chapter 1 Flashcards
entrepreneurship
the process by which individuals pursue opportunities without regard to resources they currently control, for the purpose of exploiting future goods and services. it can also be defined as the art of turning an idea into a business.
corporate entreneurship
practiced by establishes firms with an orientation toward acting entrepreneurially.
entrepreneurial intensity
the position of a firm on the continuum ranging from highly conservative to highly entrepreneurial. entrepreneurial firms are typically proactive innovators and are not averse to taking calculated risks. conservative firms take more of a “wait and see” posture, are less innovative, and are risk averse.
passion for the business
it gets a business going and keeps it going when times are tough. passion is particularly important for for-profit and not-for-profit entrepreneurial organisations because the process of starting a firm is demanding. each of the five reasons reflects a personal attribute that passion engenders. removing one could make it more difficult to launch and sustain a successful entrepreneurial organisation.
product/customer focus
a company should provide real value to both its users and customers. it also involves the diligence to spot product opportunities and to see them through to completion. according to steve jobs, “the computer is the most remarkable tool we’ve ever built but the most important thing is to get them in the hands of as many people as possible.”
tenacity despite failure
entrepreneurs usually try something new and so the possibility of failure exists. for this the litmus test can also be used. it is also important that entrepreneurs have sufficient tenacity to overcome personal obstacles along with professional ones.
litmus test
tests the ability of entrepreneurs to persevere through setbacks and failures.
execution intelligence
the ability to fashion a solid idea into a viable business. it is often the factor that determines whether a start-up is successful or fails. the ability to effectively execute a business idea means developing a business model, putting together a new venture team, raising money, establiishing partnerships, managing finances, leading, and motivating employees, etc. one way early-stage companies learn execution intelligence is by participating in start-up incubator and accelerator programs.
Entrepreneurs are born, not made
this myth is based on the belief that some people are genetically predisposed to be entrepreneurs, which has been proven to be untrue. everyone has potential to become an entrepreneur. however, there are personality traits and characteristics that are commonly associated with entrepreneurs.
Entrepreneurs are gamblers
this myth stems from two sources. first, entrepreneurs typically have jobs that are less structured. second, many entrepreneurs have a strong need to achieve and often set challenging goals. the truth is that entrepreneurs are often moderate risk takers.
Entrepreneurs are motivated primarily by money
money is rarely the primary reason entrepreneurs start new firms and persevere.
Entrepreneurs should be young and energetic
entrepreneurial activity is fairly evenly spread out over age ranges. although it is important to be energetic, investors often find the strength of the entrepreneur as the most important crieterion in the decision to fund new ventures. what makes an entrepreneur “strong” in the eyes of an investor is experience in the area of proposed business, skills, and abilities that will help the business.
Entrepreneurs love the spotlight
a vast majority of entrepreneurs do not attract public attention.
salary-substitute firms
small firms that yield a level of income for their owner or owners that is similar to what they would earn when working for an employer. they offer common, easily available, and not particularly innovative products or services to customers.
lifestyle firms
provide their owner or owners the opportunity to pursue a particular lifestyle and earn a living while doing so. these are not innovative, nor do they grow quickly. they promote a particular sport, hobby, or pastime and may employ only the owner or just a handful of people, e.g. personal trainers.
entrepreneurial firms
bring new products and services to market. they bring value to customers. one characteristic of entrepreneurial firms is that they partner with other firms and organisations, often to obtain the boost they need to realise their full potential.
value
refers to worth, importance, or utility.
Joseph Schumpeter
argued that entrepreneurs develop new products and technologies that over time make current products and technologies obsolete. he called this process creative destruction.
creative destruction
new products and technologies are typically better than those they replace and the availability of improved products and technologies increases consumer demand. thus, it stimulates economic activity. the new products and technologies may also increase the productivity of all elements of a society. it is initiated most effectively by start-up ventures that improve on what is currently available.
innovation
the process of creating something new, which is central to the entrepreneurial process. small innovative firms are 16 times more productive than large innovative firms in terms of patents per employee.
job creation
small businesses create a substantial number of net new jobs in the US. a key factor for this ability is the skill of small businesses when it comes to wisely and effectively deploying capital resources.
triggering event
usually prompts an individual to become an entrepreneur.
business model
a firm’s plan or recipe for how it creates, delivers, and captures value for its stakeholders.
business plan
a written document that describes all the aspects of a business venture in a concise manner.
