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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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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
© 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution
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?
