Short AnswerEssay Questions

© John Wiley & Sons Australia, Ltd 2014 2

Chapter 1:

Entrepreneurship: definition and evolution

Short Answer/Essay Questions

• Provide a definition of entrepreneurship and list the three areas of study that Shane and Vankataraman

suggested make up the field of entrepreneurship.

Correct Answer:

Chapter 1 page 5, Difficulty: Easy. Entrepreneurship is defined as the process, brought about by individuals, of identifying new opportunities and converting them into marketable products or services.Entrepreneurship involves the study of sources of opportunities; the process of discovery, evaluation and exploitation of opportunities; and the set of individuals who discover evaluate and exploit those opportunities.

2.Briefly explain the two main sources of market opportunities and what the role of the entrepreneur is.

Correct Answer:

Chapter 1 page 7, Difficulty: Easy. In its most elemental form, what may later be called an opportunity may appear as imprecisely defined market needs, or unemployed resources or capacities. Imprecisely defined market needs are the source of market-pulled opportunities. Prospective customers may or may not be able to articulate their needs, interests and problems. Even if customers cannot do so, the role of the entrepreneur is to recognise these needs and to develop an offer in which customers will perceive some value. Under-utilised or unemployed resources, as well as new technologies or capabilities, may also offer possibilities to create new value for customers. In this case, entrepreneurs first identify resources that are not optimally used, and then seek a better use or combination of these in a specific market. This type of opportunity can be called market-pushed opportunities.

3.Explain the two levels of the environment that exert an influence on the emergence of a business venture.

Correct Answer:

Chapter 1 page 9, Difficulty: Easy. There are two levels of the environment that exert an influence on the emergence of a business venture: the community level and the broader societal level. At the community level, both the number of organisations in an industry and the strength of the relationship between these organisations are important to entrepreneurs. Individuals trying to create business ventures in a population with high density will find more opportunities for acquiring effective knowledge and creating extensive social networks, but they will also encounter more intensive competition. At the societal level, at least two aspects shape the environment for organisation: cultural norms and values, and government activities and policies. Changing norms and values alter (Entrepreneurship and Small Business (Asia Pacific Edition) 4e Schaper Volery, Weber Gibson) (Test Bank, Correct Answer are marked with*) 1 / 4

Chapter 1: Entrepreneurship: definition and evolution © John Wiley & Sons Australia, Ltd 2014 3

entrepreneurial intentions and the willingness of resource providers to support new ventures.Government actions and political events create new institutional structure for entrepreneurial action, encouraging some activities and impeding others.

• Explain the concept of creative destruction.

Correct Answer:

Chapter 1 page 11, Difficulty: Medium. Creative destruction is the process of simultaneous emergence and disappearance of technologies, products and firms in the marketplace as a result of innovation. The new destroys the old. Entrepreneurs are central to the process of creative destruction; they identify opportunities and bring the new technologies and new concepts into active commercial use.

• Name five emerging trends that brought profound changes that have affected entrepreneurship in the

Asia-Pacific region.

Correct Answer:

Chapter 1 page 20, Difficulty: Easy. Liberalisation and globalisation; adoption of Western ideas; adoption of rule-based systems and emergence of an entrepreneurial society.

True/False Questions

• The shape of the social network helps determine a network's usefulness to its individuals. Small, tight

networks are more useful to their members than open networks with more weak ties and social connections.

• True

*b. False

General Feedback:

References: Chapter 1 page 7, Difficulty: Easy

• According to Schaper et al. the level of entrepreneurial activity is a function of the degree to which

people recognise the opportunities available and their capacity to exploit them.

*a. True

• False

General Feedback:

Chapter 1 page 7, Difficulty: Easy

• Entrepreneurial activity is uniformly distributed around the world. 2 / 4

Testbank to accompany: Entrepreneurship and small business by Schaper et al.

© John Wiley & Sons Australia, Ltd 2014 4

• True

*b. False

General Feedback:

Chapter 1 page 15, Difficulty: Easy

• According to GEM developing countries generally have a lower prevalence rate for necessity

entrepreneurship.

• True

*b. False

General Feedback:

Chapter 1 page 15, Difficulty: Easy

• Estimates indicate that 95% of all registered Indian firms are family-owned businesses.

*a. True

• False

General Feedback:

Chapter 1 page 18, Difficulty: Easy

Multiple Choice Questions

• According to Shane and Vankataraman, the field of entrepreneurship involves the study of sources of

opportunities, the study of individuals who discover, evaluate and exploit those opportunities and the study of…

• the different types of organisational arrangements that exist for the exploitation of entrepreneurial

opportunities

• the resources needed to pursue the opportunity

*c. the process of discovery, evaluation and exploitation of opportunities

• the environment in which the opportunity is pursued

General Feedback:

Chapter 1 page 5, Difficulty: Medium

• According to Schaper et al. which of the following factors is not commonly cited as a factor for

entrepreneurship to take place.

• / 4

Chapter 1: Entrepreneurship: definition and evolution © John Wiley & Sons Australia, Ltd 2014 5

• an individual
• a market opportunity
• adequate resources
• a business organisation
• a favourable environment

*f. None of the above

General Feedback:

Chapter 1 page 5, Difficulty: Medium

• Researchers have hypothesised a number of factors that influence the way opportunities are

recognised and exploited by entrepreneurs. According to Schaper et al. which of the following has not been identified as especially important?

• Active search of opportunities

*b. Risk-taking propensity

• Entrepreneurial alertness
• Prior knowledge
• Social networks

General Feedback:

Chapter 1 page 6, Difficulty: Medium

• Who was the first one to use the term 'entrepreneurial alertness' as the propensity of individuals to

notice and be sensitive to information about objects, incidents and patterns of behaviour?

• Schumpeter
• Shane and Vankataraman

*c. Kirzner

• Aldrich
• None of the above

General Feedback:

Chapter 1 page 6, Difficulty: Medium

• Entrepreneurs must be willing and able to marshal resources in order to pursue the opportunity and

transform their ideas into an organisation. The resource-based theory recognises six types of resources.Which of the following resources is not mentioned?

• Financial
• Physical
• Human

*d. Management

• Technological
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