Lecture 1: Introduction to entrepreneurship
What is entrepreneurship? ‘Entrepreneurship is the pursuit of opportunity beyond resources
controlled.’ Stevenson as cited in Eisenmann, 2013
– Entrepreneurship consists of eight factors: the entrepreneur, innovation, organization
creation, creating value, profit or nonprofit, growth, uniqueness, the owner manager (Gartner
1990)
– The term entrepreneurship is very fuzzy (Anderson & Starnawska 2008)
DIFFERENT PERSPECTIVES OF ENTREPRENEURSHIP
1. The economic perspective
- First definitions going back to the 18th century, starting with encompassing buying
something and selling it for more
- Knight introduced the concept of dealing with uncertainty and therefore risk in the 1900s
- Schumpeter (1934) introduced the concept of creative destruction: “The entrepreneur is an
innovator who, by combining existing things, generates new opportunities and organizations
in the economy.” This could lead to the destruction of established businesses.
- His definition includes creating new products, production methods, new markets, utilizing
new supply sources and the reorganization of an industry.
2. The social-psychological tradition
- Starting in the 60s, researchers tried to identify the social-psychological factors of
entrepreneurs. Examples of these social-psychological factor are ‘energetic participation in
endeavor’, ‘confidence’, ‘desire to be your own boss’, and ‘need to accomplish”
- However, studies failed to identify “the entrepreneur” out of the mass è If this research
would have been successful, we would have a valid ‘entrepreneur’ test. Instead we use
proxies, like entrepreneurial intention
- The environment also has a big impact, the phenomenon is too complex to find an easy
answer
3. The emergence tradition
- Entrepreneurship is equivalent with forming an organization, namely creating a new venture
- Research focus on the process of venture formation including topics like formal policy,
administrative structure and goals
- Behavioral patterns are an important aspect
4. The opportunity tradition
- Entrepreneurship consists of ‘discovery, evaluation and exploitation of opportunities to
introduce new goods and services, ways of organizing, markets processes and raw materials’
(Shane 2003: 4)
- Discovering or creating opportunities is the core of this theory
- Opportunities are ‘situations in which new goods, services, raw materials, markets and
organizing methods can be introduced through the formation of new means, ends, or means-
ends relationship’ (Eckhardt & Shane 2003: 336)
Q: WHICH TWO TRADITIONS OF ENTREPRENEURSHIP RESEARCH ARE DOMINANT TODAY?
A: The economic perspective and the social-psychological tradition
B: The social-psychological tradition and the emergence tradition
C: The economic perspective and the opportunity tradition
D: The emergence tradition and the opportunity tradition
SIDENOTE: For the exam, it would be good to e.g. know about the four traditions. However, you do not
need to learn long definitions by heart. I will not ask you to write down any definitions, but rather about
your understanding of concepts.
1
,WHO IS AN ENTREPRENEUR?
Ø The individual entrepreneur plays a crucial role in establishing a new business.
Ø Venture capital investors often consider the role of the entrepreneur as more important than the
business idea!
TYPES OF ENTREPRENEURS
Entrepreneur can be multiple types of these types of entrepreneurs!
• Novice: No entrepreneurial experience
• Habitual: Having entrepreneurial experience
• Serial: Creating new ventures on a regular basis
• Portfolio: Owning several organizations simultaneously
• Hybrid: Employed and business-owner at the same time
• Nascent entrepreneur: in the process of becoming an entrepreneur (want to become an
entrepreneur but is not an entrepreneur yet)
• Intrapreneur: Acting as in entrepreneur within an organization (e.g. someone in a company
creates a new product)
ARE ENTREPRENEURS BORN OR MADE? è THE ‘BORN’ PERSPECTIVE
Entrepreneurs are ‘special’ individuals. They have character traits like being independent, goal
oriented, innovative, intelligent, creative and many more.
– Critical note: your traits do not necessary are stable throughout your life as they can change
BIG FIVE FACTORS: openness, conscientiousness, extraversion, agreeableness, neuroticism
The influence of genes in entrepreneurship
• Entrepreneurs often have parents who are also involved in entrepreneurial activities è idea
of influence of genes
• Genes combined with environmental might lead to a certain degree influence behavior (e.g.
autism)
• Bönte et al. (2016) e.g. showed a positive influence of prenatal testosterone exposure on
entrepreneurship intention
• Results should be taken very cautiously: replication crisis in social science (Open Science
Collaboration 2015)
ARE ENTREPRENEURS BORN OR MADE? è THE ‘MADE’ PERSPECTIVE
– The social demographic environment is crucial for becoming an entrepreneur including e.g.
age, work experience, and education
– Global Entrepreneurship Monitor 2010 highlighted the role of age (25-34 years) as important
factor
– Education including e.g. entrepreneurship courses seem to have a positive impact (Lee 2005)
The elements of entrepreneurship: (I) Individual, (II) Organization, (III) Process, and (IV) Environment
2
, Lecture 2: Opportunities and business models
DEFINITION OF OPPORTUNITIES: An entrepreneurial opportunity consists of a set of ideas, beliefs
and actions that enable the creation of future goods and services in the absence of current markets
for them. -Venkataraman, 1997
CRITERIA FOR A VALID OPPORTUNITY
Four dimensions/factors of opportunities
1. Anchored: bound to a product, a service, or an experience that creates value for others
2. Attractive: others are willing to pay for the value that represents the idea
3. At the right time and place: the environment is mature enough to receive the entrepreneur
and his or her idea
4. Capable of being done: the opportunity is practically feasible
CLASSIFY OPPORTUNITIES – SCHUMPETERIAN VERSUS KIRZNERIAN
• SCHUMPETERIAN è CREATIVE DESTRUCTION
- Created a whole new market
- Eating (like a shark) market share of other businesses
- Creating a new market opportunity
- Example: Netflix created a new market by ‘eating’ market of Hollywood (dvd’s) by
creating their own movies.
• KIRZNERIAN è MARKET EQUILIBRIUM
- Does not change (destruct) the market but offers a market equilibrium to customers
- Consolidating an existing market
- Example: Aldi
OPPORTUNITIES – DISCOVERED OR CREATED?
• Discovery view: Opportunities are out there. The entrepreneurs can identify them by e.g.
being more alert to it. Out of a set of opportunities he or she collects one.
• Creation view: The entrepreneur creates the opportunity him- or herself. It is his or her
creation.
OPPORTUNITIES – EVALUATIONS
• Instrumental perspective
o Evaluation of: product, market, industry, people, money (of an opportunity)
• Venture Capital decision criteria
– The entrepreneur’s personality and experience
– Characteristics of the market
– Financial considerations
– Characteristics of the product or service
o The product is proprietary or can otherwise be protected.
o The products enjoy demonstrated market acceptance.
o The product has been developed to the point of a functioning prototype.
o The product may be described as “high tech”.
– Other decision criteria: top management team; market and market growth; product, risk;
returns; exit; deal; strategy; customer; competition
OPPORTUNITIES – CREATING TRUST
This can be done by for example:
• Establishing a website
• Setting up social media accounts and regularly create updates
• Founding an official company
3
What is entrepreneurship? ‘Entrepreneurship is the pursuit of opportunity beyond resources
controlled.’ Stevenson as cited in Eisenmann, 2013
– Entrepreneurship consists of eight factors: the entrepreneur, innovation, organization
creation, creating value, profit or nonprofit, growth, uniqueness, the owner manager (Gartner
1990)
– The term entrepreneurship is very fuzzy (Anderson & Starnawska 2008)
DIFFERENT PERSPECTIVES OF ENTREPRENEURSHIP
1. The economic perspective
- First definitions going back to the 18th century, starting with encompassing buying
something and selling it for more
- Knight introduced the concept of dealing with uncertainty and therefore risk in the 1900s
- Schumpeter (1934) introduced the concept of creative destruction: “The entrepreneur is an
innovator who, by combining existing things, generates new opportunities and organizations
in the economy.” This could lead to the destruction of established businesses.
- His definition includes creating new products, production methods, new markets, utilizing
new supply sources and the reorganization of an industry.
2. The social-psychological tradition
- Starting in the 60s, researchers tried to identify the social-psychological factors of
entrepreneurs. Examples of these social-psychological factor are ‘energetic participation in
endeavor’, ‘confidence’, ‘desire to be your own boss’, and ‘need to accomplish”
- However, studies failed to identify “the entrepreneur” out of the mass è If this research
would have been successful, we would have a valid ‘entrepreneur’ test. Instead we use
proxies, like entrepreneurial intention
- The environment also has a big impact, the phenomenon is too complex to find an easy
answer
3. The emergence tradition
- Entrepreneurship is equivalent with forming an organization, namely creating a new venture
- Research focus on the process of venture formation including topics like formal policy,
administrative structure and goals
- Behavioral patterns are an important aspect
4. The opportunity tradition
- Entrepreneurship consists of ‘discovery, evaluation and exploitation of opportunities to
introduce new goods and services, ways of organizing, markets processes and raw materials’
(Shane 2003: 4)
- Discovering or creating opportunities is the core of this theory
- Opportunities are ‘situations in which new goods, services, raw materials, markets and
organizing methods can be introduced through the formation of new means, ends, or means-
ends relationship’ (Eckhardt & Shane 2003: 336)
Q: WHICH TWO TRADITIONS OF ENTREPRENEURSHIP RESEARCH ARE DOMINANT TODAY?
A: The economic perspective and the social-psychological tradition
B: The social-psychological tradition and the emergence tradition
C: The economic perspective and the opportunity tradition
D: The emergence tradition and the opportunity tradition
SIDENOTE: For the exam, it would be good to e.g. know about the four traditions. However, you do not
need to learn long definitions by heart. I will not ask you to write down any definitions, but rather about
your understanding of concepts.
1
,WHO IS AN ENTREPRENEUR?
Ø The individual entrepreneur plays a crucial role in establishing a new business.
Ø Venture capital investors often consider the role of the entrepreneur as more important than the
business idea!
TYPES OF ENTREPRENEURS
Entrepreneur can be multiple types of these types of entrepreneurs!
• Novice: No entrepreneurial experience
• Habitual: Having entrepreneurial experience
• Serial: Creating new ventures on a regular basis
• Portfolio: Owning several organizations simultaneously
• Hybrid: Employed and business-owner at the same time
• Nascent entrepreneur: in the process of becoming an entrepreneur (want to become an
entrepreneur but is not an entrepreneur yet)
• Intrapreneur: Acting as in entrepreneur within an organization (e.g. someone in a company
creates a new product)
ARE ENTREPRENEURS BORN OR MADE? è THE ‘BORN’ PERSPECTIVE
Entrepreneurs are ‘special’ individuals. They have character traits like being independent, goal
oriented, innovative, intelligent, creative and many more.
– Critical note: your traits do not necessary are stable throughout your life as they can change
BIG FIVE FACTORS: openness, conscientiousness, extraversion, agreeableness, neuroticism
The influence of genes in entrepreneurship
• Entrepreneurs often have parents who are also involved in entrepreneurial activities è idea
of influence of genes
• Genes combined with environmental might lead to a certain degree influence behavior (e.g.
autism)
• Bönte et al. (2016) e.g. showed a positive influence of prenatal testosterone exposure on
entrepreneurship intention
• Results should be taken very cautiously: replication crisis in social science (Open Science
Collaboration 2015)
ARE ENTREPRENEURS BORN OR MADE? è THE ‘MADE’ PERSPECTIVE
– The social demographic environment is crucial for becoming an entrepreneur including e.g.
age, work experience, and education
– Global Entrepreneurship Monitor 2010 highlighted the role of age (25-34 years) as important
factor
– Education including e.g. entrepreneurship courses seem to have a positive impact (Lee 2005)
The elements of entrepreneurship: (I) Individual, (II) Organization, (III) Process, and (IV) Environment
2
, Lecture 2: Opportunities and business models
DEFINITION OF OPPORTUNITIES: An entrepreneurial opportunity consists of a set of ideas, beliefs
and actions that enable the creation of future goods and services in the absence of current markets
for them. -Venkataraman, 1997
CRITERIA FOR A VALID OPPORTUNITY
Four dimensions/factors of opportunities
1. Anchored: bound to a product, a service, or an experience that creates value for others
2. Attractive: others are willing to pay for the value that represents the idea
3. At the right time and place: the environment is mature enough to receive the entrepreneur
and his or her idea
4. Capable of being done: the opportunity is practically feasible
CLASSIFY OPPORTUNITIES – SCHUMPETERIAN VERSUS KIRZNERIAN
• SCHUMPETERIAN è CREATIVE DESTRUCTION
- Created a whole new market
- Eating (like a shark) market share of other businesses
- Creating a new market opportunity
- Example: Netflix created a new market by ‘eating’ market of Hollywood (dvd’s) by
creating their own movies.
• KIRZNERIAN è MARKET EQUILIBRIUM
- Does not change (destruct) the market but offers a market equilibrium to customers
- Consolidating an existing market
- Example: Aldi
OPPORTUNITIES – DISCOVERED OR CREATED?
• Discovery view: Opportunities are out there. The entrepreneurs can identify them by e.g.
being more alert to it. Out of a set of opportunities he or she collects one.
• Creation view: The entrepreneur creates the opportunity him- or herself. It is his or her
creation.
OPPORTUNITIES – EVALUATIONS
• Instrumental perspective
o Evaluation of: product, market, industry, people, money (of an opportunity)
• Venture Capital decision criteria
– The entrepreneur’s personality and experience
– Characteristics of the market
– Financial considerations
– Characteristics of the product or service
o The product is proprietary or can otherwise be protected.
o The products enjoy demonstrated market acceptance.
o The product has been developed to the point of a functioning prototype.
o The product may be described as “high tech”.
– Other decision criteria: top management team; market and market growth; product, risk;
returns; exit; deal; strategy; customer; competition
OPPORTUNITIES – CREATING TRUST
This can be done by for example:
• Establishing a website
• Setting up social media accounts and regularly create updates
• Founding an official company
3
