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Summary theory session 1
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Theory session 1 - What isentrepreneurship?
1. What is entrepreneurship?
SOURCE: SHANE
There haven’t been developed a clear definition of entrepreneurship. The definition of an
entrepreneur as a person who establishes a new organization is an problem, because this definition
does not include consideration of the variation in the quality of opportunities that different people
identify, it leads researchers to neglect to measure opportunities.
New definition entrepreneurship = scholarly examination of how, by whom, and with what effects
opportunities to create future goods and services are discovered, evaluated, and exploited.
So, the field involves the study of:
- sources of opportunities
- the processes of discovery
- evaluation
- exploitation (making use) of opportunities
- the set of individuals who discover, evaluate and exploit them
Three sets of research questions about entrepreneurship:
- why, when, and how opportunities for the creation of goods and services come into
existence
- why, when, and how some people and not others discover and exploit these opportunities
- why, when, and how different modes of action are used to exploit entrepreneurial
opportunities
Equilibrium approach = entrepreneurial opportunities either do not exist or are assumed to be
randomly distributed across the population. Because people in equilibrium models cannot discover
opportunities that differ in value from those discovered by others, who becomes an entrepreneur in
these models depends solely on the attributes of people.
Disequilibrium approach = approach used in this article, we are describing the tendency of certain
people to respond to the situational cues of opportunities-not a stable characteristic that
differentiates some people from others across all situations.
Why studying entrepreneurship?
- Entrepreneurship is a mechanism which converts technical information into products and
services in the society.
- Entrepreneurship is a mechanism through which temporal and spatial inefficiencies in an
economy are discovered and mitigated (verzacht).
- According to Schumpeter entrepreneurship is crucial for driving change processes.
Entrepreneurial opportunities = are those situations in which new goods, services, raw materials, and
organizing methods can be introduced and sold at greater than their cost of production. Recognition
of the opportunities is subjective, but the opportunities themselves are objective and can be
recognized by everyone. (B.v. de ontdekking van de telefoon creëerde nieuwe kansen voor
, communicatie, ongeacht of mensen deze kansen ontdekten). Opportunities for enhancing the
efficiency of existing goods, are no entrepreneurial opportunities! Entrepreneurial opportunities are
new means-end relationships/services!
Three different categories of opportunities (Drucker) :
- (1) the creation of new information, as occurs with the invention of new technologies
- (2) the exploitation of market inefficiencies that result from information asymmetry, as
occurs across time and geography
- (3) the reaction to shifts in the relative costs and benefits of alternative uses for resources, as
occurs with political, regulatory, or demo graphic changes.
Entrepreneurship requires that people hold different beliefs about the value of resources.
Entrepreneurial discovery = occurs is someone makes the conjecture (vermoeden) that a set of
resources is not put to its best use. The resources are priced "too low," given a belief about the price
at which the output from their combination could be sold in another location, at another time, or in
another form.
If the conjecture is acted upon and is correct, the individual will earn an entrepreneurial
profit.
If the conjecture is acted upon and is incorrect, the individual will incur an entrepreneurial
loss
Er zijn twee redenen waarom beliefs over de waarde van rescources moeten verschillen:
- Joint productie
Entrepreneurship omvat joint productie, twee resources worden bij elkaar gebracht om zo
een nieuw product te vormen. Het belief over de waarde van de resource van de
entrepreneur moet verschillen van het belief van waarde van de eigenaar van de resource.
Als de eigenaar hetzelfde belief had, dan had hij de prijs namelijk wel verhoogd zodat de
entrepreneur geen kans maakt om winst te maken!
- Concurrentie
Als alle mensen (potentiele entrepreneurs) dezelfde conjectures (vermoedens) zouden
hebben, dan zou iedereen concurrenten worden voor dezelfde onderneming en dan wordt
de opportunity volledig geëlimineerd.
Why do people possess different beliefs about prices in markets?
- Incorrect decisions
The process of discovery in a market setting requires the participants to guess each other's
expectations about a variety of things. People make decisions based on a lot of things,
sometimes incorrect are decisions made. This can therefore lead to errors and shortcomings,
an observant person sees where prices are "too low".
- Imperfectly distributed information
The economy is constantly changing in the field of technology, politics etc. This change offers
new information about how to use resources to increase wealth. Information alters the price
of resources. However, information is imperfectly distributed. Persons who obtain
information earlier than others can buy resources below their equilibrium value and earn an
entrepreneurial profit by recombining the resources and then selling them.
After a while opportunities become inefficient to pursue because:
- Entry of imitating entrepreneurs
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