Entrepreneurship and Innovation Review

Flashcard study set covering introductory concepts in entrepreneurship, innovation management, opportunity identification, business legal forms, firm growth strategies, and entrepreneurial ecosystems.

What is entrepreneurship as defined in the lecture?

Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control, creating something new through a set of behaviors and a mindset characterized by initiative, innovation, and calculated risk-taking.

What are the French root words for "entrepreneur" and their original meanings?

The word derives from the French words "entre" (meaning "between") and "prendre" (meaning "to take"), originally describing people who take on the risk between buyers and sellers or undertaking a task such as starting a new venture.

How does an entrepreneur differ from an inventor?

An inventor creates something new, whereas an entrepreneur assembles and integrates all necessary resources—money, people, the business model, strategy, and risk-bearing ability—to transform inventions into viable businesses.

What is corporate entrepreneurship and how is entrepreneurial intensity defined?

Corporate entrepreneurship refers to established firms practicing entrepreneurship. Entrepreneurial intensity describes a firm's position on a conceptual continuum ranging from highly entrepreneurial (proactive innovators who take calculated risks) to highly conservative (risk-averse firms taking a "wait and see" posture).

What are the three primary motivations for individuals to become entrepreneurs?

1. To be their own boss (independence and autonomy). 2. To pursue their own ideas. 3. To pursue financial rewards.

What are the four primary characteristics of successful entrepreneurs shown in this framework?

1. Passion for the business. 2. Product/customer focus. 3. Tenacity despite failure. 4. Execution intelligence.

What are the three broad types of startup firms based on their objectives?

1. Salary-Substitute Firms: Provide owners a similar income level to a conventional job. 2. Lifestyle Firms: Allow owners to pursue a particular lifestyle and make a living at it. 3. Entrepreneurial Firms: Bring new products and services to market by creating and seizing opportunities regardless of resources currently controlled.

What are the four steps of the Entrepreneurial Process?

1. Decision to become an entrepreneur. 2. Developing successful business ideas. 3. Moving from an idea to an entrepreneurial firm. 4. Managing and growing an entrepreneurial firm.

What is Joseph Schumpeter's concept of "creative destruction" (1934)?

Creative destruction is the process where entrepreneurs develop new products, technologies, pricing strategies, distribution channels, or retail formats that over time make current products and technologies obsolete, stimulating economic activity and increasing societal productivity.

What strategies were recommended by the UK's Diversity and Inclusion Business Council to support women- and minority-owned businesses?

Encouraging diversity in high value-added sectors, providing targeted local support, establishing government-sponsored resource centers, ensuring government involvement for inclusion, involving minority groups in decision-making and business networks, prioritizing local minority business needs, and involving women and ethnic minorities in overseas trade missions.

What is Joseph Schumpeter's economic definition of innovation (1939/1964) and its production function formula?

Schumpeter defines innovation as the establishment of a new production function $Q = f(K, L)$, where $Q$ is Output, $K$ is Capital, and $L$ is Labour.

What are Joseph Schumpeter's five basic types of innovation?

1. Introduction of a new product or new quality of goods. 2. Introduction of a new production or commercial process. 3. Opening of a new market. 4. Conquest of a new source of supply of raw materials or semi-finished goods. 5. Creation of a new industrial organization (or abolishing one).

How does innovation differ from invention, creativity, and R&D?

Invention is the creation of a new device or process; creativity is the ability to produce something new and beneficial; R&D is the background research activity. Innovation occurs only when a creative idea or invention is implemented in practice to create value or generate profit.

According to Bódis-Kiss (2025), what threshold of GDP spent on R&D leads to significantly higher productivity?

Spending at least $3\text{ per cent}$ of GDP on research and development in a predictable manner regardless of economic cycles.

In the matrix of innovation by novelty, what strategy corresponds to high novelty for both the company and the market?

Comprehensive solutions, where technology and the market evolve together.

What are the core differences between Closed Innovation and Open Innovation?

Closed innovation assumes that the industry's best people work for the firm, requiring internal discovery, development, and control of IP to win. Open innovation relies on collaborating with smart people inside and outside the company, leveraging external R&D, and capitalizing on others' IP.

What are the four sustainable innovation models highlighted in the course?

1. Product as a Service (PaaS): Shift from ownership to access where providers retain asset ownership. 2. B2B sharing networks: Digital platforms for peer-to-peer sharing of underutilised equipment. 3. Digital product passports: Blockchain and IoT tracking of material origin and repair history. 4. Decentralised micro-factories: Local 3D printing centres producing components on demand.

What are the five sequential stages of the innovation chain?

1. Marketing. 2. Research and development. 3. Investment. 4. Production. 5. Sales.

What is the difference between industrial property protection and copyright protection?

Industrial property protection provides legal protection for technical creations, products, and services (inventions, utility models, designs, plant varieties, trademarks). Copyright protection protects individual, original works (studies, poems, software, websites, graphic designs, architectural plans, musical compositions, films).

What are the terms of validity for Patents, Utility Models, Design Protection, Trademarks, and Copyright?

• Patent: $20$ years. - Utility model: $10$ years. - Design protection: $5 \times 5$ years (up to $25$ years). - Trademark: $10$ years (renewable). - Copyright: $70$ years after the author's death.

What is the definition of a business idea versus a business opportunity?

An idea is a thought, impression, or notion. An opportunity is a favourable set of circumstances that creates a need for a new product, service, or business.

What four critical factors characterize a promising business opportunity?

1. Attractive. 2. Timely. 3. Durable. 4. Anchored in a product, service, or business that creates or adds value for its buyer or end user.

What are the three main ways to identify business opportunities?

1. Observing Trends (Economic forces, Social forces, Technological advances, Political and regulatory changes). 2. Solving a Problem. 3. Finding Gaps in the Marketplace.

How do shifts in consumer income create different types of business opportunities?

Rising income ($+30\text{ per cent}$) boosts demand for discretionary and premium goods (e.g., Allbirds stylish shoes), whereas falling income ($-20\text{ per cent}$) increases demand for value-based, cost-saving services (e.g., GasBuddy for cheaper fuel).

What are the five stages of the Creative Process?

1. Preparation. 2. Incubation. 3. Insight (Eureka!). 4. Evaluation. 5. Elaboration.

What are the key rules and specific techniques used in structured brainstorming?

Key rules: No criticism or decision-making during the session, prioritize quantity over quality, encourage wild ideas, and build on others' ideas. Techniques include Mind Mapping (visual hierarchical diagramming) and the Bug Report Technique (listing $50\text{–}75$ daily frustrations to uncover unmet needs).

What five key factors must founders evaluate when selecting a legal business form?

1. Formation and Maintenance Costs. 2. Personal Liability. 3. Taxation. 4. Capital Raising Ability. 5. Continuity and Transferability.

How do C Corporations, S Corporations, and LLCs differ in terms of liability and tax treatment?

• C Corporation: Limited liability; subject to double taxation (corporate tax on profits, individual tax on dividends). - S Corporation: Limited liability; pass-through taxation (profits/losses reported on personal returns). - LLC: Limited liability; pass-through taxation by default with elective tax status options.

What strict requirements must a company satisfy to qualify for Subchapter S Corporation status?

1. Must be a domestic, independent U.S. corporation. 2. Shareholders must be U.S. citizens or resident individuals. 3. Only one class of stock allowed. 4. Maximum of $100$ shareholders. 5. Unanimous consent and filing of Form 2553 with the IRS.

What are the major warning signs that a company is scaling too quickly?

1. Operating on debt to pay routine expenses. 2. Extremely thin or non-existent profit margins. 3. Overstretched staff and widespread burnout. 4. Declining product quality or customer service defects. 5. Communication breakdowns and operating perpetually in crisis mode.

How does Jim Collins' "hedgehog concept" apply to a growing firm's core strategy?

The hedgehog concept suggests that great companies succeed by focusing disciplined effort on doing one important thing exceptionally well based on their core competencies, rather than distracting themselves by chasing numerous off-core opportunities.

What are the six primary domains of Daniel Isenberg's Entrepreneurial Ecosystem model?

1. Policy. 2. Finance. 3. Culture. 4. Support. 5. Human Capital. 6. Markets.