Theories and Models of Entrepreneurship

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Questions and Answers

Which of the following are sociological theories related to entrepreneurship?

Theory of Religious Beliefs (correct)

Theory of Economic Development

Theory of Capital Accumulation

Theory of Social Change (correct)

Who propounded the theory of religious beliefs related to entrepreneurship?

Max Weber

What does the spirit of capitalism signify in Weber's theory?

Social Inequality

Economic Freedom (correct)

Government Control

Religious Asceticism

Hagen's theory suggests that economic development can be achieved by imitating western technology.

False Signup and view all the answers

According to McClelland, the highest need for entrepreneurs is the need for ______.

achievement Signup and view all the answers

What are the three types of needs identified by McClelland?

Need for achievement, need for power, need for affiliation Signup and view all the answers

What does Schumpeter's Innovation Theory emphasize?

Innovation as a key driver for development Signup and view all the answers

Match the following models of entrepreneurship with their descriptions:

Consultant Model = Common among academicians and industry experts Moonlighting Model = Part-time entrepreneurship without full-time risks Brilliant Idea Model = Employees capitalize on innovative ideas Exiting Business/Franchise Model = Starting a venture after leaving corporate jobs Signup and view all the answers

To enhance individual creativity, it is important to allow yourself to be ______.

creative Signup and view all the answers

Giving your mind fresh ______ every day can boost your creative thinking.

input Signup and view all the answers

Recognizing the creative power of ______ can lead to innovative breakthroughs.

mistakes Signup and view all the answers

Keeping a journal handy to record your thoughts and ______ can enhance creativity.

ideas Signup and view all the answers

Encouraging ______ within an organization can lead to increased innovative solutions.

creativity Signup and view all the answers

Providing ______ training can equip individuals with tools to think creatively.

creativity Signup and view all the answers

Understanding the ______ process is essential for showcasing one's creative ideas effectively.

creative Signup and view all the answers

One of the key steps in the creative process is ______, where ideas are developed and refined.

verification Signup and view all the answers

According to Joseph Schumpeter, an entrepreneur is someone who is innovative, creative and has ______.

foresight Signup and view all the answers

The ______ model allows professionals to experience entrepreneurship part-time while minimizing risks.

moonlighting Signup and view all the answers

The ______ model involves professionals realizing they have a valuable idea and seeking to implement it in their workplace.

brilliant idea Signup and view all the answers

Culturally minority groups often act as the ______ of entrepreneurial and economic development.

spark-plugs Signup and view all the answers

Innovation occurs when an entrepreneur introduces a new ______, method, or opens up a new market.

product Signup and view all the answers

Right-brained thinkers always ask, 'Is there a ______ way?'

better Signup and view all the answers

Entrepreneurship requires both left- and right-brained ______.

thinking Signup and view all the answers

Right-brained thinking draws on ______ reasoning.

divergent Signup and view all the answers

Left-brained thinking relies on ______ reasoning.

convergent Signup and view all the answers

Blindly following ______ can be a barrier to creativity.

rules Signup and view all the answers

Questions that spur imagination include 'Can you ______ or adapt it?'

borrow Signup and view all the answers

Creative people can ______ seemingly unrelated ideas to a problem.

relate Signup and view all the answers

Fearing mistakes and ______ can hinder creativity.

failure Signup and view all the answers

Viewing play as ______ can limit creative potential.

frivolous Signup and view all the answers

Creative thinkers can visualize a situation without ______ it.

experiencing Signup and view all the answers

The goal of ______ is to create a large quantity of novel and imaginative ideas.

brainstorming Signup and view all the answers

A technique that visually displays relationships among ideas is called ______.

mind-mapping Signup and view all the answers

______ involves transforming an idea into an actual model to highlight flaws.

Rapid prototyping Signup and view all the answers

The ______ protects the creators of original works like literary, musical, and artistic creations.

copyright Signup and view all the answers

A ______ identifies the source of a service, similar to how a trademark identifies a product.

servicemark Signup and view all the answers

The process of validating an idea for market needs is known as ______.

verification Signup and view all the answers

The exclusive right to make, use, or sell an invention for 20 years is granted by a ______.

patent Signup and view all the answers

To enhance innovation, it is important to engage in the ______ process, which encourages diverse thinking.

creative Signup and view all the answers

______ is an evolved concept that plays a significant role in socio-economic development.

Entrepreneurship Signup and view all the answers

Identifying the invention’s novelty is an essential step in the ______ process.

patent Signup and view all the answers

Study Notes

Introduction to Theories and Models of Entrepreneurship

Entrepreneurship evolves with advancements in science and technology, crucial for socio-economic development.
Various theories categorize entrepreneurship, such as sociological, economic, cultural, innovation, and psychological theories.

Sociological Theories

Entrepreneurship is influenced by societal values, religious beliefs, customs, and taboos.
Theory of Religious Beliefs: Proposed by Max Weber, it describes how entrepreneurial culture is shaped by religion.
- Spirit of Capitalism: Highlights capitalism’s praise of economic freedom and private enterprise.
- Adventurous Spirit: Distinction between disciplined capitalism and impulsive adventurousness, both influencing entrepreneurship.
- Protestant Ethic: A favorable attitude towards capitalism is essential for its growth.
- Inducement of Profit: Profit motivation leads to the emergence of more business enterprises.
Theory of Social Change: Developed by Everett E. Hagen, it explains the transition from traditional to progressive societies.
- Focuses on interactions between physical environment, social structure, personality, and culture.
- Rejects dependency on imitating Western technology (follower's syndrome) for economic development.
- Identifies historic shifts as catalysts for social change and entrepreneurial emergence.

Economic Theories

Entrepreneurship drives and benefits from economic development, showing mutual interdependence.
Entrepreneurial activities are motivated by favorable economic conditions and incentives, including taxation, finance sources, and market access.

Psychological Theories

Successful entrepreneurship is linked to individuals possessing particular psychological traits.
Theory of High Achievement/Motivation: McClelland highlights characteristics of entrepreneurs:
- Innovating and improving processes.
- Decisive nature in uncertain situations.
- Emphasis on achievement over financial incentives.
Motivation Theory (Acquired Needs Theory): McClelland identifies three needs relevant to entrepreneurship:
- Need for Achievement: Desire for success through personal effort.
- Need for Power: Aspiration to influence and dominate others.
- Need for Affiliation: Preference for maintaining friendly relationships.

Cultural Theories

Culture plays a significant role in fostering entrepreneurship.
Hoselitz’s Theory: Argues that cultural factors determine the supply of entrepreneurs, with minority groups often driving economic development.

Entrepreneurship Innovation Theory

Introduced by Joseph Schumpeter, this theory posits that entrepreneurs catalyze economic development through innovation.
Key Innovation Dimensions:
- New products.
- New production methods.
- Opening new markets.
- Finding new sources of raw materials.
- Creating new organizational structures.

Models of Entrepreneurship

Consultant Model: Common among academics and retirees from corporate jobs who offer expertise through consulting.
Moonlighting Model: Allows individuals to pursue entrepreneurship part-time, minimizing risk while leveraging their expertise.
Brilliant Idea Model: Involves professionals who recognize potential business ideas while employed; may pursue entrepreneurship if ideas are rejected by management.
Exiting Business/Franchise Model: Individuals transitioning from corporate roles to running their businesses using established brands and support.

Notable Theories and Models

Schumpeter's Innovation Theory emphasizes groundbreaking changes.
McClelland’s Need for Achievement Theory focuses on entrepreneurial characteristics.
Hagen’s Status Withdrawal Theory describes shifts in social dynamics as a precursor to entrepreneurship.
Kunkel’s Social Behavior Theory and Cochran's Model Personality Theory address various personality traits influencing entrepreneurial success.
Drucker’s Theory of Systematic Innovation outlines structured approaches to innovation in business contexts.

Enhancing Organizational Creativity

Embrace diversity to encourage a wide range of perspectives and solutions.
Expect creativity as a standard, fostering an environment where innovative ideas thrive.
Encourage tolerance for failure, viewing it as a natural part of the creative process.
Provide creativity training to equip employees with tools and techniques for idea generation.
Establish a system for capturing ideas to ensure that valuable insights are documented.
Reward creative contributions to motivate ongoing innovation within the organization.
Model creative behavior, as leadership sets the tone for organizational culture.

Enhancing Individual Creativity

Allow personal freedom in creative pursuits to explore unique ideas and concepts.
Introduce fresh inputs daily to stimulate creativity and new thinking.
Embrace mistakes to recognize their potential as stepping stones to innovation.
Maintain a journal to document thoughts, ideas, and inspirations regularly.
Engage actively in listening to others for diverse viewpoints and insights.

The Creative Process Steps

Preparation: Cultivate a mindset of lifelong learning through reading and discussion.
Investigation: Participate in professional associations, travel, and improve listening skills.
Transformation: Analyze collected information to identify patterns and connections.
Incubation: Take breaks, daydream, and explore ideas in varied environments to allow subconscious processing.
Illumination: Recognize moments of insight where ideas may come to fruition.
Verification: Assess the practicality and feasibility of ideas through validation processes.
Implementation: Transform validated ideas into actionable plans.

Characteristics of Creative Thinkers

Right-brained thinkers explore divergent reasoning and are open to multiple possibilities.
Left-brained thinkers depend on convergent reasoning for evaluating ideas.
"Helicopter skills" involve seeing the big picture and recognizing the multiple approaches to a problem.
Reflective thinkers are open to rethinking routines and challenging norms.

Barriers to Creativity

The pursuit of one “right” answer limits exploration and discovery.
Overemphasis on logic can stifle imaginative thought.
Fear of failure and looking foolish can prevent risk-taking crucial for creativity.
Specialization may limit exposure to diverse ideas and perspectives.

Questions to Stimulate Imagination

Consider alternative approaches or adaptations to existing methods.
Explore potential substitutes or rearrangements of components.
Challenge the status quo by asking “What if?” scenarios.
Investigate other markets or applications for potential ideas.

Verification of Ideas

Validate ideas by assessing their accuracy, utility, and market potential.
Determine alignment with core competencies and production feasibility.

Techniques for Improving Creativity

Brainstorming: Encourage the generation of numerous imaginative ideas without immediate criticism.
Mind-mapping: Utilize visual tools to display relationships among ideas and enhance problem-solving.
Rapid prototyping: Create models to identify flaws and improve designs quickly.

Protecting Intellectual Property

Patents: Legal grants allowing inventors exclusive rights to their inventions for 20 years.
Trademarks: Symbols or names identifying the source of goods and distinguishing them from others.
Copyrights: Rights protecting creators of original artistic, literary, or musical works.