The World of the Entrepreneur Fredy Piller
Definitions Entrepreneur
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Its origin lies in France – as an individual commissioned to undertake a particular commercial project by someone with money to invest – The “Undertaker”
In its earlier stages this usually meant an overseas trading project
Such projects were risky, both for the investor (who could lose money) and for the entrepreneur (who could lose a lot more)
Definitions (continuous) Entrepreneur
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Although the term was used before Cantillon, it is clear that Cantillon was the first to offer a clear conception of the entrepreneurial function as a whole (in 1755).
He defined “Entrepreneur” as a person who took an active risk-bearing role in pursuing opportunity
What about Jean-Baptiste Say?
What about Schumpeter? For Next Week Tutorial What is “Creative Destruction”?
The World of the Entrepreneur •
The Economist such as Cantillon (1755), Say (1803) and Schumpeter (1954):
- looked more into economic development
- creating wealth
- innovation
• Behaviourists such as Max Weber (1930) and David C. McClelland (1961):
– tried to understand entrepreneur as a person
– concentrated on creativity
– intuitive characteristics of entrepreneurs
The Entrepreneur can be considered as:
Entrepreneurs not are characterised by every action they take, but by a particular set of actions aimed at the creation of new wealth with their ventures
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A manager undertaking an activity – i.e. in terms of the particular tasks they perform and the way they undertake them
An agent of economic change – i.e. in terms of the effects they have on economic systems and the changes they drive
An individual – i.e. in terms of their psychology, personality and personal characteristics.
Classifying Entrepreneurs WARNING! • •
Classification is a tool to aid understanding, not a rigid category that entrepreneurs must be shoehorned into. It provides the starting point for gaining an insight into how different types of entrepreneurial ventures work and the disparate factors underlying their success
Classical Approach
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Craftsmen – attempt to make a living by privately selling their trade or the product they produce
- income oriented: just to secure steady income
- expansion oriented: want more than just steady income
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Opportunist Entrepreneurs – interested in maximising their return from short-term deals
- growth-oriented: pursue opportunities to maximise the potential of the ventures
- independence-oriented: main ambition was to work for themselves – preferred stability to growth
Webster’s Approach •
The Cantillon Entrepreneur (classic type) !
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The Industry Maker !
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Administrative Entrepreneur (Intrapreneur) !
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The Small Business Owner ! an entrepreneur who takes responsibility for
brings people, money and
materials together to create an entirely new organisation goes beyond merely creating a new firm; their innovation is such important that a whole industry is created on the back of it a manager who operates within an established firm but does so in an entrepreneurial manner owning and running their own venture.
Serial Entrepreneur Serial Entrepreneurs ! Entrepreneurs or a group of entrepreneurs who, having led one business success, move on to start another Serial Entrepreneurs may be sub-divided into:
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Sequential Entrepreneurs: those who started the business in sequence, only run one at a time.
- Example: James Dyson who started the ball-wheel-barrow business before moving on to cyclone vacuum cleaner business
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Portfolio Entrepreneurs: those who run several business simultaneously
- Example: Sir Richard Branson who diversified his Virgin group into a number of different areas
The Entrepreneur Three meta-definitions:
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As a performer of managerial tasks
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An agent of economic change, and
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As an individual with a particular personality
All three complement each other
Specify entrepreneurs by the task that they perform.
Four levels of intrapreneurial activity Within : Outside
These differ on the impact on: • • • •
The organisation and its surroundings Venture’s stakeholders Resources required Level of risk
1. Management of specific projects 2. Setting up of new business units 3.Reinvigorating the whole organisation 4. Reinventing the business’s industry
The Setting up of new Business Units • • • •
Structure
External strategic issues
Resources (including HR)
Relationship with parent business
Reinvigorating the whole organisation • •
Flexibility and responsiveness to new and unmet customer demands
Reintroduce inventive spirit back – it is a radical process!
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An intrapreneur must lead with entrepreneurial vision, leadership and motivation, and overcome resistance to change.
Internal concerns
Reinventing the Business’s Industry Entrepreneurs reinvent the industries they
operate in by introducing:
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New technology Delivering new products New processes
Businesses can win by playing or changing the rules: Either requires strategic thinking, vision, risk taking and leadership. Here,
intrapreneurship = entrepreneurship
Limitations to intrapreneurship •
Entrepreneurs comfort: Entrepreneurs who have created the company must let go so that intrapreneurs can operate.
(It is about breaking rules which entrepreneurs have created (Young, 1999)
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Decision-making control: Balance needed between freedom for the intrapreneur and maintaining the business on a constant strategic path.
Limitations to intrapreneurship
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Internal politics: Intrapreneurs must be able to predict and understand internal resistance to change. “Thrive on chaos” (Tom Peters, 1989)
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Rewards: Can the organisation offer the same rewards as those expected by entrepreneurs? (economic, social and developmental). Moves to start own venture?
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