entreprenuership (chapter 5)
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Copyright © 2008 by Nelson, a division of Thomson Canada Limited
ENTREPRENEURSHIP
A PROCESS PERSPECTIVERobert A. BaronScott A. Shane
A. Rebecca Reuber
Slides Prepared by:
Sandra Malach, University of Calgary
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5 Assembling the Team: Acquiring and Utilizing
Essential Human Resources
1
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LEARNING OBJECTIVES1. Explain the difference between similarity and
complementarity and the relevance of these conceptsto the task of choosing cofounders in a new venture.
2. Explain why entrepreneurs should conduct a carefulself-assessment as part of the process of choosingpotential cofounders.
3. Define ―impression management‖ and describe various
tactics used by individuals for this purpose.
4. Define ―self -serving bias‖ and explain how it plays animportant role in perceived fairness.
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LEARNING OBJECTIVES1. Explain the difference between constructive and
destructive criticism.
2. Describe sources of error in the interpretation ofinformation by decision-making groups. Be sure toinclude early favourites, group polarization, andgroupthink.
3. Describe various techniques for countering the
effects of these sources of error.
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―Union may be strength, but it ismere blind brute strength unless
wisely directed.‖
--Samuel Butler, 1882
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ENTREPRENEURIAL TEAMS More than 2/3 of new ventures are
started by teams.
Teams are beneficial if the people worktogether wisely and well
Choose people carefully
Work together effectively
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HUMAN RESOURCES Attributes of co-founders and early
employees are key to success
Knowledge
Skills
Talents
Abilities
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THE APPEAL OF SIMILARITY Similarity leads to liking another person
Almost any kind of similarity will do —similarity with respect to attitudes andvalues, demographic factors, interests,etc.
Such effects are both strong andgeneral
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THE VALUE OF
COMPLEMENTARITY Avoids redundancy.
Provides a wider range of information,skills, aptitudes, and abilities.
The whole is greater than the sum of itsparts.
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RULE FOR FOUNDING TEAMS Don’t yield to the temptation to work
solely with people whose background,
training, and experience is highly similarto your own.
Doing so will be easy and pleasant in
many ways, but it will not provide therich foundation of human resources thenew venture needs.
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CHARACTERISTICS OF
STRONG TEAMS
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FOUNDING TEAMS Business Acumen
Managing, human resources, investors, growth
strategy
Operational Experience
Executing plans – distribution, IT, cash flow
Domain Knowledge Industry knowledge and customer expectations
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KNOW THYSELF We are often unaware of at least some
of the factors that affect our behaviour.
We do not gain knowledge of our majortraits, abilities, or attitudes directly,through reflection.
We gradually gain insight into ourselvesthrough our relations with otherpersons.
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YOUR PERSONAL INVENTORY Knowledge base
Specific skills Motives
Commitment
Personal attributes
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BIG 5
DIMENSIONS OF PERSONALITY Conscientiousness
Extraversion-Introversion
Agreeableness
Emotional stability
Openness to experience
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SIMILARITY ORCOMPLEMENTARITY?
A balanced approach
Focus primarily on complementarity
with respect to knowledge, skills andexperience
Bring similarity into the picture with
respect to personal characteristics andmotives
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―He who knows others is clever; he who
knows himself has discernment.‖ --Lao-Tzu
(Ancient Chinese Philosopher)
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SOCIAL PERCEPTION
The process through which we come toknow and understand other persons.
Proficiency will result in greater financialsuccess.
The difficulty is that other people do not
always portray themselves accurately.
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Impression Management
Self-enhancement - efforts toincrease appeal to others
Other-enhancement – tactics toinduce positive moods andreactions in others.
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SELF-ENHANCEMENTTACTICS
Boost physical appearance
Appear highly skilled
Describe self in positiveterms
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OTHER-ENHANCEMENTTACTICS
Flattery
Expressing agreement
Showing high degree of interest
Doing small favours
Asking for advice or feedback Using nonverbal signals
Intimidation
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DUE DILIGENCE
Failing to recognize impressionmanagement techniques can lead
entrepreneurs to make poor choices asthey assemble their initial team.
Don’t accept information or appearance
without checking it out.
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DECEPTION
Commonly confronted
Avoid being a victim of deception by
exercising due diligence
Avoid engaging in deception – it isunethical.
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―I try to balance sincerity against trust.If entrepreneurs are being super-
optimistic, I don’t mind, as long as Ithink, they are also sincere. If I thinkthey are trying to mislead me, though,
trust flies out the window and the gameis over as far as I’m concerned.‖
(a venture capitalist)
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FOUNDING TEAM RELATIONSHIPS
Three factors are crucial in developingstrong working relationships among the
team: Clear initial assignment of roles
Careful attention to perceived fairness
Effective communication
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COHESIVE FOUNDING TEAM
Founders must work together in aneffective manner
High levels of cohesion were associatedwith superior financial performance
Integration can improve effectiveness
of a firm’s ability to internationalize
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ROLES
The set of behaviours that individualsoccupying specific positions within a
group are expected to perform, and theauthority or jurisdiction they will wield.
Divide responsibilities and authority
following the principle ofcomplementarity.
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SELF-SERVING BIAS
The tendency to attribute successfuloutcomes largely to internal causes, but
unsuccessful ones largely to externalcauses
Often leads people to conclude that
they have not been treated fairly
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SELF-SERVING BIAS &PERCEIVED UNFAIRNESS
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EFFECTIVE COMMUNICATION
Constructive
Is considerate
Doesn’t threaten Is timely
Doesn’t blame
Is specific
Offers concretesuggestions forimprovement
Destructive
Is harsh
Contains threats Is not timely
Blames
Is not specific
Offers no concreteideas forimprovement
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GROUP DECISION MAKING
Factors that can distort theinterpretation of information
Early favourites
Group polarization
Groupthink
Ignoring unshared information
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IMPROVING GROUP DECISIONS
Devil’s advocate technique
List all pertinent information known
prior to the discussion
Board of Advisors
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