Entrepreneurship: Nature, Development and Process

Nature and Development of Entrepreneurship

• An entrepreneur takes initiative to gather resources in innovative ways, accepting the risks and uncertainties.
• Being an entrepreneur involves creation, time, effort, rewards, and necessary risks.
• Entrepreneurial action is behavior responding to a judgmental decision under uncertainty for potential profit.

Aspects of the Entrepreneurial Process

• Identify and evaluate the opportunity beginning with opportunity assessment, creation, opportunity length, and value perception.
• Also consider risk vs returns, personal skills/goals alignment, and the competitive environment.
• Develop a business plan that covers the title page, table of contents, executive summary, and a detailed section further split down.
• The major plan sections are descriptions of the business and industry.
• It also includes a technology, marketing, financial, production, organization and operational plan, including a summary and any exhibits.
• Resources are required beginning with determining what's needed and what already exists, identify current gaps and find suppliers.
• Access to needed resources is critical to getting started.
• Management of enterprise is also key to developing management style, understanding success variables, and identifying potential problems.
• Implementing controls and developing a growth strategy are next steps.

The Entrepreneurial Process

• Opportunity identification is the process by which an entrepreneur finds a new venture opportunity.
• Market size and the length of opportunity influence the determining of risks and rewards.
• Window of opportunity refers to the time available to create a new venture.
• A business plan helps define the future direction of the business.

How Entrepreneurs Think

• Entrepreneurs may think differently based on the task or decision environment.
• Given the decision-making, entrepreneurs should effectuate, be cognitively adaptable, and learn from failure.
• Causal process starts with desired outcome, and focuses on generating the outcome.
• Effectuation process starts with what they know, and selects among possible outcomes.
• An entrepreneurial mind-set is the ability to sense, act, and mobilize under uncertainty.
• Cognitive adaptability describes the degree to which entrepreneurs are dynamic, flexible, self-regulating, and engaged.
• Adaptability involves generating multiple decision frameworks focused on sensing and processing changes in the environments and then acting on it and reflects an entrepreneur's metacognitive awareness.
• Achieving cognitive adaptability involves comprehension questions to understand the environment.
• Connection tasks will stimulate thinking to similarities and differences with previously solved scenarios.
• Strategic tasks will stimulate actions appropriate to solve the problem.
• Reflection tasks promote thinking in terms of understanding and feelings to progress into the entrepreneurial process.
• Better cognitive adaptability allows entrepreneurs to adapt, create, and communicate reasoning.

Learning from Business Failure

• Learning from business failure needs to account for the uncertainties.
• Entrepreneurs are not just motivated by profit.
• Loyalty to a product fuels the drive.
• Loyalty extends to a market and its customers.
• The need for personal growth and to prove oneself inspires progress.
• A business loss results in negative emotions.
• It can interfere with the ability to learn or future motivation.

Recovery and Learning Process

• Emotional recovery happens when events surrounding the business loss generate no negative emotions.
• These descriptions relate to loss-orientation and restoration-orientation.
• Loss-orientation involves working through some aspect of the loss experience.
• Working through the loss helps dissolve emotional bonds to the object lost.
• This will eventually produce a changed viewpoint.
• Loss-orientation involves confrontation, characterized by feelings of relief and pain.
• Restoration-orientation applies avoidance and proactiveness toward secondary stress from major loss.
• Suppressing emotions presents adverse consequences for health.
• This suppression reduces the loss's emotional significance.

Dual Process for Learning from Failure

• Oscillating between loss and restoration aids in recovery.
• An individual obtains the benefits of each process, while minimizing costs to avoid stagnation.
• The dual process promotes recovery.
• Knowledge and reactions that are normal after the fact of loss.
• Realizing that the psychological outcomes of loss are "symptoms” can reduce related stress.
• A recovery to learn from failure offers comfort of eventual diminished feelings.
• The learning process can be enhanced by oscillation itself.
• Recovery offers knowledge of entrepreneurship in general.

Ethics and Social Responsibility of Entrepreneurs

• Entrepreneurs usually develop an internal ethical code.
• Personal value systems are influenced by peer pressure, norms, or competitors.
• Business ethics explores behavior and morals in business.

Role of Entrepreneurship in Economic Development

• Innovation is depicted as crucial to economic development.
• The product-evolution process develops and commercializes.
• Iterative synthesis is the intersection of knowledge and social needs that starts the product process.
• Three types of innovation: ordinary, technological, and breakthrough.
• Ordinary are new products that show little change overall.
• Technological have significant advantages.
• Breakthrough have some degree of adaptation from the existing products.

Effectuation

• Effectuation is a decision-making approach by Saras Sarasvathy from University of Virginia's Darden School of Business.
• This approach is useful in uncertain environments, and emphasizes action to move despite uncertainty.
• Effectuation focuses on control.
• It leverages networks and resources.
• Iteration goes towards goals.
• There are five key principles of effectuation.
• First, start with what you have.
• Second, take risks you know you can afford to lose.
• Third, build partnerships to leverage resources, building networks to the expertise of others.
• Fourth, turn setbacks into opportunities.
• Fifth, focus on control.
• Effectuation is flexible for innovation.
• It encourages experimentation and adaptation.

Meta-cognition

• Meta-cognition is the process of controlling one's own processes.
• Perception, attention, memory, learning are all cognitive processes.
• Meta-cognition means "thinking about thinking”.
• Meta-cognition is awareness.
• You use awareness to plan.
• You use awareness to monitor, and adjust.
• Meta-cognition is crucial for decision-making and problem-solving.
• It helps optimize performance, identify biases, and develop learning strategies.
• Examples are reflecting and evaluating, setting goals, or planning.
• Monitoring actions, and adjusting to the end is also included.
• Developing these skills will help effectively problem solve and think critically.