Chapter 6: Entrepreneuring Flashcards
What is the entrepreneuring mode of management?
management style based on venturing in the pursuit of opportunities.
What is entrepreneuring?
model centred on venturing practice, which creates value by bringing resources together with an opportunity.
What is professional entrepreneuring?
effectively turning society’s needs into value while engaging in professional conduct (sustainably, responsibly and ethically). These ventures are good ventures.
What are entrepreneurs?
practitioners who engage in practice of entrepreneuring.
What are the big five entrepreneurial personality traits?
- High need for achievement
- High risk-taking propensity
- Internal locus of control: believing in ability to change outcomes
- High self-efficacy: goal orientation and ability to build personal competence necessary to achieve goals
- High extraversion: positive energy levels invested in building and maintaining relationships.
How do you see the big five entrepreneurial personality traits in orientations of practice?
- High need for achievement; Autonomy: independent action to realize business vision
- High risk-taking propensity; Innovativeness: willing to experiment to introduce new concepts.
- Internal locus of control; Proactiveness: foresight to seize opportunities in anticipation of future demand
- High-self efficacy; Competitive aggressiveness: intense effort to outperform industry rivals
- High extraversion; Risk taking: making decisions and taking actions without certain knowledge of probable outcome.
Name the six types of entrepreneuring classifications
- Venturing experience
- By traits-venture mix
- Financial success of business ventures
- Position in organization
- Attitude towards business ventures
- Entrepreneuring work patterns
What is a productive motive?
For entrepreneuring it is initiated by desiring meaningful work such as delivering innovation to generate value for stakeholders.
What are the dark triad personality traits?
- Narcissism: feeling superior to others and believing you should be admired by others
- Machiavellianism: cynical, little concern for well-being of others but very self-interested.
- Psychopathy: callous, insensitive to others’ needs, every person for themselves.
What is an unproductive motive for entrepreneuring?
consists of value-extracting behaviour to apporapriate existing value and externalize costs, reducing overall welfare along with it. Could be related to the dark triad of personality traits
What are the different classifications of venturing experience?
- Enterprising person (potential, but not engage
- Nascent person: process of starting new venture
- Novice: running their first venture
- Portfolio entrepreneurs: run multiple ventures simultaneously
- Serial entrepreneurs: have already run multiple ventures before
What are the classifications of a by traits-venture mix?
- Diamond: visionary dreamer leading to transformative ventures
- Stars: charismatic individuals building personality brands
- Transformers: change makers
- Rocket ships: analytical thinkers making strategic improvements.
What are the classifications of position in organization type of system?
- Founders
- Owner-managers
- Intrapreneurs
What are the classifications of a financial success of business venture system?
- Gazelles: high-growth businesses with +$1M revenue and doubling sales every 4y
- Unicorns: startups with +$1B valuation before IPO
What are the classifications of an attitude towards business system?
- Lifestyle entrepreneurs: purpose in running a business venture to increase quality of life.
- Career entrepreneurs: want to make career out of running venture(s)
What are the classifications of an entrepreneuring work patterns system?
- Butterfly entrepreneurs: opportunity spotters, from one to one, don’t get a lot of work done
- Bee Entrepreneurs: focus on one opportunity to get work done
What are entrepreneurial managers?
practitioner with both management and entrepreneuring competence, able to turn opportunities into value while administering resources.
What is causation?
Acquiring and managing resources to achieve predetermined goal
What are differences between managers and entrepreneurs?
- Doers (managers) vs creators (entrepreneur)
- High vs low tolerance for ambiguous situations (entrepreneur vs manager)
- Motivation for achievement
- Preference for autocratic decisions (entrepreneurs) vs consensus-based decisions (managers)
- Extrinsic (entrepreneurs) vs intrinsic (managers) motivation
- More agile market-oriented (entrepreneur) vs functional hierarchic (managers)
- Risk-orientation
Name three entrepreneuring logics of action?
- Causation
- Effectuation
- Bricolage
What is effectuation?
seeing the goal that could be achieved with accessible resources.
What are entrepreneurial acts?
smallest building block of different forms of entrepreneuring. Can consist of one small-action.
What is entrepreneurial bricolage?
action in which one makes do with what is available, even if it is not ideal, put together in a new way to create value.
Name three forms of entrepreneuring
- New business entrepreneuring
- Intrapreneuring
- Institutional entrepreneuring
What is intrapreneuring?
Acting entrepreneurially from inside established organization to realize internal change opportunities and tackle new external opportunities using organization’s resources
What is new business entrepreneuring?
Starting a venture to realize an opportunity to create value
What is institutional entrepreneuring?
Venturing to create a new normal, changing what is taken for granted. (in society, economy or industry)
What are the four species in the intrapreneurial animal kingdom?
- Giraffe: Strategic and focused on society (Looks ahead (O&T) while focusing on business)
- Beaver: Strategic and focused on organization (reshape environment to create new opportunities)
- Wolf: Tactical and focused on society (responding to unpopular issues and championing yet unpopular issues)
- Donkey: tactical and focused on organization (bearing workload while carrying out varies basic tasks)
Name the 8 practices of social entrepreneurs?
- Championing: continuously advocating for integration of social and business value
- Communicating: articulating rational and importance of transformation
- Creative innovative solutions: new resources configurations, actions and relationships
- Catalysing for change: inspiring and creating synergies in work of others
- Coordinating: reaching across internal and external boundaries to align interests
- Contributing: supporting success of others
- Calculating shrewdly: const-consciousness of bottom-line
- Assessing: how fast can transformational process by moved.
Name the three core practices of institutional entrepreneurship?
- Positioning: institutional entrepreneurs need to be seen as legitimate among set of stakeholders
- Theorizing: creating alternatives and new practices to become the norm
- Institutionalizing: new practices are made the new normal by connecting them to stakeholders’ routines and values.
What is hybrid entrepreneuring?
entrepreneuring practices that adhere to multiple logics, not just commercial.
What are the biggest challenges in hybrid entrepreneuring?
- Tensions and trade-offs between different logics.
- Mission drift: organizations are led by different logics than used when founding venture.
What are the three main types of social entrepreneurs?
- Social bricoleur
- Social constructionist
- Social engineer
What is a social bricoleur?
focuses on local context using existing resources. Is self-reliant by only addresses local needs
What is a social constructionist?
Spots institutional voids and provides g&s others cannot. They scale up and need important external resources. Need time for fundraising
What is an entrepreneuring process?
an Entrepreneuring process can be understood as managing ventures by connecting opportunity, resources and the team.
What is a social engineer?
Social engineer create better ways of addressing social needs than currently available with a potential to disrupt existing order globally, while finding their own resources. Disadvantage is uniqueness of founder.
What are the three main practices of managing opprtunities, resources and the team?
- Communication
- Creativity
- Leadership
What are entrepreneuring resources?
consists of different types of capital used to capture an opportunity. But, capital only creates value once it has been turned into a resource for action.
What is an entrepreneuring opportunity?
consists of unrealized potential to create value through a venture
Name the three steps in identifying entrepreneuring opportunities?
- Recognizing opportunities: bringing together existing supply and demand
- Discovering opportunities: either supply or demand is missing. Generate the missing one.
- Creating opportunities: creating both supply and demand by introducing something unique.
What is resourcing?
increase the available resources by transferring a les valuable resource into a more valuable one to seize opportunity at hand.
What are entrepreneurial teams?
teams of people working together to seize opportunities. In most extreme cases this turns into entrepreneurialism, a culture of distributed entrepreneurship where everyone is encourage to be entrepreneurial.
When are founder team most effective?
Founder teams are most effective when both members are similar enough to collaborate but different enough to mutually complement each other.
What is the entrepreneurial ecosystem and what are its core aspects?
comprises local conditions that affect entrepreneuring. Core aspects:
1. Industry clusters:
2. Business incubators and accelorators
3. Regulation
What is a venture cycle?
consists of different phases of ventures, like startin up, setting up and settling down.
Name the different stages of a venture cycle?
- Existence: focus on creativity, individualistic, until it reaches a leadership crisis
- Survival: focus on efficiency, directive, until it reaches an autonomy crisis
- Growth: focus on expansion market and staying profitable, delegative, until it reaches control crisis
- Consolidation: focus on growth and organizational consolidation, management is watchdog, until there is a red tape crisis.
- Maturity: focus on resource maturity, problem solving and innovation. Participative management until a crisis hits.
Name the three broad phases in a venture cycle
- Start-up phase: emphasis on developing venture and scaling it
- Take-off phase: emphasis on consolidationg a venture to scale it
- Settling down phase: emphasis on what now? After venture has achieved maturity or failed.
What is a business plan?
Business plan: detailed overview of business venture. Internally, they serve as orientation to stay on path. Externally, they are used to obtain funding.
What is a business model?
unique formula of organization’s value proposition, creation, exchange and capture.
What is the structure of a business plan?
- Executive summary: (value logic, hooking audience’s interests)
- Company (aims, vision, legal form, location etc.)
- Situation (market, SWOT, success factors)
- Strategy (target market, positioning, marketing)
- Organization ( organizational structure, controls, operations plan)
- Finances (assumptions of finances, projected CF, profits etc.)
What is FFF funding?
Funding from friends, families and fools.
Emotional risk of disappointing people close to you. Potential volatile nature of fools
What is venture capital?
Firms investing in potentially profitable startups.
Extensive research in viability or may serve as mentors.
What are angel investors?
VC-experienced investing own money.
Might rely on personal link to entrepreneur of gut feeling
What is bootstrapping?
funding with limited personal capital, stretching resources.
Goal: Keeping costs as low as possible
What is goodwill?
financing taps into stakeholders’ positive attitudes
Volunteering, subsidies, grants and donations
What are loans and overdrafts?
these are the traditional funding options
Fixed-term loans offer low interest rates, but overdrafts are more flexible
What is crowdfunding?
raising finance from large (online) audience More money if venture is emotionally engaging
What is private equity?
buy equity, mostly gaining control alongside management previous owners.
Invests only in mature business, make use of high debt level to maximize equity return. Big influence in business strategy
What is growth capital?
funding proven business models to accelerate growth.
Only attracted by proven and scalable business. Shareholders retain control
What is Mezzanine debt?
debt instrument structured as unsecured loan with warrant.
Used mainly when existing senior debt reaches limit and banks don’t allow further loans.
What are convertible bonds?
debt with conditions attached, converted in equity if not met.
Usually used by PE to increase management shares ratio or decrease interest paid (public comps)
What is a debt for equity swap?
agreement for creditors to see loans converted into equity. Effective way to lower company’s debt
What are debenture/bonds?
unsecured and secured loan issued publicly/privately
What is shareholder recapitalization?
shareholders injecting more capital to strengthen BS.
Required when company suffers important loss, or to invite new shareholders
What is an IPO?
Initial Public Offering; Shares listed on public markets, requires huge efforts and creates exposure to oversight
What is a turnaround funding?
investment in equity/debt coupled with professionals with experience turning distressed companies around.
Last resort before liquidation
What are the four growth strategies?
- Market penetration: selling more of same product to same type of customers
- Market development: selling existing products to new type of customers
- Product development: selling new product or services to existing customers
- Diversification: selling new products or services to new customers
What are collaborative growth strategies?
venture management is actively seeking partners to grow with.
What is dissemination?
variety of idea transfer between stakeholders with low commitment. Can create normative change, but there is a loss of control over target.
What is social franchising?
contractual agreement through which franchisees replicate the venture’s operations and impact.
What is a strategic alliance?
arrangement between multiple companies in same industry. Includes customization and flexibility with partners. Includes resource intensity and partner organization failure.
What is licensing?
arrangement involving fee for use of intellectual property, brand, design etc. Increased ownership and control. Creates exposure to quality dilution.
What is franchising?
arrangement for use of full business model and everything. Increased control and non-compliance risk reduction. Clear information flow. Increased resource intensity, need to codify systems and processes.
What is a joint venture?
Multiple business entities combine resources to pursue a project. Include leverage of partners’ funding and other resources. Necessity to design balanced governance structure.
What is a wholly owned enterprise?
parent firm creates entire operation from scratch/acquisition. Complete control operations and strong economic benefit. Includes important initial investment, potential of capital loss etc.
What is a Boiled frog failure pattern?
- Failure to adapt to changing business environment
-Hardworking, introverted family firm
-Slumbering giant
Name the four typical failure patterns
- Boiled frog
- Drowned frog
- Bullfrog
- Tadpole
What is a drowned frog failure pattern?
-Trying to do too much
-Ambitious entrepreneur
-Conglomerate king-maker
What is a bullfrog failure pattern?
- Firms in financial distress
- Small firm flash
- Money-messing megalomaniac
What is a tadpole failure pattern?
- Starving because they ran out of resources
- Failed start-up
- Big project failure
What are common forms of exiting the business?
- Acquisition by another company
- Management buy out and buy in: managers becoming co-owner or external management buying themselves in.
- Hereditary succession
Name three steps to turn an entrepreneurial process into an entrepreneurial cycle
- Internal corporate venturing: creating an entrepreneurial architecture
- External corporate venturing: buy in innovation from younger firms.
- Corporate strategic renewal of core businesses.
What are the principles of professional entrepreneuring?
- Entrepreneuring mode of management is centred on venture in pursuit of opportunities
- Entrepreneuring logics include causation, effectuation and bricolage
- There are a variety of entrepreneuring, including new business venturing, intrapreneuring and institutional entrepreneuring
- Entrepreneuring process revolves around opportunities, resources and team
- Entrepreneuring process runs through starting up, taking off and settling down phases.
