Chapter 1: Introduction to Entrepreneurship
CHAPTER 1
INTRODUCTION TO ENTREPRENEURSHIP
LEARNING OBJECTIVES
After studying this chapter students should be ready to:
1. Explain entrepreneurship and discuss its importance.
2. Describe corporate entrepreneurship and its use in established firms.
3. Discuss three main reasons people decide to become entrepreneurs.
4. Identify four main characteristics of successful entrepreneurs.
5. Explain the five common myths regarding entrepreneurship.
6. Explain how entrepreneurial firms differ from salary-substitute and lifestyle firms.
7. Discuss the changing demographics of entrepreneurs in the United States.
8. Discuss the impact of entrepreneurial firms on economies and societies.
9. Identify ways in which large firms benefit from the presence of smaller
entrepreneurial firms.
10. Explain the entrepreneurial process.
CHAPTER OVERVIEW
This chapter (1) introduces the book, (2) provides an overview of the entrepreneurial
process, and (3) introduces a conceptual model that shows how the entrepreneurial
process typically unfolds. The model, which is shown at the top of the next page, depicts
the entrepreneurial process as a 10 step process, beginning with the decision to become
an entrepreneur. The chapters of the book follow the model. We hope that this approach
provides your students a nice visual way of understanding how the entrepreneurial
process unfolds.
The chapter focuses on why people become entrepreneurs, the characteristics of
successful entrepreneurs, the changing demographics of entrepreneur, and the importance
of entrepreneurship to the economy and society. The three boxed features, which appear
in every chapter, are introduced. The chapter ends with a brief discussion of each of the
major sections of the book.
The chapter, like the rest of the book, is written in an upbeat yet realistic manner.
1
Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
,Chapter 1: Introduction to Entrepreneurship
Basic Model of the Entrepreneurial Process
The Model Parallels the Chapters in the Book
CHAPTER OUTLINE
I. Introduction to Entrepreneurship
A. What is Entrepreneurship?
B. Why Become an Entrepreneur?
C. Characteristics of Successful Entrepreneurs
1. Passion for the Business
2. Product/Customer Focus
3. Tenacity Despite Failure
4. Execution Intelligence
D. Common Myths About Entrepreneurs
E. Types of Start-Up Firms
II. Changing Demographics of Entrepreneurs
A. Women Entrepreneurs
B. Minority Entrepreneurs
C. Senior Entrepreneurs
D. Young Entrepreneurs
II. Entrepreneurship’s Importance
A. Economic Impact of Entrepreneurial Firms
B. Entrepreneurial Firms’ Impact on Society
C. Entrepreneurial Firms’ Impact on Larger Firms
III. The Entrepreneurial Process
A. Decision to Become an Entrepreneur
B. Developing Successful Business Ideas
C. Moving From an Idea to an Entrepreneurial Firm
2
Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
, Chapter 1: Introduction to Entrepreneurship
D. Managing and Growing an Entrepreneurial Firm
CHAPTER NOTES
I. Introduction to Entrepreneurship
A. What is Entrepreneurship?
1. The word “entrepreneur” derives from the French words entre, meaning
between,” and prendre, meaning “to take.” The word was originally used
to describe people who “take on the risk” between buyers and sellers or
who “undertake” a task such as starting a new venture.
2. Inventors and entrepreneurs differ from one another. An inventor creates
something new. An entrepreneur assembles and then integrates all the
resources needed to transform the invention into a viable business.
3. Entrepreneurship (according to the classic definition) is the process by
which individuals pursue opportunities without regard to resources they
currently control.
4. Established firms with an orientation to behave entrepreneurially practice
corporate entrepreneurship.
a. All firms fall on a conceptual continuum that ranges from highly
conservative to highly entrepreneurial. The position of a firm on
this continuum is referred to as its entrepreneurial intensity.
b. Entrepreneurial firms are typically proactive innovators and are not
adverse to risk. In contrast, conservative firms take a more “wait and
see” posture, are less innovative, and are risk averse.
B. Why Become an Entrepreneur?
1. The three primary reasons that people become entrepreneurs and start their
own firms are to (1) be their own boss, (2) pursue their own ideas, and
(3) realize financial goals.
a. Be your own boss. Many entrepreneurs want to be their own boss
because either they have had a long-term ambition to own their own
firm or they have become frustrated working in traditional jobs.
b. Pursue their own ideas. Some people are naturally alert, and when
they recognize ideas for new products or services, they have a desire
to see those ideas realized.
3
Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
, Chapter 1: Introduction to Entrepreneurship
c. Realize financial goals. People start their own firms to pursue financial
rewards. This motivation, however, is typically secondary to the first
two and often fails to live up to its hype.
C. Characteristics of Successful Entrepreneur
1. Passion for the Business
a. The number one characteristic shared by successful entrepreneurs is
passion for their business. This passion typically stems from the
entrepreneur’s belief that the business will positively influence
people’s lives.
2. Product/Customer Focus
a. An entrepreneur’s keen focus on products and customers typically
stems from the fact that most successful entrepreneurs are, at heart,
craftspeople.
3. Tenacity Despite Failure
a. Because entrepreneurs are typically trying something new, the failure
rate associated with their efforts is naturally high.
b. Developing a new business may require a certain degree of
experimentation before a success is attained. Setbacks and failures
inevitably occur during this process. The litmus test for
entrepreneurs is their ability to persevere through setbacks and
failures.
4. Execution Intelligence
a. The ability to fashion a solid business idea into a viable business is a
key characteristic of successful entrepreneurs.
b. The ability to effectively execute a business idea means developing a
business model, putting together a new venture team, raising money,
establishing partnership, managing finances, leading and motivating
employees, and so on. It also demands the ability to translate thought,
creativity, and imagination into action and measurable results.
D. Common Myths About Entrepreneurs
1. Myth 1: Entrepreneurs are born, not made.
a. This myth is based on the mistaken belief that some people are
4
Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
CHAPTER 1
INTRODUCTION TO ENTREPRENEURSHIP
LEARNING OBJECTIVES
After studying this chapter students should be ready to:
1. Explain entrepreneurship and discuss its importance.
2. Describe corporate entrepreneurship and its use in established firms.
3. Discuss three main reasons people decide to become entrepreneurs.
4. Identify four main characteristics of successful entrepreneurs.
5. Explain the five common myths regarding entrepreneurship.
6. Explain how entrepreneurial firms differ from salary-substitute and lifestyle firms.
7. Discuss the changing demographics of entrepreneurs in the United States.
8. Discuss the impact of entrepreneurial firms on economies and societies.
9. Identify ways in which large firms benefit from the presence of smaller
entrepreneurial firms.
10. Explain the entrepreneurial process.
CHAPTER OVERVIEW
This chapter (1) introduces the book, (2) provides an overview of the entrepreneurial
process, and (3) introduces a conceptual model that shows how the entrepreneurial
process typically unfolds. The model, which is shown at the top of the next page, depicts
the entrepreneurial process as a 10 step process, beginning with the decision to become
an entrepreneur. The chapters of the book follow the model. We hope that this approach
provides your students a nice visual way of understanding how the entrepreneurial
process unfolds.
The chapter focuses on why people become entrepreneurs, the characteristics of
successful entrepreneurs, the changing demographics of entrepreneur, and the importance
of entrepreneurship to the economy and society. The three boxed features, which appear
in every chapter, are introduced. The chapter ends with a brief discussion of each of the
major sections of the book.
The chapter, like the rest of the book, is written in an upbeat yet realistic manner.
1
Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
,Chapter 1: Introduction to Entrepreneurship
Basic Model of the Entrepreneurial Process
The Model Parallels the Chapters in the Book
CHAPTER OUTLINE
I. Introduction to Entrepreneurship
A. What is Entrepreneurship?
B. Why Become an Entrepreneur?
C. Characteristics of Successful Entrepreneurs
1. Passion for the Business
2. Product/Customer Focus
3. Tenacity Despite Failure
4. Execution Intelligence
D. Common Myths About Entrepreneurs
E. Types of Start-Up Firms
II. Changing Demographics of Entrepreneurs
A. Women Entrepreneurs
B. Minority Entrepreneurs
C. Senior Entrepreneurs
D. Young Entrepreneurs
II. Entrepreneurship’s Importance
A. Economic Impact of Entrepreneurial Firms
B. Entrepreneurial Firms’ Impact on Society
C. Entrepreneurial Firms’ Impact on Larger Firms
III. The Entrepreneurial Process
A. Decision to Become an Entrepreneur
B. Developing Successful Business Ideas
C. Moving From an Idea to an Entrepreneurial Firm
2
Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
, Chapter 1: Introduction to Entrepreneurship
D. Managing and Growing an Entrepreneurial Firm
CHAPTER NOTES
I. Introduction to Entrepreneurship
A. What is Entrepreneurship?
1. The word “entrepreneur” derives from the French words entre, meaning
between,” and prendre, meaning “to take.” The word was originally used
to describe people who “take on the risk” between buyers and sellers or
who “undertake” a task such as starting a new venture.
2. Inventors and entrepreneurs differ from one another. An inventor creates
something new. An entrepreneur assembles and then integrates all the
resources needed to transform the invention into a viable business.
3. Entrepreneurship (according to the classic definition) is the process by
which individuals pursue opportunities without regard to resources they
currently control.
4. Established firms with an orientation to behave entrepreneurially practice
corporate entrepreneurship.
a. All firms fall on a conceptual continuum that ranges from highly
conservative to highly entrepreneurial. The position of a firm on
this continuum is referred to as its entrepreneurial intensity.
b. Entrepreneurial firms are typically proactive innovators and are not
adverse to risk. In contrast, conservative firms take a more “wait and
see” posture, are less innovative, and are risk averse.
B. Why Become an Entrepreneur?
1. The three primary reasons that people become entrepreneurs and start their
own firms are to (1) be their own boss, (2) pursue their own ideas, and
(3) realize financial goals.
a. Be your own boss. Many entrepreneurs want to be their own boss
because either they have had a long-term ambition to own their own
firm or they have become frustrated working in traditional jobs.
b. Pursue their own ideas. Some people are naturally alert, and when
they recognize ideas for new products or services, they have a desire
to see those ideas realized.
3
Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
, Chapter 1: Introduction to Entrepreneurship
c. Realize financial goals. People start their own firms to pursue financial
rewards. This motivation, however, is typically secondary to the first
two and often fails to live up to its hype.
C. Characteristics of Successful Entrepreneur
1. Passion for the Business
a. The number one characteristic shared by successful entrepreneurs is
passion for their business. This passion typically stems from the
entrepreneur’s belief that the business will positively influence
people’s lives.
2. Product/Customer Focus
a. An entrepreneur’s keen focus on products and customers typically
stems from the fact that most successful entrepreneurs are, at heart,
craftspeople.
3. Tenacity Despite Failure
a. Because entrepreneurs are typically trying something new, the failure
rate associated with their efforts is naturally high.
b. Developing a new business may require a certain degree of
experimentation before a success is attained. Setbacks and failures
inevitably occur during this process. The litmus test for
entrepreneurs is their ability to persevere through setbacks and
failures.
4. Execution Intelligence
a. The ability to fashion a solid business idea into a viable business is a
key characteristic of successful entrepreneurs.
b. The ability to effectively execute a business idea means developing a
business model, putting together a new venture team, raising money,
establishing partnership, managing finances, leading and motivating
employees, and so on. It also demands the ability to translate thought,
creativity, and imagination into action and measurable results.
D. Common Myths About Entrepreneurs
1. Myth 1: Entrepreneurs are born, not made.
a. This myth is based on the mistaken belief that some people are
4
Copyright ©2010 Pearson Education, Inc. publishing as Prentice Hall
