A Framework for Entrepreneurship 21from his or her abilities to be an entrepreneur. Personal experience, knowledge, educa-
tion, and training are the accumulated human resources that the founder contributes to
the enterprise. The personal integrity of the entrepreneur and the way the entrepreneur
and the new venture are viewed by others are captured in the person’s reputation. The
risk profile of the entrepreneur determines the initial configuration of the venture—for
example, financing, product offerings, and staffing. Although it is common to speak of
the individual entrepreneur, frequently the entrepreneur is not alone. Entrepreneurs rely
on a network of other people, other businesspeople, and other entrepreneurs. These
contacts are personal resources that help the entrepreneur to acquire additional resources
and start his or her business. It is true that “who you know” and “who knows you” are
sometimes very valuable resources in new venture creation.
One of the individual entrepreneur’s most important responsibilities is to establish an
ethical climate for the new venture. Business ethicshas been defined in many ways by
many people. One definition of ethical behavior is: any business decision that creates
value for the customer by matching quality and price. Why is this so? Ethical decisions
(1) provide the customer with valid data about the product and service, (2) enable the
customer to make a free and informed choice, and (3) generate customer commitment
to the product and the organization that provides it. Violations of these three rules pro-
duce unethical behavior— invalid and false data, coerced and manipulated decisions, and
low integrity and poor reputation for the firm.^50 How important are ethics and a good
reputation? According to one advertising executive, “The only sustainable competitive
advantage any business has is its reputation.”^51
Entrepreneurs are sometimes placed in situations where ethical decision making
appears hard. It is tempting to cut corners, look for the edge by shading the truth, and
adopt a caveat emptor (“let the buyer beware”) attitude. If entrepreneurs see themselves
as outsiders, underdogs, overworked, and underappreciated, they may make decisions
based on the premise that the ends justify the means. Caution is advised. The means will
become known, and if the means fail the tests for ethical conduct, the fine reputation of
the product and the entrepreneurial team will be irreparably tarnished.
The role of the individual founder or team changes over time. We can imagine that
at the founding of the business, the imprinting of the individual/team characteristics on
the business represents the primary way of identifying the firm. The venture is made in
the image of its makers. But over time the importance that this initial imprinting has on
the firm decreases. While the imprinting is always present in some form, the business
develops its own personality and characteristics. New leaders and managers come
aboard. Product and service mixes change and new management makes organizational
changes. Eventually the business develops its own identity, although the ethos and the
values of the original entrepreneurs may remain.
The Environment
The environment poses both opportunities (see above) and threats for new venture cre-
ation. The opportunities come in the form of change and resources—money, people,
technology. The entrepreneurial challenge is to acquire resources from the environment,
combine them with other resources already possessed, and configure the new venture
into a successful organization. The threats, or constraints, imposed by the environment