Test Bank For Entrepreneurial Chapter 2

Chapter 02 Small Business Entrepreneurs: Characteristics and

Competencies Answer Key

True / False Questions

1.

(p. 30)

There is one specific pattern of entrepreneurial behavior or entrepreneurial type.

FALSE

There is no one pattern of entrepreneurial behavior or entrepreneurial type.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

2.

(p. 30)

Passion is displayed by being persistently focused on the business.

TRUE

Passion is displayed in three ways: (1) by looking at the challenges of the business

in a creative way, (2) by being persistently focused on the business, and (3) by

being absorbed by the tasks and concerns of the business.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

2-1

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

3.

(p. 31)

Opportunistic planners always plan around the most important aspect of the

business first, act on it, and then consider if additional plans are needed.

FALSE

Opportunistic planners generally start with a goal and look for opportunities to

achieve it. Once they find a good opportunity, even if it isn’t the one related to

their original goal, they act on it, so it is very short term in orientation.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

4.

(p. 32)

Habit-based planners don’t plan, and they don’t even tend to react to changes in

their environments.

TRUE

Habit-based planners do not really plan at all because their actions are dictated by

their routines. They do today what they did yesterday. They don’t plan, and they

don’t even tend to react to changes in their environments.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

5.

(p. 32)

A situation that occurs when businesses have founders or owners who are

passionate about one or two of the key business functions, such as sales,

operations, accounting, finance, or human resources is known as expert business

professionalization.

FALSE

A situation that occurs when all the major functions of a firm are conducted

according to the standard business practices of its industry is known as expert

business professionalization.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

2-2

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

6.

(p. 34)

Most successful entrepreneurs exhibit hard work, but completely lack in

competencies.

FALSE

All the entrepreneurial personality types aspects depend on hard work, but there

are other specific types of business-related expertise—called competencies—that

appear repeatedly in successful entrepreneurs around the world.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

7.

(p. 35)

The competency suggested by exchange relates to the organizational and

business processes of a firm called basic business competency.

FALSE

The competency suggested by boundary relates to the organizational and business

processes of a firm called basic business competency.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

8.

(p. 36)

Skills necessary to identify and exploit elements of the business environment that

can lead to a profitable and sustainable business are called opportunity

competencies.

TRUE

Exchange deals with the actual process of exploiting the opportunity for profit—

which is a fancy way of saying “making sales.” The competencies that make this

work are called opportunity competencies, which include identifying an

opportunity, a product, or service idea that is likely to lead you to a profit and is

ideally distinctive to your firm and, you hope, hard for others to copy.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-02 Assess the operational competencies of the successful entrepreneur.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

2-3

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

9.

(p. 37)

Succession challenges rarely affect family businesses.

FALSE

There are two challenges typical to family businesses—role conflict and

succession. Succession is the process of intergenerational transfer of a business.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-03 Describe the challenges of family business owners.

Level of difficulty: 1 Easy

Topic: The Sociology of Entrepreneurs

10.

(p. 37)

One of the major challenges identified for family businesses is role conflict.

TRUE

There are two challenges typical to family businesses—role conflict and

succession. Role conflict describes the kind of problem that arises when people

have multiple responsibilities, such as parent and boss, and each makes di:erent

demands on them.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-03 Describe the challenges of family business owners.

Level of difficulty: 1 Easy

Topic: The Sociology of Entrepreneurs

11.

(p. 39)

Only one-third of family-owned businesses survive beyond the first generation.

TRUE

Thirty-nine percent of U.S. family-owned businesses are expected to face the

retirement or semiretirement of their CEO within the next five years. This statistic

grows in importance if you factor in the idea that only one-third of family-owned

businesses survive beyond the first generation.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-03 Describe the challenges of family business owners.

Level of difficulty: 1 Easy

Topic: The Sociology of Entrepreneurs

2-4

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

12.

(p. 40)

Succession plans deal with the people who will take over, what roles they will fill,

and what supports they will receive.

TRUE

Succession plans deal with the people who will take over, what roles they will fill,

and what supports (such as training, outside assistance, voting power, resources

control) they will receive. Problems arise when there are no successors available

within the family.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-03 Describe the challenges of family business owners.

Level of difficulty: 1 Easy

Topic: The Sociology of Entrepreneurs

13.

(p. 40)

One way to maximize communication in the succession process is to create a

family council.

TRUE

One way to maximize communication in the succession process is to create a

family council. A family council includes family members with immediate interests

in the business (spouse, sisters and brothers, older children, etc.). The focus of

council meetings is the business-family relationship. The meetings can also be a

good forum for grappling with issues like role expectations, commitment, and

personal responsibility.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-03 Describe the challenges of family business owners.

Level of difficulty: 1 Easy

Topic: The Sociology of Entrepreneurs

14.

(p. 40)

In family-owned businesses, the board of members can only be comprised of

family members.

FALSE

The key di:erence between a family council and a board of directors is that the

function of the family council is to keep the family involved while the board is

focused on running the business. The board includes significant nonfamily

membership.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-03 Describe the challenges of family business owners.

Level of difficulty: 1 Easy

Topic: The Sociology of Entrepreneurs

2-5

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

15.

(p. 41)

The best way to handle ownership problems is to come out right at the start and

specify or negotiate who owns what.

TRUE

Ownership problems like this happen all the time in teams. The best way to handle

it is to come out right at the start and specify or negotiate who owns what. There

is no one “right” answer; it depends on how the group and their larger organization

handle it.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-04 Recognize the special nature of entrepreneurial teams

Level of difficulty: 1 Easy

Topic: The Thoughtful Entrepreneur

16.

(p. 42)

The slowest growing sector of all U.S. businesses is women-owned businesses.

FALSE

Women-owned businesses are one of the fastest growing sectors of all U.S.

businesses. Between 1997 and 2012, the number of private businesses with at

least 51 percent female ownership increased by 54 percent, while the rate for

firms overall was 37 percent.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-05 Identify the challenges women and minority business owners face.

Level of difficulty: 1 Easy

Topic: The Thoughtful Entrepreneur

17.

(p. 43)

Access problems for women- and minority-owned small businesses crop up most

often as discrimination in marketing.

FALSE

Access problems for women- and minority-owned small businesses crop up most

often as discrimination in financing. This means that they may not be given the

same access to funds or contracting opportunities that white male-owned firms are

given.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-05 Identify the challenges women and minority business owners face.

Level of difficulty: 1 Easy

Topic: The Thoughtful Entrepreneur

2-6

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

18.

(p. 43)

For corporations, certification for businesses owned by women or minority is

handled by organizations that are not aBliated with the government or big

business.

TRUE

For corporations, certification is handled by organizations that are not aBliated

with the government or big business, such as the National Minority Supply and

Diversity Council or the Women’s Business Enterprise National Council.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-05 Identify the challenges women and minority business owners face.

Level of difficulty: 1 Easy

Topic: The Thoughtful Entrepreneur

19.

(p. 44)

About a third of the retirees who return to work decide to become self-employed.

TRUE

About a third of the retirees who return to work decide to become self-employed.

Those who do face three challenges—adjusting to the entrepreneurial life,

reestablishing self-confidence, and keeping personal finances out of the business.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-06 Describe the situation of people who become business owners later in life.

Level of difficulty: 1 Easy

Topic: Second Career Entrepreneurs

20.

(p. 45)

One of the major issues identified for late career entrepreneurs is keeping personal

finances out of the business.

TRUE

A problem for late career entrepreneurs is keeping personal finances out of the

business. Often when individuals are laid o: or given early retirement, they can

receive lump-sum financial settlements. Frequently, people intending to become

late career entrepreneurs plan to use a substantial portion of these funds to start

the new business.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-06 Describe the situation of people who become business owners later in life.

Level of difficulty: 1 Easy

Topic: Second Career Entrepreneurs

2-7

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

Multiple Choice Questions

21.

(p. 30)

Cognition:

A. is a person’s way of perceiving and thinking about his or her

experience.

B. refers to successful entrepreneurial behavior that leads to the creation of

a new firm.

C. pertains to the feeling of being absorbed by the tasks and concerns of

the business.

D. does not help in making any managerial

decisions.

Cognition is a person’s way of perceiving and thinking about his or her experience.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

22.

(p. 30)

The visible behavior a person takes is known as:

A. promotio

n.

B. perceptio

n.

C. actio

n.

D. cognitio

n.

The visible behavior a person takes is known as action.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

2-8

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

23.

(p. 30)

Which of the following is one of the most common behaviors found in successful

entrepreneurs?

A. Preemptio

n

B. Frigidnes

s

C. Personalizati

on

D. Passio

n

There are five aspects of behavior that most successful entrepreneurs display.

These are not the only possible behaviors that you could consider, but they are

behaviors that have been shown in the research to relate to success among

entrepreneurs. The five behaviors include passion, perseverance,

promotion/prevention focus, planning style, and professionalization.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

24.

(p. 30)

Which of the following is best thought of as a type of learned optimism in

successful entrepreneurs?

A. Apath

y

B. Professionalizati

on

C. Perseveranc

e

D. Cognitio

n

Perseverance is best thought of as a type of learned optimism, the ability to stick

with some activity even when it takes a long time, and when a successful or

unsuccessful outcome is not immediately known.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

2-9

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

25.

(p. 30)

_____ is the ability to stick with some activity even when it takes a long time, and

when a successful or unsuccessful outcome is not immediately known.

A. Compatibili

ty

B. Competen

ce

C. Sustenanc

e

D. Perseveranc

e

Perseverance is best thought of as a type of learned optimism, the ability to stick

with some activity even when it takes a long time, and when a successful or

unsuccessful outcome is not immediately known.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

26.

(p. 31)

The problem behavior of trying the same action repeatedly without learning is

called _____.

A. perseverati

on

B. prevention

focus

C. e:ectuati

on

D. critical

observation

The danger is to keep trying the same action repeatedly without learning. That is a

problem behavior called perseveration.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

2-10

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

27.

(p. 31)

Regulatory focus is a mix of _____ focus and _____ focus.

A. e:ectuation;

comprehension

B. comprehension;

prevention

C. e:ectuation;

promotion

D. promotion;

prevention

Most of us have some mix of two internal focuses (also called our regulatory

focus), a promotion focus intent on maximizing gains, which gives us a bias toward

pursuing opportunities likely to lead to those gains, and a prevention focus intent

on minimizing losses, with a bias toward inaction or protective action. Being a

successful entrepreneur involves balancing the two focuses.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

28.

(p. 31)

A(n) _____ focus refers to an entrepreneur’s attention on maximizing gains and

pursuing opportunities likely to lead to gains.

A. comprehensi

on

B. promoti

on

C. e:ectuati

on

D. preventi

on

Most of us have some mix of two internal focuses (also called our regulatory

focus), a promotion focus intent on maximizing gains, which gives us a bias toward

pursuing opportunities likely to lead to those gains, and a prevention focus intent

on minimizing losses, with a bias toward inaction or protective action. Being a

successful entrepreneur involves balancing the two focuses.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

2-11

in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

29.

(p. 31)

A(n) _____ focus refers to an entrepreneur’s attention to minimizing losses, with a

bias toward inaction or protective action to avert loss.

A. extern

al

B. promoti

on

C. e:ectuati

on

D. preventi

on

Most of us have some mix of two internal focuses (also called our regulatory

focus), a promotion focus intent on maximizing gains, which gives us a bias toward

pursuing opportunities likely to lead to those gains, and a prevention focus intent

on minimizing losses, with a bias toward inaction or protective action. Being a

successful entrepreneur involves balancing the two focuses.

AACSB: Analytic

Blooms: Remember

Learning Objective: 02-01 Recognize the key aspects of entrepreneurial personality.

Level of difficulty: 1 Easy

Topic: The Psychology of Entrepreneurs

30.

(p. 31)

Which of the following approaches yields better results in an established industry

or a poor one?