Introduction To Entrepreneurship: Bruce R. Barringer R. Duane Ireland

Chapter 1
Introduction to
Entrepreneurship
Bruce R. Barringer
R. Duane Ireland
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Chapter Objectives
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1. Explain entrepreneurship and discuss its

importance.
2. Describe corporate entrepreneurship and its use in
established firms.
3. Discuss three main reasons people decide to
become entrepreneurs.
4. Identify four main characteristics of successful
entrepreneurs.
5. Explain five common myths regarding
entrepreneurship.
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Copyright ©2012 Pearson Education
Chapter Objectives
2 of 2
6. Explain how entrepreneurial firms differ from

salary-substitute and lifestyle firms.
7. Discuss the changing demographics of
entrepreneurs in the United States.
8. Discuss the impact of entrepreneurial firms on
economies and societies.
9. Identify ways in which large firms benefit from the
presence of smaller entrepreneurial firms.
10. Explain the entrepreneurial process.
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Introduction to Entrepreneurship
There is tremendous According to the 2010 GEM

interest in study, 7.6% of Americans
are actively engaged in
entrepreneurship in the
starting a business or are
U.S. and around the world. the owner/manager of a
business that is less than
three years old.
1-4
Indications of Increased Interest
in Entrepreneurship
• Books
– Amazon.com lists over 35,600 books dealing with
entrepreneurship and 62,700 focused on small business.
• College Courses
– In 1985, there were about 250 entrepreneurship courses
offered across all colleges in the United States.
– Today, more than 2,000 colleges and universities in the
United States (which is about two-thirds of the total) offer at
least one course in entrepreneurship.
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What is Entrepreneurship?
• Academic Definition (Stevenson & Jarillo)

– Entrepreneurship is the process by which individuals pursue
opportunities without regard to resources they currently
control.
• Venture Capitalist (Fred Wilson)
– Entrepreneurship is the art of turning an idea into a
business.
• Explanation of What Entrepreneurs Do
– Entrepreneurs assemble and then integrate all the resources
needed – the money, the people, the business model, the
strategy – to transform an invention or an idea into a viable
business.
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Corporate Entrepreneurship
1 of 2
• Corporate Entrepreneurship
– Is the conceptualization of entrepreneurship at the firm
level.
– All firms fall along a conceptual continuum that ranges
from highly conservative to highly entrepreneurial.
– The position of a firm on this continuum is referred to as its
entrepreneurial intensity.
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Corporate Entrepreneurship
2 of 2
Entrepreneurial Firms Conservative Firms
• Proactive • Take a more “wait and see”

posture
• Innovative
• Less innovative
• Risk taking
• Risk averse
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Why Become an Entrepreneur?
The three primary reasons that people become

entrepreneurs and start their own firms
Desire to be their own boss
Desire to pursue their

own ideas
Financial rewards
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Characteristics of Successful Entrepreneurs
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Four Primary Characteristics
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2 of 3
• Passion for the Business

– The number one characteristic shared by successful
entrepreneurs is a passion for the business.
– This passion typically stems from the entrepreneur’s belief
that the business will positively influence people’s lives.
• Product/Customer Focus
– A second defining characteristic of successful
entrepreneurs is a product/customer focus.
– An entrepreneur’s keen focus on products and customers
typically stems from the fact that most entrepreneurs are, at
heart, craftspeople.
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3 of 3
• Tenacity Despite Failure

– Because entrepreneurs are typically trying something new,
the failure rate is naturally high.
– A defining characteristic for successful entrepreneurs is
their ability to persevere through setbacks and failures.
• Execution Intelligence
– The ability to fashion a solid business idea into a viable
business is a key characteristic of successful entrepreneurs.
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Five primary reasons Passion is important for the
launch of a successful entrepreneurial organization
1. The ability to learn and iterate

2. A willingness to work hard for an extended period of
time
3. Ability to overcome setbacks and no’s
4. Ability to listen to feedback on the limitations of your
organization and yourself
5. Perseverance and persistence when the going gets
tough
1-13
Common Myths About Entrepreneurs
1 of 6
• Myth 1: Entrepreneurs Are Born, Not Made

– This myth is based on the mistaken belief that some people
are genetically predisposed to be entrepreneurs.
– The consensus of many studies is that no one is “born” to
be an entrepreneur; everyone has the potential to become
one.
– Whether someone does or doesn’t become an entrepreneur
is a function of their environment, life experiences, and
personal choices.
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2 of 6
Although no one is “born” to be an entrepreneur, there are common traits and
characteristics of successful entrepreneurs
• A moderate risk taker • Optimistic disposition

• A networker • Persuasive
• Achievement motivated • Promoter
• Alert to opportunities • Resource assembler/leverager
• Creative • Self-confident
• Decisive • Self-starter
• Energetic • Tenacious
• Has a strong work ethic • Tolerant of ambiguity
• Lengthy attention span • Visionary
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3 of 6
• Myth 2: Entrepreneurs Are Gamblers

– Most entrepreneurs are moderate risk takers.
– The idea that entrepreneurs are gamblers originates from
two sources:
• Entrepreneurs typically have jobs that are less structured, and so
they face a more uncertain set of possibilities than people in
traditional jobs.
• Many entrepreneurs have a strong need to achieve and set
challenging goals, a behavior that is often equated with risk taking.
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4 of 6
• Myth 3: Entrepreneurs Are Motivated Primarily by

Money
– While it is naïve to think that entrepreneurs don’t seek
financial rewards, money is rarely the reason entrepreneurs
start new firms.
– In fact, some entrepreneurs warn that the pursuit of money
can be distracting.
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5 of 6
• Myth 4: Entrepreneurs Should Be Young and

Energetic
– Entrepreneurial activity is fairly easily spread out over age
ranges.
– While it is important to be energetic, investors often cite
the strength of the entrepreneur as their most important
criteria in making investment decisions.
• What makes an entrepreneur “strong” in the eyes of an investor is
experience, maturity, a solid reputation, and a track record of
success.
• These criteria favor older rather than younger entrepreneurs.
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6 of 6
• Myth 5: Entrepreneurs love the Spotlight

– Albeit some entrepreneurs are flamboyant, the vast
majority of them don’t attract public attention.
– In fact, many entrepreneurs avoid public notice, because
they are working on proprietary products or services.
• There are thousands of companies around the world, but how many
of these entrepreneurs can you name? Most of us would say, Bill
Gates, Steve Jobs, Mark Zuckerberg, Jack Maa,……. and Then??
• These evidences defy the myth that entrepreneurs love spotlight.
1-19
Types of Start-Up Firms
Examples: Dry Examples: ski Examples: Google,

cleaners, restaurants, instructors, tour Facebook, Microsoft
accounting firms, guides, golf and tennis etc.
retail stores etc. pros etc.
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Changing Demographics of Entrepreneurs
1 of 3
Women Entrepreneurs
• There were 6.2 million women-
owned businesses in 2002 (the
most recent statistics available)
• This number was up 20% from
1997.
• There are a growing number of
organizations that support and
advocate for women-owned
businesses.
1-21
2 of 3
Minority Entrepreneurs Senior Entrepreneurs
• There has been a substantial • The percentage of U.S.

increase in minority entrepreneurs who are seniors
entrepreneurs in the U.S. from jumped from 15% to 23% from
1996 to 2010. 1996 to 2010.
• The biggest jump has come in • The increase is attributed to
Latino entrepreneurs, which corporate downsizing, a desire
increased from 11% to 23% among older workers for more
from 1996 to 2010. fulfillment in their lives, a need
for additional income, and
similar factors.
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3 of 3
Young Entrepreneurs
• Interest among young people in entrepreneurial careers

is high.
• According to a Harris Interactive survey, 40% of people eight
to 21 years old said they’d like to start their own business
someday.
• A total of 59% of the 8- to 21- year olds said they know
someone who has started their own business.
1-23
Economic Impact of Entrepreneurial Firms
• Innovation
– Is the process of creating something new, which is central to
the entrepreneurial process.
– Several studies have found that small businesses outperform
their larger counterparts in terms of obtaining patents.
• Job Creation
– Small businesses are the creators of most new jobs in the
U.S., and employ half of all private sector employees.
– According to a Kauffman Foundation survey, 92% of
Americans say entrepreneurs are critically important to job
creation.
1-24
Entrepreneurial Firms’ Impact on Society
and Larger Firms
• Impact on Society
– The innovations of entrepreneurial firms have a dramatic
impact on society.
– Think of all the new products and services that make our
lives easier, enhance our productivity at work, improve our
health, and entertain us in new ways.
• Impact on Larger Firms
– Many entrepreneurial firms have built their entire business
models around producing products and services that help
larger firms become more efficient and effective.
1-25
The Entrepreneurial Process
The Entrepreneurial Process Consists of Four Steps

Step 1: Deciding to become an entrepreneur.
Step 2: Developing successful business ideas.
Step 3: Moving from an idea to an entrepreneurial firm.
Step 4: Managing and growing the entrepreneurial firm.
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Steps in the Entrepreneurial Process
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Step 1 Step 2
Developing Successful Business Ideas
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Steps in the Entrepreneurial Process
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Step 3 Step 4
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All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the United
States of America.

1-29

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Chapter 1

1. Explain entrepreneurship and discuss its

6. Explain how entrepreneurial firms differ from

There is tremendous According to the 2010 GEM

• Academic Definition (Stevenson & Jarillo)

Entrepreneurial Firms Conservative Firms

• Proactive • Take a more “wait and see”

The three primary reasons that people become

Desire to be their own boss

Desire to pursue their

Four Primary Characteristics

• Passion for the Business

• Tenacity Despite Failure

1. The ability to learn and iterate

• Myth 1: Entrepreneurs Are Born, Not Made

• A moderate risk taker • Optimistic disposition

• Myth 2: Entrepreneurs Are Gamblers

• Myth 3: Entrepreneurs Are Motivated Primarily by

• Myth 4: Entrepreneurs Should Be Young and

• Myth 5: Entrepreneurs love the Spotlight

Examples: Dry Examples: ski Examples: Google,

Minority Entrepreneurs Senior Entrepreneurs

• There has been a substantial • The percentage of U.S.

• Interest among young people in entrepreneurial careers

The Entrepreneurial Process Consists of Four Steps

Copyright ©2012 Pearson Education

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