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Summary Introduction to Entrepreneurship
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Summary of Introduction to Entrepreneurship Bob LangereisSummary Introduction to Entrepreneurship
Lecture 1 – Defining Entrepreneurship
Entrepreneurs: People who innovate something – Do something ‘new’.
Profit opportunities
- Non-entrepreneurial Opportunity: to enhance efficiency of existing activities
- Entrepreneurial Opportunity: to engage in new activities
Important – What is the level of newness?
- For who is it new? For the company? The whole industry? To everyone – the world?
Entrepreneurship defined (Sharma and Chrisman)
Entrepreneurship is the acts of organisational creation, renewal or innovation inside or
outside an organisation.
à Entrepreneurs: Individuals (or groups of individuals), acting independently or as a part of
a corporate system, who create new organizations OR instigate renewal or innovation within
an existing organisation.
Entrepreneurship is building the road (innovation/renewal, venture creation) – SMEs walk
the road (management, running an established firm/venture).
à Often used together, but not all SMEs are entrepreneurial and not all entrepreneurship
occurs in SMEs.
Small and Medium Sized Enterprises – SMEs
Definitions:
- Quantitative: Statistical conventions that people adhere to
o Used for policies etc. – when asking for subsidies
o EUs Quantitative definition
§ Less than 250 employees
§ Includes ‘SSEs’ – Solo self employed
§ About Revenue and Turnback – no more than 50 million euros.
- Qualitative: Qualitative characteristics of SMEs
o Relates more to the impact and value of the SME
o Bolton Committee and Nooteboom Qualitative definition
§ Small scale, independent
§ Personality – understanding the entrepreneurial motivation
Benefits of SMEs: can easily take risks, can act fast, flexibility
Benefits of larger firms: brand name, capital, market power
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,Summary of Introduction to Entrepreneurship Bob Langereis
Schools of thought framework
Macro view: Looking from the outside in
/ external factors that affect
entrepreneurs.
à School of thought:
- Environmental: external factors
affecting entrepreneurial
motivation.
- Financial/capital: the search for
seed and growth capital
- Displacement: negative side of
groups – group hindering persons from advancing.
Micro view: Focusing on the entrepreneur themself and the effect of their actions.
The inside out view.
à School of thought:
- Entrepreneurial traits: characteristics that make an entrepreneur successful
- Venture opportunity: Developing the right idea at the right time.
- Strategic formulation: emphasising the planning process for entrepreneurial success.
Forms of entrepreneurship, independent and corporate entrepreneurship
Managed Economy (ME) – old economy
- Power through capital
- Advantage in size (capital) – economies of scale
o Making it non beneficial for SMEs as they lack scale
- Long term commitment, between firms and workers; long employment
- Policy: focus on control and constraints – keeping things the way they are
Entrepreneurial Economy (EE) – new economy / dynamic capitalism
- Innovation is key
- Advantage by innovation and knowledge
- SMEs are important (due to their flexibility)
- short term commitment, Looser contracts – solo self-employed, temporary workers
- Policy: Focus on facilitating Entrepreneurship.
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, Summary of Introduction to Entrepreneurship Bob Langereis
Defined (Thurik et al.): Entrepreneurial economy is an economy where economic
performance is related to distributed innovation and the emergence and growth of
innovative ventures.
Reasons for an emerging Entrepreneurial Economy
We move from a Managed Economy to
an Entrepreneurial Economy majorly as
an effect of the raising (importance of)
ICT (Information and Communication
Technology) businesses. The ICT shock
came around the 1970s. Second to the
ICT shock the Globalization of the
market also contributed to the EE.
Through the free movement of goods,
capital, people and ideas. As a policy
response to globalization the source of
competitiveness moved shifted from
capital to knowledge and technology.
Entrepreneurial economy creating and entrepreneurial environment (Thurik et al.)
The knowledge spill over theory of entrepreneurship states that entrepreneurial activity is
greater in the presence of higher investments of knowledge. Regions with higher
investments of knowledge also have higher start-up rates. When there is a large base of local
knowledge and skill firms that act in national economies are more likely to be able to
compete in international markets. Also, in these environments ambitious entrepreneurs are
more likely to make new combinations of existing knowledge and skill
The role of SMEs (and entrepreneurs) in economies
Schumpeter; 1909: SMEs/Entrepreneurs are important for creative destruction; 1947:
Importance of SMEs will decrease
à Creative destruction: new improved inventions replace older outdated inventions.
SMEs make out 99.8% of all companies and 65% of employment inside the European Union.
Stages of Entrepreneurship
Shane and Venkataraman: Entrepreneurship is the discovery and exploitation of
entrepreneurial opportunities. - The situations in which goods, services, raw materials, and
organizing methods can be introduced and sold at a greater cost then production.
à Entrepreneurial discovery: When someone realises that a set of resources is not put to
its best use.
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