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Week : Entrepreneurship, Creativity + Adjustment · Entrepreneurship as risk-taking! Risk-taking is...
Transcript of Week : Entrepreneurship, Creativity + Adjustment · Entrepreneurship as risk-taking! Risk-taking is...
!Week5:Entrepreneurship,Creativity+AdjustmentDrChristopherPokarier|EB202IntroductiontoBusiness
‘Entrepreneurship’concept
Whatis`entrepreneurship’?
! Anumberofdefinitionsanddescriptions
! Typicallyfocusesondecisionmakingunderuncertaintyandtherisk,insightandcreativityinvolved
! Severaldistinctschoolsofthoughtonentrepreneurship…
!Entrepreneurship
Entrepreneurshipasrisk-taking
! Risk-takingisasignificantfactorwhichdifferentiatesbeinginbusinesstobeingemployed.
! Inbusiness,costscomebeforerevenues
! Theownersofabusinessaretheresidualclaimantstoanyresidualsurplus(profits)afterallcostsaremetandrevenuesreceived.
! Marketforcescanbecompelrisktakingandrewarditwell–promotinginnovationandeconomicdynamism
! FrankKnightstudiedentrepreneurshipfromariskperspective
BUTmoderncapitalismsharesrisk
! Financialmarketspriceanddistributerisk–makingentrepreneurshipmucheasier
! Issuingsharesraisescapital(likebankloans)butsharesriskwithothers
! Thiscanreducethepersonalfinancialrisksforentrepreneurs
! Weneedtounderstandentrepreneurshipthenasmorethanjustfinancialrisk-taking
! Althoughmanybusinesspeoplestillbearrisks(eg.toreputation)evenifthefinancialrisksareshared
Entrepreneurshipasinnovation
! JosephSchumpeterwasaleadingAustrianeconomistwhofirmlyestablishedacademicinterestinentrepreneurship
! Hefocusedontheeconomicconsequencesofentrepreneurship,especiallyinnovation&sawinnovation(intechnologies,products,processes,production,marketingetc)asdisturbingmarkets–causingmarketdisequilibrium
! Creativedestructionconcept-influentialinlate1990sJapan
! Schumpeteralsolookedatthesocialfoundationsofentrepreneurship
Entrepreneurshipasarbitrage
! Thisviewseesentrepreneursasidentifyingandtakingadvantageofmarketimperfections
! Eg.Anentrepreneurmightbuyacommodityorproductinonelocationandsellitinanotherataprofitowingtopriceorexchangedifferentials
! Arbitrageinitspurestform,involvingsimultaneousbuyandsellcontracts,isactuallyriskfreeandtakesadvantageofthosepricedifferentials(butclearlyisentrepreneurial)
! Thisentrepreneurshipbringsmarketsclosertoequilibrium
! ArbitrageviewassociatedwithLeibenstein,Kirzner
!EntrepreneurshipasdiscoveryKirznerdescribes‘entrepreneurialalertness’toprofitopportunitiesinimperfectmarkets
MarkCasson’sapproach
! CassonisaleadingBritishscholarofentrepreneurship
! Focusesondecisionmakingunderuncertainty-judgementaldecisionmaking
! Considersseniormanagementandnotjustowner-foundersofbusinesses
! ThisfitsthesignificantroleofleadingmanagementinrestructuringWesternfirmsfromthetopdowninthe1980s&1990s
‘Intrapreneurship’
! ‘intrapreneurship’isamorerecentpopulartermtodescriberisk-takingandinnovationinsideacompany
! Thatis,itcoversentrepreneurshipbyemployees
! ItisoftenappliedtoJapanesefirms–wheremuchinnovationhascomefrommiddleandlowerranksofthecompanyratherthanfromtopmanagementorowners
!MarketnichestrategyExpertise&sufficientdemandcanmakenarrowspecializationasuccess
Successfulentrepreneurs
! Eitherhadahungersuccessandtried(andoftenfailed)atmanyventures
! ORhaddeepexperience(andlovefor)aparticularindustryoractivity
! Eg.LonelyPlanetpublicationscreatedbyacouple(TheWheelers)wholovedtravel
! Billabongcreatedbysurfers
! BurtonSnowboardscreatedbyJimBurton–wholovesriding
!Networks&entrepreneurshipDeep&broadinteractionbringideas,expertise,financeandefforttogether
SociologyofEntrepreneurship
Whendoentrepreneursemerge?
! insocialcontextsthatsupportrisk-taking,failure,socialmobility,andbusinessingeneral
! Sometimeswhenpeoplehavesupportingsocialnetworks–eg.Oldschoolconnectionsetc–reducingrisk
! Sometimeswhenpeoplehavelittleotheroption–afterwar,migrantswhocan’thaveregularcareers,orgroupswhoareprejudicedagains
! Eg.JewsinEurope,ChineseinSoutheastAsia,QuakersinEngland
!CreativityInmatureeconomies&industriesinnovation+designarevitalforsuccess
Creativityinmodernbusiness
! creativity+innovation+designadvantagesarevital
! Oldindustrialcommand&controlmanagementstyleisconflictwithsuchneeds
! Organisationsbecome‘flatter’–less‘top-down’
! Moreoutsourcing,freeagents,freecontractingbetweenboutiquespecialistfirms
! Somenations,cities,regions,mayhaveculturaladvantages
!AdjustmentCompetition,technologicalchange,&systemicshockscreatelosers+winners
CreativeDestruction
! Entrepreneurshipcreatesnewbusinessesandbringsnewvaluetocustomers&society
! Butthissuccesscanmakeotherindustrieslesscompetitive(eg.exportsuccesscausesarisingcurrencyandrisingdomesticlabourcosts)
! Internationalcompetitioncompoundstheimpactson‘thelosers’ofmarketcompetition
! Socialandpoliticalchallengetosupportthevictimsofeconomicadjustment
!TheSILLYcanSUCCEEDIfthemarketwantsit..EastBarinStockholm
NewMoney&Bling
! Somewillquestionthetasteandmoralityofthenewwealthy
!MoralcritiquesofcommerceSavonarola(1452-1498)decriedmaterialisticimmorality&gotburntforitinFlorence
!SuccessfulentrepreneursCreatedemandforotherservices(suchasyachtingsupplies!)
FearNotFailure
! Ifyoucan’taffordthecruiseryoucanstillfishofftherocks
! TherearemanymaterialrewardsforcommercialsuccessBUT
! Manyentrepreneurscontinuetolivesimplyandtoworkhard
! &failuresareoftenhappy!
!PhilanthropyCopenhagenOperaHouse,mostlyfundedbyMrMoller,ownerofMaerskshipping
!‘entrepreneurial’outsidebusinessInpolitics,charities,orperhapsin‘catching’anentrepreneurformarriage…!