Introduction Theories of Entrepreneurship
Causes of change
Technology
- Shift from industrial to knowledge-based economies
- Global connectivity & communication
-- Deconstruction of value chains
-- Data moneterization & mining - Decreasing fixed costs in some industries
Competition
- Global competition but increasing concentration & consolidation in some industries
- Competition from entrepreneurial smaller firms
- Shift from economies of scale to economies of scope & market niches
Global warming
- Environmental & social sustainability (CSR)
Social trends
- Corporate scandals and accountability
- Increasing complexity
Making an enduring company is both far harder and more important than making a great product
Steve Jobs, 1955 - 2011
founder Apple Corporation
Complexity theory & the
requirements for self-organization
Scaling laws
sublinear scaling
- When you double the number of cells in an organism the number of capillaries increases by only 75%
super-linear scaling
- When you double the size of a city the infrastructure needed increases by 85%. BUT the number of socioeconomic outputs (wages, patents, crimes, restaurants etc.) increases by 115%
- The average life expectancy of a multinational company is 40-50 years
- The half-life* of a US publicly traded company is only 10 years
*Time needed for the amount of something to fall to half its initial value
Geoffrey West
Griener’s growth model
Character traits of entrepreneurs
High internal locus of control
High need for independence
High creativity, innovation & opportunism
High drive & determination
High acceptance of measured risk & uncertainty
High need for achievement
Big Five Model
Openness
- creativity, change, diversity & new experiences
Extraversion
- outgoing, talkative, energetic social interaction
Conscientiousness
- self-regulating, self-disciplined, achievement orientated
Agreeableness
- harmony, altruism, trusting, not competitive
Neuroticism
- fear, guilt, worry, stress
How entrepreneurs manage
Complexity theory
Relationships
- strong networks of relationships inside (‘in-group’) & outside the organization
- building identity & relationships
Loose control but mitigate risk through information & knowledge, coming from structures & external partnerships
- using information & relationships
Emergent strategies & incremental decision-making, based on continuous strategizing, generates strategic options based on information & knowledge underpinned by strong strategic intent
- building purpose & direction using information and relationships
Seeks to explain how complex systems work
They are the result of multiple independent actions
- unpredictable & small actions at one level that can have large-scale unexpected consequences elsewhere
There is no stable equilibria in these situations
- change can become continuous and unpredictable
Common identity & purpose
Free flow of knowledge & information
Strong personal relationships