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CHAPTER 9

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CHAPTER 9 LEARNING OBJECTIVES

After studying this chapter, you should be able to:

1. Define entrepreneurship, entrepreneurs, and entrepreneurial firms.

2. Identify the institutions and resources that affect entrepreneurship.

3. Identify three characteristics of a growing entrepreneurial firm.

4. Describe how international strategies for entering foreign markets are different from those for staying in domestic markets.

5. Articulate what you should do to strengthen your entrepreneurial ability on an international level.

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LO1: ENTREPRENEURSHIP

Terms to Know Entrepreneurship Entrepreneurs International

entrepreneurship

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LO2: INSTITUTIONS, RESOURCES, AND ENTREPRENEURSHIP

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LO2: FORMAL INSTITUTIONS AND ENTREPRENEURSHIP

Whether entrepreneurship is facilitated or retarded significantly depends on formal institutions governing how entrepreneurs start up new firms.

© iStockphoto.com/Vikram Raghuvanshi Photography

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LO2: INFORMAL INSTITUTIONS AND ENTREPRENEURSHIP

Individualistic, low uncertainty-

avoidance societies tend to foster

more entrepreneurs than collectivistic,

high uncertainty-avoidance societies.

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LO2: RESOURCES AND ENTREPRENEURSHIP

Entrepreneurial resources must be…

Valuable Rare Inimitable Organized

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LO3: CHARACTERISTICS OF A GROWING ENTREPRENEURIAL FIRM

Growth

Innovation

Financing

Internationalization

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LO3: FINANCING THE ENTREPRENEURIAL FIRM

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LO3: FINANCING THE ENTREPRENEURIAL FIRM

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LO4: INTERNATIONALIZING THE ENTREPRENEURIAL FIRM

MYTH: Only large MNEs do business abroad; SMEs operate domestically

Born global firms: start-ups that do international business from inception

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LO4: ENTERING FOREIGN MARKETS

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LO4: AN EXPORT-IMPORT TRANSACTION

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LO4: STAGE MODEL Suggests that required level of complexity and resources increase as firm moves from direct export to licensing to FDI.

But, there are many counter-examples (born global firms).

The key to rapid internationalization–the international experience of the entrepreneurs.

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LO4: STAYING IN DOMESTIC MARKETS

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LO5: ENCOURAGING ENTREPRENEURISHIP ON AN INTERNATIONAL LEVEL

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DEBATE: MICROFINANCE: MACRO SUCCESS OR GLOBAL MESS?

Recent IPOs of microfinance institutions have sparked controversy over the ethics of shareholders profiting from the poor. During the 2008-2009 crisis, default rates skyrocketed, leaving many borrowers burdened with crippling amounts of debt.

Muhammad Yunus pioneered microfinance, a system for providing small loans to poor people in places like rural India (primarily to women or village collectives), which can be used to make small capital investments (cows, cell phones) for entrepreneurial activities.

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