Columbia Faculty on “What is the Entrepreneurial Mindset”

Entrepreneurship is one of those terms that’s a bit like the old saw about art or pornography - “I can’t define it, but I know it when I see it”.  If you want to bring a collection of entrepreneurship academics to a screeching halt, just ask the question “What is entrepreneurship?” This will provoke such a long and heated debate that all other purposes of coming together get lost in the shuffle.  This has gone on at least as long as the 18 years I’ve been in the field. 

It was therefore interesting for Columbia’s entrepreneurship center to collect different faculty members’ perspectives on the notion of entrepreneurial mindset in one place.  You’ll find their definitions and observations here.

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• Posted Rita McGrath on December 20, 2007

Venture Capitalists may not be so good at stopping failing projects after all

My colleague, Isin Guler, has just published a fascinating study in one of our more erudite management journals.  In an exhaustive look at investments made by venture capital companies, she finds that as funding rounds proceed, expected returns to the investment decline.  You would think that a hard-nosed VC would just shut the loser down, wouldn’t you?  Turns out, not so.  In fact, the likelihood of a venture being terminated as a result of poor performance actually declines as more rounds of financing are completed.  Isin (a professor at the University of North Carolina at Chapel Hill) suggests that political agendas, the desire to look good before one’s colleagues, a reluctance to admit defeat and giving too much weight to sunk costs all come into play. 

It’s a sobering bit of research for those of us (myself among them) who have said that ruthlessly shutting down uncertain projects that don’t meet their goals is key to containing risk in uncertain investments.  You also have to wonder - since VC’s are investment professionals, one might expect companies, in which far greater interference from the forces for escalation are likely to be prevalent - to be far worse at making the tough calls. 

For those of you interested in the academic paper, the citation is:
Guler, I. 2007. Throwing good money after bad?  Political and institutional influences on sequential decision making in the venture capital industry. Admin. Sci. Quart. 52(2) 248-285.

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• Posted Rita McGrath on October 15, 2007

Entrepreneurial Japan - that’s news!

In the February, 2007, Harvard Business Review, there is a wonderful short piece on Entrepreneurial Japan. It notes how many trends -- the end of guaranteed lifetime employment, changing governance structures, the changing social attitude toward independent entrepreneurship and an increase in the number of successful role models - are coming together to create a far more exciting environment for those who would like to do things differently.

This is such a wonderful development to hear about. And I'd like to draw attention here to one of our colleagues, Dr. Takeru Ohe, who has been trying to get Japanese business to think more entrepreneurially for several decades now. One of his latest ventures is to run a summer camp that teaches entrepreneurial skills to youngsters, hoping to take that next generation even further.

To put in a plug for Columbia - we are running a course on creating strategy in July (24-26) that I direct (which means I'm there the whole time) which hopes to draw on some of the entrepreneurial energy now infusing the economy. See the web site http://www0.gsb.columbia.edu/execed/open/programs/japan_strategy.cfm

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• Posted Admin on February 27, 2007

Preparing for Startup

Rita was recently asked how people can best prepare themselves for an entrepreneurial career later on in life. Here are her suggestions:

There are three things that you can do to position yourself to start a company at some stage:

#1: Build your network. All entrepreneurs benefit greatly from their networks of contacts, and in fact this is one of the most important factors that determine whether someone will eventually succeed or fail. What you want is diversity, ability to keep in touch and the buildup of - social capital - meaning favors owed, people who like you, and the ability to engage others in making your vision real.

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• Posted Admin on July 18, 2006

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