THIRD EDITION Theory in Practice OXFORD UNIVERSITY PRESS SOUTHERN AFRICA
Contents Acknowledgements Dedication Preface PARTI Pre start-up phase: opportunity recognition and e... 1.1 Introduction 1.2 Entrepreneurship as a field of study 1.3 Conceptualising entrepreneurship 1.4 Different domains of entrepreneurship 1.5 Entrepreneurship distinguished from other management forms 1.5.1 Entrepreneurship versus conventional management 1.5.2 Entrepreneurship versus small business management 1.6 A brief history of entrepreneurship 1.6.1 Origins of entrepreneurship 1.6.2 The Renaissance and Industrial Revolution periods 1.6.3 Modern-era entrepreneurship 1.6.4 Entrepreneurship in African societies 1.7 The entrepreneurial process 1.8 Typologies and differential impacts of entrepreneurs 1.8.1 High growth versus replicative entrepreneurship 1.8.2 Necessity versus opportunity-based entrepreneurship 1.8.3 Local versus systemic entrepreneurship 1.9 A framework to explain the entrepreneurial process Gase scenario and exercise Chapter key terms and core concepts Chapter summary Chapter review questions Application questions Relevant chapter Websites References : 2.1 Introduction - 2.2 The individual as a first-order force - 2.3 Entrepreneurial intentions 2.3.1 Ajzen's Theory of Planned Behaviour (TPB) - 2.3.2 Shapero's Model of the Entrepreneurial Event 2.4 Entrepreneurial mindset and cognitions ;
Entrepreneurship: Theory in Practice 2.5 Entrepreneur's background and human capital variables 54 2.5.1 Background and characteristics 54 2.5.2 Human capital variables 55 2.5.3 Entrepreneurial capital 59 2.6 Entrepreneurial intelligence and creativity 60 2.6.1 Intelligence 60 2.6.2 Creativity 63 2.6.3 Creativity techniques 64 2.7 Entrepreneurial motivation and behaviour 65 2.7.1 'Big Five' key dimensions of entrepreneurial behaviour 68 Gase scenario and exercise 74 Chapter key terms and core concepts 75 Chapter summary 75 Chapter review questions 76 Application questions 76 Relevant chapter Websites 76 References 77 <«a social contsxt 86 3.1 Introduction 86 3.2 Social capital conceptualised 87 3.3 Networks as a form of social capital 88 3.3.1 Network diversity 90 3.3.2 Networking ties 92 3.3.3 Network relations and trust 93 3.3.4 Networks and spatial distance 95 3.4 Entrepreneurial heritage 97 3.4.1 Institutional legacy 97 3.4.2 Family background 98 3.5 Culture as a form of social capital 100 3.5.1 Cultural values ' 101 3.5.2 Cultural values and entrepreneurial activity 104 3.5.3 African entrepreneurial culture 105 Case scenario and exercise 107 Chapter key terms and core concepts 108 Chapter summary 109 Chapter review questions 109 Application questions 110 Relevant chapter Websites 110 References 110 4.1 Introduction 120 4.2 Importance of the environment 121
4.3 Factors and their impact on entrepreneurship 124 4.3.1 Technological factors 124 4.3.2 Economic factors 125 4.3.3 Regulatory, political and legal factors 127 4.3.4 Socio-cultural factors 128 4.3.5 Sustainability factors 130 4.3.6 Global and international factors 131 4.4 Key entrepreneurship indicators 132 4.4.1 The Global Competitiveness Index 133 4.4.2 Ease of doing business indicators 136 4.4.3 Global Entrepreneurship Monitor (GEM) indicators 138 Gase scenario and exercise 143 Chapter key terms and core concepts 144 Chapter summary 144 Chapter review questions 145 Application questions 146 Relevant chapter Websites 146 References 146 ÜHlMil ErareprwMurial apportu texus between the 5.1 Introduction 152 5.2 Opportunity and change 153 5.3 Entrepreneurs and opportunities 155 5.3.1 Signal detection theory (SDT) 156 5.3.2 Regulatory focus theory (RFT) 158 5.4 Opportunity identification as a process 158 5.4.1 Opportunity recognition and development processes 159 5.4.2 Factors influencing the core process 160 5.5 Exploiting opportunities for value 163 5.5.1 Opportunities that favour established firms 164 5.5.2 Opportunities that favour new firms 166 5.6 Opportunities and risk-taking 167 5.6.1 Risk perception and cognitive biases 169 5.7 Integrative framework development 170 Gase scenario and exercise 172 Chapter key terms and core concepts 173 Chapter summary 173 Chapter review questions 174 Application questions 174 Relevant chapter Websites 174 References 174 vii
Entrepreneurship: Theory in Practice T 182 6.1 Introduction 182 6.2 The nature of business plans 183 6.3 Controversies around business plans 185 6.4 Business plan structure and components 187 6.5 Business plans for different types of ventures 190 6.6 The business model canvas 193 6.7 Benefits and limitations of business plans 196 6.8 Fatal flaws to avoid when business planning 197 6.9 Business plan presentation 198 Gase scenario and exercise 199 Chapter key terms and concepts 200 Chapter summary 200 Chapter review questions 201 Application questions 201 Relevant chapter Websites 202 References 202 7.1 Introduction 206 7.2 The sole proprietorship 207 7.3 The partnership 207 7.3.1 The partnership agreement 207 7.3.2 Rights and duties of the partners 210 7.3.3 Dissolution of the partnership 211 7.3.4 Advantages and disadvantages of the partnership 212 7.4 The Company 212 7.4.1 Types of companies 212 7.4.2 Incorporation of companies 216 7.4.3 Close corporations 217 7.4.4 Small businesses and the Act 218 7.4.5 Company names 220 7.4.6 Directors' duties and liabilities 221 7.4.7 Business rescue 223 7.4.8 Regulatory agencies 226 7.4.9 Winding-up and liquidation 227 7.4.10 Advantages and disadvantages of the Company 227 7.5 The franchise 228 7.5.1 Types of franchises 229 7.5.2 Advantages and disadvantages of franchising 229 7.5.3 Is franchising entrepreneurial? 232 viii
7.6 The co-operative 233 7.6.1 Defining co-operatives 235 7.6.2 Types of co-operatives 236 7.6.3 Legal characteristics of co-operatives 237 7.6.4 Advantages of co-operatives 239 Gase scenario and exercise 241 Chapter key terms and core concepts 242 Chapter summary 243 Chapter review questions 243 Application questions 244 Relevant chapter Websites 244 References 244 irmtrailrtii'llfllm brgader con,.«u.l issues 250 8.1 Introduction 250 8.2 The National Development Plan 251 8.3 Promotion of entrepreneurship and SMMEs 254 8.4 Broad-based black economic empowerment policy 255 8.5 Industrial development policy 256 8.6 National strategy for the development and promotion of franchising 258 8.7 Strategie framework on gender and women's economic empowerment 259 8.8 National youth enterprise strategy 260 8.9 Co-operatives policy 260 8.10 Competition policy 260 8.11 Trade policy 262 8.12 Fiscal policy 263 8.13 Monetary policy 265 8.14 Labour policy 266 8.15 Intellectual property policy 269 8.16 Education policy 274 8.17 Bankruptcy policy 276 Case scenario and exercise 276 Chapter key terms and core concepts 279 Chapter summary 279 Chapter review questions 281 Application questions 281 Relevant chapter Websites 283 References 283 ' - 286 9.1 Introduction 286 9.2 Own money 288 ix
Entrepreneurship: Theory in Practice 9.3 Other people's money 289 9.3.1 Debt financing 289 9.4 Equity finance 314 9.4.1 Shareholder capital 315 9.4.2 Venture capital 316 9.4.3 Angel Investors 322 9.5 Crowdfunding as an alternative - beyond traditional debt and equity 325 Case scenario and exercise 327 Key terms and core concepts 332 Chapter summary 332 Chapter review questions 333 Application questions 333 Relevant chapter Websites 334 References 334 fihhhhmkymhiemfc MßfoprsAourship 342 10.1 Introduction 342 10.2 Defining strategy and the Strategie management process 343 10.2.1 The Strategie management process 344 10.3 Components of the Strategie planning process 344 10.3.1 Initial assessment - creating vision and mission statements 344 10.3.2 Strategie analysis 345 10.3.3 Strategy formulation 355 10.3.4 Strategy Implementation 359 10.3.5 Strategy monitoring and control 361 10.4 The concept of Strategie entrepreneurship 363 10.5 The concept of Blue Ocean strategy 366 10.6 The growing field of business modelling in entrepreneurship 367 Case scenario and exercise 368 Chapter key terms and core concepts 370 Chapter summary 371 Chapter review questions 372 Application questions 372 Relevant chapter Websites 372 References 373 Wä rthfcll IS3U8S 376 11.1 Introduction 376 11.2 The relevance of ethics to the study and practice of entrepreneurship 377 11.3 What is ethics? 380 11.3.1 Morality and ethics 380 11.3.2 Ethical absolutism versus relativism 381 11.3.3 Ethical dilemmas 382 x
11.4 Approaches to ethics 383 11.4.1 Teleological ethics 383 11.4.2 Deontological ethics 384 11.4.3 Social morality and justice 387 11.4.4 Other ethical approaches 388 11.5 Moral judgement and ethical decision-making 389 11.5.1 Moral judgement 389 11.5.2 Ethical decision-making 391 11.6 Ethics, the law and compliance 392 11.6.1 Ethics and the law 392 11.6.2 Compliance 393 11.6.3 Legality, legitimacy and the informal economy 409 11.7 Corporate social responsibility and entrepreneurship 411 11.8 Guidelines for ethical behaviour 414 Gase scenario and exercise 415 Key terms and core concepts 418 Chapter summary 419 Chapter review questions 420 Application questions 420 Relevant chapter Websites 421 References 421 PART 3 Post start-up phase: sustainability and growth P & 12.1 Introduction 430 12.2 What is technopreneurship? 431 12.3 Understanding technology 432 12.3.1 Defining technology 432 12.3.2 Types and forms of technologies 432 12.3.3 The technological adoption life cycle 436 12.4 The technopreneurship ecosytem 438 12.5 What is e-commerce? 443 12.5.1 The Internet 443 12.5.2 The Internet and e-commerce 444 12.6 Forms of e-commerce 448 12.7 Flanning the e-commerce initiative 452 12.8 How e-commerce works 454 12.9 Guidelines to making the Implementation of e-commerce effective 458 12.10 The benefits of e-commerce for the entrepreneur in South Africa 458 12.11 E-commerce policy in South Africa 459 Gase scenario and exercise 462 Chapter key terms and core concepts 464 430 xi
Entrepreneurship: Theory in Practice Chapter summary 465 Chapter review questions 466 Application questions 466 Relevant chapter Websites 467 References 467 HK 472 13.1 Introduction 472 13.2 Why family businesses? 473 13.3 What is a family business? 474 13.4 The roles and perspectives of major participants in the family business 476 13.4.1 The owner-manager or founder 477 13.4.2 The owner-manager's spouse 477 13.4.3 Husband and wife teams (copreneurs) 478 13.4.4 Children (siblings) and sibling rivalry 478 13.4.5 In-laws 479 13.4.6 Multi-family ownership and partners 479 13.4.7 Non-family employees 480 13.5 Differences between family and non-family business enterprises 481 13.6 Unique characteristics of family businesses 483 13.7 Managing succession in family businesses 486 13.7.1 Pre-planning analysis 487 13.7.2 Succession planning 490 13.7.3 Managing the founder's departure ('letting go') 495 13.8 Ensuring transgenerational success and entrepreneurial thinking in a family 498 13.9 Governance practices that enable a family business to function effectively 500 Gase scenario and exercise 504 Chapter key terms and core concepts 505 Chapter summary 505 Chapter review questions 506 Application question 507 Relevant chapter Websites 507 References 507 14.1 Introduction 512 14.2 Defining corporate entrepreneurship 513 14.2.1 Entrepreneurial orientation (EO) 514 14.3 Dimensions of corporate entrepreneurship 515 14.3.1 Innovativeness 516 14.3.2 Risk-taking 516 14.3.3 Proactiveness 516 xii
14.3.4 Competitive aggressiveness 517 14.3.5 Autonomy 517 14.4 Types of corporate entrepreneurship 519 14.4.1 Corporate venturing 520 14.4.2 Intrapreneuring 520 14.4.3 Organisational transformation 521 14.4.4 Industry rule-bending 521 14.4.5 Similarities in the four types 522 14.5 Corporate entrepreneurial culture and climate 522 14.5.1 Organisational climate 523 14.5.2 Establishing a corporate entrepreneurial climate 524 14.5.3 Characteristics of a corporate entrepreneurial climate 526 14.6 A framework for corporate entrepreneurship - from theory to application 532 14.6.1 An overview of the integrated framework 533 14.6.2 From theory to practice 535 Case scenario and exercise 536 Chapter key terms and core concepts 539 Chapter summary 540 Chapter review questions 541 Application questions 542 Relevant chapter Websites 542 References 542 CHAPTER 15 Social entrepreneurship 550 15.1 Introduction 550 15.2 What is social entrepreneurship? 551 15.3 Why social entrepreneurship? 554 15.4 Characteristics of social entrepreneurs 559 15.5 The process of social entrepreneurship 561 15.5.1 Social context 561 15.5.2 The mission 565 15.5.3 The social opportunity 569 15.5.4 Action 574 15.5.5 Impact (evaluation and scaling out) 580 15.6 Ecopreneurship 584 Case scenario and exercise 586 Chapter key terms and core concepts 588 Chapter summary 588 Chapter review questions 589 Application questions 589 Relevant chapter Websites 590 References 590 xiii
Entrepreneurship: Theory in Practice 16.1 Introduction 598 16.2 Defining international entrepreneurship 599 16.3 Theories of internationalisation 600 16.3.1 The Uppsala Internationalisation Process Model 601 16.3.2 Vernon's International Product Life Cycle (IPLC) Theory 601 16.3.3 Dunning's Eclectic Paradigm 602 16.3.4 The Population Ecology Theory 604 16.3.5 Resource Based Theory 606 16.3.6 Network approach to internationalisation 608 16.3.7 Foreign Direct Investment approaches (FDI) 609 16.4 Drivers of internationalisation 611 16.5 Requirements for internationalisation 613 16.6 Modes of internationalisation 618 16.6.1 Exporting 619 16.6.2 Importing 622 16.6.3 Strategie alliances 622 16.6.4 Licensing 626 16.6.5 International franchising 626 16.6.6 Foreign direct Investment 627 Gase scenario and exercise 629 Key terms and core concepts 631 Chapter summary 632 Chapter review questions 633 Application questions 633 Relevant chapter Websites 633 References 634 Index 642 598 xiv