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CHAPTER 1
CHAPTER 1

ENTREPRENEURSHIP AND THE INDIVIDUAL ENTREPRENEUR MINDSET

Learning Objectives

• To introduce the concept of entrepreneurship and explain the process of entrepreneurial action • To
• To introduce the concept of entrepreneurship and explain the process
of entrepreneurial action
• To describe how structural similarities enable entrepreneurs to make
creative mental leaps
• To highlight bricolage as a source of entrepreneurs’ resourcefulness
• To introduce effectuation as a way expert entrepreneurs sometimes
think
• To develop the notion that entrepreneurs cognitively adapt
• To introduce sustainable entrepreneurship as a means of sustaining the
natural environment and communities and developing gains for others
The Nature of Entrepreneurship • Entrepreneurship plays an important role in the creation and growth of
The Nature of Entrepreneurship
• Entrepreneurship plays an important role in the creation and
growth of businesses, as well as in the growth and prosperity of
regions and nations
• Entrepreneurial Opportunities
• Situation in which new goods, services, raw materials, and
organizing methods can be introduced
• Sold at greater that their cost of production
• Entrepreneurial Action
• Creation of new products/services
• Involves entry into new markets
• May occur through a newly created organization or within an
established organization
The Nature of Entrepreneurship • Entrepreneur act on what they believe is an opportunity and because
The Nature of Entrepreneurship
• Entrepreneur act on what they believe is an opportunity and because
it exist in high uncertainty, entrepreneurs must use their judgment
about whether or not to act.
• The individual prior knowledge can decrease the amount of
uncertainty and his or her motivation indicates a willingness to bear
uncertainty.
• Entrepreneur act on the possibility that one has identified an
opportunity worth pursuing.
• Entrepreneurial Thinking
• An individuals’ mental processes of overcoming ignorance to:
• Decide whether a signal represents an opportunity for someone
• Decide whether that opportunity is applicable to the individual
specifically
• Process feedback from action steps taken
Entrepreneurial Action
Entrepreneurial Action
Entrepreneurial Action
How Entrepreneurs Think
How Entrepreneurs Think
How Entrepreneurs Think Think Structurally Effectuate Entrepreneur Should: Engage in Bricolage Cognitively Adapt
Think Structurally
Think Structurally
How Entrepreneurs Think Think Structurally Effectuate Entrepreneur Should: Engage in Bricolage Cognitively Adapt
How Entrepreneurs Think Think Structurally Effectuate Entrepreneur Should: Engage in Bricolage Cognitively Adapt
Effectuate
Effectuate
Entrepreneur Should:
Entrepreneur
Should:
Engage in Bricolage
Engage in
Bricolage
How Entrepreneurs Think Think Structurally Effectuate Entrepreneur Should: Engage in Bricolage Cognitively Adapt
How Entrepreneurs Think Think Structurally Effectuate Entrepreneur Should: Engage in Bricolage Cognitively Adapt
Cognitively Adapt
Cognitively Adapt
Think Structurally
Think Structurally

Example of a creative mental leap is from knowledge about existing markets to technology that could lead to products/services that satisfy

Example of a creative mental leap is from knowledge about existing markets to technology that could
that market
that market
Creative mental leap could be from knowledge about a technology to a new market that could
Creative mental leap could
be from knowledge about a
technology to a new market
that could benefit from its
introduction
Making these connection between a new product and a target market where it can be introduced
Making these connection
between a new product and
a target market where it can
be introduced is aided by
superficial and structural
similarities
Superficial Similarities: Basic elements of the technology resemble the basic elements of the market
Superficial Similarities:
Basic elements of the
technology resemble the
basic elements of the market
Structural Similarities: Underlying mechanisms of the technology resemble the underlying mechanisms of the market
Structural Similarities:
Underlying mechanisms of
the technology resemble the
underlying mechanisms of
the market
The entrepreneurial challenge often lies in making creative mental leap based on structural similarities
The entrepreneurial challenge often lies in making creative
mental leap based on structural similarities
Engage in Bricolage
Engage in
Bricolage

Engage in Bricolage

Entrepreneurs often lack of resources

As a result they seek resources from others to provide the ‘slack’ necessary to experiment and generate

entrepreneurial opportunities, or engage in bricolage

• Bricolage:
• Bricolage:
• This involves taking existing resources and experimenting, tinkering, repackaging and/or reframing them so they can
• This involves taking existing resources and experimenting,
tinkering, repackaging and/or reframing them so they can
• Entrepreneurs making do by applying combinations of
the resources at hand to new problems and
be used in a way for which they were not originally
designed or conceived
opportunities
Effectuate
Effectuate
Entrepreneurs do not always think through a problem in a way that starts with desired outcomes
Entrepreneurs do not always think through a problem in a way that starts with desired
outcomes and focuses on the means to generate that outcome
Such process is referred to as causal process Causal process: A process that starts with a
Such process is referred to as causal process
Causal process:
A process that starts with a desired outcome and focuses on
the means to generate that outcome
Entrepreneur sometimes use an effectuation process Effectuation: A process that starts with what one has (who
Entrepreneur sometimes use an effectuation process
Effectuation:
A process that starts with what one has (who they are, what
they know, and whom they know) and selects among possible
outcomes
Effectuate
Effectuate
Effectuation helps entrepreneur think in an environment of high uncertainty. Organization today operate in complex and
Effectuation helps entrepreneur think in an environment of high uncertainty.
Organization today operate in complex and dynamic environment that are
increasingly characterized by rapid, substantial, and discontinuous change. Given
the nature of this type of environment, most managers of firms need to take on an
entrepreneurial mind-set so that their firms can successfully adapt to
environmental changes
Entrepreneurial Mind-Set: Involves the ability to rapidly sense, act, and mobilize, even under uncertain conditions
Entrepreneurial Mind-Set:
Involves the ability to rapidly sense, act, and mobilize,
even under uncertain conditions
Cognitively Adapt
Cognitively Adapt

Cognitive adaptability

Describes the extent to which entrepreneurs are:

• Dynamic, flexible, self-regulating and engaged in the process of generating multiple decision • Focused on
• Dynamic, flexible, self-regulating and engaged
in the process of generating multiple decision
• Focused on sensing and processing changes in
their environments and then acting on them
frameworks

Metacognitive awareness:

• Ability to reflect upon,understand, and control one’s thinking and learning
• Ability to reflect upon,understand, and
control one’s thinking and learning
Cognitively Adapt
Cognitively Adapt
• We can achieve cognitive adaptability by asking a series a questions that relate to: Comprehension
We can achieve cognitive adaptability by asking a
series a questions that relate to:
Comprehension
Questions
Series of
Connection
Reflection Tasks
Questions
Task
Strategic Tasks
Strategic Tasks
• Comprehension questions – Increase entrepreneurs’ understanding of the nature of the environment • Connection tasks
Comprehension questions
– Increase entrepreneurs’
understanding of the nature of the
environment
Connection tasks
– Stimulate thinking about similarities
and differences of current situations
with situations previously faced and
solved
Strategic tasks
– Identify strategies that are
appropriate for solving the problem
or pursuing the opportunity
• Reflection tasks • Stimulate entrepreneurs to think about their understanding and feelings as they progress
• Reflection tasks
• Stimulate entrepreneurs to
think about their
understanding and feelings as
they progress through the
entrepreneurial process
Entrepreneurs who are able to increase cognitive adaptability have an improved ability to:
Entrepreneurs who are able to increase cognitive adaptability have an improved ability to:
Communicate one’s Adapt to new situations Be creative reasoning behind a particular response
Communicate one’s
Adapt to new
situations
Be creative
reasoning behind a
particular response
The Intention to Act Entrepreneurially
The Intention to Act Entrepreneurially
• Entrepreneurial intentions – Motivational factors that influence individuals to pursue entrepreneurial outcomes • Entrepreneurial self-efficacy
Entrepreneurial intentions
– Motivational factors that influence individuals to
pursue entrepreneurial outcomes
Entrepreneurial self-efficacy
– Conviction that one can successfully pursue
entrepreneurial outcomes
Perceived desirability
– Degree to which a potential entrepreneurial
outcome is evaluated as favorable or unfavorable

Entrepreneur Background and

Characteristics Education Age Work History
Characteristics
Education
Age
Work History

Education

• Education – Facilitates integration and accumulation of knowledge thus providing a larger opportunity set –
Education
– Facilitates integration and accumulation of
knowledge thus providing a larger opportunity set
– Casts a wider net for the discovery or generation of
potential opportunities
– Assists entrepreneurs in adapting to new situations
– Does not necessarily determine whether the
individual will create a new business

Age

Age

Age • Age – Chronological age – Usually between the ages 22 and 45
Age • Age – Chronological age – Usually between the ages 22 and 45

Chronological age Usually between the ages 22 and 45

Work History

• Work history – Past work experience of an individual
Work history
– Past work experience of an individual
Role Models and Support Systems
Role Models and Support Systems
• Role models: Individuals whose example an entrepreneur can aspire to and copy
Role models: Individuals whose example an
entrepreneur can aspire to and copy
• Moral-support network: Individuals who give psychological support to an entrepreneur
Moral-support network: Individuals who give
psychological support to an entrepreneur
• Professional-support network: Individuals who help the entrepreneur in business activities
Professional-support network: Individuals who help
the entrepreneur in business activities

Sustainable Entrepreneurship

Sustainable Entrepreneurship • Preserving nature, life support, and community in the pursuit of perceived opportunities to:
• Preserving nature, life support, and community in the pursuit of perceived opportunities to: – Bring
Preserving nature, life support, and community in
the pursuit of perceived opportunities to:
– Bring future products, processes, and services into
existence for gain
Can generate:
– Economic gains
– Environmental gains
– Social gains

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