Entrepreneurship as a gateway to economic and

social security

Agnieszka Kurczewska University of Lodz

Goal of the session

• To familiarize with a concept of entrepreneurship!

• To encourage to study entrepreneurship!

• To inspire to become entrepreneur and think in entrepreneurial way!

• What is entrepreneurship?

• Why to be entrepreneur?

• How to become an entrepreneur?

What is Entrepreneurship…?

Entrepreneurship in its broadest interpretation is as old as civilization

It is quite ambiguous concept.

It appears on different levels of discussion: economy, politics,

education, personal level.

It appears in everyday life. We talk about entrepreneurial mindset, entrepreneurial thinking, entrepreneurial competences, etc.

It is a scientific concept.

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Entrepreneurship concerns…

• Creating business

• Bringing value

• Changing ideas into market products or services

• Being under condition of risk and uncertainty

• Innovativeness and creativeness

What is entrepreneurship in broader sense?

• a culture enabling developing selves and mind-set shift,

• an intellectual development of individuals leading to execution of entrepreneurial behaviour,

• a venture creation process with different phases dynamics, where each phase demands different competences and resources.

• a process of creating new practices and breaking down old systems (in econonomic and cultural sense)

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Entrepreneurship as a research field

• Entrepreneruship is about entrepreneurial humans, the autonomic individuals whose behaviour is difficult to predict and describe.

• The basic characteristics of entrepreneruship is CREATION (Brush et al. 2003) of new ventures, ogranizations, goods or services.

• The process of EMERGENCE (ex. Dimov 2010).

• It is highly contextual.

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Basic questions in entrepreneurship

• what happens when entrepreneurs act - focus on the results of the actions of the entrepreneur, not the entrepreneur or his or her actions per se.

• why entrepreneurs act - emphasis on the entrepreneur as an individual, and on the idea that individual human beings with their background, environment, goals, values, and motivations.

• how entrepreneurs act - analyze the characteristics of entrepreneurial management, how entrepreneurs are able to achieve their aims

Stevenson and Jarillo (1990)

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Broad meaning of entrepreneurship

„Entrepreneurship refers to an individual’s ability to turn ideas into action. It includes creativity, innovation and risk taking, as

well as the ability to plan and manage projects in order to achieve objectives. This supports everyone in day-to-day life at home and in society, makes employees more aware of the context of their

work and better able to seize opportunities, and provides a foundation for entrepreneurs establishing a social or commercial

activity.” Commission Communication “Fostering entrepreneurial mindsets through education and learning”.

COM(2006) 33 final.

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Opportunity focused understanding of entrepreneurship

„Entrepreneurship as a scholarly field seeks to understand how opportunities to bring into existence "future" goods and services are discovered, created,

and exploited, by whom, and with what consequences”

(Venkataraman, 1997, 120)

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Core of entrepreneurship - opportunities

(1) why, when and how opportunities for the creation of goods and services in the future arise in an economy;

(2) why, when, and how some are able to discover and exploit these opportunities while others cannot or do not;

(3) what are the economic, psychological, and social consequences of this pursuit of a future market not only for the pursuer, but also for the other stakeholders and for society as a whole. Venkataraman (1997)

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Who is entrepreneur?

• Any age

• Any gender

• Different education level

• Different social and cultural background

• Different nationality and ethnical origin

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?

Who is entrepreneur?

• Global Heroes: Bill Gates, Steve Jobs, Richard Branson, Al-Fayed

• Everyday heroes: a women who is opening childcare in her house, a man opening small café down the corner …….

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Who is entrepreneur?

• Entrepreneur is a person who is willing to bear the personal financial risk of a business venture (Cantillon 1730)

• Entrepreneur is an innovator (Schumpeter 1934)

• Entrepreneur is a person with a high need for achievement (McClleland 1961)

• Entrepreneur is responsible for change (Drucker 1964)

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WHO IS THE ENTREPRENEUR IS WRONG QUESTION!

Gartner

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What entrepreneur does?

• Value creator who moves resources out of less productive areas and into more productive ones (Say)

• Innovator responsible for changes in economy, dis-equilibrating role (Schumpeter)

• A person who discovers opportunity, playing equilibrating role (Kirzner)

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Evolution of the view on entrepreneurship theories of economic development

the existence of certain personality traits that could be associated with the entrepreneurial activity

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behavioral school – what entrepreneur does not who is he-she, disccusion on competences

cognitive approach - entrepreneurial intentions, attitudes, perception. cognitive schemas

CRUSHING THE KEY MYTHS OR MISUNDERSTANDINGS ABOUT

ENTREPRENEURSHIP 18

1. Entrepreneurship does not start when a business starts!

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2. Entrepreneurs does not only work for a profit in economic terms!

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3. Entrepreneurship is associated with start-ups but may also appear in a form

of corporate entrepreneurship!

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4. Being entrepreneurial does not only mean to start up a business but also continuing family

business!

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5. Entrepreneurship is not only connected with innovativeness but also imitation and

replication!

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6. Entrepreneurs and managers are not the same!

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7. You do not have to be born entrepreneurial, it is possible to learn

how to be more entrepreneurial!

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Nature vs. nurture

HOW DO ENTREPRENEURS THINK AND MAKE DECISIONS?

EFFECTUATION

VERSUS

CAUSATION

Saras Sarasvathy

• Top class world professor in entrepreneruship

• Author of effectuation theory

Introduction

• In dynamic thus uncertain environment entrepreneurs take actions in different ways.

• What is distinctive for successful entrepreneur (especially expert one) is specific logic of thinking and in consequence making decisions.

• The logic might be analyses in CONTROL-PREDICTION frame.

READ THE RECIPE

SET THE GOALS

GO TO SHOP TO BUY INGREDIENTS

OBTAIN THE RESOURCES

COOK ACHIEVE THE

GOAL

SEE WHAT YOU HAVE

MOBILIZE YOUR

RESOURCES

PREPARE THE MEAL

CLARIFY YOUR IDEA

Effectuation vs causation • There are different approaches to taking actions, solving

problems and decision making:

• Effectuation - the future is unpredictable yet controllable, entrepreneurs create opportunities, effectual models begin with given means and seek to create new ends, based on the premise „To the extent we can control the future, we do not need to predict it”

• Causation – rooted in prediction, causal models begin with an effect to be created, based on the premise „To the extent we can predict the future, we can control it”

Sarasvathy 2008

Causual reasoning • predictive and very functional area in business

• begins with a pre-determined goal and a given set of means and seeks to identify the optimal – fastest, cheapest, most efficient, etc. – alternative to achieve the given goal.

• involves the creation of additional alternatives to achieve the given goal.

• causal reasoning may or may not involve creative thinking. The form of creative causal reasoning is often used in strategic thinking.

Effectual reasoning

• does not begin with a specific goal. Instead, it begins with a given set of means and allows goals to emerge contingently over time from the imagination and aspirations of the founders and the people they interact with.

• effectual reasoning is creative

Effectual reasoning

• entrepreneur selects alternatives based on the affordability of experimentation and hedges experiments by making alliances with and getting pre-commitments from potential suppliers, competitors, and customers

• decision criteria are the affordability of experimentation and the degree to which an uncertain outcome can be controlled through alliances and pre-commitments

Chandler et al. (2007)

5 principles of effectuation

• Bird-in-hand principle → Start with Who you are, What you know and Whom you know

• Affordable loss principle → Invest what you can afford to lose

• Crazy Quilt principle → Build a network of self-selected stakeholders

• Lemonde principle → Embrace and leverage surprises (every day)

• Pilot-in-the-plane principle → The future comes from what people do

Final reflection

Do not ask yourself:

How to become a successful entrepreneur?

BUT

Given who I am, what I know, and whom I know, what kind of entrepreneur I could become and what kind of

enterprise I could create?

How to find an idea?

INTENTION, ATTITUDE

• READING

• OBSERVING

• THINKING AND INVENTING

• LISTENING

• EXPERIENCE AND EDUCATION

How to start?

• Open for information and knowledge

• Follow success stories

• Network

• Pursue your passion

• Reflect

• Role models

• Actions going together with reflections