1a perspectives on entrepreneurship
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WHAT IS
ENTREPREURSHIP ?
THE CREATION ORRECOGNITION AND PURSUIT
OF OPPORTUNITY WITHOUTREGARD TO THERESOURCES CURRENTLYUNDER ONES CONTROL OR
INFLUENCE.(Timmons, 1994)
This involves:
THE DEFINITION, CREATIONAND DISTRIBUTION OF VALUEAND AND BENEFITS TOINDIVIDUALS, GROUPS,ORGANIZATIONS AND
SOCIETY.
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MAIN TRAITS AND
CHARACTERISTICS
(a)A NEED FOR ACHIEVEMENT
THEY ARE DRIVEN BY
CHALENGES. BY SUCCEEDINGFROM THIS THEY GAINRECOGNITION, PRESTIGE, andESTEEM.
(b)RISK TAKING PROPENSITY
TO SUCCEED THEY ARE WILLINGTO TAKE RISKS BOTH PERSONALAND FINANCIAL.
DRUCKER CALCULATED RISK TAKER
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( c ) LOCUS OF CONTROL
most entrepreneurs believe success of
their enterprise depends on their
contribution - they have have a high
internal locus of control
they make things happen
alternatively some people believe
there lives are mainly controlled by
others or other forces external to them
- a high external locus of control
THIS CAN LEAD TO APATHY OR
ALTERNATIVELY TO A
TENDENCY TO TAKE BIG RISKS
WITHOUT EVALUATION
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OTHER TRAITS
(d) NEED FOR AUTONOMY
people often become an
entrepreneur out of a desire tobe independent of others - theyoften feel they are surrounded byincompetence - they can do
better. Alternatively, they do notlike to conform and want to do ittheir way or move away from thesituation they are in.
(e) CREATIVITY
entrepreneurs are viewed asbeing very creative - they areoften successful as a result of
creative solutions to problems.
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CONTEMPORARY
PSYCHOLOGICAL RESEARCH
TWO STRANDS
1) ATTEMPT TO ESTABLISH A
LINK BETWEEN PERSONALITYTRAITS AND PROPENSITY TOSTART AN ENTREPRENEURIAL
VENTURE.
2) ESTABLISH A LINK BETWEENPERSONALITY TRAITS ANDSUCCESS
The link between entrepreneurialcharacteristics and success cannot
be identified simply because it does
not exist.
(Chell and Hawthorne,1991)
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RISK TAKING AND
ENTREPRENEURSHIP
ENTREPRENEURSHIP IS RISKY
BECAUSE SO FEW SO CALLED
ENTREPRENEURS ACTUALLYKNOW WHAT THEY AREDOING.
Drucker, P. (1985)Innovation and Entrepreneurship.
Pan Books
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I CAN SMELL THEFERRARI
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THE POPULAR VIEW
WHEN THE GOING GETS
TOUGH -THE TOUGH GET
SELF- EMPLOYED
Mandel, M. (1991) Business Week
RISK
The possibility of adverseeffect. OR
The willingness to commit to
a course of action which may
result in rewards or penalties
associated with success or
failure. Palmer, M. California
Management Review (1971)
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RISK AND THEENTREPRENEUR (CONTD)
THE POPULAR IDEA OF
THE ENTREPRENEUR IS
ONE BASED ON THETOTALLY SELF-MADE
MAN (MAINLY) LACKINGIN FORMAL
QUALIFICATIONSI left school at 14 and
look at me now
The concept of RISK through
the: e.g. a lack education -the entrepreneur MADEnot just by experience.
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PROPENSITY TO TAKE RISKS
Entrepreneurs take calculated
risks. They are not gamblers.
(Timmons, 1994)
Risk Versus Reward
Entrepreneurs avoid low-risk
situations because there is a lack
of challenge.
They avoid high risk situations
because they want to succeed.
(Meredith et al. 1982)
What is a calculated risk?
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Calculated Risks
Three types of RISK
1. RATIONAL
2. NON -RATIONAL
3. IRRATIONAL
RATIONAL RISK TAKING IS
BASED ON
FINANCIAL CALCULATIONS
MARKET RESEARCH THATIS QUANTITATIVE BASED
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CLASSIFICATION OF RISK (contd)
Non-Rational RISK TAKING is based
mainly on:
Qualitative judgements
Experience Your own observations
Past examples
Irrational RISK TAKING is based on:
gut feel
personal belief
nothing to lose - go for it
life is short
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PERSONAL RISK TAKING
THE DECISION TO BE A STUDENT
OR TO GO TO A PARTICULAR
UNIVERSITY - HOW DID YOU
DECIDE?
Cost - benefit analysis.
Debt versus possible return.
Opportunity cost.
Image of the University
Family pressure.
Friends recommendation.
The nearest.
The only one who would have
me?
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RISK MINIMISATION
HOW CAN THE
ENTREPRENEUR MINIMISE
RISK?
1. KNOW YOURSELF
2. DEVELOP THE COMPETENCIES
YOU NEED.
3. SEEK INFORMATION ANDHELP.
4. DO THE FINANCIAL
CALCULATIONS PREFERABLY
YOURSELF.
5. DO MARKET RESEARCH.
6. BE CLEAR ABOUT YOUR
OBJECTIVES - GOALS.
7. THINK BIG BUT THINK!
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THE ENTREPRENEURIAL
PROCESS
People+Opportunity+Resources+Context= FIT
Long term value creation and
Realization.
Recognizing, creatingopportunity regardless ofresources currently at hand.
New Venture, entrepreneurialmanagement and innovation.
Entrepreneurship can occur in large
companies and small ones, old
firms and new ventures, fast and
slow growing companies, the private,
public and not-for-profit sectors ; and
it can fail to occur in each of these