(Video) Kirzner on Entrepreneurship
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The first key element is the ability to understand how people act. In contrast to what one might think, people do
not want to stay in the ‘status quo’. They want change and try to find new and better ways to achieve their goals. An
entrepreneur must think in the same way, i.e. find new opportunities that provide more value than the
previous one. The Second key point is the Alertness entrepreneurial element which means that it’s important to
always stay alert about opportunities of new products and opportunities offered by market change. This is in the core
of the definition of the entrepreneur seen by Kirzner. Unfortunately, alertness can have its downsides: entrepreneur
can undergo costs and take risks by being constantly alert market-wise. For example, following a certain path might
lead you nowhere and your projects might not be able to create value. His role is to enhance the 4 following
dimensions that people give value to: goods, methods, services and resources. Those dimensions will help to offset
the risks and costs that an entrepreneur can undergo. The Third key point is reallocation of resources to discover
opportunities. From the outside, entrepreneur might look like they are disrupting a stable allocation of resources in
order to create a performant product. But this is not the case! He actually reallocates these resources to find better
way to use them. This is what gives them competitive advantage. To do this, it is necessary to keep abreast of new
opportunities in terms of technology and new methods in order to adapt the offer in time and not be overtaken by
competitors. The entrepreneur must try to find the best possible allocation of resources that no one has yet noticed!
In the Implication 1 : Develop your knowledge on the topics that occupy your life. You can, for example take evening
business classes if you are studying this to find a way to innovate. Try to discover yourself.
On the other hand, enroll in totally different courses to perhaps discover a passion that you did not know you had
and that could help you innovate. Seize a maximum of opportunities. The first limitation : Be careful not to think in
box too new, that doesn’t fit demand yet: Difficulties to adapt your business and know if what you do is good.
Solutions could be : Find a way to know how to know. Use expert/consultant in the domain to advise you or buy a
company/start up specialized in the domain. Like the Company Meta. Moreover, customers on the market may not
fit your offer. Nobody has tried a new product, and few want to try it first. EX: Failure of Google Glass. So, make
sure that what you do concerns the “pain” of customers.
In the Implication 2: Find your level of alertness and adapt it. Some methods can be used : Having contacts in
different sectors, Working with consultants/professionals, Staying informed with scientific works and journals,
Participating to seminars and Hackathons. The second limitation: Alertness must be balanced between the 2
extremes: not being too much nor too little alert. If you’re too little alert, you might miss opportunities because of
the lack of information. EX: Failure of Blackberry. If you’re too much alert, you face huge quantity of information
and without good knowledge support an strategy, you won’t be able to select right opportunities. You must also be
careful about misinformation, it lead you to the wrong direction even though you are alert. EX: Greenwashing
In the Implication 3: It’s important to know when the cycle of a product tends to end. Ex: industry of music: Vinylthe CD – the MP3- now Spotify. There’s always a product that replaces the current one à know how to find it +
how to allocate resources. The third limitation : Making a good transition and feeling the end of a cycle is the enemy
of many companies: because even if we allocate resources periodically to determine the transition of the product ,
we are still left in the unknown for the evolution of the market. Moreover, you can inject a lot of resources into a
product but you need to have a long term vision. Don’t be stuck on short term vision only.
New sources:
1) Making the Leap to Entrepreneurship. (2020, April 2). Harvard Business Review.
How you can differentiate yourself; Gain practical experience ; Build your network and attend industry events.
2) Kirzner, I. M. (2008). The Alert and Creative Entrepreneur: A Clarification.
The nature of the market process set in motion by the entrepreneurial decisions; Alertness refers to the sense of what
may be “coming”
Bergmann, H., Hundt, C., & Sternberg, R. (2016). What makes student entrepreneurs? On the relevance (and irrelevance) of the university and the regional context for student start-ups. Small Business Economics, 47(1), 53-76.
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Key insights
In this article, the authors make the difference between new and nascent entrepreneurship in students at university in economy and business. They also explain that students’ propensity to launch their own start-ups depends on their individual characteristics and on the organizational and regional contexts. They further detail and test hypotheses using multi-level statistics and conclude that the organizational context is more important for nascent entrepreneurship while regional context is more important for new entrepreneurship. Moreover, fellow students who have attended entrepreneurship education have a positive effect on nascent entrepreneurship of students.
Managerial implications
In order to help as many student-entrepreneurs as possible and to allow more and more of them, this first implication should be that universities could partner more with companies. First, to allow students to have some networks in the business. Secondly, to allow them to have more experience through internships for example. Because the industry experience seems to be even more valuable for entrepreneurial performance than academic knowledge and this experience might increase the ability to perceive a viable business idea. But also, to think about organizing more compulsory courses at the beginning of the student’s curriculum during their studies. Moreover, we know that these courses also affect student who don’t take them thanks to social interactions and observations of ones’ peers.
A second implication we observed is the importance of coordination between university programmes to support student entrepreneurship and the respective strategies of the region in which the university is located. Since the authors of the text have proven the importance of both parties in the entrepreneurial process, a coordinated strategy can be more effective than isolated efforts.
Limitations
To begin with, even if more entrepreneurship courses would allow students to be more immersed in this entrepreneurial culture, it will be difficult for everyone to find the right fit. When we look at start-ups and young companies, the diversity of projects is such that it would be difficult to provide everyone with the necessary tools through courses as it would be necessary to have a consequent number of partner companies willing to share their knowledge to fulfil everyone’s needs related to their own project. But on the other hand, wouldn’t it be better to acquire general skills, to be able to adapt to any situation? The world of entrepreneurship is uncertain, and it is not uncommon for a start-up or young company to change course along the way. There is therefore a tradeoff between the desire to set up courses providing everyone with the necessary tools to start their journey as entrepreneurs, and the need to have general skills, in order to remain agile and to adapt to the different situations that may arise in this uncertain world of entrepreneurship.
Then, the article tells us that when considering nascent entrepreneurship, the organizational context is more important. Regarding the influence of the university context, a second limitation should be highlighted. Indeed, the influence of this organizational context on the students’ willingness to undertake is only valid if the students are actually immersed in this university context. We all know or have known a “ghost student”, i.e. a student who does not physically go to class, and who is not actively involved in university life. For those students who are not immersed in the university life and context, interactions with other students, professors or even start-ups present on campus cannot be considered as factors favoring nascent entrepreneurship. It is therefore necessary to distinguish the students who actively follow the course and benefit from all the advantages put forward by the article, from the so-called ghost students, who are not physically present on campus and not actively involved in the university life. Moreover, in this era of covid19 and online courses, the influence of the university context is drastically limited. There is little or no student interaction, and the stimuli mentioned by the article are no longer relevant.
Then even in an appropriate regional and organizational context, the business created by the student may not be viable. The personal characteristics of the student in relation to entrepreneurship must also be taken into account. Indeed, not all students are cut out for entrepreneurship, and having an idea or desire to start a business is far from sufficient. This is our third limitation. You need to have appropriate temperament, a different way of thinking or ability to identify market opportunities as well as a great motivation and a passion for your project. If these characteristics are not present in the student, it is a limitation to the development of the start-up. Finally, although it is not a limitation as such, we also believe that the private sphere can affect the entrepreneurial process. For example, often the student’s thinking will be different if he or she has independent parents. They will certainly have already developed some important skills and behaviors, which is an advantage when starting a business.
Further insights
Breznitz, S. M., & Zhang, Q. (2019). Determinants of graduates’ entrepreneurial activity. Small Business Economics, 1-18. doi:http://dx.doi.org.proxy.bib.ucl.ac.be/10.1007/s11187-019-00171-8
Sousa, M. J. (2018). Entrepreneurship skills development in higher education courses for teams leaders. Administrative Sciences, 8(2), 18. doi:http://dx.doi.org.proxy.bib.ucl.ac.be/10.3390/admsci8020018
Show lessHayter, C.S. (2011). In search of the profit-maximizing actor: Motivations and definitions of success from
nascent academic entrepreneurs. The Journal of Technology Transfer, 36(3), 340-352.
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Key points: The article examined seeks to enrich the knowledge and the understanding regarding the academic
entrepreneurship. The author observes that new knowledge created in research universities is an increasingly
major element of economic growth and innovation. However, the primary goal of university research is the
production of new knowledge, not necessarily the creation of new commercially viable technologies. For this
reason, University spin-offs are used to transform an initial invention into a successful business venture.
The problem tackled by the author is that, while we can identify a robust literature about motivations for
business start-up, the examination of how academic entrepreneurs define success has never been accounted.
Addressing this issue will help to better understand the role of academic entrepreneurs.
The author interviews many academic entrepreneurs and what he finds out is that the success is defined
in complex and interrelated ways, such as technology development and diffusion, public service and peer
motivations. Moreover, he discovers that spin offs are not created to maximize profit and that financial gain is
often seen as a beneficial side effect.
Implications: Firstly, about motivation, academic entrepreneurs do not see money as their main primary goal
but rather as a compensation for their work spend. Therefore, policy makers have to understand that many other
non-monetary factors can encourage motivation like for example peer factors or yet public service. All spinoffs
don’t have as main goal to maximize profit. The role of policy makers is to identify these factors and encourage
them by creating a policy to support these factors. As concrete example, they could give more vocational
training for them which could support the peer factors because they could for example be more competitive than
their peer group. A source of motivation could also be for example encouraging the entrepreneurs to take part to
contest against another innovator. With at the end for the best innovation a price that can be money or maybe to
be published in a specialised review that is estimated by the peers of the entrepreneurs. That will give recognition
and as we saw in the key insight that is what academics entrepreneurs are looking for.
For the second implication about ambition, academic entrepreneurs have also different ambitions when
they start the spin-off. And in most cases, it is not necessarily the commercialization of the
technology. Sometimes it is also not good seen by their peers. Academic entrepreneurs seem so to create
their spin-off and use it more as a platform to access to the governments grants and the SBI
awards. The commercialization of the technology is not for them a short-term goal. The policymakers have to
understand that, and they need to understand that increasing the offer of grant and other type of award can
help the academic entrepreneurs to maintain their ambitions in short term and in long term. The objective is that
in the end the entrepreneurs finally commercialize their technologies. They could also create policy that could
push large companies to invest more in spin-offs and maybe retake or rebuy the project to launch the technology.
Limitations: The research tend to explain that the profit-maximization is not the main goal for success, but that
motivation is. However, it seems important to us to say that being profitable remains a requirement for the
creation of a business that thrives in the long term. Motivation is not the only solution to have a success story. –
> while government might find the social gain sufficient to subsidize a spin-off this probably will not be the case
for private investors. And as described in this paper some spin-offs require huge financial resources to launch
their company. Therefore, even if making profit is not the main goal, it clearly has to be kept in mind to attract
investors.
Furthermore, it is also important to have experience to make a business a success. Indeed, spin-offs are
launched by researchers who have to become entrepreneurs, even though they have little or no experience in this
field. It requires significant resources and needs to be supported by a university and the creation of a business
requires tangible and intangible resources. Such resources can only be obtained if the project owners are
recognized as legitimate by most stakeholders. The legitimacy is necessary to obtain the resources needed to
launch it.
Further references
Hayter, C. S. (2016). A trajectory of early-stage spinoff success: the role of knowledge intermediaries within an
entrepreneurial university ecosystem. Small Business Economics, 47, 633–656.
Meoli, M. & Vismara, S. (2016). University support and the creation of technology and non-technology
academic spin-offs. Small Business Economics, 47, 345–362.
Hayter,C.,Lubynsky,R.,Maroulis,S.(2017). Who is the academic entrepreneur? The role of graduate students in
the development of university spinoffs. Journal of Technology Transfer,42,1237-1254
(Article) Cunha, M. P. E., Rego, A., Oliveira, P., Rosado, P., & Habib, N. (2014). Product innovation in resource‐poor environments: Three research streams. Journal of Product Innovation Management, 31(2), 202-210.
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Key insights:
Because environmental changes make some previous competences obsolete, developing knowledge on product innovation in resource-poor environments may be an important contribution for building possible renewal routes for organizations. In the article “Product Innovation in Resource-Poor Environments: Three Research Stream” they made a litterature review about product innovation in three streams of scarcity: first a scarcity of ressource, then of time and finally of affluent customers. For each of those key point we will explain the concept and conclude on the presence or not of available literature.
Bricolage:
This stream explains the capacity for an organization to find and combine resources to deal with new issues and opportunities. Those opportunities are not obvious and built by observation, accumulation of knowledge which will therefore reveal the potential service extracted. Bricoleurs can gain an “acquired taste” for inventiveness and develop a critical perspective of the competitors who use resources in standard ways.
However, there is too few studies who analyzed the relation between bricolage and performance as independent variable to be able to conclude if there is a relationship . Some inferiors resources may render superior products as the danish experience of Garud and Karnoe (2003) on turbine which found out that turbines from scrap had better performance than american ones using new components.
Improvisation:
The second stream considers a product innovation under time pressure where planning and execution cannot be separated which therefore will limit the window of opportunity. To deal with that issue organizations have to combine strong elements of control with ample freedom. As example, there is the Tolvon case of the company Organon where the firm started to develop an antihistamine but finally found a medicine against depression. They had to move to that opportunity without planning.
The authors start with the postulate that improvisation is not favored given the risk involved but their point is that there is a growing interest in that field in the litterature.
Frugal Innovation:
Frugal innovation is defined by the ability for organizations to reimagine their relationship with their customers via product innovations that will potentially tap hidden markets. They answer with extreme efficiency to some essential needs, especially but not exclusively for poor customers. Beyond that fact, there is a real opportunity for organizations to deal with emerging markets in the context of economic stagnation in western countries.
The authors noted, however, that tere is a clear lack of academic maturity of frugal innovations. The name in itself is still atheoretical.
Managerial implications:
From a linear economy to a circular economy: The circular economy is a process who implies using waste to produce something else, in a circular chain so that barely nothing is wasted. This concept derive from the fact that “Unused resources (bricolage) or resources considered worthless by some organizations (e.g., commercial firms) may be valued and appreciated by other organizations(e.g., social enterprises)”. Managers have to move from their traditional linear economy to the circular economy especially in resource poor environment.
As an example, at the firm AGC, the special sand that the company uses in its float glass process, poured in long furnaces, is expensive and is disputed worldwide due to its high usage. The company therefore recovers waste from glass production and the glass industry and breaks it in order to re-incorporate it into the production process so that no raw material is lost. In this way, AGC saves approximately 1 million tons of raw materials each year.
Improvisation as source of competitive advantage: Related to the key point 1 and 2, executing improvisation seems be a source of responsiveness and competitive capacity in markets where advantages are becoming more temporary and sensitive to the timing of response. Managers have to see improvisation leaded by short time pressure or events as an opportunity to develop new innovations, ventures or to tackle new activities. As an example, we can point out that in this coronavirus crisis, the belgian laboratories of university (ULiège) will develop rapidly new tests in this period of scarcity of reagents (as well as in a short timing) to improve the quantities of tests. Faced with the shortage, the research centre decided to “produce its own 5 reagents who will allow the automation of tests”. Thanks to this breakthrough, the country’s biggest pharmaceutical giants will be able to be supplied with the reagent they lacked.
Social intimacy: it is a crucial element to be successful in subsistence markets because people survive on relational, reciprocation based system. In relation with the key point 3 and the concept of frugal innovation we can point out new initiative launched by companies like TOMS. Indeed, the company changed its business model to give away a pair of shoes to people in need with every purchase. All their business model is based around the proximacy with local people who are in need, they offer for example ophthalmology service, support to the local association that fights for education and the right to peace. By identifying a need in a market that was not specifically theirs, TOMS is now a key player in humanitarian aid. These actions need to be immersed deep down and involved in the local communities they are acting in.
Limitations:
A company that enter in a circular economy might enter in a circle of scarcity: our first managerial implication was to enter a circular economy to avoid scarcity, this allows a company to have access to wastes. However, this situation can increase the interest of producers of wastes and the competitors of the firm: producers can want to value their wastes and competitors who are still in a scarcity situation might want to change their situation as well. This increases the demand and therefore the competition around the new ressource. The first company might enter in a situation where it can not get enough resources to run it’s business which can lead to new scarcity situation and the cycle can thus turn in circles. For example, recycled plastic PET production in the word represent only 8% of the production of non-recycled plastic PET production. Europe said that by 2025 25% of our plastic bottle must be recycled plastic and by 2030 it’s 30%. Therefore, huge groups like Nestlé has unlocked funds to find solutions.
The limitation we highlighted with “Improvisation” in terms of innovation is that running out of time can lead to misunderstanding of the market, or just product that are not trusted. Let’s take the example of vaccines. European citizen are the least inclined to trust vaccines in the world. So if we take the covid situation, there are companies that tries to find a vaccine, even if there is a hurry because people are dying, it does not obviously mean that the vaccine will be adopted if tomorrow a company claims that it has found a vaccine due to incredible innovation. Is the market ready for the product ? Is not it too soon ? Will it be trusted ?
Frugal innovation lead to cost cutting and reduction of resource. Even with product innovation, they may face big obstacles to fill their costs or to assure security For example, the tata nano was the cheapest car on the market. It was made for the Asian market. However, this car failed to be secure, it was not powerfull enough and could not create a relationship with indian customers (seen as cheapest car on market and peoples did not wanted to drive the cheapest car)).
Further references:
Ted Video, Navi Radjou (2014), Creative problem-solving in the face of extreme limits
Woschke, T., Haase, H. and Kratzer, J. (2017), “Resource scarcity in SMEs: effects on incremental and radical innovations”, Management Research Review, Vol. 40 No. 2, pp. 195-217. https://doi.org/10.1108/MRR-10-2015-0239
Yanadori, Y., & Cui, V. (2013). ‘Creating incentives for innovation? The relationship between pay dispersion in R&D groups and firm innovation performance’. Strategic Management Journal, 34, 1502-1511.
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Key insights
As you all know, innovation is a crucial component for a firm to create a competitive advantage. One of the methods to create innovation is to invest heavily in R&D to promote technological advantages. The article we present you today focuses on the relationship between pay dispersion in R&D groups and the generation of innovation in that firm. If we look at the big picture, what comes out from the study of the authors is that (1) pay dispersion in R&D groups is negatively related to firm innovation and (2) this negative relationship is diminished in firms with greater financial slack.
The first statement that the authors make is that, on the one hand, individual knowledge is positively influenced by a large pay dispersion while shared knowledge of employees and knowledge management systems of the firm react negatively to large pay dispersion.
But what we can notice is that establishing pay dispersion that accurately reflects individual performance is almost impossible. Indeed, determining the individual contribution to an innovation is very difficult. Consequently, the positive motivational effect of pay differentiation is unlikely in the R&D context. That leaves us with the conclusion that pay dispersion among R&D employees is negatively associated with innovation.
And the article goes further than that and the authors advance the following consideration: the negative reaction of employees to a large pay dispersion will be greater when they think that the compensation budget of the firm will be weaker. On the contrary, the negative reaction will be smaller if they expect a future expansion of the compensation budget. The article highlights two factors that influence employees’ expectations about their firm’s future compensation budget: growth opportunities and financial slack. A firm with large financial slack is more likely to invest in employees and that include better compensation. Employees are therefore likely to anticipate an expansion of compensation budget in the future.
Based on these arguments, we propose that in firms with higher growth opportunities and larger financial slack, the negative impact of pay dispersion on innovation will decrease because employees react to large pay dispersion less negatively.
As a conclusion, to sum it up, this article says that in the context of R&D, large pay differentials between employees have a negative impact on innovation. We also find that generous firm financial slack reduces the negative effects of pay dispersion.
Implications
There are therefore 3 actions on which managers should focus more to better manage innovation in this R&D context.
As said earlier, putting together a team of high-quality knowledge workers does not necessarily guarantee innovation. Indeed, the management of human capital is crucial and there is a need to create incentive mechanisms that encourage them to innovate. In addition, we know that the compensation system is a key element of organizational incentive structures. Therefore, that is why the first important thing for managers to pay attention to is to involve senior human resources managers as much as possible in the process of formulating and implementing the firm’s strategy.
The second implication for managers that this article makes quite clear is to reduce as much as possible the differences in remuneration between R&D employees, which create disincentives that then prevent innovation.
Thirdly, generally speaking, given the difficulty of measuring individual performance or taking into account their personal behavior in the field in this R&D context, managers should adopt intra-departmental teams in order to still benefit from the advantages of a difference in compensation, this time between project teams and not between employees.
Limitations
The first managerial implication underlines the importance of involving senior human resources managers in the elaboration of the strategic management process. However, the sample of companies studied for this paper does not take into account innovative companies with limited human and financial resources. These recommendations are therefore not adapted to all types of innovative companies. Let’s take the case of young start-ups for example. Human and financial resources are often limited. Therefore, involving senior people in the implementation of the strategic process is simply not possible or too expensive when it comes to using external consultants.
The second managerial involvement suggests reducing the differences in remuneration between R&D employees as much as possible. However, in circumstances where employees have different experiences, qualifications and expertise, this recommendation could have a negative effect on innovation if employees do not feel that they are being treated fairly. The limitation of this recommendation is therefore that a company has to maintain a fair and consistent remuneration policy towards its employees.
The third managerial implication consisted in setting up a system of intradepartmental teams that would make it possible to use a difference in remuneration between project teams (and no longer between individuals) as a driving force for innovation. However, this recommendation will not always be appropriate in all contexts. On the one hand because R&D departments do not always have several teams. Take the case of small companies for example. On the other hand, because forcing team building is not always relevant. Indeed, the number of experts is not unlimited and therefore forming too many project teams diminishes the expertise within them.
Further references
To complete our workshop, we suggest reading the article “Firm-Specific Knowledge resources and competitive advantage: the roles of economic- and relationship-based employee governance mechanisms” written in 2007 in the scientific journal “Strategic Management Journal” (DOI: 10.1002/smj.787). Indeed, the pay dispersion is not the only aspect of compensation that managers can use to encourage their employees to innovate. In this article, the authors show us that stock-based compensation could also promote innovation. It is a way to pay employees of a company with shares of ownership in the business and thus align their interests with those of their company but also to encourage them to stay longer because they have to wait for shares to vest.
Our second suggestion to go further is the article “Pay dispersion and workforce performance: moderating effects of incentives and interdependence” from the same Journal (DOI: 10.1002/smj.235). Our first article worked in a very specific context, the R&D department, and focused on the horizontal dimension of pay dispersion (i.e., pay differentials among the employees within the same job level). What this second paper explains is that vertical pay dispersion (i.e., pay differentials across different job levels) are more logically tolerated as differences in job requirements, prestige and social status for example are considered acceptable reasons. This article adds that this tolerance can also be applied between employees of the same organizational level if the work is independent between them and that, on the contrary, pay dispersion is inefficient if it is used in a highly interdependent work context. What can finally be retained from all these articles is that coherence between human resources management, the management of an organization’s strategy and the structure of the compensation system put in place is essential to the prosperity of an organization.
Rehn, A., Brännback, M., Carsrud, A., & Lindahl, M. (2013). Challenging the myths of entrepreneurship? Entrepreneurship & Regional Development, 25(7-8), 543-551
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1. What are the key insights of the paper?
The initial problem that the writers spotted is the institutionalization of the entrepreneurship field in the way that it contains many assumptions or even myths. Their goal is therefore to challenge these assumptions or myths that flourish in the field by critically questioning them. Even if it is natural for a science to rely on assumptions and the establishment of paradigms, such foundations can also be a blinding barrier to the field’s alternatives and new ways. The authors pointed out that assumptions such as entrepreneurship is generating value, stimulating the economy, and so on also help to define the concept more acutely than its internal definition does. The conclusion for those points is that a field needs its myths, just as it needs its mythbusters. Indeed, myths are both productive in that they enable us to delimit a concept and destructive as mentioned earlier. Therefore, a field needs its myths and its mythbusters. The last point is that we also need to question the method that are in place. The writers stressed that using the same method gives distinctive advantages, but they show that it can lead to closed systems supported by those invested in them. Knowing that, critique and questioning methods are needed in order to further the field.
2. What are the managerial implications of those insights? Be specific.
Managers must keep in mind is that myths also affect the practice of entrepreneurship. Especially when there is a power difference between the master narrative and minority entrepreneurs, and that an ideology of entrepreneurialism can create negative associations despite its very best intentions. It means that for one group is a self-evident and productive manner of enhancing entrepreneurialism can by another group be read in a far less positive manner. The implication for managers is that they must hire those who would be most likely to challenge these thoughts about entrepreneurship, by having a critical mind and to not keep myths as universal truths. For instance, the assumption that “Entrepreneurship has been identified as a key driver of economic growth” must be subject to critical scrutiny. What the term “growth” means? Entrepreneurs should not merely accept growth as a given good and keep asking questions. Then, the managers should also trigger the conditions for these employees to actually do it. This could be done by letting in a more heterogeneous group of people and viewpoints into the discussion, collaborating more over disciplinary lines and not getting too caught up in what is today considered the most ‘important’ issues in the field.
3. What are the limitations of those insights and/or outstanding issues? Provide concrete examples.
In this article, a myth is related to what is considered as true on a specific field of study. These are often hypotheses that form the basis of science. However, it is sometimes needed to be disruptive in order not to reach a cul-de-sac. Nevertheless, always trying to question the fundamental of a something could lead to lose time, efforts and even sometimes money by making research on something that does not need to be questioned. It also could lead, by always questioning everything, to slow down researches and could lead to a situation where there is a multiplication of efforts. It means that everybody is working to proof or not the basic hypothesis, concentrating the efforts on the same thing, instead of driving researches forward. Additionally, it could lead to reject some hypothesis on basis of some specific facts related to exceptional situations. Furthermore, even if these hypotheses can be considered as a hindrance to the understanding of a question, which blinds the other alternatives, it also allows to define and delimit the focus of a question. Without this, even if we open the door much more possibility, we also could be lost in the messy complexity of the world in question. Which finally leads to a much more complex situation.
4. Suggest new relevant sources regarding the subject of the paper, videos or articles selected from list of recommended journals.
What they don’t tell you about entrepreneurship by Mark Leruste at TEDxCardiff. https://www.youtube.com/watch?v=f6nxcfbDfZo
Brown, R., Mawson, S., & Mason, C. (2017). Myth-busting and entrepreneurship policy: the case of high growth firms. Entrepreneurship & Regional Development, 29(5-6), 414–443. doi:10.1080/08985626.2017.1291762
Nicholson, L., & Anderson, A. R. (2005). News and Nuances of the Entrepreneurial Myth and Metaphor: Linguistic Games in Entrepreneurial Sense–Making and Sense–Giving. Entrepreneurship Theory and Practice, 29(2), 153–172. https://doi.org/10.1111/j.1540-6520.2005.00074.x
Show less(Article) Audia, P. G., & Rider, C. I. (2005). A garage and an idea: what more does an entrepreneur need?. California Management Review, 48(1), 6-28.
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The key points of the article are popularity of the garage belief, accuracy of the garage belief and why does this belief persist? We will start with the popularity, the garage belief is very popular, mainly because we link it with some well-known successful companies. In this paper, there are some figures about the garage belief. In a survey asking business school students, 89% of them could name at least one company which started in a garage, a dorm or a kitchen. Those students also thought that 48% of entrepreneurs started this way. About the second key point, accuracy of garage belief, reasearches showed that people employed in existing organizations are more likely to start a new company in the same or a related industry, we are talking about entrepreneur as organisational product. This notion implies that entrepreneurs typically come from within the industry where they acquire confidence, information, knowledge, and social connections at local organizations. After having understood this, we can analyse why this belief persists. The paper explains that the garage belief is a contemporary legend, it is a story told as true by people in the society. Another reason is that garage is a state of mind, it is the rejection of the idea that you need dozens of engineers to be successful. The garage belief is also part of the American dream which vehicles the idea that through hard work you can achieve your dreams.
After those key points, we will analyse the implications of the article. The first implication is about what schools should do. The notion of entrepreneurs as organizational products suggests that business schools should give equal emphasis to prior work experience in the entrepreneurial process as is currently given to analytical skills. The second implication is that companies are natural incubators for the entrepreneurial ideas of employees. So, companies can take specific actions to benefit from their natural incubator tendencies. 4 conditions are required in companies to promote the launch of a career as an entrepreneur. The first one is that employees have information that enables them to identify entrepreneurial opportunities. The second one is that employees can exercise a wide range of critical roles in business processes so that they gain confidence in their capacity to develop a new organization. The third one is that employees can have intimate contact with co-workers in other operational areas and with whom they could form groups. The last one is that employees have full access to direct providers of key resources. Therefore, companies must put in place actions to ensure that these four conditions are met. The last implication is about the importance to have experience in the field. There are three reasons why organizational experience increases the probability that an individual may start a new company. First, organizations create opportunities for individuals to build confidence in their abilities to create and run a new company. Second, organizations provide access to broad industry knowledge and information about entrepreneurial opportunities. Third, organizations help individuals to form social networks. In this way, possession of information about entrepreneurial opportunities and knowledge of the business is more likely to be held by individuals employed by existing organizations than those that are not.
Those implications have limitations, the first one is that it is easier for young firms to offer jobs that meet the conditions we have explained. Indeed, in small firms, employees have more freedom and more responsabilities in several domain. It will help them to build confidence about their own capacities to create a company. In addition employees are more likely to have direct contact with the founder, so they are able to get more experience in entrepreunariat. This will help them to catch entrepreunarial opportunities. The second limitation are the geographical boundaries. Spatial distribution studies demonstrate that geographic areas that have a great number of organizations of a certain kind tend to generate a greater number of new organizations of that same kind. Indeed existing organizations expand the pool of potential entrepreneurs available in a localization. Individuals acquire information about entrepreneurial opportunities and develop the social ties necessary for resource mobilization. Entrepreneurs tend to rely on supportive social ties that are geographically localized. For this reason, they are likely to establish new businesses close to their homes and current employers.
If you want to go further, here are two interesting references:
TED video (2017). Why schools should teach entrepreneurship. [online video] available form: https://www.ted.com/talks/linda_zhang_why_schools_should_teach_entrepreneurship
TED video (2017). How I became an entrepreneur at 66. [online video] available form: https://www.ted.com/talks/paul_tasner_how_i_became_an_entrepreneur_at_66#t-398766
Baer, M. (2012). Putting creativity to work: The implementation of creative ideas in organizations. Academy of Management Journal, 55(5), 1102-1119.
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The paper “Putting creativity to work: The implementation of creative ideas in organizations” written by Markus Baer examines the possibility that the relation between creativity and ideas implementation is regulated by individual’s motivation to put their ideas into practice and their ability to network.
In this paper, we can identify three key insights. The first one is about the link between the ideas’ generation and the extent to which those ideas are realized. Indeed, it explains that although innovating in a firm is a continuous process, there are two different steps the ideas must go through: Firstly, the ideas must be generated. It can come from the management, the employees, external sources, etc. Then, they need to be implemented, to come true. However, some of the ideas are often rejected due either to the innovation’s novelty aspect or the uncertain atmosphere running and thus the fear of fail. Consequently, the real issue here is the gap between the number of ideas generated and the number of ideas realized. Indeed, it can lead to workers’ demotivation. According to Vroom, the performance is equal to the motivation multiplied by the ability to network. Companies should thus work on those two factors to increase the number of implemented ideas.
Then, the second insight refers to the conditions required to go from the first step identified as idea generation to the second step, the idea implementation. These conditions can be divided into two factors: personal variables which are promoting the suggestion of ideas and organizational ones which are more focused on the implementation of ideas. The three main conditions retained are the implementation instrumentality, the networking ability and the strong tie that links the two previous factors. The latter leads us to the third and last key insight of the paper which aims at understanding how these factors are combined to jointly shape idea implementation. Indeed, instead of maximizing of one isolated factor, the maximization of the function between the main factors is the key to achieve a high level of idea implementation.
Regarding managerial implications, the first thing that we can identify is related to the uncertainty and the resistance to change that always happen when implementing new ideas. It is important to put tools in place in order to manage both incremental but also radical changes. The risks of not taking preventive measures are unnecessary delays in implementation or worse, its ultimate failure. To do so, different strategies exist such as the visualization of the change and its benefits, reward and recognition systems’ adaptation and the communication.
The second implication is directly related to the production of ideas that should be implemented. Indeed, companies need to give tools to workers to encourage them to share all their ideas about the company. Not only providing tools, some systems must be created to help employees who brought incredible ideas to realize them but also being recognized for the work provided. As an example, IBM launched a platform called ThinkPlace where employees are invited to share their suggestion regarding innovation.
However, in those previous insights, some limits can be highlighted. Firstly, the idea’s implementation is limited to the environment because it is a social-political process. It implies that creative ideas, compared to ideas that are more mundane, are naturally disadvantaged in harvesting the resources necessary for their implementation. Secondly, many studies don’t make the differentiation between idea creation and idea implementation. This could lead to some demotivation coming from workers who have invested time and energy on an idea creation, thinking to see it come true. Furthermore, the factors that shape the relation between creativity and idea implementation are still largely unknown. It can be explained by the fact that research has always been focusing on the quantity of ideas rather than on the nature of employees’ ideas. Finally, employees could have some fear to fail when providing ideas, and therefore, will only propose improvement of existing ideas rather than radical innovations.
Finally, in the further references we learn and discuss how technology as well as personal initiative can improve the generation and implementation of ideas. We identify also three conditions which are necessary to foster creative ideas: first, the access and exposure to diverse and new information, then full engagement in the work role is needed, and third the experience of socioemotional or instrumental support.
Further resources:
● Oldham, G. R., & Da Silva, N. (2015). The impact of digital technology on the generation and implementation of creative ideas in the workplace. Computers in Human Behavior, 42, 5-11
● Axtell, C. M., Holman, D. J., Unsworth, K. L., Wall, T. D., Waterson, P. E., & Harrington, E. (2000). Shopfloor innovation: Facilitating the suggestion and implementation of ideas. Journal of occupational and organizational psychology, 73(3), 265-285.
● Daniels, K., Wimalasiri, V., Cheyne, A., & Story, V. (2011). Linking the demands–control–support model to innovation: The moderating role of personal initiative on the generation and implementation of ideas. Journal of Occupational and Organizational Psychology, 84(3), 581-598.
The 10 Myths of Entrepreneurship (University of StGallen)
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This video is about 10 common myths of entrepreneurship. In this summary, we decided to focus on some of them and developing them with managerial implications and limits related to these myths.
1.Entrepreneurship is not an extraordinary phenomenon but lies dormant in each of us as an entrepreneurial potential to act.
Implication: When hiring, think about the potential, not the entrepreneurial background. Develop actions to develop potential.
Limitation: Not everybody has the ability to develop their entrepreneur potential, even if everyone has that potential. Therefore, hiring people just because they are convinced that they can develop that is not enough. People that are already entrepreneurs are also good people to hire in order to have a uniform team. The presence of entrepreneur could then be very helpful in order to develop this potential. Not be to idealistic.
2.According to the entrepreneurial method, its starts with the available means- who I am, what do I know etc – Not with mystical goals or fictitious ideas. Therefore, as an entrepreneur, I don’t submit my actions under one great idea. On the basis of my stock of means, I constantly develop my imagination about various possible goals for the solution of specific problems.
Implication: Promote this way of thinking. Do not limit the potential idea to the top idea. Push them to redefine the model.
Limitation: What if we don’t have enough means to achieve any good goal? And what if we have a too large amount of ideas? How to deal with them?
3. Don’t keep your ideas secret but exchange your goals on the basis of your means with others. So, co-creation develops with the additional means and the new goals of the partners.
Implication: Improve your means: ask advices and share your ideas (both you as a manager than your employees). At this stage only co-creation, not funding.
Limitation: You’re never totally safe from a bad surprise (people stealing your idea and doing better things in your back). Co-creation is good. But finding a partner who has the same ambition and value chain as you is not always easy.
Further references:
▸Rehn, A., Brännback, M., Carsrud, A., & Lindahl, M. (2013). Challenging the myths of entrepreneurship? Entrepreneurship & Regional Development,25(7-8), 543-551.
▸MOOC University (2013) Course ITE: Saras Sarasvathy Explains the Entrepreneurial Method (VIDEO).
▸TedxTalk(2013) Myths Of Entrepreneurship: Tim Foltaat TEDxPurdueU (Video)
Brandstätter, H. (2011). Personality aspects of entrepreneurship: A look at five meta-analyses.
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In the 19th century, the importance of the entrepreneurs for economic development was convincedly pointed out. Decades later, looking for personality traits characterizing entrepreneurs became a topic of research. Many studies have already been reviewed in meta-analyses.
This paper presents a summary of 5 meta-analyses focusing on personality including risk propensity and also on achievement motivation.
It attempts to integrate its results in the light of the Five-Factor Model. What is the FFM? Also called the big five system, the FFM is the predominant reference system of personality traits. It consists on 5 dimensions used to measure the differences in personality.
Insights
1) Risk propensity of entrepreneurs and managers
This meta-analysis compares risk propensity between entrepreneurs and managers. Results indicate that the risk propensity of entrepreneurs is greater than the risk propensity of managers. Moreover, they divide entrepreneurs into two categories: growth-oriented entrepreneurs and income-oriented entrepreneurs. The risk is higher for those whose primary goal is venture growth.
2) Entrepreneurs’ vs. managers’ Big Five
This meta-analysis is based on the big five system and it examines the relationship between personality and entrepreneurial status. Results of this meta-analysis indicates that entrepreneurs score higher on Conscientiousness, Openness to Experience, and Extraversion, but lower scores on Agreeableness and Neuroticism.
3) Specific personality traits predict business creation and success
Besides the entrepreneurial status, the business success criteria may be given by the estimation of some entrepreneurial personality traits which goes beyond the Big Five location. By scaling the importance of the different traits for entrepreneurs, the analysis shows that traits judged as more important are correlated more significantly with business creation and business success in comparison with unimportant ones.
4) Entrepreneurial intention and performance – Big Five
Intuitively and based on other studies, it was predicted that Conscientiousness, Openness to Experience, Emotional Stability and Extraversion are more likely to have positive effects on intention and performance while Agreeableness was expected to have negative effects.
5) Achievement motivation of entrepreneurs
This last meta-analysis compares achievement motivation of entrepreneurs with that of managers. The study clearly confirms that entrepreneurs have higher achievement motivation, especially those who are the founders of their business and those who are oriented towards growth.
Managerial implications + limitations
As said earlier, entrepreneurs are more risk prone than managers. Entrepreneurs have to cope with situations that are unstructured and uncertain about the outcome of decisions. It is therefore more problematic for risk averse people than for risk prone people. However, running a new business demands careful and prudent decision-making. Therefore, being an entrepreneur requires a good balance between taking risk and being wise.
Limitation: However, the risk propensity assessed here the entrepreneurial intention. It does not apply for the entrepreneurial performance. Only the entrepreneurial intention is positively related to risk propensity.
The second managerial implication is an advice that come post hoc from people who have founded a business. Achievement motivation is key for business foundation as well as for business success. When becoming an entrepreneurs, you no longer have a person or group of people above you to set goals, deadlines and incentives. The responsibility of inspiration becomes a task of self-motivation.
Limitation: Indeed, it says that motivation is key to success, but it is not that simple. We believe it also includes other elements such as competences among the business, financing means, potential customers, …
New sources
– Kerr, S. P., Kerr, W., & Xu, T. (2017). Personality Traits of Entrepreneurs: A Review of Recent Literature. Harvard Business Review.
– Fitzsimmons, J. R., & Douglas, E. J. (in press). Interaction between feasibility and desirability in the formation of entrepreneurial intentions. Journal of Business Venturing.
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Hayton, J. C. (2005). Promoting corporate entrepreneurship through human resource management practices: A review of empirical research. Human Resource Management Review, 15(1), 21-41.
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This article aims to explain the link between human resource management practices and corporate entrepreneurship. First of all, we understand the notion of corporate entrepreneurship as the exploration of new knowledge and the exploration of existing knowledge. The author also wants us to understand through his article the practice of compensation which is an HR practice and its influence on corporate entrepreneurship. He explains that this practice depends on the strategy of the organisation, the environmental complexity and the organisational life-cycle stage, and that it generates innovative investments rather than results. Finally, the article describes the importance of the contribution of interactions between employees and between the organisation and the employees to stimulate corporate entrepreneurship. Companies are advised to implement team work, delegation and performance related pay.
The article also outlines some managerial practices to be implemented in the organisation to stimulate corporate entrepreneurship. First of all it suggests to nurture more informal entrepreneurial behaviours. Managers should invest in employee group skills and socialization. It is also advisable to make use of cross-functional teams while allowing highs level of individual autonomy. What will result from these practices will be trusting relationships between employees and stakeholders as well as increased collaboration and organisational learning. This practice will also enhance distrectionary behvaiors which means that the flow of knowledge and information will be improved.
The second managerial implication that can be drawn from this article is that managers must address the acceptance of risk by its members to stimulate corporate entrepreneurship. They can do this by compensating for risk-taking behaviour, providing resources and support for risk-taking, or by favouring external recruitment and less prescriptive, broader job descriptions. This would enable employees to be better equipped to act in the changing environment of entrepreneurship. They will find it easier to make decisions in an environment without the necessary information and to adapt to it.
Finally, we have identified some limitations in this article, i.e. cases in which what the article suggests is not applicable. Indeed, managers should not nurture informal entrepreunarial behaviours when this would conflict with company policies or when it would distract stakeholders from core business objectives. In addition, there are also situations in which managers should not address the acceptance of risk by members of the organisation. When risk is already part of the organisational culture or when it is a necessary part of achieving organisational objectives.
Further Sources:
• Roessler, M., Velamuri, V. K., & Schneckenberg, D. (2019). Corporate entrepreneurship initiatives: Antagonizing cognitive biases in business model design. R & D Management, 49(4), 509–533. https://doi.org/10.1111/radm.12340
• Riar, F. J., Wiedeler, C., Kammerlander, N., & Kellermanns, F. W. (2022). Venturing Motives and Venturing Types in Entrepreneurial Families: A Corporate Entrepreneurship Perspective. Entrepreneurship: Theory and Practice, 46(1), 44–81. https://doi.org/10.1177/10422587211006427
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