Week : Entrepreneurship, Creativity + Adjustment ?· describe risk-taking and innovation inside a company…

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  • !Week5:Entrepreneurship,Creativity+AdjustmentDrChristopherPokarier|EB202IntroductiontoBusiness

  • Entrepreneurshipconcept

    Whatis`entrepreneurship

    ! Anumberofdefinitionsanddescriptions

    ! Typicallyfocusesondecisionmakingunderuncertaintyandtherisk,insightandcreativityinvolved

    ! Severaldistinctschoolsofthoughtonentrepreneurship

  • !Entrepreneurship

  • Entrepreneurshipasrisk-taking

    ! Risk-takingisasignificantfactorwhichdifferentiatesbeinginbusinesstobeingemployed.

    ! Inbusiness,costscomebeforerevenues

    ! Theownersofabusinessaretheresidualclaimantstoanyresidualsurplus(profits)afterallcostsaremetandrevenuesreceived.

    ! Marketforcescanbecompelrisktakingandrewarditwellpromotinginnovationandeconomicdynamism

    ! FrankKnightstudiedentrepreneurshipfromariskperspective

  • BUTmoderncapitalismsharesrisk

    ! Financialmarketspriceanddistributeriskmakingentrepreneurshipmucheasier

    ! Issuingsharesraisescapital(likebankloans)butsharesriskwithothers

    ! Thiscanreducethepersonalfinancialrisksforentrepreneurs

    ! Weneedtounderstandentrepreneurshipthenasmorethanjustfinancialrisk-taking

    ! Althoughmanybusinesspeoplestillbearrisks(eg.toreputation)evenifthefinancialrisksareshared

  • Entrepreneurshipasinnovation

    ! JosephSchumpeterwasaleadingAustrianeconomistwhofirmlyestablishedacademicinterestinentrepreneurship

    ! Hefocusedontheeconomicconsequencesofentrepreneurship,especiallyinnovation&sawinnovation(intechnologies,products,processes,production,marketingetc)asdisturbingmarketscausingmarketdisequilibrium

    ! Creativedestructionconcept-influentialinlate1990sJapan

    ! Schumpeteralsolookedatthesocialfoundationsofentrepreneurship

  • Entrepreneurshipasarbitrage

    ! Thisviewseesentrepreneursasidentifyingandtakingadvantageofmarketimperfections

    ! Eg.Anentrepreneurmightbuyacommodityorproductinonelocationandsellitinanotherataprofitowingtopriceorexchangedifferentials

    ! Arbitrageinitspurestform,involvingsimultaneousbuyandsellcontracts,isactuallyriskfreeandtakesadvantageofthosepricedifferentials(butclearlyisentrepreneurial)

    ! Thisentrepreneurshipbringsmarketsclosertoequilibrium

    ! ArbitrageviewassociatedwithLeibenstein,Kirzner

  • !EntrepreneurshipasdiscoveryKirznerdescribesentrepreneurialalertnesstoprofitopportunitiesinimperfectmarkets

  • MarkCassonsapproach

    ! CassonisaleadingBritishscholarofentrepreneurship

    ! Focusesondecisionmakingunderuncertainty-judgementaldecisionmaking

    ! Considersseniormanagementandnotjustowner-foundersofbusinesses

    ! ThisfitsthesignificantroleofleadingmanagementinrestructuringWesternfirmsfromthetopdowninthe1980s&1990s

  • Intrapreneurship

    ! intrapreneurshipisamorerecentpopulartermtodescriberisk-takingandinnovationinsideacompany

    ! Thatis,itcoversentrepreneurshipbyemployees

    ! ItisoftenappliedtoJapanesefirmswheremuchinnovationhascomefrommiddleandlowerranksofthecompanyratherthanfromtopmanagementorowners

  • !MarketnichestrategyExpertise&sufficientdemandcanmakenarrowspecializationasuccess

  • Successfulentrepreneurs

    ! Eitherhadahungersuccessandtried(andoftenfailed)atmanyventures

    ! ORhaddeepexperience(andlovefor)aparticularindustryoractivity

    ! Eg.LonelyPlanetpublicationscreatedbyacouple(TheWheelers)wholovedtravel

    ! Billabongcreatedbysurfers

    ! BurtonSnowboardscreatedbyJimBurtonwholovesriding

  • !Networks&entrepreneurshipDeep&broadinteractionbringideas,expertise,financeandefforttogether

  • SociologyofEntrepreneurship

    Whendoentrepreneursemerge?

    ! insocialcontextsthatsupportrisk-taking,failure,socialmobility,andbusinessingeneral

    ! Sometimeswhenpeoplehavesupportingsocialnetworkseg.Oldschoolconnectionsetcreducingrisk

    ! Sometimeswhenpeoplehavelittleotheroptionafterwar,migrantswhocanthaveregularcareers,orgroupswhoareprejudicedagains

    ! Eg.JewsinEurope,ChineseinSoutheastAsia,QuakersinEngland

  • !CreativityInmatureeconomies&industriesinnovation+designarevitalforsuccess

  • Creativityinmodernbusiness

    ! creativity+innovation+designadvantagesarevital

    ! Oldindustrialcommand&controlmanagementstyleisconflictwithsuchneeds

    ! Organisationsbecomeflatterlesstop-down

    ! Moreoutsourcing,freeagents,freecontractingbetweenboutiquespecialistfirms

    ! Somenations,cities,regions,mayhaveculturaladvantages

  • !AdjustmentCompetition,technologicalchange,&systemicshockscreatelosers+winners

  • CreativeDestruction

    ! Entrepreneurshipcreatesnewbusinessesandbringsnewvaluetocustomers&society

    ! Butthissuccesscanmakeotherindustrieslesscompetitive(eg.exportsuccesscausesarisingcurrencyandrisingdomesticlabourcosts)

    ! Internationalcompetitioncompoundstheimpactsonthelosersofmarketcompetition

    ! Socialandpoliticalchallengetosupportthevictimsofeconomicadjustment

  • !TheSILLYcanSUCCEEDIfthemarketwantsit..EastBarinStockholm

  • NewMoney&Bling

    ! Somewillquestionthetasteandmoralityofthenewwealthy

  • !MoralcritiquesofcommerceSavonarola(1452-1498)decriedmaterialisticimmorality&gotburntforitinFlorence

  • !SuccessfulentrepreneursCreatedemandforotherservices(suchasyachtingsupplies!)

  • FearNotFailure

    ! Ifyoucantaffordthecruiseryoucanstillfishofftherocks

    ! TherearemanymaterialrewardsforcommercialsuccessBUT

    ! Manyentrepreneurscontinuetolivesimplyandtoworkhard

    ! &failuresareoftenhappy!

  • !PhilanthropyCopenhagenOperaHouse,mostlyfundedbyMrMoller,ownerofMaerskshipping

  • !entrepreneurialoutsidebusinessInpolitics,charities,orperhapsincatchinganentrepreneurformarriage!