SUMMARY ENTREPRENEURSHIP THEORY AND PRACTICE
Part 1: Entrepreneurial Foundations
Chapter 1: Entrepreneurship in Focus
Three key components of a definition of entrepreneurship:
1. Risk and uncertainty
a. Making decision under uncertainty; ‘it is impossible to form a group of
instances because the situation dealt with is in a high degree unique’.
b. You cannot manage uncertainty, but you can manage risk.
c. Entrepreneurship is a process of transforming ‘unknowns’ into quantifiable
risks. The entrepreneur undertakes to bring forward solutions that solve
problems that can provide benefits both to the entrepreneur and society.
2. The entrepreneur
a. Entrepreneurs are characterized by supernormal qualities of intellect and will.
They’re innovators as in getting things done.
b. Agents of change.
c. Radical innovation and competence destroying (e.g., zelfscankassa’s).
d. They need to be alert to opportunities, these come from ‘errors’ (e.g., high
prices or poor service).
5 ways of introducing innovations:
Introduction of a new method of production.
Opening up a new market.
The conquest of a new source of supply of raw materials or half-manufactured
goods.
The creation of a new type of industrial organization.
Introduction of a new good or significant improvement.
3. Entrepreneurial contexts
a. Opportunities are socially constructed by people working together to give
meaning to the identification and realization of opportunities.
b. Entrepreneurship is the creation of organizations.
c. People who act independently to create new organizations or innovations
within an existing organization.
d. Meet social needs.
Self-employment is a way to measure entrepreneurship.
1
,However, it is not a good measurement for quality.
5 features:
1. Entrepreneurial activity varies markedly in richer countries.
2. Entrepreneurial patterns vary over time in richer countries.
3. Men are more likely to be entrepreneurially active than women.
4. Entrepreneurial activity is higher in poorer countries.
5. Many self-employed people operate in hyper-competitive markets.
A small business is more likely to experience external market or customer uncertainty. It is
more likely to devote substantial resources to its operations, logistics and marketing. It lacks
the market share, brand recognition and economics of scale. More likely to adopt a flexible
strategy. Leadership is more visible and accessible.
A multinational is more likely to experience internal uncertainty. Its size and geographic
spread make it difficult for staff to buy into its strategy, mission and vision. Access to
multiple sources of funding from dect.
2
, Chapter 2: What makes an Entrepreneur? Traits and Biases
Psychological traits
Risk taker: a greater willingness to pursue uncertain decisions or courses of
action even if there is uncertainty about success or failure.
o There is a positive correlation between risk-taking and entrepreneurship.
o You need to turn uncertainties into manageable risks by better
understanding customers, suppliers and competitors.
Locus of control: a generalized expectation that the outcome of an event is either
within or beyond a person’s control.
o If you’re the author of your own future, you have a high internal locus of
control. If you believe outcomes are due to fate or luck, you have a high
external locus of control.
Need for achievement: you seek out contexts that provide moderate levels of
risk-taking, allow you to take individual responsibility and give you direct
feedback on your actions.
Stress tolerance, the need for autonomy and a tolerance for ambiguity.
Big five personality dimensions: openness, conscientiousness, extraversion, agreeableness
and neuroticism (OCEAN).
Planned behaviors and self-efficacy
If we want to understand why someone acts in the way that they do, we have to examined
their intentions. This is influenced by three factors:
Attitude to behavior
Perceived social norms
Perceived behavioral control
If you want to achieve something, believe you can do it and feel supported by your social
network to succeed, you form positive intentionality’s towards that activity.
Ajzen’s theory of planned behavior
Self-efficacy: concerned with judgments of how well one can execute courses of action
required to deal with prospective situations. Situation dependent. 4 sources:
1. Knowledge and feelings gained from direct past experience.
2. Vicarious learning from self and others.
3. Social persuasion.
4. Emotional status.
The best way of building self-efficacy is having experience of successfully completing a task
in a specific area, this builds resilience. You can also observe others who achieves success.
3
Part 1: Entrepreneurial Foundations
Chapter 1: Entrepreneurship in Focus
Three key components of a definition of entrepreneurship:
1. Risk and uncertainty
a. Making decision under uncertainty; ‘it is impossible to form a group of
instances because the situation dealt with is in a high degree unique’.
b. You cannot manage uncertainty, but you can manage risk.
c. Entrepreneurship is a process of transforming ‘unknowns’ into quantifiable
risks. The entrepreneur undertakes to bring forward solutions that solve
problems that can provide benefits both to the entrepreneur and society.
2. The entrepreneur
a. Entrepreneurs are characterized by supernormal qualities of intellect and will.
They’re innovators as in getting things done.
b. Agents of change.
c. Radical innovation and competence destroying (e.g., zelfscankassa’s).
d. They need to be alert to opportunities, these come from ‘errors’ (e.g., high
prices or poor service).
5 ways of introducing innovations:
Introduction of a new method of production.
Opening up a new market.
The conquest of a new source of supply of raw materials or half-manufactured
goods.
The creation of a new type of industrial organization.
Introduction of a new good or significant improvement.
3. Entrepreneurial contexts
a. Opportunities are socially constructed by people working together to give
meaning to the identification and realization of opportunities.
b. Entrepreneurship is the creation of organizations.
c. People who act independently to create new organizations or innovations
within an existing organization.
d. Meet social needs.
Self-employment is a way to measure entrepreneurship.
1
,However, it is not a good measurement for quality.
5 features:
1. Entrepreneurial activity varies markedly in richer countries.
2. Entrepreneurial patterns vary over time in richer countries.
3. Men are more likely to be entrepreneurially active than women.
4. Entrepreneurial activity is higher in poorer countries.
5. Many self-employed people operate in hyper-competitive markets.
A small business is more likely to experience external market or customer uncertainty. It is
more likely to devote substantial resources to its operations, logistics and marketing. It lacks
the market share, brand recognition and economics of scale. More likely to adopt a flexible
strategy. Leadership is more visible and accessible.
A multinational is more likely to experience internal uncertainty. Its size and geographic
spread make it difficult for staff to buy into its strategy, mission and vision. Access to
multiple sources of funding from dect.
2
, Chapter 2: What makes an Entrepreneur? Traits and Biases
Psychological traits
Risk taker: a greater willingness to pursue uncertain decisions or courses of
action even if there is uncertainty about success or failure.
o There is a positive correlation between risk-taking and entrepreneurship.
o You need to turn uncertainties into manageable risks by better
understanding customers, suppliers and competitors.
Locus of control: a generalized expectation that the outcome of an event is either
within or beyond a person’s control.
o If you’re the author of your own future, you have a high internal locus of
control. If you believe outcomes are due to fate or luck, you have a high
external locus of control.
Need for achievement: you seek out contexts that provide moderate levels of
risk-taking, allow you to take individual responsibility and give you direct
feedback on your actions.
Stress tolerance, the need for autonomy and a tolerance for ambiguity.
Big five personality dimensions: openness, conscientiousness, extraversion, agreeableness
and neuroticism (OCEAN).
Planned behaviors and self-efficacy
If we want to understand why someone acts in the way that they do, we have to examined
their intentions. This is influenced by three factors:
Attitude to behavior
Perceived social norms
Perceived behavioral control
If you want to achieve something, believe you can do it and feel supported by your social
network to succeed, you form positive intentionality’s towards that activity.
Ajzen’s theory of planned behavior
Self-efficacy: concerned with judgments of how well one can execute courses of action
required to deal with prospective situations. Situation dependent. 4 sources:
1. Knowledge and feelings gained from direct past experience.
2. Vicarious learning from self and others.
3. Social persuasion.
4. Emotional status.
The best way of building self-efficacy is having experience of successfully completing a task
in a specific area, this builds resilience. You can also observe others who achieves success.
3
