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Entrepreneurial resources

Entrepreneurial resources. And competitive advantage A summary of Brush, Greene, and Hart, 2001 Brush, C.G., Greene, P.G., Hart, M.M. 2001. From initial idea to unique advantage: The entrepreneurial challenge of constructing a resource base. Academy of Management Executive , 15(1):64-78.

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Entrepreneurial resources

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  1. Entrepreneurial resources And competitive advantage A summary of Brush, Greene, and Hart, 2001 Brush, C.G., Greene, P.G., Hart, M.M. 2001. From initial idea to unique advantage: The entrepreneurial challenge of constructing a resource base. Academy of Management Executive, 15(1):64-78.

  2. Introduction: From initial idea to unique advantage • Before there is a company, there is an entrepreneur with an idea – the idea may meet a perceived market opportunity, solve a social problem, or be just a better way of doing things • One of the first challenges is deciding which resources to focus on when building an initial resource base • Start-ups lack operating history, have no customer base, no reputation for performance, and often no shared experience (among founding team members) • Every year a majority of start-ups fail or cease operations because of ineffective management, lack of capital, human failings, or inability to attract and retain talented people • Start-ups need to focus on creating unique capabilities rooted in innovative combinations of resources

  3. Entrepreneurial resources • Entrepreneurship is a process of starting up and growing • These processes emphasize importance of money, people, information, etc. that must be acquired to launch and grow new venture • The entrepreneur is the primary resource, and his/her expectations about the future drive decisions about strategic direction (and therefore resource accumulation) • Constructing an initial resource base requires that resources be identified, assembled, and acquired to meet a perceived opportunity before they can be used to execute the strategy

  4. What resources? • Human • Social • Physical • Financial • Technological • Organizational

  5. Resource attributes: simple versus complex Simple Complex Intangible Systemic Knowledge-based Example: human resources are difficult to identify and measure plus largely intangible • Tangible • Discrete • Property-based • Example: financial resources are quantifiable and tangible

  6. Resource attributes: utilitarian vs instrumental Utilitarian Instrumental Used specifically to provide access to other resources Example: financial resources • Applied directly to the productive process or combined to develop other resources • Examples: machinery, trucks, office space

  7. Jeff Hawkins and Donna Dubinsky

  8. Jeff Hawkins 1992 – Palm Computing 1998 - Handspring Tech knowledge, management experience, management team, personal money, deeper understanding of customer needs and suppliers No business plan, product, or patents Launched Handspring without using outside investors and leveraged shared team experience • Excellent reputation and tech knowledge • Patent for handwriting algorithm • No $, management experience, business plan, management team, or product • Leveraged his knowledge, reputation, and relationships to get access to human, physical, and financial resources to build Palm

  9. Resource development at Palm Computing Starting resource base

  10. Resource development at Handspring Starting resource base

  11. Resource pyramid of value creation Strategic assets that are valuable, rare, and costly to imitate Core competencies that contribute to value-creating aspects of competitive advantage Capabilities that are crucial to firm’s mission and executed consistently well Combinations of generic resources that enhance firm’s abilities Easy to identify and access, given sufficient capital

  12. How entrepreneurs identify and develop resources • Assembling – first resources are entrepreneur’s education, experience, reputation, network contacts, industry knowledge • Attracting – start-up’s lack of reputation and track record heightens perception of risk on the part of potential resources providers – entrepreneurs act as if they were trustworthy through business plans or facilities to create an image of success • Combining – decisions about how to combine resources directly affects further development of the resource base – entrepreneurs have different beliefs • Transforming personal resources into organizational ones – the entrepreneur institutionalizes his/her knowledge, capabilities, and vision to provide for continued growth and greater complexity and value

  13. The entrepreneurial challenge • A new idea can become a great success story and result in significant wealth creation if a company’s resource position is strategically developed from the time of its initial launch • Entrepreneurs in start-ups must first construct their resource base and build a foundation from which capabilities can be developed • The resource development pathway is a tool for analyzing the resource development trajectory based on resource types, dimensions, and applications • The resource pyramid of value creation can show the level of resource development and create a strategy for extending personal resources to organizational resources and a unique advantage

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