Intro To Entrepreneurship and Entrepreneurial Behavior

IED Fellow’s Programme
Simon Stockley
Director, FTMBA Programme
Recommended texts
New Venture Creation The New Business Road Test The FT Guide to Business Start
Timmons, J.A & S. Spinelli John Mullins Up (2009)
McGraw Hill FT Prentice Hall Sara Williams
FT Prentice Hall
1. Entrepreneurship and
entrepreneurial behaviour
Simon Stockley
Director, FTMBA Programme
William Baumol: the ‘rules of the game’?
• Entrepreneurs are always with us

• Defined as people who are creative in the maximisation
of their utility (wealth, power, prestige, etc)
• The allocation of entrepreneurial effort is determined by
‘the rules of the game’
• The rules define the structure of payoffs in a society - The rewards accruing to
different types of behaviour vary dramatically
• The rules are a reflection of a society’s underlying value system
• Entrepreneurial activity can be productive, unproductive or destructive!
What are ‘the rules of the game’?
• Societal norms relating to utility – what

do people want?
National Children’s
• Structure of payoffs – what gets very
well rewarded?
Survey 2008
• Nature of entrepreneurial activity – how 1. To be a celebrity
do people seek to maximise their utility?
2. To be a model
• Academia 3. To be rich
• Entrepreneurship
4. To be a football player
• UK
• Denmark...
Why pursue a ‘productive’ entrepreneurial career?
• Death of the ‘psychological contract’

• Chips & BRICS...you’ll probably have no choice!
• Make the world a better place
• Get rich (maybe)
• Fun
• Patriotic duty?
If you don’t control your life,

someone else will control it for you
Differing perspectives on
entrepreneurship
The evolution of the field
Functional Indicative Behavioural ?

The economic function of The personality traits Entrepreneurial Gene-environment
the entrepreneur and characteristics of behaviour interactions
the entrepreneur
1755 - 1950s 1950s - 1988 1988 - present

•McClelland 1961 •Gartner – 1988 •Nicolaou & Shane 2007
•Cantillon – 1755
•Say – 1800 •Kets de Vries – 1977 •Stevenson – 1989
•Schumpeter - 1934 •Baron - 2000
The difficulty in defining entrepreneurship stems from a

failure to integrate these competing approaches…
Who is the Entrepreneur?
High
Inventor Entrepreneur
Creativity
and
innovation
Manager,
Promoter administrator
Low High
General management skills, business know-how,

networks
Source: Timmons 1999 p.46

Why do people start businesses?
Reasons for starting a business (Birley & Westhead, 1994) n=405
1. Freedom to adopt my own 7. Desire to have high earnings

approach to work
8. Challenge
2. To take advantage of an
opportunity 9. To achieve something and get
recognition
3. To control my own time
10. To continue learning
4. It made sense at that time in my
life (!) 11. Respect of friends and family
5. Security for myself and family 12. Tax avoidance….
6. Flexible work-life balance

Does the motive matter?
• Research suggests no link to business success

• Other factors are far more significant…
However:
• Intrinsic motivation is important

• The fit between personal and business goals
matters a great deal, especially with a team
• Stakeholders try to pick winners!
Current thinking:
Entrepreneurship is:
• A process or behaviour, not a person

• An approach to management that begins with
opportunity
‘The pursuit of opportunity beyond the

resources you currently control’
The elements of entrepreneurship
Opportunity Resources
Entrepreneur
Managerial vs. Entrepreneurial behaviour
Entrepreneur Manager/Bureaucrat
Opportunity
Driven
Strategic Orientation Resources Driven
Quick &
Commitment to Opportunity Long & Slow
Short
Minimal,
Commitment of Resources Single stage
Multi-stage
Use or rent Control of Resources Own or employ
Networks, little Formalised

hierarchy Management Structure hierarchy
Value and Individual &

team based Compensation and Rewards hierarchical
Stevenson 1998
What shapes our behaviour?
Behaviour = ƒ(S,A,P) moderated by Context
High
Low context
context environment
environment =
= weak
strong influence
influence on behaviour
on behaviour
Belief structures
•self-image
•perceived societal
Aptitude
norms
Intelligence
•fear of failure
Education
•heuristics
•ethical values ‘Psychological Ability Training
Experience
State’
Motivation
Self-efficacy
Personality
WE ARE ABLE TO CHANGE OUR
PERCEPITIONS, ATTITUDES, BELIEFS AND
BEHAVIOURS….BUT
The degree behavioural mobility:
Potential Potential Current
Entrepreneur Manager
1. Will vary between individuals

2. Will respond to differing stimuli and interventions
There is no universal recipe or ‘magic formula’!....

Becoming more entrepreneurial….
Straits Times 13th May 2004
Socio-psychological antecedents of entrepreneurial behaviour
• Self concept – ‘I see myself as an entrepreneurial person’

• Belief system – Entrepreneurship is a ‘good thing’
• Perceived societal norms – People within my environment (family,
friends, peers) approve of entrepreneurial behaviour.
• Perceived instrumentality – Displaying entrepreneurial behaviour will
help me to achieve my life’s purpose (or maximise my utility)
• Self efficacy – I believe that I can display the behaviours and attitudes
required to succeed as an entrepreneur
• Intrinsic motivation – Interest and enjoyment (pull) and/or need (push)
How to become more entrepreneurial….
• Locate yourself in suitable environments

• Get an entrepreneurial mentor
• Become obsessed with opportunity
• Take action – JFDI
• Take many small steps
• Learn by failing fast and often (but make sure the losses are small)
• Develop your social capital
• Do stuff you love
Get in the game and start playing..

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IED Fellow’s Programme

• Entrepreneurs are always with us

• Societal norms relating to utility – what

• Death of the ‘psychological contract’

If you don’t control your life,

Functional Indicative Behavioural ?

1755 - 1950s 1950s - 1988 1988 - present

The difficulty in defining entrepreneurship stems from a

General management skills, business know-how,

Source: Timmons 1999 p.46

1. Freedom to adopt my own 7. Desire to have high earnings

5. Security for myself and family 12. Tax avoidance….

6. Flexible work-life balance

• Research suggests no link to business success

• Intrinsic motivation is important

• A process or behaviour, not a person

‘The pursuit of opportunity beyond the

Use or rent Control of Resources Own or employ

Networks, little Formalised

Value and Individual &

Potential Potential Current

1. Will vary between individuals

There is no universal recipe or ‘magic formula’!....

• Self concept – ‘I see myself as an entrepreneurial person’

• Locate yourself in suitable environments

Get in the game and start playing..

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