Week 4: Entrepreneurship

Entrepreneuring

The process and practice(s) of creating new valuable realities (Laasch, 2023). It encompasses:

Needs as opportunities (addressing needs and challenges as opportunities)

Novel economic relationships (expanding them)

Resources (bringing them together)

Shared value (creating it over time and space)

Entrepreneurial personality traits

High need for achievement (propensity to take responsibility for outcomes)

High risk-taking propensity (seeking opportunities despite the risks)

Internal locus of control (belief you can influence outcomes)

High self-efficacy (goal orientation and building the competence to reach goals)

High extraversion (positive energy invested in relationships)

5 Dimensions of entrepreneurial practice

Behaviors anyone can practice without an entrepreneurial personality (you don't need born traits to lead, George et al., 2007):

1. Autonomy

2. Risk-taking

3. Proactiveness

4. Innovativeness

5. Competitive aggression

Dark Triad

Psychological precursors to fraud (Harrison et al., 2018; e.g., Sam Bankman-Fried/FTX):

Narcissism (feeling superior, expecting admiration and service without reciprocation)

Machiavellianism (cynical, self-interested, little concern for others)

Psychopathy (callous, no remorse, sees others as prey)

Narcissistic CEOs (statistic)

Up to about 18% of CEOs may be narcissists, up to 3x more prevalent than in the general population (Larcker et al., 2021).

Value creation vs value capture

Value creation (society's total utility rises after accounting for opportunity costs; productive motive)

Value capture (the actor appropriates part of the value created; unproductive when it extracts value and externalizes costs)

A social enterprise maximizes value creation and minimizes value capture.

Causation

Selecting among given means to reach a predetermined goal — managerial, deductive, inside-out

Effectuation

Imagining possible new goals from a given set of means — entrepreneurial, inductive/abductive, outside-in

Bricolage

Creatively making do with the resources available.

Entrepreneur earnings (statistics)

Own-business entrepreneurs (earn about 36% more than salaried workers; Levine & Rubinstein, 2013)

Self-employed (earn about 16.5% less on average)

Switching from salary to self-employment (18% more per hour, 29% more per year)

Top 1% of earners (are entrepreneurs; Smith et al., 2019)

Entrepreneur happiness (statistics)

Blackman (2021, WSJ) (yes, higher job satisfaction; for men where teamwork is high, for women where creativity is high)

Stephan et al. (2023) (meta-analysis of 93 studies in 82 countries: higher positive well-being, the same negative well-being, strongest where the rule of law is good)

Obelisk consulting model

AI automates junior consultant tasks, creating leaner firms with three key roles (Duncan et al., 2025):

AI facilitators (trained in the latest AI tools and data pipelines)

Engagement architects (lead projects, define problems, interpret AI outputs)

Client leaders (build trusted relationships with senior executives)

AI literacy is a key entrepreneurial competency.

Social economy in Europe (textbook)

About 2 million social economy enterprises (about 10% of all businesses) employing over 11 million people, about 6% of EU employees.

New business venturing

Creating a new organization to realize an opportunity and create value, led by a (co)founder (e.g., TOMS Shoes).

Intrapreneurship

An organizational member acting from the inside to tackle internal change or use organizational resources for a new external opportunity (e.g., Paul Polman's Unilever Sustainable Living Plan).

Institutional entrepreneurship

Entrepreneuring from any role to create or change taken-for-granted practices into a new normal (e.g., Greta Thunberg's movement).

Embedded agency

Trying to change the rules of the game while being bound by the same rules you are trying to change (Laasch, 2023).

The three steps of institutional entrepreneurship:

Positioning (being seen as legitimate among diverse stakeholders)

Theorizing (creating alternative practices through discussion and political means)

Institutionalizing (making them the new normal by linking them to stakeholders' routines and values)

Calculating shrewdly

Intrapreneurial practice of framing change in terms of aligned businesses incentives rather than “correct” ideals, staying aware of corporate realities.

Apocalypse fatigue

Constantly scaring people makes them stop listening.

To actually get people to care about a cause, keep the vibe constructive, give them realistic next steps, and back the specific people who are willing to lead the charge."

Social vs hybrid vs ecological entrepreneurship

Social (social enterprise for social entrepreneurs; e.g., Ashoka)

Hybrid (viable business with both commercial and social value; e.g., Kobo360)

Ecological (ventures for ecological and social change; e.g., Commonland)

Social entrepreneurship (4 necessary characteristics)

An essentially contested concept (Choi & Majumdar, 2014) requiring:

1. Social and economic value creation

2. Social value not secondary to economic value

3. Commercial activities instrumental to a social objective

4. Creative combination of resources

3 Schools of social entrepreneurship

Social Innovation (innovative activities that create social value)

Earned Income (commercial activity earns income to support social activities)

Positive Externalities (sustainable solutions to neglected problems; Santos, 2012)

Integrated social entrepreneurship

Social and economic activities fully merged, with the social mission central and the target group at the core of the business model (e.g., microfinance, employment model).

Differentiated social entrepreneurship

Economic activities generate funds for separate social activities, and the target group benefits without being directly involved in the enterprise.

Hehenberger's three models

Leveraged non-profit (public good for the most vulnerable, dependent on partners), pure donation based charities.

Hybrid non-profit venture (partly self-sustaining with hybrid funding)

Social business venture (profit-generating but not profit-maximizing, blended returns)

Mission drift

A mission-driven organization slowly forgets its original social values because management becomes completely obsessed with cutting costs, chasing revenue, and chasing profits.

Tensions and trade-offs (hybrids)

Commercial and social logics clashing in specific decisions, which can evoke paradoxes (Hahn et al., 2015).

Structured flexibility (Smith & Besharov, 2019)

Sustaining hybridity by using the business and social missions as guardrails around an ongoing cycle of confronting tensions, reinterpreting identity, and experimenting with practices.

The 4 SDG nexus challenges for hybrids

Tensions and trade-offs

Mission drift

Negative feedback loops

Unintended consequences

Recognizing opportunities

Supply and demand both exist; the entrepreneur connects the dots and recognizes patterns (e.g., BRAC and microfinance).

Discovering opportunities

Either supply or demand is missing, so the entrepreneur sets out to uncover and address the gap (e.g., Creo Volador).

Creating opportunities

Creating both supply and demand (e.g., the Alaska king crab industry).

Discovery vs creation vs actualization approach

Discovery (opportunities exist and must be found; Shane & Venkataraman)

Creation (entrepreneurs create opportunities themselves; Alvarez & Barney; Sarasvathy)

Actualization (an opportunity is an unrealized potential to create value, like a seed's propensity to flower; Ramoglou & Tsang, 2018)

Cultural entrepreneurship

Using narratives, symbols, and categories to frame opportunities, build venture legitimacy, and mobilize resources through storytelling (Lounsbury & Glynn, 2001).

Used primarily by startups

Necessity entrepreneurship

Venturing pushed by unmet basic needs, prioritizing rapid income and proven models, unlike opportunity entrepreneurs who are drawn in voluntarily.

Conspiracy entrepreneurship

Building commercial opportunities around alternative stories to negative events keeping things ambiguous enough that people stay engaged, creating recognition and financial opportunity.

Venture life cycle

**Starting up** (existence, survival)

**Taking off** (growth, consolidation)

**Settling down** (maturity)

Greiner's growth model

Each evolution phase ends in a crisis:

**Creativity** → leadership crisis

**Direction** → autonomy crisis

**Delegation** → control crisis

**Coordination** → red tape crisis

**Collaboration** → ??? crisis

Leadership crisis

The founder's creativity and informal style no longer fit the growing organization (losing control vs adding expertise); only about a quarter of founding CEOs in VC-backed firms make it to IPO (Wasserman, 2008).

Autonomy crisis

Lower managers know more than top leaders and feel torn between following procedures and taking initiative under centralized direction; usually solved through delegation.

Control crisis

Too much department/branch autonomy leads to lost coordination and internal competition between units (e.g., Sears).

Red tape crisis

Bureaucracy from extra reports, processes, and silos, slowing decisions and reduces agility (e.g., IBM in the early 1990s).

??? crisis

Mature-stage crisis linked to the incumbent's curse (being the largest industry player so you change slower), lethargy, and Schumpeter's creative destruction (new innovation wipes out old players)

Business model tools

Business Model Canvas (Osterwalder & Pigneur, 2010)

Sustainable Business Model Canvas

Triple-Layered BMC (Joyce & Paquin, 2016)

Dynamic BM Framework (Cosenz & Noto, 2018)

Flourishing Business Canvas

Causal loop diagrams (Sarmiento et al., 2020)

Scaling through collaboration spectrum

From low control/low risk to high control/high risk:

Dissemination (free info) → Strategic alliance → Licensing → Franchising → Joint venture → Wholly owned

Joint venture

Two or more entities combine resources in a new company for a single project (e.g., PATAR Coffee + IKEA); it leverages partners' funding but needs balanced governance.

Social franchising (textbook)

Franchisees replicate a venture's commercial and social blueprint with their own resources, so impact scales without the venture itself growing (e.g., Greenstar).

Internal vs external corporate venturing (textbook)

**Internal** (spinning off new ventures from innovations inside a mature company)

**External** (buying in innovation from younger ventures)