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New Venture Creation and Control Mechanism

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Presentation on theme: "New Venture Creation and Control Mechanism"— Presentation transcript:

1 New Venture Creation and Control Mechanism
Professor Alexander Settles

2 Introduction to the Course
New Venture Creation Entrepreneurship / Research on Entrepreneurship Innovation Business Planning Finance Organization Theory and Entrepreneurship and Innovation

3 Course Design Requirements Attendance, Participation and Readings
Personality Assessment Innovation Journal Assessment of New Venture or Entrepreneurial Policy/Action (in Groups) Exam

4 Entrepreneurship

5 Entrepreneurs Challenging the Unknown
Recognize opportunities where others see chaos or confusion Are aggressive catalysts for change within the marketplace Challenge the unknown and continuously create the future

6 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 an innovative manner. 6

7 The Evolution of Entrepreneurship
Entrepreneur is derived from the French entreprendre, 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.

8 A Summary Description of Entrepreneurship
Entrepreneurship (Robert C. Ronstadt) The dynamic process of creating incremental wealth. This wealth is created by individuals who assume major risks in terms of equity, time, and/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. 8

9 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. 9

10 An Integrative Model of Entrepreneurial Inputs and Outcomes
Source: Michael H. Morris, P. Lewis, and Donald L. Sexton, “Reconceptualizing Entrepreneurship: An Input-Output Perspective,” SAM Advanced Management Journal 59, no.1 (Winter 1994): 21–31. 10

11 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. 11

12 Entrepreneurial Firms’ Impact
Entrepreneurial components of the U.S. Economy: Large firms have increased profitability by returning to their “core competencies through restructuring and downsizing. New entrepreneurial companies have been blossoming in new technologies and new markets. Thousands of smaller firms established by women, minorities, and immigrants have strengthened the economy. 12

13 Entrepreneurial Firms’ Impact
Entrepreneurial firms make two indispensable contributions to an economy: They are an integral part of the renewal process that pervades and defines market economies. They are the essential mechanism by which millions enter the economic and social mainstream of society. 13

14 Aspects of Entrepreneurship
Venture Financing Social Entrepreneurship Corporate Entrepreneurship Trends in Entrepreneurship Research Entrepreneurial Cognition Global Entrepreneurial Movement Family Businesses Women and Minority Entrepreneurs Entrepreneurial Education 14

15 Common Characteristics of Entrepreneurs
Commitment, determination, and perseverance Drive to achieve Opportunity orientation Initiative and responsibility Persistent problem solving Seeking feedback Internal locus of control Tolerance for ambiguity Calculated risk taking Tolerance for failure High energy level Creativity and Innovativeness Vision Self-confidence and optimism Independence Team building

16 Outline of the Entrepreneurial Organization
Imagination Flexibility Acceptance of Risks 8 16

17 Entrepreneurship Theory
Entrepreneurs cause entrepreneurship. Entrepreneurship is a function of the entrepreneur: Entrepreneurship is the interaction of skills related to inner control, planning and goal setting, risk taking, innovation, reality perception, use of feedback, decision making, human relations, and independence.

18 Typology of Entrepreneurial Styles
Source: Thomas Monroy and Robert Folger, “A Typology of Entrepreneurial Styles: Beyond Economic Rationality,” Journal of Private Enterprise IX(2) (1993): 71. 18

19 The Dark Side of Entrepreneurship
The Entrepreneur’s Confrontation with Risk Financial risk versus profit (return) motive varies in entrepreneurs’ desire for wealth. Career risk—loss of employment security Family and social risk—competing commitments of work and family Psychic risk—psychological impact of failure on the well-being of entrepreneurs

20 A Model of Entrepreneurial Motivation
Source: Douglas W. Naffziger, Jeffrey S. Hornsby, and Donald F. Kuratko, “A Proposed Research Model of Entrepreneurial Motivation,” Entrepreneurship Theory and Practice (spring 1994): 33.

21 Opportunity Identification: The Search for New Ideas
Opportunity identification is central to entrepreneurship and involves: The creative pursuit of ideas The innovation process The first step for any entrepreneur is the identification of a “good idea.” The search for good ideas is never easy. Opportunity recognition can lead to both personal and societal wealth.

22 Entrepreneurial Imagination and Creativity
How entrepreneurs do what they do: Creative thinking + systematic analysis = success Seek out unique opportunities to fill needs and wants Turn problems into opportunities Recognize that problems are to solutions what demand is to supply

23 The Role of Creative Thinking
Creativity The generation of ideas that result in the improved efficiency or effectiveness of a system. Two important aspects of creativity exist: Process The process is goal oriented; it is designed to attain a solution to a problem. People The resources that determine the solution.

24 The Critical Thinking Process

25 The Creative Climate Characteristics of a creative climate:
A trustful management that does not overcontrol the personnel Open channels of communication among all business members Considerable contact and communication with outsiders A large variety of personality types A willingness to accept change An enjoyment in experimenting with new ideas Little fear of negative consequences for making a mistake The selection and promotion of employees on the basis of merit The use of techniques that encourage ideas, including suggestion systems and brainstorming Sufficient financial, managerial, human, and time resources for accomplishing goals

26 Country Level Competitiveness

27 Ease of Doing Business Rank
Economy Ease of Doing Business Rank Singapore 1 New Zealand 2 Hong Kong, China 3 United States 4 United Kingdom 5 Denmark 6 Ireland 7 Canada 8 Australia 9 Norway 10 Georgia 11 China 89 Bangladesh 119 Russian Federation 120 Costa Rica 121 Brazil 129 India 133

28 Innovation Rankings INSEAD 2009
1. United States 2. Germany 3. Sweden 4. United Kingdom 5. Singapore 6. South Korea 7. Switzerland 8. Denmark 9. Japan 10. Netherlands

29 Russia’s Innovation Capacity
64. Vietnam 65. Trinidad and Tobago 66.Mauritius 67. Panama 68. Russia 69. Romania 70. Nigeria 29. Estonia 42. Lithuania 57. Azerbaijan 59. Uzbekistan 60. Latvia 72. Kazakhstan 79. Ukraine 98. Georgia 104. Armenia 112. Tajikistan 116. Moldova 122. Kyrgyzstan

30 Russia Components Legacy of innovation - 49 Culture to innovate - 46
Quality of the educational system - 41 Quality of management schools – 66 Intellectual property protection – 93 Technological awareness - 91 Firm level technology absorption - 90

31 United States Human Capacity – 1 Culture to innovate - 2
Quality of the educational system – 3 Quality of management schools - 10

32 Innovation and the Entrepreneur
Is the process by which entrepreneurs convert opportunities into marketable ideas. Is a combination of the vision to create a good idea and the perseverance and dedication to remain with the concept through implementation. Is a key function in the entrepreneurial process. Is the specific function of entrepreneurship.

33 The Innovation Process
Types of Innovation Invention Extension Duplication Synthesis Sources of Innovation Unexpected occurrences Incongruities Process needs Industry and market changes Demographic changes Perceptual changes Knowledge-based concepts

34 Type Description Examples Invention
Totally new product, service, or process Wright brothers—airplane Thomas Edison—light bulb Alexander Graham Bell—telephone Extension New use or different application of an already existing product, service, or process Ray Kroc—McDonald’s Mark Zuckerberg—Facebook Barry Sternlicht—Starwood Hotels & Resorts Duplication Creative replication of an existing concept Wal-Mart—department stores Gateway—personal computers Pizza Hut—pizza parlor Synthesis Combination of existing concepts and factors into a new formulation or use Fred Smith—Fed Ex Howard Schultz—Starbucks

35 Major Innovation Myths
Myth 1: Innovation is planned and predictable Myth 2: Technical specifications should be thoroughly prepared Myth 3: Creativity relies on dreams and blue- sky ideas Myth 4: Big projects will develop better innovations than smaller ones Myth 5: Technology is the driving force of innovation success

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