Chapter 1 Flashcards
three key components of a good definition of entrepreneurship
risk and uncertainty, the entrepreneur, and entrepreneurial contexts.
risk and uncertainty (components of a good definition)
Making decisions under uncertainty is the first element of a good definition of entrepreneurship (we calculate risks based on experience (Frank knight)
the entrepreneur (components of a good definition)
The characteristics of the entrepreneur are important.
entrepreneurial contexts (components of a good definition)
Context is important because entrepreneurship is not solely the expression of an individual personality
What difference uncertainty and risk?
You cannot manage uncertainty, but you can manage risk. (Entrepreneurship is a process of transforming ‘unknowns’ into quantifiable risks).
Innovator
Someone who marketilize a product and makes it a company. Not inventing just getting things done.
Five ways of introducing innovations
- Introduction of a new method of production (lopende band etc.)
- Opening up of a new market (amazon)
- The conquest of a new source of supply of raw materials or half-manufactured goods
- The creation of a new type of industrial organisation (social enterprise)
- Introduction of a new good or significant improvement (self-driving cars)
How did Schumpeter characterized entrepreneurs
supernormal qualities of intellect and will, innovator: not inventing just getting things done, arbitrage, entrepreneurial alertness.
why did Schumpster saw creativity as destruction
by changing the environment you also destroy the old ones. (from gas to electric cars creative but destroy industries (and jobs etc.))
Arbitrage
An individual realizes there is a difference in price for a product or service between one market and another and exploits the opportunity for profit (buying matchsticks in bulk from the Swedish capital Stockholm, breaking them down to smaller batches and selling them at a higher price in his local village.)
Entrepreneurial alertness
ability to recombine existing information into something profitable, be aware to oppurtunities that exist because ‘errors’ like poor sevice of one company or to high prices. (bring markets back into equilibrium)
opportunities
socially constructed by people working together to give meaning to the identification and realisation of opportunities
Kirzner’s contribution
to point out how individuals could act entrepreneurially
Input of Gartner
instead of examining ‘who’ the entrepreneur was, it is better to work out ‘what’ they do in particular situations. (‘unit of analysis’ should focus on entrepreneurial behaviours rather than the dispositions of the entrepreneur) becaus
Difference Schumpeter and Kirzner & Gartner
Schumpeter and Kirzner focused on the economic role of the entrepreneur rather than whether they owned a business –> Gartner concluded that ‘Entrepreneurship is the creation of organizations’; ‘it is a role that individuals undertake to create organizations’.
very few start-ups are radical Schumpeterian innovators
Most start-ups are incremental ‘order-of-magnitude improvements in price/performance that build on existing know-how within product classes (Margaret Thatcher ice cream)
venture creation
the process of turning a new idea or technology into a business (that can succeed and will attract investors)
strategic entrepreneurship
renew an existing business by developing new innovative ways of meeting customer needs.
Social entrepreneurship:
‘individuals who are starting or currently leading any kind of activity, organisation or initiative that has a particularly social, environmental or community objective’
corporate venturing
Individuals or groups of individuals, acting independently or as part of a corporate system, who create new organizations or instigate renewal or innovation within an existing organization. (Corporate entrepreneurs might decide to set up a start-up from within their large business or independently.)
Why is Keeping score important?
Entrepreneurs: to get benefits, policymakers and research to rank entrepreneurial activity per country/region
Why is self-employment a measure of entrepreneurship (proxy measure of activity)?
Self-employment is a measure of entrepreneurship because it involves organising resources, identifying and exploiting opportunities and making decisions in dynamic and uncertain settings. (one of the few standardised ways of comparing entrepreneurial activity across countries and regions)
Why is self-employment a bad quality measure?
necessity entrepreneurs (people semi forced and not motivated to grow business or stay in business for long) & Statistics on self-employment only count those formally registered (many people don’t formally register)
Five consistent features of entrepreneurial activity
Entrepreneurial activity varies markedly in richer countries, Entrepreneurial patterns vary over time in richer countries, Men are more likely to be entrepreneurially active than women, Entrepreneurial activity is higher in poorer countries, and Many self-employed people operate in hyper-competitive markets.
Small and Medium-sized Enterprises (SMEs)
SMEs are classified into three broad size groupings: micro-businesses (0–9 employees), small businesses (10–49 employees) and medium-sized businesses (50–249).
why is scall also considerable factor for entrepreneur activity
Since limited companies rather than the self-employed – are more likely to create jobs and economic growth.
