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SBE Lect 5_ Part 7: ch7 Global entrepreneurship Monitor (Causal or…
SBE Lect 5_ Part 7: ch7 Global entrepreneurship Monitor
1. How do individuals go about creating a business?
Emerging organisations have four ‘properties’ (Katz & Gartner)
Resources
– resources (e.g. workers, finance) have to be identified, collected, assembled and put to use
Boundary
– the creation of deliberate psychological (e.g., telling family or friends) or official (e.g., registering a business) boundaries
Intentionality
– those seeking to set up a new business have to form some intentions towards setting up their business
Exchange
– transactions (e.g. sales) have to occur
see slide 22/26 for table with examples for each
Causal or effectual process?
Causal
- some chefs follow a recipe (means) to cook a meal (ends)
VERSUS
Effectual
- Others go into their cupboard and investigate what ingredients (means) they have. They then imagine what the meal should look like (effects) before cooking the meal (ends).
‘...organising a new venture is not a patterned or linear process but rather is simultaneous, messy and iterative’
SEE SLIDE 23/26
Effectuation: 5 core principles
Implications for teaching entrepreneurship
Affordable Loss:
Entrepreneur does not focus on possible profits, but on the possible losses and how they can minimize those losses
Crazy Quilt:
Entrepreneurs cooperate with parties they can trust. These parties can limit the affordable loss by giving pre-commitment
Bird in Hand
: Entrepreneur does not start with a given goal, but with the tools he or she has
Lemonade:
Surprises are not necessarily seen as something bad, but as opportunities to find new markets
Pilot-in-the-plane.
In this stage, all the previous principles are put together. The future cannot be predicted, but entrepreneurs can control some of the factors which determine the future
Cyclical: Diminishing role for the business plan (e.g., at ECE)
Summary
What actually triggers nascents to start a business?
Nascents most similar to actual entrepreneurs
Actual start ups of measurable economic significance
Social context and framework conditions important for start-up and survival
How do individuals go about creating a business?
Develop: Intentionality, Resources, Boundary, Exchange
Effectuation process
How many individuals are involved?
People do business not businesses
Not all nascents will become an entrepreneur (dreamers, but learning)