Entrepreneurship

Howard Van Auken, PhDHoward Van Auken, PhD

Professor of ManagementProfessor of Management

Iowa State UniversityIowa State University

Summer 2008Summer 2008

Overview of Course

Module 1Module 1 Introduction and Introduction and

Business Start-UpBusiness Start-Up

Module 2Module 2 Global EntrepreneurshipGlobal Entrepreneurship

Module 3Module 3 Competing in the MarketCompeting in the Market

Module 4Module 4 Sources of Capital

Module 5Module 5 Raising CapitalRaising Capital

Module 6Module 6 Launching the FirmLaunching the Firm

Module 1Topics

Introduction to Entrepreneurship

Definitions

Importance

Creativity and Innovation

Failure

Process

Entrepreneurship Intensity

Module 1Introduction and Business Start-up

Entrepreneurship is:

Value-Producing ActivityIndividual Goal

Process

The at-risk organization is not prepared for the entrepreneurial age

Entrepreneurship Is

Process of identifying and pursuing business opportunities

Process of creating value by bringing together resources to exploit an opportunity

Pursuit of opportunity without regard to resources controlled

Set of critical thinking skills

Entrepreneurial Perspective

Entrepreneurial is being

opportunity-driven not resource-constrained

Individual

Organization

Region/Country

Government

Why Entrepreneurship?

Key to economic development and growth

Creates jobs, income, and wealth

Source of new technology and products

Entrepreneurship

Not about individual business stabilityNot about individual business stability

Entrants, growth, displacements, failures Entrants, growth, displacements, failures create dynamic economycreate dynamic economy

Starts and failures signs of economic healthStarts and failures signs of economic health

The challenge…

-to embed this process into the strategies, -to embed this process into the strategies, culture, structures, procedures, and jobsculture, structures, procedures, and jobs

-this includes organizations (large/small, -this includes organizations (large/small,

private/ non-profit/public sectors) and private/ non-profit/public sectors) and individualsindividuals

Five elements for entrepreneurship to happen…Five elements for entrepreneurship to happen…

The organizational context

The entrepreneur

The resourcesThe concept

The entrepreneurial process

The environment

11

Entrepreneurial Orientation

InnovativenessRisk-taking

Proactiveness

Entrepreneurship as a ProcessEntrepreneurship as a Process

Identify/Evaluation Idea

Develop Plan

Acquire Resources

Launch

Manage

Exit/Harvest

Why Start a BusinessWhy Start a Business

Independence

Control Over One’s Life

Personal Satisfaction

Financial Rewards

Risk - Risk - Business Failure

Financial Risk

Career Risk

Family/Social

Personal

Small Firm Failure in US

25% within 2 years

52% within 4 years

63% within 6 years

Reasons for Failure

Do Not Understand the Market

Lack of Planning

Lack of Managerial Skills

Lack of Capital

Creativity and Innovation

CreativityCreativity

Process of generating new ideasProcess of generating new ideas

InnovationInnovation

Process of generating Process of generating and and applyingapplying new new ideasideas

Source of New Ideas(Being Creative)

Grace Grace Ideas come from nowhereIdeas come from nowhere

Accident Accident Ideas arise by chanceIdeas arise by chance

Personality Personality Ideas a human trait of someIdeas a human trait of some

Association Association Apply knowledge to new Apply knowledge to new areasareas

CognitionCognition Action stimulates creativityAction stimulates creativity

Obstacles to Creativity/Innovation

Need for quick resultsNeed for quick results

Rigid rulesRigid rules

StressStress

RoutinesRoutines

Strong BeliefsStrong Beliefs

Strong EgoStrong Ego

Fear of criticism or failureFear of criticism or failure

Improving Ability to Recognize Opportunities

Stay healthyCarefully define the problem

Exposure to new ideasReceptive to new ideas

Continue learning

Innovation Myths

Only small/new companies innovateOnly small/new companies innovate

Only need one great idea Only need one great idea

Need to stick to what we knowNeed to stick to what we know

Innovation is part-timeInnovation is part-time

Innovation is haphazard (just need luck)Innovation is haphazard (just need luck)

We know what our customers wantWe know what our customers want

Market knowledge is held by specialistsMarket knowledge is held by specialists

Creativity/Innovation and Society

A more innovative society

- Values learning

- Strong cultural reinforcements (e.g. nurturing

family environment)

- Builds human capital

- Highly specialized to master subfields

Intensity of Entrepreneurship

Frequency Frequency ofof XXInnovationInnovation XX

XXXX

XX

XX XX

XX

Degree ofDegree ofInnovationInnovation

Discussion

Assignment

1. Identify a broad market trend and/or societal change inPortugal

What is the trend?What new business might be started?

2. Identify a problem that you experience as a consumer

What is the problem?What new business might be started?