Principles of Entrepreneurship Exam 1

Questions and Answers

What is a nonrole morally questionable act?

Superficial performance appraisal

Expense account cheating (correct)

Not withdrawing product line

Bribery

What characterizes role failure morally questionable acts?

Not confronting expense account cheating (correct)

Investing in unethically governed countries

Price fixing

Manipulating suppliers

Role distortion morally questionable acts have what kind of effect?

Neutral

For the firm (correct)

Uncertain

Against the firm

What is a reason for unethical behaviors to occur?

Survival bottom-line thinking Signup and view all the answers

A code of ethics promotes ethical behavior of employees.

True Signup and view all the answers

What does corporate entrepreneurship involve?

Creating new organizations or instigating renewal or innovation within an existing organization. Signup and view all the answers

Define social entrepreneurship.

Entrepreneurship that combines private-sector focus with social problem-solving. Signup and view all the answers

Which of the following describes sustainable entrepreneurship?

Preserving nature and community Signup and view all the answers

Impediments to creativity include _____ thinking.

either/or Signup and view all the answers

What is a key function of innovation?

Converting opportunities into marketable solutions Signup and view all the answers

What is entrepreneurship?

The process whereby an individual or group of individuals use organized efforts to pursue opportunities to create value and grow by fulfilling wants and needs through innovation and uniqueness. Signup and view all the answers

What does creative destruction mean?

The process whereby existing products, processes, ideas and businesses are replaced with better ones. Signup and view all the answers

What is one misconception about entrepreneurship?

All of the above Signup and view all the answers

Why is entrepreneurship important today?

All of the above Signup and view all the answers

What defines a novice entrepreneur?

An individual who has no prior business ownership experiences as a business founder, inheritor, or purchaser. Signup and view all the answers

What characterizes a habitual entrepreneur?

An individual who has prior business ownership experience. Signup and view all the answers

What does the term 'nascent entrepreneur' refer to?

An individual in the process of starting a new business, who can be either a novice or a habitual entrepreneur. Signup and view all the answers

What is a serial entrepreneur?

An individual who has sold or closed an original business and establishes another new business. Signup and view all the answers

What defines a portfolio entrepreneur?

An individual who retains an original business and builds a portfolio of additional businesses. Signup and view all the answers

What demographic traits are common among entrepreneurs?

Tend to be first born and men more likely to start businesses than women; prior entrepreneurial experience is positively correlated to being an entrepreneur. Signup and view all the answers

Which of the following is NOT a common characteristic of entrepreneurial personality profiles?

Fear of failure Signup and view all the answers

Define the entrepreneurial process.

A dynamic process of vision, change, and creation, involving energy and passion towards the creation and implementation of new ideas and solutions. Signup and view all the answers

All entrepreneurs are extreme risk-takers.

False Signup and view all the answers

What is a 'gazelle' in business terms?

A business establishment with at least 20% sales growth in each year for five years, starting with a base of at least $100,000 in annual sales. Signup and view all the answers

What are some characteristics of 'gazelles' as leaders in innovation?

Responsible for 55% of innovations and 95% of radical innovations; obtain more patents per sales dollar than larger firms. Signup and view all the answers

What are common sources of entrepreneurial stress?

Loneliness, immersion in business, people problems, need to achieve. Signup and view all the answers

All firms fail in the first year.

False Signup and view all the answers

What role do entrepreneurs play in the economic lifecycle?

They are integral to the renewal process that defines market economies and provide pathways for individuals to enter the economic mainstream. Signup and view all the answers

What is the entrepreneurial mind-set characterized by?

Determination, perseverance, opportunity orientation, creativity, and innovation. Signup and view all the answers

Which factor does NOT contribute to exceptional entrepreneurial activity in the U.S.?

High fear of failure Signup and view all the answers

What is a key aspect of the global entrepreneurship monitor (GEM)?

It provides an annual assessment of the entrepreneurial environment of over 100 countries. Signup and view all the answers

Study Notes

Entrepreneurship Overview

Entrepreneurship involves organized efforts to exploit opportunities, creating value through innovation and uniqueness.
It encompasses the pursuit of opportunities to fulfill unmet wants and needs.

Creative Destruction

Refers to the replacement of existing products, processes, and ideas with superior alternatives, driving innovation and market shifts.

Misconceptions About Entrepreneurship

A great idea alone does not guarantee successful entrepreneurship; execution is critical.
Entrepreneurship is often perceived as easy, but it requires effort and risk assessment.
Not confined to small businesses; intrapreneurship exists within larger organizations.
Entrepreneurial ventures and small businesses differ, particularly in their focus on growth potential.

Importance of Entrepreneurship

Innovations drive economic development, enhancing productivity and efficiency.
Many new start-ups contribute significantly to job creation, supporting long-term economic health.

The Entrepreneurial Process

Involves exploring opportunities, leveraging competitive advantages, and managing the venture effectively.
Requires identifying trends and assessing funding options, alongside ongoing management practices.

Types of Entrepreneurs

Novice Entrepreneur: No previous ownership experience.
Habitual Entrepreneur: Has prior business ownership experience.
Nascent Entrepreneur: Actively in the process of starting a new business.
Serial Entrepreneur: Continually establishes new businesses after selling/closing previous ones.
Portfolio Entrepreneur: Maintains an original business while developing multiple additional businesses.

Demographic and Personality Profiles of Entrepreneurs

Demographics: First-born individuals and men are more likely to start businesses; prior experience and education also increase the likelihood.
Personality Traits: Successful entrepreneurs possess high motivation, self-confidence, persistent problem-solving skills, and moderate risk tolerance.

Integrated Definitions of Entrepreneurship

Entrepreneurial activity is defined as a dynamic process requiring vision, change, and the ability to take calculated risks while building effective teams and recognizing opportunities.

Myths of Entrepreneurship

Many common myths exist, such as the belief entrepreneurs are born, always inventors, and extreme risk-takers, which misrepresent the entrepreneurial reality.

Contemporary Small Business Dynamics

Entrepreneurs, managers, and technicians each play distinct roles in small businesses to ensure effective operations and result production.

Schools of Thought in Entrepreneurship

Macro View: Focuses on environmental and capital factors affecting entrepreneurship, including external influences and economic displacement.
Micro View: Examines specific traits necessary for successful ventures and strategic planning processes.

Entrepreneurial Stages

Startup/Acquisition Stage: Involves obtaining seed capital and making crucial decisions on proceeding with the venture.
Ongoing Venture Stage: Focus on cash flow management, decision-making about maintaining or expanding the business.
Decline/Succession Stage: Evaluates profitability and considers options for selling, retirement, or closing operations.

The Global Entrepreneurship Monitor (GEM)

Assesses the entrepreneurial environment across over 100 countries, highlighting the U.S.'s support for entrepreneurship.

Contributions of Entrepreneurs to Economic Growth

Entrepreneurs thrive by entering existing markets, creating new ones, and increasing diversity while supporting minority participation.

New Venture Statistics

Each year, entrepreneurs launch over 400,000 new businesses. Small firms account for almost half of private-sector jobs.

"Gazelles" in Entrepreneurship

Defined as rapidly growing businesses with strong sales growth, they play a significant role in innovation and economic vitality, responsible for a large percentage of industry's innovations.

Entrepreneurial Components of the U.S. Economy

Growth of entrepreneurial companies, especially those established by diverse demographic groups, contributes significantly to economic resilience.

Research Themes in Entrepreneurship

Key areas of study include venture financing, corporate entrepreneurship, social entrepreneurship, cognitive aspects, and the growth of women and minority entrepreneurs.

Entrepreneurial Mind-Set Attributes

Successful entrepreneurs exhibit determination, creativity, a drive for achievement, and the ability to embrace risk while fostering team collaboration.

Ethical Considerations in Entrepreneurship

Entrepreneurs must navigate ethical dilemmas, influenced by various rationalizations and the pressures of business dynamics, including interactions in digital commerce spaces.### Ethics in Administration
A code of ethics clarifies the importance of ethical decision-making, employee behavior, and the establishment of rewards and consequences related to ethics.

Entrepreneurial Concepts

Entrepreneurial Motivation: Driven by the desire to create and sustain new ventures.
Entrepreneurial Persistence: Continual commitment to pursue entrepreneurial opportunities despite challenges.

Key Terms in Entrepreneurship

Familiarity with terms such as career risk, code of conduct, cognitive adaptability, and entrepreneurial mind-set is vital for understanding entrepreneurship.

Innovation-Driven Organizations

Important practices include setting clear goals, creating feedback systems, emphasizing individual accountability, and rewarding based on results without punishing failures.

Rules for Fostering Innovation

Encourage active participation, informal meetings, tolerance for failure, and small team dynamics to support creative processes.

Corporate Entrepreneurship

Defined as individuals or groups within an existing organization driving new ventures or innovation. Strategies for success include supportive leadership and fostering collaborative environments.

Innovation Types

Radical Innovation: Introduces groundbreaking ideas; requires experimentation and vision (e.g., cloud storage).
Incremental Innovation: Systematic improvements on existing products (e.g., frozen yogurt, microwave popcorn).

Corporate Innovation Practices

3M's rules emphasize resilience in projects, maintaining small divisions, and valuing customer relationships.

Aimed at social impact through innovative solutions, combining elements of non-profits with business strategies for societal betterment.
Social entrepreneurs are visionaries and change agents focused on addressing root causes of social issues.

Environmental and Sustainable Entrepreneurship

Sustainable Entrepreneurship: Concentrates on enhancing nature and community, balancing economic and societal benefits.
Ecopreneurship: Involves environmental initiatives aimed at preserving biodiversity and natural ecosystems.

Organizations engage in practices that promote social good beyond legal requirements.

The Triple Bottom Line (TBL) evaluates performance based on economic, environmental, and social factors, shifting traditional business thinking.

Creativity in Entrepreneurship

Key steps in creativity: accumulating knowledge, incubation, idea generation, and implementation. Innovative ideas stem from recognizing shifts in trends and understanding opportunities within the environment.

Impediments to Creativity

Barriers include binary thinking, risk aversion, stereotyping, and seeking predictability, which hinder innovation processes.

Innovation vs. Invention

Innovation is the process of transforming ideas into marketable solutions and stems from the vision to address opportunities.
Invention refers to the creation of entirely new products or processes (e.g., the airplane, light bulb, telephone).

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Description

Test your knowledge on the foundational concepts of entrepreneurship with these flashcards. Understand essential terms such as entrepreneurship itself and creative destruction. Prepare effectively for your Exam 1 in the Principles of Entrepreneurship course.