Entrepreneurship

Definition Entrepreneurship

„ … the process of discovery, evaluation, and exploitation of opportunities; and the set of Individuals who …“

• anything we start from scratch

• high focus on the individual

Pre-Launch Phase

Discovering and Evaluating an Opportunity

• identification of business opportunity

• evaluation of business opportunity

• intention to proceed further

Launch Phase

Exploiting an Opportunity

• assembling resources

• choosing legal form

• protecting new products/servides

• developing initial marketing plans and strategy

Post-Launch-Phase

Exploiting an Opportunity

• managing the business

• conducting negotiations

• human resource management

Opportunities emerge from …

… a complex pattern of changing conditions in:

• technology

• economy

• politics

• society

• demography

→ specific juxtaposition or confluence which did not exist previously

Classification of opportunities by …

• Type

• Characteristic

• Mechanism

• Role

Classification: Type

Classified by origin

• Technological

• Regulatory

• Demographic

• Socio-Cultural

• Macroeconomic

• Political

• Natural-environmental

Classification: Characteristics

Influence actionability and market potiental

• Scope (the larger the more promising)

  • spatial

  • temporal

  • sectoral

  • socio-demographic

• Onset

  • predictability/suddenness

Classification: Mechanism

Specify the cause-effect relationship

• Combination

• Compression

• Conservation

• Enclosing

• Expansion

• Generation

• Legitimation

• Substitution

• Uncertainty Reduction

Classification: Role

Situate effects by venture creation stage

• Triggering

• Shaping

  • Offer

  • Venture

  • Process

• Outcome-enhancing

Compression

Reduction in the amount of time required to perform an activity

Conservation

Reduction in the amount of resources required to perform an activity

(Resource) Expansion

Increase in the amount of resource that is accessible

(Resource) Substitution

Replacement of one resource with another

Combination

Coupling with external resources or artifacts to provide functionality

Generation

Allowing the creation of new artifacts (devices, functionalities, business models)

Uncertainty Reduction

Reduction in the perceived uncertainty of any business decision of buyers or sellers

Legitimation

Increase in the legality or psychological/sociocultural acceptability of the venture or its offerings

(Demand) Expansion

Increase in demand at a given price and given functionality

(Demand) Substitution

Increase in demand that is due to making a focal venture‘s market offerings (perceived as) more needed/attractive (positive substitution) or to making competitive offerings perceived as less needed or attractive (negative substitution)

Enclosing

Increase in a venture‘s ability to capture the loyalty of buyers and the value it creates

Pre-Launch Phase: Psychological perspective

• prior knowledge

• active information search

• coachability

• creativity

Importance of prior knowledge

individuals are not equally likely to recognize a given entrepreneurial opportunity

• specific prior knowledge guides the cognitive process of interpreting new information

• prior knowledge on markets, customers, and other products influences the individuals discovery of business opportunities

knowledge corridor

people’s prior knowledge determines whether or not and which business opportunity they will identify

experience in markets

• … may be helpful to identify a specific opportunity

• … may lead to being unreceptive for other opportunites

• … may lead to discarding new information, strongly relying in past experiences

entrepreneurs who identify a set of market opportunites prior to first entry…

… derive performance benefits by doing so

the positive relationship between the number of market opportunities identified prior to first entry ...

… and new firm performance is nonlinear and subject to decreasing marginal return

escaping the knowledge corridor

• entrepreneurial experience

• active information search and external knowledge sourcing breadth

• coachability

• creativity techniques

experienced entrepreneurs posses…

… a refined and complex (mental) schemata to identify and evaluate business opportunities

lack of entrepreneurial experience can be made up for, by …

… active information search

coachability

degree to which an entrepreneur seeks, carefully considers and integrates feedback

escaping the knowledge corridor through

• active knowledge breadth

• coachability

• creativity

analogical reasoning

applying the knowledge from one domain as a kind of model to help in understanding or developing ideas in another domain

conceptual combination

mentally combining different, opposing, previously unrelated concepts

three creativity techniques

• conceptual combination

• analogical reasoning

• morphological box

morphological box

breaking down the problem into its key dimensions

What is an opportunity?

end-state that can be actualized through action when the necessary conditions (are believed to) exist

behavioral patterns of innovative entrepreneurs

1. Questioning frequently, challenging the status quo

2. Observing the world around, everyday experiences to find new ideas

3. Experimenting with hypothesis-testing and an open mindset

4. Idea Networking, testing ideas with a netword of individuals, diverse in background and perspective

role of action in entrepreneurship

• catalyst for associatinal thinking/pattern recognition

• change the status quo

• less susceptible to status quo bias

associatinal thinking

• cognitive process of connecting concepts that appear to be unconnected

• make connenctions across seemingly unrelated questions, problems, disciplines, fields or ideas

entrepreneurship: cognitive bias → discovery behaviors → cognitive process to generate novel ideas

bias against status quo → questioning, observing, experimenting, idea networking → associational thinking → opportunity recognition