Entrepreneurship Theory Process And Practice 10th Edition by Donald F. Kuratko Test Bank

Entrepreneurship Theory Process And Practice 10th Edition by Donald F. Kuratko Test Bank

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WITH ANSWERS

Entrepreneurship Theory Process And Practice 10th Edition by Donald F. Kuratko Test Bank

CHAPTER 2: THE ENTREPRENEURIAL MIND-SET IN INDIVIDUALS: COGNITION AND ETHICS

 

True/False

 

1. The generation of the twenty-first century may become known as generation E because it is becoming the most entrepreneurial generation since the Industrial Revolution.

 

ANS:  T

 

 

2. Entrepreneurial cognition is, in part, about understanding how entrepreneurs use simplifying mental models to make assessments, judgments, and decisions about opportunities.

 

ANS:  T

 

3. Commitment, determination, and perseverance are the only characteristics one needs to become a successful entrepreneur.

 

ANS:  F

 

 

4. There is a certain psychic risk involved with entrepreneurship.

 

ANS:  T

 

 

5. The dark side of entrepreneurship refers to the stress that entrepreneurs experience.

 

ANS:  F

 

 

6. According to the Model of Entrepreneurship Motivation, the entrepreneurs expectations are not compared with the actual or perceived outcomes of the firm.

 

ANS:  F

 

7. A loss orientation toward grief recovery in dealing with failure can sometimes lessen negative emotional reactions.

 

ANS:  F

 

 

8. Todays entrepreneurs are faced with few ethical decisions because the legal system imposes greater penalties on wrongdoers.

 

ANS:  F

 

9. Ethics represents a set of principles prescribing a behavioral code that does not include moral duty and obligations.

 

ANS:  F

 

 

10. A code of conduct is a statement of ethical practices or guidelines to which an enterprise adheres.

 

 

ANS:  T

 

 

 

Multiple Choice

 

1. Every person has the _____ and _____ to pursue a career as an entrepreneur

a.	stubbornness; stupidity
b.	potential; free choice
c.	rights; regulations
d.	obligation; duty

 

 

ANS:  B

 

2. Entrepreneurs

a.	are driven by intense commitment and perseverance.
b.	are egomaniacs.
c.	loners who never fit in to typical firms.
d.	are never satisfied.

 

 

ANS:  A

 

3. Characteristics often attributed to the entrepreneur include:

a.	Commitment, determination, and perseverance
b.	Prefers to be a loner
c.	Power hungry
d.	Ability to be indecisive

 

 

ANS:  A

 

 

 

 

4. Which of the following is not a trait of successful entrepreneurs?

a.	initiative
b.	frustration
c.	perseverance
d.	strategic thinking

 

 

ANS:  B

 

 

5. When entrepreneurs believe that their accomplishments and setbacks are within their own control and influence, they are exhibiting

a.	persistent problem-solving.
b.	internal locus of control.
c.	external locus of control.
d.	opportunity orientation.

 

 

ANS:  B

 

 

 

 

6. Areas of risk to the entrepreneur include

a.	career, family, psychic.
b.	family, business, social.
c.	psychic, social, physical.
d.	financial, product, market

 

 

ANS:  A

 

7. Which of the following may be the greatest risk to the well-being of the entrepreneur?

a.	social risk
b.	financial risk
c.	psychic risk
d.	family risk

 

 

ANS:  C

 

8. Generally, entrepreneurial stress is due to

a.	being surrounded by incompetents.
b.	fear of failure.
c.	the discrepancy between the entrepreneurs expectations and the ability to meet demands.
d.	caused by a big ego.

 

 

ANS:  C

 

 

9. Entrepreneurial stress can be caused by having a type A personality which can be defined as

a.	having a chronic sense of time urgency
b.	taking too little responsibility
c.	getting away from business
d.	taking things personally

 

 

ANS:  A

 

10. The entrepreneurial ego can cause the entrepreneur to

a.	have a sense of pessimism.
b.	take characteristics that usually lead to success to the extreme.
c.	ignore government regulations.
d.	take too few risks.

 

 

ANS:  B

 

 

11. Which of the following is not characteristic of the dark side of entrepreneurship?

a.	an external optimism
b.	a desire for success
c.	knowing when to take a vacation
d.	a sense of distrust

 

 

ANS:  C

 

 

 

 

12. The decision to behave entrepreneurially is the result of the interaction of:

a.	the individuals personal entrepreneurial mind-set and an opportunity
b.	the existence of a viable business idea
c.	the relevant business environment
d.	a new market

 

 

ANS:  A

 

13. A decision to sell pharmaceuticals that have not been cleared with the Federal Drug Administration is an example of a(n)

a.	illegal and ethical decision.
b.	legal and unethical decision.
c.	illegal and unethical decision.
d.	legal and ethical decision.

 

 

ANS:  C

 

14. A decision to sell toys that pass minimum safety standards but can often result in minor accidents to children is an example of a(n)

a.	illegal and ethical decision.
b.	legal and unethical decision.
c.	illegal and unethical decision.
d.	legal and ethical decision.

 

 

ANS:  B

 

 

15. A __________ is a statement of ethical practices or guidelines to which an enterprise adheres.

a.	code of conduct
b.	code of ethics
c.	code of honor
d.	code of silence

 

 

ANS:  B

 

 

 

 

 

 

 

 

 

 

 

 

 

Short Answer

 

1. Explain and discuss the dark side of entrepreneurship.

 

ANS:

 

The entrepreneurial profile has its destructive side.  First, the need for control can become an obsession.  The need for control can cause problems in networking and in an entrepreneurial team.  A sense of distrust can cause the entrepreneur to lose sight of reality or focus on trivial things.  An entrepreneurs desire for success can also be destructive if the individual becomes more important than the venture itself.  The last dark side trait is external optimism.  When the entrepreneur takes optimism to the extreme, he or she may begin using a fantasy approach to the business.  Trends, facts, and reports are ignored because the entrepreneur thinks everything will turn out fine.

 

 

 

2. Discuss the specific areas of entrepreneurial risk.

 

ANS:

 

The four areas of risk are financial risk, career risk, family and social risk, and psychic risk.  First, financial risk deals with the amount of savings or resources that the entrepreneur puts into venture.  If the venture is not successful, the money or resources will most likely be lost.  The entrepreneur will probably sign obligations that exceed his or her personal wealth. The second risk is career.  The would-be entrepreneur frequently asks if he or she will be able to find a job or go back to a previous job.  The new venture has no guarantees about career security.  Family and social risk are also to be considered.

 

 

 

3. Name the sources of entrepreneurial stress and discuss the ways of dealing with stress.

 

ANS:

 

Entrepreneurs experience four types of stress. The first is loneliness. Although there are many people around the entrepreneur, there are few in whom he can confide. Another stress is immersion in business.  A successful entrepreneur may make enough money for vacations, but never have the time to go because the business would not allow it.  People problems are another type of stress.  The entrepreneur may get frustrated, disappointed, and aggravated by employees or other individuals upon whom the ventures work depends. Usually this happens when the entrepreneurs expectations of a high performance are not met. The last source of stress is the need to achieve. The entrepreneur usually attempts to accomplish too much and sometimes cannot manage to control the need for achievement.  The three steps an entrepreneur can take to reduce stress are acknowledging its existence, developing coping mechanisms, and probing for personal unacknowledged needs. There are five ways in which an entrepreneur can cope with stress. First is networking.  Networking involves sharing experiences with other business owners.  Another coping mechanism is to get away from it all. These interludes help combat immersion in business.  Communicating with subordinates may help to cope with stress. The entrepreneur can be aware of the concerns employees have about their jobs.

 

Finding satisfaction outside of the company is also important. The entrepreneur needs to get away and enjoy life. The last way an entrepreneur can deal with stress is by delegating.  Appropriate delegates need to be found and trained so the entrepreneur can gain time away from the business.

 

 

 

4. Define ethics and discuss some conflicts over the ethical nature of decisions.

 

ANS:

 

In a broad sense, ethics is the rules or parameters for conduct in any activity as long as it is done in an acceptable manner.  Ethics can also be described as a set of principles prescribing a behavioral code that explains what is good and right or bad and wrong.  Even though society is in an ever-changing state, this definition implies that universal principles remain intact.  An entrepreneur faces many conflicts for many reasons.  One conflict arises as a business is faced with outside as well as inside interests.  Some examples are stockholders, the community, the government, employees, and unions.  Also, as society changes, the values and mores of society must change.

 

 

 

5. Give some in-depth examples of the dilemmas entrepreneurs face with ethics and laws.

 

ANS:

One dilemma entrepreneurs face is managerial rationalization.   Managers may use rationalizations to justify questionable conduct.  Some examples are: believing that the activity is not really illegal or immoral, the act is in the companys best interest, the behavior will not be found out, and the company will condone the act.  The questionable act may seem all right to the manager using these rationalizations, yet is against the laws of the business world and society.

 

Another dilemma concerns the matter of morality.  Using LaRue Hosmers conclusions concerning legal requirements and moral judgments, the requirements might overlap but not duplicate the moral standards of society.  First, this results from laws not having any moral content, laws being morally unjust, and moral standards having no legal basis.  Second, legal requirements tend to be negative whereas morality tends to be positive.  Third, legal requirements can lag behind the acceptable moral standards of society.

 

Another dilemma entrepreneurs are often faced with concerns economic trade-offs.  Economic trade-offs occur when innovations, risk taking, or venture creation are used to stimulate the economic system to create new jobs and new growth.  These qualities produce the trade-off between economic and social welfare.  Some examples are, advertising for cigarettes with death as a possible result; toxic waste dumps invading lakes, streams, and eventually drinking water; minorities being laid off only because they were the last to be hired, and capital gains realized through the advance information of mergers.

 

CHAPTER 4: SOCIAL ENTREPRENEURSHIP AND THE GLOBAL ENVIRONMENT FOR ENTREPRENEURSHIP

 

True/False:

 

 

1. Social responsibility consists of those obligations that society has to businesses.

 

ANS:  F

 

2. Social obligation, social responsibility, and social responsiveness are all ways firms view their interactions with society.

 

ANS:  T

 

3. Social entrepreneurs are known to combine resources to exploit opportunities to create social value.

 

ANS:  T

 

 

4. Ecopreneurship is a combination of ecologically and economically sustainable development.

 

ANS:  T

 

5. The triple bottom line is an accounting framework that focuses on optimizing short-term financial performance.

 

ANS:  F

 

6. The three Ps of the triple bottom line are people, planet, and profits.

 

ANS:  T

 

 

7. Purpose, accountability, and transparency are characteristics associated with socially sustainable enterprises.

 

ANS:  T

 

 

8. Successful global start-ups, or entrepreneurial businesses that are born global, surprisingly often lack internationally experienced management.

 

ANS:  F

 

9. International alliances rarely require the exchange of proprietary knowledge.

 

ANS:  F

 

10. Licensing agreements can involve patents, trademarks, and technical know-how.

 

ANS:  T

 

Multiple Choice:

 

1. One researcher established a framework that classified social actions of corporations into distinct categories that included

a.	social obligation.
b.	social responsiveness.
c.	social action.
d.	a and b only.

 

 

ANS:  D

 

2. The most pro-active position for a corporation to take in regard to social responsibility would be termed

a.	social obligation.
b.	social intensity.
c.	social responsiveness.
d.	social decisiveness.

 

 

ANS:  C

 

 

3. Which of the following designations is not synonymous with social entrepreneur?

a.	social innovator
b.	public entrepreneur
c.	civic entrepreneur
d.	social impersonator

 

 

ANS:  D

 

4. Which of the following statements about social entrepreneurship is not true?

a.	Social entrepreneurship is limited to the world of not-for-profit corporations.
b.	Social entrepreneurship is about having a heightened sense of accountability
c.	Social entrepreneurship has, in recent years, been the subject of widespread media attention.
d.	Social entrepreneurship adopts some of the same principles that have been effective in successful entrepreneurship.

 

 

ANS:  A

 

5. If we accept the argument that social entrepreneurship is a continuum, at one extreme would be social entrepreneurs driven exclusively by producing social benefits; at the other, would be

a.	social entrepreneurs motivated by the environment with social benefits being the means
b.	social entrepreneurs motivated by profitability with social benefits being the means
c.	social entrepreneurs motivated by income from their beneficiaries
d.	social entrepreneurs motivated by income with entrepreneurial means

 

 

ANS:  B

 

 

 

 

 

 

 

6. Examples of social enterprise obligations to the environment include all of the following except

a.	pollution control
b.	restoration of the environment
c.	recycling efforts
d.	support for minority-own businesses

 

 

ANS:  D

 

 

7. Corporate social responsibility refers to

a.	the enhancement of global competition
b.	environmental entrepreneurship in the United States
c.	actions that further some social good beyond the interests of the firm
d.	the affect of ecopreneurship only on some industries

 

 

ANS:  C

 

8. Ecopreneurs are concerned

a.	only with ecologically sustainable development
b.	only with economically sustainable development
c.	both ecologically and economically sustainable development
d.	neither ecologically nor economically sustainable development

 

 

ANS:  B

 

9. Key elements in plans to create a sustainable future are likely to include which of the following?

a.	eliminating the concept conservation
b.	eliminating the concept of waste
c.	eliminating the concept of price
d.	eliminating the concept of accountability

 

 

ANS:  B

 

10. An account framework that goes beyond the traditional measures of profit, return on investment, and shareholder value to include environmental and social dimensions is called

a.	the shared bottom line
b.	the value proposition
c.	the triple bottom line
d.	the twin bottom line

 

 

ANS:  C

 

11. Bottom-line measures of economic performance include all of the following except:

a.	global competition
b.	personal income
c.	cost of underemployment
d.	job growth

 

 

ANS:  A

 

 

 

 

 

12. An L3C is a new legal form for social enterprises known as

a.	limited liability corporations
b.	low-profit, limited liability companies
c.	long-term, low-profit, low-liability companies
d.	limited liability laborers

 

 

ANS:  B

 

13. Among the advantages for global entrepreneurs of diaspora networks is

a.	the speed with which information flows across borders
b.	the distrust among traditional trading partners
c.	the creation of places where anything can happen
d.	the decline in political risks across ethnic communities

 

 

ANS:  A

 

14. Methods for going international include all of the following except

a.	importing
b.	exporting
c.	licensing
d.	foreign reclamation

 

 

ANS:  D

 

15. The first of five steps for entering the international marketplace is

a.	securing adequate financing
b.	filing the proper documents
c.	conducting research
d.	preparing a feasibility study

 

 

ANS:  C

 

 

Short Answer:

 

1. List some activities that have come to be associated with social entrepreneurship.

 

ANS:

Adoption of a mission to create and sustain social value; recognition and relentless pursuit of opportunities for social value; engagement in continuous innovation and learning; action beyond the limited resources at hand; heightened sense of accountability.

 

 

 

2. Why has sustainable development, perhaps, become the most prominent topic of our time?

 

ANS:

Reports of ozone depletion, climate change, and the destruction of the planets biodiversity are commonplace, and scholars have claimed that entrepreneurial action can preserve ecosystems, counteract climate change, and deduce environmental degradation and deforestation.

 

 

 

3. In the context of benefit corporations, what does transparency refer to?

 

ANS:

Transparency refers to the obligation to report to the public on a firms overall social and environmental performance, using a credible third-party standard.

 

 

 

 

 

 

 

 

4. Why is global thinking important to todays entrepreneurs?

 

ANS:

Global thinking is important to todays entrepreneurs because todays consumers can select products, ideas, and services from many nations and cultures. One of the most exciting and promising avenues for entrepreneurs to expand their businesses is by participating in the global marketplace.

 

PTS:   5

 

5. Explain the concept of informal international alliances. What path do entrepreneurs usually follow with respect to informal international alliances?

 

ANS:

In general, informal alliances are agreements between companies from two or more countries that are not legally binding. Because such agreements lack legal protection, most entrepreneurs limit their involvement with informal alliances or avoid them altogether.

 

PTS:     5

 

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