The Entrepreneurial Society

In what 4 ways does Entrepreneurship capitalize on abnormal profits from the profit-based economist/practicalist view?

1. Monopoly / Rent seeking

2. Uncertainty Premium

3. Liquidity premium

4. Risk Premium

What is an abnormal profit?

When your revenue exceeds the costs, anything above break-even

The field of entrepreneurship is concerned with why, when, and how..... (3 parts)

1. Opportunities for the creation of goods and services in the future arise in an economy

2. Some are able to discover and exploit these opportunities while others cannot or do not

3. What are the economic, psychological, and social consequences of this pursuit of a future market not only for the pursuer but also for the other stakeholders and for society as a whole

What is Schummpter's view of entrepreneurship?

Entrepreneurship is all about applying new combinations of products and processes, organization and markets in ways that create diequilibria in the economic system

What is Cole's view of entrepreneurship?

Entrepreneurship is the purposeful activity to initiate maintain and develop a profit-oriented business

What is Weber's view of entrepreneurship

Entrepreneurship means the taking over and organization of some part of an economy in which peoples needs are satisfied through exchange for the sake of making a profit and at one's own economic risk.

What are the two BIG theories of entrepreneurship?

1. Macrotheory

2. Microtheory

List the micro theories of entrepreneurship discussed in class

1. Entrepreneurial trait theory

2. Venture opportunity theory

3. Strategy formulation theory

List the macro theories of entrepreneurship discussed in class

1. Examining entrepreneurial impact as a whole

2. Economic theory

3. Psychological theory

4. Sociological theory

5. Anthropological

6. Opportunity-based

7. Resource-based

8. Displacement theory

What are the three main definitions of Entrepreneurship?

1. Theoretical Definition

Entrepreneurship as a process

2. Operational or Practical Definition (Application Based)

Entrepreneurship from a professional or practical perspective

3. Research or Academic Definition

Entrepreneurship as the study of a set of questions

What is a Gazelle?

An entrepreneurial venture that has gone massive. At least 20% growth each year for 5 years starting with a base of at least $100,000

Name some examples of Gazelles

Open AI

Microsoft

Amazon

Google

Meta

Blackrock is the behemoth of gazelles of investment banking

What is GEM

The Global Entrepreneurship Monitor is a large scale annual research program that assesses entrepreneurial activity and attitudes at the macro (national) level in multiple countries

What are the 5 main purposes of GEM

1. Measuring entrepreneurial activity

2. Identifying influencing factors

3. Informing policy

4. Understanding entrepreneurial characteristics

5. Promoting economic growth and development

What is the significance of the GEM report

· Provides evidence-based advocacy

· Holds government accountable

· Facilitates dialogue and reflection

· Global reach and an indispensable part of global entrepreneurship education

· Focuses on key issues

Explain Entrepreneurial Trait Theory (Micro)

Focuses on identifying common traits of entrepreneurs. Traits that if copied should lead to similar successes for entrepreneurs.

Ex. Zest for achievement, creativity, determination, technical knowledge

Explain venture opportunity theory (Micro)

Focuses on the opportunity aspect of venture development, the search for idea sources, the development of concepts and the implementation of venture opportunities

Key feature: highlights developing the right idea at the right time for the right market niche which is key to the entrepreneurial success

Explain Strategy Formulation Theory (Micro)

Emphasizes the importance of the planning process and how effectively an entrepreneur can leverage their unique elements to form successful ventures.

Name each of the unique elements of the Strategy Formulation Theory

Unique Markets

Unique People

Unique Products

Unique Resources

Describe Unique Markets as it relates to strategy formulation theory

Identifying major market segments as well as interstice (in-between markets that arise from larger markets)

Ex. Mountain vs Mountain Gap strategy: A specialty coffee shop that focuses on high quality, unique blends, to attract coffee enthusiasts, differentiating itself from large chains by serving a specific niche of the broader coffee market

Describe Unique People as it relates to strategy formulation theory

Strategies which refer to the skills or special talents of one or more individuals around whom the venture is built. The key to success is an extraordinary individual

Ex. Starbucks poaching Chipotle's CEO because they believe he is the reason for their success.

Describe unique products as it relates to strategy formulation theory

Strategies which refer to innovations that encompass new or existing markets

Ex. Markets using personalization and context such as showing a clothing discount only to women or displaying a referral offer after a purchase

Describe unique resources as it relates to strategy formulation theory

Strategies which refer to the ability to gather or harness special resources, land, labour, capital, raw materials, over the long term

Ex. Donald trump wanting to access Greenland for minerals and location

Explain the economic theory of entrepreneurship

Highlights economic factors that enhance entrepreneurial behaviours such as benefits of trade, specialization and competition and sees entrepreneurs as the essential director of the production and distribution of goods in a competitive marketplace

Explain the psychological theory of entrepreneurship

Emphasize personal characteristics of individuals who seek to engage in entrepreneurial activities including personality traits, need for achievement, locus of control, ability to take risks, innovativeness, tolerance for ambiguity

Explain the sociological theories of entrepreneurship

Focus on the social context of entrepreneurship. It also deals with factors related to ethnic identification, where individual's sociological backgrounds serve as a divisive factor in propelling entrepreneurial affinity

What is anthropological entrepreneurship

Focus on importance of both social and cultural context as determinant of successful entrepreneurship specific issues include cultural attitudes towards entrepreneurship and the integration of cultural values and norms into the process used to launch new ventures

Distinguish between opportunity-based and resource-based entrepreneurship

Opportunity-based entrepreneurship theories are based on the premise that entrepreneurs do not necessarily bring about change directly but scan the environment for changes and then seize and exploit the opportunity that creates successful entrepreneurship

Resource-based entrepreneurship theories are focused on the importance of access to resources (ex. Financial, human, natural etc.) as a facilitator and predictor of identifying opportunities suitable for entrepreneurial activities.

Explain displacement theories of entrepreneurship

This theory uses group phenomena and examines the group affects and certain factors that project the individual into an entrepreneurial venture

What are the three types of displacement theories

1. Political Displacement Theory

2. Cultural Displacement Theory

3. Economic Displacement Theory

Explain Political Displacement theory

Political displacement: caused by factors ranging from an entire political regime that rejects free enterprise (international environment) to governmental regulations and policies that limit or redirect certain industries or wars or uprisings against political regimes

Explain Cultural Displacement Theory

Cultural displacement: deals with social groups precluded from professional fields. Ethnic background, religion, race, and sex are examples of factors that figure in the minority experience.

Explain the Economic Displacement theory

Economic displacement: concerned with the economic variations of recessions and depression, job loss, capital shrinkage, or simply bad times can create the foundation for entrepreneurial pursuits

Name the different definitions of entrepreneurship

1. Theoretical Definition

2. Operational Definition

3. Academic Research Definition

Explain the theoretical definition of entrepreneurship and its dimensions

Dynamic process of vision, change and creation that require energy and passion towards the creation and implementation of new ideas and creative solutions.

Accomplished through four major dimensions:

1. Individual

2. Organizational

3. Social

4. Cultural process

It is also aided by collaborative networks in government, education, and institutions

Explain the operational Definition of Entrepreneurship

An attempt at new business or venture creation such as self employment, new business organization or the expansion of an existing business, by an individual or team of individuals or an established business

Explain the academic research definition of Entrepreneurship:

The phenomenon of entrepreneurship are fundamentally concerned with three sets of research questions

1. Why, when, and how opportunities for creation of goods & services come into existence

2. Why, when, and how some people and not others discover and exploit these opportunities

Why, when and how different modes of action are used to exploit entrepreneurial opportunities

Who is an entrepreneur according to the 3 related definitional concepts discussed in class?

1. The entrepreneur is an innovator or developer who recognizes and seizes opportunities; converts those opportunities into workable or marketable ideas; adds value through time, effort, money, or skills and assumes the risk of the competitive marketplace to implement these ideas.

2. The entrepreneur is a catalyst for economic change, uses purposeful searching, careful planning, and sound judgement when carrying out the entrepreneurial process

3. The entrepreneur is uniquely committed and opportunistic and works creatively to establish new resources or endow old ones with a new capacity all for the purpose of creating wealth.

What is the Global Entrepreneurship Monitor Report

A large scale annual research program that assesses entrepreneurial activity and attitudes at the national level in multiple countries

What is the purpose of the GEM report

Measure entrepreneurial activity

Amass data directly from entrepreneurs

Identify Influencing Factors

Inform Policymakers

Understand Entrepreneurial Characteristics

Promote Economic Growth

Who was John Molson?

An Englishman who immigrated to Montreal in 1782. Started the Molson Brewing company at 19 years old in 1786. He is the namesake of JMSB Concordia.

What are the three classifications of business size according to StatsCan?

· Small businesses (1-99) employees

· Med Business 100-499

· Large business 500 or more

They only do studies on Small to medium sized enterprises (SMEs)

Roughly, what are the number of businesses by size in Canada?

· 1.07 million small businesses

· About 17k medium sized

· 3346 large businesses

What is enterprise birth rate?

Number of new businesses / Total number of active businesses in the economy (x100)

What is Enterprise exit rate?

Number of businesses that are present one year but not the following year / average active firm population between two years x100

What is Creative Destruction?

An increase or decrease in the number of businesses is the net result of the appearance or disappearance of businesses over a given period. This is often referred to as creative destruction.

List some major tends affecting canadian SMEs

· Higher business costs

· Labour and skill shortages

· Technology

· Sustainability

· Source: BDC

What are some risks of SMEs

· Risk from changes in the business, economic, and market environment

· Cybersecurity risk

· Climate risk

GEM captures perceptions of entrepreneurial skills using which five

measures

I. Affiliation with/knowing an entrepreneur

II. Opportunities for entrepreneurship

III. Perceived entrepreneurial capabilities

IV. Fear of failure

V. Intention to start a new business in the next 3 years.

Based on the GEM entrepreneurial skills measures, which has Canada increased in compared to 2023?

1. Knowing entrepreneurs

2. Entrepreneurial intentions

3. Perceived capabilities

Based on the GEM entrepreneurial skills measures, how many of them does Canada lead in globally and which ones?

Among the G6, Canada leads in:

I. Affiliation with/knowing an entrepreneur

II. Opportunities for entrepreneurship

III. Perceived entrepreneurial capabilities

V. Intention to start a new business in the next 3 years.

We fall in 3rd for IV. Fear of failure, behind UK and France, however Canada's Fear of Failure did drop 2.2% between 2023 and 2024

What important findings regarding Canada were found in GEM's 2024 report?

More Canadians in 2024 are affiliated with entrepreneurs, intend to start a new business in the next 3 years, have greater confidence in their capabilities todo so, and are less concerned with fear of failure

What has happened with the perception gap between entrepreneurial opportunities and intentions for Canada in 2024?

It has decreased in 2024, with this gap significantly less than other G6 economies.

What is Total early-stage Entrepreneurial Activity (TEA)?

TEA describes entrepreneurial activity during the period preceding and immediately after the actual start of a firm. TEA includes 'nascent entrepreneurs' (those actively establishing a new business who have not paid salaries for more than 3 months) and entrepreneurs (owner-managers) of a new firm which is less than 42 months old but more than 3 months old

What is Established business ownership (EBO)

EBO describes a business existing for over 42 months (3.5 years).

What is the state of Canada's Total early-stage Entrepreneurial Activity (TEA) in 2024?

Canada has the highest level of total early-stage entrepreneurial activity (TEA) 30 compared to other G6 economies, a similar result to 2023

What is the state of Canada's Established business ownership (EBO) in 2024?

Canada's EBO level, the highest in the G6 in2023, has decreased by2% in 2024, dropping it below the USA, UK, Germany, and Italy.

Findings suggest difficulty in converting Canada's relatively high rate of startups into established businesses, as the long-term EBO trend for Canada has been downward. This remains a persistent challenge for Canada, and one that as a direct effect on Canadian job growth and productivity.

TEA Rates examine entrepreneurial motivations based on which four questions/reasons for entrepreneurship?

To make a difference in the world

To build great wealth or very high income

To continue a family tradition

To earn a living because jobs are scarce [Necessity Entrepreneurship]

What was the leading motivator for Canadian Entrepreneurship in 2024

Necessity Entrepreneurship: They needed to become entrepreneurs because jobs were scarce.

The second leading motivator was to build high income.

What country in the G6 has by far the highest rate of business discontinuance?

Canada

What is the biggest discontinuance factor for Canada?

Business was not profitable. (23%)

Followed by an opportunity to sell the business (19%)

What does the GEM 2024 Canada Report say about angel investors?

Canada's average level of funds from angel investors decreased by almost USD 10K in 2024, with USA at 10x Canada

What does the GEM 2024 Canada Report say about business-oriented services and why?

Business-oriented services showed a noticeable decrease in early-stage entrepreneurial activity, influenced by rising costs and new technologies

What might be the reason for Canada's low level of business transition?

The high rate of business discontinuance

How many Canadian entrepreneurs use digital technologies to sell their products (%)?

60%

What does the GEM global study say about Canada's gender gap?

Canada's relative gender gap for both early-stage entrepreneurial activity and established businesses is among the highest in the GEM global study.

What does GEM recommend for Canada after the 2024 report?

Prioritize support for entrepreneurship through the adoption of advanced technologies

Refine regulatory frameworks

Strengthen support for entrepreneurship education at primary and secondary levels

Develop More Effective Policies for Entrepreneurship through Better Usage of Data and Measures

Increase Support for Younger Entrepreneurs and Owners in Business Succession

What are the three pillars of innovation?

1. Innovative capacity

2. Innovation activity

3. Innovation results

a. Patents

b. Measures of productivity

c. Global market competition

Where does Canada stand in the overall worldwide innovation ranking who is first?

15th in the world, fairly poor. We have a B in capacity, C in activity, D- in Results, overall C

South Korea wins.

Why does Canada have a poor innovation capacity?

Mainly due to a culture of risk-adverse behaviour and lack of government spending in research and development

Why does Canada have a poor innovation activity?

Inadequate R&D spending on behalf of businesses. It has been falling for 20 years.

Why does Canada have poor innovation results?

· A declining manufacturing base has collapsed Canada's competitive industrial performance

· The deep integration of Asian economies into the global market and the subsequent offshoring of Canadian manufacturing reduced Canadas competitiveness

· Consistently poor performance in high tech exports

Define indigenous entrepreneurship?

A firm owned by more than 50% indigenous people

What percentage of firms are indigenous in Canada?

Less than 1.5% of firms

What are the primary types of indigenous businesses in Canada?

Handicraft and casino businesses

What does Indigenous business say about the gender gap?

There is basically no disparity between men and women businesses in indigenous firms in Canada

what are the recommendations for indigenous businesses?

• Increase support for indigenous businesses to expand to international markets

• Increase structural support for Indigenous entrepreneurs

• Ensure smooth access to all government programs and policies

• Develop digital tools and resources on best practices to support indigenous entrepreneurship

• Ensure government and organizations widely adopt indigenous procurement policies

• Support the indigenous chamber of commerce

What is an entrepreneurial opportunity what does it require?

It is a desirable future state for entrepreneurs to take advantage of that requires:

· The introduction of new goods, services, raw materials, and organization methods

· Having an impact on the market

· Offering profit potential

· Through the creation of new ventures or the radical improvement of existing ventures

What is the entrepreneurial process?

A subjective process where an entrepreneur recognizes, evaluates, and seizes entrepreneurial opportunities to create wealth. They are influenced by societal or environmental variables.

Why is the entrepreneurial process subjective? Are opportunities subjective or objective?

Whether you choose to see something as an opportunity is subjective, but the fact that the opportunity is there is objective, it is there no matter what.

What are the three different sources of entrepreneurial opportunities?

1. The creation of new information, as occurs with the invention of new technologies

2. The exploitation of market inefficiencies that result from information asymmetry occurs across time and geography

3. The reaction to shifts in the relative costs and benefits of alternative uses for resources as occurs with political, regulatory, or demographic changes

True or false: The entrepreneurial process is a linear, sequential, dynamic, iterative process.

True.

What are the three stages of the entrepreneurial process?

1. Opportunity recognition

2. Opportunity Exploitation

3. Creation of value

Define opportunity recognition

The entrepreneur recognizes opportunities, initial ideas are developed into fully-fledged business opportunities

Define Opportunity Exploitation

Necessary resources are combined to enable exchange with the market. The recognized business opportunity is translated into a concrete offering.

Define the Creation of Value

If the offering is taken up by the market, opportunity exploitation leads to the creation of value. The creation of value is regarded as the outcome of the entrepreneurial process (Money).

Name some ways opportunity recognition might evolve?

Your brain is working and triggering conversations, ideas, etc by itself: any of the following can discover an opportunity

· Trigger experience

· Random Stuff

· Visualization

· Serendipity

· Deliberate search

· Past work experience

· Personality

· Environmental context

· Anything and everything can trigger an entrepreneurial opportunity

Explain the bumble situation

Bumble was founded by one of the founders of tinder after discovering how easy it is for women to have bad experiences on Tinder. She founded bumble where women have to message first, creating some checks and balances for a similar dating app.

What do studies find about the evolution of opportunity recognition?

Social, cultural, and personal factors lead to the discovery of the field of opportunity (Initial Vision)

Then, this idea is evaluated and refined until the entrepreneur decides whether or not to proceed.

What is the role of entrepreneurs in the opportunity recognition process? What major personal factors affect the opportunity recognition process?

1. Psychological traits and characteristics (risk propensity, self-efficacy, and need for achievement)

2. The entrepreneur's personality is seen as decisively shaped by something from the outside (socio-cultural attributes like ethnicity, gender, and family)

3. Individual life path changes (Losing one's job, cultural factors, and perceptions of feasibility)

4. Differences in knowledge, information, and cognitive behavior (explain why some individuals are more inclined to recognize and develop opportunities than others)

What is the role of the environment in the opportunity recognition process?

Socially, the environment source of ideas, where entrepreneurs consistently use their networks to get ideas and gather information to recognize entrepreneurial opportunities. The entrepreneur interacts with the network to obtain information and advice.

The environment additionally affects opportunities through political, cultural, economic, and technological factors.

Name the factors affecting opportunity exploitation through starting a new business vs within an existing firm

• The creation of new firms is more common when industries have low barriers to entry

• Personal reasons for new venture creation are, for example, previous self-employment experience

• Need for independence or freedom would cause entrepreneurs to create a new business

• Commercialization of an opportunity through the creation of a new firm is more likely when the technological innovation is more critical, radical, and patent-protected

What is the role of entrepreneurs in opportunity exploitation?

Psychological attributes, knowledge and experience, and cognitive processes drive actual entrepreneurial behavior.

Personal attributes, low levels of risk perception, and over-optimism facilitate the exploitation of opportunities by stimulating rosy forecasts of the future

Entrepreneurs are more inclined to exploit opportunities when they have relevant knowledge and experience from previous employment on how to serve specific markets and deal with customer needs.

Successful nascent entrepreneurs are more aggressive in making their business a reality than those who do not start a business.

What is the role of the environment in the opportunity exploitation?

1. Provides access to resources

2. Provides a competitive context and a market

Why is value creation important to include in the entrepreneurial process model?

the entrepreneurial process is driven by the perceived value created by the exploitation of the opportunity. This includes value created for stakeholders, the entrepreneur, customers, and investors.

Explain entrepreneurial traits through the big 5 model

Openness

Conscientiousness

Extraversion

Agreeableness

Neuroticism

what are the limitations of the ocean model?

Too generalized

Cannot easily predict situation-specific behaviours

May not help in understanding the specific mechanisms through which personality impacts entrepreneurial attitudes and actions

Necessity- versus opportunity-driven entrepreneurs certainly bring different personality traits

Describe the Attraction-Selection-Attrition model

According to this model, workers are attracted to jobs whose demands and opportunities match their talents, motives, and personality traits;

Employers or financiers then select applicants whose aptitudes and motives fit their criteria;

Workers then stay in their occupational group when they find their professional situation more rewarding than alternative positions.

Describe the alternative to the big 5 personality traits theory: The Multidimensional Personality Framework

Composed of 4 big traits:

Risk Attitudes

Need for Achievement

Locus of Control

Self-efficacy and innovation

What is self-efficacy?

Self-efficacy describes a person's belief that they can perform tasks and fulfill roles, and is directly related to expectations, goals, and motivation"