CHAPTER 1

ENTREPRENEURSHIP AND THE

INDIVIDUAL ENTREPRENEUR
MINDSET
 Learning Objectives
To introduce the concept of entrepreneurship and explain the process
of entrepreneurial action

To describe how structural similarities enable entrepreneurs to make

creative mental leaps

To highlight bricolage as a source of entrepreneurs resourcefulness

To introduce effectuation as a way expert entrepreneurs sometimes

think

To develop the notion that entrepreneurs cognitively adapt

To introduce sustainable entrepreneurship as a means of sustaining the

natural environment and communities and developing gains for others
 The Nature of Entrepreneurship

Entrepreneurship plays an important role in the creation and

growth of businesses, as well as in the growth and prosperity of
regions and nations

Entrepreneurial Opportunities
Situation in which new goods, services, raw materials, and
organizing methods can be introduced
Sold at greater that their cost of production

Entrepreneurial Action
Creation of new products/services
Involves entry into new markets
May occur through a newly created organization or within an
established organization
 The Nature of Entrepreneurship

Entrepreneur act on what they believe is an opportunity and because

it exist in high uncertainty, entrepreneurs must use their judgment
about whether or not to act.

The individual prior knowledge can decrease the amount of

uncertainty and his or her motivation indicates a willingness to bear
uncertainty.

Entrepreneur act on the possibility that one has identified an

opportunity worth pursuing.

Entrepreneurial Thinking
An individuals mental processes of overcoming ignorance to:
Decide whether a signal represents an opportunity for someone
Decide whether that opportunity is applicable to the individual
specifically
Process feedback from action steps taken
Entrepreneurial Action
 How Entrepreneurs Think

Engage in
Think Structurally
Bricolage

Entrepreneur
Should:

Effectuate Cognitively Adapt

 Think Structurally

Example of a creative mental Making these connection

Creative mental leap could
leap is from knowledge between a new product and
be from knowledge about a
about existing markets to a target market where it can
technology to a new market
technology that could lead to be introduced is aided by
that could benefit from its
products/services that satisfy superficial and structural
introduction
that market similarities

Structural Similarities:
Superficial Similarities:
Underlying mechanisms of
Basic elements of the
the technology resemble the
technology resemble the
underlying mechanisms of
basic elements of the market
the market

The entrepreneurial challenge often lies in making creative

mental leap based on structural similarities
 Engage in
Bricolage

Engage in Bricolage

Entrepreneurs often lack of resources

As a result they seek resources from others to provide the
slack necessary to experiment and generate
entrepreneurial opportunities, or engage in bricolage
Bricolage:
Entrepreneurs making do by applying combinations of
the resources at hand to new problems and
opportunities
This involves taking existing resources and experimenting,
tinkering, repackaging and/or reframing them so they can
be used in a way for which they were not originally
designed or conceived
 Effectuate

Entrepreneurs do not always think through a problem in a way that starts with desired
outcomes and focuses on the means to generate that outcome

Such process is referred to as causal process

Causal process:
A process that starts with a desired outcome and focuses on
the means to generate that outcome

Entrepreneur sometimes use an effectuation process

Effectuation:
A process that starts with what one has (who they are, what
they know, and whom they know) and selects among possible
outcomes
 Effectuate

Effectuation helps entrepreneur think in an environment of high uncertainty.

Organization today operate in complex and dynamic environment that are
increasingly characterized by rapid, substantial, and discontinuous change. Given
the nature of this type of environment, most managers of firms need to take on an
entrepreneurial mind-set so that their firms can successfully adapt to
environmental changes

Entrepreneurial Mind-Set:
Involves the ability to rapidly sense, act, and mobilize,
even under uncertain conditions
 Cognitively Adapt

Cognitive adaptability

Describes the extent to which entrepreneurs are:

Dynamic, flexible, self-regulating and engaged
in the process of generating multiple decision
frameworks
Focused on sensing and processing changes in
their environments and then acting on them
Metacognitive awareness:
Ability to reflect upon,understand, and
control ones thinking and learning
 Cognitively Adapt

We can achieve cognitive adaptability by asking a

series a questions that relate to:

Comprehension
Questions

Series of Connection
Reflection Tasks
Questions Task

Strategic Tasks
 Comprehension questions
Increase entrepreneurs
understanding of the nature of the
environment
Connection tasks
Stimulate thinking about similarities
and differences of current situations
with situations previously faced and
solved
Strategic tasks
Identify strategies that are
appropriate for solving the problem
or pursuing the opportunity
 Reflection tasks
Stimulate entrepreneurs to
think about their
understanding and feelings as
they progress through the
entrepreneurial process
Entrepreneurs who are able to increase cognitive adaptability have an improved ability to:

Communicate ones
Adapt to new
Be creative reasoning behind a
situations
particular response
 The Intention to Act Entrepreneurially

Entrepreneurial intentions
Motivational factors that influence individuals to
pursue entrepreneurial outcomes
Entrepreneurial self-efficacy
Conviction that one can successfully pursue
entrepreneurial outcomes
Perceived desirability
Degree to which a potential entrepreneurial
outcome is evaluated as favorable or unfavorable
 Entrepreneur Background and
Characteristics

Education

Age

Work History
 Education
Education
Facilitates integration and accumulation of
knowledge thus providing a larger opportunity set
Casts a wider net for the discovery or generation of
potential opportunities
Assists entrepreneurs in adapting to new situations
Does not necessarily determine whether the
individual will create a new business
 Age
Age
Chronological age Usually between the ages 22
and 45
 Work History
Work history
Past work experience of an individual
 Role Models and Support Systems

Role models: Individuals whose example an

entrepreneur can aspire to and copy

Moral-support network: Individuals who give

psychological support to an entrepreneur

Professional-support network: Individuals who help

the entrepreneur in business activities
 Sustainable Entrepreneurship

Preserving nature, life support, and community in

the pursuit of perceived opportunities to:
Bring future products, processes, and services into
existence for gain
Can generate:
Economic gains
Environmental gains
Social gains
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Product A Product B
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Feature 2 Feature 2
Feature 3 Feature 3