Deck 5: Growing and Internationalizingthe Entrepreneurial Firm

Question 1

Development of entrepreneurship around the world depends on avoiding the impact of formal institutions that govern how entrepreneurs start up new ventures.

Answer 1

False

Question 2

Compared to underdeveloped countries, governments in developed economies impose more procedures and a higher total cost for new start-ups.

Answer 2

False

Question 3

When working with venture capitalists, entrepreneurs may consider ceding a portion of their ownership in a start-up firm in order to obtain larger-scale financing.

Answer 3

True

Question 4

In entrepreneurial firms, an innovation strategy is a specialized form of differentiation strategy.

Question 5

Entrepreneurship is not the exclusive domain of small, young firms.

Question 6

For both large and small firms, the decision against internationalization is based primarily on high transactions costs.

Question 7

The age and size of a firm are the defining characteristics of its level of entrepreneurship.

Question 8

Innovators at large firms are more likely to personally profit from their innovations.

Question 9

When entrepreneurs are private owners of small firms, their personal networks are unlikely to have much impact on firm performance.

Question 10

Innovative, proactive and risk-seeking behavior crosses national borders.

Question 11

Around the world, there are striking differences in government regulations concerning start-ups.

Question 12

Most successful entrepreneurial ventures are based on resources that are easily imitated.

Question 13

Direct exporting involves selling products made in domestic market to customers in foreign markets.

Question 14

Transaction costs are qualitatively higher in international markets.

Question 15

Capital-intensive industries hinder the chances of entrepreneurial success.

Question 16

The numerous differences in formal institutions and informal cultures/norms are not barriers to internationalization.

Question 17

Selling out can be a viable exit strategy.

Question 18

As a general rule, entrepreneurs without previous international experience should not pursue rapid internationalization.

Question 19

One downside to licensing/franchising is that the licensor/franchisor may lose control over how their technology and brand are used.

Question 20

Start-ups sometimes lack legitimacy, but this intangible resource can be transferred through association with alliance partners, sponsors, or customers.

Question 21

Harsh bankruptcy laws become exit barriers but not significant barriers to entry.

Question 22

Institutionally, it makes sense to design entrepreneur-friendly bankruptcy policies that encourage failed entrepreneurs toward future entrepreneurial ventures.

Question 23

Personal traits of entrepreneurs are no different from those of non-entrepreneurs.

Question 24

Indirect exporting can be achieved through export intermediaries.

Question 25

The industry-based view argues that institutional frameworks explain the differences in entrepreneurial and economic development around the world.

Question 26

Entrepreneurs and their firms are engines of the creative destruction process.

Question 27

Entrepreneurial firms cannot actually internationalize without entering foreign markets.

Question 28

There are no hard and fast rules on whether entrepreneurial firms should internationalize rapidly or slowly.

Question 29

Most scholars now agree that entrepreneurship is a result of both nature and nurture.

Question 30

Which of the following best describes entrepreneurs?

A)Those who identify and exploit imitable opportunities.
B)Founders and owners of new businesses.
C) Managers of large existing firms (i.e. those with more than 500 employees).
D) Individuals with proactive, risk-avoiding behaviors.

Question 31

Franchising is seen more often in manufacturing industries than in servicing industries.

Question 32

Behavior of entrepreneurs differs from non-entrepreneurs.

Question 33

It is much easier for entrepreneurs to walk away from debts incurred in failed/bankrupt ventures in Germany and Japan than in the United States.

Question 34

The personal traits of entrepreneurs have been the primary motivating force in China and Southeast Asia, not the environments that set formal and informal rules.

Question 35

One of the ways an SME can internationalize to is through becoming a supplier to a foreign firm that is entering a domestic market.

Question 36

Without exception, it is better for entrepreneurs to start the internationalization process as soon after founding as possible to avoid the inertia of domestic orientation.

Question 37

One problem for failed entrepreneurs is that many will not acknowledge failure and thus avoid exiting the business despite escalating losses.

Question 38

The percentage of Europeans is high and due primarily to their risk-taking entrepreneurial culture.​

Question 39

Children from wealthy families are less likely to start new businesses.

Question 40

FDI lowers firm performance more than other forms of entry (over the long term).

Question 41

Which of the following is NOT true in regards to small and medium-sized enterprises (SMEs).

A)They create approximately 50% of total value added in the world.
B)They generate 60-90% of employment, depending on where they are located.
C) Each year 4-6% of the adult working population in North America, Western Europe, Central and Eastern Europe attempt to start a new venture.
D) Around the world, a majority of entrepreneurial firms (including 60% of start-ups in the United States) succeed within 6 years.

Question 42

Which of the following is NOT an example of one of the five entrepreneurial strategies?

A)Use speed and stealth to disrupt and pre-empt competitors.
B)Emphasize analysis over action.
C) Less novel, but substantially new ways of doing business can also be innovative.
D) Centrally located network positions are most helpful.

Question 43

Following an IPO, an entrepreneur:

A)​Has more control of "their" firm.
B)​No longer faces the demands of periodic reporting.
C) ​Is forced to focus on the long term.
D) ​Is subject to new fiduciary responsibilities to shareholders.

Question 44

Loans in small amounts of US$50-US$300 that made with the intention of helping lift entrepreneurs out of poverty are called:

A)​Equity stake.
B)​Microloans.
C) ​Venture capital.
D) ​Initial public offering.

Question 45

Entrepreneurship involves which of the following?

A)​The sources of opportunities.
B)​The processes of discovery, evaluation, and exploitation of opportunities.
C) ​The set of individuals who discover, evaluate, and exploit those opportunities.
D) ​All of the above.

Question 46

The comprehensive model of entrepreneurship involves which of the following perspectives?

A)​Transaction cost-based.
B)​MNE-based.
C) ​Institution-based.
D) ​Accounting-based.

Question 47

An SME would be the least likely to enhance its credibility through:

A)Specializing in standardized commodities such as books and airline tickets.
B)Using e-commerce sites.
C) Dealing in products in which quality is an issue with consumers.
D) Forming strategic alliances with larger firms.

Question 48

One of the best ways for an entrepreneurial firm to overcome the liability of newness is:

A)​Take the firm through an initial public offering (IPO).
B)​Draw on entrepreneurs' social networks.
C) ​Follow a specialized form of differentiation strategy.
D) ​Use currently underutilized resources and capabilities better.

Question 49

Which would tend to result in a greater level of entrepreneurship?

A)Fewer numbers of incumbents.
B)Capital-intensive industries.
C) Weak bargaining power of suppliers.
D) Ability to reduce the bargaining power of buyers.

Question 50

Among the resource-based considerations of entrepreneurship is:

A)​The industry's entry and exit barriers.
B)​The bargaining power of suppliers and buyers.
C) ​The cultural values and norms of a society.
D) ​The aspects of value and rarity.

Question 51

A potential benefit of an initial public offering (IPO) is that it:

A)Can increase firm's financialSTAbility.
B)Focuses on short-term results.
C) Leads to increased scrutiny by stakeholder groups.
D) Increases an entrepreneurs' freedom of action.

Question 52

When an industry is conducive for entry:

A)​Entrepreneurs need not understand the nature of the industry prior to entry.
B)​Entrepreneurial success is almost guaranteed.
C) ​Firm-specific resources and capabilities are important.
D) ​Product rarity and inimitability are not important.

Question 53

One general conclusion that we can reach regarding entrepreneurship is that:

A)Regulatory burdens on newSTArt-ups are much easier in poorer countries.
B)The less entrepreneur-friendly a country's formal institutional requirements are the more likely entrepreneurship will contribute to economic development.
C) Collectivistic societies may result in relatively higher levels of entrepreneurship.
D) Individualistic and low uncertainty-avoidance societies tend to foster relatively more entrepreneurship.

Question 54

Which of the following situations would offer the greatest opportunity for entrepreneurs?

A)​Substitute products that redefine the game.
B)​Products that increase the bargaining power of buyers.
C) ​A product that is easily imitated.
D) ​High uncertainty avoidance

Question 55

New entrepreneurial firms:

A)Benefit from greater bargaining power of suppliers.
B)Are not noticeably affected by a society's informal institutions.
C) Tend to cluster around low-entry-barrier industries.
D) View interfirm rivalry in an industry as a motivating factor in entering an industry.

Question 56

SMEs are;:

A)​Rarely entrepreneurial.
B)​The exclusive domain of entrepreneurship.
C) ​On average, more entrepreneurial than large firms.
D) ​Reclassified as MNEs within 2-5 years.

Question 57

To achieve success, entrepreneurial resources must be:

A)Of low value so as to reduce cost.
B)Common.
C) Non-core competencies that are hard to imitate.
D) Organizationally embedded.

Question 58

According to the institution-based view

A)​It is relatively easy to establish a start-up in any country.
B)​Both formal and informal institutional constraints affect entrepreneurship.
C) ​Governments in less developed countries tend to impose fewer procedures, resulting in lower total cost.
D) ​Flourishing entrepreneurship is unrelated to the level of development in a country.

Question 59

Of the five entrepreneurial strategies, which one addresses the liability of newness?

A)​Growth.
B)​Innovation.
C) ​Network.
D) ​Harvest.

Question 60

Which of the following would NOT be considered a route of entrepreneurial harvest and exit?

A)​Declaring bankruptcy.
B)​Engaging a venture capitalist.
C) ​Merging with another firm.
D) ​Considering an initial public offering.

Question 61

In the process of internationalization, which model states that firms must enter culturally and institutionally close markets first, spend enough time there to accumulate overseas experience, and then gradually move from exports to more sophisticated strategies?

A)​The stage model.
B)​The born-global model.
C) ​The experiential model.
D) ​The leveraged model.

Question 62

When it comes to entering foreign markets, most SMEs will:

A)​Only be able to internationalize through franchising.
B)​Not struggle with either the domestic market or the foreign markets.
C) ​Be unable to do so.
D) ​Aggressively seek to go abroad.

Question 63

Innovation is at the heart of an entrepreneurial mindset and important to success. However, what if a person does not tend to be creative? Should that person not consider forming an SME? What approaches can follow that will likely enable such a person to be more innovative than would otherwise have been the case?

Question 64

The number of corporate bankruptcies during the Great Recession of that began in 2008:

A)Has been limited to very small firms.
B)Has been limited mostly to very large firms.
C) Is only noticeably high in less developed countries.
D) Has climbed to new heights.

Question 65

In a manufacturing setting, the purchase of the right to use another firm's proprietary technology is referred to as:

A)Direct exporting.
B)Licensing.
C) Franchising.
D) Importing

Question 66

Which of the following involves the most complexity?

A)Direct exporting.
B)Franchising.
C) Direct investment.
D) Licensing.

Question 67

A firm becomes a supplier to a foreign firm that enters the domestic market, which is an example of:

A)​Direct exports.
B)​Internationalizing in the domestic market.
C) ​Franchising.
D) ​Harvesting.

Question 68

Which of the following is TRUE about the influence of micro institutions in entrepreneurial activity?

A)Family background and educational attainment do not correlate with entrepreneurship.
B)Entrepreneurship is primarily the result of nurture rather than nature.
C) Children of wealthy parents are less likely to start their own firms.
D) The informal norms of an individual's socioeconomic group affect that person's entrepreneurial propensity.

Question 69

Which of the following best describes Foreign Direct Investment (FDI)?

A)Avoiding the use of financial intermediaries such as brokers.
B)Firm invests directly in production or service activities in another country.
C) Traveling to a country to invest instead of using the Internet.
D) The use of cash instead of credit.

Question 70

SMEs can enter foreign markets through:

A)​Direct exports.
B)​Licensing and franchising.
C) ​Foreign direct investment.
D) ​All of the above.

Question 71

Which of the following traits would tend to prevent entrepreneurs from establishing new firms?

A)Strong desire for achievement.
B)Strong locus of control.
C) Willingness to take risks and tolerate ambiguity.
D) None of the above.

Question 72

Born global firms are:

A)​Not generally subject to transaction costs.
B)​Generators of much of the world's employment.
C) ​Firms that attempt to do business aboard from their inception.
D) ​Firms that have great difficulty internationalizing.

Question 73

The sale of products made by entrepreneurial firms in their home country to customers in other countries is best described as:

A)Direct exporting.
B)Indirect exporting.
C) Franchising.
D) None of the above.

Question 74

Which of the following is TRUE regarding internationalizing firms?

A)Only large MNEs are able to internationalize successfully.
B)SMEs do not operate solely in domestic markets.
C) Opportunism is easy to detect and remedy in international markets.
D) Transaction costs do not prevent large firms from internationalizing.

Question 75

As government policies in China became more friendly toward entrepreneurship:

A)​Social norms still restrict most entrepreneurial activity.
B)​Institutional transitions have encouraged more entrepreneurship.
C) ​The risk avoidance culture has completely altered.
D) ​None of the above.

Question 76

With growth as an entrepreneurial strategy, a firm can:​

A)Leverage its vision and drive in order to grow.
B)Generally rely on its plentiful tangible financial resources.
C) Eliminate overused resources and capabilities.
D) Focus primarily on an industry-based view of strategy.

Question 77

Which normally provides the most control over technology and brand?

A)Direct investment.
B)Licensing.
C) Franchising.
D) There is no difference in any of the above.

Question 78

An individual's characteristics and actions of entrepreneurship are based:

A)​Almost entirely on personal traits.
B)​Almost entirely on situational factors.
C) ​On a relatively universal standard psychological and personality profile.
D) ​On both factors of nurture and nature.

Question 79

When considering domestic transactions costs:

A)​Born global firms are the most effective form of entrepreneurialism.
B)​Entrepreneurship is the exclusive domain of small, young firms.
C) ​International costs are qualitatively higher.
D) ​Costs related to opportunism are not relevant.

Question 80

Suppose you are an SME with limited financial resources. In view of that, your best choice for entering foreign markets would be:

A)Foreign direct investment.
B)Licensing or franchising.
C) Direct exporting.
D) None of the above.