Entrepreneurship

Howard Van Auken, PhD

Professor of Management
Iowa State University
Summer 2008

Overview of Course
Module 1
Module 2
Module 3
Module 4
Module 5
Module 6

Introduction and
Business Start-Up
Global Entrepreneurship
Competing in the Market
Sources of Capital
Raising Capital
Launching the Firm

Module 1
Topics
Introduction to Entrepreneurship
Definitions
Importance
Creativity and Innovation
Failure
Process
Entrepreneurship Intensity

Module 1
Introduction and Business Start-up
Entrepreneurship is:
Value-Producing Activity
Individual 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 stability
Entrants, growth, displacements, failures
create dynamic economy
Starts and failures signs of economic health

The challenge
-to embed this process into the strategies,
culture, structures, procedures, and jobs
-this includes organizations (large/small,
private/ non-profit/public sectors) and
individuals

Five elements for entrepreneurship to happen

The environment
1

The organizational
context

The entrepreneurial
process

The concept

The resources

The
entrepreneur

Entrepreneurial
Orientation

Innovativeness

Risk-taking

Proactiveness

Entrepreneurship as a Process
Identify/Evaluation Idea
Develop Plan
Acquire Resources
Launch
Manage
Exit/Harvest

Why Start a Business

Independence
Control Over Ones Life
Personal Satisfaction
Financial Rewards

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

Creativity
Process of generating new ideas
Innovation
Process of generating and applying new
ideas

Source of New Ideas

(Being Creative)
Grace

Ideas come from nowhere

Accident

Ideas arise by chance

Personality

Ideas a human trait of some

Association

Apply knowledge to new areas

Cognition

Action stimulates creativity

Obstacles to Creativity/Innovation
Need for quick results
Rigid rules
Stress
Routines
Strong Beliefs
Strong Ego
Fear of criticism or failure

Improving Ability to
Recognize Opportunities
Stay healthy
Carefully define the problem
Exposure to new ideas
Receptive to new ideas
Continue learning

Innovation Myths
Only small/new companies innovate
Only need one great idea
Need to stick to what we know
Innovation is part-time
Innovation is haphazard (just need luck)
We know what our customers want
Market 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
of X
Innovation
X
X
X

Degree of
Innovation

Discussion

Assignment
1.

Identify a broad market trend and/or societal change in

Portugal
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?