3/11/2011

Entrepreneurial Culture, Structure, Theories

Entrepreneurial Culture
Entrepreneurial culture implies a set of values ,

norms, and traits that are conducive for growth of entrepreneurship It is different from administrative (corporate) culture that focuses on existing opportunities and how to pursue them. An entrepreneur would ask questions like where is the opportunity, how to capitalize on it, what resources are needed , etc. But companies must exhibit good entrepreneurial and corporate culture

Stages in Entrepreneurial Process

First stage: some change in the existing world a war breaks out 2. Might create new needs a, products, services- it happened in Japan and Germany after the second world war 3. Second stage: is about the idea that meets the need like the micro computer that was so personal capitalized upon by the Apple Computers 4. One can become an entrepreneur in several ways : he may just need to acquire the status of a franchisee.
1.

Barriers to Entrepreneurship
1.

Lack of a viable concept

2. Lack of Market Knowledge 3. Lack of Technical Skills 4. Lack of Seed Capital 5. Lack of Business Know-how 6. Complacency lack of motivation

Social Marginality and Entrepreneurship

7. Social Stigma 8. Time Pressures and Distractions 9. Legal Constraints and Regulations 10. Monopoly and Protectionism 11. Inhibitions due to Patents
Social marginality implies: a situation in which there

is a discontinuity between the individuals personal attributes (physical characteristics , intellectual make up, social behavior patterns) and the role / roles the individuals hold in the society . A person of such background might adopt owner manager role as a solution to marginality if he is a member of a social group traditionally constrained to enter economic activity and barred from many other activities.

3/11/2011

Definitions for Entrepreneurship

Entrepreneurship is the attempt to create value

Nature and Dimensions of Entrepreneurship

Entrepreneurship is a multi-dimensional concept. It 1.

through recognition of business opportunity, the management of risk-taking appropriate to the opportunity, and through communicative and management skills to mobilize human, financial, and material resources necessary to bring a project for fruition. Entrepreneurship can be viewed as a creative and innovative response to the environment and an ability to recognize, initiate, and exploit an economic opportunity.

has distinctive features: Innovation a creative activity that introduces something new into the economy The innovation could be in terms of production, distribution, resource uses, allocation, speed , cost reduction, etc. Do things in a new and better way. An entrepreneur is not just an innovator. He has to assume risks and arrange human efforts.

2. A function of high achievement

3. Organization building function

There are two aspects to the characteristics of entrepreneurship : 1) doing things in a new and better way; 2) taking decisions under uncertainty. For both the above achievement levels are important considerations. The achievement orientation can be looked upon as the motive for gaining success/excellence. This achievement motive is, by assumption, a relatively stable enduring characteristic of an individual.

Skills to build an organization: the ability to multiply oneself by effectively delegating responsibility to others. 4. A Function of Group level pattern Entrepreneurial characteristics are often found in entrepreneurial groups. Entrepreneurial activity is perhaps generated by the particular family background.

5. A function of managerial skills and leadership

7.

Managerial skills and leadership are the most critical facets of entrepreneurship. A person who wants to run a business must have more than the drive to earn profits and amass wealth; he must have the ability to lead and manage. 6. Gap filling function Entrepreneurship is a function of input completing and gap filling. An entrepreneur has to organize all the inputs to realize final products.

A function of function of status withdrawal Creative innovation or change is the fundamental feature of economic growth. He feels a sense of increased pleasure when facing a problem and tolerates disorder without discomfort. In traditional societies, positions of authority are granted on the basis of status, rather than individual ability. Authoritarian personality as distinct from innovative personality

3/11/2011

8.

A function of social, political, and economic structure: It depends upon: 1) Limitation structure - society limits specific activities and this structure affects all members of the society 2) Demand structure - changes economic progress and government policies 3) Opportunistic structure consists of availability of capital, management, and technological skills, information concerning production methods, labor, and markets 4) Labor structure supply of competent and willing labor

9. A function of religious beliefs According to Max

Weber, the spirit of capitalism can be generated only when the mental attitude in the society is favorable to capitalism. The protestant ethic provides this mental attitude where as Hinduism lacks such an attitude .

A Conceptual Model of Entrepreneurship

The Entrepreneurial Personality

The entrepreneurial personality is a composite of the

The Person

The Organization

Entrepreneurship

The Task

The Environment

person, his skills, styles, and motives. The entrepreneur is central to entrepreneurship because without the key individual who makes things happen, there can be no creative result. The ultimate success of a new venture may largely depend upon the psychological makeup and determination of the entrepreneur.

The Entrepreneurial Task

The act of entrepreneurship is an act patterned after The central task of the entrepreneur is to recognize

modes of copying with early childhood experiences." A lot can depend upon his upbringing and the authorities exercised by his parents, etc. Some pundits thought that he was motivated by persistent feelings of dissatisfaction, rejection, powerlessness.

and exploit opportunities. He may perceive opportunities stemming from various sources which others do not. To succeed in his relentless pursuit of opportunities, he may need intuition or a finely tuned antennae. The entrepreneur is both a dreamer and doer. He has ability to attend to details, perform multi tasks such as marshalling resources, working with other people, and persuading others to join the enterprise. He acts as a leader and uses his charisma.

3/11/2011

The Entrepreneurial Environment

The world surrounding organizations influences,

The Organizational Context

The organizational context is the immediate setting

facilitates, or hinders the growth of entrepreneurship and the viability of the enterprise. It is made up of several elements such as economic, socio-cultural, politico-legal, technological, and others. For example, without the availability of capital and people with necessary skills, an organization cannot take shape and produce results.

in which creative and entrepreneurial work takes place. It includes the organization structure, and systems, the definition of work roles, group culture etc. The above factors may promote or hinder creativity and entrepreneurship.

Schumpeters views on Entrepreneurship

According to Joseph Schumpeter, entrepreneurship
1. 2.

Innovation Happens When?

The introduction of a new product or introduction of a new quality of an existing product The introduction of a new production method that has not yet been tested out by any manufacturer or a new way of handling commodity commercially Entering a new market which the particular branch of manufacture of a country had not previously entered irrespective of whether it had existed earlier before or not The conquest of a new source of supply of raw materials, semi-finished goods, etc The carrying out of the new organization of any industry, like creation of monopoly position or the breaking up of a monopoly position

is essentially a creative activity. An entrepreneur is one who innovates, i e. carries out new combinations or enterprise. She foresees the potentially profitable opportunity and try to exploit it. Innovation involves problem solving and the entrepreneur is a problem solver.
Joseph Alois Schumpeter (8 February 1883 8 January 1950) was

3.

4. 5.

an Austrian-American economist and political scientist. He popularized the term "creative destruction" in economics.

Distinction between an innovator and inventor

1. 2.

Pewter Druckers views on Entrepreneurship

According to Peter Drucker, an entrepreneur is one who

According to Joseph Schumpeter: An inventor discovers new methods and materials On the contrary, the innovator is one who utilizes or applies inventions and discoveries in order to make new combinations, products, etc which yield better satisfaction and profits An inventor produces ideas where as innovator implements these ideas An inventor is concerned with the technical work of his invention where as the innovator would convert the technical success into economic performance

always searches for change, responds to it, and exploits is as an opportunity. Entrepreneurs innovate and innovation is a specific instrument of entrepreneurship. It creates resources that never can be considered resources unless some use or value is established for them. The test of an innovation lies not in its novelty or scientific content but in the market place.
Peter Ferdinand Drucker (November 19, 1909 November 11, 2005) was a

3. 4.

writer, management consultant, and self-described social ecologist. His books and scholarly and popular articles explored how humans are organized across the business, government and the nonprofit sectors of society.

3/11/2011

While many mar consider entrepreneurship as

something mysterious or a stroke of genius, Drucker treats it as a practice or discipline that has a knowledge base (theory). The focus should be not on psychology or character traits of entrepreneurs, but on their actions and behavior. He felt that entrepreneurship is not confined to big business and economic institutions but also important to small business and non-economic institutions.