Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. © Chapter 1 The Power of Entrepreneurship.
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Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Chapter 1
The Power of Entrepreneurship
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
An entrepreneur is the person who destroys the existing economic order by introducing new products and services, by introducing new methods of production, by creating new forms of organization, or by exploiting new raw materials.
Definition of entrepreneurship
Schumpeter
An entrepreneur is the person who perceives an opportunity and creates an organization to pursue it.
Simpler
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Business in the US
99.5% are smallbusinesses
(with 500 or feweremployees)
24 millionbusinesses
Have only1 employee
Part-timeemployees
Full-timeemployees
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
2 years 10 years1 year
81 % survive
5 years
10-year survival rates of business
establishments 40 % survive
65 % survive 25 % survive
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Entrepreneurship Revolution Strikes Gold
Netscape Communications:
$6 million of own money + $6 million of VC money = $2.2 billion of market capitalization on the first day of IPO
eBay:
Benchmark Capital’s investment of $5 million in eBay multiplied 1500-foldin just two years
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Venture Capital Investments in Internet-related companies
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
'94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04
Nu
mb
er o
f C
om
pan
ies
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
To
tal I
nve
ste
d (
$ b
illio
n)
Number of Companies Total InvestedSource: Venture Economics
Netscape IPO1995
Amazon.com IPO1997
Yahoo IPO1996
eBay IPO1998
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Changes in the Entrepreneurial Framework Conditions
Financial
Human
Infrastructure
Physical
Infrastructure R&D transfer
Government
Cultural
and Social
Norms
Education,
Professionalization
Training
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Total Entrepreneurial Activity [TEA Prevalence] 2004: By Country
-5.00
10.0015.0020.0025.0030.0035.0040.0045.00
Japa
nS
love
nia
Hon
g K
ong
Bel
gium
Sw
eden
Cro
atia
Por
tuga
lH
unga
ryIta
lyF
inla
ndG
erm
any
Net
herla
nds
Spa
inD
enm
ark
Sou
th A
fric
aS
inga
pore
Gre
ece
Fra
nce
Uni
ted
Kin
gdom
Isra
elN
orw
ayIr
elan
dP
olan
dC
anad
aU
nite
d S
tate
sA
rgen
tina
Aus
tral
iaB
razi
lIc
elan
dN
ew Z
eala
ndJo
rdan
Ecu
ador
Uga
nda
Per
u
AV
ER
AG
E
#/ 1
00 A
du
lts,
18-
64 Y
ears
Old
[95
%
Co
nfi
den
ce In
terv
al]
TEA (total entrepreneurial activity) is the percent of the adult population thatare either nascent entrepreneurs or baby businesses’ owner-managers or both.It measures the overall entrepreneurial activity of a nation.
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
TEA (necessity) is the percent of adults who are trying to start or have started a baby business
because all other options for work are either absent or unsatisfactory.
TEA (Opportunity)/TEA (Necessity) 2004
R2 = 0.57
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
16.00
18.00
0 10,000 20,000 30,000 40,000 50,000 60,000
GDP per capita, US$
TE
A (
Op
po
rtu
nit
y)/
TE
A
(Ne
ce
ss
ity
)
TEA (opportunity) is the percent of the adult population that are trying to start or have started a
baby business to exploit a perceived opportunity.
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
TEA vs. GDP per Capita in PPP (2005)
R2 = 0.49
0%
5%
10%
15%
20%
25%
30%
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000
GDP per Capita 2005, in Purchasing Power Parities (PPP)
Per
cen
tag
e o
f p
op
ula
tio
n b
etw
een
18-
64 y
ears
EasternEurope
EU-14Countries
MiddleIncomeCountries
VE
NZ
HU
HR LV
AR
CL
TH
BR
CN
JM
MX
ZA
USIS
CA
AU
SG
SI
ES
GR
JP
NOIE
DK
SW
UK
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
TEA 2004: by Age Categories and Country Income Group
0
5
10
15
20
25
low income countries middle income countries high income countries
#/ 1
00 A
du
lts,
18-
64 Y
ears
Old
18-24 years
25-34 year
35-44 years
45-54 years
55-64 years
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
TEA 2004: by Gender
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Japa
nSl
oven
iaH
ong
Kon
gB
elgi
umSw
eden
Cro
atia
Port
ugal
Hun
gary
Italy
Finl
and
Ger
man
yN
ethe
rland
sSp
ain
Den
mar
kSo
uth
Afr
ica
Sing
apor
eG
reec
eFr
ance
Uni
ted
Kin
gdom Isra
elN
orw
ayIre
land
Pola
ndC
anad
aU
nite
d St
ates
Arg
entin
aA
ustr
alia
Bra
zil
Icel
and
New
Zea
land
Jord
anEc
uado
rU
gand
aPe
ru
AVE
RA
GE
#/
10
0 A
du
lts
, 1
8-6
4 Y
ea
rs O
ld Women
Men
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
TEA 2004: Education by Country Income Group
(GDP per capita)
0% 20% 40% 60% 80% 100%
low incomecountries >$10,000
middle incomecountries
high incomecountries >$25,000
up to some secondary secondary degree post secondary
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
Informal Investment and Classic Venture CapitalPercent of GDP
0.00
0.50
1.00
1.50
2.00
2.50
3.00
H
unga
ry
Fin
land
Norw
ay
Por
tuga
l
Slo
veni
a
Fr
ance
I
rela
nd UK
J
apan
Ita
ly
Bel
gium
Swed
en
Aust
ralia
Sout
h Af
rica
Hong
Kon
g
S
pain
USA
G
erm
any
Net
herla
nds
D
enm
ark
Cana
da
Is
rael
Swi
tzer
land
Si
ngap
ore
Pola
nd
G
reec
e N
ew Z
eala
ndInfo
rmal
in
vest
men
t an
d c
lass
icve
ntu
re c
apit
al a
s p
erce
nt
of
GD
P
Classic venture capital
Informal investment
Bygrave & Zacharakis, 2007. Entrepreneurship, New York: Wiley. ©
21ST CENTURY ECONOMIES:
ANGLO-SAXON OR SOCIAL MODELS?
Anglo-Saxon
EconomicSystems
Anglo-Saxon economic systems have a high prevalence rate of high-expectationentrepreneurial activity.
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