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Assignment 2 Entrepreneurial Mindset Motivations And Behaviors

Introducyion yo entrepreneurial mindset, motivations, and behaviors


2.2Enterpreneurial mindset -- studio Experience

Entrepreneurs cause entrepreneurship

Market Opportunities, Technology changes, and other fators influence entrepreneurship
--- But, the entrepreneur, is at the heart of the matter.
Without entrepreneur, there is no entrepreneurships.

Understanding entrepreneurs:
1. Who are they?
2. What do they think?
3.How do they think ?
4. What influences their decisions?

Answers are critical to understanding how to develop and launch successful ventures.

(1). Need for Achievement
---Defined as a preference for challenge,
--- An acceptance of personal responsibility for outcomes, and a personal drive for accomplishment
--- Willingness and often a preference to go against the norm, Results in entrepreneurs needing less support or approval from others
--- High individualism is associated with an emphasis on individual initiative and achievement
--- belief that a person can internal or cannot external control their own destiny and influence outcomes
--- what do you attribute outcomes to
-- yourself or others (market, luck, etc)
--- Internals are more alert and discovers more oppotunities than externals

--- Attention + commitment
-- Entrepreneurs are able to focus attention on a single task
-- Ability to process information
-- changing environmental conditions
---Leads select individuals to react and to become successful entrepreneurs

To improve focus, set S.M.A.R.T. Goals
.S - Specific (or Significant)
.M - Measurable (or Meaningful)
.A - Attainable (or Action-Oriented)
.R - Relevant (or Rewarding)
.T - Time-bound (or Trackable)

(5) Optimism
--- Leads entrepreneurs to frequently make judgments on subjective positive factors
--- Tendency to overlook critical elements and discount uncertainties
--- Excessive optimism can lead to high levels of risk acceptance and loss

Moderate Optimism to improve success
.Objectively evaluate the strengths and weaknesses of your solution, and examine potential problem areas
-- Versus customer's needs (now and in the future)
-- versus competitors (now and in the future)
. Gathering information from potential customers, experts, knowledge friends and families
-- Validate your belief and/ or challenge you r assumptions


What rules does need for achievement play in your decisions?
How does individualism influence your decision-making?
Do you have an internal or external focus and control
Are you able to effectively focus yourself?
Can you be optimistic, while managing the risks of overconfidence?

2.3 Enterpreneurial motivations
2.4 Enterpreneurial behaviors
2.5 Risk taking in entrepreneurial decision making
2.6 Risk, uncertanty, and stakeholder involvement

2.3 Enterpreneurial Motivations
Obejective how entrepreneurial motivation encompasses the factors by which goal-directed behavior is initiated, energized, and maintained.
-- self -efficacy
-- cognitive motivation
-- tolerance for ambiguity

Self- efficacy is defined as your belief in your ability to accomplish a specific task.
-- Intersects the entrepreneurial minset and entrepreneurial motivation
Self- efficacy is related to control and confidence .. but tied to a specific task or activity
Self-efficacy is top predictor of individual performance in a wide variety of tasks

Cognitive motivation

Cognition == the process of thought
Individuals high in need for cognition (thinking ) tend to seek, acquire, think,and reflect on relevant information
Individuals low in need for cognition tend to rely on experience, assumptions, and luck.

High cognition is better than low.

Tolerance for ambiguity
.Defined as the tendency to perceive ambiguous situations as desirable rather than threaening
.Necessary factor for entrepreneurs based on dynamic nature of markets and competition
.Important to be able to make complex decision quickly with limited information.

Cognitive biases and heuristics common in entrepreneursip
1. Over confidence
3.Counterfactual thinking

Understand how entrepreneurial behavior results from the entrepreneurial mindset and motivation
–Interpersonal relationship skills
–Social capital
–Risk tolerance

•Important for entrepreneurs to believe in themselves and their abilities
–Balanced by the reality of the tasks at hand
•May require going against the norm
–Popular opinion
–Advice of friends and family
•Self doubt can result in doubts from your team, partners, investors, customers, etc.

Interpersonal relationship skills
•Driven by your likeability and communication skills
•Influences you ability to connect with individuals…
–and to connect with their connections
•May be a natural skill for you…
–or require a level effort …
–and/or personal study and development

Social capital
•Refers to the resources available in and through personal and professional networks
–Who you know, and who they know
•Richness depends on the size, quality, and diversity of your networks

Why build social capital?
•People with rich social capital are:
–Better informed
–More creative
–More efficient
–Better problem solvers
•With the right networks, people:
–Save time because they know where to get the information they need
–Foster cooperation and collaboration

Risk tolerance
•Addresses your willingness to accept risk
–Which is different than a desire for risk
•Entrepreneurs are no more likely to take risks than non-entrepreneurs
–But entrepreneurs do perceive risk differently
–Risk is in the eye of the beholder
•Consider the risk-reward balance, and your potential to return to the status quo

Risk taking in entrepreneurial decision-making

•Understand entrepreneurs’ tendencies to take risks
•Examine why entrepreneurs engage in risk
•Discuss keys for entrepreneurs to more accurately assess risk and improve decision-making

Strategic entrepreneurial decisions are inherently risky
•Rarely know all possible outcomes
•Difficult to apply probabilities to outcomes
•If information on the consequences of a decision is incomplete, uncertainty involves risk.
•Risk is conceptualized based on the individual entrepreneur’s assessment of risk and uncertainty in a decision

Do entrepreneurs show higher natural tendencies to take risks?
•No, not consistently
–Growing consensus among researchers that managers and entrepreneurs do not show differences in natural tendencies to take risks (Busenitz, 1999)
•Perceptions of risk may differ
•Other factors are motivating entrepreneurs to start firms besides risk propensity

Managers and entrepreneurs do not show differences in natural tendencies to take risks.
Perceptions of risk may differ
Other factors of motivating entrepreneurs to start firms besides risk propensity.

Why do entrepreneurs engage in risk?
•Lack necessary information in a decision situation (Gibcus et al., 2008)
•Develop an inside view of the decisions they face (Kahneman & Lovallo, 1993)
•Ignore elements of past situations
•Favor positive possible outcomes

Key influencing factors of entrepreneurs accepting risk in their decision
•How high are the risks?
•What are the rewards?
•What are the consequences?
•Were all of the complex elements of the decision considered

Cognitive complexity contributes to a better understanding of ESDM
•Explores an individual’s information processing capabilities
•Addresses the structural configuration of a decision-maker’s mental representation of a decision situation
•How does the cognitive complexity of individual entrepreneurs relate to their risk propensity?

Industry dynamism influences entrepreneurial decision-making
•Relationship between cognitive complexity and risk-taking behavior is negatively moderated by the dynamism of the industry in which the decision takes place
–Entrepreneurs operating in highly dynamic industries see the necessity of taking risk
–Also more easily recognize when there is no need to take large strategic risks

•Entrepreneurs’ tendencies to take risks are influenced by perception and relative risk and reward.
•Entrepreneurs engage in risk for a unique variety of reasons that are personally important to them.
•It’s important for entrepreneurs (and aspiring entrepreneurs) to more accurately assess risk and thereby improve their decision-making.

Risk, uncertainty, and stakeholder involvement

•Assess the impact of risk perception and uncertainty on the entrepreneurial decision-making process
•Explore the extent to which the perception of risk and uncertainty leads to the involvement of stakeholders in entrepreneurial strategic decision-making

Entrepreneurs differ from corporate managers based on decision-making factors
•Individualistic view
•High tolerance for ambiguity
•Confidence in skills, knowledge, and expertise

Understanding how entrepreneurs make informed decisions on risky opportunities
•Individualistic view
•High tolerance for ambiguity
•Confidence in skills, knowledge, and expertise

Perceived uncertainty Perceived risk

Perceived vs. objective risks?
•Perceived = belief
•Objective = reality
•Perceived risk drives the decision-maker

Success of new ventures relies on the choices made by entrepreneurs
•Fast-changing competitive environments
•Demand for actively interpreting opportunities and threats
•Situations with incomplete information
–Drive need to perceive rather than to know for sure
•Decisions perceived to be more uncertain increase perceived level of risk involved

Experienced entrepreneurs mitigate risk in decision-making
•Intuition improved through past experiences
•Individualistic view complemented by relationships and team orientation
•High tolerance for ambiguity based on comfort with making difficult choices with in complement information in the past
•Confidence in skills, knowledge, and expertise enhanced based on past success

Role of stakeholders in decision-making
•Stakeholders: individuals or groups who can affect or are affected by the achievement of the organizational objectives (e.g. customers, suppliers, investors, etc.)
•Involvement of stakeholders can reduce uncertainty and improve decision-making
–Why? Understand their experience, desires, constraints, etc.
•Higher uncertainty increased value of involving stakeholders in decision-making

Which stakeholders should entrepreneurs focus on?
•With limited resources, focus on deeply understanding a few stakeholders rather then getting a limited understanding of many
•Select stakeholders with:

Methods to hear the voice of stakeholders
–Experts in the field, to include faculty
–Prospective customers
–Prospective investors
•Focus groups
–Consider Twitter and Facebook integration

Be sure to:
•Assess the impact of risk perception and uncertainty on the entrepreneurial decision-making process
–Each factor play a central role in entrepreneurial decision-making
•Perception of risk and uncertainty benefit from the involvement of stakeholders in entrepreneurial strategic decision-making
–Focus on a few, meaningful stakeholders
•Traits helpful for managing risk perception and uncertainty
–High tolerance for ambiguity

By understanding the components of the entrepreneurial behavior, you can assess and enhance your own.
•How high are the risks?
•What are the rewards?
•What are the consequences?
•Were all elements of the decision considered?

As we examine entrepreneurial mindset, we want to recognize that at the heart of

the matter is the entrepreneur, and that entrepreneurs cause entrepreneurship.

Now what we mean by that is that market opportunities, technology changes and

other factors certainly influence entrepreneurship and

influence new venturing.

But without the entrepreneur, there's no entrepreneurship.

So we want to seek to understand entrepreneurs.

We want to understand who they are, what they think, how they think,

as well as what influences their decisions.

The first panel we're going to look at is need for achievement.

Now what need for achievement means is that it's a preference for a challenge.

It's that acceptance of personal responsibility for outcomes.

It's that personal drive.

That element of being a self-starter.

That element of being motivated.

And when we look at need for

achievement Richard Branson is one great example of that.

They could have retired decades ago.

This is a subset of the companies that he started and the number is around 400.

He started very early on,

doing newspapers and even starting a small record label

that we know now as Virgin Records, but he's gotten into spaceships,

and air carriers, and mobile electronics communications.

Balloon flights, music festivals, a variety of things.

He started a television station a few years later.

He needed some content for this local Atlanta, Georgia-based television station,

and he bought the Atlanta Braves Major League Baseball team,

which in the 1970s was not a very good team, was not a very popular team,

and was, in the baseball terms, a fairly inexpensive team.

But he used that content and

that television platform to build not only a successful television station that had

hundreds of hours of programming per year because of the baseball affiliation, but

also built a strong fan base in a time before cable television was popular.

In a time before satellite television even existed.

And through the 70s and 80s and 90s, the Atlanta Braves became America's team and

one of the most popular teams in the US.

He went on down the sports theme into wrestling, professional wrestling.

He was a pioneer in news, cable news, at a time when other people thought

he was crazy to start a television station that was going to show 24-hour news.

His competition was the 6 pm news, or the 7 pm news.

So he took something that was only on perhaps once a day, or

with the morning news, maybe twice a day, and made a 24-hour model.

He's run that into countless other television entities and properties.

And with control we're going to look at the element of locus of control,

in the context of internal versus external.

Do you believe that you can influence the surroundings around you?

Do you have internal locus of control, or do you have an external locus of control,

where you believe you are subject to your environment?

So it's this element of what you attribute outcomes to, that makes a difference

between, are you internally or externally motivated in your locus of control?

Internals are much more alert in discovery of new opportunities.

They're seeking something, they are looking for

something that they can take action on and bring to fruition.

And so with that, has had great success and

great individual, internal locus of control of believing that he, and

his founding team, could change the online payment industry with PayPal,

could change the automotive industry with Tesla.

And has done it, and is having great success with it.

Tied to focus is goal setting.

And SMART goals are something that we champion in our courses and

in our programs, of setting goals that are specific, that are measurable,

that are attainable, that are relevant, and that are time-bound.

So rather than trying our best, which typically means we underperform,

we want, not to set an ambition of selling a lot of shirts, but

to make the commitment to sell a certain number, perhaps a 100, at a certain price,

perhaps $10 each, at a certain time, perhaps by Friday.

So when you think about goal setting and

when you think about new venturing, we challenge you to set SMART goals for

yourself because try your best often doesn't get things done.

So in summary, when we think about entrepreneurial mindset we

want to recognize achievement and need for

achievement, and recognize the role that this plays.

We want to think about how individualism influences our decision making.

We want to recognize locus of control, and try and

foster an internal locus of control within ourselves.

We also want to be effective and focus, and achieve things, and set smart goals.

And we want to be an optimist,

while managing the risk associated with overconfidence.

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