Entrepreneurship & Innovation MGMT8608
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1 BUSINESS SCHOOL Entrepreneurship & Innovation MGMT8608 TOPIC 2: THE ENTREPRENEUR MIND AND ACTION
2 Learning Outcomes Examine the psychological and social trait theories of entrepreneurship. Consider the environmental factors likely to trigger enterprising behaviour. Complete an entrepreneurial assessment. Relate theories of entrepreneurship to individual vocational and professional contexts.
3 The Entrepreneurial Mindset I put my balls on the line and I thought, I am just going for it I have self-belief that no matter what happens there will always be opportunities and you don t always need money to do them, this helps a lot. Andrew, entrepreneur and successful property developer
4 What is an Entrepreneur?
5 Three questions: What are the characteristics that define entrepreneurship? Do all people have these qualities? Why do some people succeed at entrepreneurship while others don t?
6 Case Study Analysis Individually read the case studies of Lessons from Entrepreneurs In groups address the questions What do these cases highlight about the entrepreneurial mindset? Report your group s findings
7 Common Characteristics of Entrepreneurs Commitment & Determination Drive to Achieve Opportunity Orientation Persistence in problem solving Internal locus of control Calculated risk taking Tolerance for failure Creativity and innovativeness Self-confidence and optimism Team building capacity Initiative and responsibility Seeking feedback Tolerance for ambiguity Integrity & reliability High energy levels Vision Independence Source: Kuratko & Hodgetts 2004
8 Research into Entrepreneurial Behaviour Psychological Characteristics: Need for achievement (McClelland, 1961) Tolerance of Ambiguity (Schere, 1982) Risk taking propensity (Brockhaus, 1980) Internal Locus of Control (Brockhaus, 1985) Desire for autonomy (Shane, Locke & Collins, 2003) Ego drive & self-efficacy (Shane, Locke & Collins, 2003) Locus of control (Shane, Locke & Collins, 2003) Desire for Control (Greenberger & Sexton, 1988) Environmental Characteristics: Career History (Storey, 1982; Ronstadt, 1988) Gender (Buttner & Rosen, 1989; Kolvereid, et. al., 1993) Family background (Scott & Twomey, 1988; Matthew & Moser, 1995) Ethnicity (Aldrich & Waldinger, 1990)
9 A Model of Entrepreneurial Motivation PC PE PG Expectation/ Outcome Comparison Intrinsic/Extrinsic Rewards Decision to behave Entrepreneurially Entrepreneurial Strategy Entrepreneurial Management Firm Outcomes Implementation/ Outcome Perception BE IDEA PC = Personal Characteristics PE = Personal Environment PG = Personal Goals BE = Business Environment Source: Naffzinger, Hornsby & Kuratko, 1994
10 Model of Entrepreneurial Motivation and the Entrepreneurial Process Entrepreneurial Motivations: 1. General Need for achievement Locus of control Vision Desire for autonomy Passion Drive 1. Task Specific Goal setting Self-efficacy Entrepreneurial Opportunities Environmental Conditions OPPORTUNITY RECOGNITION IDEA DEVELOPMENT EXECUTION: Resource assembly Organizational design Market making Product development Cognitive Factors: Vision Knowledge Skills Abilities Source: Shane, Locke and Collins (2003)
11 Entrepreneurial Behaviour Source: Cunningham & Lischeron (1990)
12 Factors Influencing Enterprise Behaviour Stage of Life Childhood Adolescence Early Adult Middle Adult Late Adult Family Class Work Education Values & goals Family vocational preference Vocational education choice Education values & goals Friends & community Further education choice Class ranking Residual and own family influence Friends & community Work & class mobility Work Own family & friends Job satisfaction Social interaction Class & wealth Family situation Work opportunities Job satisfaction Retirement facilities Source: Gibb, 1988
13 Conceptual Framework of Entrepreneurial Orientation Task Environment of the Firm dynamic & turbulent munificent complexity industry characteristics Characteristics of the Firm s Management Team Entrepreneurial Orientation Innovative Achievement focused Autonomy driven Risk taking profile Proactive & Competitive Strategic capacity Performance of the Firm sales growth market share profitability stakeholder satisfaction Organisational Configuration of the Firm size structure strategy strategic planning processes resources (e.g. financial & human) culture Source: Lumpkin & Dess (1996)
14 Three Factor Measure of Entrepreneurial Orientation 1. R&D Leadership 2. New Product Lines Innovativeness 3. Product Changes 4. Competitive Actions 5. New Techniques Pro-activity Entrepreneurial Orientation 6. Competitive Posture 7. Risk Taking Proclivity 8. Environmental Boldness Risk Taking Proclivity Source: Kreiser, Marino & Weaver (1996)
15 Personal Theory Values & Motivation Ambitious Goals Known Capabilities Confidence & Self-Belief Achievement Active Learning Relationships DEVELOPMENT OF ENTREPRENEURIAL CAPABILITY TIME Source: Rae (2000)
16 Thinking Exercise What are the common lessons from each of these three successful entrepreneurs?
17 Jeff Bezos Advice for Entrepreneurs
18 Steve Jobs Advice for Entrepreneurs
19 Richard Branson Advice for Entrepreneurs
20 Discussion How would you summarise the key messages that each of these three highly successful entrepreneurs have provided as advice for others who wish to become entrepreneurs?
21 General Enterprise Tendencies G.E.T TEST
22 Thinking Exercise How did you score? What do your scores suggest about: Your personal history? Your professional career? Write down your own description of what it is to be an entrepreneur
23 A Measure of Enterprise Tendencies Foundations of the GET Test General Entrepreneurial Tendencies (GET) Test: (Caird, 1991; 1992; 1993) Employs 54 item scale to measure: Need for Achievement Need for Autonomy Creative tendency Propensity for calculated risk taking Locus of control Draws upon a range of psychometric scales: McClelland s Thematic Apperception Test (TAT) Edwards Personal Preference Schedule (EPPS) Honey & Mumford s Measure of Learning Styles Jackson s Personality Inventory Myers-Briggs Type Indicator Source: Caird, 1993
24 GET Test Comparison of Occupations Group Need to Achieve Need Autonomy Creative Risk taking Locus of control Total score Ownermanagers High High High High High 41/54 Teachers Medium Medium High Medium Medium 36/54 Nurses Medium Low Medium Medium Low 33/54 Clerical staff Low Medium Medium Medium Low 29/54 Civil servants Medium Medium Medium Medium Low 33/54 Lecturers Medium High High High Medium 38/54 Source: Caird, 1993
25 Research Support for GET Test Study of 194 managers & 661 students (Cromie & O Donaghue, 1992) GET Test has criterion validity Able to differentiate significant differences between the entrepreneur & student populations Suggests it has good validity Entrepreneurial propensity measured by High creative tendencies Above average need for autonomy High calculated risk taking orientation High need for achievement Internal locus of control (Cromie, Callaghan & Jansen, 1992)
26 MBA Student Study 56 MBA students enrolled in a course in entrepreneurship & innovation were administered the GET Test Scores were examined and discussed in class Students then identified a person who profiled as an entrepreneur Students read literature on character of entrepreneurs Students conducted an interview with chosen entrepreneur using Timmon s (1999) visit with an entrepreneur interview guide) Focus on personal & professional history, triggers for entrepreneurship activity, role models, opportunity recognition and resource management Entrepreneur was asked to take the GET Test Findings compared with those of student & literature Triangulation of data and self analysis Am I an Entrepreneur? Source: Mazzarol, 2007
27 Findings from GET Test Entrepreneur? N Max GET Score Average GET Score Actual Mean Score Std. Deviation Sig t-test (2-tailed ) Achievement Drive yes * no * Autonomy Drive yes no Creativity Drive yes * no * Calculated Risk Taking yes * no * Locus of control yes no Total GET score yes * * p < 0.05 no * Source: Mazzarol, 2007
28 Findings from GET Test Achievement Drive Autonomy Drive Creativity Drive Calculated RiskTaking Drive and Determination Manager Business Owner Nurse 2 Business Owner Business Business Owner Owner 0 entrepreneur Classification MBA student GET Test Average Source: Mazzarol, 2007
29 MBA Case Study Overall GET Score = 42/54 Career history: Engineer and manager with overseas work experience. Part time investor in the stock market. Family background: Parents owned small manufacturing business and taught him to work hard. My education, training, and experience should give me the necessary entrepreneurial skills needed, more experience would be an advantage. With a family (two young kids) I would need to carefully access the risks of an entrepreneurial venture to ensure we have sufficient money for our future The GET test showed the entrepreneur and I were above average in our tendencies towards being entrepreneurial with scores of 42 and 50, compared to average of 37, and maximum of 54. The results for the entrepreneur support the GET test theory. They suggest that, with an above average score, I am a potential entrepreneur. Thus I shall go and find the right opportunity!
30 MBA Case Study Overall GET Score = 22/54 Career history: Registered nurse. Nursing does not encourage enterprise tendencies. Family background: Father was self employed engineer but died in his 50s leaving mother to raise the children. Taught to study hard and get secure career. The results of the GET indicate that I have the entrepreneurial tendencies of an inanimate object I believe that my personal background and especially current context impacts highly on my tendencies towards entrepreneurialism. While I did have a positive role model in my father in terms of new venture creation, my chosen profession is one that, in direct patient care, requires conformation to rule with risk taking (even moderate) and creativity not valued attributes. Left nursing to become practice manager for her husband who was setting up a new cardiac practice.
31 Group Discussion Compare your GET Test results with the people around you. Which entrepreneurial traits do you recognise in yourself and your group? Which attributes are valued by your employers or organisations? Which attributes do you have little chance to develop in your current environment? How could entrepreneurship be better encouraged in your organisations?
32 End of Presentation
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