Understanding Entrepreneurship basics

Understanding Entrepreneurship

• Entrepreneurship is a multifaceted social and behavioral activity.
• It involves pinpointing, assessing, and capitalizing on opportunities.
• These opportunities lead to the creation of goods and services that do not currently exist.
• Opportunities arise from favorable conditions.
• A window of opportunity is a brief period where a desired action can be taken, and once missed, it may not return.

Defining the Entrepreneur

• Encompasses individuals, groups, organizations, or communities.
• Entrepreneurs identify, discover, craft, or enact opportunities.
• They introduce prospective goods and services that fill a gap in the market.
• Entrepreneurs specialize in taking accountability for making crucial judgments concerning the allocation of resources.
• They focus on spotting new financial possibilities and launching innovative concepts in the commercial sector.

Entrepreneurial Opportunity Explained

• Entrepreneurial opportunities exist in the introduction of new goods, services, materials, markets, and organizing methods.
• This introduction happens through creating new means, ends, or means-ends relationships.
• Entrepreneurial opportunities differ because of their potential to change economic exchange terms and disrupt the market.
• The opportunities often involve creative or innovative decisions.

Eclecticism of Entrepreneurship

• An understanding that entrepreneurship is a complex phenomenon.
• It can be effectively examined from varied disciplinary angles.
• Disciplines include arts, humanities, natural and social sciences, engineering, and applied sciences.

Entrepreneurship Research Agenda

• The pursuit of understanding entrepreneurship involves key questions.
• These questions ask why, when, and how do opportunities for creating goods and services arise.
• It is also important to determine why certain social actors can exploit these opportunities while others cannot.
• How various strategies are deployed to use entrepreneurial opportunities should be examined.

Process and Person View

• This involves identification, resource assembly, a practical plan, and timely reward harvesting.
• Entrepreneurial outcomes can be a new venture, value, products, profit, or personal growth.

Innovation as Development

• Innovation involves crafting new combinations of existing resources.
• It's the entrepreneurial function, distinct from invention, with commercial potential.
• Schumpeter highlights that innovation is a social activity pursued in the economic sphere with commercial potential.

Creative Destruction Detailed

• Schumpeter's term for the industrial mutation process that revolutionizes the economic structure.
• It incessantly destroys the old and creates the new.
• Creative destruction is an ongoing activity driven by product and process innovations.
• It restructures macroeconomic performance including factor markets.

Innovation as Combinatory

• Schumpeter describes innovation as combining materials and production factors in a new way.
• Schumpeter said means must combine materials and factors differently for the "new combination" to emerge from continuous adjustments.

Entrepreneurial Function Described

• Involves discovering, assessing, and exploiting opportunities.
• The innovative design and pursuit of new products, services, or production processes.
• It is formulating strategies, new organizational forms, and new markets.

Schumpeter’s innovative Activities

• Five types exist:
• New product/service innovation involves introducing something novel to the market
• New process innovation focuses on new methods of production
• Market innovation refers to the opening of new markets
• Input innovation involves new resources
• Organizational innovation is aimed at restructuring an entire industry or breaking up a monopoly

Creative Destruction in Entrepreneurship

• Schumpeter coined it to highlight entrepreneurship as "the essential fact about capitalism".
• It describes social and economic change, where entrepreneurs exploit existing inventions in novel ways instead of just inventing.

Distinguishing the Entrepreneurial Function

• The focus is differentiating it from other social/economic roles.
• It separates the entrepreneurial function from investor activities as well as managerial duties.
• Novelty is a key function in capitalist systems.

Risk-Taking in Entrepreneurship

• Highlights the pioneering spirit of entrepreneurs who defy convention.
• Entrepreneurs take business risks in uncertain business environments.
• Entrepreneurs take risks that involve potential financial loss but also create opportunities for desirable results.

Entrepreneurship as Innovation per Drucker

• Drucker emphasized that entrepreneurs innovate, with innovation being the specific tool of entrepreneurship.
• Innovation gives resources the ability to create wealth, effectively creating resources.

Defining Risk

• It's measured by exact probabilities and expected outcomes.
• Risk involves anticipating undesirable or unfavorable events.

Uncertainty Defined

• Uncertainty means situations where variables and information are unknown.
• Probabilities cannot be computed and outcomes may not be clear.
• Uncertainty makes planning difficult and increases risk.

Entrepreneurial Discovery Defined

• A process of systematically scanning for changes.
• These exist across technological, political, regulatory, social, and demographic sectors.
• The scanning is done to discover opportunities for introducing new goods and services.

Prototype Definition

• Prototyping involves experimentation and fabrication.
• Translating ideas into tangible forms.
• Prototypes allow design validation through material and digital mediums.
• Designers can fabricate models in different configurations and validate them through applications and testing.
• It is a sample, model, or release for testing quality.
• Relevant in architectural engineering, design, electronics, and software programming.
• Entrepreneurs are also able to refine designs and craft brands via prototyping prior to production and commercialization.

Entrepreneurship and Alertness

• Kirzner proposed the concept of entrepreneurship as discovery/alertness.
• Klein says entrepreneurship can be boosted by understanding entrepreneurship as judgment coupled with a subjectivist view of capital.
• Opportunities are subjective phenomena neither discovered nor created, rather imagined.

Window of Opportunity Defined

• A period to act/decide for desirable outcomes.
• Opportunities expire when the period ends.

New Venture Creation

• This perspective captures the various activities and events that entrepreneurs or founders experience.
• New venture creation is viewed as a journey.

Entrepreneurship as Exploration Explained

• The firm's intent to enter new territories to gain customers is known as exploration.
• Organizations should maintain an inventory of innovative projects.

Linking Exploration and Exploitation

• It's crucial to balance the exploration of new opportunities with exploiting existing competencies.
• Doing this helps organizations obtain rewards.

Behaviors in Exploration

• Activities entailed by exploration consist of searching, taking risks, making discoveries, as well as conducting experimentation, prototyping, and lastly being flexible.

Advantages of Exploration

• Reallocate resources toward new opportunities.
• Reposition strategies to capitalize on means-ends relationships.
• Focus on future, not current frameworks.
• Requires short-term investment for long-term survival.
• Is risky, uncertain, and has long gestation periods for organizations.

Entrepreneurship as Exploitation Analysis

• O'Reilly & Tushman characterize it by innovation from deploying current assets.
• This results in reasonable outcomes, described as "enhancement and efficiency".
• This applies to those content with improvements to existing products and market penetration.
• They know their customers, so address exploitation challenges.

Entrepreneurship & Experimentation

• Experimentation is crucial because success knowledge is unknowable beforehand.
• It is not deduced from general concepts.
• Entrepreneurial experimentation facilitates the commercial exploitation of new technologies.
• It is characterized by interactions among stakeholders in the discovery and exploitation of fresh concepts.

Productive Entrepreneurship

• Any activity contributing to net economic output is considered production entrepreneurship.
• For example, a new product or process implementation made available to user is production entrepreneurship.

Aspects of Activity

• New discovery is a factor of productive entrepreneurship, especially when it grows joint surplus.
• Productive activity is only performed by legal, registered businesses.

Dysfunctional Forms of Entrepreneurship

• This involves incessant rent-seeking to manipulate policy for profits.
• Sometimes, an entrepreneur does not generate any outcomes to real output or enables a destructive role.
• This happens when incentives attract efforts into unproductive rent-seeking.

Profit Over Progress

• Government bonds are more profitable for financial institutions.
• This makes them choose bonds over supporting small business and job creation.

Destructive Activities

• Illegality comes in the form of rent-seeking, illegal activities and corruption
• Illegal or informal types of entrepreneurial behavior are viewed as unproductive.
• Illegal entrepreneurial behavior can have a negative impact when others follow.

Rent Seeking Analyzed

• Deliberate pursuit of economic rents not automatically contravening rules of society.
• Rent-seeking examples include hostile takeovers and tax evasion, being a single threat to productive entrepreneurship.

Entrepreneurial Economy Explored

• One where economic performance is linked to distributed innovation.
• It involves growth of innovative ventures.
• The entrepreneur is an idea source and maker for new products or technologies.

Peter Drucker's Idea

• Analysts use it to emphasize the role of entrepreneurship and entrepreneurs.
• There is a connection between entrepreneurial activity and economic performance when generating growth, jobs and income.

Describing Entrepreneurial Society

• A creative, innovative, and entrepreneurial society has specific focus.
• Focus exists on deploying entrepreneurial principles.

Commonalities Explored

• The proliferation of entrepreneurs, start-ups, and new ventures is marked by activities recognizing contributions.

Entrepreneurial Firm Described

• One that engages in product-market innovation and risky ventures and beats competitors to the punch.

Entrepreneurial Orientation (EO) Described

• EO is a mindset for social change through product processes and decision-making.
• EO is demonstrated by a firms structures.

Entrepreneurship Education Described

• It fosters entrepreneurial attitudes, skills, and competencies.
• The goal is pursuing the launch, ownership. management, and operation of new business.

Teaching Entrepreneurship

• It deals with general knowledge of concepts related to entrepreneurship.
• Academic programs are used to develop entrepreneurial attributes.
• Researchers classify the intellectual content into three branches.

Entrepreneurial University Defined

• Facilitates the commercialization of research and startups. It is a broader role to enhance entrepreneurship.

Role of Entrepreneurial University

• The university's goal transcends promoting technology transfer and startups in entrepreneurial societies.
• Key roles of universities are:
  • A source for knowledge that drives economic growth
  • A hothouse geared towards technology transfer and startups
  • A leader set on thriving in the entrepreneurial society

Entrepreneurial Age

• The shift towards entrepreneurial dominance occurred in the late 20th and early 21st centuries.
• The U.S. economy especially.

Entrepreneurial Society Defined

• A community where people coordinate activities.

"Normal" Conceptions

• Innovation and entrepreneurship are normal and continual, becoming an integral part of organizations and the economy.

Characteristics of an Entrepreneurial Society

• Lifelong learning is a major factor.
• There is the creation of institutions.
• There is a learning culture present.
• Stimulate innovation as failures enhance learning.
• Structures influence organizational culture, particularly related to community member interactions.

Key Aspects of Education

• It emphasizes entrepreneurial cultures.
• Is identified as a function of innovation.
• Education is a function of leadership.
• Education is a function of institutional building and high achievement.
• It involves enterprise creation.
• And also represents value for customers
• It enables changes and abilities.

Notable Ghanaian Entrepreneurs

• Dr. Kofi Amoah – Citizen Kofi Entertainment
• Patricia Poku-Diaby – Founder of Plot Enterprise Ghana
• Joseph Siaw Agyepong – Jospong Group of Companies
• Michael Agyekum Addo – Founder of Kama Group