THEORIES ON

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• THEORIES ON
• ENTREPRENEURSHIP

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CONTENTS OF THE LECTURE

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

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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)

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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?

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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

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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

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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.

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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

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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

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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.

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Landaus Approach
Gambler
True Entrepreneur
High
Risk Bearing
Consolidator
Dreamer
Low
Low
High
Innovativeness
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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

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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.

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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.
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Intrapreneur
an entrepreneur who works within the confines
of an established organisation.
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• 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

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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

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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
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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
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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

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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.

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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?

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