Chapter 1—Understanding Entrepreneurship
TRUE/FALSE
1. Entrepreneurship is a form of creative destruction.
2. The entrepreneurial mindset cannot be found within large corporations or socially responsible
nonprofit organizations.
3. Entrepreneurship can be found in some form in every country, race, age group, and (increasingly) in
women as often as in men.
4. Entrepreneurial ventures are not responsible for significant job creation.
5. Entrepreneurial ventures and small businesses are related, but they are not the same in most respects.
6. The vital issue for entrepreneurs is not avoiding failure but minimizing the cost of a possible failure.
7. The term entrepreneur has been in popular use for more than 100 years.
8. Economic turmoil has a plus side because it produces opportunities for entrepreneurs who are
comfortable with environmental factors outside their control.
9. Entrepreneurial ventures are responsible for job creation that is disproportionate to the net total new
jobs created in the U.S. over the past 25 years.
10. The time prior to a firm’s birth is called the fuzzy front end.
MULTIPLE CHOICE
1. As entrepreneurial firms achieve noticeable levels of success and a new industry grows, it generally
becomes more ____ as a result of so many firms competing for position.
a.
stable
b.
unstable
c.
consolidated
d.
fragmented
e.
None of these choices
2. ____ entrepreneurship is characteristic of small lifestyle businesses.
a.
Replicative
b.
Innovative
c.
Local
d.
Fragmented
e.
None of these choices
3. The ____ has been called the Decade of Entrepreneurship.
a.
1950s
b.
1960s
c.
1970s
d.
1980s
e.
1990s
4. Women now comprise ____ of all entrepreneurial activity globally.
a.
one-quarter
b.
one-third
c.
one-half
d.
the majority
e.
the highest levels
5. Entrepreneurs are taking advantage of several subtrends within the ____ sector, including eco-iconic
marketing.
a.
international
b.
technology
c.
green power
d.
educational
e.
women’s
6. Twitter has been the leader in facilitating a new trend known as ____.
a.
social marketing
b.
social mingling
c.
mass networking
d.
mass mingling
e.
None of these choices
7. The late 1990s brought the “dot com” bubble and the rush of the ____ community to position itself for
what appeared to be a new way of doing business.
a.
venture capital
b.
technology
c.
knowledge
d.
educational
e.
global
8. Entrepreneurship provides many benefits to society, chiefly ____, new industry formation, and ____.
a.
new technologies / new markets
b.
economic growth / job creation
c.
job creation / diversity
d.
economic growth / new technologies
e.
globalization / new markets
9. The ____ school of thought proposes an integrated input/output model to describe the entrepreneurial
process.
a.
Morris, Lewis, and Sexton
b.
Ronstadt
c.
Gartner
d.
Rogers
e.
None of these choices
10. Gartner’s conceptual framework for the new venture creation process focuses on three major categories
of variables: the individual entrepreneur and what he or she brings to the process; the ____; and the
____.
a.
market / technology
b.
input / output
c.
environment / organization
d.
career / environment
e.
technology / industry
11. Early economists recognized that ____ is the primary force behind rising standards of living and that
____ innovation would determine the success of many nations in the future.
a.
technology / technological
b.
labor / growth
c.
manufacturing / distribution
d.
industry formation / job
e.
economic growth / invention
12. Technological change has facilitated ____ and a new form of creative destruction by moving ____ out
of the Unites States to countries where labor costs are substantially less.
a.
innovation / platform technologies
b.
globalization / lower-skilled jobs
c.
input models / resources
d.
fluid groups / higher-skilled jobs
e.
None of these choices
13. Today, ____ is growing faster than any modern economy.
a.
the United States
b.
Pakistan
c.
India
d.
China
e.
Japan
14. New industries are born when technological change produces a/an ____ opportunity that an
enterprising entrepreneur seizes.
a.
investment
b.
novel
c.
crucial
d.
successful
e.
efficient
15. Denmark, Israel, United Arab Emirates, and the United States have ____ economies.
a.
production-driven
b.
factor-driven
c.
efficiency-driven
d.
innovation-driven
e.
entrepreneurial
16. The Small Business Administration (SBA) defines a small business as one with fewer than ____
employees.
a.
250
b.
385
c.
600
d.
700
e.
500
17. Entrepreneurs typically have a vision of where they want their businesses to go, and generally that
vision is on a regional, national, or (more often) ____ level.
a.
state
b.
global
c.
country
d.
local
e.
None of these choices
18. The process of new venture formation is characterized by ____ stage(s) and ____ transition(s) or
decision points.
a.
one / two
b.
three / five
c.
two / three
d.
four / three
e.
five / two
19. ____ is the mechanism that drives an individual to become a nascent entrepreneur because all other
opportunities for income appear to be absent or unsatisfactory.
a.
Pull
b.
Risk
c.
Success
d.
Push
e.
Money
20. The Small Business Administration Office of Advocacy reports that ____ of new businesses survive at
least five years.
a.
one-half
b.
one-third
c.
three-quarters
d.
two-thirds
e.
None of these choices
21. Firms that are most likely to survive over the long term are those that display superior levels of
reliability and accountability in performance, ____, and structure.
a.
resources
b.
age
c.
operations
d.
processes
e.
controls
22. More than ____ percent of Salesforce.com’s employees are involved in philanthropy.
a.
63
b.
89
c.
90
d.
75
e.
85
23. The term entrepreneur has been popular in the United States since the ____.
a.
1920s
b.
1940s
c.
1960s
d.
1980s
e.
1990s
24. The 1970s saw the beginning of three significant trends that would forever change the face of
business: macroeconomic turmoil, ____, and the technological revolution.
a.
the Vietnam War
b.
agricultural disasters
c.
international competition
d.
recession
e.
None of these choices
25. The ____ microprocessor affected the technological revolution of the 1970s.
a.
Apple
b.
Microsoft
c.
Java
d.
Intel
e.
Sun
26. ____ was not alone in asserting that the United States was rapidly and by necessity becoming an
entrepreneurial economy.
a.
Steve Jobs
b.
Peter Drucker
c.
Mike Boyer
d.
Marc Weinstein
e.
Sam Goody
27. Responding to this entrepreneurial drive, big business in the 1980s found it necessary to downsize and
reverse the trend of ____ it had promulgated for so long.
a.
innovation
b.
restructurings
c.
diversification
d.
internationalizing
e.
None of these choices
28. Toward the end of the 1980s, researchers observed that young entrepreneurial ventures were ____
much earlier than expected and at a much smaller size.
a.
internationalizing
b.
diversifying
c.
creating jobs
d.
restructuring
e.
failing
29. More than perhaps anything else, the 1990s were characterized as the ____.
a.
Commercial Age
b.
Information Age
c.
Competitiveness Age
d.
Knowledge Age
e.
Internet Age
30. The new millennium ushered in what many refer to as the ____.
a.
technology economy
b.
information economy
c.
knowledge economy
d.
Internet economy
e.
dot com economy
SHORT ANSWER
1. Briefly describe what entrepreneurship is.
2. What is included in the three schools of thought about the process of entrepreneurship?
3. Briefly explain how economic growth comes about.
4. Briefly discuss why so many more firms are created than an industry can support.
5. Briefly discuss the three primary characteristics of entrepreneurial ventures.
6. Briefly discuss the process of new venture formation.
7. Briefly discuss the significant changes in entrepreneurship from the 1960s to the 1990s.
8. Discuss/describe the knowledge economy of the 2000s.
9. Describe the impact that entrepreneurship has had on women-owned businesses.
10. What new opportunities will the Internet create for the future trends of entrepreneurial businesses?