haris papoutsakis, mba, phd technological education...

MOTIVATE MOTIVATE

“Entrepreneurship Supported by Information & Communication Technologies: New Modules for Initial Teacher Training ”

MOTIVATE LLP Conference – Budapest & Dunaujvaros, November 2008

Haris Papoutsakis, MBA, PhDTechnological Education Institute of Crete

Heraklion, Crete, [email protected]

SUMMARY1. Introduction

2. The Economics of Entrepreneurship

3. Critical Factors3.1 Start-up capital and Leadership


4. Information & Communication Technologies4.1. Entrepreneurship and ICTs

6. Conclusions

5. Educating Entrepreneurs

1. IntroductionA historic flashback

The term was first introduced early in the 18th century(Richard Cantillon, Irish economist with French ancestors)

Won broader acceptance during the 19th century(John Stuart Mill, Principles of Political Economy, 1848)

Then, it disappeared until early in the 20th century(Frank H. Knight redefined it by distinguishing betweenrisk, which is insurable, and uncertainty, which is not)


A historic flashback (2)For Joseph Alois Schumpeter

(also early in the 20th century)“An entrepreneur destroys the existing economic orderby introducing new products and services, by creating newforms of organisations, or by exploiting new materials”


But still, right after World-War II, entrepreneurship was only seriously discussed within a small group ofacademics involved in the study of ‘small businesses’For many others, entrepreneurs were people who starttheir own business in order to avoid getting a job!

The entrepreneurial decadesDuring the 1980s, the view points changed:

To some, entrepreneurs are those who form a new businessthat prosper and create new employment (like Bill Gates ofMicrosoft, Steve Jobs and Steve Wozniak of Apple)Others view as entrepreneurs and the corporate managers

who achieve outstanding success for their firms (like Harold Genin of IT&T, Lee Iacocca of Chrysler)


Irrespectively of the definition, facts indicate that: - in the USA economy, 21M jobs were created in the 80s, with

a 94% of those generated by the 15% of entrepreneurial firms- at the same period, 3.5M jobs were eliminated by

Fortune 500 companies (Birch, 1987)

The entrepreneurial decades (2)

During the 1990s:In eastern Europe approximately 7M entrepreneurswere striving, to transform the command economies of the post communist nations into free markets,and...

Recently, even China recognised the importance of entrepreneurs, by accepting them as members of the communist party


2. The economics of entrepreneurship

Entrepreneurs are considered the natural leadersof the economic life in today’s industrial world

However, one-sided knowledge of economic processesis not sufficient to maintain this leadership in the long run

Narrow-minded specialists with partial educationcannot successfully lead complex undertakings (i.e. economic ventures)

Entrepreneurs have to be the specialists onmuch broader issues


The economics of entrepreneurship (2)

how a society creates new wealth, and...

how this is distributed among its members

(Kirchoff, 1994)


The economics of entrepreneurship are very important to the economic development and social welfare of a nation, as they affect the two major questions:


But… neoclassical theory has always had its critics; many classical economists objected to the absence of entrepreneurship from the neoclassical model

Entrepreneurs were practically deleted under theneoclassical perspective (many buyers and many sellerswho interact so as to ensure that supply equals demand)


The classical capitalism theory (owners of land, buildings, machinery and capital can create profits for themselves) spawned entrepreneurship and gave to entrepreneurs a sense of purpose and accomplishment



Since 1979 (when the MIT business demographer David Birch, published his report) entrepreneurs:

are considered the creators of wealth through innovation;

they are at the centre of job and economic growth;

they represent a mechanism of fair wealth distributionthat depends on innovation, hard work and risk taking

3. Critical factorsIs entrepreneurship a talent...

...or a science that can be taught?

In the mid 80s many academics maintainedthat entrepreneurship could not be taughtBut… in the mid 90s it became an importantsubject in the major business schools curricula


Courses on entrepreneurship were introduced evenat the People’s University of Beijing early in the 90sThe process of creating a new, innovative business is well understood and, thus, it can be taught

The Entrepreneurial Process

Moore’s (1986) model of the entrepreneurial process:

starts with the innovative ideaof the entrepreneur and

is almost always followed by a triggering event(that gives birth to a new organisationthat will implement the idea)

in the hope that significant growth will eventually close the circle of the model


The Entrepreneurial Process (2)For Bygrave (1994):

“the entrepreneurial process involves all the functions,activities, and actions associated with perceiving opportunities and creating organizations to pursue them”

He recognizes a number of personal, sociological, and environmental factors that are critical upon establishing a new enterprise, like family status, rolemodels to which he/she is exposed, alternative career options, the economical situation and, last but not least, the availability of resources


External Factors

External, environmental influences are as important as the personal attributes for a would-be entrepreneur:

Some distinct areas of the world are definitely moreentrepreneurial than others (i.e. East Cambridge nextto MIT and the Silicon Valley next to Stanford University)

Having successful entrepreneurs into their close homeor work environments is another strong factor that generates the desire to would-be entrepreneursto become one


Family and the DNA

Bygrave (1994), reports that at Babson College morethan half of the students studying entrepreneurshipcome from families that own businesses

On the contrary, for Schumpeter, people with the right DNA (children and grandchildren of successful entrepreneurs) are very often seduced by inherited wealth and occasionally fail as second generationentrepreneurs!!

(Capitalism, Socialism and Democracy, 1942)


3.1 Start-up capital and leadership

Raising the start-up capital was a critical questionto be answered by the entrepreneurs of the 80s

Some striking examples have been given special attention:

Olsen and Anderson started DEC with only 70,000 US $and built a company ranking in the top 25 of Fortune 500

Jobs and Wozniak used as start-up capital for Apple the1,300 US $ raised by selling Job’s Volkswagen andWozniak’s calculator


Start-up capital

But for the majority of the entrepreneurs, there are two options left: debt or equity

by choosing debt start-up capital, they maintain total business ownership but are burdened with bankinterest and eventually have to pay back the initial capitalby choosing equity, they prefer to give up some of thebusiness ownership in order not to have to repay the start-up capital


LeadershipLeadership, also, largely differentiates the entrepreneur from the non-entrepreneur

HR management researchers distinguish two rolesthat effective entrepreneurs should undertake:

the charismatic role (envisioning, empowering, energising)the architectural role (design of the organizational structure

and setting of the appropriate control and reward systems)(Kets de Vries and Balazs, 1999)


The ability of the entrepreneur to balance amid these two roles appeared critical for the success of the enterprise as each one affects different functions of the organization

Entrepreneurs and Knowledge

In order to connect the above raised entrepreneurial problems with knowledge and its management, we must first define a certain number of ‘knowledge domains’in which the entrepreneur can target himself in particular

Beijerse (2000) defines three such domains: OrganisationMarketingTechnology


Three ‘knowledge domains’K in the organisation is applied to all levels of management (strategic, tactical and operational),policies, company culture, and human resources


K in the area of marketing can be relatedto markets, competition, customers, sales, distribution channels, and target groups

Technological K is closely associatedwith core competences, product R&D, ICTs

In modern entrepreneurial or not organizations, effective use of ICTs is considered among the key variables that are driving competitiveness


Porter and Millar (since 1985!!) warned that:

“Information Technology is more than just computers”

4. Information & Communication Technologies

What are the ICTs

ICTs are “…the capabilities offered by computers, software applications, and telecommunications”

Davenport & Short (1990)

ICTs are: “…computing, communications, business solutions and services…”

Applegate, McFarlan & McKenney (1999)


4.1. Entrepreneurship and ICTs

Expanded public and private ICT-networks meanthat any information is made available at any time, anywhere and at a reasonable cost

This enormous speed-up in the flow of work is made possible by ICTs, in a number of ways:


• Within the manufacturing area, at both ends of thevalue chain, using Local Area Networks (LANs)in order to connect design, manufacturing, R&D, quality and purchasing

Entrepreneurship and ICTs (2)

• Wireless Local Area Networks (WLANs) provide

always-on, anywhere communication capabilitiesto users who are within range of a WLAN node

• Inter-organizational links (i.e. supplier to buyer)in the form of electronic Just-In-Time (e-JIT) orElectronic Data Interchange (EDI) are shifting theboundaries of the entrepreneurial organization


5. Educating Entrepreneurs

We have noted close link between:- entrepreneurs and innovation,

- innovation and information & knowledge

This raises the question: ‘Is the world educational system, today–secondary, higher, vocational & organisational–capable to educate would-be entrepreneurs?’


Educating Entrepreneurs (2)Good education and wide practical experience

help the entrepreneur to interpret varied kindsof Information and Knowledge

Enhancing educators, by adding new modules intheir ITT is a significant step towards this direction


Based on the previous discussion we propose twoexisting -in the ITT curricula- modules to be enhanced:

Modules to be enhanced

1. Fundamentals of EconomicsShould now include topics like the economics ofentrepreneurship, financial planning and budgeting

2. Fundamentals of ManagementShould now include topics like programming andplanning, innovation management, leadership, Human Resource & risk management


New modules to be added

Based also on the previous discussion we proposethree new modules to be added, in the ITT curricula:

1. Entrepreneurship (analysis of the entrepreneurial process, entry strategies, opportunity recognitionand marketing).

Issues like financial projections, dept, legal and tax,venture capital, financing and franchising should also be addressed, at least in principal


New modules to be added (2)

2. Information & Communication Technologiesis a module that appears only in certain curriculaEmphasis to be given on conversion, storage &processing of data using modern s/w packages

Depending on the speciality & the level of education, emphasis should be on the effective use of advancedcommunication capacities (i.e. e-conferencing,groupware, etc.), networking (i.e. LANs, WLANs),and certain s/w applications (i.e. e-JIT, EDI, etc.)


New modules to be added (3)

3. Fundamentals of Social & Industrial PsychologyBasic knowledge of personal attributes, sociological &environmental concerns, as applied to the fields ofcommercial and industrial psychology


6. Conclusions

We have emphasized on the issue of education& training and we have demonstrated that:

there is a lot for a small business owner to learnin order to convert his/her entrepreneurial small business into a successful organization

We have proposed existing modules to be enhancedand new ones to be introduced at the ITT curricula


Conclusions (2)

We believe that this is a very safe wayfor new, entrepreneurial, economical, managerial, socio-psychological and ICT-based competencesto reach the would-be entrepreneur on time;

that means before the moment she/he will be required to demonstrate them all in practice !


And a general ‘conclusion’

Successful transformation of entrepreneurialfirms into organisations that make

good use of ICTs will grant to small businesses access to everything thatin the past, only big businesses could own!!


MOTIVATEMOTIVATE


THANK YOU for your

ATTENTION

Haris Papoutsakis, MBA, PhDTEI of Crete, [email protected]@yahoo.com

haris papoutsakis, mba, phd technological education...

Documents