1/23/2025

Department of Software Engineering

Dr. Amna Iftikhar
Lecture # 01 ,02 and 03

Nature and Development of

Entrepreneurship
 Entrepreneur – An individual who takes initiative to
bundle resources in innovative ways and is willing to bear
the risk and/or uncertainty to act.
 Individual who takes risks and starts something new or
unique.
 Being an entrepreneur:
 Involves creation process.
 Requires devotion of time and effort.
 Involves rewards of being an entrepreneur.
 Requires assumption of necessary risks.

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Nature and Development of

Entrepreneurship (cont.)
 Entrepreneurial action - Behavior in response to a
judgmental decision under uncertainty about a
possible opportunity for profit.
 Entrepreneurship:
Process of creating something new and assuming the
risks and rewards.

Table 1.1 - Aspects of the

Entrepreneurial Process

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Ethics and Social Responsibility of

Entrepreneurs
 Entrepreneurs usually develop an internal ethical
code.
 Personal value systems tend to be influenced by:
 Peer pressure.
 General social norms in the community.
 Pressures from their competitors.
 Business ethics - The study of behavior and morals in a
business situation.

Role of Entrepreneurship in
Economic Development
 Innovation is depicted as a key to economic
development.
 Product-evolution process - Process through which
innovation is developed and commercialized.
 Iterative synthesis - The intersection of knowledge and
social need that starts the product development process.

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Role of Entrepreneurship in
Economic Development (cont.)
 Three types of innovation:
 Ordinary - New products with little technological
change.
 Technological – New products with significant
technological advancement. (dialing to touch system in
mobiles)
 Breakthrough – New products with some technological
change. (normal to laser drilling)

What is Entrepreneurship?
• Academic Definition (Stevenson & Jarillo)
– Entrepreneurship is the process by which individuals pursue
opportunities without regard to resources they currently
control.
• Venture Capitalist (Fred Wilson)
– Entrepreneurship is the art of turning an idea into a
business.
• Explanation of What Entrepreneurs Do
– Entrepreneurs assemble and then integrate all the resources
needed –the money, the people, the business model, the
strategy—needed to transform an invention or an idea into a
viable business.
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Corporate Entrepreneurship
1 of 2

• Corporate Entrepreneurship
– Is the conceptualization of entrepreneurship at the firm
level.
– All firms fall along a conceptual continuum that ranges
from highly conservative to highly entrepreneurial.
– The position of a firm on this continuum is referred to as its
entrepreneurial intensity.

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Corporate Entrepreneurship
2 of 2
Entrepreneurial Firms Conservative Firms

• Take a more ―wait and see‖

• Proactive
posture
• Innovative
• Risk taking • Less innovative
• Risk adverse

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Why Become an Entrepreneur?

The three primary reasons that people become

entrepreneurs and start their own firms
Desire to be their own boss

Desire to pursue their

own ideas

Financial rewards

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Entrepreneurial Revolution

• 7 Million American Millionaires are ‘self-made

entrepreneur’.

• The poor become rich due to

entrepreneurial process.

• Building entrepreneurial community is the

priority of the new E-Generation.

• Secret weapon of the American economy

!

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Nature of Entrepreneurship
The Role of Entrepreneurship
 Key Point: Entrepreneurship drives the creation and growth
of businesses, contributing to regional and national
prosperity.
 Details: Entrepreneurial actions begin with a lucrative
opportunity and an enterprising individual.
 Example: Introducing a product to a new market or creating
a new product for an existing market.
Definition of Entrepreneurial Opportunities
 Key Point: Situations where new goods, services, or methods
can be introduced and sold for more than their cost of
production.
 Details: Can involve creating new markets, new products, or
both.

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Entrepreneurial action
Action through the creation of new products/ processes
and/or the entry into new markets, which may occur through
a newly created organization or within an established
organization
Entrepreneurial thinking
Individuals’ mental processes of overcoming ignorance to
decide whether a signal represents an opportunity for
someone and/or reducing doubt as to whether an opportunity
for someone is also an opportunity for them specifically,
and/or processing feedback from action steps taken

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How Entrepreneurs Think

Entrepreneurs think differently from non-entrepreneurs and
adapt their thinking based on the situation.
 Structural Thinking: Recognizing patterns and connections
in uncertain environments.
 Bricolage: Making do with limited resources by creatively
combining them.
 Effectuation: Focusing on controllable aspects and shaping
outcomes with available means.
 Cognitive Adaptation: Adjusting thinking processes to fit
new and uncertain circumstances.
 Context: Entrepreneurs face high stakes, time pressure,
and emotional investment, requiring unique decision-
making approaches

Think Structurally
Opportunity beliefs often require creative mental leaps from
existing knowledge.
 Creative Mental Leaps: Linking knowledge about
markets to new technologies or vice versa.
 Superficial Similarities: Basic, observable elements of
technology and market that resemble each other.
 Structural Similarities: Underlying mechanisms of
technology and market that match.
 Example:
A coffee shop introduces a mobile app for ordering drinks. Superficial
similarity exists between the app and a typical retail ordering system,
but structural similarity lies in enhancing customer convenience and
experience.

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Bricolage
Entrepreneurs making do by applying combinations of the
resources at hand to new problems and opportunities
Key Point: Entrepreneurs often lack resources and turn to
bricolage—making do with what is at hand.
Example:
 Urban Rooftop Farming: A small entrepreneur in Karachi
uses discarded plastic bottles to create a rooftop garden.
 Collects rainwater for irrigation and composts kitchen waste
for fertilizer.
 Grows vegetables and herbs, selling them to local markets.
 Utilizes solar panels to power small irrigation pumps.

Effectuation
Entrepreneurs often use effectuation rather than traditional
causal thinking.
 Causal Process:
 Starts with a specific goal.
 Focuses on finding means to achieve that outcome.
 Example: A chef follows a pre-selected menu, lists
ingredients, shops, and prepares the meal.
 Effectuation Process:
 Starts with available resources (who they are, what they know,
whom they know).
 Focuses on selecting from multiple possible outcomes.
 Example: A chef creates a meal by using available ingredients
and utensils, imagining various possible menus.

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Sarasvathy’s Thought Experiment

#1: Curry in a Hurry Page # 09
 The crux of this example illustrates two different approaches—causation and
effectuation—in entrepreneurship, using the example of starting an Indian fast food
restaurant called "Curry in a Hurry."
 Causation: This approach starts with a desired outcome and focuses on how to achieve
it. It follows a structured, analytical process, such as segmenting a market, targeting a
specific segment, and designing marketing strategies to reach that target. In this case,
the entrepreneur would start by analyzing the broader market, segmenting it, and
designing the restaurant based on pre-existing market research and customer
preferences.
 Effectuation: This approach starts with the resources and means available and selects
among possible outcomes. The entrepreneur uses what they already have—knowledge,
skills, and networks—to shape and adapt their business idea. Instead of following a
predetermined market structure, the entrepreneur in this case would creatively explore
possibilities with limited resources, adapting as they learn from customers and
experiences. This could result in unexpected outcomes, such as pivoting from a
restaurant to a different business model altogether based on customer feedback and
evolving resources.
 In summary, the example contrasts these two approaches: causation is a more traditional,
structured process of achieving a goal, while effectuation allows for flexibility and
adaptation based on available resources and emerging opportunities, often in situations
of high uncertainty

Cognitive adaptability
Cognitive adaptability refers to an entrepreneur's ability to be
dynamic, flexible, self-regulating, and engaged in generating
multiple decision frameworks to sense and process environmental
changes effectively.
Key Components:
 Dynamic Thinking: Quickly adjusting to new information and
situations.
 Flexibility: Adapting strategies and approaches as needed.
 Self-Regulation: Monitoring and controlling one's cognitive
processes.
 Engagement: Actively participating in the decision-making
process.
 Entrepreneurial Mindset: Cognitive adaptability is a core
element, enabling entrepreneurs to navigate uncertainty and
capitalize on opportunities.

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Enhancing Cognitive Adaptability

Reflecting on and understanding one's thinking and learning processes.
 Development Strategies:
 Comprehension:
Understanding the problem or opportunity thoroughly before taking action.
 Questions to ask: What is the issue? What does it mean?
 Connection:
Relating current challenges to past experiences to inform decisions.
 Questions to ask: How is this situation similar to previous ones? What can I learn from the past?
 Strategy:
Developing and implementing a plan to address the challenge or seize the opportunity.
 Questions to ask: What is the best strategy? How will I execute it?
 Reflection:
Evaluating the outcomes and adjusting strategies accordingly for continuous
improvement.
 Questions to ask: What went well? What can be improved for the future?.
 Benefits:
 Improved adaptability to new situations.
 Enhanced creativity in problem-solving.
 Better communication of reasoning and decisions.

Practical Application and Self-

Assessment
 Self-Assessment: Regularly evaluate your cognitive
adaptability to identify strengths and areas for
improvement.
 Practical Application:
 Apply comprehension, connection, strategy, and
reflection in daily entrepreneurial activities.
 Seek feedback and engage in continuous learning to
enhance adaptability.
 Outcome: Developing cognitive adaptability leads to
more effective decision-making and a stronger
entrepreneurial mindset.

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THE INTENTION TO ACT ENTREPRENEURIALLY

 Intentional Behavior:
Entrepreneurs intentionally pursue opportunities,
enter new markets, and offer new products.
 Strong intentions = Higher likelihood of action.
 Motivational Factors:
Intentions are influenced by how desirable and
feasible the action is perceived to be.
 Feasibility: Perceived ability to perform the task
(Entrepreneurial Self-Efficacy).
 Desirability: Attitude toward entrepreneurial action
and the potential rewards.

 Self-Efficacy:
Confidence in one's ability to successfully execute
entrepreneurial actions.
 High self-efficacy = Increased effort, persistence, and
performance.
 Low self-efficacy = Reduced effort and performance.

 Desirability vs. Feasibility:

The stronger the perception of feasibility and desirability, the
stronger the entrepreneurial intention.
 Perceived Feasibility: Can I do it?

 Perceived Desirability: Do I want to do it?

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Entrepreneurial Background &

Education
 Role of Education in Entrepreneurship:
Education plays a significant role in shaping entrepreneurs by
equipping them with necessary skills to solve problems and adapt to
challenges.
 Formal Education: Not always necessary for starting a business (e.g.,
Andrew Carnegie, Henry Ford), but provides a strong foundation in
areas like finance, marketing, management, and communication.
 General Education: Broad knowledge helps entrepreneurs discover
new opportunities, integrate new information, and adapt to various
situations.
Key Insights:
 Education increases the likelihood of identifying opportunities.
 It does not guarantee that an individual will create a business to exploit
those opportunities, but it enhances the feasibility of entrepreneurial
action.

1. Entrepreneurial Age :
 Entrepreneurial Age: Reflects the experience of an entrepreneur,
which is a strong predictor of success, especially in familiar fields.
 Chronological Age: Most entrepreneurs begin between the ages of 22
and 45, with milestone ages (25, 30, 35, 40, 45) marking increased
likelihood to start a venture.
 Career Initiation:
 Male entrepreneurs typically start in their early 30s.
 Female entrepreneurs typically start in their mid-30s.
 Late-life entrepreneurship is common when financial concerns lessen, and
personal goals shift.
2. Work History:
 Motivation to Start: Frustration with work (lack of challenge,
promotional opportunities, etc.) often drives individuals to pursue
entrepreneurship.
 Experience Matters: Technical, industry, and managerial experience
(finance, product development, distribution, and leadership) are
crucial for launching and growing a venture.
 Importance of Prior Start-Up Experience: Previous start-up
experience builds confidence, provides benchmarks, and enhances the
ability to evaluate opportunities, improving the likelihood of success in
future ventures.

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3. Role Models:
 Entrepreneurs often look to successful role models (e.g., parents,
siblings, other entrepreneurs) for inspiration and guidance.
 Impact of Role Models: Role models help entrepreneurs believe
that success is achievable and inspire them to pursue their own
ventures.
 Mentorship: Role models can serve as mentors, offering advice and
support during the start-up phase and beyond.
4. Support Systems:
 Entrepreneurs require a strong support and advisory network,
particularly during the start-up phase.
 Social Networks: Connections and networks expand over time,
with key attributes including density (extent of ties) and centrality
(connections with others).
 Moral-Support Network:
 Family and friends act as a critical moral-support network, offering
encouragement and understanding.
 Spouses, friends, and relatives often provide emotional support and
practical help, especially during tough times.
 Family support can be crucial for persistence through challenges.

Professional-Support Network in Entrepreneurship

 Mentors:
 Entrepreneurs need expert advice and counsel to navigate their venture.
 Finding a Mentor: Start by identifying experts in areas like finance, marketing,
law, and management. A mentor acts as a coach, sounding board, and advocate.
 Regular updates on the venture's progress help develop a strong mentor-mentee
relationship.
 Business Associates:
 Clients and Buyers: Key for generating revenue and providing word-of-mouth
advertising.
 Suppliers: Crucial for building a good relationship, ensuring material availability,
and offering industry insights.
 Trade Associations:
 Keep the business competitive by providing industry updates and data.
 Personal Affiliations:
 Engage with individuals through shared hobbies, clubs, or alumni groups for
referrals, advice, and information.
 Entrepreneurial Networks:
 Key Benefits: Provide confidence, support, advice, and resources.
 Business Networks: Built on trust, facilitate the transfer of knowledge, and
exchange goods/services, which supports entrepreneurial growth and intentions
for sustainable entrepreneurship.

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Sustainable Entrepreneurship
Sustainable entrepreneurship focuses on preserving nature, life support, and
community while pursuing opportunities for economic and non-economic gains.
These gains include benefits to individuals, the economy, society, and the
environment.
 Key Drivers:
 Knowledge: Awareness of the natural environment (earth, biodiversity, ecosystems) and market
knowledge is critical in identifying opportunities for sustainable ventures.
 Motivation: Entrepreneurs must be driven to create value not just for themselves but also for others
and society.
 Types of Gains:
 Economic: Employment opportunities, revenues for governments.
 Environmental: Reduced pollution, improved air/water quality, better living conditions.
 Social: Improved child survival, life expectancy, education, and equal opportunity.
 Example:
 Entrepreneurs recognizing the need for hybrid stoves in developing countries to reduce household
pollutants while preserving traditional cooking methods.
 Idealistic Yet Realistic:
 Entrepreneurial actions can be used for both positive (building communities) and negative (harming
the environment) purposes. The goal is to use entrepreneurial action for the good of society and the
planet.
 Example:Eco-Friendly Brick Kilns:

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