SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HEE 4102 Entrepreneurship development BY Prof. Henry M. Bwisa.

SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HEE 4102 Entrepreneurship development BY Prof. Henry M. Bwisa bwihem@yahoo.com www.professorbwisa.com 0722858507 6/13/20161H.M. Bwisa

HEE 4102 Entrepreneurship development Prerequisite: 3102Entrepreneurial Behaviour PURPOSE The purpose of the course is to equip the student with advanced knowledge and practice of methods of national and personal entrepreneurship development COURSE OBJECTIVES At the end of the course students are expected to: Critique the processes of national and personal entrepreneurship development Plan and execute entrepreneurship development programmes 6/13/20162H.M. Bwisa

Course description Introduction to entrepreneurship development; meaning and dimensions of entrepreneurship development; meaning and essence of entrepreneurial culture, development of an entrepreneurship culture, the entrepreneurial mindset and entrepreneurial orientation, Role and Importance of Entrepreneurship in developing Small Enterprises. The Entrepreneurial Process: pre-startup, startup, post startup, changing Role of The Entrepreneur - Entrepreneur's role at Different stages of the venture. Planning for entrepreneurship growth: The strategies useful to entrepreneurs for pursuing growth, Quality: its management and improvement in entrepreneurship. Policy issues in Entrepreneurship: entrepreneurship policy formulation and implementation. MSE and entrepreneurship policy. Entrepreneurship Developments in Kenya: how entrepreneurship emerges in a Community, Entrepreneurial context in Kenya, Barriers to the Development of Entrepreneurship, Opportunity and Prospects for Developing Entrepreneurship in Kenya, Known Development strategies, Conceptual Frameworks for Developing Entrepreneurship, A general conceptual Framework - The Entrepreneur, Tasks and Roles, Organizations, Environment, A contextual Framework - Socio-cultural Context of the entrepreneur, The Drive, motivational force, Ability and knowledge of the entrepreneur, Financial Strength, Environmental factors 6/13/20163H.M. Bwisa

TOPICSUBTOPIC INTRODUCTIONMEANING OF ENTREPRENEURSHIP ENTREPRENEURSHIP CULTURE ENTREPRENEURSHIP AND DEVELOPMENT THE ENTREPRENEUR (TASKS, ROLES, DRIVE, KNOWLEDGE, FINANCIAL STRENGTH, ENVIRONMENTAL FACTORS) E-SHIP MINDSET AND ORIENTATION ENTREPRENEURIAL MINDSET ENTREPRENEURIAL ORIENTATION ENTREPRENEURSHIP PROCESS PRESTART UP/START-UP/POST START-UP ROLES OF ENTREPRENEUR AT DIFFERENT STAGES OF THE PROCESS CRITICAL ISSUESPLANNING FOR ENTREPRENEURSHIP GROWTH QUALITY AND ENTREPRENEURSHIP POLICY ISSUES IN ENTREPRENEURSHIP ENTREPRENEURSHIP AND SMEs SMEs ENTREPRENEURIAL VENTURES ENTREPRENEURSHIP DEVELOPMENT IN KENYA HISTORICAL PERSPECTIVES – ETHNICITY AND E-SHIP IN KENYA ENTREPRENEURIAL OPPORTUNITIES IN KENYA BARRIERS TO ENTREPRENEURSHIP DEVELOPMENT IN KENYA ENTREPRENEURSHIP DEVELOPMENT FRAMEWORK COURSE OUTLINE 6/13/20164H.M. Bwisa

Teaching Methodologies Lectures, Cooperative teaching, Case Studies, Group discussions, Field studies, and Critiques. Instructional Materials/Equipment Texts, power point, audio and video cassettes, computer software, case studies 6/13/20165H.M. Bwisa

Assessment Continuous written assessment tests ……………..….. 30 Group presentations ………………………..……….……….. 30 Individual research based critique/project ………… 40 Total marks ……………………………….……….……………… 100 6/13/20166H.M. Bwisa

WkContentLearning domainEvaluation 1 meaning of entrepreneurship/ culture entrepreneurship and development the entrepreneur (tasks, roles, drive, knowledge, financial strength, environmental factors) Cognitive (thinking) Passive teacher centered lectures I HEAR I FORGET; TEACHING ABOUT Abstract conceptualization Formative through Questioning oral quizzes, 2 entrepreneurial mindset/ orientation ;prestart up/start-up/post start-up; roles of entrepreneur at different stages of the process 3 planning for entrepreneurship growth, quality and entrepreneurship; policy issues in e-ship 4 SMEs: entrepreneurial ventures; historical perspectives – Kenya: ethnicity and e-ship ; entrepreneurial opportunities ; barriers to entrepreneurship development; entrepreneurship development framework 5- 11 group field work relating theory to real world of entrepreneurship Affective ; group work - I SEE I REMEMBER; Reflective observation, Concrete experiencing None 12-Seminarian group presentationsPsychomotor presentations, I DO I UNDERSTAND;Active experimentation Summative project 14Examination COURSE STRUCTURE 6/13/20167H.M. Bwisa

Course evaluations The course will be evaluated via class participation, group presentations and an end of semester project as an examination CATs will comprise of regular classroom queries and class presentations End of semester project will be a practical assignment that addresses real issues in the Kenyan environment and calls for the application of the theoretical knowledge gained from this unit in particular and other course units in general 6/13/20168H.M. Bwisa

Text books African Businessmen - A Study Of Entrepreneurship And Development In Kenya [Paperback] by Peter And Somerset, Anthony Marris Burch, J. (1986). Entrepreneurship. John Wileys and sons N.Y Bwisa, H., (1998). How to find and evaluate a business opportunity, mukmik consultants, Nairobi. Bwisa, H., (2011). Entrepreneurship theory and practice: a Kenyan perspective. JKF, NBI David Holt (2000). Entrepreneurship and New venture creation. Prentice-Hall Publishers Drucker, P., (1986). Innovation and entrepreneurship: practices and principles. Affiliated East- West Press Hisrich, R., (2005). Entrepreneurship. McGraw-Hill Kanungo, R., N., (1998). Entrepreneurship innovations: models for development. Sage Kao, J., (1989). Entrepreneurship creativity and organization: text, cases and readings, Kuratko, D. F., (1998). Entrepreneurship: a contemporary approach Narayanan, V. K., (2001). Manageing technology and innovation for competitive advantage. Pearson educational publishers Proctor, T., (1997). The essence of management creativity. Prentice-Hall Warnock, G. J.(1979). Philosophy of Economic Theory: Oxford readings in Philosophy. OUP www.professorbwisa.com; www.mukmik.comwww.professorbwisa.comwww.mukmik.com Google search machine 6/13/20169H.M. Bwisa

LECTURE NOTES 6/13/201610H.M. Bwisa

Week 1 6/13/201611H.M. Bwisa

INTRODUCTION  MEANING OF ENTREPRENEURSHIP  ENTREPRENEURSHIP CULTURE  ENTREPRENEURSHIP AND DEVELOPMENT  THE ENTREPRENEUR (TASKS, ROLES, DRIVE, KNOWLEDGE, FINANCIAL STRENGTH, ENVIRONMENTAL FACTORS) 6/13/201612H.M. Bwisa

MEANING OF ENTREPRENEURSHIP 6/13/201613H.M. Bwisa

Simply put entrepreneurship is the act of being an entrepreneur and entrepreneur is a French word meaning "one who undertakes innovations, finance and business acumen in an effort to transform innovations into economic goods". The result could be a new organizations or a revitalized existing organization. In both cases there must have been a perceived opportunity that led to the birth or revitalization. The most obvious form of entrepreneurship is that of starting new businesses); however, in recent years, the term has been extended to include social and political forms of entrepreneurial activity. When entrepreneurship is describing activities within a firm or large organization it is referred to as intrapreneurship. 6/13/201614H.M. Bwisa

History The entrepreneur was recognized in classical economics by writers like Richard Cantillon and Adam Smith in the late 17th and early 18th centuries. However it was largely ignored theoretically until the late 19th and early 20th centuries. In the 20th century, the understanding of entrepreneurship owes much to the work of economist Joseph Schumpeter in the 1930s and other Austrian economists such as Carl Menger, Ludwig von Mises and Friedrich von Hayek. To Schumpeter, an entrepreneur is a person who is willing and able to convert a new idea or invention into a successful innovation. Entrepreneurship employs what Schumpeter called "the gale of creative destruction" to replace in whole or in part inferior innovations across markets and industries, simultaneously creating new products including new business models. In this way, creative destruction is largely responsible for the dynamism of industries and long-run economic growth. For Schumpeter, entrepreneurship resulted in new industries but also in new combinations of currently existing inputs. To illustrate this Schumpeter used the example of the combination of a steam engine and the wagon technologies to produce the horseless carriage. In this case the innovation, the car, was transformational but did not require the development of a new technology, merely the application of existing technologies in a novel manner. The steam engine did not immediately replace the horse drawn carriage, but in time, incremental improvements which reduced the cost and improved the technology led to the complete practical replacement of beast drawn vehicles in modern transportation. 6/13/201615H.M. Bwisa

Despite Schumpeter's early 20th-century contributions, traditional microeconomic theory did not formally consider the entrepreneur in its theoretical frameworks (instead assuming that resources would find each other through a price system). In this treatment the entrepreneur was an implied but unspecified actor, but it is consistent with the concept of the entrepreneur being the agent of x-efficiency. Different scholars have described entrepreneurs as, among other things, bearing risk. For Schumpeter, the entrepreneur did not bear risk: the capitalist did. And a capitalist is not necessarily an entrepreneur. To Frank H. Knight (1921) and Peter Drucker (1970) entrepreneurship is about taking risk (BEARING RISK TAKING RISK). The behavior of the entrepreneur reflects a kind of person willing to put his or her career and financial security on the line and take risks in the name of an idea, spending much time as well as capital on an uncertain venture. Knight classified three types of uncertainty. Risk, which is measurable statistically (such as the probability of drawing a red color ball from a jar containing 5 red balls and 5 white balls). Ambiguity, which is hard to measure statistically (such as the probability of drawing a red ball from a jar containing 5 red balls but with an unknown number of white balls). True Uncertainty or Knightian Uncertainty, which is impossible to estimate or predict statistically (such as the probability of drawing a red ball from a jar whose number of red balls is unknown as well as the number of other colored balls). 6/13/201616H.M. Bwisa

Entrepreneurship: The Classic Definition Identifying an opportunity in the marketplace and accessing resources to exploit it for personal gain 6/13/201617H.M. Bwisa

Entrepreneurial Schools-of-Thought Approach 6/13/201618H.M. Bwisa

Macro View: External Locus of Control The Environmental School of Thought – Considers the external factors that affect a potential entrepreneur’s lifestyle. The Financial/Capital School of Thought – Based on the capital-seeking process—the search for seed and growth capital. The Displacement School of Thought – Alienation drives entrepreneurial pursuits Political displacement (laws, policies, and regulations) Cultural displacement (preclusion of social groups) Economic displacement (economic variations) 6/13/201619H.M. Bwisa

Table 1.1Financial Analysis Emphasis Venture StageFinancial ConsiderationDecision Start-up or acquisitionSeed capital Venture capital sources Proceed or abandon OngoingCash management Investments Financial analysis and evaluation Maintain, increase, or reduce size Decline or successionProfit question Corporate buyout Succession question Sell, retire, or dissolve operations 6/13/201620H.M. Bwisa

Micro View: Internal Locus of Control (cont’d) The Entrepreneurial Trait School of Thought – Focuses on identifying traits common to successful entrepreneurs. Achievement, creativity, determination, and technical knowledge The Venture Opportunity School of Thought – Focuses on the opportunity aspect of venture development—the search for idea sources, the development of concepts, and the implementation of venture opportunities. Corridor principle: New pathways or opportunities will arise that lead entrepreneurs in different directions. 6/13/201621H.M. Bwisa

Definitions And Criteria Of One Approach To The Micro View Entrepreneurial ModelDefinitionMeasuresQuestions “Great Person”“Extraordinary Achievers”Personal principles Personal histories Experiences What principles do you have? What are your achievements? Psychological Characteristics Founder Control over the means of production Locus of control Tolerance of ambiguity Need for achievement What are your values? ClassicalPeople who make innovations bearing risk and uncertainty “Creative destruction” Decision making Ability to see opportunities Creativity What are the opportunities? What is your vision? How do you respond? ManagementCreating value through the recognition of business opportunity, the management of risk taking... through the communicative and management skills to mobilize... Expertise Technical knowledge Technical plans What are your plans? What are your capabilities? What are your credentials? Leadership“Social architect” Promotion and protection of values Attitudes, styles Management of people How do you manage people? IntrapreneurshipThose who pull together to promote innovation Decision makingHow do you change and adapt? Source: Adapted from J. Barton Cunningham and Joe Lischeron, “Defining Entrepreneurship,” Journal of Small Business Management (January 1991): 56. 6/13/201622H.M. Bwisa

Micro View… (cont’d) The Strategic Formulation School of Thought – Emphasizes the planning process in successful venture development. Ronstadt’s View – Strategic formulation is a leveraging of unique elements: Unique Markets—mountain gap strategies Unique People—great chef strategies Unique Products—better widget strategies Unique Resources—water well strategies 6/13/201623H.M. Bwisa

Process Approaches to Entrepreneurship Integrative Approach – Built around the concepts of inputs to the entrepreneurial process and outcomes from the entrepreneurial process. – Focuses on the entrepreneurial process itself and identifies five key elements that contribute to the process. – Provides a comprehensive picture regarding the nature of entrepreneurship that can be applied at different levels. 6/13/201624H.M. Bwisa

Process Approaches… (cont’d) Entrepreneurial Assessment Approach – Stresses making assessments qualitatively, quantitatively, strategically, and ethically in regard to the entrepreneur, the venture, and the environment Multidimensional Approach – Views entrepreneurship as a complex, multidimensional framework that emphasizes the individual, the environment, the organization, and the venture process. 6/13/201625H.M. Bwisa

BONUS NOTES 6/13/201626H.M. Bwisa

Entrepreneurship Is Process of identifying and pursuing business opportunities Process of creating value by bringing together resources to exploit an opportunity Pursuit of opportunity without regard to resources controlled Set of critical thinking skills

18 TH – 19 TH CENTURY20 TH CENTURY GENERAL RECOGNITION NO SEPARATION OF ENTREPRENEUR FROM CAPITALIST FOCUS ON MARKET FORCES AND INVISIBLE HAND DRIVING FORCE FOR ENTREPRENEUR SEEN AS PROFIT MAXIMIZATION SPECIFIC RECOGNITION ENTREPRENEUR AS ENTREPRENEUR CHICAGO (KNIGHT) SCHUMPETERIAN (SCHUMPETER) AUSTRIAN (KIRZNER) 1920s1930s1970s FOCUS: ENTREPRENEUR AS RISK TAKER AND CAPITALIST DRIVING FORCE: PROFIT FOCUS: ENTREPRENEUR AS INNOVATOR AND EQUILIBRIUM DESTRUCTOR DRIVING FORCE: NEED TO ACHIEVE (n-ARCH) FOCUS: ENTREPRENEUR AS DISCOVERER AND EQUILIBRIUM STABILIZER DRIVING FORCE: CURIOSITY A summary of views on an entrepreneur through different eras represented by specific authors is given in the following diagramme. Source: Drawn by H. M. Bwisa from literature review. 2002. 6/13/201628H.M. Bwisa

TIMEKEY PERSON AND FOCUS OF DEFINITION Mid. agesActor and person in charge of large scale production projects 17 th CPerson bearing risks of profit (loss) in a fixed-price contract with government. 1725Richard Cantillon: person bearing risks is different from one supplying capital 1803Jean Baptist Say - separated profits of entrepreneur from profits of capital. 1876Jean Baptist Say - separated profits of entrepreneur from profits of capital. 1934Joseph Schumpeter - entrepreneur is an innovator and develops untried technology. 1961David McClelland - entrepreneur is an energetic, moderate risk taker. 1964Peter Drucker - entrepreneur maximizes opportunities. 1975Albert Shapero - entrepreneur takes initiative, organizes some social and economic mechanisms and accepts risk of failure. 1980Karl Vesper - entrepreneur seen differently by economists, psychologists, businesspersons, and politicians. 1983Gifford Pinchot - intrapreneur is an entrepreneur within an already established organization. 1985Robert Hisrich - entrepreneurship is the process of creating something different with value by devoting the necessary time and effort; assuming the accompanying financial, psychological, and social risk and receiving the resulting rewards of monetary and personal satisfaction. General chronology of the development of the term entrepreneur by economists. Source: Hisrich D. R., Peters P.M. 2002. Entrepreneurship. N.Y: McGraw-Hill Publishers 6/13/201629H.M. Bwisa

ENTREPRENEURSHIP AS A... SCIENCE Systematized factual knowledge about how to successfully start and grow an organization ART An inborn talent that propels individuals towards successful self-employment THEORY The theory that explains why some people are more successful owner-managers than others PRACTICE The practice of generating creative and gainful ideas for commercialization; The practice of starting new organisations, particularly new businesses. PROCESS incremental wealth; The process of innovation and new-venture creation; the process by which entrepreneurs assemble resources which include innovations, finance and business acumen, in an effort to transform innovations into economic goods.. DISCIPLINE A discipline that teaches the theory, skills and attitudes needed in the venture creation and management process. 6/13/201630H.M. Bwisa

Role of entrepreneurship in a country’s economy development Creates jobs Drives economic growth Frees up states resources Fosters competition Fosters innovation Increases productivity Provides a tax base for government 6/13/201631H.M. Bwisa

FORMS OF ENTREPRENEURSHIP 6/13/201632H.M. Bwisa

TYPEEXPLANATION ENTREPRENEURSHIPThe mainstream entrepreneurship – sometimes referred to as economic entrepreneurship - is about making profits by private sector business owner-managers. INTRAPRENEURSHIPProcess of creating something new inside an existing company. The entrepreneurship reward is profit but for intrapreneurship it is a salary (a wage). PUBLIC SECTOR ENTREPRENEURSHIP Process of creating value for citizens via unique combinations of public/private resources to exploit social opportunities. Takes place in government institutions. COLLECTIVE ENTREPRENEURSHIP Process of designing, financing, and incorporating profit-oriented collective (rather than sole or corporate) actions or activities. POLITICAL ENTREPRENEURSHIP Process of gaining political and social benefits in return for providing the common goods that can be shared by an unorganized general public. SOCIAL ENTREPRENEURSHIP Process of innovating solutions to society’s pressing social problems. Rather than leave societal needs to government or business sectors, social entrepreneurs persuade entire societies to take new leaps. ACADEMIC ENTREPRENEURSHIP Process of creating environment for knowledge exploitation by academia 6/13/201633H.M. Bwisa

Entrepreneur Public sector entrepreneur Intrapreneur Collective entrepreneur Social entrepreneur Academic entrepreneur Business management skills and practice Innovation skills & practice Entrepreneurship types’ grid Political entrepreneur 6/13/201634H.M. Bwisa

Traditional governmentEntrepreneurial government DriveFunction DrivenPerformance Driven Measure of effectiveness The government role is to supply services and infrastructure, fund these operations from users and taxpayers, and provide an environment where persons are treated equitably and business can develop. Unless government is failing, it is presumed to be working. Evaluation cycle dominated by government budget and election cycles The government adds value by delivering improvements in competitiveness, social value, and governability. Performance focuses on desired products. Innovation is a common activity. Evaluation focuses on short-term impacts and relative performance Business/Gove rnment Roles Government sets the business environment. The business role is to generate national competitiveness Recognition that government and business need to work together to improve societal competitiveness Comparison of Traditional & Entrepreneurial Government 6/13/201636H.M. Bwisa

EntrepreneurIntrapreneurPublic Sector Entrepreneur Primary motiveFreedom; goal fulfillment, self- reliance; achievement Freedom, accessibility to corporate resources; goal fulfillment, corporate rewards and recognition Power, achievement; may think in grandiose terms; not constrained by profit motive SkillsHolistic business knowledge; high management and innovation skills, weak political skills Strong technical skills or product knowledge; good managerial skills; weak political skills Strong political skills; ability to develop power sources beyond those formally assigned; adept at using public relations and the media to advantage Attitude toward system Frustrated by system so rejects it and starts his/her own Dislikes system but learns to work within it and manipulate it Tends to redesign or restructure the system to accomplish his/her own ends FocusExternal; markets and technology Internal and external; builds, internal networks and finds mentors or sponsors Learns to co-opt or use external forces to accomplish internal change; builds constituencies of support among politicians, unions, the private sector, the media and the community Risks and failureAssumes considerable financial and personal risk; clearly identifies key risk factors and tries to minimize them; sees failure as learning experience Likes moderate risks; principal risks are career related; sensitive to need to appear orderly within corporation; hides risky projects so can learn from mistakes without political cost of public failure Calculated risk-taker; takes big organizational risks without taking big personal risks by managing the process by which risky decisions are made; tends to deviate from rules only slightly at first, then progressively more, since failure is harder to define, will manage events to promote positive outcomes Courage and destinySelf-confident, optimistic, bold Self-confident, optimistic, bold; cynical about the system but believes he/she can manipulate it Self-confident, optimistic, bold; high tolerance for ambiguity; uses ambiguity as a source of managerial discretion Comparing the Entrepreneur, Intrapreneur and Public Sector Entrepreneur 6/13/201637H.M. Bwisa

Some Definitions  An entrepreneur is ‘a necessary destabilising force bringing economic growth through the disequilibrium of constant change and innovation’. -Joseph Schumpeter  ‘Individual who undertook formation of an organisation for commercial purposes’. - Adam Smith  ‘It is possessing the know-how to find, marshal and control resources (often owned by others) - Timmons 6/13/201638H.M. Bwisa

Opportunity entrepreneurship vs. Necessity entrepreneurship o Opportunity entrepreneur develops an idea to exploit an existing opportunity o Necessity entrepreneurs result from lack of alternatives  Entrepreneur vs. Businessman o All entrepreneurs are businessmen but not all businessmen are entrepreneurs o A Businessman establishes a business for personal goals while an entrepreneur establishes an enterprise for profit and growth –Beaver and Jenkins 6/13/201639H.M. Bwisa

Entrepreneurial Perspective Entrepreneurial is being opportunity-driven not resource-constrained Individual Organization Region/Country Government 6/13/201640H.M. Bwisa

Why Entrepreneurship? Key to economic development and growth Creates jobs, income, and wealth Source of new technology and products 6/13/201641H.M. Bwisa

 ENTREPRENEURSHIP CULTURE 6/13/201642H.M. Bwisa

Entrepreneurial Culture ‘The collective programming of the mind which distinguishes one group of people from another’ An entrepreneurial culture is one that fosters positive social attitudes towards entrepreneurship Many consider the culture in the USA to be the most entrepreneurial in the world 6/13/201643H.M. Bwisa

Entrepreneurial Culture: The American Dream Always seeking something new Restless, constantly on the move Strong preference for freedom of choice for the individual The individual is always free to compete against established institutions Rebellious non-conformist youth is the accepted norm 6/13/201644H.M. Bwisa

Entrepreneurial Culture: The American Dream The ‘American Dream’ is that even the humblest of individuals can become the greatest of people (measured in monetary terms) Achievement is prized and lauded throughout society Individuals believe that they control their destiny 6/13/201645H.M. Bwisa

Entrepreneurial Culture: The American Dream Americans think big Nothing is impossible They prefer the new or at least the improved They worship innovation They are tolerant of those who make mistakes Things need to get done quickly rather than always get done perfectly 6/13/201646H.M. Bwisa

Hofstede’s Dimensions of Culture Individualism vs Collectivism – The degree to which people prefer to act as individuals rather than groups Power Distance – The degree of inequality among people that a community is willing to accept Uncertainty Avoidance – The degree to which people prefer to avoid ambiguity, resolve uncertainty and prefer structured rather than unstructured situations Masculinity vs Femininity – This defines quality of life issues. Masculine virtues are those of assertiveness, competition and success. Feminine virtues are those such as modesty, compromise and cooperation 6/13/201647H.M. Bwisa

Hofstede’s Dimensions of Culture Individualism Power Distance Uncertainty Avoidance Masculinity High (upper quartile countries) Low (Lower quartile countries) USA, Australia, New Zealand, UK, Canada, France, Germany South America, Pakistan Malaysia, Philippines, France, South America UK, USA, Scandinavia, Germany Greece, Portugal, Uruguay, Guatemala, France Hong Kong, Singapore, UK, USA Japan, Austria, Italy, UK, USA, Germany North Europe 6/13/201648H.M. Bwisa Read “Culture as a Factor in Entrepreneurship Development: A Case Study of the Kamba culture of Kenya”. Henry M. Bwisa, Johnson Muthoka Ndolo International Journal of Business Management. V., Issue 1, December 2011, 2231-547

Culture Usually culture is understood as a diversity of values, norms and traditions which are reflected as common value of tools and environment of creative process. Culture always has been supposed as a result of people’s activity. It is fulfilling the role of society’s social memory and provides connection of centuries and continuity of generations values. In the economic aspect the term of culture is used quite recently. First of all, as common understanding of industrial relationships inside of collective economic subject (company). It’s possible to describe the stable employees relationships with the culture of business administration in the company with the goal to elaborate and define the decisions about effective use of limited resources in the production. 6/13/201650H.M. Bwisa

Innovation Culture An entrepreneurship and innovation culture means an environment where people can explore and express their creative, innovative and business acumen. It is an environment whereby entrepreneurs and innovators are the norm in society rather than an exception. The management of Innovation culture is defined by the elaboration of the Innovation strategy in the company together with access to all the necessary analytical information. 6/13/201651H.M. Bwisa

Innovation culture in the company Components which describes the innovation competence of managers and are related to their professional knowledge and experience during the innovation processes in the company; Motivation for value, which describes the motivating power of innovatin culture – common sense of demand factors, values, motives and stereotypes, which encourages the manager to implement the particular model of behavoiur during the innovation in the company. This level reflects the manager’s personal motivation. Behaviour, which includes all practical managerial activities in all innovation elaboration and implementation phases. It’s possible to divide the particular terms “entrepreneur” and “intrapreneur”. The entrepreneur is a person who establishes and run the new private business – company, while the intrepreneur is a person who starts new activities in the company owned by others. 6/13/201652H.M. Bwisa

1. INNOVATION AND EXISTING CULTURE (especially regional / local) as it exists 2. CULTURE FOR INNOVATION 2. CULTURE FOR INNOVATION in the sense of an innovation conducive climate within a certain location (“innovation milieu”) in the sense of an innovation conducive climate within a certain location (“innovation milieu”) 3. INNOVATION CULTURE in the sense of an innovation-conducive habit or system or best practise within a given company Innovation & Culture 6/13/201653H.M. Bwisa

Nature of Culture Basic beliefs and assumptions about the company Emotional aspect Reflect history Inherently symbolic Fuzzy Substance and Form 6/13/201654H.M. Bwisa

Components of Culture Values Rules of Conduct Vocabulary Methodology Rituals Myths and Stores 6/13/201655H.M. Bwisa

Levels of Culture Three levels – Assumptions – Substance – Values – Substance – Artifacts and Creations – Form Culture underlies all components of work environment that support entrepreneurship 6/13/201656H.M. Bwisa

Elements of an Entrepreneurial Culture People and empowerment focused Value creation through innovation and change Attention to the basics Hands-on management Doing the right thing Freedom to grow and to fail Commitment and personal responsibility Emphasis on the future and a sense of urgency 6/13/201657H.M. Bwisa

Issues Confronting Entrepreneurial Culture Conflicting value choices – Primary Values Balance Quantitative vs Qualitative decision-making basis Healthy discontent 6/13/201658H.M. Bwisa

Individualism vs Collectivism Individualism – Self-orientation – Emphasis on self-efficiency and control – Pursuit of individual goals – Value system driven by pride in their own accomplishments Collectivism – Group-orientation – Subordination of personal interests and goals – Emphasis on sharing – Concern for group welfare Entrepreneurial Intensity is achieved by balance between individualism and collectivism 6/13/201659H.M. Bwisa

Failure Entrepreneurial Firm embraces it Perceived Psychological Types: Moral, Personal, Uncontrollable Failure can enhance success only if learning is taking place 6/13/201660H.M. Bwisa

6/13/2016H.M. Bwisa61 “When I climbed out of the boat that had brought us back … to Naples, and gave to one of the boys lying on the pavement my briefcase to carry, he shook his head with the words: I have already eaten!” (Brentano) “When I offered to buy all the 8 coconuts for my thirsty research team from a seller in Malindi Kenya, he complained to me – my son, if you buy everything then what will I sell” (Bwisa H. M.) CAN WE SPOT ENTREPRENEURSHIP CULTURE IN THESE QUOTATIONS??

Table 13.3 The Entrepreneurial Culture versus the Administrative Culture Entrepreneurial FocusAdministrative Focus CharacteristicsPressuresCharacteristicsPressures Strategic Orientation Driven by perception of opportunity Diminishing opportunities Rapidly changing technology, consumer economics, social values, and political rules Planning systems and cycles Social contracts Performance measurement criteria Commitment to Seize Opportunities Revolutionary, with short duration Action orientation Narrow decision windows Acceptance of reasonable risks Few decision constituencies Evolutionary, with long duration Acknowledgement of multiple constituencies Negotiation about strategic course Risk reduction Coordination with existing resource base Commitment of Resources Many stages, with minimal exposure at each stage Lack of predictable resource needs Lack of control over the environment Social demands for appropriate use of resources Foreign competition Demands for more efficient use A single stage, with complete commitment out of decision Need to reduce risk Incentive compensation Turnover in managers Capital budgeting systems Formal planning systems Control of Resources Episodic use or rent of required resources Increased resource specialization Long resource life compared with need Risk of obsolescence Risk inherent in the identified opportunity Inflexibility of permanent commitment to resources Ownership or employment of required resources Power, status, and financial rewards Coordination of activity Efficiency measures Inertia and cost of change Industry structures Management Structure Flat, with multiple informal networks Coordination of key noncontrolled resources Challenge to hierarchy Employees’ desire for independence HierarchyNeed for clearly defined authority and responsibility Organizational culture Reward systems Management theory Source: Reprinted by permission of the Harvard Business Review. An exhibit from “The Heart of Entrepreneurship,” by Howard H. Stevenson and David E. Gumpert, March/April 1985, 89. Copyright © 1985 by the President and Fellows of Harvard College; all rights reserved. 6/13/201662H.M. Bwisa

Balancing the Focus—Entrepreneurial versus Manager (Stevenson and Gumpert) The Entrepreneur’s Point of View – Where is the opportunity? – How do I capitalize on it? – What resources do I need? – How do I gain control over them? – What structure is best? The Administrative Point of View – What resources do I control? – What structure determines our organization’s relationship to its market? – How can I minimize the impact of others on my ability to perform? – What opportunity is appropriate? 6/13/201663H.M. Bwisa

 ENTREPRENEURSHIP AND DEVELOPMENT 6/13/201664H.M. Bwisa

Definitions of Development For almost every writer a different definition of development exists Important to first distinguish between: – a. Development as a state or condition- static – b. Development as a process or course of change- dynamic 6/13/201665H.M. Bwisa

Meaning of Development-Todaro Development is not purely an economic phenomenon but rather a multi-dimensional process involving reorganization and reorientation of entire economic AND social system Development is process of improving the quality of all human lives with three equally important aspects. These are: 6/13/201666H.M. Bwisa

Todaro’s Three Objectives of Development 1. Raising peoples’ living levels, i.e. incomes and consumption, levels of food, medical services, education through relevant growth processes 2. Creating conditions conducive to the growth of peoples’ self-esteem through the establishment of social, political and economic systems and institutions which promote human dignity and respect 3. Increasing peoples’ freedom to choose by enlarging the range of their choice variables, e.g. varieties of goods and services 6/13/201667H.M. Bwisa

Alternative Interpretations of Development (Mabogunje) Development as Economic Growth- too often commodity output as opposed to people is emphasized-measures of growth in GNP. Note here the persistence of a dual economy where the export sector contains small number of workers but draws technology as opposed to traditional sector where most people work and is dominated by inefficient technology 6/13/201669H.M. Bwisa

Alternative Interpretations of Development Development as Modernization- emphasizes process of social change which is required to produce economic advancement; examines changes in social, psychological and political processes; How to develop wealth oriented behavior and values in individuals; profit seeking rather than subsistence and self sufficiency Shift from commodity to human approach with investment in education and skill training 6/13/201670H.M. Bwisa

Alternative Interpretations of Development Development as Distributive Justice- view development as improving basic needs Interest in social justice which has raised three issues: 1.Nature of goods and services provided by governments 2. Matter of access of these public goods to different social classes 3. How burden of development can be shared among these classes Target groups include small farmers, landless, urban under-employed and unemployed 6/13/201671H.M. Bwisa

Alternative Interpretations of Development Development as Distributive Justice- view development as improving basic needs Interest in social justice which has raised three issues: 1.Nature of goods and services provided by governments 2. Matter of access of these public goods to different social classes 3. How burden of development can be shared among these classes Target groups include small farmers, landless, urban under-employed and unemployed 6/13/201672H.M. Bwisa

Marxist View of Development Emphasizes Mode of Production - elements and activities necessary to produce and reproduce real, material life Capitalist (market economy) mode depends on wage labor whose labor power produces a surplus which is accumulated and appropriated by the employer-result is often class conflict in capitalist societies 6/13/201673H.M. Bwisa

Neocolonial Dependence Model Outgrowth of Marxist thinking-Dos Santos Existence of underdevelopment due to historical evolution of an unequal international capitalist system of rich country-poor country relations Sets up center (developed countries) versus periphery (developing countries) contrast Attempts to become self-reliant and progressive are surpressed by this relationship Moreover certain elites in the developing world (e.g landlords, entrepreneurs, merchants) enjoy high incomes, social status and political power and thus perpetuate inequality and conformity and are rewarded They serve international power groups such as multi- national firms, assistance agencies (World Bank) and other agents 6/13/201674H.M. Bwisa

Sustainable Development Defined as development that is likely to achieve lasting satisfaction of human needs and improvement of the quality of life and encompasses: Help for the very poorest who are left with no option but to destroy their environment to survive Idea of self-reliant development with natural resource constraints Cost effective development using different economic criteria to the traditional –i.e. development should not degrade environment Important issues of health control, appropriate technologies, food self-reliance, clean water and shelter for all People centered activities are necessary- human beings are the resources in the concept 6/13/201675H.M. Bwisa

Theories of Development 1940-50s- Keynesian growth theory -process of capital of formation is determined by savings and investment Domestic savings are chanelled to productive investments such as manufacturing which result –usually-in high productivity Growth is market driven as income levels rise, savings rises and frees capital for alternative investment 6/13/201676H.M. Bwisa

Theories of Development Modernization Theory -as noted previously this theory suggests that economic dimension alone is insufficient and adds theories on institutional and social change Incorporates non-economic elements such as social practices, beliefs, values and customs (McClelland, Achieving Society) Diffusion and speed of change is critical as is removal of various cultural and social barriers Backward internal structures-rather than external factors-cause underdevelopment 6/13/201677H.M. Bwisa

Theories of Development NeoLiberal Development Theory- grew in the 1970s and designed to counteract impact of Keynesianism New emphasis on supply side factors in development- private initiatives and market led growth Move away from demand stimulation (interest rate manipulation), import substitution, state intervention and centralized planning Gradual industrialization with ‘trickle down’ of benefits to all social classes 6/13/201678H.M. Bwisa

Theories of Development Popular Development- what is it? Avoids ‘grand theories’ and emphasizes solutions viewed in context of development which is part of historical process Context of development is constantly changing in scale and time Accommodates geographical and historical diversity Theory of little use to practitioners of development Stresses local diversity, human creativity, process of social change through pragmatism, flexibility and context Not extent of state intervention but comparative advantages of public and private sectors and their complementarity 6/13/201679H.M. Bwisa

Popular Development and Environment Recognizes high “opportunity costs” associated with irreversible environmental damage Dealing with environmental problems requires solutions sensitive to local social and ecological conditions Society and nature relations are affected by variations in class, gender and ethnicity “Reproductive squeeze” forces peasants to intensify production in fragile environments 6/13/201680H.M. Bwisa

Popular Development, Space and Place Bottom up approaches (as opposed to top-down) to peoples’ participation are important in this view How are various social groups and classes affected by rural-urban, core-periphery and other spatial interactions? Growing importance of “decentralization” of decision-making and authority from center to periphery 6/13/201681H.M. Bwisa

Popular Development and Power How does the power structure affect development? Examine sources of empowerment, inequality and discrimination Need to devise more people centered approaches which stress empowerment and participation Empowerment as participatory development seeks to engender self-help and self-reliance but also effective collective decision-making 6/13/201682H.M. Bwisa

What causes underdevelopment? Very easy to focus on characteristics of development For example we know that underdevelopment is usually characterized by: low per capita incomes, low literacy and educational attainment, lack of basic services- water and power But how do we EXPLAIN underdevelopment? 6/13/201683H.M. Bwisa

Some Common ‘Theories” Old view that absence of development caused by certain physical environments, particular cultural traditions and value systems-environmental and cultural determinism Lack of natural resources certainly impediment to development but not impossible- example of Japan Why has Japan succeeded? 6/13/201684H.M. Bwisa

Reasons for Japanese Success Strong cooperation between government and business Able to adapt to spatial-physical situation and acquire a maritime prowess Early development (Meiji restoration) of transport and banking systems Highly literate population Niche development- technology driven 6/13/201685H.M. Bwisa

Other Common Explanations of Underdevelopment Instability and other adverse internal situations- political factors Some truth to this as extended periods of turbulence are not conducive to development- central African nations with tribal rivalries and ethnic cleansing Poor physical environment- lack of rainfall, poor soils also may pose barriers to development 6/13/201686H.M. Bwisa

Vicious Circles- Gunnar Myrdal Complex web of interlocking vicious circles each of which constitutes a chain of cause and effect relationships where one unfavorable circumstance leads to another and produces downward spiral High Birth Rate> Large Families>Low PCI> Poverty> Low Output Per Worker> Low PCI> Low Productivity> Poor Health>Inadequate Housing Remedy > Downward spiral not reversible without massive aid 6/13/201687H.M. Bwisa

Remedy for Vicious Circle Aid would stimulate growth in modern sector and reduce size of ‘informal’ or traditional sector Thus eliminate dualism and the major causes of unequal distribution of wealth Foreign aid would allow countries to increase low levels of productivity 6/13/201688H.M. Bwisa

Another Common Explanation Colonialism As Scapegoat Attacking vicious circle proponents-do not explain how these magic circles come into existence Need to view development in historical perspective as sequence of dynamic events- explore roots Colonialism viewed as the cause of disintegration and decline- how? 6/13/201689H.M. Bwisa

Colonialism as Scapegoat Indigenous population exploited Traditional way of life and self sufficient mode of production have been destroyed Forced to pay taxes and conscripted labor practices Social differentiation increased- disintegrating force Fatal effects on secondary (manufacturing) and tertiary (service) sectors- import of cheap goods forced indigenous artisans out of work Discouraged modern industrialization 6/13/201690H.M. Bwisa

Colonialism as Scapegoat cont’d Thus what occurred in these situations was dependent not autonomous development Colonial powers extracted wealth for home country-Netherlands, France, Great Britain International division of labor (IDL) and western dominated trading structure was created to take advantage of colonial authority IDL=allocation of tasks among laborers such that each one engages in tasks that he performs most efficiently and this promotes worker specialization and productivity 6/13/201691H.M. Bwisa

What to Do With Development Theory ? Several theories have been advanced have been criticized and some also discredited— to be replaced by other theories Third World is very heterogeneous-dissimilar in terms of population, resources, climates, culture, economic structure and location Unlikely that one theory will be powerful enough to explain underdevelopment everywhere 6/13/201692H.M. Bwisa

What to Say About Development Theory ? Underdevelopment must be seen as a product of an array of complex and continuously changing interactions between: 1. Past and Present 2. Natural and Human Environments 3. External and Internal Conditions Multitude of obstacles to development vary with place and time Critical to remember that the above theoretical ideas aid us in asking pertinent questions 6/13/201693H.M. Bwisa

Entrepreneurship and development

Entrepreneurship has been defined in a number of ways over the years From Schumpeter [1934] to the Internet of today – Google gives a page of definitions I have adopted the definition of the field of entrepreneurship as ‘the scholarly examination of how, by whom, and with what effects opportunities to create future goods and services are discovered, evaluated, and exploited’ From Venkataraman [1997] and Shane and Venkataraman [2000] 6/13/201695H.M. Bwisa

In Essence – entrepreneurship involves: the study of sources of opportunities the processes of discovery, evaluation, and exploitation of opportunities, and, the set of individuals who discover, evaluate and exploit them. 6/13/201696H.M. Bwisa

Role of Entrepreneurship in Economic Development Innovation is depicted as a key to economic development. – Product-evolution process - Process through which innovation is developed and commercialized. –Iterative synthesis - The intersection of knowledge and social need that starts the product development process. 6/13/201697H.M. Bwisa

Role of Entrepreneurship in Economic Development (cont.) Three types of innovation: – Ordinary - New products with little technological change. – Technological – New products with significant technological advancement. – Breakthrough – New products with some technological change. 6/13/201698H.M. Bwisa

Entrepreneurship and rural development: Seven unique challenges for rural entrepreneurs 1) culture that promotes entrepreneurship 2) distance to markets and services 3) capital availability and capital-ready deal flow 4) threshold of demand to justify the location of support services 5) absence of other entrepreneurs 6/13/201699H.M. Bwisa

Seven unique challenges for rural entrepreneurs 6) absence of industry clusters 7) independent spirit of rural population – i.e., balance the entrepreneurial desire to ‘be one’s own boss’ with the realization that successful entrepreneurs cannot ‘do it alone.’ 6/13/2016100H.M. Bwisa

Lichtenstein and Lyons [1996, 2001] The focus of entrepreneurial development should be shifted from programs to development of individual entrepreneurial skills. They proposed a comprehensive ‘needs assessment’ approach, To build on each of the existing programs in the community, and Identify additional training services required 6/13/2016101H.M. Bwisa

The Proposed System Expand the population of entrepreneurs, not just the ‘right’ ones. Entrepreneurs need continuous assistance with many of the skills needed to move through the stages of business development. This suggests an ongoing mentoring program coupled with networking with others who have already been through the process themselves. 6/13/2016102H.M. Bwisa

Truly creating an ‘entrepreneurial community.’ Bringing together, in a developmentally focused system, persons with entrepreneurial skills at various stages of development to share these skills Persons who help each other develop these skills, and Persons who will assist others in recognizing new opportunities for innovation in the community. 6/13/2016103H.M. Bwisa

CONDITIONS FOR THE DEVELOPMENT OF ENTREPRENEURSHIP Entrepreneurship is born, it nurtures and thrives in an entrepreneurial climate and culture; an environment that encourages entrepreneurship; one where there are favorable attitudes to entrepreneurship. This therefore means that a prerequisite to entrepreneurship development is an entrepreneurship policy. Such a policy has three pillars: motivation, skill and opportunity. 6/13/2016104H.M. Bwisa

THE THREE PILLARS OF ENTREPRENEURSHIP POLICY 6/13/2016105H.M. Bwisa

MOTIVATION Promotion of entrepreneurship culture; reduction of stigma of failure, recognition of role models. This creates entrepreneurship social value and desire for people to make entrepreneurship a career. Demand for entrepreneurship skills is created SKILLS Introduction of entrepreneurship education at all levels. OPPORTUNITY Reduction of barriers to entry via regulatory system. Provision of start-up financing; seed capital;. Provision of business start- up support (incubators, mentoring, markets, one-stop shops, networks, start-up portals) When the populace views entrepreneurship favourably then a desire to acquire entrepreneurship is created. Entrepreneurship skills can be wasted if opportunities are not created to utilize them. THE THREE PILLARS OF ENTREPRENEURSHIP POLICY 6/13/2016106H.M. Bwisa

Five elements for entrepreneurship to happen… The organizational context The entrepreneur The resources The concept The entrepreneurial process The environment 1 6/13/2016107H.M. Bwisa

Week 2 6/13/2016108H.M. Bwisa

 THE ENTREPRENEUR (TASKS, ROLES, DRIVE, KNOWLEDGE, FINANCIAL STRENGTH, ENVIRONMENTAL FACTORS) 6/13/2016109H.M. Bwisa

Who are entrepreneurs?  Entrepreneurship – Strategic thinking and risk-taking behavior that results in the creation of new opportunities for individuals and/or organizations.  Entrepreneurs – Risk-taking individuals who take actions to pursue opportunities and situations others may fail to recognize or may view as problems or threats. 6/13/2016110H.M. Bwisa

Who are entrepreneurs?  Entrepreneurs are … – Founders of businesses that become large-scale enterprises. – People who: Buy a local franchise outlet Open a small retail shop Operate a self-employed service business – People who introduce a new product or operational change in an existing organization. 6/13/2016111H.M. Bwisa

Who is an entrepreneur?  Typical characteristics of entrepreneurs: – Internal locus of control – High energy level – High need for achievement – Tolerance for ambiguity – Self-confidence – Passion and action-orientation – Self-reliance and desire for independence – Flexibility 6/13/2016112H.M. Bwisa

Personal traits and characteristics of entrepreneurs. 6/13/2016113H.M. Bwisa

CHARACTERISTICEXPLANATION ENTERPRISINGAre innovative and hard working NEED-DRIVEN Motivated by need to achieve (n-Arch); self-starters TOLERANT Tolerate long hours of work - are persevering and enduring. RESPONSIBLE Self reliant; takes personal responsibility EFFICIENT Economical, hates wasting resources PROFITEER Wise investor; think of money as a source for more money RESOURCEFUL Take initiative and seek personal responsibility; compete against self-imposed standards ENERGETIC Have high amount of personal energy and drive NETWORKING Know when, where,.. to seek help; seek wide opportunities ENVISAGERS Planners; think before leaping; have ability and commitment to set clear attainable goals UNSTOPPABLE Have high determination and always desire to solve problems and complete the job; worry a problem till solution is found RISK-LOVERS Take moderate calculated risks; do not gamble SELF-CONFIDENT Have high level of self confidence BWISA’S MODEL 6/13/2016114H.M. Bwisa

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. 6/13/2016115H.M. Bwisa

Who is an entrepreneur?  Typical entrepreneurial backgrounds and experiences: – Parents were entrepreneurs or self-employed. – Families encouraged responsibility, initiative, and independence. – Have tried more than one business venture. – Have relevant personal or career experience. – Become entrepreneurs between 22 and 45 years of age. – Have strong interests in creative production and enterprise control. – Seek independence and sense of mastery. 6/13/2016117H.M. Bwisa

 Common myths about entrepreneurs: – Entrepreneurs are born, not made. – Entrepreneurs are gamblers. – Money is the key to entrepreneurial success. – You have to be young to be an entrepreneur. – You must have a degree in business to be an entrepreneur. 6/13/2016118H.M. Bwisa

Entrepreneurs—Challenging the Unknown Entrepreneurs – Recognize opportunities where others see chaos or confusion – Are aggressive catalysts for change within the marketplace – Challenge the unknown and continuously create the future 6/13/2016119H.M. Bwisa

Entrepreneurs versus Small Business Owners: A Distinction Small Businesses Owners – Manage their businesses by expecting stable sales, profits, and growth Entrepreneurs – Focus their efforts on innovation, profitability and sustainable growth 6/13/2016120H.M. Bwisa

The entrepreneur’s supporting/advisory network entrepreneur Role model Moral support network Family Friends Professional support network business associates trade associations Mentor personal affiliations Social capital 6/13/2016121H.M. Bwisa

Contacts with: - clients - suppliers - experts - colleagues - support agents What are the needs of an entrepreneur? Ideas Assessing the opportunity Strategic processes Business plan Culture, values, norms Facilities Personel arrangements & Systems Knowledge Own capital bridging development period Financing investments - Venture Capital - Loans Scope: from idea to Strategy Social Network- Contacts Skills: Patterns of Organisation Scale: Economy: Financial means Entrepreneur and Enterprise 6/13/2016122H.M. Bwisa

Support instruments Contacts with: - clients - suppliers - experts - colleagues - support agents Ideas Assessing the opportunity Strategic processes Business plan Culture, values, norms Facilities Personelrrangements & Systems Knowledge Own capital bridging development period Financing investments - Venture Capital - Loans Scope: from idea to Strategy Social Network- Contacts Skills: Patterns of Organisation Scale: Economy: Financial means Entrepreneur and Enterprise Knowledge & Space Organisational support Contacts Brokerage Strategic Coach Soft loans participation Coaching, training & Courses 6/13/2016123H.M. Bwisa

Characteristics of high ambition spin offs Contacts with: - clients - suppliers - experts - colleagues - support agents Ideas Assessing the opportunity Strategic processes Business plan Culture, values, norms Facilities Personelrrangements & Systems Knowledge Own capital bridging development period Financing investments - Venture Capital - Loans Scope: from idea to Strategy Social Network- Contacts Skills: Patterns of Organisation Scale: Economy: Financial means Entrepreneur and Enterprise Balanced teams combining management, commercial & technology skills Strong connections with market (suppliers-clients) Managing strong & weak ties (in business & academic world) Growth ambition Strategic focus based on insights in T-M-O dynamics & value creation Overcoming death valley (time-to-market vs investments) through access to venture capital (Formal-informal investors) Entrepreneurial and market orientation 6/13/2016124H.M. Bwisa

The four entrepreneurial skill categories and 17 skill dimensions 1) Technical skills Operational – the skills necessary to produce the product or service Supplies/raw materials – the skills to obtain them, as necessary Office or production space – the skills to match needs and availability Equipment/plant/technology – the skills to identify and obtain 6/13/2016125H.M. Bwisa

The four entrepreneurial skill categories and 17 skill dimensions 2) Managerial skills Management – planning, organising, supervising, directing, networking Marketing/Sales – identifying customers, distribution channels, supply chain Financial – managing financial resources, accounting, budgeting Legal – organisation form, risk management, privacy and security Administrative – people relations, advisory board relations Higher-order – learning, problem-solving 6/13/2016126H.M. Bwisa

The four entrepreneurial skill categories and 17 skill dimensions 3) Entrepreneurial skills Business concept – business plan, presentation skills Environmental scanning – recognize market gap, exploit market opportunity Advisory board and networking – balance independence with seeking assistance 6/13/2016127H.M. Bwisa

The four entrepreneurial skill categories and 17 skill dimensions 4) Personal maturity skills Self-Awareness – ability to reflect and be introspective Accountability – ability to take responsibility for resolving a problem Emotional Coping – emotional ability to cope with a problem Creativity – ability to produce a creative solution to a problem 6/13/2016128H.M. Bwisa

The Social Sciences on “What Makes an Entrepreneur”

Trait Theory  Energy/motivation  Business orientation  Business attitude  People skills 6/13/2016130H.M. Bwisa

Personality Characteristics  Need for achievement  Locus of control  Risk-taking propensity 6/13/2016131H.M. Bwisa

Career Anchors  Motivate vocational choices  Technical  Managerial  Security  Creativity  Autonomy 6/13/2016132H.M. Bwisa

Sociological Characteristics  Negative displacement  Between things  Positive pull  Positive push 6/13/2016133H.M. Bwisa

Situational Characteristics  Perceptions of desirability  Perceptions of feasibility  Entrepreneurial event 6/13/2016134H.M. Bwisa

Comparing Entrepreneurs to Managers and Leaders EntrepreneurManagerLeader InnovatesAdministersInnovates CreatesMaintainsDevelops Sees opportunities See problems Sees the future Asks how and when Asks what and why Makes it happen Does things right Uses influence Builds the team Relies on control Inspires trust 6/13/2016135 H.M. Bwisa

E-SHIP MINDSET AND ORIENTATION ENTREPRENEURIAL MINDSET ENTREPRENEURIAL ORIENTATION 6/13/2016136H.M. Bwisa

Entrepreneurial Mind-Set (EMS) Entrepreneurs think differently from non-entrepreneurs EMS Involves the ability to rapidly sense, act, and mobilize, even under uncertain conditions. EMS is a way of thinking about business that focuses on capturing the benefits of uncertainty. EMS attaches meaning to ambiguous and fragmented situations. EMS identifies opportunities and threats continuously and proactively from the firm’s many environments. 6/13/2016137H.M. Bwisa

How Entrepreneurs Think Entrepreneurs in particular situations may think differently when faced with a different task or decision environment. Given the nature of their decision-making environment, entrepreneurs need to sometimes: – Effectuate. – Be cognitively adaptable. – Learn from failure.

. Effectuation vs. Causation  Causation: starting with a desired outcome and looking for the optimal means (resources) to attain it  Effectuation: starting from what we have, and selecting among possible outcomes (with corrections)

2. Cognitive adaptability  The ability to appropriately generate and evolve individual decision-frameworks in concert with a changing and uncertain environment.  The ability to generate these decision framework is reflected in the entrepreneur's capacity to reflect on his/her own ways of thinking and learning = meta-cognitive awareness = “to think about thinking”

Causation and Effectuation According to Professor Saras Sarasvathy (Darden, University of Virginia), entrepreneurs tend to use an effectuation process more often than a causal process. – Causal Process Starts with a desired outcome. Focuses on the means to generate that outcome. – Effectuation Process Starts with what one has (who they are, what they know, and whom they know). Selects among possible outcomes.

The Causation Process (1of 3) The causation process has been typified by and embodied in the procedures used by Philip Kotler’s Markjeting Management. –Market: “Consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want” (1991: 63).

The Causation Process (2 of 3) Given a product or a service, Kotler suggests a procedure for bringing the product/service to market: –Analyze long-run opportunities in the market. –Research and select target markets. –Identify segmentation variables and segment the market. –Develop profiles of resulting segments. –Evaluate the attractiveness of each segment. –Select the target segment(s). –Identify possible positioning concepts for each target segment.

The Causation Process (3 of 3) Given a product or a service, Kotler suggests a procedure for bringing the product/service to market: –Select, develop, and communicate the chosen positioning concept. –Design marketing strategies. –Plan marketing programs. –Organize, implement, and control marketing effort. This process is called the STP (segmentation, targeting, and positioning) process.

Principles of Effectuation (1of 2) Implications of effectuation for the entrepreneur are explained in terms of five basic principles: ONE -Patchwork quilt: means-driven action, emphasizes creation of something new with existing means rather than discovering new ways to achieve given goals. TWO -Affordable loss: prescribes committing in advance to what one is willing to lose rather than investing in calculations about expected returns to the project. THREE -Bird-in-hand: involves negotiating with any and all stakeholders who are willing to make actual commitments to the project; determines the goals of the enterprise.

Principles of Effectuation (2 of 2) Implications of effectuation for the entrepreneur are explained in terms of five basic principles: FOUR - Lemonade: p rescribes leveraging surprises for benefits rather than trying to avoid them, overcome them, or adapt to them. FIVE - Pilot-in-the-Plane: urges relying on and working with people as the prime driver of opportunity and not limiting entrepreneurial efforts to exploiting factors external to the individual.

Cognitive Adaptability Describes the extent to which entrepreneurs are: – Dynamic. – Flexible. – Selfregulating. – Engaged in the process of generating multiple decision frameworks. – Focused on sensing and processing changes in their environments and then acting on them. Reflects in an entrepreneur’s metacognitive awareness.

Achieving Cognitive Adaptability (1 of 2) Entrepreneurs can ask themselves questions relating to: – Comprehension: increase entrepreneurs’ understanding of the nature of the environment – Connection: stimulate entrepreneurs to think about the current situation in terms of similarities and differences with situations previously faced and solved. – Strategic: stimulate entrepreneurs to think about which strategies are appropriate for solving the problem (and why) or pursuing the opportunity (and how). – Reflection: stimulate entrepreneurs to think about their understanding and feelings as they progress through the entrepreneurial process.

Achieving Cognitive Adaptability (2 of 2) Entrepreneurs who are able to increase cognitive adaptability have an improved ability to: – Adapt to new situations. – Be creative. – Communicate one’s reasoning behind a particular response.

Learning from Business Failure Uncertainty, changing conditions, and insufficient experience can contribute to failure among entrepreneurial firms. An entrepreneur’s motivation is not simply from personal profit but from: – Loyalty to a product. – Loyalty to a market and customers. – Personal growth. – The need to prove oneself.

Grief Loss of a business is likely to generate a negative emotional response from the entrepreneur referred to as grief. It can interfere with: – Entrepreneur’s ability to learn from the failure. – Motivation to try again.

Grief Recovery Process An individual has recovered from grief when thoughts about the events surrounding, and leading up to the loss of the business, no longer generate a negative emotional response. Two primary descriptions of the process of recovering from grief are classifiable as: – Loss-oriented. – Restoration-oriented.

Loss-Orientation Involves working through, and processing, some aspect of the loss experience and, as a result of this process, breaking emotional bonds to the object lost. – Involves confrontation, which is physically and mentally exhausting. – Can evoke a sense of yearning for the way things used to be. – Foster a sense of relief that the events surrounding the loss.

Restoration-Orientation Based on both avoidance and a proactiveness toward secondary sources of stress arising from a major loss. –Involves suppression, which requires mental effort and presents potentially adverse consequences for health. –Provides opportunity to address secondary causes of stress. May reduce emotional significance of the loss.

A Dual Process of Grief The dual process of o scillating between the two grief orientations enables a person to: –Obtain the benefits of each. –Minimize the costs of maintaining one for too long.

Practical Implications of the Dual Process Practical implications of the process: –Knowledge that feelings and reactions being experienced are normal. –Realizing that “symptoms” of grief can reduce secondary sources of stress and assist with choice of treatment. – Process of recovery from grief will eventually diminish. – Recovery and learning process can be enhanced. – Recovery from grief offers an opportunity to increase one’s knowledge of entrepreneurship.

BONUS NOTES

Managerial Versus Entrepreneurial Decision Making Entrepreneurial management is distinct from traditional management in terms of eight dimensions: – Strategic orientation. – Commitment to opportunity. – Commitment of resources. – Control of resources. – Management structure. – Reward philosophy. – Growth orientation. – Entrepreneurial culture.

Distinguishing Entrepreneurially from Traditionally Managed Firms Insert Table 2.2 >

Figure 13.6 The Entrepreneurial Mindset 6/13/2016160H.M. Bwisa

Table 13.2 The Managerial versus the Entrepreneurial Mind-Set Managerial Mind-SetEntrepreneurial Mind-Set Decision-making assumptions The past is the best predictor of the future. Most business decisions can be quantified. A new idea or an insight from a unique experience is likely to provide the best estimate of emerging trends. ValuesThe best decisions are those based on quantitative analyses. Rigorous analyses are highly valued for making critical decisions. New insights and real-world experiences are more highly valued than results based on historical data. BeliefsLaw of large numbers: Chaos and uncertainty can be resolved by systematically analyzing the right data. Law of small numbers: A single incident or several isolated incidents quickly become pivotal for making decisions regarding future trends. Approach to problemsProblems represent an unfortunate turn of events that threaten financial projections. Problems must be resolved with substantiated analyses. Problems represent an opportunity to detect emerging changes and possibly new business opportunities. Source: Mike Wright, Robert E. Hoskisson, and Lowell W. Busenitz, “Firm Rebirth: Buyouts as Facilitators of Strategic Growth and Entrepreneurship,” Academy of Management Executive 15(1): 114. 6/13/2016161H.M. Bwisa

Strategic Orientation and Commitment to Opportunity Strategic orientation: Refers to factors that are inputs into the formulation of the firm’s strategy. – Strategy of entrepreneurial management: Driven by presence or generation of opportunities for new entry. Less concerned about resources required to pursue such opportunities. Entrepreneurially managed firms: – Committed to taking action on potential opportunities. Able to pursue opportunities rapidly. – Can decommit resources from a particular opportunity and do so rapidly.

Commitment of Resources and Control of Resources Resources: – Resources are more towards the firm minimizing resources required in pursuit of a particular opportunity. – Smaller sunk costs help stop entrepreneurially managed firms from becoming entrenched with a particular course of action. Control of resources: – Less concerned about ownership of resources and more concerned about having access to others’ resources.

Management Structure An entrepreneurially managed firm’s structure is organic. – Flayers of bureaucracy between top management and customer. – Multiple informal networks. – Structured to make use of internal and external Networks.

Reward Philosophy Focused on pursuing opportunities for new entry that represent new value for the firm. – Rewards based on employees’ contribution toward discovery/generation and exploitation of opportunities. – Employees have freedom to experiment with potential opportunities and are rewarded accordingly. – Organizational culture encourages employees to generate ideas, experiment, and engage in other tasks to produce creative output.

Ethics and Social Responsibility of Entrepreneurs Entrepreneurs usually develop an internal ethical code. Personal value systems tend to be influenced by: – Peer pressure. – General social norms in the community. – Pressures from their competitors. Business ethics - The study of behavior and morals in a business situation. 6/13/2016166H.M. Bwisa

Dimensions of an Entrepreneurial Orientation (Lumpkin and Dess, 1996) (1)Risk-taking: an acceptance of uncertainty and risk inherent in original activity and is typically characterized as resource commitment to uncertain outcomes and entering unknown markets and activities. (2)Innovativeness: attempts to embrace and support creativity and experimentation, technological leadership, novelty and R&D in the development of products, services and processes. (3)Proactiveness: a forward-looking perspective where companies actively seek opportunities to develop and introduce new products with the goal of obtaining first-mover advantages as well as the prospect of shaping the environment. (4)Competitive aggressiveness: the competitive nature or posture of a company and the intensity with which it competes to surpass its competitors. (5)Autonomy: employees are given the necessary authority and independence to develop business concepts and visions and carry them through to completion. 6/13/2016167H.M. Bwisa

Entrepreneurial Orientation Innovativeness Risk-taking Proactiveness 6/13/2016168H.M. Bwisa

ENTREPRENEURSHIP PROCESS  PRESTART UP/START-UP/POST START-UP  ROLES OF ENTREPRENEUR AT DIFFERENT STAGES OF THE PROCESS 6/13/2016169H.M. Bwisa

Entrepreneurial Process “The entrepreneurial process involves all the functions, activities, and actions associated with perceiving opportunities and creating organizations to pursue them.” 6/13/2016170H.M. Bwisa

The Entrepreneurial Process Adult Population Business Firm Population Growth Persist Quit Firm Birth ? NE NI Start-up Processes Gestation Phase New Firm 0 3.5 Yrs Total Entrepreneurial Activity Index Established Firm NE = Nascent Entrepreneur; NI = Nascent Intrapreneur 6/13/2016171H.M. Bwisa

Develop an Opportunity Determine/Acquire Resources Implement and adjust Harvest the venture Repeat process “Serial Entrepreneur” “ The Process …” Generate a Business Model Innovate and Change 6/13/2016172H.M. Bwisa

THE NEW VENTURE CREATION PROCESS The environment is the most comprehensive component in the venture creation process. It includes all the factors that affect the decision to start a business, for example, government regulation, competitiveness, and life cycle stage. Within specific industries and in specific geographic regions, environmental variables and the degree of their impact will differ. The new venture process begins with an idea for a product, service, or business. 6/13/2016173H.M. Bwisa

Feasibility Analysis The entrepreneur develops an idea into a business opportunity or business concept that is then tested in the market through a process of feasibility analysis. Feasibility analysis is used to inform the entrepreneur about the conditions required to move forward and develop the business. This may involve market research. Once the entrepreneur has determined that the concept is feasible, a business plan is developed to detail how the company will be structured and to describe its operation 6/13/2016174H.M. Bwisa

Feasibility Analysis The business concept (which is essentially a specific product or service) is tested through a process of feasibility analysis that answers three fundamental questions: 1.Are there customers and a market of sufficient size to make the concept feasible? 2.Do the capital requirements to start, based on estimates of sales and expenses, make sense? 3.Can an appropriate start-up team be put together to make it happen? 6/13/2016175H.M. Bwisa

Components of Feasibility Analysis Thus, there are actually four areas which are tested in the feasibility analysis: – The product/service – Industry/market/consumer – Founding team – Financials 6/13/2016177H.M. Bwisa

Viability Testing the business concept in the real world is what actually determines if the business has viability. Thus, the business must actually be launched and operated in the environment to determine viability. In a business, the term viability is the point when the company is able to generate sufficient cash flows to allow the business to survive on its own without cash infusions from outside sources such as the entrepreneur's own resources, investors, or a bank loan. 6/13/2016178H.M. Bwisa

LAUNCHING A NEW BUSINESS Three key issues in the pre-start-up phase: 1) Testing concept feasibility 2) Developing a business plan 3) Acquiring resources ($$$ and personnel) Three key issues in the start-up phase: 1)Finding customers 2)Building a structure 3)Generating positive cash flows 6/13/2016179H.M. Bwisa

Opportunity Creation Developing a product, service, process, or niche that has not existed before. Opportunity recognition requires high levels of creativity. Typically, opportunity creation involves an invention process that is characterized by four activities: connection, discovery, invention, and application 6/13/2016180H.M. Bwisa

Opportunity Creation Connection occurs when two ideas are brought together that normally are not juxtaposed, such as nature and machines, which produced the field of nanotechnology or microscopic machines that copy nature in the way that they operate. Discovery happens once a connection has been made. It is actually the result of the connection in the form of an idea. Inventions are the product of turning an idea into a product or service. Application comes about when the inventor is able to apply the invention to a number of different uses or applications in a variety of industries and situations. 6/13/2016181H.M. Bwisa

Opportunity Recognition The process of using creative skills to identify a new innovation --- (a product, service, process, or marketing method) --- which is often based on something already existing in the marketplace.

How to recognize a business opportunity List all the ideas in no particular order. Eliminate those ideas that can’t generate a profit and don’t fit the business model very well. Review the remaining ideas and choose the one that inspires the most passion and enthusiasm 6/13/2016183H.M. Bwisa

The Initial Business Concept: There are four essential elements required to test whether or not a potential business idea is feasible: What is the product and/or service that is the basis for the business? Who is the customer likely to be? What is the benefit of your product/service to the customer? How will the benefit be delivered? 6/13/2016184H.M. Bwisa

Figure 13.5 A Venture’s Typical Life Cycle 6/13/2016185H.M. Bwisa

Few: early adopters Few Fewcompetitors Growing adopters: trial of product/ service Entry of Entry ofcompetitors Growing selectivity of purchase May be many Likely price cutting for volume Shake-out of weakest weakest competitors competitors Saturation Reliance on repeatpurchases Difficulties in gaining/taking share; fights Emphasis on efficiency/ low cost Drop-off in usage Exit of some competitors Selectivedistribution Development Growth Shake- out Maturity Decline Users/buyers Competitiveconditions The industry life cycle model (Johnson, Scholes and Whittington, 2005: 86) 6/13/2016186H.M. Bwisa

Life Cycle of a Business Venture 6/13/2016187H.M. Bwisa

Pre-launch: Opportunity Identification Does the Idea = an Opportunity? – Market – Margin – Mission (session 1) The Right Team? The Necessary Resources? 6/13/2016188H.M. Bwisa

The Five Stages of a Business’s Life Cycle Pre Start-up Start-up Growth Maturity Rebirth or Decline 6/13/2016189H.M. Bwisa

The Life Cycle of the Company 6/13/2016190H.M. Bwisa

The Best Founders Founders of successful companies have many things in common. They are: – A common vision – Passion and a willingness to dedicate themselves – Experience in the industry – Contacts for capital – Experience in basic business functions – Excellent credit ratings 6/13/2016191H.M. Bwisa

Bootstrappers Bootstrappers are start-up entrepreneurs who have no financial resources beyond their own savings. They realize that to get what they need to start their businesses—location, equipment, money, and perhaps employees—they must possess a double dose of ingenuity and supreme self-assuredness. 6/13/2016192H.M. Bwisa

Successful Bootstrappers John Schnatter founded Papa John’s International, the $164+ million pizza restaurant franchise, with $1,600 in personal savings. Bill Gates and Paul Allen started Microsoft in a cheap apartment in Albuquerque with virtually no overhead, a borrowed computer, and very little capital. 6/13/2016193H.M. Bwisa

The Bootstrap Business Location Businesses that don’t require a storefront location can begin their development in a spare room or a garage. Negotiate free rent and lower lease rates in buildings where a lessor is having difficulty releasing the space. Lease a portion of a larger company’s space and take advantage of its reception area and conference room. 6/13/2016194H.M. Bwisa

START-UP RESOURCES Putting together sufficient resources to start a business requires enormous creativity and persistence, with the ultimate reward being a company that is able to reach critical mass and take advantage of significantly more choices for growth capital. 6/13/2016195H.M. Bwisa

Why are So Many Ventures Self-Funded? Many new ventures are initially funded by the entrepreneur, because: No intellectual property rights or licenses to give them a competitive advantage Many lack a significant track record of success Many ventures have not fully defined themselves in the marketplace, which makes investment risky. Investors see new ventures as too risky 6/13/2016196H.M. Bwisa

How does one start a new venture?  Life cycle of entrepreneurial firms – Birth stage – Breakthrough stage – Maturity stage  Each stage poses different managerial challenges and requires different managerial competencies. 6/13/2016197H.M. Bwisa

Stages in the life cycle of an entrepreneurial firm. 6/13/2016198H.M. Bwisa

Entrepreneurship as a Process Identify/Evaluation Idea Develop Plan Acquire Resources Launch Manage Exit/Harvest 6/13/2016199H.M. Bwisa

PRE-START UP 1.ACQUIRE MOTIVATION AND RAW IDEA 2.VALIDATE IDEA 3.SET OPERATION SCALE & IDENTIFY RESOURCES 4.NEGOTIATE TO START START UP 5. BIRTH 6. SURVIVAL GROWTH MATURITY DECLINE TIME PROFIT BUSINE SS LIFE CYCLE 6/13/2016200H.M. Bwisa

S T E P QUESTIONS IN MIND OF ENTREPRENEUR S ELF-ASSESSMENT Do I have what it takes to be an entrepreneur? Do I know why I want to go into business? T HINK –TANK Do I have a viable idea? Do I know the product/service I will deal in? A SSESS MARKET. Do I know my customers?.Is there demand for my product?.Do I know my competitors? R AISE CAPITAL Do I know how much money I will need to start?.Do I know where/how to borrow?.Have I got a fund raising business plan? T AKE UP LOCATION Do I have a suitable location/site? U NDERSTAND LAW.Do I know which form of legal business ownership I need?.Do I know how to register?.Do I know my legal obligation? P LUNGE IN Why not enjoy being my own boss! Notice that reading down the first letters of each step 1-7 spells out the words START UP. Bwisa’s model 6/13/2016201H.M. Bwisa

The entrepreneurial process Opportunity recognition Opportunity development Value creation Entrepreneur Network Imagination 6/13/2016202H.M. Bwisa

6/13/2016203H.M. Bwisa

Idea generation Entrepreneurship Network TOP ENT-Training Coaching training, courses, networks Concept development Accelerator Incubator Technopark Organisation development Venture capital & financing Housing/facilities (technopark) organisational support (CI) “Train the trainer” Monitoring entrepreneurship development Support throughout enterprise genesis process 6/13/2016204H.M. Bwisa

Aspects of the Entrepreneurial Process 6/13/2016205H.M. Bwisa

Entrepreneurship is a way of thinking, reasoning and acting that is opportunity obsessed, holistic in approach [emphasis added], and leadership balanced” (Timmons, 1999: 27). The Entrepreneurial Process

The Entrepreneurial Process (Timmons, 2000) OpportunityResources Team Communication Business Plan Fits and Gaps Creativity Leadership Capital Market Forces Uncertainty Ambiguity Exogenous Forces Founder 6/13/2016207H.M. Bwisa

Entrepreneurship Process: Demand and Supply Model External Factors influencing Demand Opportunities Entrepreneurship Performance Supply Abilities Incentives Culture/Motivation Framework Conditions Firm Creation High-growth firms Business Density Financial Capital Social/Human Capital Technology Transfer Access to Market 6/13/2016208H.M. Bwisa

Week 3 6/13/2016209H.M. Bwisa

ENTREPRENEURIAL ROLES AT DIFFERENT STAGES 6/13/2016210H.M. Bwisa

Pre- start up Start-upDevelopmentGrowthMaturity Decline STAGES OF A BUSINESS OVER TIME ORIGINATOR/INVENTOR PLANNER ORGANIZER DEVELOPER/ ADMINISTRATOR SUCCESSOR /REORGANIZER THE BUSINESS LIFE CYCLE ORIGINATOR/INVENTOR Basic entrepreneurial role of creating innovative activities PLANNER/ ORGANIZER Role of defining and analyzing personal and business objectives. DEVELOPER/ADMINISTR ATOR-OPERATOR Role of selecting, motivating and developing workers. SUCCESSOR /REORGANIZER Role of rehabilitating the business and/or starting over ENTREPRENEURIAL ROLES AND PROCESS STAGES 6/13/2016211H.M. Bwisa

CRITICAL ISSUES IN ENTREPRENEURSHIP DEVELOPMENT  PLANNING FOR ENTREPRENEURSHIP GROWTH  QUALITY AND ENTREPRENEURSHIP  POLICY ISSUES IN ENTREPRENEURSHIP 6/13/2016212H.M. Bwisa

 PLANNING FOR ENTREPRENEURSHIP GROWTH 6/13/2016213H.M. Bwisa

What is planning? 6/13/2016214H.M. Bwisa

Planning requires systematically thinking through and analyzing the project This process equips your mind with tools necessary to handle project problems. So beginning with planning assists you know what is not going or did not go as planned. Why would planning be useless? Why would planning by essential? Nothing ever goes exactly as planned. PLANNING: “In planning for battle I have always found that plans are useless, but planning is indispensable.” --- Dwight D. Eisenhower 6/13/2016215H.M. Bwisa

A process where an organization envisions its future and develops strategies to achieve that vision. Planning is to look into the future? Who doesn’t? 6/13/2016216H.M. Bwisa

WHAT IS THE VISION? WHERE ARE WE NOW? WHERE DO WE WANT TO GO? HOW DO WE GET WHERE WE WANT TO GO? HOW DO WE CHECK OUR MILESTONES HAVE BEEN REACHED? HOW DO WE KEEP THE MOMENTUM GOING? HIGH LEVEL BUSINESS OBJECTIVES ASSESSMENTS MEASURABLE TARGETS PROCESS IMPROVEMENT MEASUREMENTS AND METRICS THE BUSINESS PLANNING PROCESS 6/13/2016217H.M. Bwisa

1.An Organizational Vision 2.Functional Mission Statement 3.SWOT Analysis 4.Driving Forces 5.Organizational Values 6.Strategic Profiles that Meets the Vision 7.Current Performance Levels 8.Measuring Gaps 9.Goals to Close Gaps 10.Annual Operating Plans 6/13/2016218H.M. Bwisa

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6/13/2016220H.M. Bwisa

The circular flow of income The interdependence of goods markets and factor markets

FIRMS (suppliers of goods and services, demanders of factor services) HOUSEHOLDS (demanders of goods and services, suppliers of factor services) The interdependence of goods and factor markets 6/13/2016222H.M. Bwisa

Q1Q1 P1P1 QF2QF2 PF2PF2 Q2Q2 P2P2 PF1PF1 QF1QF1 D2D2 D2D2 The interdependence of goods and factor markets P Q P Q£ £ ££ Factor services Goods Factor services S S D1D1 D1D1 (1) Consumer demand (1) Consumer demand (4) Factor supply (4) Factor supply (3) Factor demand (3) Factor demand (2) Producer supply (2) Producer supply O O Multiplier effect 6/13/2016223H.M. Bwisa

The circular flow of income Consumption, injections, withdrawals and equilibrium

Factor payments Factor payments Consumption of domestically produced goods and services (C d ) Consumption of domestically produced goods and services (C d ) The circular flow of income Firms Households 6/13/2016225H.M. Bwisa

Factor payments Factor payments Consumption of domestically produced goods and services (C d ) Consumption of domestically produced goods and services (C d ) Investment (I) Government expenditure (G) Government expenditure (G) Export expenditure (X) Export expenditure (X) BANKS, etc Net saving (S) Net saving (S) GOV. Net taxes (T) Net taxes (T) ABROAD Import expenditure (M) Import expenditure (M) The circular flow of income WITHDRAWALS INJECTIONS 6/13/2016226H.M. Bwisa

Key terms… Injections = I + G + X Withdrawals = S + T + M

Circular Flow of Income – what if…. What if Injections* are greater than withdrawals? *Injections = I + G + X growth 6/13/2016228H.M. Bwisa

What if withdrawals* are greater than Injections? * Withdrawals = S + T + M collapse 6/13/2016229H.M. Bwisa

Government Macro Economic policies…  Look at managing injections and withdrawals to allow a positive economic growth of 2% per year.  The Govt can achieve this either by  reducing withdrawals  or by increasing injections 6/13/2016230H.M. Bwisa

What is growth? Development from a lower or simpler to a higher or more complex form; evolution. An increase, as in size, number, value, or strength; extension or... 6/13/2016231H.M. Bwisa

Growth Theories Neoclassical Model--Solow (1956, 1957) The Three Central Assumptions – Constant Returns To Scale – Perfect Competition – Exogenous Technological Change Role Of Investment Summarized By Two Equations: Production Function and Capital Accumulation Production Function: Relationship Between Output, Technology and Capital and Labour Inputs Capital Stock Equation Relates Investment to Capital Accumulation 6/13/2016232H.M. Bwisa

Neoclassical Model Growth Determined By Accumulation Of Capital And Labour Along With Technical Change. Technical Change Is Calculated Residually – Is Assumed To Grow Regardless Of The Pace Of Accumulation In The Factors Of Production Accumulation Of Capital Will Directly Contribute To Economic Growth Based On Its Share Of Income 6/13/2016233H.M. Bwisa

New Growth Theory Endogenous growth theory is “an equilibrium model of endogenous technological change in which long-run growth is driven primarily by the accumulation of knowledge by forward-looking, profit-maximizing agents.” – Romer (1986). Spillovers Or Externalities Exist Because Knowledge Cannot Be Perfectly Patented Or Kept Secret 6/13/2016234H.M. Bwisa

New Growth Theory Three Drivers of Long-Term Growth Proposed: – Machinery and Equipment – Human Capital – Research and Development Hybrid Models with Two Or More Drivers Others Linked Openness To Trade With Capital Accumulation To Explain Economic Growth 6/13/2016235H.M. Bwisa

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. 6/13/2016236H.M. Bwisa

Growth by internal expansion – product differentiation – vertical integration – diversification Growth by external expansion: mergers and takeovers – horizontal mergers – vertical mergers – conglomerate mergers Growth Strategy 6/13/2016237H.M. Bwisa

National Growth  National Income = all incomes from FoP are added (from Firms to Households)  National Product = all g & s produced (by firms)  National Expenditure (AD) = all expenditure on output is added. 6/13/2016238H.M. Bwisa

Representing the national income at the beginning of the first year under consideration as Y 0 and the annual growth rate as g, in decimal not percentage terms, the growth formula becomes Y t = Y 0 (1 +g) t where Y is the level of national income at the end of period t. Since (1+g) 0 is equal to 1 the value of Y 0 is confirmed as Y 0 = Y 0 x 1. The sequence of values can be seen to be in geometric progression by substituting successive values of t as follows: Y 0, Y 0 (1+g), Y 0 (1+g) 2, Y 0 (1+g) 3, …, Y 0 (1+g) t, …. 6/13/2016239H.M. Bwisa

The Nature of Planning in Emerging Firms Most entrepreneurs’ planning for their ventures is informal and unsystematic. The need for formal, systematic planning arises when: – The firm is expanding with constantly increasing personnel size and market operations – A high degree of uncertainty exists – There is strong competition – There is a lack of adequate experience, either technological or business 6/13/2016241H.M. Bwisa

Strategic Planning – The formulation of long-range plans for the effective management of environmental opportunities and threats in light of a venture’s strengths and weaknesses. – Includes: Defining the venture’s mission Specifying achievable objectives Developing strategies Setting policy guidelines 6/13/2016242H.M. Bwisa

Strategic Planning (cont’d) Basic Steps in Strategic Planning: 1.Examine the internal and external environments of the venture (strengths, weaknesses, opportunities, threats). 2.Formulate the venture’s long-range and short-range strategies (mission, objectives, strategies, policies). 3.Implement the strategic plan (programs, budgets, procedures). 4.Evaluate the performance of the strategy. 5.Take follow-up action through continuous feedback. 6/13/2016243H.M. Bwisa

Figure 13.1 The Strategic Management Process Source: Michael A. Hitt, R. Duane Ireland, and Robert E. Hoskisson, Strategic Management: Competitiveness & Globalization, 8th ed. (Mason, OH: South-Western Publishing, 2009), 5. Reprinted with permission of South-Western, a division of Thomson Learning: www.thomsonrights.com. 6/13/2016244H.M. Bwisa

Key Dimensions Influencing a Firm’s Strategic Planning Activities Demand on strategic managers’ time Decision-making speed Problems of internal politics Environmental uncertainty The entrepreneur’s vision – Step 1:Commitment to an open planning process. – Step 2:Accountability to a corporate conscience. – Step 3:Establishment of a pattern of subordinate participation in the development of the strategic plan. 6/13/2016245H.M. Bwisa

The Lack of Strategic Planning Reasons for the Lack of Strategic Planning 1.Time scarcity 2.Lack of knowledge 3.Lack of expertise/skills 4.Lack of trust and openness 5.Perception of high cost 6/13/2016246H.M. Bwisa

The Value of Strategic Planning Findings of Strategic Planning Studies – Strategic planning is of value to a venture and that planning influences a venture’s survival. Benefits of Long-Range Planning – Cost savings – More efficient resource allocation – Improved competitive position – More timely information – More accurate forecasts – Reduced feelings of uncertainty – Faster decision making – Fewer cash-flow problems 6/13/2016247H.M. Bwisa

Strategic Planning Levels (cont’d) Strategic Planning Categories (Rue and Ibrahim) – Category I: No written plan – Category II: Moderately sophisticated planning – Category III: Sophisticated planning Results: More than 88% of firms with Category II or III planning performed at or above the industry average compared with only 40% of firms with Category I planning. All research indicates: – Firms that engage in strategic planning are more effective than those that do not. – The planning process, rather than merely the plans, is a key to successful performance. 6/13/2016248H.M. Bwisa

Fatal Visions in Strategic Planning Fatal mistakes that entrepreneurs fall prey to in their attempt to implement a strategy: – Fatal Vision #1:Misunderstanding industry attractiveness – Fatal Vision #2:No real competitive advantage – Fatal Vision #3:Pursuing an unattainable competitive position – Fatal Vision #4:Compromising strategy for growth – Fatal Vision #5:Failure to explicitly communicate the venture’s strategy to employees 6/13/2016249H.M. Bwisa

Figure 13.2 The Integration of Entrepreneurial and Strategic Actions Source: R. Duane Ireland, Michael A. Hitt, S. Michael Camp, and Donald L. Sexton, “Integrating Entrepreneurship and Strategic Management Actions to Create Firm Wealth,” Academy of Management Executive 15(1) (February 2001): 51. 6/13/2016250H.M. Bwisa

Strategic Positioning: The Entrepreneurial Edge Strategic Positions – Are often not obvious, and finding them requires creativity and insight. – Are unique positions that have been available but simply overlooked by established competitors. – Can help entrepreneurial ventures prosper by occupying a position that a competitor once held but has ceded through years of imitation and straddling. 6/13/2016251H.M. Bwisa

Table 13.1 Strategic Approaches: Position, Leverage, Opportunities Source: Reprinted by permission of Harvard Business Review from “Strategy as Simple Rules,” by Kathleen M. Eisenhardt and Donald N. Sull (January 2001): 109. Copyright © 2001 by the Harvard Business School Publishing Corporation; all rights reserved. PositionLeverageOpportunities Strategic LogicEstablish positionLeverage resourcesPursue opportunities Strategic StepsIdentify an attractive market Locate a defensible position Fortify and defend Establish a vision Build resources Leverage across markets Jump into the confusion Keep moving Seize opportunities Finish strong Strategic QuestionWhere should we be?What should we be?How should we proceed? Source Of AdvantageUnique, valuable position with tightly integrated activity system Unique, valuable, inimitable resources Key processes and unique simple rules Works Best InSlowly changing, well- structured markets Moderately changing, well- structured markets Rapidly changing, ambiguous markets Duration Of AdvantageSustained Unpredictable RiskIt will be too difficult to alter position as conditions change Company will be too slow to build new resources as conditions change Managers will be too tentative in executing on promising opportunities Performance GoalProfitabilityLong-term dominanceGrowth 6/13/2016252H.M. Bwisa

Figure 13.3 The Entrepreneurial Strategy Matrix: Independent Variables Source: Matthew C. Sonfield and Robert N. Lussier, “The Entrepreneurial Strategic Matrix: A Model for New and Ongoing Ventures.” Reprinted with permission from Business Horizons, May/June 1997, by the trustees at Indiana University, Kelley School of Business. 6/13/2016253H.M. Bwisa

Figure 13.4 The Entrepreneurial Strategy Matrix: Appropriate Strategies Source: Matthew C. Sonfield and Robert N. Lussier, “The Entrepreneurial Strategic Matrix: A Model for New and Ongoing Ventures.” Reprinted with permission from Business Horizons, May/June 1997, by the trustees at Indiana University, Kelley School of Business. 6/13/2016254H.M. Bwisa

Four Different Organisational Approaches to Change / Growth Prospectors: – Risk-takers, opportunity-seekers Defenders: – Keep existing products, protect market share Analyzers: – Build on strengths, look for add-on options Reactors: – Respond, don’t look for change (Miles and Snow (1978) used by Harrison 2003: 205; compare Ansoff matrix of product/market choices in Johnson, Scholes & Whittington 2005: 341) 6/13/2016255H.M. Bwisa

Growth Strategies Internal – Market penetration – Market development – Product or service development – Vertical Integration (also external) External – Horizontal Integration – Related acquisitions – Unrelated acquisitions – Joint venture 6/13/2016256H.M. Bwisa

Internal and External Growth Strategies (1 of 2) Internal Growth StrategiesExternal Growth Strategies Involve efforts taken within the firm itself, such as new product development, other product-related strategies, and international expansion. Rely on establishing relationships with third parties, such as mergers, acquisitions, strategic alliances, joint ventures, licensing, and franchising. 6/13/2016257H.M. Bwisa

Internal and External Growth Strategies (2 of 2) Internal and External Growth Strategies 6/13/2016258H.M. Bwisa

Internal Growth Strategies New product development International expansion Other product- related strategies 6/13/2016259H.M. Bwisa

Advantages and Disadvantages of Internal Growth Strategies AdvantagesDisadvantages Incremental, even-paced growth Provides maximum control Preserves organizational culture Encourages internal entrepreneurship Allows firms to promote from within Slow form of growth Need to develop new resources Investment in a failed internal growth strategy can be difficult to recoup Adds to industry capacity 6/13/2016260H.M. Bwisa

New Product Development (1 of 2) New Product Development – Involves the creation and sale of new products (or services) as a means of increasing firm revenues. – In many fast-paced industries, new product development is a competitive necessity. For example, the average product life cycle in the computer software industry is 14 to 16 months. Because of this, to remain competitive, software companies must always have new products in their pipeline. 6/13/2016261H.M. Bwisa

New Product Development (2 of 2) Find a need and fill it Develop products that add value Get quality right and pricing right Focus on a specific target market Conduct ongoing feasibility analysis Keys to Effective New Product and Service Development Inadequate feasibility analysis Overestimation of market potential Bad timing Inadequate advertising and promotions Poor service Common Reasons That New Products Fail 6/13/2016262H.M. Bwisa

Other Product-Related Strategies (1 of 2) Product-Related Strategies Product Strategy Description Improving an Existing Product or Service Increasing the Market Penetration of an Existing Product or Service Often, a business can increase its revenue by improving an existing product or service—enhancing quality, making it larger or smaller, making it more convenient to use, or making it more up-to-date. A market penetration strategy seeks to increase the sales of a product or service through greater marketing efforts or through increased production capacity and efficiency. 6/13/2016263H.M. Bwisa

Other Product-Related Strategies (2 of 2) Product-Related Strategies (continued) Product Strategy Description Extending Product Lines Geographic Expansion A product line extension strategy involves making additional versions of a product so that it will appeal to different clientele or making related products to sell to the same clientele. Many entrepreneurial businesses grow by simply expanding from their original location to additional geographic sites. 6/13/2016264H.M. Bwisa

International Expansion (1 of 3) International Expansion – Another common form of growth for entrepreneurial firms. – International new ventures are businesses that, from their inception, seek to derive significant competitive advantage by using their resources to sell products or services in multiple countries. – Although there is vast potential associated with selling overseas, it is a fairly complex form of growth. 6/13/2016265H.M. Bwisa

International Expansion (2 of 3) Foreign-Market Entry Strategies – Exporting Producing a product at home and shipping it to a foreign market. – Licensing An arrangement whereby a firm with the proprietary rights to a product grants permission to another firm to manufacture that product for specified royalties or other payments. – Joint Ventures Involves the establishment of a firm that is jointly owned by two or more otherwise independent firms. – Fuji-Xerox is a joint venture between an American and a Japanese company. 6/13/2016266H.M. Bwisa

International Expansion (3 of 3) Foreign-Market Entry Strategies – Franchising An agreement between a franchisor (a company like McDonald’s Inc. that has an established business method and brand) and a franchisee (the owner of one or more McDonald’s restaurants). – Turnkey Project A contractor from one country builds a facility in another country, trains the personnel that will operate the facility, and turns over the keys to the project when it is completed and ready to operate. – Wholly Owned Subsidiary A company that has made the decision to manufacture a product in a foreign country and establish a permanent presence. 6/13/2016267H.M. Bwisa

External Growth Strategies Mergers and acquisitions Strategic alliances and joint ventures Licensing Franchising (covered in Chapter 15) 6/13/2016268H.M. Bwisa

Advantages and Disadvantages of External Growth Strategies AdvantagesDisadvantages Reducing competition Getting access to proprietary products Gaining access to new products and markets Access to technical expertise Access to an established brand name Economies of scale Diversification of business risk Incompatibility of top management Clash of corporate cultures Operational problems Increased business complexity Loss of organizational flexibility Antitrust implications 6/13/2016269H.M. Bwisa

Mergers and Acquisitions (1 of 2) Mergers and Acquisitions – Many entrepreneurial firms grow through mergers and acquisitions. An acquisition is the outright purchase of one firm by another. A merger is the pooling of interests to combine two or more firms into one. Purpose of Acquisitions – Acquiring another business can fulfill several of a company’s needs, such as: Expanding its product line. Gaining access to distribution channels. Achieving competitive economies of scale. 6/13/2016270H.M. Bwisa

Mergers and Acquisitions (2 of 2) The Process of Completing the Acquisition of Another Firm 6/13/2016271H.M. Bwisa

Licensing (1 of 2) Licensing – Is the granting of permission by one company to another company to use a specific form of its intellectual property under clearly defined conditions. – Virtually any intellectual property a company owns that is protected by a patent, trademark, or copyright can be licensed to a third party. Licensing Agreement – The terms of a license are spelled out by a licensing agreement. 6/13/2016272H.M. Bwisa

Licensing (2 of 2) Types of Licensing Type of Licensing Description Technology Licensing Merchandise and Character Licensing Is the licensing of proprietary technology that the licensor typically controls by virtue of a utility patent. Is the licensing of a recognized trademark or brand that the licensor typically controls through a registered trademark or copyright. 6/13/2016273H.M. Bwisa

Strategic Alliances (1 of 2) Strategic Alliances – A strategic alliance is a partnership between two or more firms developed to achieve a specific goal. – Strategic alliances tend to be informal and do not involve the creation of a new entity. – Participating in strategic alliances can boost a firm’s rate of product innovation and foreign sales. 6/13/2016274H.M. Bwisa

Strategic Alliances (2 of 2) Types of Strategic Alliances Type of AllianceDescription Technology Alliances Marketing Alliances Typically match a company with a distribution system with a company that has a product to sell. Feature cooperation in research and development, engineering, and manufacturing. 6/13/2016275H.M. Bwisa

Joint Ventures (1 of 2) Joint Ventures – A joint venture is an entity created when two or more firms pool a portion of their resources to create a separate, jointly owned organization. – A common reason to form a joint venture is to gain access to a foreign market. In these cases, the joint venture typically consists of the firm trying to reach a foreign market and one or more local partners. 6/13/2016276H.M. Bwisa

Joint Ventures (2 of 2) Types of Joint Ventures Type of Joint Venture Description Scale Joint Venture Link Joint Venture In a link joint venture, the position of the parties is not symmetrical, and the objectives of the partners may diverge. For example, many of the joint ventures between food companies provide one partner access to distribution channels and the other partner more products to sell. In a scale joint venture, the partners collaborate at a single point in the value chain to gain economies of scale in production or distribution. This type of joint venture can be a good vehicle for developing new products or services. 6/13/2016277H.M. Bwisa

Advantages and Disadvantages of Participating in Strategic Alliances and Joint Ventures AdvantagesDisadvantages Gain access to a particular resource Economies of scale Risk and cost sharing Gain access to a foreign market Learning Speed to market Neutralizing or blocking competitors Loss of proprietary information Management complexities Financial and organizational risks Risk becoming dependent on a partner Partial loss of decision autonomy Partners’ cultures may clash Loss of organizational flexibility 6/13/2016278H.M. Bwisa

To Grow Or Not To Grow Market Factors That Affect Growth : – Size and Characteristics – Competition – Intellectual-property rights – Predictability 6/13/2016279H.M. Bwisa

To Grow Or Not To Grow (continued) Management factors that affect growth – Ability to adapt and change business over time even of the business is successful 6/13/2016280H.M. Bwisa

Stages of Growth 6/13/2016281H.M. Bwisa

To Grow Or Not To Grow (continued) Stages of growth in a new venture – Start-up success – Initial growth – Rapid growth – Stable growth and maintenance 6/13/2016282H.M. Bwisa

To Grow Or Not To Grow (continued) Problems with growth – Inability to understand/respond to the business’s environment Framework for growth – Scan and assess the environment – Plan the growth strategy – Hire for growth – Create a growth culture – Build a strategy advisory board 6/13/2016283H.M. Bwisa

Growth Strategies Intensive growth strategies – Exploit opportunity in the current market Integrative growth strategies – Exploit growth within the industry as a whole Diversification strategies – Exploit opportunities outside the current market/industry Global strategies – Exploit opportunities in the international arena 6/13/2016284H.M. Bwisa

Growth Strategies for Entrepreneurs 6/13/2016285H.M. Bwisa

Strategic Innovation New concepts are not generally attractive to established companies in the early stages because – It breaks the mold – The early markets are generally small with low margins – Large companies typically wait to see how the new model fares in the market and then they either change their model or attempt to acquire the entrepreneur’s company. 6/13/2016286H.M. Bwisa

Intensive Growth Strategies Market Penetration – Increase sales through effective marketing strategies within the current target market Market Development – Expand sales through expanding geographic representation 6/13/2016287H.M. Bwisa

Intensive Growth Strategies (continued) Market Development (continued) Franchising Licensing- steps for a successful transaction – Decide exactly what will be licensed – Understand/define the benefits the buyer will receive from the transaction – Conduct thorough market research – Conduct due diligence on potential licensees – Determine the value of the license agreement – Create a license agreement 6/13/2016288H.M. Bwisa

Intensive Growth Strategies (continued) Product Development – Increase sales through new products/services 6/13/2016289H.M. Bwisa

Integrative Growth Strategies (continued) Vertical Integration Strategies – Growing forward/backward within the distribution channel Horizontal Integration Strategies – Buying up competitors/starting a competing business within the current industry Modular or Network Strategies – Focus on core competencies and outsource the rest 6/13/2016290H.M. Bwisa

Diversification Growth Strategies Investing in or acquiring products/businesses which are outside the core competencies and industries Use when all other growth strategies within the current market/industry have been exhausted – Synergistic strategy – Acquire products/services unrelated to the core – Conglomerate diversification-acquiring businesses that are unrelated to the company’s current business 6/13/2016291H.M. Bwisa

Growing by Going Global Reasons to go global early in development – Product lives are short due to rapid technology changes – R&D is expensive and must be spread across many markets – Competition and saturated markets 6/13/2016292H.M. Bwisa

Growing by Going Global (continued) Characteristics of successful globalization – A global vision from the start – Internationally experienced managers – Strong international business networks – Preemptive technology – A unique intangible asset – Closely linked product/service extensions – A closely coordinated organization on a world- wide basis 6/13/2016293H.M. Bwisa

Growing by Going Global (continued) Finding the best global market – Information sources International Trade Statistics yearbook of the United States International Trade Administration offices in Washington, D.C. and at district levels Department of Commerce 6/13/2016294H.M. Bwisa

Growing by Going Global (continued) Export Financing sources – Bank financing – Internal cash flow – Venture capital or private investor capital – Prepayment from foreign client – Down payment from foreign client – Progress payments from foreign client Assurances – The Import-Export Bank 6/13/2016295H.M. Bwisa

Growing by Going Global (continued) Foreign agents, distributors, and trading companies – Choosing an intermediary Due diligence work to assure the right partner – Choosing a freight forwarder Handles all aspects of delivering the product 6/13/2016296H.M. Bwisa

Week 4 6/13/2016297H.M. Bwisa

 QUALITY AND ENTREPRENEURSHIP 6/13/2016298H.M. Bwisa

What is quality? 6/13/2016299H.M. Bwisa

Quality: The Concept No single accepted definition Quality is relative, not absolute Quality is dynamic, not static Quality is a journey, not a destination 6/13/2016300H.M. Bwisa

Quality: definitions (Concise Oxford Dictionary, 1979) degree of excellence faculty, skill, accomplishment high rank or social standing (logic) being affirmative or negative distinctive character (of sound, voice etc.) concerned with maintenance of high quality (quality control) 6/13/2016301H.M. Bwisa

Quality: definition (Bergman and Klefsjö, 1994) “The quality of a product (article or service) is its ability to satisfy the needs and expectations of the customers” „Quality in the totalness of attributes concerning their ability to fulfill defined and preconditioned demands.“ (Norm DIN EN ISO 8402) 6/13/2016302H.M. Bwisa

Quality: definition (ISO 8402/ISO 9000) “Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs” 6/13/2016303H.M. Bwisa

Technical Definition of Quality High Quality = high technical power + high resistance + high durability + faultless function + no mistakes 6/13/2016304H.M. Bwisa

Tasks of Quality Management : to determine the usability of a product/service, to form and constantly improve, as well as to guarantee its flawlessness 6/13/2016305H.M. Bwisa

Management Quality management Quality planningQuality improvement Quality controlQuality assurance Customer/ client Quality management system Tasks of Quality Management 6/13/2016306H.M. Bwisa

Western Viewpoint Quality is functional – something that works Indian Viewpoint Quality is a metaphysical Concept – beyond functionality Exclusive Inclusive ‘Becoming’ ‘Being’ 6/13/2016307H.M. Bwisa

Western Influence Parameter of Quality in India is “Becoming” Risk One dimensional man/woman Cognitively rich, mentally and spiritually poor 6/13/2016308H.M. Bwisa

Scope of quality management Quality management is particularly important for large, complex systems. The quality documentation is a record of progress and supports continuity of development as the development team changes. For smaller systems, quality management needs less documentation and should focus on establishing a quality culture. 6/13/2016309H.M. Bwisa

Quality management activities Quality assurance – Establish organisational procedures and standards for quality. Quality planning – Select applicable procedures and standards for a particular project and modify these as required. Quality control – Ensure that procedures and standards are followed by the software development team. Quality management should be separate from project management to ensure independence. 6/13/2016310H.M. Bwisa

Quality planning A quality plan sets out the desired product qualities and how these are assessed and defines the most significant quality attributes. The quality plan should define the quality assessment process. It should set out which organisational standards should be applied and, where necessary, define new standards to be used. 6/13/2016311H.M. Bwisa

Summary of Quality: It has to be considered, that the quality of a product or a service can not be generally appointed, but is measured by the assessment of use by the customer. This assessment can be done according to various criteria which again can be of very different importance according to the situative context, the cultural characteristics or the nature of the product itself. Therefore the customer is king hence the prevalence of the marketing concept in entrepreneurship 6/13/2016312H.M. Bwisa

M R A K E T I N G MEASURE CUSTOMER NEEDS ASSEMBLE THE PRODUCT RATE THE PRODUCT KITE THE PRODUCT EXCHANGE THE PRODUCT TELECAST EMERGING NEEDS INNOVATE/IMPROVE THE PRODUCT NURTURE THE INNOVATION GROW /GRADUATE TO A NEW LEVEL P eople P roduct P rice P romotion P lace P rojection P ep-up P ilot P rofiteer BWISA’s 9 Ps of MARKETING 6/13/2016313H.M. Bwisa

Marketing Process Stage Bwisa’s 9 Ps of marketing Major Activities Measure consumers needs People Consumer needs assessment; Market size; study; Market segments; Market share assessment; Competitor studies Assemble product Product  Designing; Developing; Quality checks; Packaging Rate product Pricing  Price level assessment; Credit terms; Payment terms; Discounts Kite product Promotion  Advertising; Publicity; Public relations; Sales promotion Exchange product Place  Distributors; Retailers; Locations; Inventory; Transport Tele-cast needs Projection  Study of emerging consumer needs, markets and competitors Innovate/Improve Pep up  Re-design; Re-train; Re-target Nurture product Pilot  Pilot-test; Re-launch Grow/Graduate Profiting New break-even analysis; Rehabilitation; Expansion; Diversification; New markets 6/13/2016314H.M. Bwisa

Quality Gurus W Edwards Deming Joseph Juran Philip Crosby Shigeo Shingo Kaoru Ishikawa Yoshio Kondo Taiichi Ohno READ ABOUT THEM & OTHERS AND RELATE THEIR TEACHINGS TO ENTREPRENEURSHIP 6/13/2016315H.M. Bwisa

 POLICY ISSUES IN ENTREPRENEURSHIP 6/13/2016316H.M. Bwisa

Definition of Entrepreneurship Policy Rules, regulations aimed at creating an environment & support system to foster the emergence of new entrepreneurs & the start-up and early stage growth of new firms Policy measures – Aimed at the pre-start, the start-up and post- start stages of the entrepreneurial process – Designed and delivered to address the areas of motivation, opportunity and skill – With the primary objective of increasing the supply of entrepreneurs and new firms t-n to t+42 months Entrepreneurship policy 6/13/2016317H.M. Bwisa

E-policy focuses on improving culture and climate for entrepreneurial activity Objectives broader than for SME policy Shift from firms to individuals Shift from demand side to supply side Embraces 4 areas not routinely found in SME policy – education, entry/exit issues, promotion, support for nascents and starters Infancy stage; moving rapidly Need for more examination of E-policy formulation in variety of contexts 6/13/2016318H.M. Bwisa

6/13/2016319H.M. Bwisa

Two policies Encouraging phase Birth phaseStart phase After-start phase (upon 42 months) Growth management phase Entrepreneurship policy Promotion of new innovative SMEs policy 6/13/2016320H.M. Bwisa

The entrepreneurship and SME policies and the business life cycle PRE START-UP STAGE START-UP STAGE GROWTH, MATURITY EXPANSION STAGES ENTREPRENEURSHIP POLICY SME POLICY TIME AND/OR VOLUME OF PRODUCTION COST, REVENUE, PROFIT OPPORTUNITY AWARENESS, DESIRE, WILLINGNESS, ABILITY TO OWN A BUSINESS ABILITY AND SUPPORT TO START AND MANAGE AN OWN BUSINESS Break even point Business life cycle Idea birth Idea development CONCEPTUALIZED BY BWISA H. M. 2006 6/13/2016321H.M. Bwisa

6/13/2016322H.M. Bwisa

Barriers to entry Skill Motivation Entrepreneurship Policy Foundations Desirability Feasibility Social value Munificent environment – climate AND culture ‘Quiet disincentives’ Access to resources Opportunity Business skills Technical skills Entrepreneurial skills 6/13/2016323H.M. Bwisa

Objectives -Entrepreneurial climate and culture -Encourage entrepreneurship -Favorable attitudes to entrepreneurship -Increase business start-up rate; the creation of new businesses; the number of new firms; the number of entrepreneurs MotivationOpportunity Reduction of barriers to entry, obstacles (time & cost), tax changes, other regulations Start-up financing; loan guarantees; seed capital; micro-loans Business start- up support (incubators, mentoring, first- stop shops, networks, start- up portals) Promotion of an entrepreneurship culture; promotion of enterprise; reduce stigma of failure Entrepreneurshi p education in the schools Skills Target underrepresented groups and techno-starters Framework of Entrepreneurship Policy Measures 6/13/2016324H.M. Bwisa

Motivation is an extremely important foundation for entrepreneurship development 6/13/2016325H.M. Bwisa

6/13/2016326H.M. Bwisa

What is Motivation? The term ‘motivation’ has been derived from the word ‘motive’. Motive may be defined as an inner state of our mind that moves or activates or energizes and directs our behavior towards our goals. Motives are expressions of a person’s goals or needs. 6/13/2016327H.M. Bwisa

Motivation may be defined as The process that motivates a person into action and induces him to continue the course of action for the achievement of goals. It is an ongoing process because human needs/goals are never completely satisfied. According to Dalton E McFarland: “Motivation refers to the way in which urges, drives, desire and striving, aspirations or needs direct, control or explain the behavior of human being.” 6/13/2016328H.M. Bwisa

The Process of Motivation Basic Elements MotiveBehaviorGoal 6/13/2016329H.M. Bwisa

Intention (Motive) Effort Barriers (External) Barriers (Internal) Help (Assistance) Expectation (+ve/-ve) Goal Feelings (+ve/-ve) Relationship between Motive, Behavior & Goal Activity Behaviour 6/13/2016330H.M. Bwisa

6/13/2016331H.M. Bwisa

Motivations Theories: Maslow’s theory is based on the human needs. These needs are classified into a sequential priority from the lower to higher. According to him, all human needs are classified into the five need-clusters as shown in the following: Physiological Need Biological Needs. Safety Need Need to be financially secured. Social Need Need to interact with other people. Esteem Need Need for self-respect and respect for others. Self-actualization Need Need to display the full range of competencies. 6/13/2016332H.M. Bwisa

Slide#8 6/13/2016333H.M. Bwisa

Slide#9 McClelland’s Needs Theory: According to David McClelland, a person acquires three types of needs as a result of one’s life experience. These three needs are: Need for Affiliation Need for Power Need for Achievement 6/13/2016334H.M. Bwisa

David McClelland's Needs-Based Motivational Model Need for achievement (n-ach) – attainment of realistic but challenging goals, and advancement in the job. Feedback as to achievement and progress, and a sense of accomplishment. Need for authority and power (n-pow) – influential, effective and to make an impact,personal status and prestige. Need for affiliation (n-aff) – friendly relationships and interaction with other people Need for security/safety (n-sec) – Comfortable with secure employment and unwillingness to take higher risk 6/13/2016335H.M. Bwisa

Motivating Factors: Entrepreneurs are motivated by two factors: Internal /intrinsic Factors:  Personal goals  Need for achievement  Ambition  Desire to do something new  Educational background  Occupational background or experience. External/extrinsic Factors:  Compulsion  Support  Successful entrepreneurs  Access to capital  Government assistance and support  Availability of labor and raw materials  Encouragement from big business houses  Promising demand for the product. 6/13/2016336H.M. Bwisa

Slide#12 Motivational factors by another study: Factors Intrinsic to Entrepreneurs: Enterprising Attitude Training/ education in such kind of production Previous experience in the same or related line. Factors Extrinsic to Entrepreneurs: Shortage of demand for product Government and Institutional Assistance. Profit earned by friends in similar concern Contact with others Unsound units available at cheap price. 6/13/2016337H.M. Bwisa

Achievement Motivation The need for achievement plays an important role in making an entrepreneur successful. It is an inner spirit that activates an entrepreneur to strive for success. In simple terms, need for achievement Is the desire to do well. There is empirical evidences to support the hypothesis that need for achievement contributes to entrepreneurial success. Hence, in order to develop entrepreneurship in an economy there is need for developing achievement motivation among the populace 6/13/2016338H.M. Bwisa

Behavior of Achievement- Motivated People A chievement is more important than material or financial reward. A chieving the aim or task gives greater personal satisfaction than receiving praise or recognition F inancial reward is regarded as a measurement of success, not an end in itself. S ecurity is not prime motivator, nor is status. 6/13/2016339H.M. Bwisa

Behavior of Achievement- Motivated People F eedback is essential, because it enables measurement of success, not for reasons of praise or recognition. A chievement-motivated people constantly seek improvements and ways of doing things better. A chievement-motivated people will logically favor jobs and responsibilities that naturally satisfy their needs, i.e. offer flexibility and opportunity to set and achieve goals, e.g., sales and business management, and entrepreneurial roles. 6/13/2016340H.M. Bwisa

Behavior of Achievement- Motivated People C apacity to set high personal but obtainable goals C oncern for personal achievement rather than the rewards of success T he desire for job-relevant feedback (How well am I doing?) rather than for attitudinal feedback (How well do you like me?) 6/13/2016341H.M. Bwisa

A Model of Entrepreneurial Motivation 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 Source: Naffziger, Hornsby and Kuratko, (1994) Internal Internal/External 6/13/2016342H.M. Bwisa

Entrepreneurial Motivation & Entrepreneurship Process Source: Shane, et.al. (2003) 6/13/2016343H.M. Bwisa

Entrepreneurial Behavior & Favorable Business Outcome 6/13/2016344H.M. Bwisa

National entrepreneurial Intentions Model If you make the population have a perceived net desirability of self- employment (NDSE) and … You create a tolerance for risk (TR) among the populace and … You make the population have a perceived feasibility (self-efficacy) of self- employment (SE) Then you would have created Self-employment intentions Source: adapted by Bwisa from Gerry Segal, Dan Borgia & Jerry Schoenfeld (2005) 6/13/2016345H.M. Bwisa

Source: Martyn Roberton et.al. (2003) Factors Critical to Start-Up & Reasons for Not Starting-Up 6/13/2016346H.M. Bwisa

Factors Critical to Start-Up & Reasons for Not Starting-Up Source: Martyn Roberton et.al. (2003) 6/13/2016347H.M. Bwisa

POLICYDIRECT FOCUS DIRECT SUPPORT FOR/OVER LAP WITH E-SHIP POLICY INDIRECT SUPPORT FOR/OVERLAP WITH E-SHIP POLICY E-ship Encouragement of nascent and new entrepreneurs SME Protection and strengthening of existing SMEs Fostering of start-up and early growth firms Innovation Transformation of knowledge into economic value, diffusion and (mainly by universities) Fostering of innovative entrepreneurs and spin- offs University – industry firm Collaboration S & T Investment in R&D and creation of knowledge (mainly by R&D institutions Transferring of technology to existing firms 1.Support of SME policy via diffusion of technology among SMEs 2. University-industry firm Collaboration 6/13/2016349H.M. Bwisa

Policy convergence and integration 6/13/2016350H.M. Bwisa

Framework of Entrepreneurship policy areas Policy Objectives Entrepreneurshipeducation Reduction of entry/exit barriers Start-up financing Create dynamic start-up market for entries and exits Stimulate climate and culture for entrepreneurship Stimulate more entrepreneurial activity; new businesses; new entrepreneurs Target group measures Start-up support (enterprise & SB centres; networks ) Promotion of entrepreneurship 6/13/2016351H.M. Bwisa

Framework of Innovation policy areas Policy Objectives S&T; entrepreneurship education Incubators,, TTOs, cluster networks R&D investment Equity financing; risk capital Increase R&D intensity; foster business innovation Stimulate climate and culture for innovation Stimulate development, commercialization; innovative new firms; spin-offs; new products; technology take-up Reduction of entry/exit barriers; IP rules Target group measures Promotion of innovation 6/13/2016352H.M. Bwisa

YOUR RESEARCH IMPERATIVE Examine policies oriented to start-up and growth of entrepreneurial firms AND policies oriented to producing innovation – Policies, institutional arrangements for policy implementation, scope of policy measures, policy and performance indicators Identify nexus between innovation policy and entrepreneurship policy, policy gaps and opportunities Identify good practices in the integration of these policy domains leading to more positive performance outcomes Draw lessons learned that can be applied in other countries Consider impact of “context” on appropriate policy orientation (e.g., level of economic development – Sweden vs China) 6/13/2016353H.M. Bwisa

SME & entrepreneurial vitality Economic Outcomes E-P ‘Context’ Description – 31 variables Demographics and industrial structure – pop/growth and age, education, net immigration, service sector/GDP, government taxation/GDP, public sector share of employment Opportunities for entrepreneurship Structure Economic performance – GDP/capita; GDP growth, LF participation rate, unemployment rate, exports Density - % of business owners; SMEs per 1000 pop; nascent %; self- employment %; SME share of employment; % micro-firms and employment share, female entrepreneurs ‘Dynamic’ – annual entries, exits; growth in no. of SMEs, SME employment Favorable context 6/13/2016354H.M. Bwisa

Innovation vitality Economic Outcomes I-P ‘Context’ Description – add variables Demographics and industrial structure – pop/growth; education, net immigration, service sector/GDP, government taxation/GDP, public share of employment, R&D intensity (BERD, GERD, URD) Opportunities for innovation Structure Economic performance – GDP/capita; GDP growth, LF participation rate, unemployment rate, exports (of high tech products) Density - % of business owners; S&T graduates per 1000 pop; patents per M/pop; no. of spin-offs; employment in tech sectors; % innovative SMEs ‘Dynamic’ – annual entries, exits; % growth firms; sales of new-to- firm & new-to-market products Favorable context 6/13/2016355H.M. Bwisa

ENTREPRENEURSHIP AND SMES 6/13/2016356H.M. Bwisa

The global view: SME contribution to employment and GDP SME contribution to employment and GDP (median values) For government, SMEs contribute to wealth creation and generate tax revenues. SMEs constitute an important source of local supply and service provision to larger corporations. SMEs have extensive local knowledge of resources, supply patterns and purchasing trends. In society, they are an important source of employment. In business, SMEs represent an important source of innovation. Source: World Bank 6/13/2016357H.M. Bwisa

The persistance of the informal economy Average size of the informal economy, in % of official GDP Source: Schneider, Friedrich. 2005. "Size and Measurement of the Informal Economy in 100 Countries around the world. " Working Paper. 2005-13. Center for Research in Economics, Management and the Arts, Johannes Kepler University of Linz. Informality is a matter of degree In developing countries, the size of the informal economy has been increasing as a percentage of official GDP. Many SMEs choose to remain informal because the costs and procedural burden of joining the formal economy outweigh the benefits. 6/13/2016358H.M. Bwisa

What are the needs? If many entrepreneurs dip into their personal savings when financing a business, what are the implications when personal savings are scarce? Greater actual risk? Fewer business opportunities? Less investment for future growth? Slower overall business growth? When income does not fully cover even daily necessities, everything else becomes a luxury. Thus there are a great many things that the poor cannot afford to buy. Tools, materials, and upkeep for income-generating assets like transportation or farm equipment are all expenses that are routinely left out of the family budget. -World Resources Institute (2005). "Life on a Dollar a Day" Small and medium enterprises firms have more financing barriers than large firms. 1 Higher interest rates Less access to long-term loans, foreign banks, non-equity, and export finance More bank paperwork 6/13/2016359H.M. Bwisa

Starting a business in developing countries "Starting a business is a leap of faith even in the best of circumstances. Governments should encourage the daring." World Bank. 2006. Doing Business. Business registration for SMEs needs to be quick, easy and of reasonable cost. 6/13/2016360H.M. Bwisa

Number of days to start a business Source: World Bank. 2007. Doing Business. 6/13/2016361H.M. Bwisa

What are the challenges? Burdensome regulatory frameworks Lack of tax incentives and subsidies Absence of investor-friendly environment Lack of access to finance Lack of capacity-building programs and inadequate provision of vocational training 6/13/2016362H.M. Bwisa

What can business do to enable enterprise development? Build supply chain capacity Technology transfers, investment in infrastructure Strengthen local distribution networks Improve standards and environmental performance Provide access to financial services 6/13/2016363H.M. Bwisa

Key messages For governments, an effective policy framework for SMEs can: Create a healthier and more diverse economy Create employment opportunities and increase tax revenues Formalize SME business activity Contribute to social stability Encourage environmental stewardship For business, investing in SMEs can: Lead to the creation of effective business partners Strengthen local supply chain capacity Reduce costs by sourcing locally and lowering transportation costs Strengthen distribution networks and open up new markets Strengthen the business license to operate 6/13/2016364H.M. Bwisa

SMEs AND ENTREPRENEURIAL VENTURES 6/13/2016365H.M. Bwisa

MSE = MICRO AND SMALL ENTERPRISES SME = SMALL AND MEDIUM ENTERPRISES MSME = MICRO, SMALL AND MEDIUM ENTERPRISES 6/13/2016366H.M. Bwisa

Eight reasons why many small businesses fail. 6/13/2016367H.M. Bwisa

ENTREPRENEURSHIP DEVELOPMENT IN KENYA 6/13/2016368H.M. Bwisa

 ENTREPRENEURSHIP DEVELOPMENT FRAMEWORK  HISTORICAL PERSPECTIVES – ETHNICITY AND E-SHIP IN KENYA  ENTREPRENEURIAL OPPORTUNITIES IN KENYA  BARRIERS TO ENTREPRENEURSHIP DEVELOPMENT IN KENYA 6/13/2016369H.M. Bwisa

Entrepreneurship Framework Entrepreneurship Determinants Market Conditions Technology Infrastructures Finance Access to Markets Culture Macro-Economic Environment Entrepreneurship Impact Policy Objectives Poverty reduction Job Creation Economic Growth Reduction of the informal sector 6/13/2016 370

Entrepreneurship Performance: Demand and Supply Model External Factors Influencing performance Demand Opportunities Entrepreneurship Performance Supply Abilities Incentives Culture/Motivation Framework Conditions Firm Creation High-growth firms Business Density Financial Capital Social/Human Capital Technology Transfer Access to Market 6/13/2016371H.M. Bwisa

Traces of a trajectory of an evolution of a semblance of entrepreneurship in post independent Kenya  Kenyatta’s government (1963-1978) introduced import substitution and encouraged the private sector  Moi’s government (1978 – 2002) introduced export orientation and entrepreneurship education and a dedication to making the private sector the engine of growth in the economy. Policies aimed at encouraging SMEs can be found in a number of sessional papers  Kibaki’s government (2002 – 2012) established youth and women development funds and a Vision 2030 to guide the industrialization path  No concrete entrepreneurship policy in the three eras – only SME policy – refer to e-policy diagrammes discussed earlier. 6/13/2016372H.M. Bwisa

Challenges facing Kenyan Entrepreneurs Underdeveloped entrepreneurial culture Lack of entrepreneurship education at all levels Inadequate access to finances Low incomes and corresponding low savings culture Little initiative by banks to be creative (Equity bank stands out positively) Poor differentiation between MSE and entrepreneurship policies Inconsistent government initiatives Political lip service to entrepreneurship Poor access to information 6/13/2016373H.M. Bwisa

S L E P T & Co P SOCIO-CULTURAL : some aspects hinder e-ship development LEGAL-REGULATORY: not yet entirely conducive e.g. taxes ECONOMIC: poor money supply, low purchasing power etc POLITICAL: lots of rhetoric and politicking TECHNOLOGICAL: inadequate policy e.g. Support for local inventors/innovators COMPETITIVE: destructive e.g. KBL/Keroche PHYSICAL: inadequacies DOMAINS OF KENYA’S ENTREPRENEURSHIP DEVELOPMENT ENVIRONMENT 6/13/2016374H.M. Bwisa

Factors favouring entrepreneurship  Political stability  Macro-economic stability  Secure property rights  Ease of starting a business  Free flow of information  The rule of law and mechanism for contract enforcement  Availability of human capital  Access to finance  Size of the market in terms of numbers and income levels  Regulation of businesses  Culture 6/13/2016375H.M. Bwisa

Key Institutions that help entrepreneurship to thrive An independent central bank An independent judiciary An independent media and easy access to credible information Neutral and professional security forces 6/13/2016376H.M. Bwisa

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. 6/13/2016377H.M. Bwisa

BONUS SLIDES 6/13/2016378H.M. Bwisa

DO U WANT TO 2 DO RESEARCH IN ENTREPRENEURSHIP ???? THINK OF..... 6/13/2016 379

Sources of Research on Entrepreneurs The Entrepreneurial Mindset Speeches, Seminars and Presentations Direct Observation Research and Popular Publications 6/13/2016380H.M. Bwisa

Sources of Research on Entrepreneurs (cont’d) Publications – Technical and professional journals – Textbooks on entrepreneurship – Books about entrepreneurship – Biographies or autobiographies of entrepreneurs – Compendiums about entrepreneurs – News periodicals – Venture periodicals – Newsletters – Proceedings of conferences – The Internet Direct Observation of Practicing Entrepreneurs – Interviews – Surveys – Case studies Speeches, Seminars, and Presentations by Practicing Entrepreneurs 6/13/2016381H.M. Bwisa

21st Century Trends in Entrepreneurship Research Venture Financing Social Entrepreneurship Corporate Entrepreneurship Trends in Entrepreneurship Research Entrepreneurial Cognition Global Entrepreneurial Movement Family Businesses Women and Minority Entrepreneurs Entrepreneurial Education 6/13/2016382H.M. Bwisa

21st Century Trends in Entrepreneurship Research Major Research Themes: – Venture Financing: venture capital and angel capital financing and other financing techniques strengthened in the 1990s. – Corporate Entrepreneurship and the need for entrepreneurial cultures has drawn increased attention. – Social Entrepreneurship has unprecedented strength within the new generation of entrepreneurs. – Entrepreneurial Cognition is providing new insights into the psychological aspects of the entrepreneurial process. – Women and Minority Entrepreneurs appear to face obstacles and difficulties different from those that other entrepreneurs face. – The Global Entrepreneurial Movement is increasing. 6/13/2016383H.M. Bwisa

21st Century Trends… (cont’d) Major Research Themes (cont’d): – Family Businesses have become a stronger focus of research. – Entrepreneurial Education has become one of the hottest topics in business and engineering schools throughout the world. 6/13/2016384H.M. Bwisa

HOW ABOUT INVESTIGATING Entrepreneurship Indicators

Entrepreneurship Indicators - Performance, Determinants and Impact PerformanceDeterminants Impact (= policy targets)

Firm births and deaths Entrepreneurship Indicators - Performance, Determinants and Impact Performance 19 indicators Firm survival Employment in new firms Competitiveness contribution

Entrepreneurship Indicators - Performance, Determinants and Impact Market conditions Access to finance Technology and infrastructures Supply of entrepreneurial spirit Entrepreneurship culture Regulatory framework Determinants ~ 50 indicators grouped in 6 categories

Entrepreneurship Indicators - Performance, Determinants and Impact Creation of more and better jobs Economic growth Productivity growth Increased SME competitiveness Poverty reduction Globalization challenges mastered Reduction of informal economy Enhancement of job satisfaction Growth of workforce flexibility Emigration of talent stopped Impact 12 potential policy target areas “Lead markets” created Technological changes utilized

Entrepreneurship Indicators - Performance, Determinants and Impact PerformanceDeterminantsImpact

Employer firm birth rate Entrepreneurship Indicators - Performance, Determinants and Impact Employer firm death rate Business churn Net business population growth Firm births and deaths Performance 19 indicators

Entrepreneurship Indicators - Performance, Determinants and Impact Firm births and deaths Firm survival Employment in new firms Competitiveness contribution Performance 19 indicators

Survival rate among 3-year old businesses Survival rate among 5-year old businesses Proportion of young firms with 3-year survival Proportion of young firms with 5-year survival Entrepreneurship Indicators - Performance, Determinants and Impact Firm survival Performance 19 indicators

Entrepreneurship Indicators - Performance, Determinants and Impact Firm births and deaths Employment in new firms Firm survival Competitiveness contribution Performance 19 indicators

Entrepreneurship Indicators - Performance, Determinants and Impact Self employment: Business ownership rate among start-ups Self employment: Business ownership rate in total firm population Employment rate in 3 (and/or 5) year old firms Average firm size by employees after 3 (and/or 5) years Percentage of adults in population starting a new firm per month Employment in new firms Performance 19 indicators

Entrepreneurship Indicators - Performance, Determinants and Impact Firm births and deaths Employment in new firms Firm survival Competitiveness contribution Performance 19 indicators

Rate of high-growth firms by employment and/or turnover Competitiveness contribution Entrepreneurship Indicators - Performance, Determinants and Impact Performance 19 indicators “Gazelles”: Rate of young high-growth firms by employment and/or turnover Value-added contribution by new firms Contribution of firms to productivity growth by size Contribution of firms to productivity growth by age Export propensity of new/small firms

Entrepreneurship Indicators - Performance, Determinants and Impact PerformanceDeterminantsImpact

Entrepreneurship Indicators - Performance, Determinants and Impact Market conditions Access to finance Technology and infrastructures Supply of entrepreneurial spirit Entrepreneurship culture Regulatory framework Determinants ~ 50 indicators grouped in 6 categories

Entrepreneurship Indicators Performance, Determinants and Impact PerformanceDeterminantsImpact Firm births and deaths Firm survival Employment in new firms Competitiveness contribution Employer firm birth rate Employer firm death rate Business churn Net business population growth Survival rate 3 years Survival rate 5 years Proportion 3 years survival Proportion 5 years survival Employment rate young firms % adults starting firms Ownership rate business population Ownership rate start-ups Rate of high-growth firms Rate of Gazelles Value-added young firms Productivity contribution Productivity growth contribution Export propensity Market conditions Access to finance Technology and infrastructure Supply of entrepre neurial spirit Entrepre- neurship culture Regulatory framework Creation of more and better jobs Economic growth Productivity growth Increased SME competitiveness Poverty reduction Globalization challenges mastered Reduction of informal economy Enhancement of job satisfaction Growth of work force flexibility Emigration of talent stopped Competition, competitive arena Anti-trust laws Degree of public ownership Degree of public involvement Access to the domestic market, public procurement Access to foreign markets Export share of young firms Measures of export credits Measures for debt financing Cost of debt financing by firm size VC invest ment as % of GDP Private Equity in % of GDP Business angel financing Employment VC-backed firms Credit guarantees University / industry interface Technological cooperation between firms Industrial technology transfer Communication: Broadband access Patent system, standards R&D and Innovation data Characteristics of entrepreneurs Education and experience of entrepreneurs Business and E-ship education E-ship support infrastructure Immigration and E-ship Intrapre neurship opportunities Risk attitude in societies Attitudes towards entrepreneurs Desire for business ownership Fiscal environment Court-legal framework Safety and health regulation Labour market regulation Product regulation Environment regulation Firm start, close, exit and bankruptcy regulation Average firm size after 3 years Days to start Procedures Cost to start Time to close Bankruptcy stigma Mezzanine financing Technological changes utilized Creation of “lead markets”

Entrepreneurship Indicators: Performance, Determinants, Impact 6/13/2016401H.M. Bwisa

U COULD ALSO GO STRATEGIC 6/13/2016402H.M. Bwisa

Strategic Entrepreneurship Simultaneous opportunity-seeking and advantage-seeking behaviour (mindset). Forces entrepreneurial behaviour to be pursued in a strategically meaningful way. Forces entrepreneurial thinking to confront strategic thinking. Clear value-added, or contribution to advantage, must be made evident for the entrepreneurial behaviour to continue. Randomness and excessiveness replaced with advantage perspective. 6/13/2016403H.M. Bwisa

A Model of Strategic Entrepreneurship Entrepreneurial Mindset -Recognising opportunities -Alertness -Goals Entrepreneurial Orientation -Risk-taking, Innovativeness, Proactiveness Leadership Managing Resources Strategically -Financial capital -Human capital -Social capital Apply Creativity and Develop Innovation (Innovation management) Competitive Advantage Adapted from: Ireland, R.D., Hitt, M.A., and Sirmon, D.G. (2003), “A Model of Strategic Entrepreneurship: The Construct and its Dimensions”, Journal of Management, 29(6), pp.963-989. Strategically-managed network relationships 6/13/2016404H.M. Bwisa

HOW ABOUT INVESTIGATING INNOVATIVENESS IN FIRMS ??? 6/13/2016405H.M. Bwisa

Enterprising Behaviours Coping with and enjoying uncertainty Taking actions in uncertain environments Flexibly responding to challenges Actively seeking to achieve goals Acting independently on own initiative Persuading others Solving problems/ conflicts creatively Making things happen Seeking opportunity INNOVATION 6/13/2016406H.M. Bwisa

Innovation Culture MAY NOT BE about having more technological innovations …. 6/13/2016407H.M. Bwisa

... but ABOUT the right attitude and understanding how to make best out of innovations in a specific situation 6/13/2016408H.M. Bwisa

Assignment for group presentation Learning Outcome i. Demonstrate knowledge and understanding of entrepreneurship development. ii. Develop a capacity for informed critical analysis of entrepreneurship development process. iii. Demonstrate entrepreneurial activities and competence building. iv. Demonstrate an understanding of factors affecting entrepreneurship development in a developing country. Assignment Specifications select a given organization in Kenya. Assess its corporate entrepreneurship culture and status. Propose a suitable programme to enhance or introduce an entrepreneurship culture and how the programme can be implemented Method The following assessment scheme will be adopted in order to evaluate the elements above: * programme (15%) This criterion evaluates the overall uniqueness of the proposed programme, degree of challenge and attractiveness, and innovation level. * Proposal Strength (25%) Marks will be awarded for the quality of the plan as it should be convincing to the management of the organization. This is done by ensuring that proper explanations are given that are supported by factual research and thorough application of concepts. Critical and analytical thinking is expected with overall maturity in presentation of the programme. Clear discussion using own ideas and words. * Application of entrepreneurship Concepts (20%) On this ground students will be assessed on their overall entrepreneurship knowledge and ability to utilize entrepreneurship information and concepts to add credibility to the proposed programme. Methodology (20) * Strategic Development (20%) This criterion measures the rationale of the strategies... 6/13/2016409H.M. Bwisa

END OF SEMESTER INDIVIDUAL EXAMINATION PROJECT Select a county of your own choice, assess its entrepreneurship development potential and write a proposal to the governor on how to develop entrepreneurship in the county 6/13/2016410H.M. Bwisa

RULES FOR THE END OF SEMESTER EXAMINATION YOU MAY WORK IN GROUPS BUT THE END PROJECT MUST BE INDIVIDUAL PROJECTS FOUND TO BE SIMILAR WILL BE CONSIDERED AN EXAMINATION IRREGULARITY (CHEATING) AND MARKED OUT OF ZERO PERCENT A SOFT COPY OF THE PROJECT MUST BE SUBMITTED TO bwihem@yahoo.com LATEST A DAY BEFORE THE OFFICIAL UNIVERSITY EXAMINATION DATE bwihem@yahoo.com A HARD COPY MUST BE SUBMITTED (NO PRESENTATIONS) IN PERSON ON THE OFFICIAL UNIVERSITY EXAMINATION DAY EVERY STUDENT WILL SIGN THE EXAMINATION ROLL CALL ON SUBMISSION OF THE HARD COPY FAILURE TO SUBMIT BY THE SAID DEADLINES WILL BE DEEMED AN EXAMINATION FAILURE I.E. A ZERO MARK WILL BE AWARDED 6/13/2016411H.M. Bwisa

The end THANK YOU P.O BOX 7228 (00300) NAIROBI, KENYA Tel: 254722858507 bwihem@gmail.com www.mukmik.com www.professorbwisa.com

SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HEE 4102 Entrepreneurship development BY Prof. Henry M. Bwisa.

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SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HEE 4102 Entrepreneurship development BY Prof. Henry M. Bwisa.

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Presentation on theme: "SCHOOL FOR HUMAN RESOURCE DEVELOPMENT (SHRD) Department of Entrepreneurship and Procurement HEE 4102 Entrepreneurship development BY Prof. Henry M. Bwisa."— Presentation transcript:

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