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Entrepreneurship MGT602

Lesson 5

THE ENTREPRENEURIAL AND ENTREPRENEURIAL MIND (continued...)

LEARNINGOBJECTIVES

1. To explain the aspects of the entrepreneurial process.

2. To explain the differences between entrepreneurial and managerialdomains.

3. To explain the organizational environment conducivefor entrepreneurship.

4. To identify the general characteristics of an entrepreneur.

5. To explain the process of establishing entrepreneurship in an organization.

MANAGERIALVERSUS ENTREPRENEURIAL DECISIONMAKING

The difference between the entrepreneurial andmanagerial styles involvesfive businessdimensions.

StrategicOrientation

Theentrepreneur's strategic orientationdepends on his or her perception of the opportunity. This

orientation is most important when otheropportunities have diminishingreturns accompanied by rapid

changes in technology, consumer economies, socialvalues or political rules.When the use of planning

systems is the strategic orientation, there is more pressure for the administrative domain to be operant.

Commitment to Opportunity

Theentrepreneurialdomain is pressured by the need for action and has a short time span in terms of

opportunity commitment. The administrativedomain (the ways mangers make decisions) is notonly slow to

act on an opportunity, but the commitment is usually for a longer time span.

Commitment of Resources

An entrepreneur is used to having resources committed at periodic intervals, often based on certain tasks or

objectives being reached. In acquiring theseresources the entrepreneur is forced to achieve significant

milestonesusing very few resources. In the administrative domain, the commitment of resources is for the

total amount needed. Administrative-orientedindividuals receive personalrewards by effectively

administering the resources under theircontrol.

Control of Resources

The administrator is rewarded by effective resource administration and has a drive to own or accumulate as

manyresources as possible. The entrepreneur, under pressure of limited resources,strives to rentresources

on an as-needed basis.

ManagerialStructure

In the administrative domain, the organizational structure is formalized and hierarchical in nature.

The entrepreneur employs a flat organizational structure with informal networks.

CAUSESFOR RECENT INTEREST IN ENTREPRENEURSHIP

Interest in entrepreneurship has resulted fromevents occurring on social, cultural, andbusiness levels.

There is an increasing interest in "doingyour own thing." Individualsfrequently desire to createsomething

of their own. They want responsibility and want more freedom in theirorganizations. Frustrationcan

develop and result in the employeebecoming less productive or leaving the organization. This hasrecently

causedmore discontent in structuredorganizations. When meaning is not provided within the organization,

individualsoften search for an institution, such as entrepreneurship,that will provideit.

Entrepreneurship is one method for stimulating and capitalizing on those whothink that something can be

done differently and better, such as Xerox Corporation's commitment to Xerox Technology Ventures.

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Entrepreneurship MGT602

It is important to instill the entrepreneurial spirit in an organization in order to innovate and grow.

In a large organization problems occurthat thwart creativity andinnovation. This growth and diversity that

canresult are critical, sincelarge corporations are moreefficient in a competitive marketthan are smaller

firms. The resistance againstflexibility, growth, anddiversification can be overcome by developing a spirit

of entrepreneurship, called Entrepreneurship, within the existing organization.

There are social, cultural, andbusiness pressures for Entrepreneurship. Hyper competition has forced U.S.

companies to focus on new product development and increasedproductivity.

Reductions in large corporation's staff are being absorbed in the workforce, particularly in small businesses.

Entrepreneurial endeavors consist of fourkey elements.

1. Newbusiness venturing refers to the creation of new business within an existing organization.

2. Organizationalinnovativeness refers to product and serviceinnovation with an emphasis on

development and innovation in technology.

3. Self-renewalreflects the transformation of organizationsthrough the renewal of the keyideas on

which they are built.

4. Proactivenessincludesinitiative and risk taking, as well as competitive aggressiveness

KEY TERMS

Administrativedomain

Theways managers makedecisions

Businessplan

The description of the future direction of the business

Corporateculture

Theenvironment of a particular organization

Entrepreneurialdomain

Theways entrepreneurs makedecisions

Entrepreneurialprocess

Theprocess through which a new venture is created by an entrepreneur

Entrepreneurialculture

Theenvironment of an entrepreneurial-oriented organization

Entrepreneurship

Entrepreneurship within an existing business organization

Opportunity identification

Theprocess by which an entrepreneur comes up with the opportunity for a new venture

Opportunityparameters

Barriers to new product creation and development

Topmanagement commitment

Managers in an organization strongly supporting Entrepreneurship

Traditionalmanagers

Managers in a non-entrepreneurial-oriented organization

Window of opportunity

The time period available forcreating the new venture