Entrepreneurship ‘Dafna Kariv’s book is an indispensable resource for students and practitioners alike, to learn about entrepreneurship. It provides an excellent foundation for better understanding this crucial subject matter. Kariv manages to integrate theory with practice via fascinating case studies from all over the world. The book is well written and inspires a lively discussion on a variety of themes in the field of entrepreneurship.’ Sibylle Heibrunn, Ruppin Academic Center,Israel. Entrepreneurship means different things to different people, but the entrepreneurial personality is a crucial success factor to any new business. These traits are also increasingly in great demand at established multinational corporations. This groundbreaking textbook differs from its competitors by placing an emphasis both on the core processes and practices of entrepreneurship, as well as demonstrating the impact of complex local environments in shaping the processes of entrepreneurship. Topics include: n Main processes of entrepreneurial venture creation, innovation and growth. n Operational steps characterizing processes of entrepreneurship. n Establishing and realizing entrepreneurial ventures. n Core processes and practices of entrepreneurship. With case studies and interviews with entrepreneurs from across the globe, Entrepreneurship’s international approach makes it stand out from other titles, providing students and practitioners alike with a unique perspective on the subject. Dafna Kariv is a senior lecturer, researcher and the director of the TempusBiz Project and ‘Young Entrepreneurs’ at the College of Management, Academic Studies, Rishon LeZion, Israel, and is a member of the Chair of Entrepreneurship at HEC, Montréal, Canada. Her research interests include entrepreneurship, gender and cross-national research. She has published in highly ranked journals, and apaper was chosen for the Outstanding Paper Award for Excellence 2009. Entrepreneurship An international introduction Dafna Kariv First published 2011 by Routledge 2Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2011. To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk. ©2011 Dafna Kariv The right of Dafna Kariv to be identified as the author of this work has been asserted by her in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988 All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage and retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data Acatalogue record for this book is available from the British Library Library of Congress Cataloguing in Publication Data Kariv, Dafna. Entrepreneurship: an international introduction / Dafna Kariv. p.cm. Includes bibliographical references and index. 1. Entrepreneurship. I. Title. HB615.K367 2011 658.4¢21—dc22 2010031383 ISBN 0-203-83193-4 Master e-book ISBN ISBN: 978–0–415–56119–8 (hbk) ISBN: 978–0–415–56120–4 (pbk) ISBN: 978–0–203–83193–9 (ebk) This book is dedicated to my father,Dan Barel.His memory and his inspiration will always be special to me,touching upon all aspects of my life. Contents List of case studies xii List of illustrations xiii List of tables xv Forewordby Professor Louis Jacques Filion xvi Acknowledgments xviii INTRODUCTION 1 Who should read this book? 1 Entrepreneurship in a global context 2 Basic theoretical models in entrepreneurship at a glance: a research evolutionary perspective 3 National culture and entrepreneurship 4 Entrepreneurs versus small-business owners 6 Entrepreneurship today 7 The book’s approach 8 PARTI THE RESOURCE-BASED PERSPECTIVE IN THE ENTREPRENEURIAL COURSE 15 1 THE ENVIRONMENT AND ENTREPRENEURSHIP 17 The market analysis 18 Uses of market segmentation 19 The environment 19 Clientele 23 Summary 24 2 THE ENTREPRENEURIAL CULTURE 29 What is entrepreneurial culture? 29 Processes that structure the entrepreneurial culture 32 Summary 33 vii CONTENTS 3 ‘ENTREPRENING’ 37 What does it take to be an entrepreneur? 37 Is there a background that prompts entrepreneurship? 38 Main characteristics of today’s entrepreneurship and entrepreneurs 40 Summary 45 PARTII THE PROCESS-ORIENTED PERSPECTIVE IN ENTREPRENEURSHIP 51 4 CREATIVITY IN ENTREPRENEURSHIP 53 Defining creativity 54 Creativity in the entrepreneurial realm 54 Creativity and environment 56 Types of creative ideas 57 The ‘idea’ 58 Creativity in the context of entrepreneurial projects 59 Amodel of creativity 62 Gaps and asynchronicities 64 Creativity in the context of the business plan 65 Differentiation of the business 66 Summary 66 5 INNOVATION 72 The design of innovationin the entrepreneurial context 72 Innovators and entrepreneurs 74 The dynamic capabilities perspective and innovation 75 How to stimulate innovation 76 Innovation and business success 76 Unexpected business results 78 The effects of market demand 79 Opportunity exploitation in the context of innovation 79 Differentiating creativity and innovation in the entrepreneurial context 80 Summary 81 6 OPPORTUNITY EXPLOITATION 90 Opportunity identification 90 Opportunity exploitation 92 Opportunity creation 94 Opportunity evaluation 95 Practical ways of identifying or exploiting opportunities 96 University incubators: promoting entrepreneurship in higher education 97 Summary 99 viii CONTENTS 7 THE STARTUP STAGE 105 Phase 1—Decision-making 106 Phase 2—Realizing the vision 107 Phase 3—Equipment know-how 108 Phase 4—Buying 109 Phase 5—Initiating the venture 109 Phase 6—Selling 111 Phase 7—Managing the business 111 Summary 113 8 MENTORSHIP, COACHING AND COUNSELING 118 Mentorship 119 Coaching 122 Counseling 124 Summary 126 9 PLANNING AND MANAGING AN ENTREPRENEURIAL VENTURE 133 Business planning and business performance 134 Mission statement 134 Value statement 135 Writing a mission statement 136 Redefining the firm’s goals 136 Main themes in business planning 136 Business plans for established firms 138 Break-even analysis 140 Setting prices 140 What should entrepreneurs look for? 141 Two types of business plan 142 Elements of a business plan 143 Reflections on the planning process: a new perspective on business plans 143 Finalizing the planning process: the strategic plan 146 Planning by IPA: an alternative approach 147 Summary 148 10 MANAGEMENT SKILLS IN THE ENTREPRENEURIAL REALM 154 Managerial skills in entrepreneurship 154 Managerial skills relevant for different stages of business development 156 Entrepreneurial management 156 Management and the resource-based view 159 Leadership in the entrepreneurial realm 159 The new venture team 164 Aglimpse into entrepreneurial teams 166 Summary 170 ix