Questions for Chapter 1
True/False
1. The 2018-2019 Global Entrepreneurship Monitor reports that across the 49 countries investigated
32.6 % of adults were in the process of working to start a new business or were running one they
recently started. (pg. 1)
2. New and emerging businesses (e.g., Airbnb or Uber) created half of the new private-sector jobs in
the United States in 2018. (pg. 2)
3. Moravian-born economist, Joseph Schumpeter defines an entrepreneur as someone who destroys
the existing economic order as a result of his or her activities. (pg. 2)
4. According to the United States Small Business Association (SBA), there are over 30 million small
5. In general, businesses with fewer than 600 employees are considered “small–sized businesses”.
(pg. 3)
6. Approximately 66% of all businesses start in the owner’s home but fail to grow primarily
because the entrepreneur hires too many full-time workers. (pg. 3)
7. A majority of small business owners feel their companies have increased their overall standard of
living. (pg. 4)
8. The first two NASDAQ stocks to be included in the Dow Jones Industrial Average were
Microsoft and Apple. (pg. 4)
9. At the turn of the 20th century, about 4% of US workers worked in either the agricultural or the
domestic service spheres. Approximately 100 years later that percentage has grown to about 50%.
(pg. 6)
10. In 1928, the DJIA comprised 50 companies. (pg. 6)
11. Venture Capital is a source of growth funding exclusively for technology companies with the
potential for rapid, scalable growth. (pg. 10)
12. The former dean of the Nomura School of Advanced Management in Japan, Jiro Tokuyama,
once said that the venture capital firms in Japan comprise one of the chief advantages for Japanese,
technology start-ups. (pg. 11)
13. Historically, annual returns for venture capitalists have averaged 143% over the past several
decades. (pg. 11)
14. The period between 1996 through 2000 was considered the golden era for classic venture
capitalists and the companies they invested in. (pg. 11)
15. Yahoo! Inc.’s IPO set the all-time record, in terms of capital raised, for Silicon Valley
companies. (pg. 11)
16. Entrepreneurship did not grow very much after the Great Depression, until it began increasing in
the 1970’s. (pg. 12)
17. Baby boomers are not as concerned about job security as were their parents. (pg. 14)
18. The Fortune 500 employed 15 percent of the workforce in 2005. (pg. 14)
19. There was a burst of venture capital backed startups in the last half of the 1960s. (pg. 14)
20. Each year, the Small Business Innovation Research (SBIR) program has set aside $2.2 billion to
support the financing of cutting-edge technologies developed by small businesses. (pg. 15).
21. Today, approximately 700 universities have offices for technology transfer. (pg. 16)
22. Virtual companies are so called because they outsource much of their work. (pg. 16)
23. Today, the International Business Innovation Association (INBIA) estimates that there are over
24. In 2018, the National Venture Capital Association reported that venture capital investment
reached $150 billion, surpassing the all-time high in 2000. (pg. 17)
25. The professionalization of the entrepreneurial process, which has developed over the last 20
years, has almost eliminated the need for young entrepreneurs to write business plans themselves.
(pg. 17)
26. Five percent of American adults report they “invested” in someone else’s venture in the last
three years. (pg. 18)
27. Churning is a main component of a healthy economy. (pg. 18)
28. The Global Entrepreneurship Monitor (GEM) is an organization created to gather information
about the most successful start-ups for potential investors. (pg. 19)
29. Baby business managers are owners-managers who are actively trying to start a new business
but who have not yet done so. (pg. 19)
30. The Total Entrepreneurial Activity (TEA) index tracks the percent of the adult population that is
trying to start or has started an infant business because all other options for work are either absent or
31. Within the Middle East/Africa and Latin America/Caribbean, Angola and Guatemala have the
highest TEA ranks and scores in their respective region. (pg. 20)
32. Overall, entrepreneurial activity among employees in existing companies is seen to be highest in
Europe. (pg. 20)
Multiple Choice
1. The 2018-2019 Global Entrepreneurship Monitor reports that across the 49 countries investigated
____ % of adults were in the process of working to start a new business or were running one they
D. 47.1%
E. 66.3%
2. New and emerging businesses (e.g., Airbnb or Uber) created _____ of the new private-sector jobs
in the United States in 2018. (pg. 2)
3. Small businesses in the United States represent what percent of all businesses in the country? (pg.
E. 60%
5. What percentage of new business ventures typically survive their first 5 years of operation? (pg.
6. What percentage of Americans dream of starting a business? (pg.4)
7. Today, approximately what percent of U.S. jobs are in the goods-producing sector? (pg. 6)
8. At the turn of the 20th century, about 50% of US workers worked in either the agricultural or the
domestic service spheres. Approximately 100 years later that percentage had decreased to which of
the following figures? (pg. 6)
9. Which of the following entrepreneurs was one of the pioneers of the biotechnology industry? (pg.
10. Which software application was the predecessor to the Lotus 1-2-3 spreadsheet? (pg. 8)
11. Which of the trends below converged to spark the Internet revolution of the 1990’s? (pg. 10)
12. Jim Clark, an IT entrepreneur, became the first Internet billionaire because of his investment in
what company? (pg. 10)
13. In 2018, there were how many internet users globally? (pg. 10)
14. Which of the following industries was the prime example of venture capital fueling the pace of
commercial innovation? (pg. 10)
15. Dating back to the 1970’s till today, what percent of public companies can trace their roots back
to venture capital? (pg. 11)
16. What was the increase in Benchmark Capital’s investment of $5 million in eBay? (pg. 11)
17. The stock market collapse that led to the Great Depression occurred in what year? (pg. 12)
18. Who reasoned that capitalism would be inevitably destroyed by elites? (pg. 13)
19. According to the GEM model, how many sets of activities create the basis for national economic
growth? (pg. 13)
20. Which term is used to describe business churning? (pg. 14)
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
C. Making the butter
D. Business expansion
E. Creative destruction
21. What percent of the workforce did Fortune 500 companies employ in 1960’s? (pg. 14)
22. What percent of the executives downsized in the 1980’s and 1990’s started their own
businesses? (pg. 14)
E. $930 million
24. What does SBIR stand for? (pg. 15)
25. How much does the Bayh-Dole Act contribute annually to the US economy? (pg. 16)
E. All of the above
27. How many business incubators were in the US in 2006? (pg. 17)
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
A. 240
B. 764
28. What percent of American, four-year colleges have courses in entrepreneurship? (pg. 17)
29. How much do informal investors contribute to startup businesses annually? (pg. 18)
30. Annually, informal investors invest how much money in startups and baby businesses? (pg. 18)
31. What is the most successful US airline? (pg. 18)
32. The highest average TEA rates are found in? (pg. 20)
33. Overall, entrepreneurial activity among employees in existing companies is seen to be highest in
which of the following? (pg. 20)
E. Latin America/Caribbean
Open ended
1. Why are small businesses an important consideration for state and federal politicians? (pg.
2. Explain, in your own words, Schumpeter’s view of entrepreneurship’s role in an economy
and society. (pg. 2)
3. Describe how Intel and Microsoft became the two major entrepreneurial driving forces that
transformed the U.S. economy in the last quarter of the 20th century. (pg. 5)
4. What was the most critical step in Federal Express’ rapid growth? (pgs. 6 – 7)
5. Give two examples of how companies strengthened their businesses through changes in
regulations. (pgs. 6 – 7)
6. Why is the Internet one of the most revolutionary developments in the history of
Zacharakis, A., Corbett, A. & Bygrave (2020) Entrepreneurship, 5th Edition. Hoboken, NJ: Wiley.
7. Why was the Netscape’s IPO so popular and successful? (pgs. 10)
8. How did the advent of the PC churn up the entire computer industry? (pg. 18)
9. Which factors led to American entrepreneurial revolution? (pg. 12-18)
10. What was the effect of the Bayh-Dole Act? (pg. 15-16)
11. Who, in your opinion, would benefit from the creative destruction process and why? (pgs.
12. Describe the three main measures of entrepreneurial activity. (pg. 19)
13. Explain what the Global Entrepreneurship Monitor (GEM) is. (PG. 19)