CHAPTER 1 ENTREPRENEURSHIP: EVOLUTIONARY DEVELOPMENT

Chapter 1/Entrepreneurship: Evolutionary Development—Revolutionary Impact

© 2017 Cengage Learning ® . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.2

CHAPTER 1 ENTREPRENEURSHIP: EVOLUTIONARY DEVELOPMENT —

REVOLUTIONARY IMPACT

CHAPTER OUTLINE

• Entrepreneurs—Breakthrough Innovators

II. Entrepreneurs versus Small-Business Owners: A Distinction

III. Entrepreneurship: A Mind-Set

IV. The Evolution of Entrepreneurship

V. Avoiding Folklore: The Myths of Entrepreneurship

A. Myth 1: Entrepreneurs Are Doers, Not Thinkers

B. Myth 2: Entrepreneurs Are Born, Not Made

C. Myth 3: Entrepreneurs Are Always Inventors

D. Myth 4: Entrepreneurs Are Academic and Social Misfits

E. Myth 5: Entrepreneurs Must Fit the Profile

F. Myth 6: All Entrepreneurs Need Is Money

G. Myth 7: All Entrepreneurs Need Is Luck

H. Myth 8: Entrepreneurship Is Unstructured and Chaotic

I. Myth 9: Most Entrepreneurial Initiatives Fail

J. Myth 10: Entrepreneurs Are Extreme Risk Takers

VI. Approaches to Entrepreneurship

• Schools-of-Thought Approaches to Entrepreneurship

1. THE MACRO VIEW

• The Environmental School of Thought
• The Financial/Capital School of Thought
• The Displacement School of Thought

2. THE MICRO VIEW

• The Entrepreneurial Trait School of Thought
• The Venture Opportunity School of Thought
• The Strategic Formulation School of Thought

3. SCHOOLS OF ENTREPRENEURIAL THOUGHT: A SUMMARY

• Process Approaches to Entrepreneurship

1. AN INTEGRATIVE APPROACH

2. DYNAMIC STATES APPROACH

3. A FRAMEWORK OF FRAMEWORKS APPROACH

VII. The Entrepreneurial Revolution: A Global Phenomenon

• The Impact of Entrepreneurial Ventures in the United States
• The Impact of Gazelles

1. GAZELLES AND INNOVATION

2. GAZELLES AND GROWTH

3. GAZELLES AND SURVIVAL

• Legacy of Entrepreneurial Firms

VIII. Twenty-First-Century Trends in Entrepreneurship Research IX. Key Entrepreneurship Concepts

• Entrepreneurship
• Entrepreneur

(Entrepreneurship Theory, Process, and Practice, 10e Donald F. Kuratko) (Solution Manual all Chapters) 1 / 4

Chapter 1/Entrepreneurship: Evolutionary Development—Revolutionary Impact

© 2017 Cengage Learning ® . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.3

• Entrepreneurial Discipline
• Entrepreneurial Leadership

FEATURED CONTENT

The Entrepreneurial Process: The E-Myth

The Entrepreneurial Process: The Best Business Schools for Entrepreneurship

LEARNING OBJECTIVES

• To examine the historical development of entrepreneurship
• To explore and debunk the myths of entrepreneurship
• To define and explore the major schools of entrepreneurial thought
• To explain the process approaches to the study of entrepreneurship
• To set forth a comprehensive definition of entrepreneurship
• To examine the entrepreneurial revolution taking place today
• To illustrate today’s entrepreneurial environment

CHAPTER SUMMARY

This opening chapter attempts to provide a broad perspective of the entrepreneurial evolution occurring throughout the United States and the world. Beginning with a discussion of entrepreneurs who have been compared to Olympic athletes, symphony orchestra conductors, and top-gun pilots, the chapter presents the perspective of entrepreneurship as an aggressive catalyst for change within the marketplace. Entrepreneurship is a mind-set that anyone can develop regardless of the setting.

Entrepreneurship: Theory, Process, Practice concentrates on entrepreneurs and

entrepreneurial ventures where the entrepreneur’s principal objectives are innovation, profitability, and growth, not on small businesses, which, although they are independently owned and operated, are not dominant in their fields and usually do not engage in many new or innovative practices. As Entrepreneurship defines it, entrepreneurship is a dynamic process of vision, change, and creation. It requires an application of energy and passion toward the creation and implementation of new ideas and creative solutions. Essential ingredients include the willingness to take calculated risks—in terms of time, equity, or career; the ability to formulate an effective venture team; the creative skill to marshal needed resources; the fundamental skill of building a solid business plan; and, finally, the vision to recognize opportunity where others see chaos, contradiction, and confusion.To underscore its approach to entrepreneurship, Entrepreneurship examines 10 myths about the topic that, once safely sidestepped, allows for a foundation of research and contemporary theory to be built. The myths are presented to debunk misconceptions about entrepreneurship and educate the reader of the true nature of entrepreneurship. The chapter then provides an overview of entrepreneurial theory and contemporary research to broaden the horizon for studying entrepreneurship and to better focus on the what, how, and why behind the discipline.This chapter next provides a perspective on the Entrepreneurial Revolution that is occurring throughout the United States and the world, discussing important statistics that support 2 / 4

Chapter 1/Entrepreneurship: Evolutionary Development—Revolutionary Impact

© 2017 Cengage Learning ® . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.4 the entrepreneurial economy. For example, the U.S. Small Business Administration has reported that, during the past ten years, new business start-ups numbered nearly 600,000 per year.Approximately one new firm with employees is established every year for every 300 adults in the United States. Because the typical new firm has at least two owners/managers, 1 of every 150 adults participates in the founding of a new firm each year. Substantially more—1 in 12—are involved in trying to launch a new firm. And, during the “Great Recession” (as some have called our lengthy recessionary period), more Americans have become entrepreneurs than at any time in the past 20 years. The net result, then, is that the United States has a very robust level of firm creation. Among the 6 million establishments (single- and multisite firms) with employees, approximately 600,000 to 800,000 are added each year. That translates into an annual birthrate of 14 to 16 per 100 existing establishments.A description of gazelles—business establishments with at least 20 percent sales growth every year, starting from a base of $100,000—and their impact on the economy is included, along with the challenges associated fast growth.Eight trends in entrepreneurship in the twenty-first century are also itemized and the chapter ends with a review of three key concepts: entrepreneurship, entrepreneur, and entrepreneurial management. To be a successful entrepreneur, an individual must be an independent thinker who is willing to take risks and to dare to be different. Personal initiative, ability to consolidate resources, management skills, and risk taking are just a few of the important qualities needed to be a successful entrepreneur.

LECTURE NOTES

• Entrepreneurs—Breakthrough Innovators

Individuals recognize opportunities where others see chaos or confusion. They are compared to Olympic athletes, symphony conductors, and top-gun pilots.

II. Entrepreneurs versus Small-Business Owners: A Distinction

The terms entrepreneur and small business owner are used interchangeably, but there are differences.

Small business owners are not dominant in their field and are not innovative.

The objectives of entrepreneurial ventures are innovation, profitability, and growth.

III. Entrepreneurship: A Mind-Set

Entrepreneurship is more than the mere creation of business.

A special perspective permeates entrepreneurs: seeking opportunities, taking risks beyond security, and having the tenacity to push an idea through to reality.

It is a mind-set that has revolutionized the way business is conducted at every level and in every country: inside or outside an organization, in for-profit or not-for-profit enterprises, and in business or nonbusiness activities.

IV. The Evolution of Entrepreneurship 3 / 4

Chapter 1/Entrepreneurship: Evolutionary Development—Revolutionary Impact

© 2017 Cengage Learning ® . May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.5 Entrepreneurship is from the French “entreprendre,” meaning “to undertake.”

An entrepreneur is an innovator or developer who recognizes and seizes opportunities; converts those opportunities into workable/marketable ideas; adds value through time, effort, money, or skills; assumes the risks of the competitive marketplace to implement these ideas; and realizes the rewards from these efforts.

Characteristics of entrepreneurs:

• Personal initiative • The ability to consolidate resources • Management skills • A desire for autonomy • Risk taking • Aggressiveness • Competitiveness • Goal-oriented behavior • Confidence • Opportunistic behavior • Intuitiveness • Reality-based action • The ability to learn from mistakes • The ability to employ human relations skills

Historical developments in entrepreneurship:

• No single definition of entrepreneur exists.• Recognition of entrepreneurs dates back to eighteenth-century France.• Until 1950, the majority of definitions and references came from economists.• Over the decade, writers have continued to modify the definition.• Robert C. Ronstadt said, “Entrepreneurship is the dynamic process of creating incremental wealth.” • In the twentieth century, the word entrepreneur became closely linked with free enterprise and capitalism.• Entrepreneurs serve as agents for change, provide creative, innovative ideas for business enterprise and help businesses grow and become profitable.• In the twenty-first century, entrepreneurs are considered heroes of free enterprise.• Many people now regard entrepreneurship as “pioneership” on the frontier of business.

An integrated definition of entrepreneurship recognizes entrepreneurship as a dynamic process of vision, change, and creation.

V. Avoiding Folklore: The Myths of Entrepreneurship

Myth 1: Entrepreneurs Are Doers, Not Thinkers

Entrepreneurs have a tendency toward action, but they are also thinkers.

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