Lecture 1 Understanding Entrepreneurship

Lecture - 1
Understanding Entrepreneurship
Entrepreneurship and Innovation (MGEM 611)

KUSOM, MBA, 2020
Faculty - Shashi Raj Bajracharya
1. Introduction to Entrepreneurship
The Oxford English Dictionary defines an Entrepreneur as:

“A person who attempts to profit by risk and initiative.”
A brief start on a definition may be:

• involved in "business"
• making, selling or trading things or services
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1.1 What is Entrepreneurship?
“The carrying out of new combinations we call ‘enterprise’; the
individuals whose function it is to carry them out we call
‘entrepreneurs’”
- Joseph A. Schumpeter, 20th century economist
“I’m encouraging young people to become social business

entrepreneurs and contribute to the world, rather than just
making money. Making money is no fun. Contributing to and
changing the world is a lot more fun.”
- Muhammad Yunus, academic and social entrepreneur
(From Blundel and Lockett [2011])
What is entrepreneurship?
Entrepreneurship is the ability to create and build something
from practically nothing. It is initiating, doing, achieving and
building … rather than just watching, analysing and
describing … It is the knack of sensing an opportunity where
others see chaos, contradiction and confusion.
- Timmons, 1989
Behaviours, skills and attributes applied individually and/or

collectively to help individuals and organisations of all kinds,
to create, cope with and enjoy change and innovation
involving higher levels of uncertainty and complexity as a
means of achieving personal fulfilment.
- Gibb, 1993
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• Entrepreneurs are those persons (business owners) who
seek to generate value through the creation or expansion of
economic activity, by identifying and exploiting new
products, processes or markets.
• Entrepreneurial activity is enterprising human action in
pursuit of the generation of value through the creation or
expansion of economic activity, by identifying and exploiting
new products, processes or markets.
• Entrepreneurship is the phenomenon associated with
entrepreneurial activity.
- OECD-Eurostat (2009: 6) (From Blundel and Lockett [2011])
Entrepreneurs are interested in:
• Success
• Profit
• Wealth creation
• Leaving their mark on society
We can also define the entrepreneur in terms of behaviour,
thinking and actions.
“Entrepreneurs use innovation to exploit or create change and

opportunity for the purpose of making profit. They do this by
shifting economic resources from an area of lower productivity
into an area of higher productivity and greater yield,
accepting a high degree of risk and uncertainty in doing so.”
- Burns (2011, p.13)
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1.2 Entrepreneurial Behaviours
• Opportunity seeking and grasping
• Taking initiatives to make things happen
• Solving problems creatively
• Managing autonomously
• Taking responsibility for, and ownership of, things
• Seeing things through
• Networking effectively to manage interdependence
• Putting things together creatively
• Using judgement to take calculated risks
- Gibb, 1993
1.3 Entrepreneurial Skills

• Creative problem solving
• Persuading
• Negotiating
• Selling
• Proposing
• Holistically managing
business/projects/situations
• Strategic thinker
• Intuitive decision making
under uncertainty
• Networking
- Gibb, 1993
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1.4 Entrepreneurial Attributes
• Achievement orientation and ambition
• Self confidence and self belief
• Perseverance
• High internal locus of control (autonomy)
• Action orientation
• Preference for learning by doing
• Hardworking
• Determination
• Creativity
- Gibb, 1993
1.5 Benefits of Entrepreneurship

• Increase in both for- and not-for-profit business birth
rates
• Increase in wealth and value creation
• New employment opportunities
• New products and services
• New and improved ways of doing things
• Less dependency on large employers and the state means
a more vibrant “go-getting” economy and society
• What are the downsides? Discuss
5
1.6 The Entrepreneurial and
Intrapreneurial Mind
The entrepreneurial process is the process through which a

new venture is created by an entrepreneur which involves
more than just a problem solving in a typical management
position. An entrepreneur must find, evaluate, and develop
an opportunity by overcoming the forces that resist the
creation of something new.
This process has four phases:-
• Identify and evaluate the opportunity
• Develop a business plan
• Determine the resources required
• Manage the enterprise
(i) Identify and evaluate the

opportunity
• Opportunity assessment
• Creation and length of opportunity
• Real and perceived value of opportunity
• Risk and returns of opportunity
• Opportunity versus personal skills and goals
• Competitive environment
(ii). Develop a business plan

•A good business plan must be developed in order to
exploit the defined opportunity. It is essential for
developing the opportunity and determining the resources
required, obtaining those resources, and successfully
managing the resulting venture.
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(iii). Determine the resources required
• Determine resources needed
• Determine existing resources
• Identify resource gaps and available suppliers
• Develop access to needed resources
(iv). Manage the enterprise

• Develop management style
• Understand key variables for success
• Identify problems and potential problems
• Implement control systems
• Develop growth strategy
***
2. The Entrepreneurial and

Intrapreneurial Mind
Intrapreneurship is the practice of
entrepreneurship by employees within an
organization.
Intrapreneur is a person within a large

corporation who takes direct responsibility for
turning an idea into a profitable finished
product through assertive risk-taking and
innovation.
It is also known as the practice of a corporate

management style that integrates risk-taking
and innovation approaches, as well as the
reward and motivational techniques that are
more traditionally thought of as being the
province of entrepreneurship.
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Entrepreneurial Venturing Inside a
Corporation
• A project that is new to the company and carries a
much higher risk of failure than other project.
• Due to the level of uncertainty, it is often managed
separately
• Corporate ventures undertaken to move the company in
new directions
2.1 Difference between

an Entrepreneur and an Intrapreneur
• An entrepreneur takes substantial risk in being the
owner and operator of a business with expectations of
financial profit and other rewards that the business may
generate.
• On the contrary, an intrapreneur is an individual

employed by an organization for remuneration, which is
based on the financial success of the unit he is
responsible for.
• Intrapreneurs share the same traits as entrepreneurs

such as conviction, zeal and insight. As the intrapreneur
continues to express his ideas vigorously, it will reveal
the gap between the philosophy of the organization and
the employee. If the organization supports him in
pursuing his ideas, he succeeds. If not, he is likely to
leave the organization and set up his own business.
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2.2 Benefits of Corporate Venturing
• Effective way to create new revenue streams
• Entrepreneurial activities stimulate product/process
innovation
• CV is a source of organizational growth
• Entrepreneurial activities spur the company to take risks
and pioneer, making it more competitive
• Entrepreneurial activities help the company overcome
resource limitations.
2.3 Climate for Intrapreneurship

In establishing an intrapreneurial environment in an
organization certain factors and leadership characteristics
need to be operant.
They are as follows:-

• Organization Operates on Frontiers of Technology
• New Ideas Encouraged
• Trial and Error
• No Opportunity Parameters
• Resources Available and Accessible
• Multidiscipline Team Approach
• Volunteer Program
• Appropriate Reward System
• Sponsors and Champions Available
• Support of Top Management
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***
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3. Managerial Versus
Entrepreneurial Decision Making
The differences between the entrepreneurial and managerial
styles can be viewed from five key business dimensions:-
• Strategic orientation
• Commitment to opportunity
• Commitment of resources
• Control of resources
• Management structure
(i). Strategic Orientation
The entrepreneur’s strategic orientation depends on

his/her perception of the opportunity. This orientation is
most important when other opportunities have diminishing
returns accompanied by rapid changes in technology,
consumer economics, social values, or political rules.
If the strategic orientation is use of planning systems as

well as measuring performance to control current
resources, it is the domain of administration i.e.,
managerial.
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(ii). Commitment to opportunity
The entrepreneurial approach is pressured by the need for

action, short decision windows, a willingness to assume
risk and hence has a short time span in terms of
opportunity commitment.
Whereas the managerial domain is very slow to act on an

opportunity and if the action is taken then the commitment
is usually for a long time span.
(iii). Commitment of resources
The resources being used by the entrepreneur are often

acquired from others. Usually they are difficult to obtain
and this forces the entrepreneur to maximize any
resources use.
Often entrepreneurs have resources commitment at

periodic intervals based on certain task or objectives.
However the commitment by managerial domain is for the

total amount needed and their response is directed to the
source of rewards offered by effectively administering the
resources under their control.
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(iv). Control of resources
The administrator is motivated to own or accumulate as

many resources as possible in order to avoid rental or
other periodic use of resources since the administrator is
rewarded by effective resource administration.
In contrast to this approach the entrepreneur under the

pressure of limited resources, the risk of obsolescence, a
need for flexibility and the risks involved is motivated to
rent, or otherwise achieve use of the resources on need
basis.
(v). Management structure
In the administrative domain the organizational structure is

formalized and hierarchical in nature and has clearly
defined lines of authority and responsibility.
In contrast, the entrepreneurs have flat organizational

structure with informal networks and much of
independence.
***
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3. Entrepreneurs Versus Inventors
Invention:
• something that has never been made before, or

the process of creating something that has never been
made before.
• An invention is a unique or novel device, method,

composition or process. The invention process is a process
within an overall engineering and product development
process. It may be an improvement upon a machine or
product or a new process for creating an object or a
result.
3. Entrepreneurs Versus Inventors

Inventor:
• An inventor is a person who creates or discovers a new
method, form, device or other useful means that
becomes known as an invention.
Shunpei Yamazaki Kia Silverbrook

Japanese Inventor, Australian Inventor,
Thomas Alva Edison Entrepreneur Entrepreneur
US Inventor, Entrepreneur 5255 Patents 4744 Patents (9874 Applied)
1093 Patents
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Entrepreneurs Versus Inventors
Generally both inventors and entrepreneurs are able to
come up with new ideas, and share some common
characteristics, however, the key difference is
that inventors are usually focused on the tangible invention,
while entrepreneurs are more focused on the business
opportunity
• An individual who creates something for the first time, and is
highly driven and motivated by his or her own work and
personal ideas.
• Highly creative, well-educated and has occupational
experiences that contribute to creative development and free
thinking.
• Problem solver able to reduce complex problems to simple
ones.
Entrepreneurs Versus Inventors

• Problem solver able to reduce complex problems to simple
ones.
• Enjoy the process of inventing, not implementing.
• Enjoy the process of inventing, not implementing.
• Falls in love with the invention and will only reluctantly
modify the invention to make it more commercially
feasible.
• Usually not likely to view monetary benefits as a measure
of success.
Inventor’s work often requires the expertise of an

entrepreneur and a team approach, as many inventors are
unable to focus on just one invention long enough to
commercialize it.
*****
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Home Assignment
Assignment – 1, Lecture 1
Compare and contrast entrepreneurs and inventors and

evaluate their importance and contribution to world
economy and the society at large by bringing out the
argument and evidence.
Please submit hand written answers in A4 sheets by Feb

24, 2020, Monday.
15

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Lecture - 1

Entrepreneurship and Innovation (MGEM 611)

Faculty - Shashi Raj Bajracharya

The Oxford English Dictionary defines an Entrepreneur as:

A brief start on a definition may be:

“I’m encouraging young people to become social business

Behaviours, skills and attributes applied individually and/or

“Entrepreneurs use innovation to exploit or create change and

1.3 Entrepreneurial Skills

1.5 Benefits of Entrepreneurship

The entrepreneurial process is the process through which a

(i) Identify and evaluate the

(ii). Develop a business plan

(iv). Manage the enterprise

2. The Entrepreneurial and

Intrapreneur is a person within a large

It is also known as the practice of a corporate

2.1 Difference between

• On the contrary, an intrapreneur is an individual

• Intrapreneurs share the same traits as entrepreneurs

2.3 Climate for Intrapreneurship

They are as follows:-

(i). Strategic Orientation

The entrepreneur’s strategic orientation depends on

If the strategic orientation is use of planning systems as

The entrepreneurial approach is pressured by the need for

Whereas the managerial domain is very slow to act on an

(iii). Commitment of resources

The resources being used by the entrepreneur are often

Often entrepreneurs have resources commitment at

However the commitment by managerial domain is for the

The administrator is motivated to own or accumulate as

In contrast to this approach the entrepreneur under the

(v). Management structure

In the administrative domain the organizational structure is

In contrast, the entrepreneurs have flat organizational

• something that has never been made before, or

• An invention is a unique or novel device, method,

3. Entrepreneurs Versus Inventors

Shunpei Yamazaki Kia Silverbrook

Entrepreneurs Versus Inventors

Inventor’s work often requires the expertise of an

Compare and contrast entrepreneurs and inventors and

Please submit hand written answers in A4 sheets by Feb

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