2008 Prentice Hall

1-1
Entrepreneurship:
Successfully Launching
New Ventures, 2/e
Bruce R. Barringer
R. Duane Ireland
2008 Prentice Hall
1-2
Chapter 1
Entrepreneurship:
Successfully Launching
New Ventures, 2/e
Bruce R. Barringer
R. Duane Ireland
2008 Prentice Hall
1-3
Chapter Objectives
(1 of 2)
1. Explain entrepreneurship and discuss its
importance.
2. Describe corporate entrepreneurship and its use in
established firms.
3. Discuss the three main reasons that people decide to
become entrepreneurs.
4. Identify four main characteristics of successful
entrepreneurs.
5. Explain the five common myths regarding
entrepreneurship.
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Chapter Objectives
(2 of 2)
6. Explain how entrepreneurial firms differ from
salary-substitute and lifestyle firms.
Discuss the changing demographics of
entrepreneurs in the United States.
Identify ways in which large firms benefit from the
presence of smaller entrepreneurial firms.
Explain the entrepreneurial process.
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Introduction to Entrepreneurship
There is tremendous
interest in
entrepreneurship
around the world
According to the GEM
2005 study, about 330
million people, or 14%
of the adults in the 35
countries surveyed, are
involved in forming
new businesses
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What is Entrepreneurship?
(1 of 2)
Origin of the Word Entrepreneur
The word was originally used to describe people who take
on the risk between buyers and sellers or undertake a
task such as starting a new venture.
Difference Between an Inventor and an Entrepreneur
An inventor creates something new.
An entrepreneur puts together all the resources neededthe
money, the people, the strategy, and the risk-bearing ability
to transform the invention into a viable business.
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Transforming Ideas into Innovations
Sources
Inventors
One ten-year study found that inventors typically:
1.Have mastered the basic tools and operations of the field in
which they invent, but they will have not specialized solely on
that field.
2.Are curious, and more interested in problems than solutions.
3.Question the assumptions made in previous work in the field.
4.Often have the sense that all knowledge is unified. They will
seek global solutions rather than local solutions, and will be
generalists by nature
Such individuals may develop many new devices or processes but
commercialize few.

Why do you think this is so?
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What is Entrepreneurship?
(2 of 2)
Entrepreneurship Defined
Entrepreneurship is the process by which individuals
pursue opportunities without regard to the resources they
currently control.
The essence of entrepreneurial behavior is identifying
opportunities and putting useful ideas into practice.
The set of tasks called for by this behavior can be
accomplished by either an individual or a group and
typically requires creativity, drive, and a willingness to take
risks.
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Corporate Entrepreneurship
(1 of 2)
Corporate Entrepreneurship
Is the conceptualization of entrepreneurship at the firm
level.
All firms fall along 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.

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Corporate Entrepreneurship
(2 of 2)
Entrepreneurial Firms Conservative Firms

Proactive
Innovative
Risk taking
Take a more wait and see
posture
Less innovative
Risk adverse
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Corporate Entrepreneurship
Venture Team (skunk
works)
A small team that
operates as a
semiautonomous unit
to create and develop
a new idea. May be
from different
organizations.
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Why Become an Entrepreneur?
There are three primary reasons that people become
entrepreneurs and start their own firms
Desire to be their own boss
Financial rewards
Desire to pursue their
own ideas
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Characteristics of Successful Entrepreneurs
(1 of 3)
Four Primary Characteristics of Successful Entrepreneurs
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Characteristics of Successful Entrepreneurs
(2 of 3)
Passion for the Business
The number one characteristic shared by successful
entrepreneurs is a passion for the business.
This passion typically stems from the entrepreneurs belief
that the business will positively influence peoples lives.
Product/Customer Focus
A second defining characteristic of successful
entrepreneurs is a product/customer focus.
An entrepreneurs keen focus on products and customers
typically stems from the fact that most entrepreneurs are, at
heart, craftspeople.


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Characteristics of Successful Entrepreneurs
(3 of 3)
Tenacity Despite Failure
Because entrepreneurs are typically trying something new,
the failure rate is naturally high.
A defining characteristic for successful entrepreneurs is
their ability to persevere through setbacks and failures.
Execution Intelligence
The ability to fashion a solid business idea into a viable
business is a key characteristic of successful entrepreneurs.
The ability to translate thought, creativity, and imagination into
action and measurable results is the essence of execution
intelligence.

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Characteristics of Successful Entrepreneurs
(3 of 3)
Tenacity Despite Failure
Because entrepreneurs are typically trying something new,
the failure rate is naturally high.
A defining characteristic for successful entrepreneurs is
their ability to persevere through setbacks and failures.

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Common Myths About Entrepreneurs
(1 of 5)
Myth 1: Entrepreneurs Are Born Not Made
This myth is based on the mistaken belief that some people
are genetically predisposed to be entrepreneurs.
The consensus of many studies is that no one is born to
be an entrepreneur; everyone has the potential to become
one.
Whether someone does or doesnt become an entrepreneur
is a function of the environment, life experiences, and
personal choices.
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Common Myths About Entrepreneurs
(2 of 5)
Although no one is born to be an entrepreneur, there are common
personality traits and characteristics of successful entrepreneurs
Achievement motivated
Alert to opportunities
Creative
Decisive
Energetic
Has a strong work ethic
Is a moderate risk taker
Lengthy attention span
Optimistic disposition
Persuasive
Promoter
Resource assembler
Self-confident
Tenacious
Tolerant of ambiguity
Visionary
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Common Myths About Entrepreneurs
(3 of 5)
Myth 2: Entrepreneurs Are Gamblers
A second myth about entrepreneurs is that they are
gamblers and take big risks. The truth is, most
entrepreneurs are moderate risk takers.
The idea that entrepreneurs are gamblers originates from
two sources:
Entrepreneurs typically have jobs that are less structured, and so
they face a more uncertain set of possibilities than people in
traditional jobs.
Many entrepreneurs have a strong need to achieve and set
challenging goals, a behavior that is often equated with risk taking.
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Common Myths About Entrepreneurs
(4 of 5)
Myth 3: Entrepreneurs Are Motivated Primarily by
Money
While it is nave to think that entrepreneurs dont seek
financial rewards, money is rarely the reason entrepreneurs
start new firms.
In fact, some entrepreneurs warn that the pursuit of money
can be distracting.
It can be very distracting - Intelledex

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Common Myths About Entrepreneurs
(5 of 5)
Myth 4: Entrepreneurs Should Be Young And
Energetic
The most vibrant age range for early stage entrepreneurial
activity is 25 to 34 years old.
While it is important to be energetic, investors often cite
the strength of the entrepreneur as their most important
criteria in making investment decisions.
What makes an entrepreneur strong in the eyes of an investor is
experience, maturity, a solid reputation, and a track record of
success.
These criteria often favor older rather than younger entrepreneurs.
The #1 criteria for VC is often the
management team.
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Types of Start-Up Firms
Types of Start-up Firms
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Changing Demographics of
Entrepreneurial Firms
(1 of 3)
Women Entrepreneurs
There were 6.5 million women-owned businesses in 2002, the
most recent year the U.S. Census Bureau collected business
ownership data. That number is up 20% from 1997.
Minority Entrepreneurs
The number of minority-owned businesses has also risen
sharply.
There were 1.2 million African-American owned businesses in 2002, up
45% from 1997.
There were 1.1 million Asian-owned businesses in 2002, up 24% from
1997.
There were 206,125 Native American-owned businesses in 2002, up
24% from 1997.
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Changing Demographics of
Entrepreneurial Firms
(2 of 3)
Senior Entrepreneurs
Although the Census Bureau does not collect data on senior
entrepreneurs (people 55 years old and older), there is strong
evidence to suggest that the number of older people starting
their own businesses is rapidly growing.
The dramatic increase in the number of senior entrepreneurs
is attributed to a number of factors, including:
Corporate downsizing.
An increasing desire among older workers for more personal
fulfillment in their lives.
Growing worries among seniors that they need to earn additional
income to pay for future health care services and other expenses.

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Changing Demographics of
Entrepreneurial Firms
(3 of 3)
Young Entrepreneurs
Interest in entrepreneurship among young people is also
growing.
At the high school level, a Gallup study revealed that 7 out of 10 high
school students want to start their own companies.
Interest in entrepreneurship on college campuses is growing.
According to a recent study, 1,992 two- and four-years colleges and
universities now offer at least one course in entrepreneurship, up from
300 in the 1984-1985 school year.
Although the bulk of entrepreneurship education takes place within
business schools, many other colleges and departments are offering
entrepreneurship courses as well, including engineering, agriculture,
theater, dance, education, law, and nursing.

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Economic Impact of Entrepreneurial Firms
(1 of 2)
Innovation
Is the process of creating something new, which is central
to the entrepreneurial process.
Small entrepreneurial firms are responsible for 55% of all
innovations in the U.S.
Job Creation
In the past two decades, economic activity has moved in
the direction of smaller entrepreneurial firms, which may
be due to their unique ability to innovate and focus on
specialized tasks.
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Some Definitions
Idea - Something imagined or pictured in the mind.

Innovation* - The practical implementation of an
idea

Creativity The process of generating and converting
an idea into an innovation.





*For the purpose of this course we will consider innovation to be a noun
defined by Merriam Webster as a new method or device.

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Economic Impact of Entrepreneurial Firms
(2 of 2)
Globalization
Today, over 97% of all U.S. exporters are small businesses
with fewer than 500 employees.
Export markets are vital to the U.S. economy and provide
outlets for the sale of U.S. produced products and services.
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Entrepreneurial Firms Impact on Society
and Larger Firms
Impact on Society
The innovations of entrepreneurial firms have a dramatic
impact on society.
Think of all the new products and services that make our
lives easier, enhance our productivity at work, improve our
health, and entertain us in new ways.
Impact on Larger Firms
Many entrepreneurial firms have built their entire business
models around producing products and services that help
larger firms become more efficient and effective.
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The Entrepreneurial Process
The Entrepreneurial Process Consists of Four Steps
Step 1: Decision to become an entrepreneur
Step 2: Developing successful business ideas
Step 3: Moving from an idea to an entrepreneurial firm
Step 4: Managing and growing an entrepreneurial firm
We will cover the first 3 steps.
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Steps in the Entrepreneurial Process
(1 of 2)
Step 1 Step 2
Developing Successful Business Ideas
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Steps in the Entrepreneurial Process
(2 of 2)
Step 3 Step 4
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Business Mentor Project
Start thinking of idea for a business.
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End
Chapter 1

Entrepreneurship:
Successfully Launching
New Ventures, 2/e
Bruce R. Barringer
R. Duane Ireland