Although it is many years since we were students, we both remember the following fact well: Not all textbooks are equally useful or easy to read. Some were a pleasure to use, while others quite literally hurt our heads! Recalling these experiences, we have done our best to make this book one of the good ones. Here is an overview of the steps we have taken to reach this goal.
First, we have included many reader aids. Each chapter begins with a list of key learning objectives: what you should know after you finish reading it. Within the text itself, important terms are printed in boldface type and are followed by a definition. These terms are also defined in a glossary at the end of each chapter. To help you retain what you read, each major section is followed by a list of key points—a brief summary of major points covered in that section. All figures and tables are clear and simple, and most contain special labels and notes designed to help you understand them (see Figure 1.11 for an example). Finally, each chapter ends with a summary and review of the key points. Reviewing this section can help you retain the information presented and help you to benefit more from this course.
Second, the text contains three special features designed to make it more useful—and interesting. One is labeled Danger! Pitfall Ahead! These sections, which appear within each chapter rather than at the end, highlight potential snares and hazards of which entrepreneurs should be aware—ones that can prove fatal to their new ventures, and their dreams. Having been there ourselves, we are only too aware of these pitfalls, and think it is crucial that we call them clearly to your attention.
The second special feature is labeled Qualifying Common Sense: What We Think We Know About Entrepreneurship . . . And What We Really Do Know.
These special sections provide vivid illustrations of the fact that, often, commonsense ideas about entrepreneurship are misleading. In addition, they indicate how careful research has helped to correct or clarify many of these misconceptions. After reading these sections, you will have a much clearer understanding of why we can’t trust intuition or informal knowledge to provide the full understanding of the entrepreneurial process we seek.
Each chapter is followed by one or more brief cases and by experiential exercises labeled Getting Down to Business. As this title suggests, these exercises are designed to provide you with practice in using the information presented earlier in the chapter. Finally, it’s important to note that the chapters follow the timeline presented earlier in this chapter (refer to Figure 1.7). Thus, Part 1 (Chapters 1, 2, and 3) examines the field of entrepreneurship and what is, perhaps, the start of the entire process: emergence and recognition of opportunities. Part 2 (Chapters 4–7) focuses on assembly of the resources needed to launch a new venture: information, financial, and people resources.
Part 3 (Chapters 8–10) examines the actual launch of new ventures, considering such topics as the legal form of such ventures and strategy for success. Part 4 (Chapter 11–12) focuses on key aspects of growth—issues relating to strategies for encouraging growth and management techniques and procedures useful in obtaining it through effective management techniques (e.g., attracting, motivating, and retaining top-notch employees). Finally, Part 5 (Chapter 13) focuses on the logical conclusion to the entrepreneurial process: alternative ways in which entrepreneurs can harvest the rewards of their efforts. In addition, the text ends with a unit on accounting for entrepreneurs. This module reviews key principles essential to entrepreneurs in running a new venture.
One last word: As authors and teachers, we promise faithfully that we will not lose sight of our major goals in writing this book: providing you with an accurate and up-to-date overview of what we currently know about
entrepreneurship as a process. In closing, we wish to add that we agree with the English author Lady Mary Montagu who, in writing about personal wealth, once remarked: ‘‘ ’Tis a sort of duty to be rich, that it may be in one’s power to do good. . . . ’’ We believe that successful entrepreneurs do indeed ‘‘do good’’:
true, they add to their own wealth. But in addition, they do much more: The products and services they bring into being improve the lives of countless millions of people; and on top of this, they are often extremely generous in donating substantial portions of their wealth to eminently worthy causes. For instance, a few years ago, one of us (Baron) visited the beautiful art museum in Los Angeles funded by the John Paul Getty Foundation (see Figure 1.14). What a gift to all humanity! And both of us work in Schools of Management that are named after the entrepreneurs who made generous donations to support them and the universities in which they are located. If this book helps emerging entrepreneurs to succeed in attaining their dreams—and therefore enhances their ability ‘‘to do good’’ with the wealth they acquire—we will feel that as authors, we have done our part.
ßRobertLandau/CORBIS
Figure 1 . 14
Entrepreneurs: Key Contributors to Society
Entrepreneurs do not merely add to their own personal fortunes;
they often also improve the lives of millions through the new products and services they bring to market. Moreover, they often make generous donations to worthy causes. For instance, the breathtakingly beautiful Getty Museum, located outside Los Angeles, was funded by a gift of several billion dollars from the John Paul Getty Foundation.
S U M M A R Y
& R E V I E W O F K E Y P O I N T S
n Entrepreneurship, as a field of business, seeks to understand how opportunities to create new products or services arise and are discovered or created by specific individuals, who then use various means to exploit or develop them, thus produc-ing a wide range of effects.
n In recent years, the allure of entrepreneur-ship has increased, with the result that more people than ever before are choos-ing this activity as a career.
n Entrepreneurship, as a branch of busi-ness, has important roots in economics, behavioral science, and sociology.
n The field of entrepreneurship recognizes that both the micro perspective (which focuses on the behavior and thoughts of
individuals) and the macro perspective (which focuses primarily on environmental factors) are important for obtaining a full understanding of the entrepreneurial process.
n This book will not simply describe what entrepreneurs do (common practice); it will go further and describe actions and procedures entrepreneurs can perform to increase the likelihood that their compa-nies will succeed.
n Entrepreneurship is a process that un-folds over time and moves through dis-tinct but closely interrelated phases.
n The entrepreneurial process cannot be divided into neat and easily distinguished phases, but in general, it involves generation
Glossary
Business Plan:A detailed description of the entrepre-neur’s vision for converting ideas into a profitable, going business.
Case Method:A research method in which large amounts of data about one organization or specific individuals are gathered and then used to reach conclusions about what factors influenced important outcomes, such as economic success.
Experimentation: A research method in which one variable is systematically changed in order to deter-mine whether such changes affect one or more other variables.
Hypothesis:An as-yet untested prediction or explana-tion for a set of facts.
Intrapreneurs:Individuals who create something new, but inside an existing company rather than through founding a new venture.
Macro (Perspective):A ‘‘top-down’’ perspective that seeks to understand the entrepreneurial process by focusing largely on environmental factors (i.e.,
economic, financial, political) that are largely beyond the direct control of an individual.
Micro (Perspective):A ‘‘bottom-up’’ perspective that seeks to understand the entrepreneurial process by focusing on the behavior and thought of individuals or groups of individuals (e.g., founding partners).
Opportunity: The potential to create something new (new products or services, new markets, new production processes, new raw materials, new ways of organizing existing technologies, etc.) that emerges from a complex pattern of changing conditions—changes in knowledge, technology, economic, political, social, and demographic conditions.
Systematic Observation:A research method in which certain aspects of the world are observed system-atically and careful records kept of what is detected. This information is then used as a basis for reaching conclusions about the topics under investigation.
of an idea for a new product or service and/or recognition of an opportunity, assembling the resources needed to launch a new venture, launching the venture, running and growing the business, and harvesting the rewards.
n Individual, group, and societal factors influence all phases of the entrepreneurial process. Thus, instead of choosing between a ‘‘micro’’ and a ‘‘macro’’
approach to entrepreneurship, both perspectives are necessary.
n It is the nexus of valuable opportunities and enterpris-ing individuals that is the essence of entrepreneurship.
n The field of entrepreneurship is broad in scope and reflects the wide range of factors that affect the founding and success of new ventures.
n One topic receiving a great deal of current attention is university-based technology transfer—the ways in which universities sometimes encourage entrepre-neurial activities by faculty members and others.
n Another, and closely related topic, is the role of incubators and science parks—organizations that seek to encourage economic development in a region by encouraging the sharing of knowledge. Incubators are associated with universities, while science parks may be entirely independent.
n Recent research has also attempted to understand the ways in which entrepreneurs think, reason, and make decisions: entrepreneurial cognition. Findings
indicate that entrepreneurs do indeed think differently from other people in several respects, and that their cognitive processes often play a key role in the founding and success of new ventures.
n Many potential sources of knowledge about entre-preneurship exist, but the most accurate and reliable knowledge is provided by methods found to be useful for this purpose in other fields: systematic observa-tion, experimentaobserva-tion, and reflection.
n Systematic observation involves careful measurement of variables of interest in order to determine whether they are related (correlated) in any orderly manner. To the extent they are, one can be predicted from the other.
n In the case method, large amounts of information are gathered about one organization or specific individ-uals, and this information is then used to reach conclusions about what factors influenced important outcomes such as economic success.
n Experimentation involves direct interventions: One variable is changed systematically in order to deter-mine whether such changes affect one or more additional variables.
n Theory involves efforts to explain rather than merely describe various phenomena—to understand why and how they occur. Research is conducted to obtain data relevant to theories—not to prove them.
Technology Transfer Offices: Departments at univer-sities charged with the task of helping to move scientific and technological discoveries by faculty from the laboratory to the marketplace.
Theory:Refers to effort to go beyond merely describing various phenomena and, instead, to explain them.
Variables:Aspects of the world that can take different values.