THEORIES ON

1

• THEORIES ON
• ENTREPRENEURSHIP

2
CONTENTS OF THE LECTURE

• DEFINITIONS
• THE WORLD OF THE ENTREPRENEUR
• CLASSIFYING ENTREPRENEUR
• SERIAL ENTREPRENEURS
• INTRAPRENURSHIP

3
Definitions
Entrepreneur

• Its origin lies in 17th 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)

4
Definitions (continuous)
Entrepreneur

• 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?

5
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

6
A number of concepts have been derived from the
idea of the entrepreneur such as
entrepreneurship, entrepreneurial and
entrepreneurial venture

• Entrepreneurship ? is what the entrepreneur does
• Entrepreneurial ? an adjective describing how the
  entrepreneur undertakes what he or she does
• Entrepreneurial Venture ? the means which new
  value is created as a result of the project

7
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

• 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.

8
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

9
Classical Approach

• 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
• 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

10
Websters Approach

• The Cantillon Entrepreneur (classic type) ?
  brings people, money and materials together to
  create an entirely new organisation
• The Industry Maker ? goes beyond merely creating
  a new firm their innovation is such important
  that a whole industry is created on the back of
  it
• Administrative Entrepreneur (Intrapreneur) ? a
  manager who operates within an established firm
  but does so in an entrepreneurial manner
• The Small Business Owner ? an entrepreneur who
  takes responsibility for owning and running their
  own venture.

11
Landaus Approach
Gambler
True Entrepreneur
High
Risk Bearing
Consolidator
Dreamer
Low
Low
High
Innovativeness
12
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
• 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
• Portfolio Entrepreneurs those who run several
  business simultaneously
• - Example Sir Richard Branson who diversified
  his Virgin group into a number of different areas

13
The Entrepreneur

• Three meta-definitions
• As a performer of managerial tasks
• An agent of economic change, and
• As an individual with a particular personality
• All three complement each other
• Specify entrepreneurs by the task that they
  perform.

14
Intrapreneurism

• Entrepreneurial organisation
• accepts (even a need for) change
• exploits opportunity

• Established organisation
• ability to consolidate around
• success
• manages risk
• control of resource flows

The intrapreneur achieves the synthesis between
established-entrepreneurial.
15
Intrapreneur
an entrepreneur who works within the confines
of an established organisation.
16

• Four levels of intrapreneurial activity
• Within Outside
• These differ on the impact on
• The organisation and its surroundings
• Ventures stakeholders
• Resources required
• Level of risk
• Management of specific projects
• Setting up of new business units
• Reinvigorating the whole organisation
• Reinventing the businesss industry

17
The Management of Specific Projects

• Typically,
• New Product Development
• Exploitation of new market opportunity
• Integration of new technology
• New funding for maintaining competitive edge
• How is it done
• Managed intrapreneurially, cutting across
  conventional boundaries
• Perhaps, may be made responsibility of a cross
  disciplinary team
• operating with entrepreneurial flair

18
The Setting up of new Business Units

• Structure
• External strategic issues
• Resources (including HR)
• Relationship with parent business

Best to have members of the entrepreneurial team
manage these projects, as they may have a
future role
19
Reinvigorating the whole organisation

• Flexibility and responsiveness to new and unmet
  customer demands
• Reintroduce inventive spirit back it is a
  radical process!
• An intrapreneur must lead with entrepreneurial
  vision, leadership and motivation, and overcome
  resistance to change.

Loss of flexibility as the organisation grows!!!
Internal concerns
20
Reinventing the Businesss Industry

• Entrepreneurs reinvent the industries they
• operate in by introducing
• 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

21
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)
• Decision-making control Balance needed between
  freedom for the intrapreneur and maintaining the
  business on a constant strategic path.

22
Limitations to intrapreneurship

• Internal politics Intrapreneurs must be able to
  predict and understand internal resistance to
  change. Thrive on chaos (Tom Peters, 1989)
• Rewards Can the organisation offer the same
  rewards as those expected by entrepreneurs?
  (economic, social and developmental). Moves to
  start own venture?