Date post: | 11-Jan-2016 |
Category: |
Documents |
Upload: | olivia-collins |
View: | 220 times |
Download: | 4 times |
Chapter 10
Entrepreneurial Firm
LEARNING OBJECTIVES
After studying this chapter, you should be able to:
1. Define entrepreneurship, entrepreneurs, and entrepreneurial firms
2. Understand how institutions and sources affect entrepreneurship
3. Identify the three characteristics of a growing entrepreneurial firm
4. Differentiate international strategies that enter foreign markets and that stay in domestic markets
5. Participate in three leading debates on growing and internationalizing the entrepreneurial firm
6. Draw implications for action
ENTREPRENEURSHIP ANDENTREPRENEURIAL FIRMS
small and medium-sized enterprises (SMEs) - generally defined in the US as firms with fewer than 500 employees
entrepreneurship – identification and exploitation of previously unexplored opportunities
entrepreneurs - founders and owners of new businesses or managers of existing firms
international entrepreneurship - combination of innovative, proactive, and risk seeking behavior that crosses national borders and is intended to create wealth in organizations
Institutions and Entrepreneurship
entrepreneurship is thriving around the globe in general, its development is unequal In general, governments in developed economies impose fewer procedures entrepreneurs confront harsher regulatory
burdens in poor countries
GROWING THE ENTREPRENEURIAL FIRM
growth - an entrepreneurial firm can be viewed as an attempt to more fully utilize currently underutilized resources and capabilities
Innovation - heart of entrepreneurship and allows for a more sustainable basis for competitive advantage
financing - start-ups need to raise capital; “4F” sources of entrepreneurial financing: founders, family, and friends, and fools
Microfinance
Lending institutions provide tiny loans ($50–$300) to entrepreneurs in developing countries that would lift them out of poverty
INTERNATIONALIZINGTHE ENTREPRENEURIAL FIRM
There is a myth based on historical stereotypes that only large MNEs do business abroad and that SMEs mostly operate domestically Transaction costs may seem so high that
many firms may choose not to pursue international opportunities
Some born global start-ups attempt to do business abroad from inception
Many venture investors look for a global view in candidate organizations
Strategies forEntering Foreign Markets
direct exports - sale of products made by entrepreneurial firms in their home country to customers in other countries
sporadic (or passive) exporting - sale of products prompted by unsolicited inquiries
licensing - agreement to give another organization the rights to use proprietary technology (such as a patent) or trademark (such as a corporate logo) for a royalty fee
franchising - as licensing, except typically used in service industries
foreign direct investment - strategic alliances, joint ventures, green-field wholly owned subsidiaries, and/or foreign acquisitions
International Strategies for Stayingin Domestic Markets
indirect exports - SMEs reach overseas customers by exporting through domestic-based export intermediaries
export intermediaries - perform an important
“middleman” function by linking sellers and buyers overseas that otherwise would not have been connected: export trading companies (ETCs), export management companies (EMCs)
Traits versus Institutions
What motivates entrepreneurs to establish new firms, while most others are simply content to work for bosses?The “traits” school of thought argues it is personal traits that matter.Critics, however, argue that some of these traits, such as a strong achievement orientation, are not necessarily limited to entrepreneurs, but instead are characteristic of many successful individuals.
Slow Internationalizers versusBorn Global Start-Ups
Can SMEs internationalize faster than what has been suggested by traditional stage models?
orShould they rapidly internationalize?
Antifailure Bias versus Entrepreneur-Friendly Bankruptcy Law
One of the leading debates is how to treat failed entrepreneurs who file for bankruptcy.
If entrepreneurship is to be encouraged, there is a need to ease the pain associated with bankruptcy by means such as allowing entrepreneurs to walk away from debt, a legal right that bankrupt American entrepreneurs appreciate.
In contrast, bankrupt German entrepreneurs mayremain liable for unpaid debt for up to 30 years. Further, German and Japanese managers of bankrupt firms can also be liable for criminal penalties.