CHAPTER 1

ENTREPRENEURSHIP AND THE

INDIVIDUAL ENTREPRENEUR
MINDSET
 Learning Objectives
• To introduce the concept of entrepreneurship and explain the process
1 of entrepreneurial action

• To describe how structural similarities enable entrepreneurs to make

2 creative mental leaps

• To highlight bricolage as a source of entrepreneurs’ resourcefulness

3

• To introduce effectuation as a way expert entrepreneurs sometimes

4 think

• To develop the notion that entrepreneur's cognitive adaptability

5

• To introduce sustainable entrepreneurship as a means of sustaining the

6 natural environment and communities and developing gains for others
The Nature of Entrepreneurship
• Entrepreneurship plays an important role in the creation and
growth of businesses, as well as in the growth and prosperity of
regions and nations.

• Entrepreneurial Opportunities
• Situation in which new goods, services, raw materials, and
organizing methods can be introduced.
• Sold at greater than their cost of production.

• Entrepreneurial Action
• Creation of new products/services.
• Involves entry into new markets.
• May occur through a newly created organization or within an
established organization.
 The Nature of Entrepreneurship
• Entrepreneur act on what they believe is an opportunity and because it
exist in high uncertainty, entrepreneurs must use their judgment about
whether or not to act.

• The individual prior knowledge can decrease the amount of

uncertainty and his or her motivation indicates a willingness to bear
uncertainty.

• Entrepreneur act on the possibility that one has identified an

opportunity worth pursuing.

• Entrepreneurial Thinking
• An individuals’ mental processes of overcoming ignorance to:
• Decide whether a signal represents an opportunity for someone.
• Decide whether that opportunity is applicable to the individual
specifically.
• Process feedback from action steps taken.
Entrepreneurial Action
 How Entrepreneurs Think

Engage in
Think Structurally
Bricolage

Entrepreneur
Should:

Effectuate Cognitively Adapt

 Think Structurally

Example of a creative mental Making these connection

Creative mental leap could
leap is from knowledge between a new product and
be from knowledge about a
about existing markets to a target market where it can
technology to a new market
technology that could lead to be introduced is aided by
that could benefit from its
products/services that satisfy superficial and structural
introduction
that market similarities

Structural Similarities:
Superficial Similarities:
Underlying mechanisms of
Basic elements of the
the technology resemble the
technology resemble the
underlying mechanisms of
basic elements of the market
the market

The entrepreneurial challenge often lies in making creative

mental leap based on structural similarities
 Bricolage -
MacGyvers

Engage in Bricolage (Do It Yourself)

• Bricolage is creating something from nothing

by making do and applying combinations of
resources at hand to new problems and
opportunities.
• This involves taking existing resources and
experimenting, tinkering, repackaging
and/or reframing them so they can be used
in a way for which they were not originally
designed or conceived.
 Effectuate - GST

Entrepreneurs do not always think through a problem in a way that starts with desired
outcomes and focuses on the means to generate that outcome.

Such process is referred to as causal process

Causal process:
A process that starts with a desired outcome and focuses on
the means to generate that outcome.

Entrepreneur sometimes use an effectuation process

Effectuation:
A process that starts with what one has (who they are, what
they know, and whom they know) and selects among possible
outcomes.
 Effectuate

Effectuation helps entrepreneur think in an environment of high

uncertainty. Organization today operate in complex and dynamic
environment that are increasingly characterized by rapid, substantial, and
discontinuous change. Given the nature of this type of environment, most
managers of firms need to take on an entrepreneurial mind-set so that
their firms can successfully adapt to environmental changes.

Entrepreneurial Mind-Set:
Involves the ability to rapidly sense, act, and
mobilize, even under uncertain conditions.
 Cognitive Adaptability – dealing
out change – new norms covid-19

Cognitive adaptability

• Describes the extent to which entrepreneurs are:

• Dynamic, flexible, self-regulating and engaged
in the process of generating multiple decision
frameworks.
• Focused on sensing and processing changes in
their environments and then acting on them.
• Metacognitive awareness:
• Ability to reflect upon, understand, and
control one’s thinking and learning.
 Cognitive
Adaptability

• We can achieve cognitive adaptability by asking a

series a questions that relate to:

Comprehension
Questions

Series of
Reflection Tasks Connection Task
Questions

Strategic Tasks
• Comprehension questions
– Increase entrepreneurs’ understanding
of the nature of the environment.
• Connection tasks
– Stimulate thinking about similarities
and differences of current situations
with situations previously faced and
solved.
• Strategic tasks
– Identify strategies that are appropriate
for solving the problem or pursuing
the opportunity.
• Reflection tasks
• Stimulate entrepreneurs to
think about their
understanding and feelings as
they progress through the
entrepreneurial process.
Entrepreneurs who are able to increase cognitive adaptability have an
improved ability to:

Communicate
Adapt to new one’s reasoning
Be creative
situations behind a particular
response
 The Intention to Act Entrepreneurially

• Entrepreneurial intentions
– Motivational factors that influence individuals to
pursue entrepreneurial outcomes
• Entrepreneurial self-efficacy
– Conviction that one can successfully pursue
entrepreneurial outcomes
• Perceived desirability
– Degree to which a potential entrepreneurial
outcome is evaluated as favorable or unfavorable
Entrepreneur Background and
Characteristics

Education

Age

Work History
 Education
• Education
– Facilitates integration and accumulation of
knowledge thus providing a larger opportunity set
– Casts a wider net for the discovery or generation of
potential opportunities
– Assists entrepreneurs in adapting to new situations
– Does not necessarily determine whether the
individual will create a new business
 Age
• Age
– Chronological age – Usually between the ages 22
and 45
 Work History
• Work history
– Past work experience of an individual
 Role Models and Support Systems

• Role models: Individuals whose example an

entrepreneur can aspire to and copy

• Moral-support network: Individuals who give

psychological support to an entrepreneur

• Professional-support network: Individuals who help

the entrepreneur in business activities
Sustainable Entrepreneurship

• Preserving nature, life support, and community in

the pursuit of perceived opportunities to:
– Bring future products, processes, and services into
existence for gain
• Can generate:
– Economic gains
– Environmental gains
– Social gains
 Group Activity
• Select one organization that practices sustainable
entrepreneurship.
• Describe the product / service offered by the
organization.
• What makes you think the organization practices
sustainable entrepreneurship? Provide examples.
• What else could be done by the organization to
promote sustainable entrepreneurship?