of Thought{Macro View

{Micro View

Entrepreneurial Trait School of Thought (People School)Venture Opportunity School of ThoughtStrategic Formulation School of Thought

Macro View(External locus of control)

The Environmental School of Thought• The Financial/Capital School of Thought• The Displacement School of Thought

1. Political Displacement

2. Cultural Displacement

3. Economic Displacement

The Micro View(internal locus of control)

• The Entrepreneurial Trait School of Thought• The Venture Opportunity School of Thought• The Strategic Formulation School of Thought

Ronstadt Views Strategic Formulation as 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

Process Approaches• Integrative Approach• Entrepreneurial Assessment

Approach• Multidimensional Approach

An Integrative Model of Entrepreneurial Inputs and Outcomes

Identify Opportunity

Assess and acquirenecessary resources

Implementation

Environmentalopportunities

Entrepreneurialindividuals

An organizational context

Unique business concepts

Resources

Inputs

The Entrepreneurial

Process

Number of events(and)

degree ofentrepreneurship

•A going venture•Value creation•New products, services•Processes•Technologies•Profits and/or personal benefits•Employment, asset, and revenue growth

Outcomes

EntrepreneurialIntensity

Innovation Proactive-ness

Risk taking

Entrepreneurial Assessment Approach

Typeof

Venture

Typeof

Entrepreneur

Typeof

Environment

Qualitative,Quantitative,Strategic, and

Ethical

ASSESSMENTS

Do the Results of the Assessments Make Sense Given:

Prior Experienceand Education

EarlyCareer

MidCareer

LateCareer

Stage of Entrepreneurial Career

Multidimensional Approach

Individual(s)

OrganizationEnvironment

Process

Entrepreneurial Management• The underlying theme of this book is the discipline

of entrepreneurial management:– Entrepreneurship is based upon the same principles,

whether the entrepreneur is an existing large institution or an individual starting his or her new venture single-handed. It makes little or no difference whether the entrepreneur is a business or a nonbusiness public-service organization, nor even whether the entrepreneur is a governmental or nongovernmental institution. The rules are pretty much the same, the things that work and those that don’t are pretty much the same, and so are the kinds of innovations and where to look for them. In every case there is a discipline we might call Entrepreneurial Management.

What is an entrepreneur?

• Two broad schools of thought– Attributes

• An entrepreneur is someone who possesses attribute X

– Behavioral/functional• An entrepreneur is someone who does Y

– So what are X and Y?

Attribute Approach

• Psychological Traits– Intelligence, extraversion, locus of control, need for

achievement, social competence, creativity, risk-taking

• Demographics– Social networks, age, marital status, parental

influences, work experience, education, income level, social status

• Are these attributes necessary?– Founding vs. Success

Behavioral/Functional Approach

• Cantillon• Knight

• Schumpeter

• Kirzner• Gartner• Stevenson

• Phelan

• One who works for uncertain wages • One who buys factors at certain prices and

sells them in the future at uncertain prices (1921)

• One who creates new products, processes, inputs, markets, or organizations (1911)

• One who is alert to profit opportunities• One who creates a new venture• One who pursues opportunities regardless of

resources currently controlled• One who seeks to earn entrepreneurial

profits

Exhibit 1.2

The Entrepreneurial Mind in Action

• Successful entrepreneurs have a wide range of personality types– Research has considered genetics, family, education,

career experience, etc., but no psychological model of entrepreneurship has been supported.

• Acquired skills are more important that specific inherent traits

Converging on the Entrepreneurial Mind

• Desirable and Acquirable Attitudes, Habits and Behaviors

• Six Dominant Themes1. Commitment and Determination

2. Leadership

3. Opportunity Obsession

4. Tolerance of Risk, Ambiguity and Uncertainty

5. Creativity, Self-Reliance, and Adaptability

6. Motivation to Excel