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The competitive position of firm is defined by a number of different factors like unique resources, relationships etc. that needs to be evaluate and renewed over time (Alvarez, 2003).
There are numerous examples of big multinational and successful companies that started up in the garage of one ambitious, idealistic, or sometimes maybe naive person. Most of the times it takes time to start-up a new enterprise and they are not considered to grow internationally at all in this early state. Yet still, some people manage to create such a successful multinational company.
Entrepreneurship is a broad subject. Many theories has been developed on the entrepreneurial process, the traits, characteristics and behaviour of the entrepreneur etc. According to Venkataraman (1997), the entrepreneurial process is about the discovering, evaluation and exploiting of opportunities. Many factors influence these three steps in the entrepreneurial process. Venkataraman (1997) means that in order to exploit an opportunity the entrepreneur must be able to discover and recognize the entrepreneurial opportunity. According to Kirzner (1997), "entrepreneurial opportunities exist when different agents have insight into the value of resources that other agents do not, and the agents with insights act upon these un-exploited opportunities" (Quote from Alvarez, 2003, page 251).
After discovering an entrepreneurial opportunity, the entrepreneur has to find ways of putting resources he/she possesses to use. Its a challenge to do this in such a way that it is efficient. Combining of resources could give the entrepreneur an competitive advantage. When the entrepreneur does not possess the right resources he/she must either re-think the exploitation process or go and find the right resources in order to be able to exploit the opportunity. The different fases of discovering, evaluating and exploiting an opportunity might ask for different use and input of different resources.
There are a lot of different types of resources to consider when it comes to the entrepreneurial process. In this paper we will focus on how the career experience of the entrepreneur and the knowledge about the customer as resources are of influence in the entrepreneurial process. We will identify in which stages these resources are used and we will analyze the potential differences in usage in the different stages of the entrepreneurial process.
According to Shane (2000) there are several traits that are of influence on a person's ability to recognize opportunities, being: prior knowledge, experience, social networks and cognitive behavior. Besides that, we found supporting theories on the importance of those traits in a more focussed perspective: 'The more career experience one has, the more effective is the entrepreneur in recognizing and acting on entrepreneurial opportunities' (Politis, 2005). The focus on the knowledge on customers specifically we found interesting because 'products and services must be based on real customer needs, not on the assumption that if you introduce something there will be an automatic demand for it.' (Cowley, 2002)
Chapter One: Contains an introduction to our main subject and discussion about resources like knowledge.
Chapter Two: Contains our literature review on resource-based theory's, prior knowledge of markets, customers, customers problems etc.
Chapter Three: In this chapter we will present our methodology on how our research will be done.
Chapter Four: Contains our analysis our the empirical data handed to us by our examinator Navid Ghannad. Here we will analyse our empirical data by linking it with our theoretical framework.
Chapter Five: Here we will present our conclusions.
In order to get to the subjects career experience
As for today, there is still no agreement on the definition of "the entrepreneurship". Nor is there an agreed on definition of the "entrepreneur". In the early years of the 20th century, Joseph Schumpeter enriched this field of research by being one of the first to come up with a specified definition on these terms. Schumpeter (1934) definition of an entrepreneur is based on innovation, which he defines by either introducing new products, new methods, new markets and/or new forms of organizations with the intent to create wealth. This does not imply directly the creation of new firms. Entrepreneurship could, according to this theory, also be conducted within a existing firm. Schumpeter's theory and boundary of the terms has caused the discussion on this topic to become very popular. In this report he talk about both the entrepreneur and entrepreneurship. We refer to the definition that nowadays seems to be the most influential ' the study of sources of opportunities, the process of discovery, evaluation and exploitation of opportunities; and the set of individuals who discover, evaluate ad exploit them (Shane and Venkataraman, 2000, p. 128)
2.2 The entrepreneurial process
Other than what some important other economists say William D. Bygrave states that creating an organization, in whatever form this may be, is an essential part of being an entrepreneur. The whole process between the existence of a entrepreneurial opportunities and the creation of an organization we refer to as the entrepreneurial process. This includes the existence, the discovery and the exploitation of an entrepreneurial opportunity (Shane & Venkataraman, 2000). The exploitation in this definition links to the creation of an organization. Studies on the entrepreneurial process so far are unfortunately almost always written in retrospect. This means that these studies are conducted when the outcomes are already known (Sanz-Velasco, Entrepreneurial Learning, 2006). A shortcoming of those studies when referring to the whole field of the entrepreneurial process is that rarely there are long-term studies on companies or ventures that did not make it and failed in certain aspects. Even though this last named group of failed ventures represents probably represents probably a substantial part of all the entrepreneurial actions. The lack of this research gives an incomplete view on the entrepreneurial process. In this report we will refer to the entrepreneurial process as Shane and Venkatarman (2000) describes; the discovering, evaluation and exploitation of opportunities.
What are entrepreneurial opportunities?
Entrepreneurial opportunities exist primarily because different agents have different beliefs about the
relative value of resources when they are converted from inputs into outputs
(Schumpeter, 1934; Kirzner, 1979; Shane & Venkataraman, 2000)
According to Casson (1982) an entrepreneurial opportunity is a situation in which a value can be added to yet existing resources by introducing new goods, services, raw materials and organizing methods. It just takes a creative view on yet existing resources and the ability to look at them from a different angle. This ability is an important step towards distinguishment of a possible entrepreneur from any other general person.
Often it is thought that an opportunity should be unique, though history and experience shows that often opportunities occur to different people at the same time. This has as a result that not rarely you hear potential entrepreneurs missing the train. They have been to busy keeping their idea a secret by being too suspicious to share the idea with others, which makes them not being able to develop the idea towards a possible exploitation. In order for a potential entrepreneur to reach the state of exploitation, it is in his or her interest to talk about the idea and thereby evaluating, screening and testing it (Bygrave, 2003)
In a research on the discovery of opportunities, Shane (2000) empirically proved that entrepreneurs tend to stumble on and recognise existing entrepreneurial opportunities, instead of actively search for them. This implies that opportunities are exist, rather than that they are created by the entrepreneurs themselves. According to the search of Berglund (2005), conceiving opportunities is not seen as either existing or non-existing per se, but as a bundle of more or less clear opportunity perceptions and opportunity projections. Acting provides important cognitive and practical drivers that more or less temporarily guide entrepreneurial actions. William and H. Dixon (2002) investigated the U.S. Locomotive Industry for the opportunity recognition and indicated that distinction between disruptive and nonthreatening technologies is made more easily after the fact. Opportunity recognition remains messy and fog-shrouded.
The causation and effectuation theory of Sarasvathy et al. (2003, p.156) states that opportunities could also be created. This is done by not looking at the resources you possess (effectuation), but by searching for the resources needed to pursue a certain creative idea (causation) (Sarasvathy, Saras D., Causation and effectuation, 2001, p. 245). This leads us to think about the existing of opportunities; where do they come from and how can we define them?
Cognitive behaviour Andrew (2002) indicates that learning mode is an important variable in the opportunity recognition process after finishing the search among information acquisition (learning mode), information processing (cognitive style) and knowledge (general and specific human capital). It plays a significant role in determining whether or not individuals recognize technical opportunities. In addition, they found that proactive search, reactive search and fortuitous discovery have differences with respect to the available organizational, intellectual, financial and technological resources. Firms employing proactive search processes tend to complete necessary gestation milestones more rapidly and reach sales and profitability more rapidly (Corbett, 2002).
Education and training could also influence entrepreneurs ability to discover and evaluate opportunities. Things we have learned in the past will influence our cognitive behaviours so that will come a big part of how we think and perceive things (Ronstad, 1998)
Next to those personal attributes, there are also external (environmental) factors of influence on the discovery and possible exploitation of an opportunity. Seeing someone in your nearness becoming a successful entrepreneur takes away some uncertainty and makes it easier to take the risk. Another part that can play a significant role in the entrepreneurial process are the family responsibilities one has compared to the risk one takes. As some industrial area's might have proven by now, the entrepreneurship fever seems contagious (Bygrave & William, 2003).
Also your network of personal friends and associates can be a great source of finding new business ventures (Singh, Hills, Hybels & Lumpkin, 1999). By exchanging information within your personal network you can come up with new ideas and solutions or evaluate ideas you already have (ibid.).
According to Ardichivall, Cardozo and Ray (2003), after discovering an opportunity and development of it entrepreneurs must do an evaluation in order to know of the opportunity is worth exploiting. That is usually done by an feasibility analysis. The feasibility analysis will give the entrepreneurs answers if the combing if resources could give the right economic revenue.
The evaluation part depends a lot on the entrepreneurs itself. The entrepreneurs perception of return objectives, experience, risk preferences, financial resources, individual responsibility and personal objectives will effect the process of evaluating of the opportunity. Ronstadt (1988) calls this "knowledge corridor". According to Ronstadt (1988), the exploitation of opportunities will be decided by the evaluating entrepreneur. While some will find an opportunity worth exploiting, some with the same idea could find it not worth pursuing.
Once you have discovered an opportunity and are willing to take the risk and explore it, how do you know whether this opportunity is a lucrative one? Nobody can assure you from the beginning that the exploitation will become a success. There are several factors that might help you to give an accurate view on this question. To have a successful business, there are three fundamental factors that are of influence: the opportunity itself, the entrepreneur and the resources (Bygrave & William, 2003) which he calls the three driving forces.:
This figure shows a model in which the three driving force are integrated and are important to make a steady and proper evaluation. According to WHOM?????????????) there are four primary areas of evaluation :
1. The team behind the idea
The employees, advisers and experienced entrepreneur. A great idea that is having high market potential requires a team behind it lead my an entrepreneur. It can effectively grow and support the idea. An entrepreneur's talent and skill may lead to the discovery and evaluation of the idea but entrepreneur may not have much competence to turn that idea into business without a team.
2. The available resources
The resources like capital and debt resources that are accessible and available to the entrepreneur and the management team. Additional assistance from the experts from the people is also a resource. The technology that is available is required to support the idea.
3. The information and knowledge
It is about how much does an entrepreneur posses the information, the knowledge of new venture concept, market research and the industry.
4. The ability to generate revenue of the idea
It is to analyze that how great is the potential to sell the service or the product to generate the revenue. In most of the cases, once the business opens people do not love the idea and they would not be in line to buy it. It is the entrepreneur who analyze to minimize the cost at the start and fluctuate it when the revenue gets increasing.
Haynie, Shepherd and McMullen (2009) identified what kinds of opportunities will attract entrepreneurs, and proposed that opportunity evaluation decision policies are constructed as future-oriented, cognitive representations of 'what will be', assuming one were to exploit the opportunity. These cognitive representations incorporate both (1) an evaluation of the existing resource endowments (already under the control of the venture), which may be employed to exploit the opportunity under evaluation, and at the same time (2) an assessment of the future, wealth generating resources that must be marshaled (and subsequently under the control of the venture) in order to exploit the opportunity under evaluation. They suggested that entrepreneurs are attracted to opportunities that are complementary to their existing knowledge resources; however, they also identified a set of opportunity-specific and firm-specific conditions that encourage entrepreneurs to pursue the acquisition and control of resources that are inconsistent with the existing, knowledge-based resources of the venture.
The exploitation of opportunities
The rise and fall of entrepreneurial opportunities
There are two phases in an established organization about discovering, evaluating and choosing entrepreneurial opportunities: The converging phase and the screening phase. In converging phase the opportunities are discovered and in screening phase the opportunities are chosen and evaluated for exploitation. Further, in screening phase the organization must pay attention to opportunities current worth. It is about social, economical and cultural structures. Both phase are important equally but screening of the entrepreneurial opportunities is what is concerning with rise and fall of opportunities.
The converging phase
The converging phase is about to the period during which entrepreneurial opportunities are discovered in an organization that is already established. It is before the phase where opportunities are evaluated and chosen for exploitation. Participants like employees, consultants, suppliers and customers flow into the organization in this phase. By communication between participants various innovations about opportunities emerge and solutions come for the certain problems. In project meetings they communicate with each other, emails, discussion forums, as well as other types of dialogue. For successful initiation of entrepreneurial opportunities, the quality of communication is crucial.
The screening phase
Once an opportunity has been identified in converging phase and relevant information has been obtained. The team of corporate entrepreneurs do forward it to the management for exploitation further more. This phase refers to the period during the entrepreneurial opportunities are evaluated and for exploitation selected by managers. In screening phase, two sets of related and situational factors, one is attention structures and other is policy windows. These factors channel the screening process by selecting opportunities for exploitation and screening the others.
The Resource-based view
In his paper 'A resource-based view of the firm' Wernerfelt comes up with the theory to look at the firms position from a resources side, rather than from a product side and to determine how to use those resources in such a way that they create new strategic options (Wernerfelt, 1984)
First mover advantages
When a person has the advantage of being the first one to be introducing a new product, using new processes or entering a new market (Lieberman and Montgomery, 1990), s/he can benefit from this position because it can affect the cost and/or revenues of the players in the field that enter afterwards, a phenomenen that is also reffered to as resource position barriers (Wernerfelt, 1984, p 173).
Research has shown that there is a correlation between the entrance to the market of different firms and their market share (Karin, R. A. 1992, Journal of marketing). There are several ways in which a first mover could benefit form this status like the learning curve and the monopolist status that you have as long as no other competitors enter your market (von Hippel, 1984) technological leadership, preemption of scarce assets, switching costs and buyer choice under uncertainty. On the other hand it brings disadvantages as well, which often take form by not having the advantages that later entrants do have. For example free-riding, technological discontinuities, market uncertainty and incumbent to adapt to environmental change (Lieberman M. B., Montgomery, D. B., first mover advantages; Research paper, October 1987). From a resource based point of view, this first mover advantage will only be an advantage as long as the product that is introduced is rare, valuable and difficult to imitate (Barney, 1991)
The resource-based view and competitive advantage
As Peteraf (1993) analyzes in her paper 'Entrepreneurial resources, organizational choices and competitive outcome, Organization Science', there are four important conditions of resource-based theory that should be taken into account::
Resource heterogeneity within an industry
Heterogeneity is a basic condition of entrepreneurship (Kirzner, 1997). A basic assumption of resource-based work is that the resource bundles and capabilities underlying production are heterogeneous across firms (Barney, 1991 Different resources could be superior over others. Heterogeneity of resources implies that a firm is stronger in the field of competition. Firms with Superior resources are more likely to be profitable (Peteraf, 2003, p. 180) According to Kirzner (1997), "entrepreneurial opportunities exist when different agents have insight into the value of resources that other agents do not, and the agents with insights act upon these un-exploited opportunities" (Quote from Alvarez, 2003, page 251). According to Alvarez (2003), firms can have heterogeneous assets but those will only generate advantage as long as their not imitated.
Ex post limits to competition
In order for the resources to be of long term value by producing rents on the long run, it is important that the resources are not only durable and sustainable. The competition should also in some way be limited in obtaining those resources and rents. Forces that might be used could be for example property rights to scarce products, information a-symmetries (Rumelt, 1987) or the notion of causal ambiguity (Lippman and Rumelt, 1982), which makes it hard or even impossible for possible imitators to know how and/or what to imitate exactly.
Imperfect resource mobility
There are perfectly immobile and imperfectly mobile resources. The difference between them is that the first mentioned one refers to the untradeable resources. They will not be of any use when they are taken out of the firm (Williamson, 1997). The second one refers to resources that are tradable and might even be of more value in another firm.
Co-specialized resources are resources that do only function when they are combined with one or more other resources (Theese, 1986). They are useless when they would be put in practice on their own.
Ex ante limits to competition.
To gain superior imperfectly mobile resources it is necessary to stay ahead of your competition by acquiring them before they think of it or do it. (Peteraf, 2003, p. 185)
The model gives a grip on the kind of resources that, on their own or combined can give a company a competitive advantage. The recognition of the value of the possessed resources is an important step for managers in order to be able to nourrish and develop them and thereby increase the competitive advantage in that way (Peteraf, M. A., 2003, p. 189)
Organisational choices and their competitive outcome
Even though an individual possesses a valuable resource, for example in the form of tacit knowledge, the way the organization chooses to make use of it influences whether it helps the company to get to or stay in the superior competitive position (Nelson & Winter, 1982) Putting the same resources into practice might generate an outcome that differs per person, since every individual has different psychological characteristics, biographical experiences, cognitive behaviour and knowledge (Woodman, 1993).
What are resources?
as those (tangible and intangible) assets which are tied semi-permanently to the firm (see Caves,
1980). Dierickx and Cool's (1989) identified which kind of resources would be fundamental to the RBV and they came up with 'non-tradeable assets which develop and accumulate within the firm.' These characteristics of the resources strengthen the position of a firm because it leaves potential competition behind. The recognition is influenced by two important aspects that or of big influence on a persons' traits: Individual attributes and the Environment (Shane, 2003).
Resources of influence in the entrepreneurial process
So, what are the necessary resources to come to the phase of exploitation and what makes someone persistent on going through all the stages of the entrepreneurial process where others will not?
Shane (2000) means that people's ability to discover and recognize of entrepreneurial opportunities depends on a few traits. Those traits are according to Shane (2000): prior knowledge, experience, social networks and cognitive behavior. Frank Cave and Alan Minty (2002) indicate that entrepreneurs seem more inclined to accept being risk tolerant, comfortable handling uncertainty and pro-active in decision-making and owner/managers avoid volatility in returns.
Entrepreneurial resources and outcomes
The function of entrepreneurs is to revolutionize and reform the pattern of production by exploiting an discovered or invented idea. The idea can be the for reforming the old product in a new way or introducing an entirely new product. It can be possible by opening up new resources of supply and revolutionizing the industry. The success of entrepreneur depends much on the entrepreneurial resources. These resources are defined as the behavioural propensities about individuals to be intuitive, creative and alert. Two extreme cases that can be compared. One in which entrepreneurial resources are available primarily by one or a few individuals and these individuals are entrepreneurs. Other is entrepreneurial resources are dispersed throughout the team entrepreneurial form in the organization
Different organizational characteristics are defined that will be associated with these two forms. The entrepreneurial individual is likely to have ratification and decision initiation and bearing of risk performed by the possessor of the entrepreneurial resources. By contrast, ratification and decision initiation will be separated through the team entrepreneurial form. These functions are also performed by the many possessors of entrepreneurial resources.
Entrepreneurs will always face difficulties regarding with knowledge and information. Either they have too much information which makes it hard to process, or they will have to little knowledge, which makes it difficult for them to make good informed decision. Knowledge can help entrepreneurs to see things in a different way (Alvarez and Barney, 2000) According to Schumpter (1934), Entrepreneurship is "the creation and commercialization of new resources or combination of existing resources in novel ways that result in formation of a new firm" (Quote from Alvarez, 2003, p. 247).
According to Ronstedt (1998) prior knowledge is a very important part of discovering, evaluation and exploiting entreprenuerial opportunities. Discovering entrepreneurial opportunities is inherently connected to the possession of knowledge one has that others lack (Kirzner, 1973). The possession of this knowledge is the first step towards the ability to recognise opportunities and to evalutae its value. According to Shane (2000) and Ronstadst (1998) there are five dimensions of prior knowledge. Those dimensions are:
- Work experience
- Education and training
- Prior knowledge of markets
- Prior knowledge of ways to serve customers
- Prior knowledge of customers problems
Knowledge resources act a important role of start-ups for creating a new business. They can be possessed by entrepreneurs or others who are willing to share knowledge.West and Noel (2009) indicated knowledge as a type of resource that confers competitive advantage and the potential for sustainability. These two factors are critical for start-ups. Three types of procedural knowledge are considered to be important at start-up: (1) about the industry; (2) about the type of business approach the venture is pursuing; and (3) about creating, building, and harvesting new ventures.Knowledge useful to the new venture is developed either through relevant personal experiences or by accessing relevant knowledge possessed by others (Page West III and Noel, 2009)
Focus on prior knowledge of the customer
Knowledge of customer makes entrepreneurs easier to exploit the opportunities. According to this knowledge, the corporation owned by entrepreneur may create a new segment of the market, possibly, which is the "blue ocean". Choi and Shepherd (2004) examined the decisions of entrepreneurs to begin exploiting business opportunities from a resource-based view. They suggested that entrepreneurs are more likely to exploit opportunities when they perceive more knowledge of customer demand for the new product, more fully developed necessary technologies, greater managerical capability, and great stakeholder support (Young and Shepherd, 2004)
Information about market can be very useful when it comes to discover opportunities. The prior knowledge of markets can also give you insight weather the opportunity is worth pursuing. Prior knowledge on how to serve customers can be very valuable when it comes to the realization of entrepreneurial opportunities. Entrepreneurs prior knowledge of ways to serve customers can also help them in discover new ways of reaching customers. Knowledge about customer problems can help entrepreneurs discover opportunities (Ronstad, 1998)
Customer references can be esteemed external and internal marketing assets. Customer references can be leveraged externally as marketing assets to (1) gain status-transfer effects from reputable customers, (2) signal passing a selection process, (3) concretize and demonstrate complex solutions, and (4) provide indirect evidence of experience, previous performance, technological functionality, and delivered customer value. Customer references can also be leveraged internally to (1) facilitate organizational learning, (2) advance offering development, (3) motivate personnel, and (4) develop understanding of customer needs, internal competencies, and delivered customer value. Finally, they concluded that customer references are critical marketing assets for industrial suppliers, not only because they serve as means of increasing the supplier's market credibility through several functions, but also because they incorporate several internal functions that contribute to organizational learning and efficiency (Jalkala and Salminen, 2010)
Customer knowledge is to understand the customers, their needs, dislikes and aims. This is essential if a business is to align its products, services and processes to build real customer relationships. Many companies have knowledge of their customers, but sometimes this is in a fragmented form and difficult to analyze or share or it is incomplete.
A business failures may happen when someone is creating a gap between what you think about customers needs compared to what customers really need and will go to your competitors to fulfill that.
Customer knowledge can be approached by two ways. First, customer knowledge is the collection of viewpoint and information that an organization keeps about its customers. The role of customer knowledge management is to collect, capture and organize the data. This data should be allowed to share and discuss throughout the entire organization. An alternative view of customer knowledge is, collection of information and with the help of this you can build strong customer relationship. Your current knowledge about your customers may not be sufficient, but you may need to put in systems and processes to gather more data and information about who are your customers and how they think and what they do. It can help the management as a huge resource of knowledge to keep i in-touch with trend and changing market.
Focus on career experience
Rae (1999) describes that entrepreneurs experience becomes a filter which influences the entrepreneur in analyzing and processing opportunities and which helps them to recognize and decide if they should act on the opportunity or not. In that way experience could be a good thing because of our experience can help entrepreneur to see opportunities and help them with knowledge on how to exploit them. Bygrave and William (2003) suggests that experience and knowledge is two of the main traits a person should have in order to be able to become an entrepreneur. It is also important to point out that experience could lead to a more pessimistic view and a more conservative attitude as well and limit people int their entrepreneurial pursuits (Bygrave & William, 2003).
Prior work experience will influence the opportunities you discover (Shane, 2000). Work experience can also help entrepreneurs in the evaluating process. The entrepreneurs past experience could be helpful when it comes to evaluate upcoming situation and opportunities in order to decide if they entrepreneur or the company should pursue the opportunity (Ronstad, 1998).
Entrepreneurial events that are antecedent to entrepreneurial knowledge are not always readily apparent in the case of a new venture due to the presence of ambiguity and continuous changes that are usually evident in an entrepreneurial context (Ravasi et al., 2004; Sarasvathy, 2001). Consequently, Diamanto Politis(2005) suggests three types of career experiences which can be related to the development of entrepreneurial knowledge: start-up experience, management experience and industry- specific experience. Those three types of experiences contain the most three important parts, and it includes creation, maintain and specific knowledge. As Diamanto Politis(2005) says: " The more career experience, the more effective is the entrepreneur in recognizing and acting on entrepreneurial opportunities; The more career experience, the more effective is the entrepreneur in coping with the liabilities of newness."
Diamanto Politis(2005) argues that prior start-up experience offers tacit knowledge which will have a great effect on decision-making about entrepreneurial opportunities. It means that someone with more start-up experience could see an opportunity as more desirable than how others perceive it. It is more likely to exploit opportunity when one has more experience. According Gimeno, Folta, Cooper, and Woo (1997) , "prior start-up experience enhances the economic performance of new ventures that new ventures whose founders had more previous start-up experiences earn more income from their businesses."
And another type of experience is the management experience. Bruderl and Preisendorfer (1998) show that "entrepreneurs' years of work experience increased their ventures' three-year survival rates, and thereby reduced the likelihood of new venture failure. " Many theories has proved that management experience can enhance entrepreneurs' intention to begin a new venture, and also facilitate the opportunity recognition during the process. So general management experience can help many aspects in the process of recognizing and exploiting entrepreneurial opportunities.
Industry specific experience
Due to entrepreneurs should meet uncertainty about the value of the goods and services which they plan to produce, Shane(2003) assumes that " industry-specific experience can have a strong influence on their development of entrepreneurial knowledge." This hints that individuals with prior experience as an entrepreneur in a specific industry will have a better understanding what the market needs and how he can gather the information. When someone decides to start his business in one industry that he did that area before, he will have an advantage of how to gather the information of the exploitation of opportunities. However, only start-up experience couldn't become a satisfactory measure of entrepreneurs' career experiences. It could be considered that entrepreneurs' career experiences have a lot of entrepreneurial events, such as products, services, customers, finance, and start-up experience could be the first part of all.
In this chapter we will present what methods we used to find empirical and theoretical information.
3.1 Deductive approach
According to Backman (2009) there are two approaches to grasp the reality: Deductive and inductive approach. Deductive approach means that the researchers read about their subject before going out in to the world. In that way the can form expectations on how the reality is (Jacobsen, 2007). Inductive approach means that the authors goes out and collect their data with an "open" mind, not having read anything about the subject and without having any expectations (Jacobsen, 2007). In this research we have used an deductive approach for this paper. In order to get a grasp of the subject, we felt the need to read what other authors and researchers had said about the subject before. That gave us a clear picture of what we wanted to look at in this study.
3.2 Qualitativ research method
Their are to basic forms of collecting data; quantitative and qualitative research method. Quantitative is good when the researcher want to get numbers on a phenomena in order to be able to draw general conclusions. Qualitative research method focus more on words an interpretations of the individual (Jacobsen, 2007). The empirical data in this paper was handed to us by out teacher, Navid Ghannad. The empirical data consist of a case study of company Polaris and it's owner Staffan Preutz. The data was collected by Navid Ghannad whith an qualitative research method using a serial in interviews with Staffan Preutz, former employees and people associated with the Polaris company.
We have not performed any empirical data collection of our in in this paper. As we are only using secondary data, we as researchers can not influence the choice of the participants int the study. Secondary data is according to Jacobsen (2007) data that is collected by other researcher for other purposes. Because we cant choose our empirical data ourself this will limit our research and will probably influence our conclusions.
3.3 Analysis method
To analyse our empirical data we have written down what Staffan Preutz and Polaris types of resources they used when it comes to knowledge and experience and how those affected the entrepreneurial process. We then compared our empirical findings with our literature review on the subject to see if there similar or theories that could explain Polaris and Staffan Preutz behaviour.
In this chapter we will analyse our empirical findings with our theoretical framework.
Knowledge and experience as a resource
taffan Preutz tells us that his interest for eye-wear and glasses started at an early age. Staffan had a big interest of drawing sketches and designing at an early age. This interest has come to define Staffan Preutz later on in his life when he acquired knowledge and information about the optical business. In young years he went travelling across Europe to different designers where he learned his profession and developed special competencies in the optical area. He later also got the chance to travel to Germany, France, Italy and England as a part of the "product council" of Synsam. Staffan learned and gained knowledge during this time on how the industry worked both vertically and horizontally. He gained a lot of knowledge on how the industry was working from the manufacturer's perspective as well as the optician's perspective. Staffan's knowledge about development and designing of new products is the most critical resource for Polaris according to Rolf Back.
Staffan also gain valuable knowledge about customer preferences during his traveling. By traveling to different countries he learner the different taste and preferences on different markets, like size, colors and quality.
In 1971 Staffan opened his first optician store in Luleå it was to generate enough money to pursue his dream: to become an eye-wear designer. At the time Staffan didn't have the demand or resources to exploit his dream so he used the resources he had to make most profit of them. According to Stevenson and Gumpter (1985) lack of resources is often a problem for entrepreneurs. Often entrepreneurs faces difficulties with resources and they have to compromise and try to do the best of the resources they got (Stevenson & Gumpter, 1985).
In 1968, Staffan managed to persuade some five opticians to start a optical chain, the Synsam group. Staffan though that by combining their resources they could be more efficient in their buying marketing process.
/ To use knowledge of resources to see opportunities. entrepreneurial alertness.
Summer 1975, Staffan showed his new design. He took his knowledge about eye-wear design combined with his knowledge on new materials to create a new type of frames in plastic material.The frames where special because the optical glass was fixed into the frame. At first the project was to costly and put on ice, but Staffan was still working in the project. Staffan became pioneer at using the new plastic material and especially ways to make into different colors. Because of his expertise in this difficult field of manufacturing those new types of frames. By gaining and learning that process he gained knowledge that gave him an competitive advantage and all stores in the Synsam chain started to send orders to his shop in Luleå.
The manufacturing of frameless glass was not a new invention. But Staffan found new ways to use existing resources that made the products better.
/ recombing of existing resources.
In 1978 Lars Karbin joins Staffan Preutz and form the company Polaris. The knowledge that Staffan Preutz had about of customers, production and designing of glasses where now combined with Lars Karbin knowledge of business administration. So Lars became the head of administration and dealing with company's' paperwork and Staffan was in charge of marketing, production and designing of new products.
The original idea wasn't the one that gave them success. By using new technologies and new ways to use resources Polaris become successful.
/ using existing resources in new ways.
Financial resources in form of loans from NUTEK, local development agencies and commercial banks. New board was formed. Expanded their knowledge resource base with Rolf Back, Erik Rosén and Arne Andersson. (Page 114) financial
There were to three main attempts to get into the US market. The first attempted was to enter the US by selling glasses to the chain "blue jeans". The year was 1979, "Blue Jeans" had expensive locations in cities like Miami, New york etc. This attempt got int lot of trouble because the eye-wear was considered to be a medical product in US. Simultaneously they hired a old friends wife to work as an agent for Polaris in US. According to Staffan it was a mistake to hire because she was more interested in giving away free products that actually selling them. In these to cases the gained valuable experience and knowledge about the market and hiring of the right people.
Their third attempt to enter the US market was with an ambitious lady, Meg. Meg became a huge resource for Polars with our ambition and motivation together with her networking skills. Her huband was a pilot and they used his private jet to travel across the country to promote the glasses. With Megs help d profit in US.
After the mistake with the new CEO in US, they gain experience. They trouble with the Kent Carlsson made Staffan and Lars relationship turn bad. It ended up with Lars leaving the company under turbulent circumstanses and with the loss of Lars, The Polaris lost a lot of competence and knowledge. The lost a big part of their business administration competences and marketing knowledge.
The company couldn't keep up with their rapid expansion and got problems with quality and delivery.
/not enough resources to cope with demand. Led to problem.
Problems in germany, gained experience
Lengton enters. Lots of knowledge and experience from being an product developer in an optical production facility in England. Started working together. Golden trio. Lars worked finacis and banking, Staffan design and market and lengton with production. Competences in metal and plastic, lead to that they could manufacture the frames themselves instead of outsorcing it to france.
Late 90's lengton left, never replaced.
From the case: What has changed nowadays?
Nowadays: he would not take the same risks:
Entering markets without any calculations, strategies or resources
He was deceived too many times by 'nice'people. Now introduced the pay-in-advance
Losses have decreased significantly
Maintainence of manufacturing facilities too high
Now only manufactured in UK, sent to Sweden
No more patents: slightest change will make lawsuit unhelpful
Weakeness: competing against mike/Gucci/etc.
Society and the way they look at him: too many employees makes you a bigger idiot and bigger danger
Polaris highly dependant on Staffan
Staffans'design is Core Competence
Network turns older, pass away. Its difficult to network with the new successors.
In this chapter we will present our conclusion and suggestions for the future.