1. New Venture Creation and Control Mechanism
Professor Alexander Settles

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

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

4. Entrepreneurship

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

6. Entrepreneurship: A Mindset
Entrepreneurship is more than the mere creation of business:
Seeking opportunities
Taking risks beyond security
Having the tenacity to push an idea through to reality
Entrepreneurship is an integrated concept that permeates an individual’s business in an innovative manner. 6

7. The Evolution of Entrepreneurship
Entrepreneur is derived from the French entreprendre, meaning “to undertake.”
The entrepreneur is one who undertakes to organize, manage, and assume the risks of a business.
Although no single definition of entrepreneur exists and no one profile can represent today’s entrepreneur, research is providing an increasingly sharper focus on the subject.

8. A Summary Description of Entrepreneurship
Entrepreneurship (Robert C. Ronstadt)
The dynamic process of creating incremental wealth.
This wealth is created by individuals who assume major risks in terms of equity, time, and/or career commitment of providing value for a product or service.
The product or service itself may or may not be new or unique but the entrepreneur must somehow infuse value by securing and allocating the necessary skills and resources. 8

9. An Integrated Definition
Entrepreneurship
A dynamic process of vision, change, and creation.
Requires an application of energy and passion towards the creation and implementation of new ideas and creative solutions.
Essential ingredients include:
The willingness to take calculated risks—in terms of time, equity, or career.
The ability to formulate an effective venture team; the creative skill to marshal needed resources.
The fundamental skills of building a solid business plan.
The vision to recognize opportunity where others see chaos, contradiction, and confusion. 9

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

11. Entrepreneurs in the United States
Reasons for the exceptional entrepreneurial activity in the U.S. include:
A national culture that supports risk taking and seeking opportunities.
Americans’ alertness to unexploited economic opportunity and a low fear of failure.
U.S. leadership in entrepreneurship education at both the undergraduate and graduate level.
A high percentage of individuals with professional, technological or business degrees who are likely to become entrepreneurs. 11

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

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

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

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

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

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

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

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

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

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

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

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

24. The Critical Thinking Process

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

26. Country Level Competitiveness

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

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

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

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

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

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

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

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

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