Global Strategy Mike W. Peng c h a p t e r 55 Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global Strategic Management Mike W. Peng Chapter 6 The Entrepreneurial Firm

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Entrepreneurship, Entrepreneurs, and Entrepreneurial Firms Entrepreneurship - the identification and exploitation of previously unexplored opportunities Entrepreneurs - set of individuals who discover, evaluate, and exploit opportunities Not the exclusive domain of small, young firms Small and medium-sized enterprises (SMEs) globally

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Comprehensive Model of Entrepreneurship Figure 6.1

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Comprehensive Model of Entrepreneurship Resource Based Industry-based considerations Resource-based considerations Institution-based considerations

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Five Entrepreneurial Strategies Growth Innovation Network Financing/governance Harvest/exit A sixth strategy, internationalization, will be covered in the next section

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. One- and Four-Year Survival Rates by Firm Size Table 6.1 Source: Adapted from J. Timmons, 1999, New Venture Creation (p. 33), Boston: Irwin McGraw-Hill, based on US data. FIRM SIZE CHANCES OF SURVIVINGFIRM SIZECHANCES OF SURVIVING (EMPLOYEES)AFTER 1 YEAR(EMPLOYEES)AFTER 4 YEARS 0-978%0-1950% % % % % % % %

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Advantages and Disadvantages of an Initial Public Offering (IPO) ADVANTAGESDISADVANTAGES  Improved financial condition  Subject to the whims of financial market  Access to more capital  Forced to focus on the short term  Diversification of shareholder base  Loss of entrepreneurial control  Ability to cash out  New fiduciary responsibilities for shareholders  Management and employee incentives  Loss of privacy  Enhanced corporate reputation  Limits on management’s freedom of action  Greater opportunity for future acquisition  Demands of periodic reporting Table 6.3

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Internationalization Strategies for Entrepreneurial Firms ENTERING FOREIGN MARKETSSTAYING IN DOMESTIC MARKETS  Direct exports  Indirect exports (through domestic export intermediaries)  Franchising/licensing  Foreign direct investment (through green-field wholly owned subsidiaries, strategic alliances, and/or foreign acquisitions)  Supplier of foreign firms  Franchisee/licensee of foreign brands  Alliance partner of foreign direct investors  Harvest and exit (though sell-off to and acquisition by foreign entrants) Table 6.4

Copyright © 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Savvy Entrepreneur  Entrepreneurs are engines of creative destruction  Insights on entrepreneurship by the three leading perspectives on strategy: Industry, Resource, and Institution views  Four fundamental questions in strategy provide insight