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1. Entrepreneurship is not the exclusive domain of small, young firms.
a. True
b. False
2. Innovative, proactive and risk-seeking behavior crosses national borders.
a. True
3. The age and size of a firm are the defining characteristics of its level of entrepreneurship.
a. True
b. False
4. Development of entrepreneurship around the world depends on avoiding the impact of formal institutions that
govern how entrepreneurs start up new ventures.
a. True
b. False
5. Around the world, there are striking differences in government regulations concerning start-ups.
a. True
b. False
6. Compared to underdeveloped countries, governments in developed economies impose more procedures and a
higher total cost for new start-ups.
a. True
b. False
7. Capital-intensive industries hinder the chances of entrepreneurial success.
a. True
8. Most successful entrepreneurial ventures are based on resources that are easily imitated.
a. True
b. False
9. Selling out can be a viable exit strategy.
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b. False
10. In entrepreneurial firms, an innovation strategy is a specialized form of differentiation strategy.
a. True
b. False
11. Innovators at large firms are more likely to personally profit from their innovations.
a. True
b. False
12. Start-ups sometimes lack legitimacy, but this intangible resource can be transferred through association with alliance
partners, sponsors, or customers.
a. True
b. False
13. When entrepreneurs are private owners of small firms, their personal networks are unlikely to have much impact on
firm performance.
a. True
14. When working with venture capitalists, entrepreneurs may consider ceding a portion of their ownership in a start-up
firm in order to obtain larger-scale financing.
a. True
b. False
15. Transaction costs are qualitatively higher in international markets.
a. True
b. False
16. The numerous differences in formal institutions and informal cultures/norms are not barriers to
internationalization.
a. True
b. False
17. For both large and small firms, the decision against internationalization is based primarily on high
transactions costs.
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a. True
b. False
18. Direct exporting involves selling products made in domestic market to customers in foreign markets.
a. True
19. One downside to licensing/franchising is that the licensor/franchisor may lose control over how their
technology and brand are used.
a. True
20. As a general rule, entrepreneurs without previous international experience should not pursue rapid
internationalization.
a. True
21. FDI lowers firm performance more than other forms of entry (over the long term).
a. True
b. False
22. Indirect exporting can be achieved through export intermediaries.
a. True
23.
For start-ups, being acquired by foreign entrants to the market may help preserve the business in the long run.
a. True
b. False
24. One of the ways an SME can internationalize to is through becoming a supplier to a foreign firm that is entering a
domestic market.
a. True
b. False
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a. True
b. False
26. Franchising is seen more often in manufacturing industries than in servicing industries.
a. True
b. False
27. The personal traits of entrepreneurs have been the primary motivating force in China and Southeast Asia,
not the environments that set formal and informal rules.
a. True
28. Children from wealthy families are less likely to start new businesses.
a. True
b. False
29. Most scholars now agree that entrepreneurship is a result of both nature and nurture.
a. True
30. There are no hard and fast rules on whether entrepreneurial firms should internationalize rapidly or slowly.
a. True
b. False
31. It is much easier for entrepreneurs to walk away from debts incurred in failed/bankrupt ventures in Germany
and Japan than in the United States.
a. True
b. False
32. One problem for failed entrepreneurs is that many will not acknowledge failure and thus avoid exiting the
business despite escalating losses.
a. True
b. False
33. Harsh bankruptcy laws become exit barriers but not significant barriers to entry.
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a. True
b. False
34. The percentage of Europeans is high and due primarily to their risk-taking entrepreneurial culture.
a. True
35. Without exception, it is better for entrepreneurs to start the internationalization process as soon after founding as
possible to avoid the inertia of domestic orientation.
a. True
b. False
36. Institutionally, it makes sense to design entrepreneur-friendly bankruptcy policies that encourage failed entrepreneurs
toward future entrepreneurial ventures.
a. True
37. The industry-based view argues that institutional frameworks explain the differences in entrepreneurial and economic
development around the world.
a. True
b. False
38. Entrepreneurs and their firms are engines of the creative destruction process.
a. True
39. Personal traits of entrepreneurs are no different from those of non-entrepreneurs.
a. True
b. False
40. Behavior of entrepreneurs differs from non-entrepreneurs.
a. True
b. False
41. Which of the following best describes entrepreneurs?
a. Those who identify and exploit imitable opportunities.
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b. Founders and owners of new businesses.
c. Managers of large existing firms (i.e. those with more than 500 employees).
d. Individuals with proactive, risk-avoiding behaviors.
42. Which of the following is NOT true in regards to small and medium-sized enterprises (SMEs).
a. They create approximately 50% of total value added in the world.
b. They generate 60–90% of employment, depending on where they are located.
c. Each year 4–6% of the adult working population in North America, Western Europe, Central and Eastern
Europe attempt to start a new venture.
d. Around the world, a majority of entrepreneurial firms (including 60% of start-ups in the United States)
succeed within 6 years.
43. SMEs are;:
a. Rarely entrepreneurial.
b. The exclusive domain of entrepreneurship.
c. On average, more entrepreneurial than large firms.
d. Reclassified as MNEs within 2–5 years.
44. Entrepreneurship involves which of the following?
a. The sources of opportunities.
b. The processes of discovery, evaluation, and exploitation of opportunities.
c. The set of individuals who discover, evaluate, and exploit those opportunities.
d. All of the above.
45. The comprehensive model of entrepreneurship involves which of the following perspectives?
a. Transaction cost–based.
b. MNE-based.
c. Institution-based.
d. Accounting-based.
46. Among the resource-based considerations of entrepreneurship is:
a. The industry’s entry and exit barriers.
b. The bargaining power of suppliers and buyers.
c. The cultural values and norms of a society.
d. The aspects of value and rarity.
47. Which of the following situations would offer the greatest opportunity for entrepreneurs?
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a. Substitute products that redefine the game.
b. Products that increase the bargaining power of buyers.
c. A product that is easily imitated.
d. High uncertainty avoidance
48. When an industry is conducive for entry:
a. Entrepreneurs need not understand the nature of the industry prior to entry.
b. Entrepreneurial success is almost guaranteed.
c. Firm-specific resources and capabilities are important.
49. According to the institution-based view
a. It is relatively easy to establish a start-up in any country.
b. Both formal and informal institutional constraints affect entrepreneurship.
c. Governments in less developed countries tend to impose fewer procedures, resulting in lower total cost.
50. Which would tend to result in a greater level of entrepreneurship?
a. Fewer numbers of incumbents.
b. Capital-intensive industries.
c. Weak bargaining power of suppliers.
51. New entrepreneurial firms:
a. Benefit from greater bargaining power of suppliers.
b. Are not noticeably affected by a society’s informal institutions.
c. Tend to cluster around low-entry-barrier industries.
d. View interfirm rivalry in an industry as a motivating factor in entering an industry.
52. To achieve success, entrepreneurial resources must be:
a. Of low value so as to reduce cost.
b. Common.
c. Non-core competencies that are hard to imitate.
53. An SME would be the least likely to enhance its credibility through:
a. Specializing in standardized commodities such as books and airline tickets.
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b. Using e-commerce sites.
c. Dealing in products in which quality is an issue with consumers.
d. Forming strategic alliances with larger firms.
54. One general conclusion that we can reach regarding entrepreneurship is that:
a. Regulatory burdens on newSTArt-ups are much easier in poorer countries.
b. The less entrepreneur-friendly a country’s formal institutional requirements are the more likely
entrepreneurship will contribute to economic development.
c. Collectivistic societies may result in relatively higher levels of entrepreneurship.
55. Of the five entrepreneurial strategies, which one addresses the liability of newness?
a. Growth.
b. Innovation.
c. Network.
56. One of the best ways for an entrepreneurial firm to overcome the liability of newness is:
a. Take the firm through an initial public offering (IPO).
b. Draw on entrepreneurs’ social networks.
c. Follow a specialized form of differentiation strategy.
57. Loans in small amounts of US$50–US$300 that made with the intention of helping lift entrepreneurs out of poverty
are called:
a. Equity stake.
b. Microloans.
c. Venture capital.
d. Initial public offering.
58. Which of the following would NOT be considered a route of entrepreneurial harvest and exit?
a. Declaring bankruptcy.
b. Engaging a venture capitalist.
c. Merging with another firm.
d. Considering an initial public offering.
59. Following an IPO, an entrepreneur:
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a. Has more control of “their” firm.
b. No longer faces the demands of periodic reporting.
c. Is forced to focus on the long term.
d. Is subject to new fiduciary responsibilities to shareholders.
60. Which of the following is NOT an example of one of the five entrepreneurial strategies?
a. Use speed and stealth to disrupt and pre-empt competitors.
b. Emphasize analysis over action.
c. Less novel, but substantially new ways of doing business can also be innovative.
61. A potential benefit of an initial public offering (IPO) is that it:
a. Can increase firm’s financialSTAbility.
b. Focuses on short-term results.
c. Leads to increased scrutiny by stakeholder groups.
d. Increases an entrepreneurs’ freedom of action.
62. The number of corporate bankruptcies during the Great Recession of that began in 2008:
a. Has been limited to very small firms.
b. Has been limited mostly to very large firms.
c. Is only noticeably high in less developed countries.
d. Has climbed to new heights.
63. With growth as an entrepreneurial strategy, a firm can:
a. Leverage its vision and drive in order to grow.
b. Generally rely on its plentiful tangible financial resources.
c. Eliminate overused resources and capabilities.
d. Focus primarily on an industry-based view of strategy.
64. Born global firms are:
a. Not generally subject to transaction costs.
b. Generators of much of the world’s employment.
c. Firms that attempt to do business aboard from their inception.
d. Firms that have great difficulty internationalizing.
65. When considering domestic transactions costs:
a. Born global firms are the most effective form of entrepreneurialism.
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b. Entrepreneurship is the exclusive domain of small, young firms.
c. International costs are qualitatively higher.
d. Costs related to opportunism are not relevant.
66. SMEs can enter foreign markets through:
a. Direct exports.
b. Licensing and franchising.
c. Foreign direct investment.
d. All of the above.
67. When it comes to entering foreign markets, most SMEs will:
a. Only be able to internationalize through franchising.
b. Not struggle with either the domestic market or the foreign markets.
c. Be unable to do so.
d. Aggressively seek to go abroad.
68. A firm becomes a supplier to a foreign firm that enters the domestic market, which is an example of:
a. Direct exports.
b. Internationalizing in the domestic market.
c. Franchising.
69. Which of the following is TRUE regarding internationalizing firms?
a. Only large MNEs are able to internationalize successfully.
b. SMEs do not operate solely in domestic markets.
c. Opportunism is easy to detect and remedy in international markets.
d. Transaction costs do not prevent large firms from internationalizing.
70. Suppose you are an SME with limited financial resources. In view of that, your best choice for entering
foreign markets would be:
a. Foreign direct investment.
b. Licensing or franchising.
c. Direct exporting.
71. In a manufacturing setting, the purchase of the right to use another firm’s proprietary technology is referred
to as:
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a. Direct exporting.
b. Licensing.
c. Franchising.
d. Importing
72. The sale of products made by entrepreneurial firms in their home country to customers in other countries is best
described as:
a. Direct exporting.
b. Indirect exporting.
c. Franchising.
d. None of the above.
73. Which of the following best describes Foreign Direct Investment (FDI)?
a. Avoiding the use of financial intermediaries such as brokers.
b. Firm invests directly in production or service activities in another country.
c. Traveling to a country to invest instead of using the Internet.
d. The use of cash instead of credit.
74. Which of the following is TRUE about the influence of micro institutions in entrepreneurial activity?
a. Family background and educational attainment do not correlate with entrepreneurship.
b. Entrepreneurship is primarily the result of nurture rather than nature.
c. Children of wealthy parents are less likely to start their own firms.
d. The informal norms of an individual’s socioeconomic group affect that person’s entrepreneurial
propensity.
75. Which of the following involves the most complexity?
a. Direct exporting.
b. Franchising.
c. Direct investment.
d. Licensing.
76. Which normally provides the most control over technology and brand?
a. Direct investment.
b. Licensing.
c. Franchising.
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77. An individual’s characteristics and actions of entrepreneurship are based:
a. Almost entirely on personal traits.
b. Almost entirely on situational factors.
c. On a relatively universal standard psychological and personality profile.
d. On both factors of nurture and nature.
78. As government policies in China became more friendly toward entrepreneurship:
a. Social norms still restrict most entrepreneurial activity.
b. Institutional transitions have encouraged more entrepreneurship.
c. The risk avoidance culture has completely altered.
d. None of the above.
79. In the process of internationalization, which model states that firms must enter culturally and institutionally close
markets first, spend enough time there to accumulate overseas experience, and then gradually move from exports to more
sophisticated strategies?
a. The stage model.
b. The born-global model.
c. The experiential model.
d. The leveraged model.
80. Which of the following traits would tend to prevent entrepreneurs from establishing new firms?
a. Strong desire for achievement.
b. Strong locus of control.
c. Willingness to take risks and tolerate ambiguity.
81. Innovation is at the heart of an entrepreneurial mindset and important to success. However, what if a person
does not tend to be creative? Should that person not consider forming an SME? What approaches can follow
that will likely enable such a person to be more innovative than would otherwise have been the case?
82. Describe how the industry-based, resource-based, and institutional-based views of strategy contribute to a
comprehensive model of entrepreneurship.
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83. Provide two examples, one of a firm in a developed country and one of a firm in a poor country, of how institution-
based considerations affect entrepreneurship.
84. One of the obstacles start-up firms often face is liability of newness. In what way might a network strategy be used to
85. Suppose you have formed a company that is pursuing a product or service that is the current hot fad among
investors and it appears that you could quickly enhance your personal wealth as well as quickly provide funds
for your company through an IPO. It seems like an awesome opportunity. However, why might you wish to
turn it down?
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86. Suppose you are convinced that you have a product/service that has a huge overseas potential but your funds
are limited and you do not wish to seek partners, investors, or creditors to exploit the opportunity. What can you
do?
87. How do firms looking to go global make use of franchising and licensing? What advantages and disadvantages might
88. Describe the strategies of internationalization based on the stage model and the born-global model.
ANSWER:
89. How many people have you known who established an SME because he/she wanted to “be his/her own
boss?” How many of them actually worked more hours and had less vacation time than if they worked for
someone else? How many had to make sacrifices for at least the first few years in terms of income and time
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with their family as compared to what their situation would likely have been otherwise? What appears to have
motivated them? If you have not known anyone like that, what do you think would drive otherwise rational
people to “become their own boss?”
90. What were the four implications for action by the savvy entrepreneur listed in the text? Which is the most
important for the entrepreneur? Which is the easiest and fastest for that person to implement?
ANSWER: