Chapter 2 Storey and Greene

Question 1

How does Casson (1982) describe an entrepreneur?

Answer 1

Someone who specialises in making judgmental decisions about the coordination of scarce resources

Question 2

Where do entrepreneurs exist?

Answer 2

Where an individual judges a price difference between a product/ service in one market and it’s price in another, and is it possible to exploit that price difference to make a profit

Question 3

What is spatial arbitrage?

Answer 3

the tendency of traders to ship goods from one location to another whenever the price difference is large enough to cover the cost of transportation

Question 4

What is temporal arbitrage?

Answer 4

the tendency of traders to store goods from one time period to a later time period whenever the expected increase in price is enough to cover storage costs

Question 5

What is the economist approach?

Answer 5

economists emphasise choices and information processing

• entrepreneurs seek to maximise their utility
• entrepreneurs bear risk and then retain profits that are subsequently derived

Question 6

What is the organisational approach?

Answer 6

emphasises cognitive processes

- focus on individual and sees entrepreneurship as a way of thinking and acting about opportunities

Question 7

What are Shane and Venkataraman’s 3 advantages of entrepreneurship?

Answer 7

• it is the mechanism by which society learns about new products and services
• it helps to rectify spatial and temporal inefficiencies in the market
• it is a major driver for underlying wider social and economic change

Question 8

What are Shane and Venkataraman’s 4 key assumptions about entrepreneurship?

Answer 8

1) entrepreneurial opportunities exist but they are not known to everyone
2) people have different perceptions on the value of the opportunity
3) some people will choose to pursue these opportunities
4) acting on these opportunities will result in differing outcomes - both profitable and unprofitable

Question 9

What does Chell argue are 3 important traits for entrepreneurs?

Answer 9

• need for achievement
• internal locus of control
• risk taking propensity

Question 10

What are cognitive approaches?

Answer 10

understanding how people THINK and REACT in different situations rather than focusing on entrepreneurial traits

Question 11

What are some examples of cognitive approaches?

Answer 11

• availability heuristic (rely on information that’s already available)
• illusion of control (overestimate personal control over outcomes)
• planning fallacy (believe their plan can be put into place quicker than possible)
• self-efficacy (belief in one’s capabilities to organise and execute the courses of action required to manage prospective situations)
• intentionality (individuals more likely to set up a business if this is their intention)