Entrepreneurship 422 - Chapter 1

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What entrepreneurship change with ages in the different types of economies?

- concentration of entrepreneurs in ages 35 - 44 - Factor driven economies have the least drop off with age showing that older people still need to support themselves

What does job creation look like amount the different economies in relation to enrepreneurs

- innovation economies have the highest proportion of individuals acting on their own

DIJA

Dow Jones Industrial Average

Why is entrepreneurship important?

- Stimulates innovation - Creates jobs - Needs are constantly changing → adaptability, identifying and meeting new needs - Answer needs before we know they are there - Making an ineffective product obsolete - Keeps large companies honest

What percent of jobs created in the private sector in 2014 were through entrepreneurship?

2/3rds

Entrepreneurship is most common in what age ranges?

25 - 34 and 35 - 44

How many businesses are in the U.S?

28 million

What percent of U.S businesses are small?

99.9%

What is considered a small business?

A business with 500 or fewer employees

factor-driven economy

A nation where the major forces for jobs, revenues, and taxes come from farming or extractive industries like forestry, mining, or oil production.

Bayh-Dole Act

Allows for the transfer of exclusive control over many government funded inventions to universities and businesses operating with federal contracts for the purpose of further development and commercialization.

Global Entrepreneurship Monitor (GEM)

An annual assessment of the national level of entrepreneurial activity across countries, started as a partnership between London Business School and Babson College.

What is to note about anglo saxon economic systems?

Anglo-Saxon economic systems have a high prevalence rate of high-expectation entrepreneurial activity

Why did entrepreneurship increase in the 1970s? Financials

Available funds have continually supported entrepreneurial ventures

What are the phases of the entrepreneurship process and GEM indicators?

Conception, firm birth, and persistence

Why did entrepreneurship increase in the 1970s? Government

In 1978 , Congress reduced the capital gains tax and eased the ERISA prudent man rule which inhibited pension funds from investing in venture capital funds. - minimized anti competitive behavior

Where is TEA the highest?

In factor driven economies with necessity motivated entrepreneurs

Where is TEA (opportunity) the highest?

In innovation driven economies

Where is TEA the lowest?

In innovation driven economies

Why did entrepreneurship increase in the 1970s? Human Infrastructure

Increased web of human infrastructure willing to support the efforts of aspiring entrepreneurs

What does the GEM report say about entrepreneurship ecosystems?

Innovation economies have better infrastructure and policies

What percent of firms receive venture capital?

Less than 1%

What are the two types of entrepreneurship within the Total-Early-Stage Entrepreneurial Activity (TEA)

Nascent entrepreneur and owner managers

Why did entrepreneurship increase in the 1970s? Cultural and Social

No first-hand memory if the great depression. Therefore, job security was less important. Big business had a negative connotation after Vietnam. Downsizing led to many bright people being fired who started businesses, other social changes opened the doors for minority entrepreneurs to start businesses

nascent entrepreneurs

People who are trying to start a business from scratch but have not yet done so

Are small company's or big companies more innovative?

Small companies produce 16 times more patents per year

How are TEA and GEM related?

TEA is a major indicator for GEM

What are the three main measures of entrepreneurial opportunity?

TEA, TEA - opportunity, TEA - necessity,

GEM Model - What drives entrepreneurial activity?

That people perceive opportunities and have the skills and motivation to exploit them

Why did entrepreneurship increase in the 1970s? Physical Infrastructure

The WWW is a great equalizer for small businesses. Additionally, outsourcing and the reduction in cost or communication due to the breakup of AT&T

What does GEM capture?

The creation of new firms and the inevitable destruction of inefficient or out modeled existing firms

Why did entrepreneurship increase in the 1970s? Education

There is now widely available education and training for aspiring entreprenuers

What are the main objectives of GEM?

To gather data that measure the entrepreneurial activity of nations and other data related to entrepreneurial activity to determine what national characteristics occur to explain how this is related to different levels of growth

What is the gender distribution of early stage entrepreneurial activity?

Women are less inclined than men to engage in entrepreneurship but women in factor-driven economics have the highest TEA rates relative to men

Efficiency-driven economy

a nation where industrialization is becoming the major force providing jobs, revenues, and taxes, and where minimizing costs while maximizing productivity is a major goal

Innovation-driven economy

a nation where the major forces for jobs, revenues, and taxes come from high-value added production based on new ideas and technologies and from professional services based on higher education

Entrepreneur

a person who destroys the existing economic order by introducing new products and services, by introducing new methods of production, by creating new forms of organization, or by exploiting new raw materials

What is GEM a function of?

activities associated with established firms and entrepreneurial ventures

What are the three phases of economic development?

factor driven, efficiency driven, and innovation driven

Owner-managers

managers of a new business that is no more than 3.5 years old

Necessity (TEA)

percentage of the adult population that is trying to start a business because all other options for work are either absent or unsatisfactory

Opportunity (TEA)

percentage of the adult population trying to start a business due to a perceived opportunity

Total Entrepreneurial Activity (TEA)

the percentage of the population of each country between the ages of 18 and 64, who are either a nascent entrepreneur or owner-manager of a new business

entrepreneurial revolution

transformed U.S economy in the late 20th century


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