ENTR 421 Midterm Exam Review Questions and Correct Answers

Entrepreneurial Motivation personal reasons, economic reasons What is entrepreneurship? An act of innovation, creating something of value from nothing, the creation of a new enterprise, the creation of new organizations There are many different definitions of entrepreneurship. Which characteristics do they all mention? Creativity What is creative destruction? Entrepreneurship moves market away from the equilibrium What is entrepreneurial discovery? Entrepreneurship moves market towards the equilibrium What is the Schumpeterian view of entrepreneurship? individual entrepreneurs are the central actors for economic development. Through the process of creative destruction, independent entrepreneurs create new economic combinations that enhance productivity growth and raise living standards. Entrepreneurial profits result from organizing "the relationship between factors of production and market opportunities in ways that create value that would not otherwise have been generated". Individuals are less likely to create new combinations that generate surplus value if they are agents in professionally managed organizations than if they are independent entrepreneurs. What is the definition of entrepreneurship? "The process of creating or seizing an opportunity in order to create new value out of the given resources". What do entrepreneurs do? seize opportunities, marshal resources, commit incessant energy to their venture, possess a growth orientation, add value to the customers, build an organization What is invention? A novel device, method, product, process or technique. The creation of a new technical idea and the physical means to accomplish or embody the idea. The creation of a product or introduction of a process for the first time. What is innovation? The process that translates knowledge into economic growth and social well-being. It addresses and satisfies a specific market need. Brings the invention idea to the market.