The Revolutionary Impact of Entrepreneurship

The Revolutionary Impact of Entrepreneurship Chapter Objectives 1. To examine the historical development of entrepreneurship 2. To explore and debunk the myths of entrepreneurship 3. To define and explore the major schools of entrepreneurial thought 4. To explain the process approaches to the study of entrepreneurship 5. To set forth a comprehensive definition of entrepreneurship 6. To examine the Entrepreneurial Revolution taking place today 7. To illustrate today’s entrepreneurial environment Entrepreneurs?challenging the Unknown Entrepreneurs Recognize opportunities where others see chaos or confusion

Are aggressive catalysts for change within the marketplace Challenge the unknown and continuously create the future Entrepreneurs versus Small Business Owners: A Distinction Small Businesses Owners Manage their businesses by expecting stable sales, profits, and growth Focus their efforts on innovation, profitability and sustainable growth Entrepreneurship: A Mindset Entrepreneurship is more than the mere creation of business: Seeking opportunities Taking risks beyond security Having the tenacity to push an idea through to reality Entrepreneurship is an integrated concept that permeates an individual’s business in n innovative manner.

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The Evolution of Entrepreneurship Entrepreneur is derived from the French entrepreneur, meaning “to undertake. ” The entrepreneur is one who undertakes to organize, manage, and assume the risks of a business. Although no single definition of entrepreneur exists and no one profile can represent today’s entrepreneur, research is providing an increasingly sharper focus on the subject. A Summary Description of Entrepreneurship Entrepreneurship (Robert C.

Roundest) The dynamic process of creating incremental wealth. This wealth is created by individuals who assume major risks in terms of equity, time, ND/or career commitment of providing value for a product or service. The product or service itself may or may not be new or unique but the entrepreneur must somehow infuse value by securing and allocating the necessary skills and resources. An Integrated Definition Entrepreneurship A dynamic process of vision, change, and creation.

Requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions. Essential ingredients include: The willingness to take calculated risks?in terms of time, equity, or career. The ability to formulate an effective venture team; the creative skill to marshal needed resources. The fundamental skills of building a solid business plan. The vision to recognize opportunity where others see chaos, contradiction, and confusion.

Effects of Entrepreneurship The Global Entrepreneurship Monitor (GEM) Provides an annual assessment of the entrepreneurial environment of 42 countries. Latest GEM study: the U. S. Outranks the rest of the world in important entrepreneurial support. Entrepreneurs lead to growth by: Entering and expanding existing markets. Creating entirely new markets by offering innovative products. Increasing diversity and fostering minority participation in the economy. Entrepreneurs in the United States Reasons for the exceptional entrepreneurial activity in the U. S. Include: A national culture that supports risk taking and seeking opportunities. Americans’ alertness to unexploited economic opportunity and a low fear of failure. U. S. Leadership in entrepreneurship education at both the undergraduate and graduate level. A high percentage of individuals with professional, technological or business degrees who are likely to become entrepreneurs. The Age of Gazelles A “Gazelle” A business establishment with at least 20% sales growth in each year for five years, starting with a base of at least $100,000 in annual sales.

Gazelles as leaders in innovation: Produce twice as many product innovations per employee as do larger firms. Have been responsible for 55% of the innovations in 362 different industries and 95% of all radical innovations. Obtain more patents per sales dollar than do larger firms. Table 1. 3 Mythology Associated with Gazelles Gazelles are the goal of all entrepreneurs. Gazelles receive venture capital. Gazelles were never mice. Gazelles are high-tech. Gazelles are global. Survival of Gazelles How many gazelles survive?

The simple answer is “none. ” Sooner or later, all companies wither and die. The Common Myth of Failure: 85% of all firms fail in the first year?in actuality, about half of all start-ups last between 5 and 7 years. Entrepreneurial Firms’ Impact Entrepreneurial components of the U. S. Economy: 1 . Large firms have increased profitability by returning to their “core competencies through restructuring and downsizing. 2. New entrepreneurial companies have been blossoming in new technologies and new markets. 3.

Thousands of smaller firms established by women, minorities, and immigrants have strengthened the economy. Entrepreneurial firms make two indispensable contributions to an economy: 1 . They are an integral part of the renewal process that pervades and defines market economies. 2. They are the essential mechanism by which millions enter the economic and social mainstream of society. 1st Century Trends in Entrepreneurship Research Major Research Themes: Venture Financing: venture capital and angel capital financing and other financing techniques strengthened in the asses.

Corporate Entrepreneurship and the need for entrepreneurial cultures has drawn increased attention. Social Entrepreneurship has unprecedented strength within the new generation of entrepreneurs. Entrepreneurial Cognition is providing new insights into the psychological aspects of the entrepreneurial process. Women and Minority Entrepreneurs appear to face obstacles and difficulties different from those that other entrepreneurs face. The Global Entrepreneurial Movement is increasing. Major Research Themes (cont’d): Family Businesses have become a stronger focus of research.

Entrepreneurial Education has become one of the hottest topics in business and engineering schools throughout the world. Key Concepts A process of innovation and new-venture creation through four major dimensions? individual, organizational, environmental, process?that is aided by collaborative networks in government, education, and institutions. Entrepreneur A catalyst for economic change who uses purposeful searching, careful planning, and mound Judgment when carrying out the entrepreneurial process.

Entrepreneurial The discipline of entrepreneurial management: Entrepreneurship is based upon the same principles. It matters not who or what that the entrepreneur is?an existing large institution or an individual, for-profit business or a public-service organization, a governmental or non-governmental institution. The rules are much the same: things that work and those that don’t are much the same, and so are innovations and where to look for them. Entrepreneurial Management them. Key Terns and Concepts

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