Part I

The Entrepreneurial Mind-Set

in the 21st Century

Chapter 2
The Entrepreneurial
Mind-Set in
Individuals: Cognition
and Ethics

PowerPoint Presentation by Charlie Cook

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a

publicly accessible website, in whole or in part.
 The Entrepreneurial Mind-Set
• Entrepreneurial Mind-Set
 Describes the most common characteristics
associated with successful entrepreneurs as well as
the elements associated with the “dark side” of
entrepreneurship.
• Who Are Entrepreneurs?
 Independent individuals, intensely committed and
determined to persevere, who work very hard.
 They are confident optimists who strive for integrity.
 They burn with the competitive desire to excel and use
failure as a learning tool.

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–2
 Entrepreneurial Cognition

Social Cognition Entrepreneurial

Cognition
Theory Cognition

The mental functions, Posits that knowledge The knowledge

processes (thoughts), structures (mental structures that people
and states of intelligent models of cognitions) can use to make
humans—attention, be ordered to optimize assessments, judgments,
remembering, producing personal effectiveness or decisions involving
and understanding within given situations. opportunity evaluation,
language, solving venture creation, and
problems, and making growth.
decisions.

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–3
 Metacognitive Perspective
• Cognitive Adaptability
 The ability to be dynamic, flexible, and self-regulating
in one’s cognitions given dynamic and uncertain task
environments.
• Metacognitive Model
 Describes the higher-order cognitive process that
results in the entrepreneur framing a task effectually,
and thus why and how a particular strategy was
included in a set of alternative responses to the
decision task (metacognition).

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–4
Characteristics of the Entrepreneurial Mind-Set
• Determination and • Calculated risk taking
perseverance • High energy level
• Drive to achieve • Creativity and
• Opportunity orientation innovativeness
• Initiative and responsibility • Vision
• Persistent problem solving • Passion
• Seeking feedback • Independence
• Internal locus of control • Team building
• Tolerance for ambiguity

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–5
 Dealing with Failure:
The Grief Recovery Process
• Loss • Restoration
Orientation Orientation
 Involves focusing on  Involves both distracting
the particular loss to oneself from thinking
construct an account about the failure event
that explains why the and being proactive
loss occurred. towards secondary
causes of stress.

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–6
 The Dark Side of Entrepreneurship
• The Entrepreneur’s Confrontation with Risk
 Financial risk versus profit (return) motive varies in
entrepreneurs’ desire for wealth.
 Career risk—loss of employment security
 Family and social risk—competing commitments of
work and family
 Psychic risk—psychological impact of failure on the
well-being of entrepreneurs

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–7
 2.1 Typology of Entrepreneurial Styles

Source: Thomas Monroy and Robert Folger, “A Typology of Entrepreneurial Styles: Beyond
Economic Rationality,” Journal of Private Enterprise 9, no. 2 (1993): 71.
© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–8
 Entrepreneurs: Type A Personalities
(impatient, demanding overstrung)
• Chronic and severe sense of time urgency.
• Constant involvement in multiple projects subject
to deadlines.
• Neglect of all aspects of life except work.
• A tendency to take on excessive responsibility,
combined with the feeling that “Only I am capable
of taking care of this matter.”
• Explosiveness of speech and a tendency to
speak faster than most people.

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–9
 Stress and the Entrepreneur
• Entrepreneurial Stress
 The extent to which entrepreneurs’ work demands
and expectations exceed their abilities to perform as
venture initiators, they are likely to experience stress.

• Sources of Entrepreneurial Stress

 Loneliness
 Immersion in business
 People problems
 Need to achieve
(David P. Boyd and David E. Gumper)
© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–10
 Dealing with Stress

Networking

Exercising Getting away

rigorously from it all

Communicating
Delegating
with employees

Finding satisfaction
outside the company

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–11
 The Entrepreneurial Ego
• Self-Destructive Characteristics
 Overbearing need for control
 Sense of distrust
 Overriding desire for success
 Unrealistic externalized optimism

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 Entrepreneurial Ethics
• Ethics (ethos – mode of conduct)
 Provides the basic rules or parameters for conducting
any activity in an “acceptable” manner.
 Represents a set of principles prescribing a behavioral
code of what is good and right or bad and wrong
 Defines “situational” moral duty and obligations.
• Sources of Ethical Dilemmas
 Pressure from inside and outside interests
 Changes in societal values, mores, and norms
“deciding what is good or right in a dynamic environment
in necessarily situational”
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 Entrepreneurial Ethics (cont’d)
• Ethical rationalizations used to justify
questionable conduct involve believing that the
activity:
 Is not “really” illegal or immoral.
 Is in the individual’s or the firm’s best interest.
 Will never be found out.
 Helps the firm so the firm will condone it.
Think of an unethical practice which became acceptable
in the modern society?

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–14
 Table
2.2 Types of Morally Questionable Acts

Type Direct Effect Examples

Nonrole Against the firm Expense account cheating
Embezzlement
Stealing supplies

Role failure Against the firm Superficial performance appraisal

Not confronting expense account cheating
Palming off a poor performer with inflated praise

Role distortion For the firm Bribery

Price fixing
Manipulating suppliers

Role assertion For the firm Investing in unethically governed countries

Using nuclear technology for energy generation
Not withdrawing product line in face of initial
allegations of inadequate safety

Source: James A. Waters and Frederick Bird, “Attending to Ethics in Management,” Journal of Business Ethics 5 (1989): 494.

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 2.3 Overlap Between Moral Standards and Legal Requirements

Ethical
Dilemmas

Think of a legal requirement that is not necessarily morally acceptable

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 Reasons for Unethical Behaviors Occur

Greed

A reliance on other social Distinctions between

institutions to convey and activities at work and
reinforce ethics activities at home

Survival Lack of a foundation

(bottom-line thinking) in ethics

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 Entrepreneurial Ethics (cont’d)
• Online Ethical Dilemmas in E-Commerce
 Continuing to obtain consumer trust.
 Protecting their business’s online reputation.
 Avoiding tactics that betray trust.
 Continuing to exhibit strong ethical responsibility.
 Establishing an ethical strategy.

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–18
 Establishing a Strategy for an Ethical Venture
• Ethical Code of Conduct
 Is a statement of ethical practices or guidelines to
which an enterprise adheres.

 “Always Do the Right Thing”

© 2017 Cengage Learning ®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2–19