Lecture 3

Question 1

What are some barriers and triggers to start-ups?

Answer 1

Triggers:
- situationally disadvanatged
- need for regular income
Barriers:
- risk averse
- fear of loss of capital
- doubts about ability

Push factors (situational)
- traditional employment opportunities not available
- unemployment - 'misfit'
Pull factors (psychological)
- independence
- personal development
- wealth - recognition

Question 2

What are the big 5 personality traits of entrepreneurs?

Answer 2

• need for achievement (forward looking, optimistic)
• need for autonomy (dislikes taking orders, working alone)
• creativity (imaginative, enjoys new challenges)
• internal locus of control (self-confident, determined)
• risk taking (will act on incomplete info, sets challenging goals)

Question 3

Criticisms of the personality approach?

Answer 3

• does not explain why some people engage in entrepreneurial activities and others don’t
• wide variations in entrepreneurs so hard to make a personality profile
• focus on a static approach (who the entrepreneur is and not what they DO)
• character traits assumed to be stable over time but some traits acquired through social, cultural and situational factors)

Question 4

What are Shane and Vankararaman’s assumptions?

Answer 4

1) entrepreneurial opportunities not known to everyone (arbitrage scenario)
2) people have different perceptions of the value of an opportunity
3) some people will choose to pursue these opportunities (cost, financial capital)
4) acting on these opportunities will have different outcomes - some profitable and some not profitable

Question 5

What is the cognitive approach?

Answer 5

• 81% of entrepreneurs believe their ventures will have at least a 70% chance of succeeding, when in reality 50-70% fail in the first 5 years

Question 6

What are some examples of common cognitive biases relating to the entrepreneur?

Answer 6

• over optimism
• self-efficacy
• planning fallacy (believing things will happen faster than they do
• intentionality (always wanting to start a business)

Question 7

What is entrepreneurial learning?

Answer 7

Experience that can crucially mould an individuals willingness and ability to acquire and organise complex information - occurs during mistakes, setbacks and failures

• learning from venture failure and success
• entrepreneurial education
• learning from others