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27 Cards in this Set
- Front
- Back
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IBUS Ch. 9 Learning Objectives
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After studying this chapter, you should be able to:
Define entrepreneurship, entrepreneurs, and entrepreneurial firms Understand how institutions and sources affect entrepreneurship Identify the three characteristics of a growing entrepreneurial firm Differentiate international strategies that enter foreign markets and that stay in domestic markets Participate in three leading debates on growing and internationalizing the entrepreneurial firm Draw implications for action |
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small and medium-sized enterprises (SMEs)
[ENTREPRENEURSHIP AND ENTREPRENEURIAL FIRMS] |
generally defined in the US as firms with fewer than 500 employees
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entrepreneurship
[ENTREPRENEURSHIP AND ENTREPRENEURIAL FIRMS] |
identification and exploitation of previously unexplored opportunities
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entrepreneurs
[ENTREPRENEURSHIP AND ENTREPRENEURIAL FIRMS] |
founders and owners of new businesses or managers of existing firms
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international entrepreneurship
[ENTREPRENEURSHIP AND ENTREPRENEURIAL FIRMS] |
combination of innovative, proactive, and risk seeking behavior that crosses national borders and is intended to create wealth in organizations
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Institutions and Entrepreneurship
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entrepreneurship is thriving around the globe in general, its development is unequal
In general, governments in developed economies impose fewer procedures entrepreneurs confront harsher regulatory burdens in poor countries |
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Institutions, Resources, and Entrepreneurship
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Institution-based View:
Formal Institutions Informal institutions (both at home and abroad) Resource-based View: Value Rarity Imitability Organization Both lead to--> Entrepreneurship Growth Innovation Financing Internationlization |
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Costs of Starting up a New Firm in 42 Countries
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Easiest to Hardest:
Canada Australia New Zealnd Denmark Ireland US Norway UK Hong Kong Mongolia Finland Israel Sweden Zambia Switzerland Singapore Latvia Netherlands Taiwan Hungary South Africa Thailand Nigeria |
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Costs of Starting up a New Firm in 42 Countries (2nd part)
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Easier to Hardest:
Chile Germany Czech Republic India Japan Egypt Poland Spain Indoenisa China South Korea Brazil Mexico Italy Vietnam Madagascar Russia Bolivia Dominican Republic Global average: 10.48 Procedures, 47-49 days, 47.08 Direct costs, 65.98 Time+ direct costs |
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growth
[GROWING THE ENTREPRENEURIAL FIRM] |
an entrepreneurial firm can be viewed as an attempt to more fully utilize currently underutilized resources and capabilities
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Innovation
[GROWING THE ENTREPRENEURIAL FIRM] |
heart of entrepreneurship and allows for a more sustainable basis for competitive advantage
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financing
[GROWING THE ENTREPRENEURIAL FIRM] |
start-ups need to raise capital; “4F” sources of entrepreneurial financing: founders, family, and friends, and fools
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Microfinance
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Lending institutions provide tiny loans ($50–$300) to entrepreneurs in developing countries that would lift them out of poverty
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INTERNATIONALIZING
THE ENTREPRENEURIAL FIRM
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There is a myth based on historical stereotypes that only large MNEs do business abroad and that SMEs mostly operate domestically
Transaction costs may seem so high that many firms may choose not to pursue international opportunities Some born global start-ups attempt to do business abroad from inception Many venture investors look for a global view in candidate organizations |
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direct exports
[Strategies for Entering Foreign Markets] |
sale of products made by entrepreneurial firms in their home country to customers in other countries
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sporadic (or passive) exporting
[Strategies for Entering Foreign Markets] |
sale of products prompted by unsolicited inquiries
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licensing
[Strategies for Entering Foreign Markets] |
agreement to give another organization the rights to use proprietary technology (such as a patent) or trademark (such as a corporate logo) for a royalty fee
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franchising
[Strategies for Entering Foreign Markets] |
as licensing, except typically used in service industries
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foreign direct investment
[Strategies for Entering Foreign Markets] |
strategic alliances, joint ventures, green-field wholly owned subsidiaries, and/or foreign acquisitions
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Internationalization Strategies for Entrepreneurial Firms
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Entering Foreign Markets:
Direct Exports Franchising/Licensing Foreign direct investment (through strategic alliances, green-field wholly owned subsidiaries, and/ or foreign acquisitions) Staying in domestic markets: Indirect exports (through export intermediaries) Supplier of foreign firms Franchisee/licensee of foreign brands Alliance partner of foreign direct investors Harvest and exit (through sell-off to and acquisition by foreign entrants) |
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An Export/Import transaction
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Three Columns:
1st of banks issuing credit and shipping documents to each other. Bottom to top: Shipping company Chinese customs broker Chinese importer Bank of China Second column: Letter of credit-From Bank of China to Bank of America (3rd column) Shipping documents- From Bank of America to Bank of China Merchandise- Shipping company to shipping company Third column: Bank of America US exporter US freight forwarder Shipping company |
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indirect exports
[International Strategies for Staying in Domestic Markets] |
SMEs reach overseas customers by exporting through domestic-based export intermediaries
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export intermediaries
[International Strategies for Staying in Domestic Markets] |
perform an important
“middleman” function by linking sellers and buyers overseas that otherwise would not have been connected: export trading companies (ETCs), export management companies (EMCs) |
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Traits versus Institutions
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What motivates entrepreneurs to establish new firms, while most others are simply content to work for bosses?
The “traits” school of thought argues it is personal traits that matter. Critics, however, argue that some of these traits, such as a strong achievement orientation, are not necessarily limited to entrepreneurs, but instead are characteristic of many successful individuals. |
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Slow Internationalizers versus
Born Global Start-Ups
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Can SMEs internationalize faster than what has been suggested by traditional stage models?
or Should they rapidly internationalize? |
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Antifailure Bias versus Entrepreneur-Friendly Bankruptcy Law
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One of the leading debates is how to treat failed entrepreneurs who file for bankruptcy.
If entrepreneurship is to be encouraged, there is a need to ease the pain associated with bankruptcy by means such as allowing entrepreneurs to walk away from debt, a legal right that bankrupt American entrepreneurs appreciate. In contrast, bankrupt German entrepreneurs may remain liable for unpaid debt for up to 30 years. Further, German and Japanese managers of bankrupt firms can also be liable for criminal penalties. |
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Implications for Action
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Push for institutions that facilitate entrepreneurship development--both formal and informal
When internationalizing, be bold but not too bold |
