Entrepreneurial resourcesx - profcraigarmstrong

wildlifeplaincityManagement

Nov 6, 2013 (3 years and 9 months ago)

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Entrepreneurial resources

And competitive advantage


A summary of Brush, Greene, and Hart, 2001


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

Introduction: From initial idea to unique
advantage


Before there is a company, there is an entrepreneur with an idea


the idea
may meet a perceived market opportunity, solve a social problem, or be
just a better way of doing things


One of the first challenges is deciding which resources to focus on when
building an initial resource base


Start
-
ups lack operating history, have no customer base, no reputation for
performance, and often no shared experience (among founding team
members)


Every year a majority of start
-
ups fail or cease operations because of
ineffective management, lack of capital, human failings, or inability to
attract and retain talented people


Start
-
ups need to focus on creating unique capabilities rooted in innovative
combinations of resources

Entrepreneurial resources


Entrepreneurship is a process of starting up and growing


These processes emphasize importance of money, people,
information, etc. that must be acquired to launch and grow new
venture


The entrepreneur is the primary resource, and his/her expectations
about the future drive decisions about strategic direction (and
therefore resource accumulation)


Constructing an initial resource base requires that resources be
identified, assembled, and acquired to meet a perceived opportunity
before they can be used to execute the strategy

What resources?


Human


Social


Physical


Financial


Technological


Organizational

Resource attributes: simple versus complex

Simple


Tangible


Discrete


Property
-
based


Example: financial resources are
quantifiable and tangible

Complex


Intangible


Systemic


Knowledge
-
based


Example: human resources are
difficult to identify and measure
plus largely intangible


Resource attributes: utilitarian
vs

instrumental

Utilitarian


Applied directly to the
productive process or combined
to develop other resources


Examples: machinery, trucks,
office space

Instrumental


Used specifically to provide
access to other resources


Example: financial resources

Jeff Hawkins and Donna Dubinsky

Jeff Hawkins

1992


Palm Computing


Excellent reputation and tech
knowledge


Patent for handwriting algorithm


No $, management experience,
business plan, management team,
or product


Leveraged his knowledge,
reputation, and relationships to get
access to human, physical, and
financial resources to build Palm

1998
-

Handspring


Tech knowledge, management
experience, management team,
personal money, deeper
understanding of customer needs
and suppliers


No business plan, product, or
patents


Launched Handspring without
using outside investors and
leveraged
shared team experience

Resource development at Palm Computing

Starting resource base

Starting resource base

Resource development at Handspring

Resource pyramid of value creation

Easy to identify and access,
given sufficient capital

Combinations of generic resources
that enhance firm’s abilities

Capabilities that are crucial to firm’s
mission and executed consistently well

Core competencies that contribute to value
-
creating aspects of competitive advantage

Strategic assets that are valuable, rare, and costly to
imitate

How entrepreneurs identify and develop
resources

1.
Assembling



first resources are entrepreneur’s education, experience,
reputation, network contacts, industry knowledge

2.
Attracting



start
-
up’s lack of reputation and track record heightens
perception of risk on the part of potential resources providers


entrepreneurs act as if they were trustworthy through business plans or
facilities to create an image of success

3.
Combining



decisions about how to combine resources directly affects
further development of the resource base


entrepreneurs have different
beliefs

4.
Transforming personal resources into organizational ones



the
entrepreneur institutionalizes his/her knowledge, capabilities, and vision
to provide for continued growth and greater complexity and value

The entrepreneurial challenge


A new idea can become a great success story and result in significant
wealth creation if a company’s resource position is strategically
developed from the time of its initial launch


Entrepreneurs in start
-
ups must first construct their resource base
and build a foundation from which capabilities can be developed


The resource development pathway is a tool for analyzing the
resource development trajectory based on resource types,
dimensions, and applications


The resource pyramid of value creation can show the level of resource
development and create a strategy for extending personal resources
to organizational resources and a unique advantage