AND INNOVATION TOOLKIT, 3rd Edition
LEE A. SWANSON
Copyright:2017 by Lee A. Swanson.
CC BY-SA 2017 by Lee Swanson
Entrepreneurship and Innovation Toolkit by Lee A. Swanson is licensed under a Creative Commons AttributionShareAlike 4.0 International License, except where otherwise noted.
TABLE OF CONTENTS
CHAPTER 1 – INTRODUCTION TO ENTREPRENEURSHIP
Considerations Inﬂuencing Deﬁnitions of Entrepreneur and Entrepreneurship
Examples of Deﬁnitions of Entrepreneur
Examples of Deﬁnitions of Entrepreneurship
The Evolution of Entrepreneurship Thought
Basic Questions in Entrepreneurship Research
The Language of Entrepreneurship
CHAPTER 2 – OPPORTUNITY RECOGNITION AND DESIGN THINKING
CHAPTER 9 – INNOVATION AND ENTREPRENEURSHIP
Innovation and Entrepreneurship
Competencies and Core Competence
Elements of Innovation
Entrepreneurship and Innovation Toolkit
Lee A. Swanson
Publication Date 2017
I am thankful for the feedback provided by my students over the past many years as they used previous versions of
this book. Its current form reﬂects their suggestions and advice.
Thanks also to Grant Wilson for his help in converting this book from its print form into this open access format.
The business world is often equated to an ecosystem, such that the environment is comprised of interacting
organizations and individuals much like the biological ecosystem (Moore, 1993). Entrepreneurship is no diﬀerent, as
it can be thought of as its own ecosystem, with new ventures being created, some maturing, others needing to
adapt, or some becoming extinct. Much like the biological ecosystem, in the entrepreneurial ecosystem change
occurs and gives rise to opportunity or presents challenges. It is important to consider the various levels of the
ecosystem when evaluating the entrepreneurial environment. For example, the ecosystems can be analyzed at a
macro level such as the terrestrial ecosystem in biology or the national economy in entrepreneurship. Additionally,
ecosystems can be analyzed at more micro levels like the rain forest ecosystem in biology or the ﬁrm level in
Whilst there is no universal readily accepted deﬁnition of the concept of entrepreneurship, it is fair to say that it is
multi–dimensional. It involves analyzing people and their actions together with the ways in which they interact with
their environments, be these social, economic or political, as well as the institutional, policy and legal frameworks
which help deﬁne and legitimize human activities (Blackburn, 2011, p. xiii).
Entrepreneurship involves such a range of activities and levels of analysis that no single deﬁnition is deﬁnitive
(Lichtenstein, 2011, p. 472).
Entrepreneurship is complex, chaotic, and lacks any notion of linearity. As educators, we have the responsibility to
develop the discovery, reasoning, and implementation skills of our students so they may excel in highly uncertain
environments (Neck & Greene, 2011, p. 55).
Chapter 1 – Introduction to Entrepreneurship
Whilst there is no universally readily accepted deﬁnition of the concept of entrepreneurship, it is fair to say that
it is multi-dimensional. It involves analyzing people and their actions together with the ways in which they
interact with their environments, be these social, economic or political, as well as the institutional, policy and
legal frameworks which help deﬁne and legitimize human activities (Blackburn, 2011, p.xiii).
Entrepreneurship involves such a range of activities and levels of analysis that no single deﬁnition is deﬁnitive
(Lichtenstein, 2011, p. 472).
Entrepreneurship is complex, chaotic, and lacks any notion of linearity. As educators, we have the
responsibility to develop the discovery, reasoning, and implementation skills of our students so they may
excel in highly uncertain environments (Neck & Greene, 2011, p. 55).
After completing this chapter you will be able to:
Examine the challenges associated with deﬁning the concepts of entrepreneur and entrepreneurship.
Discuss how the evolution of entrepreneurship thought has inﬂuenced how we view the concept of
Discuss how the list of basic questions in entrepreneurship research can be expanded to include research
inquiries that are important in today’s world.
Discuss how the concepts of entrepreneurial uniqueness, entrepreneurial personality traits, and
entrepreneurial cognitions can help society improve its support for entrepreneurship.
Apply the general venturing script to the study of entrepreneurship.
Apply the language of entrepreneurship.
This chapter provides you with an overview of entrepreneurship and of the language of entrepreneurship. The
challenges associated with deﬁning entrepreneur and entrepreneurship are explored as is an overview of how
entrepreneurship can be studied.
The objective is to enable you to apply current concepts in entrepreneurship to the evaluation of entrepreneurs, their
ventures, and the venturing environment. You will develop skills, including the capability to add value in the new
venture sector of the economy. You will acquire and practice evaluation skills useful in consulting, advising, and in
making new venture decisions.
Considerations Inﬂuencing Deﬁnitions of Entrepreneur and Entrepreneurship
It is necessary to be able to determine exactly who entrepreneurs are before we can, among other things, study them,
count them, provide special loans for them, and calculate how and how much they contribute to our economy.
Does someone need to start a business from scratch to be called an entrepreneur?
Can we call someone an entrepreneur if they bought an ongoing business from someone else or took
over the operations of a family business from their parents?
If someone starts a small business and never needs to hire employees, can they be called an
If someone buys a business but hires professional managers to run it so they don’t have to be involved
in the operations, are they an entrepreneur?
Is someone an entrepreneur if they buy into a franchise so they can follow a well-established formula for
Is someone an entrepreneur because of what they do, or because of how they think?
Can someone be an entrepreneur without owning their own business?
running the operation?
Can a person be an entrepreneur because of the nature of the work that they do within a large corporation?
It is also necessary to fully understand what we mean by entrepreneurship before we can study the concept.
Gartner (1990) identiﬁed 90 attributes that showed up in deﬁnitions of entrepreneurs and entrepreneurship provided
by entrepreneurs and other experts in the ﬁeld. The following are a few of these attributes:
Innovation – Does a person need to be innovative or not to be considered an entrepreneur? Can an
activity be considered to be entrepreneurial if it is not innovative?
Activities – What activities does a person need to do to be considered an entrepreneur?
Creation of a new business – Does someone need to start a new business to be considered to be an
entrepreneur, or can someone who buys a business, buys into a franchise, or takes over an existing
family business be considered an entrepreneur?
Starts an innovative venture within an established organization – Can someone who works within an existing
organization that they don’t own be considered an entrepreneur if they start an innovative venture for their
Creation of a not-for-proﬁt business – Can a venture be considered to be entrepreneurial if it is a not-for-proﬁt,
or should only for-proﬁt businesses be considered entrepreneurial?
After identifying the 90 attributes, Gartner (1990) went back to the entrepreneurs and other experts for help in
clustering the attributes into themes that would help summarize what people concerned with entrepreneurship
thought about the concept. He ended up with the following 8 entrepreneurship themes:
1. The Entrepreneur:
The entrepreneur theme is the idea that entrepreneurship involves individuals with unique personality characteristics
and abilities…. (e.g., risk taking, locus of control, autonomy, perseverance, commitment, vision, creativity).… Almost
50% of the respondents rated characteristics of the entrepreneur as not important to a deﬁnition of entrepreneurship
(Gartner, 1990, pp. 21, 24).
“The question that needs to be addressed is: Does entrepreneurship involve entrepreneurs (individuals with
unique characteristics)” (Gartner, 1990, p. 25)?
The innovation theme is characterized as doing something new as an idea, product, service, market, or technology in
a new or established organization…. The innovation theme suggests that innovation is not limited to new ventures,
but recognized as something which older and/or larger organizations may undertake as well (Gartner, 1990, p. 25).
Some of the experts questioned by Gartner believed that it was important to include innovation in deﬁnitions
of entrepreneurship, and others did not think it was as important.
“Does entrepreneurship involve innovation” (Gartner, 1990, p. 25)?
3. Organization Creation
The organization creation theme described the behaviors involved in creating organizations. This theme described
acquiring and integrating resource attributes (e.g., Brings resources to bear . . . , Integrates opportunities with
resources . . . , Mobilizes resources, gathers resources) as well as attributes that described creating organizations (New
venture development and The creation of a business that adds value). (Gartner, 1990, p. 25)
“Does entrepreneurship involve resource acquisition and integration (new venture creation activities)”
(Gartner, 1990, p. 25)?
4. Creating Value
This theme articulated the idea that entrepreneurship creates value. The attributes in this factor indicated that value
creation might be represented by transforming a business, creating a new business growing a business, creating
wealth, or destroying the status quo. Does entrepreneurship involve creating value (Gartner, 1990, p. 25)?
5. Proﬁt or Nonproﬁt
“Does entrepreneurship involve proﬁt-making organizations only” (Gartner, 1990, p. 25)?
Should a focus on growth be a characteristic of entrepreneurship?
This theme suggested that entrepreneurship must involve uniqueness. Uniqueness was characterized by attributes
such as a special way of thinking, a vision of accomplishment, ability to see situations in terms of unmet needs, and
creates a unique combination. Does entrepreneurship involve uniqueness (Gartner, 1990, p. 26)?
8. The Owner-Manager
• Some of the respondents questioned by Gartner (1990) did not believe that small mom-and-pop types of
businesses should be considered to be entrepreneurial.
• Some respondents felt that an important element of a deﬁnition of entrepreneurship was that a venture be
• To be entrepreneurial, does a venture need to be owner-managed?
Examples of Deﬁnitions of Entrepreneur
An entrepreneur can be described as “one who creates a new business in the face of risk and uncertainty for the
purpose of achieving proﬁt and growth by identifying signiﬁcant opportunities and assembling the necessary
resources to capitalize on them” (Zimmerer & Scarborough, 2008, p. 5).
An entrepreneur is “one who organizes, manages, and assumes the risks of a business or enterprise” (Entrepreneur,
Examples of Deﬁnitions of Entrepreneurship
Entrepreneurship can be deﬁned as a ﬁeld of business that does the following:
seeks to understand how opportunities to create something new (e.g., new products or services, new
markets, new production processes or raw materials, new ways of organizing existing technologies)
arise and are discovered or created by speciﬁc persons, who then use various means to exploit or
develop them, thus producing a wide range of eﬀects (Baron, Shane, & Reuber, 2008, p. 4)
A concise deﬁnition of entrepreneurship “is that it is the process of pursuing opportunities without limitation by
resources currently in hand” (Brooks, 2009, p. 3).
“Entrepreneurship is the process of doing something new and something diﬀerent for the purpose of creating wealth
for the individual and adding value to society” (Kao, 1993, p. 70)
The Evolution of Entrepreneurship Thought
This section includes an overview of how entrepreneurship has evolved to the present day.
The following time line shows some of the most inﬂuential entrepreneurship scholars and the schools of thought
(French, English, American, German, and Austrian) their perspectives helped inﬂuence and from which their ideas
evolved. Schools of thought are essentially groups of people who might or might not have personally known each
other, but who shared common beliefs or philosophies.
Figure 1 – Historical and Evolutionary Entrepreneurship Thought
The Earliest Entrepreneurship
The function, if not the name, of the entrepreneur is probably as old as the institutions of barter and exchange. But
only after economic markets became an intrusive element of society did the concept take on pivotal importance.
Many economists have recognized the pivotal role of the entrepreneur in a market economy. Yet despite his central
importance in economic activity, the entrepreneur has been a shadowy and elusive ﬁgure in the history of economic
theory (Hebert & Link, 2009, p. 1).
Historically those who acted similarly to the ways we associate with modern day entrepreneurs – namely those who
strategically assume risks to seek economic (or other) gains – were military leaders, royalty, or merchants. Military
leaders planned their campaigns and battles while assuming signiﬁcant risks, but by doing so they also stood to gain
economic beneﬁts if their strategies were successful. Merchants, like Marco Polo who sailed out of Venice in the late
1200s to search for a trade route to the Orient, also assumed substantial risks in the hope of becoming wealthy
(Hebert & Link, 2009).
The entrepreneur, who was also called adventurer, projector, and undertaker during the eighteenth century, was not
always viewed in a positive light (Hebert & Link, 2009).
Development of Entrepreneurship as a Concept
Risk and Uncertainty
Richard Cantillon (1680-1734) was born in France and belonged to the French School of thought although he was an
Irish economist. He appears to be the person who introduced the term entrepreneur to the world. “According to
Cantillon, the entrepreneur is a specialist in taking on risk, ‘insuring’ workers by buying their output for resale before
consumers have indicated how much they are willing to pay for it” (Casson & Godley, 2005p. 26). The workers’
incomes are mostly stable, but the entrepreneur risks loss if market prices ﬂuctuate.
Cantillon distinguished entrepreneurs from two other classes of economic agents; landowners, who were ﬁnancially
independent, and hirelings (employees) who did not partake in the decision-making in exchange for relatively stable
incomes through employment contracts. He was the ﬁrst writer to provide a relatively reﬁned meaning for the term
entrepreneurship. Cantillon described entrepreneurs as individuals who generated proﬁts through exchanges. In the
face of uncertainty, particularly over future prices, they exercise business judgment. They purchase resources at one
price and sell their product at a price that is uncertain, with the diﬀerence representing their proﬁt (Chell, 2008;
Hebert & Link, 2009).
Farmers were the most prominent entrepreneurs during Cantillon’s lifetime, and they interacted with “arbitrageurs” –
or middlemen between farmers and the end consumers – who also faced uncertain incomes, and who were also,
therefore, entrepreneurs. These intermediaries facilitated the movement of products from the farms to the cities
where more than half of the farm output was consumed. Cantillon observed that consumers were willing to pay a
higher price per unit to be able to purchase products in the smaller quantities they wanted, which created the
opportunities for the intermediaries to make proﬁts. Proﬁts were the rewards for assuming the risks arising from
uncertain conditions. The markets in which proﬁts were earned were characterized by incomplete information (Chell,
2008; Hebert & Link, 2009).
Adolph Reidel (1809-1872), form the German School of thought, picked up on Cantillon’s notion of uncertainty and
extended it to theorize that entrepreneurs take on uncertainty so others, namely income earners, do not have to be
subject to the same uncertainty. Entrepreneurs provide a service to risk-averse income earners by assuming risk on
their behalf. In exchange, entrepreneurs are rewarded when they can foresee the impacts of the uncertainty and sell
their products at a price that exceeds their input costs (including the ﬁxed costs of the wages they commit to paying)
(Hebert & Link, 2009).
Frank Knight (1885-1972) founded the Chicago School of Economics and belonged to the American School of thought.
He reﬁned Cantillon’s perspective on entrepreneurs and risk by distinguishing insurable risk as something that is
separate from uncertainty, which is not insurable. Some risks can be insurable because they have occurred enough
times in the past that the expected loss from such risks can be calculated. Uncertainty, on the other hand, is not
subject to probability calculations. According to Knight, entrepreneurs can’t share the risk of loss by insuring
themselves against uncertain events, so they bear these kinds of risks themselves, and proﬁt is the reward that
entrepreneurs get from assuming uninsurable risks (Casson & Godley, 2005).
Distinction Between Entrepreneur and Manager
Jean-Baptiste Say (1767-1832), also from the French School, advanced Cantillon’s work, but added that
entrepreneurship was essentially a form of management. Say “put the entrepreneur at the core of the entire process
of production and distribution” (Hebert & Link, 2009, p. 17). Say’s work resulted in something similar to a general
theory of entrepreneurship with three distinct functions; “scientiﬁc knowledge of the product; entrepreneurial
industry – the application of knowledge to useful purpose; and productive industry – the manufacture of the item by
manual labour” (Chell, 2008, p. 20).
Frank Knight made several contributions to entrepreneurship theory, but another of note is how he distinguished an
entrepreneur from a manager. He suggested that a manager crosses the line to become an entrepreneur “when the
exercise of his/her judgment is liable to error and s/he assumes the responsibility for its correctness” (Chell, 2008, p.
33). Knight said that entrepreneurs calculate the risks associated with uncertain business situations and make
informed judgments and decisions with the expectation that – if they assessed the situation and made the correct
decisions – they would be rewarded by earning a proﬁt. Those who elect to avoid taking these risks choose the
relative security of being employees (Chell, 2008).
Alfred Marshall (1842-1924), from the English School of thought, was one of the founders of neoclassical economics.
His research involved distinguishing between the terms capitalist, entrepreneur, and manager. Marshall saw
capitalists as individuals who “committed themselves to the capacity and honesty of others, when he by himself had
incurred the risks for having contributed with the capital” (Zaratiegui & Rabade, 2005, p. 775). An entrepreneur took
control of money provided by capitalists in an eﬀort to leverage it to create more money; but would lose less if
something went wrong then would the capitalists. An entrepreneur, however, risked his own reputation and the other
gains he could have made by pursuing a diﬀerent opportunity.
Let us suppose that two men are carrying on smaller businesses, the one working with his own, the
other chieﬂy with borrowed capital. There is one set of risks which is common to both; which may be
described as the trade risks of the particular business … But there is another set of risks, the burden
of which has to be borne by the man working with borrowed capital, and not by the other; and we
may call them personal risks (Marshall, 1961, p. 590; Zaratiegui & Rabade, 2005, p. 776).
Marshall recognized that the reward capitalists received for contributing capital was interest income and the reward
entrepreneurs earned was proﬁts. Managers received a salary and, according to Marshall, fulﬁlled a diﬀerent function
than either capitalists or entrepreneurs – although in some cases, particularly in smaller ﬁrms, one person might be
both an entrepreneur and a manager. Managers “were more inclined to avoid challenges, innovations and what
Schumpeter called the ‘perennial torment of creative destruction’ in favor of a more tranquil life” (Zaratiegui &
Rabade, 2005, p. 781). The main risks they faced from ﬁrm failure were to their reputations or to their employment
status. Managers had little incentive to strive to maximize proﬁts (Zaratiegui & Rabade, 2005).
Amasa Walker (1799-1875) and his son Francis Walker (1840-1897) were from the American School of thought, and
they helped shape an American perspective of entrepreneurship following the Civil War of 1861-1865. These scholars
claimed that entrepreneurs created wealth, and thus played a diﬀerent role than capitalists. They believed that
entrepreneurs had the power of foresight and leadership qualities that enabled them to organize resources and inject
energy into activities that create wealth (Chell, 2008).
Entrepreneurship versus Entrepreneur
Adam Smith (1723-1790), from the English School of thought, published An Inquiry into the Nature and Causes of the
Wealth of Nations in 1776. In a departure from the previous thought into entrepreneurship and economics, Smith did
not dwell on a particular class of individual. He was concerned with studying how all people ﬁt into the economic
system. Smith contended that the economy was driven by self interest in the marketplace (Chell, 2008).
Also from the English School, David Ricardo (1772-1823) was inﬂuenced by Smith, Say, and others. His work focused
on how the capitalist system worked. He explained how manufacturers must invest their capital in response to the
demand for the products they produce. If demand decreases, manufacturers should borrow less and reduce their
workforces. When demand is high, they should do the reverse (Chell, 2008).
Carl Menger (1840-1921), from the Austrian School of thought, ranked goods according to their causal connections to
human satisfaction. Lower order goods include items like bread that directly satisfy a human want or need like
hunger. Higher order goods are those more removed from satisfying a human need. A second order good is the ﬂour
that was used to make the bread. The grain used to make the ﬂour is an even higher order good. Entrepreneurs
coordinate these factors of production to turn higher order goods into lower order goods that more directly satisfy
human wants and needs (Hebert & Link, 2009).
Menger (1950 , p. 160) established that entrepreneurial activity includes: (a) obtaining
information about the economic situation, (b) economic calculation – all the various computations
that must be made if a production process is to be eﬃcient, (c) the act of will by which goods of
higher order are assigned to a particular production process, and (d) supervising the execution of the
production plan so that it may be carried through as economically as possible (Hebert & Link, 2009,
Entrepreneurship and Innovation
Jeremy Bentham (1748-1832), from the English School of thought, considered entrepreneurs to be innovators. They
“depart from routine, discover new markets, ﬁnd new sources of supply, improve existing products and lower the
costs of production” (Chell, 2008).
Joseph Schumpeter’s (1883-1950) parents were Austrian, he studied at the University of Vienna, conducted research
at the University of Graz, served as Austria’s Minister of Finance, and was the president of a bank in the country.
Because of the rise of Hitler in Europe, he went to the United States and conducted research at Harvard until he
retired in 1949. Because of this, he is sometimes associated with the American School of thought on
entrepreneurship (Chell, 2008).
Whereas Menger saw entrepreneurship as occurring because of economic progress, Schumpeter took the opposite
stance. Schumpeter saw economic activity as leading to economic development (Hebert & Link, 2009).
Entrepreneurs play a central role in Schumpeter’s theory of economic development, and economic development can
occur when the factors of production are assembled in new combinations.
Schumpeter (1934) viewed innovation as arising from new combinations of materials and forces. He provided the
following ﬁve cases of new combinations.
1. The introduction of a new good – that is one with which consumers are not yet familiar – or of a new
quality of good.
2. The introduction of a new method of production, that is one not yet tested by experience in the
branch of manufacture concerned, which need by no means be founded upon a discovery
scientiﬁcally new, and can also exist in a new way of handling a commodity commercially.
3. The opening of a new market, that is a market into which the particular branch of manufacture of the
country in question has not previously entered, whether or not this market has existed before.
4. The conquest of a new source of supply of raw materials or half-manufactured goods, again
irrespective of whether this source already exists or whether it has ﬁrst to be created.
5. The carrying out of the new organization of any industry, like the creation of a monopoly position
… or the breaking up of a monopoly position (Schumpeter, 1934, p. 66).
Another concept popularized by Schumpeter – in addition to the notion of new combinations – was creative
destruction. This was meant to indicate that the existing ways of doing things need to be dismantled – to be
destroyed – to enable a transformation through innovation to a new way of doing things. Entrepreneurs use
innovation to disrupt how things are done and to establish a better way of doing those things.
Basic Questions in Entrepreneurship Research
According to Baron (2004a), there are three basic questions of interest in the ﬁeld of entrepreneurship:
Why do some persons but not others choose to become entrepreneurs?
Why do some persons but not others recognize opportunities for new products or services that can be
Why are some entrepreneurs so much more successful than others (Baron, 2004a, p. 221)?
To understand where these foundational research questions came from and what their relevance is today, it is useful
to study what entrepreneurship research has uncovered so far.
Eﬀorts to teach entrepreneurship have included descriptions of entrepreneurial uniqueness based on personality,
behavioral, and cognitive traits (Chell, 2008; Duening, 2010).
• Personality characteristics
o Three personality characteristics of entrepreneurs that are often cited are:
• Need for achievement
• Internal locus of control (a belief by an individual that they are in control of their own destiny)
• Risk-taking propensity
• Behavioral traits
• Cognitive skills of successful entrepreneurs
Past studies of personality characteristics and behavioral traits have not been overly successful at identifying
As it turned out, years of painstaking research along this line has not borne signiﬁcant fruit. It
appears that there are simply not any personality characteristics that are either essential to, or
deﬁning of, entrepreneurs that diﬀer systematically from non-entrepreneurs…. Again, investigators
proposed a number of behavioral candidates as emblematic of entrepreneurs. Unfortunately, this
line of research also resulted in a series of dead ends as examples of successful entrepreneurial
behaviors had equal counterparts among samples of non-entrepreneurs. As with the personality
characteristic school of thought before it, the behavioral trait school of thought became increasingly
diﬃcult to support (Duening, 2010, pp. 4-5).
This shed doubt on the value of trying to change personality characteristics or implant new entrepreneurial behaviors
through educational programs in an eﬀort to promote entrepreneurship.
New research, however, has resurrected the idea that there might be some value in revisiting personality traits as a
topic of study. Additionally, Duening (2010) and has suggested that an important approach to teaching and learning
about entrepreneurship is to focus on the “cognitive skills that successful entrepreneurs seem uniquely to possess
and deploy” (p. 2). In the next sections we consider the new research on entrepreneurial personality traits and on
Entrepreneurial Personality Traits
While acknowledging that research had yet to validate the value of considering personality and behaviour traits as
ways to distinguish entrepreneurs from non-entrepreneurs or unsuccessful ones, Chell (2008) suggested that
researchers turn their attention to new sets of traits including: “the proactive personality, entrepreneurial selfeﬃcacy, perseverance and intuitive decision-making style. Other traits that require further work include social
competence and the need for independence” (p. 140).
In more recent years scholars have considered how the Big Five personality traits – extraversion, agreeableness,
conscientiousness, neuroticism (sometimes presented as emotional stability), and openness to experience
(sometimes referred to as intellect) – might be used to better understand entrepreneurs. It appears that the Big Five
traits might be of some use in predicting entrepreneurial success. Research is ongoing in this area, but in one
example, Caliendo, Fossen, and Kritikos (2014) studied whether personality constructs might “inﬂuence
entrepreneurial decisions at diﬀerent points in time” (p. 807), and found that “high values in three factors of the Big
Five approach—openness to experience, extraversion, and emotional stability (the latter only when we do not control
for further personality characteristics)—increase the probability of entry into self-employment” (p. 807). They also
found “that some speciﬁc personality characteristics, namely risk tolerance, locus of control, and trust, have strong
partial eﬀects on the entry decision” (p. 807). They also found that people who scored higher on agreeableness were
more likely to exit their businesses, possibly meaning that people with lower agreeableness scores might prevail
longer as entrepreneurs. When it came to speciﬁc personality traits, their conclusions indicated that those with an
external locus of control were more likely to stop being self-employed after they had run their businesses for a while.
There are several implications for research like this, including the potential to better understand why some
entrepreneurs behave as they do based upon their personality types and the chance to improve entrepreneurship
education and support services.
It is only fairly recently that entrepreneurship scholars have focused on cognitive skills as a primary factor that
diﬀerentiates successful entrepreneurs from non-entrepreneurs and less successful entrepreneurs. This approach
deals with how entrepreneurs think diﬀerently than non-entrepreneurs (Duening, 2010; Mitchell et al., 2007).
Entrepreneurial cognitions are the knowledge structures that people use to make assessments,
judgments or decisions involving opportunity evaluation and venture creation and growth. In other
words, research in entrepreneurial cognition is about understanding how entrepreneurs use
simplifying mental models to piece together previously unconnected information that helps them to
identify and invent new products or services, and to assemble the necessary resources to start and
grow businesses (Mitchell, Busenitz, et al., 2002, p. 97).
Mitchell, Smith, et al. (2002) provided the example of how the decision to create a new venture (dependent variable)
was inﬂuenced by three sets of cognitions (independent variables). They described these cognitions as follows:
Arrangements cognitions are the mental maps about the contacts, relationships, resources, and
assets necessary to engage in entrepreneurial activity; willingness cognitions are the mental maps
that support commitment to venturing and receptivity to the idea of starting a venture; ability
cognitions consist of the knowledge structures or scripts (Glaser, 1984) that individuals have to
support the capabilities, skills, norms, and attitudes required to create a venture (Mitchell et al.,
2000). These variables draw on the idea that cognitions are structured in the minds of individuals
(Read, 1987), and that these knowledge structures act as “scripts” that are the antecedents of
decision making (Leddo & Abelson, 1986, p. 121; Mitchell, Smith, et al., 2002, p. 10)
Cognitive Perspective to Understanding Entrepreneurship
According to Baron (2004a), by taking a cognitive perspective, we might better understand entrepreneurs and the
role they play in the entrepreneurial process.
The cognitive perspective emphasizes the fact that everything we think, say, or do is inﬂuenced by
mental processes—the cognitive mechanisms through which we acquire store, transform, and use
information. It is suggested here that this perspective can be highly useful to the ﬁeld of
entrepreneurship. Speciﬁcally, it can assist the ﬁeld in answering three basic questions it has long
addressed: (1) Why do some persons but not others choose to become entrepreneurs? (2) Why do
some persons but not others recognize opportunities for new products or services that can be
proﬁtably exploited? And (3) Why are some entrepreneurs so much more successful than others
(Baron, 2004a, pp. 221-222)?
Baron (2004a), illustrated how cognitive diﬀerences between people might explain why some people end up
pursuing entrepreneurial pursuits and others do not. For example, prospect theory (Kahneman & Tversky, 1977) and
other decision-making or behavioral theories might be useful in this regard. Research into cognitive biases might
also help explain why some people become entrepreneurs.
Baron (2004a) also revealed ways in which cognitive concepts like signal detection theory, regulation theory, and
entrepreneurial might help explain why some people are better at entrepreneurial opportunity recognition. He also
illustrated how some cognitive models and theories – like risk perception, counterfactual thinking, processing style,
and susceptibility to cognitive errors – might help explain why some entrepreneurs are more successful than others.
Cognitive Perspective and the Three Questions
Why do some and not others choose to become entrepreneurs?
Why are some people better at recognizing entrepreneurial opportunities?
Signal Detection Theory
Why are some people more successful at entrepreneurship than others?
Susceptibility to Cognitive Errors
Why do some people, or groups of people, achieve high performance economic results while others do not? Is
there a relationship between the attainment of high performance economic results and transaction cognitions
(a type of economic thought pattern)?
“Cognition has emerged as an important theoretical perspective for understanding and explaining
human behavior and action” (Dutta & Thornhill, 2008, p. 309).
Cognitions are all processes by which sensory input is transformed, reduced, elaborated, stored,
recovered, and used (Neisser, 1976).
Cognitions lead to the acquisition of knowledge, and involve human information processing.
Is a mental model, or information processing short-cut that can give information form and meaning, and
enable subsequent interpretation and action.
The subsequent interpretation and actions can result in expert performance … they can also result in
Entrepreneurial scripting exercises are critical to giving learners an explicit understanding of:
the processes that transfer expertise, and the actual expertise itself.
The structure of scripts (based upon Mitchell (2000)
Scripts are generally framed as a linear sequence of steps, usually with feedback loops, that can
explain how to achieve a particular task – perhaps like developing a business plan.
Sometimes scripts can be embedded within other scripts. For example, within a general venturing script
that outlines the sequences of activities that can lead to a successful business launch, there will
probably be sub-scripts describing how entrepreneurs can search for ideas, screen those ideas until one
is selected, plan how to launch a sustainable business based upon that idea and including securing the
needed ﬁnancial resources, setting up the business, starting it, eﬀectively managing its ongoing
operations, and managing the venture such that that entrepreneur can extract the value that they
desire from the enterprise at the times and in the ways they want it.
The most eﬀective scripts include an indication of the norms that outline performance standards and
indicate how to determine when any step in the sequence has been properly completed.
General Venturing Script
Generally, entrepreneurship is considered to consist of the following elements, or subscripts (Brooks, 2009; Mitchell,
Idea Screening Planning and
Ongoing Operations Harvest
Searching (also called idea formulation or opportunity recognition)
• This script begins when a person decides they might be a potential entrepreneur (or when an existing
entrepreneur decides they need more ideas in their idea pool).
• This script ends when there are a suﬃcient number of ideas in the idea pool.
• The scripting process involves a logical ﬂow of steps (including feedback loops, actions which must occur in
sequence, and actions which can be implemented at the same time as other actions) designed to:
• overcome mental blockages to creativity which might hinder this person’s ability to identify viable
• implement steps to identify a suﬃcient number of ideas (most likely 5 or more) which the person is
interested in investigating to determine whether they might be viable given general criteria such as this
person’s personal interests and capabilities;
Idea Screening (also called concept development)
• This script begins when the person with the idea pool is no longer focusing on adding new ideas to it; but is
instead taking steps to choose the best idea for them given a full range of speciﬁc criteria.
• This script ends when one idea is chosen from among those in the idea pool.
• The scripting process involves a logical ﬂow of steps to assess the current situation and the trends in
the following areas. The right tools must be used for each level of analysis.
• Do the current societal-level factors indicate that a particular idea should be considered for
implementation? Do the trends in these societal-level factors indicate that the idea will be viable
and sustainable into the future?
o Evaluate the political, economic, social, technological, environmental, and legal climates
• Do the current industry/market-level factors indicate an idea is viable? Are the trends in these
factors supportive of the idea?
o Evaluate the degree of competitiveness in the industry, the threat of substitutes
emerging, the threat of new entrants to the industry, the degree of bargaining power of
buyers, and the degree of bargaining power of suppliers.
o Do a market proﬁle analysis to assess the attractiveness of the position within the
industry that the potential venture will occupy.
• Do the current ﬁrm-level factors support the pursuit of the idea?
o Formulate and evaluate potential strategies to leverage organizational strengths,
overcome/minimize weaknesses, take advantage of opportunities, and overcome/ minimize threats;
o Complete ﬁnancial projections and analyze them to evaluate ﬁnancial attractiveness;
o Assess the founder ﬁt with the ideas;
o Evaluate the core competencies of the organization relative to the idea;
o Assess advice solicited from trusted advisors
Planning and Financing (also called resource determination and acquisition)
• This script begins when the idea screening script ends and when the person begins making the plans to
implement the single idea chosen from the idea pool, which is done in concert with securing ﬁnancing to
implement the venture idea.
• This script ends when suﬃcient business planning has been done and when adequate ﬁnancing has been
• The scripting process involves a logical ﬂow of steps to develop a business plan and secure adequate
ﬁnancing to start the business.
Set-Up (also called launch)
• This script begins when the planning and ﬁnancing script ends and when the person begins implementing the
plans needed to start the business.
• This script ends when the business is ready to start-up.
• The scripting process involves a logical ﬂow of steps, including purchasing and installing equipment, securing
the venture location and ﬁnishing all the needed renovations, recruiting and hiring any staﬀ needed for start-up,
and the many other steps needed to prepare for start-up.
• Start-Up (also called launch)
• This script begins when the set-up script ends and when the business opens and begins making sales.
• This script ends when the business has moved beyond the point where the entrepreneur must continually ﬁght
for the business’s survival and persistence. It ends when the entrepreneur can instead shift emphasis toward
business growth or maintaining the venture’s stability.
• The scripting process involves a logical ﬂow of steps needed to establish a new venture.
Ongoing Operations (also called venture growth)
• This script begins when the start-up script ends and when the business has established persistence and is
implementing growth (or maintenance) strategies.
• This script ends when the entrepreneur chooses to harvest the value they generated with the venture.
The scripting process involves a logical ﬂow of steps needed to grow (or maintain) a venture.
The following quotations from two preeminent entrepreneurship and entrepreneurship education researchers
indicate the growing interest in studies in this ﬁeld.
Entrepreneurship has emerged over the last two decades as arguably the most potent economic force the world
has ever experienced. With that expansion has come a similar increase in the ﬁeld of entrepreneurship
education. The recent growth and development in the curricula and programs devoted to entrepreneurship and
new-venture creation have been remarkable. The number of colleges and universities that oﬀer courses related
to entrepreneurship has grown from a handful in the 1970s to over 1,600 in 2005 (Kuratko, 2005, p. 577).
Interest in entrepreneurship has heightened in recent years, especially in business schools. Much of this interest
is driven by student demand for courses in entrepreneurship, either because of genuine interest in the subject,
or because students see entrepreneurship education as a useful hedge given uncertain corporate careers
(Venkataraman, 1997, p. 119).
Approaches to Studying Entrepreneurship
Entrepreneurship is a discipline, which means an individual can learn about it, and about how to be an eﬀective
entrepreneur. It is a myth that people are born entrepreneurs and that others cannot learn to become entrepreneurs
(Drucker, 1985). Kuratko (2005) asserted that the belief previously held by some that entrepreneurship cannot be
taught has been debunked, and the focus has shifted to what topics should be taught and how they should be
Solomon (2007) summarized some of the research on what should be covered in entrepreneurship courses, and how
it should be taught. While the initial focus was on actions like developing business plans and being exposed to real
entrepreneurs, more recently this approach has been supplemented by an emphasis on technical, industry, and
personal experience. “It requires critical thinking and ethical assessment and is based on the premise that successful
entrepreneurial activities are a function of human, venture and environmental conditions” (p. 172). Another
approach “calls for courses to be structured around a series of strategic development challenges including
opportunity identiﬁcation and feasibility analysis; new venture planning, ﬁnancing and operating; new market
development and expansion strategies; and institutionalizing innovation” (p. 172). This involves having students
interact with entrepreneurs by interviewing them, having them act as mentors, and learning about their experiences
and approaches through class discussions.
Sources of Information for Studying Entrepreneurship
According to Kuratko (2005), “three major sources of information supply the data related to the entrepreneurial
process or perspective” (p. 579).
Publications (both research-based and those written for the general public)
Academic journals like Entrepreneurship Theory and Practice, Journal of Business Venturing, and
Journal of Small Business Management
Proceedings of conferences like Proceedings of the Academy of Management and Proceedings of
the Administrative Sciences Association of Canada
Publications written for practitioners and the general public
Textbooks on entrepreneurship
Books about entrepreneurship
Biographies or autobiographies of entrepreneurs
News periodicals like Canadian Business and Proﬁt
Trade periodicals like Entrepreneur and Family Business
Government publications available through sources like the Enterprise Saskatchewan and
Canada-Saskatchewan Business Service Centre (CSBSC) websites and through various
government resource centers
Direct observation and interaction with practicing entrepreneurs
Data might be collected from entrepreneurs and about entrepreneurs through surveys, interviews, or
other methods applied by researchers.
Speeches and presentations by practicing entrepreneurs
The Language of Entrepreneurship
Eﬀectuation (and eﬀectual reasoning)
Sarasvathy (2001) distinguished between eﬀectuation and causation when examining how entrepreneurs approached
entrepreneurial challenges. He found that the uncertainty surrounding entrepreneurship – particularly with respect
to challenges involving undeﬁned end goals, like how starting a business might turn our relative to what was
originally envisioned – led to what he called eﬀectual reasoning.
Bolton and Thompson (2015) coined a new term, entirepreneurs, in response to what they described as today’s new
normal characterized by turbulence and uncertainty in the world. In this environment they claim that success is not
easily achieved by an entrepreneur starting a business, then passing it on to a manager to run who eventually may
need to give way to a strategic leader to ensure the venture’s continuing success (or perhaps to save it from failing).
Entirepreneurs embody the attributes of all of those categories of individuals.
Entirepreneurs successfully combine the attributes we conventionally associate with entrepreneurs, leaders
and managers. They make an all-round contribution. Signiﬁcantly, they appreciate the needs of diﬀerent
circumstances and challenges and ﬂexibly adjust their style and approach. Sometimes they behave in a way we
would conventionally describe as entrepreneurial; on other occasions they exhibit conventional leadership; at
other times they are ‘managerial’ (Bolton & Thompson, 2015, p. 24).
Innovation is “the implementation of a new or signiﬁcantly improved product (good or service), or process, a new
marketing method, or a new organizational method in business practices, workplace organization or external
relations” (Organization for Economic Co-Operation and Development, 2005).
Internal Locus of Control
The term internal locus of control refers to a belief by an individual that they are in control of their own destiny.
Self-eﬃcacy refers to a belief by an individual in their personal capability to be an eﬀective entrepreneur. Selfeﬃcacy is diﬀerent than self-conﬁdence because self-eﬃcacy is generally based upon past successes that lead to a
heightened belief in abilities whereas an individual might be self-conﬁdent even without that conﬁdence resulting
from a history of successes.
Chapter 2 – Opportunity Recognition and Design Thinking
Entrepreneurs see ways to put resources and information together in new combinations. They not only see the
system as it is, but as it might be. They have a knack for looking at the usual and seeing the unusual, at the
ordinary and seeing the extraordinary. Consequently, they can spot opportunities that turn the commonplace
into the unique and unexpected (Mitton, 1989, p. 12).
In my opinion, all previous advances in the various lines of invention will appear totally insigniﬁcant when
compared with those which the present century will witness. I almost wish that I might live my life over again to
see the wonders which are at the threshold. Charles H. Duell, Commissioner, U.S. Oﬃce of Patents, 1898-1901
(who has been incorrectly quoted as having said “Everything that can be invented has been invented”).
The signiﬁcant problems we face cannot be solved at the same level of thinking we were at when we created
them – Albert Einstein (1879-1955).
I think there is a world market for maybe ﬁve computers – Thomas Watson (1874-1956), Chairman of IBM,
After completing this chapter you will be able to:
Discuss opportunity recognition concepts and methods as developed and/or advocated by leading thinkers like
Drucker, Mitchell, Schumpeter, and Vesper.
Describe what design thinking is.
Apply design thinking to develop and assess new venture ideas.
This chapter introduces a sample of perspectives and tools designed to help individuals recognize potential business
opportunities. The concept of design thinking is also examined in some detail.
The objective is to help you improve your ability to apply inspiration, ideation, and implementation as part of the
design thinking process.
The following are examples of entrepreneurship theorists and practitioners who have developed the concept of
opportunity recognition. The tools introduced in the next sections can be applied for a variety of purposes, but they
are particularly useful for recognizing new venture opportunities.
Opportunity recognition is:
the active, cognitive process (or processes) through which individuals conclude that they have
identiﬁed the potential to create something new that has the potential to generate economic value
and that is not currently being exploited or developed, and is viewed as desirable in the society in
which it occurs (i.e. its development is consistent with existing legal and moral conditions) (Baron,
2004b, p. 52).
According to Baron (2004b), opportunity recognition is a cognitive process, which means that people can learn to be
more eﬀective at recognizing opportunities. They can learn this skill by changing the way in which they think about
opportunities and how to recognize them.
Systematic innovation involves “monitoring seven sources for innovative opportunity” (Drucker, 1985, p. 35). The
ﬁrst four are internally focused, within the business or industry, in that they may be visible to those involved in that
organization or sector. The last three involve changes outside the business or industry.
o The unexpected – the unexpected success, the unexpected failure, the unexpected outside event;
o The incongruity – between reality as it actually is and reality as it is assumed to be or as it ought to be;
o Innovation based on process need;
o Changes in industry structure or market structure that catch everyone unawares.
o Demographics (population changes);
o Changes in perception, mood, and meaning;
o New knowledge, both scientiﬁc and nonscientiﬁc (Drucker, 1985, p. 35).
One of the components of Mitchell’s (2000) New Venture Template asks whether the venture being examined
represents a new combination. He suggests considering two categories of entrepreneurial discovery: scientiﬁc
discovery and circumstance.
o Physical/technological insight
o New and valuable way
o Speciﬁc knowledge of time, place or circumstance When and what you know
The second set of variables to consider are the market imperfections that can give rise to proﬁt opportunities: excess
demand and excess supply. This gives rise to the following four types of entrepreneurial discovery.
Figure 2 – Four Sources for Entrepreneurial Discovery
o Uses Science to exploit excess demand (a market imperfection)
o Opportunity to discover and apply the laws of nature to satisfy excess
demand Inventions in one industry have ripple eﬀects in others
o Example: invention of airplane
o Circumstances reveals opportunity to exploit excess demand (a market imperfection)
Not necessarily science oriented
o Example: airline industry – need for food service for passengers
o Uses science to exploit excess supply (a market imperfection)
o Example: Second most abundant element on earth after oxygen = silicon microchips ….
manure fertilizer, power …. tire recycling
o Circumstances reveals opportunity to exploit excess supply (a market imperfection)
o Example: Producer’s capacities to lower prices – Wal-Mart
Schumpeter’s (1934) ﬁve kinds of new combinations (see page 13) can occur within each of the four kinds of
entrepreneurial discovery (Mitchell, 2000).
New or improved good/service
o Products/services that are new, improved … quality
o Distinction between “true” advances vs. promotional diﬀerences New method of production
o Assembly line method to automobile production
Just in time, robotics, agricultural processing
Opening of a new market
o Global context: Culture, laws, local buyer preferences, business practices, customs, communication,
transportation…setting up a new distribution channel
Honda created a new market for smaller modestly powered motorbikes
Conquest of a new source of supply of raw materials
o Enhance availability of products by providing at less cost
o Enhance availability by making more available without compromising quality
Reorganization of an industry
Murphy (2011) claimed that there was a single dimensional logic that oversimpliﬁed the approach taken to
understand entrepreneurial discovery. He was bothered by the notion that entrepreneurs either deliberately
searched for entrepreneurial opportunities or they serendipitously discovered them. This relationship is shown in
Figure 3 – A Unidimensional Model of Entrepreneurial Discovery
(Murphy, 2011, p. 8)
Figure 4 shows Murphy’s (2011) multidimensional model of entrepreneurial discovery. This perspective is meant to
indicate that opportunities may be identiﬁed (a) through a purposeful search (Deliberate Search quadrant); (b)
because others provide the opportunity to the entrepreneur (Legacy quadrant); (c) through prior knowledge,
entrepreneurial alertness, and means other than a purposeful search (Serendipitous Discovery quadrant); and, (d)
through a combination of lucky happenstance and deliberate searching for opportunities (Eureka quadrant).
Figure 4 – A Multidimensional Model of Entrepreneurial Discovery
(Murphy, 2011, p. 9)
According to experimentation research, entrepreneurial creativity is not correlated with IQ (people
with high IQs can be unsuccessful in business and those with lower IQs can be successful as an
entrepreneur). Research has also shown that those who practice idea generation techniques can
become more creative. The best ideas sometimes come later in the idea-generation process – often
in the days and weeks following the application of the idea-generating processes (Vesper, 1996).
Vesper (1996) identiﬁed several ways in which entrepreneurs found ideas:
Answering discovery questions
“Although would-be entrepreneurs usually don’t discover ideas by a deliberate searching strategy
(except when pursuing acquisitions of ongoing ﬁrms), it is nevertheless possible to impute to their
discoveries some implicit searching patterns” (Vesper, 1996, p. 60). Vesper categorized discovery
questions as follows:
Search questions, which might prompt venture ideas by placing one’s mind into a mode where the
subconscious will work to push ideas into the conscious mind. Examples of these questions include
the following (Vesper, 1996).
What is bothering me, and what might relieve that bother?
How could this be made or done diﬀerently that it is now?
What else might I like to have?
How can I fall the family tradition?
Questions based on encounters with a potential customer request, someone else’s idea, or another event
include the following (Vesper, 1996).
o Can I play some role in providing this product or service to a broader market?
o Could there be a way to do this better for the customer?
Questions based on evaluative reactions to ideas include the following (Vesper, 1996).
o Could I do this job on my own instead of as an employee?
o If people elsewhere went for this idea, might they want it here too?
Vesper (1996) also highlighted several mental blocks to departure. He suggested that generating innovative ideas
involved two tasks. The ﬁrst is to depart from what is usual or customary. The second is to apply an eﬀective way to
direct this departure. The mental blocks in the way of departure include the following.
Perceptual blocks include:
diﬃculty viewing things from diﬀerent perspectives
seeing only what you expect to see or think what others expect you to see
Emotional blocks include:
intolerance of ambiguity
preference for judging rather than seeking ideas tunnel vision
Cultural blocks include:
a belief that reason and logic are superior to feeling, intuition, and other such approaches thinking that
tradition is preferable to change
disdain for fantasy, reﬂection, idea playfulness, humor
Imagination blocks include:
fear of subconscious thinking
inhibition about some areas of imagination
Environmental blocks include:
distrust of others who might be able to help distractions
discouraging responses from other people
Intellectual blocks include:
lack of information incorrect information
weak technical skills in areas such as ﬁnancial analysis
Expressive blocks include:
poor writing skills
inability to construct prototypes
Understanding these mental blocks to departure is a ﬁrst step in ﬁguring out how to cope with them. Some tactics for
departure include the following (Vesper, 1996):
Try diﬀerent ways of looking at and thinking about venture opportunities
Try to continually generate ideas about opportunities and how to exploit them
Seek clues from business and personal contacts, trade shows, technology licensing oﬃces, and other
Don’t be discouraged by others’ negative views because many successful innovations were ﬁrst
thought to be impossible to make
Generate possible solutions to obstacles before stating negative views about them
Use idea generating tricks like:
o Considering multiple consequences of possible future events or changes
o Rearranging, reversing, expanding, shrinking, combining, or altering ideas
o Developing scenarios
“Design thinking is a human-centered approach to innovation that draws from the designer’s toolkit to integrate the
needs of people, the possibilities of technology, and the requirements for business success – Tim Brown, president
and CEO” (IDEO, 2015, para. 5). The Hasso Plattner Institute of Design at Stanford University, called the d.school, is
an acknowledged leader at promoting design thinking. You can download the Bootcamp Bootleg manual from the
Standford d.school website. The following description of design thinking is from the IDEO website:
Design thinking is a deeply human process that taps into abilities we all have but get overlooked by
more conventional problem-solving practices. It relies on our ability to be intuitive, to recognize
patterns, to construct ideas that are emotionally meaningful as well as functional, and to express
ourselves through means beyond words or symbols. Nobody wants to run an organization on feeling,
intuition, and inspiration, but an over-reliance on the rational and the analytical can be just as risky.
Design thinking provides an integrated third way.
The design thinking process is best thought of as a system of overlapping spaces rather than a
sequence of orderly steps. There are three spaces to keep in mind: inspiration, ideation, and
implementation. Inspiration is the problem or opportunity that motivates the search for solutions.
Ideation is the process of generating, developing, and testing ideas. Implementation is the path that
leads from the project stage into people’s lives (IDEO, 2015, para. 7-8).
Chapter 9 – Innovation and Entrepreneurship
While the idea of the entrepreneur and entrepreneurship has evolved to include the attributes of
innovation, opportunity discovery (or construction) and value creation, my sense of the basic gist of the term
continues to focus on this facet of human behavior: initiative taking. The process of entrepreneurship
invariably involves an individual or individuals investing eﬀort into something they had not previously done
before (Fayolle, 2007, p. ix).
After completing this chapter you will be able to:
Describe how innovation and entrepreneurship are interrelated concepts
Describe the building blocks for both innovation and successful entrepreneurship
Explain the elements of innovation
This chapter introduces the building blocks for both innovation and successful entrepreneurship while describing how
innovation and entrepreneurship are interrelated concepts. It continues with a discussion about competencies – and
speciﬁcally core competencies – as necessary building blocks for both innovation and successful entrepreneurship.
The elements of innovation are also discussed.
Innovation and Entrepreneurship
The concepts of innovation and entrepreneurship are undeniably interrelated.
Innovation is the speciﬁc tool of entrepreneurs, the means by which they exploit change as an
opportunity for a diﬀerent business or a diﬀerent service. It is capable of being presented as a
discipline, capable of being learned, capable of being practiced. Entrepreneurs need to search
purposefully for the sources of innovation, the changes and their symptoms that indicate
opportunities for successful innovation. And they need to know and to apply the principles of
successful innovation (Drucker, 1985, p. 19).
Drucker (1985) claimed that innovation should be viewed as an economic or social phenomenon rather than a
technological term. Innovation is not about making new inventions, but rather about recognizing how to take
advantage of opportunities and changes. “Systematic innovation therefore consists in the purposeful and organized
search for changes, and in the systematic analysis of the opportunities such changes might oﬀer for economic or
social innovation” (p. 35). This is consistent with Schumpeter’s (1934) view that innovation arises from new
combinations of materials and forces.
To better understand the interrelationship between innovation and entrepreneurship we will consider some of the
building blocks for both innovation and successful entrepreneurship.
Competencies and Core Competence
Competencies are the necessary ingredients for entrepreneurial competence.
Individual competencies are the combination of learnable behaviors that encompass attitudes (wanting to
do), skills (how to do), knowledge (what to do), practical experiences (proven learning), and natural talents of
a person in order to eﬀectively accomplish an explicit goal within a speciﬁc context.
Collective competencies are the synergistic combination of the individual competencies of team members
within organizations. There is a continuum that exists from low-functioning teams to high-functioning teams.
High-functioning teams, although very rare, are those that apply collective competencies the most
eﬀectively (Matthews & Brueggemann, 2015, p. 10).
Core competencies are those that are collectively held and that include “the learnable behaviors the entire
organization must practice in order to achieve competence in relation to the organization’s purpose and its
competitive environment. A core competency encompasses the knowledge, skills, and technology that create unique
customer value” (Matthews & Brueggemann, 2015, p. 11).
Organizations need to identify what core competencies they need to cultivate in their precious human
resources in order to meet a competence level that rises above the competition. The three tests to identify a
core competence are:
1. First, a core competence provides potential access to a wide variety of markets.
2. Second a core competence should make a signiﬁcant contribution to the perceived beneﬁt of the end
3. Finally a core competence should be diﬃcult for competitors to imitate (Matthews & Brueggemann, 2015,
Entrepreneurs must assess their individual competencies along with those of their organizations to better understand
how to ﬁll competency gaps and how to build collective and core competencies.
Elements of Innovation
Matthews and Brueggemann (2015) identiﬁed the following 12 elements of innovation. They argued that innovation
is best understood by ﬁrst examining each of the following elements.
Incremental innovations are small-scale improvements on what is already being done, often with the intention to
improve eﬃciencies to reduce costs, or improve products or services oﬀered. “Both Six Sigma and Lean are wellregarded managerial quality improvement programs that explicitly target the removal of many types of
organizational waste and variability …. An incremental innovation can be used to diﬀerentiate products for marketing
purposes” (Matthews & Brueggemann, 2015, p. 34).
Evolutionary innovations involve doing new things for existing customers and markets, and also doing things that
extend product oﬀerings to new customers and new markets (Matthews & Brueggemann, 2015).
Revolutionary innovations are when businesses pursue new products, businesses, customers, and markets. The
impacts from these types of innovations can be much higher than from either incremental or evolutionary
innovations (Matthews & Brueggemann, 2015).
There are many types of innovations. “Organizing innovation into types makes it is easier to understand how you can
use multiple types of innovation simultaneously. The fundamental innovation types include products, customer
experiences, solutions, systems, processes, and business and managerial models” (Matthews & Brueggemann, 2015,
Innovation direction is a concept that encompasses forward and reverse innovation. Innovation
direction is a notion that is based on the source and target of the innovation. A forward innovation
would have its source in country X and the target in country X. A reverse innovation would have its
source in country Y and later targeted to a diﬀerent country such as country X. Country X or Y could
be a developed or developing country (Matthews & Brueggemann, 2015, p. 40).
The entrepreneurial ecosystem described earlier in this book indicated that there are many individuals, ﬁrms, and
organizations that are interconnected in ways that impact each other. According to Matthews and Brueggemann
(2015), co-innovation risk occurs when multiple actors in the ecosystem are attempting to innovate and that leads
to the possibility that a new innovation developed by one company is ready at a diﬀerent time than a dependent
second innovation developed by another ﬁrm. For example, it can be disastrous for a computer hardware company
to release a new product that is dependent upon new software if the company developing that software does not
make it available on time.
Adoption chain risk also occurs when multiple ﬁrms in the value chain are simultaneously developing new
products and services. If one ﬁrm, for example, releases a product that must be serviced by a diﬀerent company
before that other company is prepared to oﬀer that service, the product release can fail (Matthews & Brueggemann,
Innovation Principles and Tenets
Both non-proﬁt and for-proﬁt organizations are governed by principles that dictate how they operate. Non-proﬁts
often strive to alleviate social problems while for-proﬁts attempt to satisfy the desires of their shareholders. In
today’s world an increasing number of organizations are adopting alternative measures of performance that include
not only economic outcomes, but also social and environmentally responsible results; a triple bottom line (Kneiding &
Tracey, 2009). This can – and should – lead to organizations redeﬁning themselves as pursuing the creation of shared
value rather than just proﬁts (Matthews & Brueggemann, 2015; Porter & Kramer, 2011).
Companies must take the lead in bringing business and society back together. The recognition is
there among sophisticated business and thought leaders, and promising elements of a new model
are emerging. Yet we still lack an overall framework for guiding these eﬀorts, and most companies
remain stuck in a “social responsibility” mind-set in which societal issues are at the periphery, not
The solution lies in the principle of shared value, which involves creating economic value in a way
that also creates value for society by addressing its needs and challenges. Businesses must reconnect
company success with social progress. Shared value is not social responsibility, philanthropy, or even
sustainability, but a new way to achieve economic success. It is not on the margin of what
companies do but at the center. We believe that it can give rise to the next major transformation of
business thinking. The purpose of the corporation must be redeﬁned as creating shared value, not
just proﬁt per se. This will drive the next wave of innovation and productivity growth in the global
economy. It will also reshape capitalism and its relationship to society. Perhaps most important of
all, learning how to create shared value is our best chance to legitimize business again (Porter &
Kramer, 2011, p. 4).
Organizations should strive to achieve their innovation threshold.
An innovation threshold is a marker that each business sector needs to achieve in order to be
competitive. To thrive, an organization cannot under-innovate, while over-innovation would be
wasteful and ineﬀectual. Innovation thresholds range from low to high, and are diﬀerent for each
business sector. Once an organization achieves the innovation threshold, additional innovation may
not matter (Matthews & Brueggemann, 2015, p. 52).
After achieving their innovation threshold such that more innovation might not generate enough extra value to make
the eﬀort worthwhile, organizations must rely on other innovation competencies. For example, some industries like
insurance and airlines have a relatively low product innovation threshold, so after reaching it they must rely on other
forms of innovation and entrepreneurship competencies “such as creativity, culture, strategy, leadership, and
technology” (Matthews & Brueggemann, 2015, p. 53) to further advance their goals. Higher technology ﬁelds
normally have higher product innovation thresholds, and can gain much by striving for more product innovations.
“The criteria that can be used to evaluate an innovation are desirability, feasibility, and viability. An innovative
design needs to be desirable, feasible, and aligned with a sustainable business model” (Matthews & Brueggemann,
2015, p. 53).
Another element of innovation is the set of planned innovation processes that are required to make innovation
happen. These processes must balance the need to provide customers with what they want with what is
technologically feasible and ﬁnancially viable. One example of an innovation process is design thinking.
Lundblad (2003) deﬁned diﬀusion of innovation as “the adoption and implementation of new ideas, processes,
products, or services” as she studied the diﬀusion of innovation “within and across organizations” (p. 51). This
concept is particularly important because many sectors of the economy strive for organizational improvement, but
“innovations often are not diﬀused within and across organizations to achieve improvement” (p. 51). To illustrate her
point, she described how research in the health care sector has led to the development of new advancements in
clinical practice and process improvements, yet – despite the relatively low cost to implement many of these process
innovations – it often takes many years before these improvements are adopted into practice, if they ever are. This
means that often there is a gap between when an innovation is developed and when it is implemented in practice.
The Theory of the Diﬀusion of Innovation can help us understand what we must do in terms of implementing steps
and processes for innovations to be diﬀused into the areas of practice where they are needed. There are four main
elements of the theory.
The ﬁrst element of the theory is the innovation itself, whether that be an idea, a product, a process, or something
else that is new to the potential adopters. The theory says that there are several characteristics of the innovation
that aﬀect its rate of adoption, including its complexity and its compatibility with whatever it will be connected with
in some manner (Lundblad, 2003).
The second element is communication; speciﬁcally the processes used by people to share the information needed to
develop a common understanding. The rate of adoption will depend upon the sources of communication, even more
so than the technical information contained in the messages (Lundblad, 2003).
Time is the third element of the theory. According to Rogers (2003), who developed the Theory of the Diﬀusion of
Innovation, there are three considerations related to the time element. The ﬁrst is the innovation-decision process
that describes the gap in time between when a potential early adopter learns about an innovation and either adopts
it or doesn’t. There are several stages that the potential adopter goes through during this time frame. Second,
Rogers (2003) classiﬁed potential adopters as “innovators, early adopters, early majority, late majority, and
laggards” (Lundblad, 2003, p. 54) based upon how early they were likely to adopt an innovation. Finally, the rate of
adoption describes how quickly the innovation is adopted.
Innovation adoption tends to follow an S-shaped curve, meaning that only a few individuals initially
adopt the innovation; but as time moves on and more and more individuals adopt, the rate
increases. Eventually, though, the adoption rate levels oﬀ and begins to decline. (Lundblad, 2003, p.
The ﬁnal element of the theory is social system. Rogers (2003) said that diﬀusion of innovation occurs within a social
system, which might be somewhat limited, like the members of an organization, or widespread, like all of the
consumers in a country. Some members within a social system inﬂuence others and include “opinion leaders, change
agents, and champions” (Lundblad, 2003, p. 55).
Innovation pacing refers to the speed with which an organization delivers innovations, and how that impacts its
ability to compete. “Pacing is inﬂuenced by your innovation capability and the ability of your customers to adopt
those innovations” (Matthews & Brueggemann, 2015, p. 60).
Red ocean strategies focus on competing with other players for market share within industries that currently exist.
This type of thinking can be a constraint if it restricts organizations’ abilities to adapt to change and to ﬁgure out
ways to pursue blue ocean strategies; namely entirely new markets, business models, industries, and other
opportunities that other have not yet been conceptualized or pursued. Blue ocean strategies are not about
competing with others, they are about rendering competitors irrelevant because they are not playing in the same
ﬁeld as your organization, and, more importantly, they are not matching the value that you create for customers in
the new market that you opened up. “Value without innovation is an improvement that may not be suﬃcient for
organic growth. Innovation without value does not provide the utility that customers would be willing to purchase.
Innovation needs to be aligned with value comprised of utility, price, and cost” (Matthews & Brueggemann, 2015, p.
The last of the 12 elements of innovation is disruptive innovation.
Disruptive innovations are diﬀerent than incremental, evolutionary, and revolutionary innovation
degrees. A disruptive innovation is not a revolutionary innovation that makes other innovations, such
as products and services, better. Rather, a disruptive innovation transforms any type of innovation
that historically was expensive and complicated into an innovation that is aﬀordable, simple, and
available to broader markets (Matthews & Brueggemann, 2015, p. 63).
Abzug, R., & Webb, N. J. (1999). Relationships between nonproﬁt and for-proﬁt organizations: A
stakeholder perspective. Nonproﬁt and Voluntary Sector Quarterly, 28(4), 416-431.
Anderson, R. B., Dana, L. P., & Dana, T. E. (2006). Indigenous land rights, entrepreneurship, and
economic development in Canada: “Opting-in” to the global economy. Journal of World Business,
Barney, J. B. (1997). Gaining and sustaining competitive advantage. Reading, Massachusetts:
Barney, J. B., & Hesterly, W. S. (2006). Strategic management and competitive advantage: Concepts
and cases. Upper Saddle River, NJ: Pearson/Prentice Hall.
Baron, R. A. (2004a). The cognitive perspective: A valuable tool for answering entrepreneurship’s basic
“why” questions. Journal of Business Venturing, 19(2), 221-239.
Baron, R. A. (2004b). Opportunity recognition: Insights from a cognitive perspective. In J. E. Butler
(Ed.), Opportunity identiﬁcation and entrepreneurial behavior (pp. 47-73). Greenwich, Conn.:
Information Age Pub.
Baron, R. A., Shane, S. A., & Reuber, A. R. (2008). Entrepreneurship : a process perspective (1st
Canadian ed.). Toronto, ON: Thomson/Nelson.
Birchall, J., & Hammond Ketilson, L. (2009). Resilience of the cooperative business model in times of
crisis. Retrieved from Geneva:
Blackburn, R. (2011). Foreword. In L. P. Dana (Ed.), World Encyclopedia of Entrepreneurship.
Cheltenham, UK: Edward Elgar Publishing Limited.
Blank, S. G., & Dorf, B. (2012). The startup owner’s manual: The step-by-step guide for building a great
company. Pescadero, California: K&S Ranch.
Bollier, D. (2002). Commons sense: Community ownership and the displacement of corporate control.
Multinational Monitor, 23(7/8), 11.
Bolton, B., & Thompson, J. L. (2015). The entirepreneur: The all-in-one entrepreneur-leader-manager.
New York: Routledge.
Borch, O. J., Førde, A., Rønning, L., Vestrum, I. K., & Alsos, G. A. (2008). Resource conﬁguration and
creative practices of community entrepreneurs. Journal of Enterprising Communities, 2(2), 100-123.
Boyle, S. (2003). Achieving community ownership: The case of a regional symphony orchestra.
INTERNATIONAL JOURNAL OF ARTS MANAGEMENT, 6(1), 9-18.
Brooks, A. C. (2009). Social entrepreneurship: A modern approach to social value creation. Upper
Saddle River, NJ: Pearson Prentice Hall.
Caliendo, M., Fossen, F., & Kritikos, A. S. (2014). Personality characteristics and the decisions to
become and stay self-employed. Small Business Economics, 42(4), 787-814. doi:10.1007/s11187-0139514-8
(2013). Succession planning. Retrieved from
Canadian Intellectual Property Oﬃce. (2015b). A guide to industrial designs. Retrieved from
Casson, M., & Godley, A. (2005). Entrepreneurship and historical explanation. In Y. Cassis & I. P.
Minoglou (Eds.), Entrepreneurship in theory and history (pp. 25-60). New York: Palgrave Macmillan.
Chaskin, R. J. (2001). Building community capacity: A deﬁnitional framework and case studies from a
comprehensive community initiative Urban Aﬀairs Review, 36(3), 291-323.
Chatterjee, S. (2013). Simple rules for designing business models. California Management Review,
Chell, E. (2008). The entrepreneurial personality: A social construction (2nd ed.). New York: Routledge.
Christie, M. J., & Honig, B. (2006). Social entrepreneurship: New research ﬁndings. Journal of World
Business, 41(1), 1-5.
Chua, J. H., Chrisman, J. J., & Steier, L. P. (2003). Extending the Theoretical Horizons of Family
Business Research. Entrepreneurship Theory and Practice, 27(4), 331-338. doi:doi:10.1111/15408520.00012
Cohen, B. (2006). Sustainable valley entrepreneurial ecosystems. Business Strategy and the
Environment, 15(1), 1-14. doi:10.1002/bse.428
Dana, L. P., & Anderson, R. B. (2007). A multidisciplinary theory of entrepreneurship as a function of
cultural perceptions of opportunity. In L. P. Dana & R. B. Anderson (Eds.), International handbook of
research on indigenous entrepreneurship (pp. 595-603). Cheltenham: Edward Elgar.
Dana, L. P., Etemad, H., & Wright, R. W. (2008). Towards a paradigm of symbiotic entrepreneurship.
International Journal of Entrepreneurship and Small Business, 5(2), 109-126.
Davis, P. S., & Harveston, P. D. (1998). The inﬂuence of family on the family business succession
process: A multi-generational perspective. Entrepreneurship: Theory and Practice, 22(3), 3153.
De Alwis, C. (2012). The new mechanism for performance evaluation of the co-operatives. Paper
presented at the Management, Knowledge and Learning International Conference 2012, Celje,
Dees, J. G. (2001). The meaning of social entrepreneurship. Retrieved from
Delmar, F., & Shane, S. (2003). Does business planning facilitate the development of new ventures?
Strategic Management Journal, 24, 1165-1185.
Dheensaw, C. (2011). Season ticket will mean ownership share. Retrieved from
Drucker, P. F. (1985). Innovation and entrepreneurship: Practice and principles. New York, NY: Harper
Duening, T. N. (2010). Five minds for the entrepreneurial future: Cognitive skills as the intellectual
foundation for next generation entrepreneurship curricula. Journal of Entrepreneurship, 19(1), 1-22.
Dutta, D. K., & Thornhill, S. (2008). The evolution of growth intentions: Toward a cognition-based
model. Journal of Business Venturing, 23, 307-322.
Edmonton Eskimos. (2011). Inside the empire: Eskimo allegiance runs deep. Retrieved from
(n.d.). Merriam-Webster.com .
Fayolle, A. (2007). Entrepreneurship and new value creation: The dynamic of the entrepreneurial
process. Cambridge: Cambridge University Press.
Gartner, W. B. (1990). What are we talking about when we talk about entrepreneurship? Journal of
Business Venturing Journal of Business Venturing, 5(1), 15-28.
Gates, J. (1999). People-ized ownership patterns: The key to a smarter capitalism. Systems Research
and Behavioral Science, 16(5), 437-452.
Green Bay Packers.
GrowthWheel. (2015). Make decisions. Take action. Retrieved from http://www.growthwheel.com/
Hebert, R. F., & Link, A. N. (2009). A history of entrepreneurship. New York: Routledge.
Hindle, K. (2007). Formalizing the concept of entrepreneurial capacity Refereed Proceedings of the
2007 ICSB World Conference (pp. CD format precludes sequential pagination). Finland: Turku School
Hindle, K. (2010). How community context aﬀects entrepreneurial process: A diagnostic framework.
Entrepreneurship & Regional Development, 22(7-8), 599-647. doi:10.1080/08985626.2010.522057
Hindle, K., & Mainprize, B. (2006). A systematic approach to writing and rating entrepreneurial
business plans. The Journal of Private Equity, 9(3), 7-23.
IDEO. (2015). About IDEO. Retrieved from http://www.ideo.com/about/
Intrapreneur. (n.d.). Merriam-Webster.com .
Kahneman, D., & Tversky, A. (1977). Prospect theory: An analysis of decision making under risk.
Eugene, Oregon: Decision Research.
Kao, R. W. Y. (1993). Deﬁning entrepreneurship: Past, present and ? Creativity and Innovation
Management, 2(1), 69-70.
Kerins, S., & Jordan, K. (2010). Indigenous economic development through community-based
enterprise. Retrieved from Canberra:
Kneiding, C., & Tracey, P. (2009). Towards a performance measurement framework for community
development ﬁnance institutions in the UK. Journal of Business Ethics, 86(3), 327-345.
Kuratko, D. F. (2005). The emergence of entrepreneurship education: development, trends, and
challenges. Entrepreneurship Theory and Practice, 29(5), 577-597.
Leadbeater, C. (1997). The rise of the social entrepreneur. London: Demos.
Lehman, J. S., & Lento, R. E. (1992). Law school support for community-based economic development
in low-income urban neighborhoods. Journal of Urban and Contemporary Law, 42, 65-84.
Lichtenstein, B. B. (2011). Complexity science contributions to the ﬁeld of entrepeneurship. In P. Allen,
S. Maguire, & B. McKelvey (Eds.), The Sage handbook of complexity and management (pp. 471-493).
Thousand Oaks, CA: SAGE Publications.
Lindsay, N. J. (2005). Toward a cultural model of Indigenous entrepreneurial attitude. Academy of
Marketing Science Review, 5, 1-17.
Lundblad, J. P. (2003). A review and critique of Rogers’ Diﬀusion of Innovation Theory as it applies to
organizations. Organization Development Journal, 21(4), 50-64.
Magretta, J. (2002). Why business models matter. Harvard Business Review, (May 2002), 86-92.
Manyara, G., & Jones, E. (2007). Community-based tourism enterprises development in Kenya: An
exploration of their potential as avenues of poverty reduction. Journal of Sustainable Tourism, 15(6),
Martiarena, A. (2013). What’s so entrepreneurial about intrapreneurs? Small Business Economics,
40(1), 27-39. doi:10.1007/s11187-011-9348-1
Martin, R., L., & Osberg, S. (2007). Social entrepreneurship: The case for deﬁnition. Stanford Social
Innovation Review, 5(2), 28-39.
Mason, C., & Brown, R. (2014). Entrepreneurial ecosystems and growth oriented entrepreneurship.
Retrieved from The Hague, Netherlands: http://www.oecd.org/cfe/leed/entrepreneurial-ecosystems.pdf
Matthews, C. H., & Brueggemann, R. (2015). Innovation and entrepreneurship: A competency
framework. New York: Routledge.
Matzler, K., Veider, V., & Kathan, W. (2015). Adapting to the sharing economy. MIT Sloan
Management Review, 56(2), 71-77.
Mintzberg, H. (2013). OvertureRebalancing society: Radical renewal beyond left, right, and center.
Mintzberg, H., & Azevedo, G. (2012). Fostering “Why not?” social initiatives — beyond business and
governments. Development in Practice, 22(7), 895-908. doi:10.2307/41723150
Mitchell, R. K. (2000). Introduction to the Venture Analysis Standards 2000: New Venture TemplateTM
Workbook. Victoria, B.C., Canada: International Centre for Venture Expertise.
Mitchell, R. K., Busenitz, L., Lant, T., McDougall, P. P., Morse, E. A., & Smith, J. B. (2002). Toward a
Theory of Entrepreneurial Cognition: Rethinking the People Side of Entrepreneurship Research.
Entrepreneurship Theory and Practice, 27(2), 93-104.
Mitchell, R. K., Busenitz, L. W., Bird, B., Gaglio, C. M., McMullen, J. S., Morse, E. A., & Smith, J. B.
(2007). The Central Question in Entrepreneurial Cognition Research 2007. Entrepreneurship Theory
and Practice, 31(1), 1-27.
Mitchell, R. K., Smith, J. B., Morse, E. A., Seawright, K. W., Peredo, A. M., & McKenzie, B. (2002). Are
entrepreneurial cognitions universal? Assessing entrepreneurial cognitions across cultures.
Entrepreneurship: Theory and Practice, 26(4), 9-32.
Mitton, D. G. (1989). The complete entrepreneur. Entrepreneurship Theory and Practice, 13(3), 9-20.
Mook, L., Quarter, J., & Richmond, B. J. (2007). What counts: social accounting for nonproﬁts and
cooperatives (2nd ed.). London: Sigel Press.
Moore, J. F. (1993). Predators and prey: A new ecology of competition. Harvard Business Review,
Murphy, P. J. (2011). A 2 x 2 conceptual foundation for entrepreneurial discovery theory.
Entrepreneurship Theory and Practice, 35(2), 359-374. doi:10.1111/j.1540-6520.2010.00368.x
Neck, H. M., & Greene, P. G. (2011). Entrepreneurship education: Known worlds and new frontiers.
Journal of Small Business Management, 49(1), 55-70. doi:10.1111/j.1540-627X.2010.00314.x
Neck, H. M., Meyer, G. D., Cohen, B., & Corbett, A. C. (2004). An entrepreneurial system view of new
venture creation. Journal of Small Business Management, 42(2), 190-208.
Neisser, U. (1976). Cognition and Reality: Principles and implications of cognitive psychology. San
Francisco, CA: W.H. Freeman.
NOVA Rentals. (2015). About NOVA Rentals. Retrieved from http://www.novarentals.ca/about/
Organisation for Economic Co-Operation and Development. (2005). Oslo manual: Guidelines for
collecting and interpreting innovation data. Retrieved from
Osterwalder, A., Pigneur, Y., & Clark, T. (2010). Business model generation: A handbook for
visionaries, game changers, and challengers. Hoboken, NJ: Wiley.
Patagonia. (2015b). Prepair is a radical act. Retrieved from https://www.patagonia.com/ca/worn-wear
Peredo, A. M., & Anderson, R. B. (2006). Indigenous entrepreneurship research: Themes and
variations. In C. Galbraith & C. H. Stiles (Eds.), Developmental entrepreneurship : adversity, risk, and
isolation (pp. 253-273). Oxford: Elsevier JAI.
Peredo, A. M., Anderson, R. B., Galbraith, C. S., Honig, B., & Dana, L. P. (2004). Towards a theory of
Indigenous entrepreneurship. International Journal of Entrepreneurship and Small Business, 1(1/2), 120.
Peredo, A. M., & Chrisman, J. J. (2006). Toward a theory of community-based enterprise. Academy of
Management Review, 31(2), 309-328.
Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. New York:
Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61-78.
Porter, M. E., & Kramer, M. R. (2011). Creating shared value. Harvard Business Review, JanuaryFebruary 2011.
PR Newswire. (2011). Patagonia launches Common Threads initiative: A partnership with customers to
Quarter, J., Mook, L., & Armstrong, A. (2009). Understanding the social economy: A Canadian
perspective. Toronto: University of Toronto Press.
Quarter, J., Mook, L., & Ryan, S. (2010). Researching the social economy. Toronto: University of
Ries, E. (2011). The lean startup: How today’s entrepreneurs use continuous innovation to create
radically successful businesses. New York: Crown Business.
Ring, J. K., Peredo, A. M., & Chrisman, J. J. (2010). Business networks and economic development in
rural communities in the United States. Entrepreneurship Theory and Practice, 34(1), 171-195.
Rochford, L. (1991). Generating and screening new products ideas. Industrial Marketing Management,
20(4), 287-296. doi:10.1016/0019-8501(91)90003-x
Rogers, E. M. (2003). Diﬀusion of innovations. New York: Free Press.
Sarasvathy, S. D. (2001). Causation and eﬀectuation: Toward a theoretical shift from economic
inevitability to entrepreneurial contingency. The Academy of Management Review, 26(2), 243-263.
Saskatchewan Roughrider Football Club Inc. (2012). Overview and goals: Share ownership rights.
Retrieved from http://www.riderville.com/article/overview_and_goals
Saskatoon CarShare Co-operative. (2015). How it works. Retrieved from
Scarborough, N. M., Wilson, D. L., & Zimmer, T. W. (2009). Eﬀective small business management: An
entrepreneurial approach (9th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.
Schoenfeld, B. (2000). F.C. Barcelona: By the fans, for the fans. Retrieved from
Schumpeter, J. A. (1934). The theory of economic development : An inquiry into proﬁts, capital, credit,
interest, and the business cycle (R. Opie, Trans.). Cambridge, MA: Harvard University Press.
Sloan, F. A. (2000). Not-for-proﬁt ownership and hospital behavior. In A. J. Culyer & J. Newhouse
(Eds.), Handbook of Health Economics (Vol. 1, pp. 1141-1174). New York: North Holland.
Smillie, C. (2015). History of Wolf Willow Cohousing. Retrieved from
Solomon, G. (2007). An examination of entrepreneurship education in the United States. Journal of
Small Business and Enterprise Development, 14(2), 168-182.
Somerville, P., & McElwee, G. (2011). Situating community enterprise: A theoretical exploration.
Entrepreneurship & Regional Development, 23(5-6), 317-330. doi:10.1080/08985626.2011.580161
Swanson, L. A., & Zhang, D. D. (2010). The social entrepreneurship zone. Journal of Nonproﬁt &
Public Sector Marketing, 22(2), 71-88. doi:10.1080/10495140903550726
Swanson, L. A., & Zhang, D. D. (2011). Complexity theory and the social entrepreneurship zone.
Emergence: Complexity and Organization, 13(3), 39-56.
Swanson, L. A., & Zhang, D. D. (2012). Social entrepreneurship. In T. Burger-Helmchen (Ed.),
Entrepreneurship – gender, geographies, and social context (pp. 171-190). Strasbourg, France:
Swanson, L. A., & Zhang, D. D. (2014). The base requirements, community, and regional levels of
northern development. Northern Review, 38, 199-222.
Torri, M.-C. (2010). Community-based enterprises: A promising basis towards an alternative
entrepreneurial model for sustainability enhancing livelihoods and promoting socio-economic
development in rural India. Journal of Small Business and Entrepreneurship, 23(2), 237-248.
Venkataraman, S. (1997). The distinctive domain of entrepreneurship research. In J. A. Katz (Ed.),
Advances in entrepreneurship, ﬁrm emergence, and growth (pp. 119-138). Greenwich, Conn.: JAI
Vesper, K. H. (1996). New venture experience (revised ed.). Seattle, WA: Vector Books.
Weidinger, C., Fischler, F., & Schmidpeter, R. (2014). Sustainable entrepreneurship: Business success
through sustainability. New York: Springer.
Winnipeg Blue Bombers. (2012). Community events: The Winnipeg Blue Bombers are proud to be a
community-owned franchise. Retrieved from http://www.bluebombers.com/page/community_events
Woodin, T., Crook, D., & Carpentier, V. (2010). Community and mutual ownership. Retrieved from
Zaratiegui, J. M., & Rabade, L. A. (2005). Capital owners, entrepreneurs and managers: a Marshallian
scheme. Management Decision, 43(5/6), 772-785.
Zimmerer, T. W., & Scarborough, N. M. (2008). Essentials of entrepreneurship and small business
management. Upper Saddle River, NJ: Pearson Prentice Hall.
UC Davis Previously Published Works
Design Thinking and Organizational Culture: A Review and Framework
for Future Research
Journal of Management, 44(6)
Elsbach, Kimberly D
Powered by the California Digital Library
University of California
JOMXXX10.1177/0149206317744252Journal of ManagementElsbach, Stigliani / Design Thinking
Journal of Management
Vol. 44 No. 6, July 2018 2274–2306
© The Author(s) 2018
Reprints and permissions:
Design Thinking and Organizational Culture:
A Review and Framework for Future Research
Kimberly D. Elsbach
University of California–Davis
Purchase answer to see full