Phase I: Innovation
Phase I: Innovation
Entrepreneurship is the process by which individuals pursue opportunities without regard to resources they currently control. The ability to imagine possibilities unconstrained by concerns about current resources and the willingness to pursue those opportunities are essential ingredients of entrepreneurship. But making the dream into reality requires resource assembly. Entrepreneurs, who start with few resources, need to mobilize resources through networks, maintain resource access by building strategic alliances, and leverage those relationships through primary partners.The resource assembly process
The resource assembly process consists of identifying specification of needs and establishing strategic networks that enable entrepreneurs to achieve the synergy possibly obtained by putting multiple individual resources or resource providers together. The synergy is derived from strategic positioning of individual resources by using them at the right time for the right purpose. The overall benefits from the resource assembly exceed the sum of the individual resources' benefits. Specification of needs is important at the start-up and through the early development stages of business. However, because of the natural characteristics of a new venture in which multiple contingencies are likely to arise, strategies often need to be modified and, consequently, resource needs change. Thus, entrepreneurs need to build flexibility in their resource reserves through strategic alliances and partnerships. When selecting partners, entrepreneurs need to consider candidates not only on the basis of their ability and willingness to make an immediate contribution, but also on their ability to provide access to additional resources, either directly or through connections to other providers.Search and Settlement Costs
According to a research conducted in 1995 by Frontier of Entrepreneurship Research, an experienced entrepreneur' reputation in an industry increases efficiency and effectiveness of the resource assembly process by reducing search and settlement costs of resource partners and building trust among them.
"Being known is as important as knowing. It enables the entrepreneur to attract and assemble resources efficiently and reduce search and settlement costs. When resource partners can evaluate the business opportunity and the founder's capabilities in both personal and professional context, the perceived risk of the enterprise is lowered and the risk premium for participation adjusts downward. Resource partners premise their trust in the entrepreneur's competence and make their commitment to the new enterprise on the basis of what they already know of the individual. Greater trust facilitates "open" agreements with attention on desired outcomes rather than on interim structures and plans and the relaxation of demands for highly specified agreements allows the entrepreneurs the flexibility they needed."Industry specific knowledge
Industry knowledge or intellectual capital, such as technology roots and new venture experience, is an important asset that entrepreneurs can use in specifying resources, selecting partners, and engaging resource providers. This knowledge informs specification of the physical and financial resource requirements, but is even more valuable in enabling the entrepreneur to identify the intangible needs of the venture. Entrepreneurs with related experience are able to specify resources more precisely and in greater depth than can industry newcomers and also to identify the full range of capabilities and potential contributions of partners and facilitates the selection among the possible providers.
Myra M. Hart, Howard H. Stevenson, Jay Dial, Entrepreneurship: A definition revisited, Frontier of Entrepreneurship Research 1995 Edition
Aldrich, H. and Zimmer, C. (1986), Entrepreneurship through Social Networks in The Art and Science of Entrepreneurship, ed. D.L. Sexton and R.W. Smilor, 3-23. Cambridge, MA: The Ballinger Publishing Company