978-1305500891 Chapter 9 Solution Manual

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END-OF-CHAPTER GUIDE

*Review Questions and Answers

*Critical Discussion Questions and Answers

*Global Action

*Closing Case

REVIEW QUESTIONS AND ANSWERS

1. Based on your definition of entrepreneurship, can a firm be truly entrepreneurial if it does

not expand globally?

The definition of entrepreneurship does not specify that an entrepreneur must expand

2. How prevalent and important are small entrepreneurial firms in economies around the

globe?

Worldwide, they account for over 95% of the number of firms, create approximately 50%

3. ON CULTURE: Which societal norms tend to encourage entrepreneurship, and which

tend to discourage it?

Because entrepreneurs necessarily take more risk, individualistic and low

4. How important are an entrepreneur’s resources and capabilities in determining his or her

success? Why?

The resource-based view suggests that firm-specific (and in many cases

5. Name and describe three major characteristics associated with an entrepreneurial firm’s

growth.

6. What qualities typically compensate for an entrepreneurial firm’s lack of tangible

resources?

7. Briefly summarize three modes an SME can use to enter foreign markets.

Chapter 9: Growing and Internationalizing the Entrepreneurial Firm

8. Name and describe at least three ways that SMEs can internationalize without leaving

their home countries.

There are at least five strategies for entrepreneurial SMEs to internationalize without

9. Compare Maps 3.1 and 3.4. Based on that information, which country would be most

attractive to you as a place to expand your business? The global economy is subject to

constant change. In your opinion, what potential changes in one of the countries shown

might make that country less attractive as a place to expand?

At the present time, when one considers both income levels and ease of doing business,

10. ON CULTURE: In the nature-versus-nurture debate, which do you think carries more

power: traits (nature) or institutions (nurture)? Does your response apply equally to all

countries around the world? Why or why not?

Some may mention those who have been successful with no obvious nurture but others

11. We know that it is possible for an SME to be born global by immediately engaging in

FDI, but do you think it is wise? Why?

The important thing is not so much the answer as the extent to which the student

demonstrates thought in providing the answer. Some may feel that the complexities

12. Describe two or three examples of institutions that could be made friendlier and more

supportive of entrepreneurs.

Institutionally, there is an urgent need to remove some of our antifailure biases. Specific

In comparing PengAtlas Maps 3.1 and 3.4, note that one of the countries that is at the bottom of

the list regarding ease of doing business is also among the poorest. Note that the two groups are

not identical. However, to what extent can ease of doing business affect the wealth of a country?

Ease of doing business may not assure the creation of wealth in a country because many

Chapter 9: Growing and Internationalizing the Entrepreneurial Firm

14. ON CULTURE: Devise your own example of an entrepreneurial action that demonstrates

your understanding of the difference between being bold and being reckless. Why may

the view of what is bold or reckless vary among countries and cultures?

As was pointed out in Chapter Three, cultures differ in terms of the level of risk taking

CRITICAL DISCUSSION QUESTIONS AND ANSWERS

1. Given that most entrepreneurial start-ups fail, why do entrepreneurs start so many new

firms? Why are (most) governments interested in promoting more start-ups?

The answer to both parts of the question lie in the fact that while most start-ups fail,

2. Some suggest that foreign markets are graveyards where entrepreneurial firms overextend

themselves. Others argue that foreign markets represent the future for SMEs. If you were

the owner of a small, reasonably profitable domestic firm, would you consider expanding

overseas? Why or why not?

This is a question in which the answer is not as important as the thought process and the

3. ON ETHICS: Your former high school buddy invites you to join an entrepreneurial

start-up that specializes in making counterfeit (generic) drugs to combat HIV/AIDS,

which would potentially help millions of patients worldwide who cannot afford the

high-priced patented drugs. He has lined up financing and offers you the job of CEO and

10% of the equity of the firm. You are currently unemployed. How would you respond?

GLOBAL ACTION

1. You work for a small foreign language services company. You have been asked to present

a market assessment of the largest translation companies for competitor evaluation. Your

report must include the following attributes for the global industry: company, size,

locations, and ownership status. What do your findings suggest about possible worldwide

opportunities?

Exercise 1 Answers

One resource which can be used is “Common Sense Advisory”. This website can be

Chapter 9: Growing and Internationalizing the Entrepreneurial Firm

2. An entrepreneurship research firm has asked you to identify the most entrepreneurial

countries in the world. Based on your knowledge of the entrepreneurship field, find a

database that may assist in your research. Once the information has been secured,

compare the top five countries across the multiple years included in the database. Are

there any countries that are included in the database in all years? What is the general

percentage of new startups in the overall economy for each of the top countries? Is the

size of each country similar? Explain these dynamics in your report.

Exercise 2 Answers

One resource which can be used is the “Entrepreneurship Database”. This website can be

found by entering the search term “IFC entrepreneurship” at the globalEDGE™ Resource

Desk search box located at http://globaledge.msu.edu/resourceDesk/. Once at the IFC

CLOSING CASE DISCUSSION GUIDE AND ANSWERS

EMERGING MARKETS: The Rise of Alibaba

1. What are the characteristics of Alibaba’s growth, innovation, and financing strategies that

are typical of successful entrepreneurial firms? What is unusual about Alibaba?

This is a question in which the answer is not as important as the thought process and the

2. Why has Alibaba become globally famous by focusing on its domestic market?

3. Sometimes the IPO of widely successful firms flops—Facebook’s disappointing IPO

comes to mind. Does Alibaba deserve to be one of the world’s most valuable companies?

This is a question in which the answer is not as important as the thought process and the

Chapter 9: Growing and Internationalizing the Entrepreneurial Firm