1. Adapted from Peng, 2006. 1 Growing and Internationalizing the Entrepreneurial Firm Dr. Ellen A. Drost

2. Adapted from Peng, 2006. 2 Outline   Entrepreneurship, entrepreneurs, and entrepreneurial firms   Opportunities for the entrepreneurial firm   Three leading perspectives of strategy in relation to entrepreneurship   Implications for strategists

3. Adapted from Peng, 2006. 3 Entrepreneurship, Entrepreneurs, and Entrepreneurial Firms   Entrepreneurship – –The identification and exploitation of previously unexplored opportunities.   Characteristics of Entrepreneurship – –Entrepreneurship is concerned with “ the sources of opportunities; the processes of discovery, evaluation, and exploitation of opportunities; and entrepreneurs. ”

4. Adapted from Peng, 2006. 4 Small and Medium-sized Enterprises   Small and Medium-sized Enterprises (SMEs) – –Defined by the OECD and US regulations as firms with less than 500 employees.   SMEs generate the most jobs now, many students will join SMEs.   Given that some SMEs may become multinational enterprises (MNEs) in the future, current and would- be strategists will not gain a complete picture of the strategic landscape if they focus only on large firms.

5. Adapted from Peng, 2006. 5 The entrepreneurial firm: Opportunities and Challenges   The Importance of Entrepreneurial Firms – –They account for over 95% of the number of firms. – –They create approximately 50% of total value added, and generate 60-90% of employment (depending on the country).   Entrepreneurship: Rewards and Challenges – –Many will try, many will fail – only few succeed   Approximately 60% of start-ups in the United States fail within 6 years, and only a small number will succeed.

6. Adapted from Peng, 2006. 6 Entrepreneurs   Entrepreneurs – –The set of individuals who discover, evaluate, and exploit opportunities. – –Some managers at large firms are entrepreneurial. – –Corporate entrepreneurship   International Entrepreneurship – –A combination of innovative, proactive, and risk- seeking behavior that crosses national borders and is intended to create wealth in organizations.

7. Adapted from Peng, 2006. 7 The Costs of Starting Up a New Firm in 20 Countries Source: Adapted from S. Djankov, R. La Porta, F. Lopez-de-Silanes, & A. Shleifer, 2002, The regulation of entry (pp. 18–20), Quarterly Journal of Economics, 67: 1–37. Drawing on a major World Bank study, the table is based on the ascending order of (1) the total number of procedures domestic entrepreneurs must fulfill, (2) the number of days to obtain legal status to start up a firm, and (3) the direct costs, as a percentage of per capita GDP, to do so. The measure, time direct costs, captures the monetized value of entrepreneurs’ time in addition to direct costs. Global average is based on the full sample of eighty-five countries, and this table reports on forty-two of them.

8. Adapted from Peng, 2006. 8 One- and Four-Year Survival Rates by Firm Size Source: Adapted from J. Timmons, 1999, New Venture Creation (p. 33), Boston: Irwin McGraw-Hill, based on US data.

9. Adapted from Peng, 2006. 9 Internationalizing Entrepreneurial Firms   Entrepreneurship is global   Encouragement to go global by government   Born global   Rates of entrepreneurship differ across countries   Why?

10. Adapted from Peng, 2006. 10 Corporate Entrepreneurship   How do firms innovate?   Corporate entrepreneurship – –Internal versus external innovation – –Incremental versus radical innovation – –Autonomous versus induces innovation   How do they implement innovation? – –Internal versus external processes

11. Adapted from Peng, 2006. 11 Views on Entrepreneurship   Leading perspectives – –The industry-based view   Entrepreneurial firms tend to choose industries with lower entry barriers and often generate more innovative, competing or substitute products. – –The resource-based view   Intangible resources (vision, drive, and willingness to take risks) are what fuel entrepreneurship. – –The institution-based view   Institutional frameworks explain differences in entrepreneurial and economic development around the world.

12. Adapted from Peng, 2006. 12 Conclusion   Why do firms differ? – –Entrepreneurs differ.   Why does entrepreneurial development differ? – –Institutional frameworks differ.   Culture and entrepreneurship   Capital and entrepreneurship   Government and entrepreneurship