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Second Edition Entrepreneurship and Innovation Copyright © 2011 Tilde University Press Chapter 2: The Entrepreneur – Mind & Action
Copyright © 2011 Tilde University Press 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.
Copyright © 2011 Tilde University Press 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
Copyright © 2011 Tilde University Press 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
Copyright © 2011 Tilde University Press 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) Research into entrepreneurial orientation
Copyright © 2011 Tilde University Press A model of entrepreneurial motivation Source: Naffzinger, Hornsby & Kuratko, 1994 Expectation/ Outcome Comparison Expectation/ Outcome Comparison Decision to behave Entrepreneurially Decision to behave Entrepreneurially Implementation/ Outcome Perception Implementation/ Outcome Perception Entrepreneurial Strategy Entrepreneurial Strategy Intrinsic/Extrinsic Rewards Intrinsic/Extrinsic Rewards Firm Outcomes Firm Outcomes Entrepreneurial Management Entrepreneurial Management BE IDEA PC PE PG PC = Personal Characteristics PE = Personal Environment PG = Personal Goals BE = Business Environment
Copyright © 2011 Tilde University Press Entrepreneurial Motivations: 1.General: Need for achievement Locus of control Vision Desire for autonomy Passion Drive 2. Task Specific: Goal setting Self-efficacy Cognitive Factors: Vision Knowledge Skills Abilities Entrepreneurial Opportunities Environmental Conditions OPPORTUNITY RECOGNITION IDEA DEVELOPMENT EXECUTION: Resource assembly Organizational design Market making Product development Model of entrepreneurial motivation and the entrepreneurial process Source: Shane, Locke and Collins (2003)
Copyright © 2011 Tilde University Press Entrepreneurial behaviour Source: Cunningham & Lischeron (1990)
Copyright © 2011 Tilde University Press Stage of Life Childhood Family class Work Education Values & goals Adolescence Family vocational preference Vocational education choice Education values & goals Friends & community Early Adult Further education choice Class ranking Residual and own family influence Friends & community Middle Adult Work & class mobility Work Own family & friends Job satisfaction Social interaction Late Adult Class & wealth Family situation Work opportunities Job satisfaction Retirement facilities Source: Gibb, 1988 The influence of life stage
Copyright © 2011 Tilde University Press Development of entrepreneurial capability Ambitious Goals Confidence & Self-Belief Personal Theory Known Capabilities Active Learning Values & Motivation TIME Relationships Achievement Source: Rae (2000)
Copyright © 2011 Tilde University Press GET TEST
Copyright © 2011 Tilde University Press 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
Copyright © 2011 Tilde University Press 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 Foundations of the GET test
Copyright © 2011 Tilde University Press Different occupations & GET scores Source: Caird, 1993
Copyright © 2011 Tilde University Press 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 and 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)
Copyright © 2011 Tilde University Press 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?”
Copyright © 2011 Tilde University Press Findings from GET test Source: Mazzarol, 2007 Entrepreneur?N Max GET Score Average GET Score Actual Mean ScoreStd. Deviation Sig t-test (2-tailed ) Achievement Driveyes 5612910.021.657.037* no 561299.341.751.037* Autonomy Driveyes 56644.051.432.209 no 56643.711.411.209 Creativity Driveyes 561289.361.967.047* no 561288.631.884.047* Calculated Risk Takingyes 561289.302.373.017* no 561288.252.242.017* Locus of controlyes 5612810.001.991.143 no 561289.481.716.143 Total GET scoreyes 565430-4343.055.795.001* no 565430-4339.415.815.001* * p < 0.05
Copyright © 2011 Tilde University Press entrepreneurMBA student Classification 0 2 4 6 8 10 12 Manager Business Owner Nurse Business Owner Achievement Drive Autonomy Drive Creativity Drive Calculated RiskTaking Drive and Determination Findings from GET test Source: Mazzarol, 2007 GET Test Average
Copyright © 2011 Tilde University Press Case study #1 Student Case #1 Male aged 48 of UK nationality employed as a manager Overall GET score = 46 –“Came as a surprise as I thought my enterprising tendencies would be average” Highest score was in Creativity –Had lived in “creative Shadow of his brother” graphic designer Family background –Numerous role models – uncles, brother –Friends who were self-employed Role models from UK –e.g. Sir Richard Branson, Freddie Laker, Alan Sugar Entrepreneur #1 Male aged 40 Australian Wine maker Overall GET score = 34 No family role models Taken risks to get started Student comment: –So, am I an entrepreneur? The GET tests, the interview comparison, the literature, and my career all indicate I indeed have the characteristics of an entrepreneur. As Gibb (1988, p.11) says, entrepreneurs “can exist in all walks of life, and can display their individual entrepreneurial mixes to different degrees”. The proof will be taking the first step and begin an entrepreneurial venture.” Source: Mazzarol, 2007
Copyright © 2011 Tilde University Press Case study #2 Student Case #2 Female aged 30 Australian employed as a registered nurse Overall GET score = 22 –“The results of the GET indicate that I have the entrepreneurial tendencies of an inanimate object” Felt she was forward looking, self- sufficient, optimistic and self-confident Family background: –Father Engineer was self-employed but died young Professional background –Nursing does not encourage enterprising tendencies Entrepreneur #2 Male aged 62 Australian Vascular Surgeon & owner of Ultra- sound testing laboratories Student comment: –“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.” Source: Mazzarol, 2007
Copyright © 2011 Tilde University Press Case study #3 Student Case #3 Male aged 32 Australian full time student with background in oil & gas engineering Overall GET score = 49 –“Throughout my 7 year career in the oil & gas sector, I was fortunate to have travelled to and worked in 17 countries (a wide sphere of influence), and on the inside, it would be fair to say that I am essentially the product of Italian & Japanese social values” Family background: –Child of “conservative baby boomers” –Grew up in Hong Kong –Strict family upbringing with values: “Family, education, conformity, hard work, status & success” Entrepreneur #3 Male aged 64 Irish- Australian Marketing & Advertising Family: –Father “charitable public servant” low income Professional career –“never unemployed” –Dropped out of school – Army & Banking, large firms then his own business Student comment: –I discovered through careful reflection that my low/moderate propensity for risk taking and internal locus (believed to stem from a conservative upbringing) are potential barriers to any large-scale entrepreneurial pursuits. Having said that, I believe that if I can build my confidence through a series of small successes (preferably with a partner), my risk-taking propensity will increase and perhaps one day, I might be the person being interviewed. I would therefore define myself as a nascent entrepreneur.” Source: Mazzarol, 2007
Copyright © 2011 Tilde University Press Case study #4 Student Case #4 Male aged 38 of Aust, NZ, UK nationality engineer & manager Overall GET score = 42 –“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 ” Family background –Taught to work hard –Parents owned factory Career history –Worked overseas –Invested in stock market Entrepreneur #4 Male aged 53 Australian Materials testing company Overall GET score = 50 Low income family background Worked overseas in Asia 25 yrs Student comment: –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 !” Source: Mazzarol, 2007
Copyright © 2011 Tilde University Press 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?
Copyright © 2011 Tilde University Press Conceptual framework of entrepreneurial orientation Characteristics of the Firm’s Management Team Entrepreneurial orientation Innovative Achievement focused Autonomy driven Risk taking profile Proactive & Competitive Strategic capacity Organisational Configuration of the Firm Size Structure Strategy Strategic planning processes Resources (e.g. financial & human) Culture Task Environment of the Firm Dynamic & turbulent Munificent Complexity Industry characteristics Performance of the Firm Sales growth Market share Profitability Stakeholder satisfaction Source: Lumpkin & Dess (1996)
Copyright © 2011 Tilde University Press Entrepreneurial Orientation Innovativeness Pro-activity Risk Taking Proclivity 1. R&D Leadership 2. New Product Lines 3. Product Changes 4. Competitive Actions 5. New Techniques 6. Competitive Posture 7. Risk Taking Proclivity 8. Environmental Boldness Three factor measure of entrepreneurial orientation Source: Kreiser, Marino & Weaver (1996)
Copyright © 2011 Tilde University Press Group discussion 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
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