| Howard Stevenson and his colleagues at Harvard | | | | For example, it is wise to raise capital gradually as the |
| Business School define entrepreneurship as "the | | | | need arises, otherwise one may end up spending it too |
| process of creating or seizing an opportunity and | | | | early on wrong decisions. Inflexibility also results from |
| pursuing it regardless of the resources currently | | | | committing permanently to a certain technology, |
| controlled." This approach, Stevenson maintains, has | | | | software or management system. |
| greatly contributed towards the success of | | | | 3. Low Sunk Cost: The cost of closing down a firm or |
| entrepreneurs. He points out that entrepreneurs seek | | | | a venture will also be lower if the ownership of |
| to use the minimum possible amount of all types of | | | | resources is less. If the up-front capital commitment is |
| resources at every stage in their venture's growth. | | | | huge, abandoning such a project will also be very |
| These resources include human resources, financial | | | | costly. |
| resources, assets and a business plan. Rather than | | | | 4. Costs: Fixed costs will be lower, which will have a |
| own the resources entrepreneurs need, they seek to | | | | positive affect on breakeven. Of course in that case |
| control them, according to Stevenson. | | | | variable cost may rise. |
| Studies indicate that entrepreneurs with such an | | | | 5. Reduced Risk: Apart from reducing risk in general, |
| approach towards business substantially reduce the | | | | other risk events such as risk of obsolescence of |
| risk in pursuing opportunities. | | | | resource are also lower. For example, biotechnology |
| 1. Capital: Since the amount of capital required will be | | | | companies have used venture leasing as a way to |
| smaller, it will mitigate risk by reducing the financial | | | | supplement sources of equity financing. |
| exposure and the dilution of the founder's equity. | | | | One should not assume incorrectly that this approach |
| 2. Flexibility: Entrepreneurs are in a better position to | | | | means that a firm cannot afford to buy resources. |
| commit and decommit quickly when they do not own | | | | The fact is that not having ownership has its own |
| a resource. The flexibility of business thus gained can | | | | advantages and options in the form of flexibility of |
| be very useful to a firm, since it enables them to | | | | business and reduced risk. However, at the same time |
| respond faster and reach decisions quickly. In addition | | | | these decisions are very complex, and considerations |
| to this, the entrepreneurial approach to resources | | | | such as tax implications of leasing vs. buying and other |
| allows strategic experiments, which means that ideas | | | | existing laws and regulations have to be thought of |
| can be tried and tested without committing to the | | | | thoroughly and carefully. |
| ownership of all assets and resources in the business. | | | | |