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Summary Entrepreneurship & Innovation Management 214 notes
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I used the class notes and lectures to create detailed summaries of key information for semester 1 - A1 or A2
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Entrepreneurship and innovationChapter 1 - nature & development of entrepreneurship
Entrepreneurs
Entrepreneur: A person who sees an opportunity in the market, gathers resources, and
creates and grows a business venture to meet these needs. She bears the risk of the
venture and is rewarded with profit if it succeeds.
- Drives economy by creating opportunities
- Fills need to do something better, cheaper or bigger profit
- Contributes to a country’s wealth
Without them
- No business, trade, trade unions or government
- No economic development
Characteristics
- Small enterprises
- Remained enthusiastic through failure
- Learnt from their own mistakes
Theory of entrepreneurship - 5 perspectives of research
- Entrepreneurship originated from economic theory
1) The economists
Baumols categories:
1. Entrepreneur-business organiser
2. Entrepreneur innovator
2) The behaviourists
- Psychologists, psychoanalysts and other human behaviour specialists
- Dominated early entrepreneurship research
3) Management Science
4) Social science
5) Entrepreneurship
Explosion of the field of entrepreneurship
- 1980: First encyclopaedia on entrepreneurship, first doctoral in it and first annual
conference on it
- Entrepreneurship was integrated into other disciplines
Defining entrepreneurship
- Entrepreneurship: Practices of an entrepreneur to facilitate the entrepreneurial activity
- Entrepreneurology: Study of entrepreneurial behaviours in a broad sense
- Entreprenology: The study of the entrepreneurial process
,Entrepreneurs are associated with:
- Emergence and growth of new businesses
- Profit-driven
- Responsive to opportunities in the market
- Creation of value for society and the individual
7 Aspects of entrepreneurs and entrepreneurship
1. Identifying a business opportunity
2. Innovation and creativity of something new and different
3. Getting resources e.g. capital, labour, equipment
4. Creating and growing a venture, starting a new business or growing an existing one
5. Taking risk - personal and financial
6. Being rewarded - element of the free market system, can be profit or increase in
business value
7. Managing the business - planning, leading, organising, controlling
Entrepreneurial ventures
- Main objectives are profitability and growth
Different to small businesses because:
- Innovation: Small business are mostly concerned with established products / services
- Potential for growth: Small businesses operate in defined space with an established
industry and market
- Strategic objectives: Small business objectives limited to survival, sales and profit
targets
SMME’s - Small, Medium and Micro enterprises
- Where most entrepreneurial activity takes place
- 35% of GDP (total value of everything produced in a country)
- Employs 55% of the private sector employees
Small Business
Small business: Any business that is independently owned and operated, but is not
dominant in its field and does not engage in any new marketing or innovative practices
- Difference between small businesses and entrepreneurial ventures
- Autonomy and security
- Owners furthering personal goals and their own security
- Stabilise after growth period and only grow with inflation
National Small business Amendment Act 26 of 2003
Ownership and structure of the business:
- Separate business entity
- Not part of a group of companies, include subsidiaries and branches
- Be a natural person, sole proprietorship, partnership or a legal person (CC or company)
Divide businesses into micro, very small, small and medium based on:
1. Total full-time paid employees
2. Total annual turnover
3. Total gross asset value (excluding fixed property)
,Model for entrepreneurship development
Entrepreneurial orientation
- Culture: Some cultures are celebrated in countries and blocked in others. Tradition-
bound societies, collectivism and avoiding uncertainty = inhibit entrepreneurship
- Family and role models: Direct exposure to entrepreneurship, high probability of
becoming an entrepreneur if its in your family
- Education: Direct link to education, can be learned. Should be taught how to become
employers and not employees
- Work experience: Type of work/skills acquired contributed to orientation. Knowledge,
skills and experience are gained as time as an employee
- Personal orientation: Creativity and innovation, Autonomy (independence), Risk taking,
Provocativeness and Competitive aggressiveness
Supportive environment
- External environment supportive of entry to a market
- Infrastructure (roads, water, electricity) should exist beforehand
- Development services also offered by government:
Financing: supplied by banks and other institutions offering capital
Training: cultivating a risk-taking attitude, focusing on the managerial process
- Discouraging to entrepreneurs:
Restrictions of free trade areas
Trading restrictions
Too many legal regulations
Cooperative environment
- Institutions who promote entrepreneurship are crucial e.g. Universities, schools who
develop entrepreneurial orientation
- Large firms fund entrepreneurship programmes through social responsibility
programmes and intervene in disadvantaged communities
, Domains of entrepreneurship, management and leadership
- Entrepreneurship develops into management as the business becomes more self-
sufficient
- Leadership is necessary throughout
- Once you discover your niche, you can exploit it
Entrepreneurial functions vs managerial functions
Entrepreneurial: Managerial functions:
- Innovative thinking - Planning
- Opportunity identification - Leading
- Planning - Organising
- Establishment / growth - Controlling
- Resource application - All the departments: Admin, HR, PR,
Production, Purchasing, Marketing, Finance
For entrepreneurs lacking managerial skills:
- Train yourself, employ people or ask specialists for advice
Entrepreneurial process
- Process through which a new venture is created
- Entrepreneur brings resources together to form an organisation in order to pursue an
opportunity
4 phases in entrepreneurial process:
1. Identify and evaluate the opportunity
- Feasibility study: General examination of the idea’s potential, focuses on ability to
pursue the idea and matches skillset with requirements
- Viability study: In-depth study of the potential of the idea. Focus is on market and profit
potential
- Less mature market has more opportunity than a mature one
2. Develop the business plan
- Needed to exploit the identified opportunity
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