Profits must exceed some minimum threshold in order to compensate the entrepreneurs (the opportunity seekers) for their efforts. Relevant Performance Measures for Entrepreneurs 1. Opportunity cost – giving up a regular salary and holidays. 2. Liquidity premium – investing your own money building prototypes & spending time networking. 3. Risk premium – In economics, risk denotes possibility of a loss. A patent protects successful a product, thus risk premium is low. 4. Uncertainty premium – Uncertainty is high if entrepreneur has no prior experience of the industry.
Entrepreneurs in a Social Context Three features of a person’s social context are important to the perception of entrepreneurial opportunities and the decision to seize them: 1. The stage of life 2. Position in social networks 3. Ethnicity 1-Stage of Life and Entrepreneurial Behaviour There is no general theory indicating the stage of life that is best for launching a business venture, but empirical research has shown that most entrepreneurs are: - Male (women’s participation rate about half of men across all countries – source Global Entrep. monitor) - Post-secondary education - Aged between 25-44 - Established career record 2-Social Networks and Entrepreneurial Behaviour The networks that entrepreneurs build for themselves stand out in a number of respects: - networks are genuinely personal - spatial dimension (time and place) is relevant – clubs, school, university, work,… - active content of an entrepreneur’s network must vary over time to be dynamic Networks are important in both Western and Eastern cultures. However, they are central to Eastern cultures and particularly to the Chinese 3-Ethnicity and Entrepreneurship Ethnic entrepreneurship can be a response to the lack of opportunities in the dominant culture/country. In this case, entrepreneurship is very often triggered by a variety of ‘Push factors’, such as limited opportunities, discrimination, lack of recognition of qualifications,… ‘Pull factors’ can also be important, such as the presence of entrepreneurs in the family as role models; high social status given to entrepreneurs in migrant families; availability of resources in the ethnic network.
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