IED Fellows Programme

Simon Stockley

Director, FTMBA Programme

Recommended texts
New Venture Creation

The New Business Road Test

Timmons, J.A & S. Spinelli

McGraw Hill

John Mullins
FT Prentice Hall

The FT Guide to Business Start

Up (2009)
Sara Williams
FT Prentice Hall

1. Entrepreneurship and
entrepreneurial behaviour
Simon Stockley

Director, FTMBA Programme

William Baumol: the rules of the game?

Entrepreneurs are always with us
Defined as people who are creative in the maximisation
of their utility (wealth, power, prestige, etc)
The allocation of entrepreneurial effort is determined by
the rules of the game
The rules define the structure of payoffs in a society - The rewards accruing to
different types of behaviour vary dramatically
The rules are a reflection of a societys underlying value system
Entrepreneurial activity can be productive, unproductive or destructive!

What are the rules of the game?

Societal norms relating to utility what

do people want?
Structure of payoffs what gets very
well rewarded?
Nature of entrepreneurial activity how
do people seek to maximise their utility?

National Childrens
Survey 2008
1. To be a celebrity
2. To be a model

Academia

3. To be rich

Entrepreneurship

4. To be a football player

UK
Denmark...

Why pursue a productive entrepreneurial career?

Death of the psychological contract
Chips & BRICS...youll probably have no choice!
Make the world a better place
Get rich (maybe)
Fun
Patriotic duty?

If you dont control your life,

someone else will control it for you

Differing perspectives on
entrepreneurship

The evolution of the field

Functional

The economic function of

the entrepreneur

1755 - 1950s
Cantillon 1755
Say 1800
Schumpeter - 1934

Indicative

The personality traits

and characteristics of
the entrepreneur

1950s - 1988
McClelland 1961
Kets de Vries 1977

Behavioural

Entrepreneurial
behaviour

Gene-environment
interactions

1988 - present
Gartner 1988
Stevenson 1989
Baron - 2000

Nicolaou & Shane 2007

The difficulty in defining entrepreneurship stems from a

failure to integrate these competing approaches

Who is the Entrepreneur?

High

Inventor

Entrepreneur

Creativity
and
innovation

Promoter

Manager,
administrator

Low

High

General management skills, business know-how,

networks
Source: Timmons 1999 p.46

Why do people start businesses?

Reasons for starting a business

1.

Freedom to adopt my own

approach to work

2.

To take advantage of an
opportunity

3.

To control my own time

4.

It made sense at that time in my

life (!)

5.

Security for myself and family

6.

Flexible work-life balance

(Birley & Westhead, 1994) n=405

7.

Desire to have high earnings

8.

Challenge

9.

To achieve something and get

recognition

10. To continue learning

11. Respect of friends and family
12. Tax avoidance.

Does the motive matter?

Research suggests no link to business success
Other factors are far more significant
However:

Intrinsic motivation is important

The fit between personal and business goals
matters a great deal, especially with a team
Stakeholders try to pick winners!

Current thinking:
Entrepreneurship is:

A process or behaviour, not a person

An approach to management that begins with
opportunity

The pursuit of opportunity beyond the

resources you currently control

The elements of entrepreneurship

Opportunity

Resources

Entrepreneur

Managerial vs. Entrepreneurial behaviour

Entrepreneur
Opportunity
Driven
Quick &
Short

Manager/Bureaucrat
Strategic Orientation

Resources Driven

Commitment to Opportunity

Long & Slow

Minimal,
Multi-stage

Commitment of Resources

Single stage

Use or rent

Control of Resources

Own or employ

Networks, little
hierarchy

Management Structure

Formalised
hierarchy

Value and
team based

Compensation and Rewards

Individual &
hierarchical

Stevenson 1998

What shapes our behaviour?

Behaviour = (S,A,P) moderated by Context

High
context
environment
=
Low
context
environment
= weak
strong
influence
on behaviour
influence
on behaviour
Belief structures
self-image
perceived societal
norms
fear of failure
heuristics
ethical values
Motivation

Psychological
State

Self-efficacy

Personality

Ability

Aptitude
Intelligence
Education
Training
Experience

WE ARE ABLE TO CHANGE OUR

PERCEPITIONS, ATTITUDES, BELIEFS AND
BEHAVIOURS.BUT

The degree behavioural mobility:

Potential

Potential

Entrepreneur

Current

Manager

1. Will vary between individuals

2. Will respond to differing stimuli and interventions
There is no universal recipe or magic formula!....

Becoming more entrepreneurial.

Straits Times 13th May 2004

Socio-psychological antecedents of entrepreneurial behaviour

Self concept I see myself as an entrepreneurial person

Belief system Entrepreneurship is a good thing

Perceived societal norms People within my environment (family,

friends, peers) approve of entrepreneurial behaviour.

Perceived instrumentality Displaying entrepreneurial behaviour will

help me to achieve my lifes purpose (or maximise my utility)

Self efficacy I believe that I can display the behaviours and attitudes
required to succeed as an entrepreneur

Intrinsic motivation Interest and enjoyment (pull) and/or need (push)

How to become more entrepreneurial.

Locate yourself in suitable environments

Get an entrepreneurial mentor

Become obsessed with opportunity

Take action JFDI

Take many small steps

Learn by failing fast and often (but make sure the losses are small)

Develop your social capital

Do stuff you love

Get in the game and start playing..