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Summary Preparation midterm (questions)
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A number of detailed questions that may be asked during the midterm.
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1. In the entrepreneurial process (session 2) there are several schools of thought on howentrepreneurs reach their goal.
a. Describe and contrast these different schools of thought
There are several schools of thought on how entrepreneurs can reach their goals. In
causation processes an entrepreneur establishes a goal first, then the focus is on
selecting between means to achieve this goal (Sarasvathy, 2001). Causation models
are applied in pre-existing markets and aim to maximize the potential returns by
selecting optimal strategies. For example, an entrepreneur tries to predict the future
through systematic information gathering and performs extensive analysis on returns
and competitors (Fisher, 2012; Sarasvathy, 2001).
In effectuation processes, it is the other way around, a set of means is given
and the entrepreneur selects between possible effects that can be created from that
set of means (Sarasvathy, 2001). Effectuation processes are mainly adopted when
opportunities are exploited in new markets under conditions of uncertainty (Fisher,
2012). Due to uncertainty it is not always possible for entrepreneurs to estimate and
calculate expected returns. Therefore, in effectuation processes the affordable loss is
predetermined (Sarasvathy, 2001). Instead of doing competitive analysis, an
entrepreneur using effectuation processes focuses on strategic alliances as a way to
reduce uncertainty (Sarasvathy, 2001). Developing strategies and performing
analyses, as done in causation processes, takes a lot of time and money. This is why
entrepreneurs who created firms through processes of effectuation seem to fail at
lower levels of investment than entrepreneurs who created firms through causation
processes (Sarasvathy, 2001).
The process of bricolage starts with a penurious environment. For instance,
an environment presents new opportunities without providing new resources (Baker
& Nelson, 2005). If an entrepreneur engages in bricolage he or she refuses to enact
limitations, the entrepreneur combines the resources at hand to uncover the new
opportunity (Baker & Nelson, 2005).
b. Explain why starting a new firm in these different schools of thought can be rather
complementary instead of mutually exclusive. (A+B max 250-500 words)
Each school of thought has its advantages. Entrepreneurs using the causation
approach can also employ behaviours associated with effectuation and bricolage
(Fisher, 2012). For example, if an entrepreneur wants to create a new firm, but has
to start off with limited resources, he or she may be best off using the bricolage
approach. The entrepreneur creates something from nothing by making do with
what is at hand (Fisher, 2012). When the firm appears to be running well, this may
ensure that the entrepreneur has more resources. The entrepreneur may also get a
clear picture of a desired end goal, to achieve this goal it might be necessary to apply
more causation associated behaviours. The entrepreneur can determine a clear
strategy and do some analyses on competitors and returns. So, it is not the case that
one approach is better than the other, it depends on the situation the entrepreneur
is in. The approach should be adopted to the situation the entrepreneur finds
himself. This indicates that the different schools of thought can be complementary to
each other and that it is not necessarily advantageous to use one approach mutually
exclusive.
, 2. Entrepreneurship is context dependent, meaning that results of entrepreneurship can vary in
different environments.
a. Using multiple sources please describe at least 4 of these different contexts
The results of entrepreneurship can vary in different environments since contexts
can influence entrepreneurship directly or indirectly (Welter, 2011). Take, for
example, a historical context, rewards to entrepreneurial activity vary a lot from time
to time and seem to have a great impact on entrepreneurial behaviour (Baumol,
1996). In the ancient Rome working in industry or commerce led to a loss of prestige.
Back then, the way of gaining more wealth and a high status was in a political and
parasitical manner (i.e. earnings from landholding or usury) (Baumol, 1996). Despite
the fact that Romans were relatively well educated and also had sufficient
opportunities (Baumol, 1996), the context made entrepreneurship unpopular, it was
even strongly discouraged.
Another example is a spatial context. The place where entrepreneurship
takes place seems to be intertwined with gender (Welter, 2011). Different norms and
values prevail in different societies. This ensures that in some places female
entrepreneurship means breaking out of the norms (Welter, 2011).
Currently, digitalization also created a new context. Digitalization was a
revolutionary change in the world which affects how opportunities are recognized
and exploited (Nambisan, 2017). For example, boundaries underlying an
entrepreneurial opportunity are more porous. Digital artefacts, such as apps, or
digital platforms can evolve over time, even if the idea has been enacted (Nambisan,
2017). So, the results of entrepreneurship in this context seem endless, since
digitalization makes it possible to reprogram and recombine opportunities which are
already fulfilled.
Also social environments can influence entrepreneurial outcomes. Social
networks, for instance, can provide financial capital, information or potential
employees. Social ties can be very important for overcoming obstacles of newness
when developing a new business, friends and family can offer emotional
understanding and encouragement. Moreover, opportunities can also be recognized
through social contacts.
b. Explain how these context have an impact on at least two entrepreneurial outcomes
of our choosing.
How the current digital context can influence entrepreneurial outcomes, can
be well explained with the company Tesla. Tesla has been able to offer new features
and functionalities into its cars even after they have been delivered to customers.
Tesla regularly introduces new software updates. Recently Tesla introduced a new
feature named ‘Sentry Mode’, the feature ensures that the Tesla's surroundings are
constantly monitored by the car's cameras, if the car has been left unattended. This
way thieves can be detected when they are trying to steal the car. This is just one of
the countless other features Tesla has introduced through software updates. It
indicates that digitalization makes it possible for entrepreneurs to keep evolving
their products or services even when they are already on the market.
Certain norms and values within a society can strongly influence female
entrepreneurship. In some places this means that women have to break out of
norms to become entrepreneurs. This is the reason why many women in these
places put aside the idea of entrepreneurship. If women in these places do take the
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