ENTREPRENEURSHIP
THE ENTREPRENEURIAL MIND‐SET
WEEK 2
Asst. Prof. Zeynep Merve ÜNAL
Chapter 2
The Entrepreneurial Mind‐Set
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What are we going to learn?
• The concept of entrepreneurship and explain the process of
entrepreneurial action.
• Structural similarities enable entrepreneurs to make creative mental
leaps.
• Highlight bricolage as a source of entrepreneurs’ resourcefulness.
• Effectuation as a way expert entrepreneurs sometimes think.
• Develop the notion that entrepreneurs cognitively adapt.
• Introduce sustainable entrepreneurship as a means of sustaining the
natural environment and communities and developing gains for
others.
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The Nature of Entrepreneurship
• As entrepreneurship plays an important role in the creating and
growth of businesses, entrepreneurial actions begin at the nexus
of a lucrative opportunity and an enterprising individual.
• Entrepreneurial opportunities are ‘‘those situations in which new
goods, services, raw materials, and organizing methods can be
introduced and sold at greater than their cost of production’’.
• An Entrepreneurial opportunities could be creating a new
technological product for an exisiting market or creating both a
new product/service and a new market.
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The Nature of Entrepreneurship
• Entrepreneurship requires actions‐ Entrepreneurial action
through the creating of new products/processes and/or the
entry into new markets, which may occur through a newly
created organization.
• To be an Entrepreneur is to act on the possibility that one has
identified an opportunity worth pursuing. It involves
Entrepreneurial thinking individuals’ mental process of
overcoming ignorance to decide whether a signal represents an
opportunity for someone and/or reducing doubt as to whether
an opportunity for someone is also an opportunity for them.
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How Entrepreneurs Think
• Entrepreneurs think differently than non‐entrepreneurs.
Entrepreneurs must often make decisions in highly uncertain
environments where the stakes are high, time pressures are
immense and there is considerable emotional investment.
• Given the nature of Entrepreneur’s decision‐making environment
s/he must:
1. Think structurally
2. Engage in bricolage
3. Effectuate (gerçekleştirme)
4. Cognitively adapt
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Think Structurally
• Forming opportunity beliefs often requires creative mental leaps. These mental
leaps are launched from a source (one’s exisiting knowledge).
• Making connection between a new product (or new service) and a target market is
aided by superficial and structural similarities between the source (e.g., the
market) and the destination (e.g., technology).
• Superficial similarities exist when the basic elements of the technology resemble
(or match) the basic element of the market.
• Structural similarities exist when the underlying mechanism of the technology
resemble the underlying mechanism of the market.
• The Entrepreneurial challenge often lies in making creative mental leaps based on
structural similarities.
• Thus, individuals who can see or create structural matches between a technology
and a target market, especially in the presence of superficial mismatches, are more
likely to recognize entrepreneurial opportunities.
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Bricolage
• Bricolage means that some entrepreneurs make ‘‘do by applying
combinations of the resources at hand to new problems and
opportunities’’.
• This involves taking existing resources and experimenting, tinkering
(tamir etmek), repackaging and/or reframing them so they can be
used in a way for which they were not originally designed or
conceived.
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Effectuation
• Professor Saras Sarasvathy (from Darden, Uversity of Virginia)
has found that entrepreneurs do not always think through a
problem in a way that starts with a desired outcome and focuses
on the means to generate that outcome. Such a process is
referred to as a causal process.
• But, entrepreneurs sometimes use an effectuation process,
which means they take what they have (who they are, what they
know, and whom they know) and select among possible
outcomes.
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Effectuation
• Effectuation helps entrepreneurs think in an
environment of high uncertainty. Indeed
organizations today operate in complex and dynamic
environments 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. This entrepreneurial mind‐
set involves the ability to rapidly sense, act, and
mobilize, even under uncertain conditions.
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Cognitive Adaptability
• 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.
• Cognitive adaptability is reflected in an entrepreneur’s meta‐cognitive awareness,
that is, the ability to reflect upon, understand, and control one’s thinking and
learning.
• Meta‐cognition describes a higher‐order cognitive process that serves to organize
what individuals know and recognize about themselves, tasks, situations, and their
environments to promote effective and adaptable cognitive functioning in the face
of feedback from complex and dynamic environments.
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The Intention to Act Entrepreneurially
• Entrepreneurial action is most often intentional. Entrepreneurs intend to
pursue certain opportunities, enter new markets, and offer new products—
and this is rarely the process of unintentional behavior.
• As a general rule, the stronger the intention to engage in a behavior, the
more likely should be its performance.
• Individuals have stronger intentions to act when taking action is perceived
to be feasible and desirable. Entrepreneurial intentions can be explained in
the same way.
• The perception of feasibility has much to do with an entrepreneurial self‐
efficacy. Entrepreneur’s self‐efficacy refers to the conviction that one can
successfully execute the behavior required; people who believe they have
the capacity to perform (high self‐ efficacy) tend to perform well.
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The Intention to Act Entrepreneurially
• Entrepreneurship scholars have found that self‐efficacy is
positively associated with the creation of a new independent
organization.
• Not only must an individual perceive entrepreneurial action as
feasible for entrepreneurial intention to be high, the individual
must also perceive this course of action as desirable.
• Perceived desirability refers to an individual’s attitude toward
entrepreneurial action—the degree to which he or she has a
favorable or unfavorable evaluation of the potential
entrepreneurial outcomes.
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Entrepreneur Background and Characteristics: Education
• Although some may feel that entrepreneurs are less educated than the
general population, research findings indicate that this is clearly not the
case. Education is important in the upbringing of the entrepreneur.
• Its importance is reflected not only in the level of education obtained but
also in the fact that it continues to play a major role in helping
entrepreneurs cope with the problems they confront.
• Although a formal education is not necessary for starting a new business—
as is reflected in the success of such high school dropouts as Andrew
Carnegie, William Durant, Henry Ford, and William Lear—it does provide a
good background, particularly when it is related to the field of the venture.
• The general education (and experiences) of an entrepreneur can provide
knowledge, skills, and problem‐solving abili‐ ties that are transferable across
many different situations
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Entrepreneur Background and Characteristics: Age
• In terms of chronological age, most entrepreneurs initiate their
entrepreneurial careers between the ages of 22 and 45. A career
can be initiated before or after these ages, as long as the
entrepreneur has the necessary experience and financial
support, and the high energy level needed to launch and manage
a new venture successfully.
• As one entrepreneur stated, “I felt it was now or never in terms
of starting a new venture when I approached 30.” Generally,
male entrepreneurs tend to start their first significant venture in
their early 30s, while women entrepreneurs tend to do so in
their middle 30s.
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Entrepreneur Background and Characteristics: Work History
• Work history can influence the decision to launch a new entrepreneurial venture,
but it also plays a role in the growth and eventual success of the new venture.
• As the venture becomes established and starts growing, managerial experience
and skills become increasingly important. Although most ventures start with few (if
any) employees, as the number of employees increases, the entrepreneur’s
managerial skills come more and more into play.
• Previous start‐up e rience is a relatively good predictor of starting subsequent
businesses.
• To the extent that start‐up experience provides entrepreneurs with a greater
belief in their ability to success‐ fully achieve entrepreneurial outcomes, this
increased perceived feasibility will strengthen entrepreneurial intentions.
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Entrepreneur Background and Characteristics: Role Models & Support
Systems
• Role models can be parents, brothers or sisters, other relatives, or
other entrepreneurs.
• As one entrepreneur stated, “After evaluating Ted and his success as
an entrepreneur, I knew I was much smarter and could do a better
job. So I started my own business.” In this way, role models can
provide important signals that entrepreneurship is feasible for them.
• An entrepreneur needs a strong support and advisory system in every
phase of the new venture. This support system is perhaps most crucial
during the start‐up phase, as it provides information, advice, and
guidance on such matters as organizational structure, obtaining
needed financial resources, and marketing.
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Entrepreneur Background and Characteristics: Moral‐Support Network
• Most entrepreneurs indicate that their spouses are their biggest
supporters and allow them to devote the excessive amounts of
time necessary to the new venture.
• Friends also play key roles in a moral‐support network. Not only
can friends provide advice that is often more honest than that
received from other sources, but they also pro‐ vide
encouragement, understanding, and even assistance.
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Entrepreneur Background and Characteristics: Professional‐Support
Network
• In addition to encouragement, the entrepreneur needs advice and
counsel throughout the establishment of the new venture. This advice
can be obtained from a mentor, business associates, trade
associations, or personal affiliations—all members of a professional‐
support network.
• Another good source of advice can be cultivated by establishing a
network of business associates. This group can be composed of self‐
employed individuals who have experienced starting a business;
clients or buyers of the venture’s product or service; experts such as
consultants, lawyers, or accountants; and the venture’s suppliers.
• Suppliers also can provide good information on the nature of trends,
as well as competition, in the industry.
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Sustainable Entrepreneurship
• Sustainable entrepreneurship is focused on preserving nature, life support,
and community (sustainability) in the pursuit of perceived opportunities to
bring future products, processes, and services into existence for gain
(entrepreneurial action) where gain is broadly construed to include
economic and noneconomic benefits to individuals, the economy, and
society (development).
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Sustainable Entrepreneurship
• For entrepreneurial actions that preserve nature to be considered
sustainable entrepreneurship, they must also develop gains for the
entrepreneur, others, and/or society.
• It has long been accepted that entrepreneurs can generate economic
wealth for themselves, but their impact on development can be far greater.
They can generate gains for others that are economic, environmental, and
social, including employment opportunities, improved access to
quality/valuable goods, and revenues for the government(s).
• The environmental gain generated for others could be reduced air pollution,
improved air quality, improved drinking‐water quality, and other enhanced
living conditions. The social gains include improved child survival rates,
longer life expectancy, superior education, equal opportunity, and so on.
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