Question 1

If a new business is started as a corporation,many countries legally require the business to have a board of directors..

Accepted Answer

In many countries, it is legally required for corporations to have a board of directors to govern the business and its activities, protect the interests of shareholders, and make strategic decisions.

Question 2

For success,an entrepreneur needs a wide range of information and skills,which is very likely to be present when all members of the founding team are highly similar to one another in important ways.

Accepted Answer

Diversity in the founding team can bring a variety of perspectives, experiences, and skills that can contribute to the success of a business. By having a diverse team, entrepreneurs are more likely to identify and solve problems in creative ways, reach a wider audience, and have a better understanding of different markets and customer needs. It is important for entrepreneurs to value and seek diversity in their teams to maximize their chances of success.

Question 3

Relevant previous entrepreneurial experience tends to increase the probability that a new firm will be successful.

Accepted Answer

Relevant previous entrepreneurial experience provides valuable knowledge, skills, and networks that can increase the likelihood of success in a new venture. Experienced entrepreneurs are more likely to identify business opportunities, navigate challenges, and make better decisions, which can lead to better performance and profitability of their new firms. Therefore, empirical evidence suggests that the probability of success is higher for entrepreneurs with prior experience than for those without it.

Question 4

Research shows that there is a causal relationship between the number of employees in a new business and its profitability.

Accepted Answer

Research typically shows a correlation between the number of employees in a new business and its profitability, but correlation does not imply causation. Many factors influence profitability, and while having more employees might be associated with higher profitability, it does not directly cause it.

Question 5

When choosing a partner to start a new business,it is better to chose one based on similarity rather than complementarity..

Accepted Answer

It is better to choose a partner based on complementarity, meaning that they have skills, abilities, and strengths that complement your own weaknesses. This allows for a better division of labor and can lead to a more well-rounded and successful business. Choosing a partner based solely on similarity may result in a lack of diversity and overlap in skills and knowledge.

Question 6

Permanent employees are associated with fixed costs and temporary employees are associated with variable costs.

Accepted Answer

Permanent employees receive a fixed salary, benefits, and may be entitled to bonuses or other perks, regardless of the level of production or revenue of the company. On the other hand, temporary employees are typically paid an hourly rate or a fixed fee for the work they perform, which varies with the level of demand for their services. Therefore, the cost of hiring temporary employees is more flexible and closely linked to the company's level of activity, while permanent employees represent a long-term commitment and a fixed cost to the organization.

Question 7

The resources brought by an entrepreneur to a new venture that is launched includes human capital and social capital.

Accepted Answer

Human capital refers to the skills, knowledge, and experience of the entrepreneur, while social capital refers to the entrepreneur's network of relationships, including contacts with customers, suppliers, and other stakeholders. These resources are crucial for the success of a new venture.

Question 8

The more similarities that exist between employees and their managers,the lower the ratings that employees will most likely receive from the managers.

Accepted Answer

The opposite is true. Research has shown that the more similar employees are to their managers, the higher the ratings they tend to receive. This is known as the "similar-to-me" effect. Managers tend to have a bias towards employees who remind them of themselves, who share similar backgrounds or interests, and who they see as part of their in-group. However, this bias can lead to unfairness and discrimination in the workplace. It is important for managers to be aware of their biases and to make an effort to treat all employees fairly and objectively.

Question 9

Research has shown that the more the founders of a business have networks and mentors,the more likely it is that their new business will be successful.

Accepted Answer

Research has found that having access to networks and mentors can provide crucial support and resources for the success of a new business. This can include introductions to potential clients, guidance on industry best practices, and access to capital and funding opportunities. Therefore, the more founders have these resources available to them, the more likely it is that their business will thrive.

Question 10

When dealing with the similarity and complementarity approach related to co-founders starting a business,it is best to focus primarily on complementarity with respect to knowledge,skills,and experience,but bring similarity into the picture with respect to personal characteristics and motives.

Accepted Answer

It is generally believed that co-founders should have complementary skills, knowledge, and experience to fill in gaps and enhance the overall performance of the company. However, it is also important that co-founders share similar personal characteristics and motives to ensure a smooth working relationship and alignment towards common goals. Therefore, while complementarity may take precedence in terms of professional aspects, similarity is still significant when it comes to personal aspects.

Question 11

Social capital refers to the knowledge,skills,talents,and abilities of the founders and employees of a business.

Accepted Answer

Social capital refers to the network of relationships, trust, and cooperation within and between individuals, groups, and organizations that facilitates coordination and collaboration towards common goals. It is not just limited to the knowledge, skills, talents, and abilities of the founders and employees of a business.

Question 12

When dealing with the similarity and complementarity approach related to co-founders starting a business,it is best to focus primarily on similarity with respect to personal characteristics and motives rather than on complementarity of knowledge,skills,and experience.

Accepted Answer

Complementarity of knowledge, skills, and experience is often more beneficial for co-founders starting a business as it allows for a broader range of expertise and perspectives, leading to better problem-solving and innovation. Similarity in personal characteristics and motives is important for cohesion but should not be the primary focus.

Question 13

By hiring friends and family members,entrepreneurs are able to acquire human resources quickly,without costly searches.

Accepted Answer

Hiring friends and family members can be a quick way to acquire human resources without costly searches, as they may already be known and trusted individuals. However, it may also present challenges such as biased decision-making, blurred boundaries between personal and professional relationships, and potential conflicts of interest.

Question 14

In situations where flexibility and speed of acquiring new sets of knowledge and expertise are crucial,permanent employees may be very beneficial,as opposed to temporary employees.

Accepted Answer

Temporary employees can provide a quick solution for filling a short-term skill gap, while permanent employees may take longer to acquire new knowledge and expertise. However, if an organization has a strong learning and development program and fosters a culture of continuous learning, permanent employees can also be flexible and adapt to changing job requirements quickly.

Question 15

Equity is also known as distributive justice..

Accepted Answer

This is true. Equity refers to the idea of distributing resources, benefits, and burdens fairly and justly among members of a society or organization. It is often used interchangeably with the concept of distributive justice.

Question 16

Since businesses that are just started are small,it is recommended that they not have a board of directors..

Accepted Answer

While it may not be necessary for a very small business to have a formal board of directors, it can still be beneficial to have advisors or a mentorship network to provide guidance and support. As the business grows, having a board of directors can help with decision-making, accountability, and accessing resources and connections. Ultimately, it depends on the goals and needs of the business.

Question 17

The success of any new venture depends on which of the following?
A) Knowledge.
B) Skills.
C) Social networks.
D) Talents.
E) All of the above are important.

Accepted Answer

All of the above factors are important for the success of a new venture. Knowledge is needed to have a good understanding of the industry and market. Skills are necessary to execute the tasks involved in the venture effectively. Social networks can provide valuable resources and support. Talents can give the venture a competitive advantage in the market.

Question 18

Conflict between team members can be very useful.

Accepted Answer

Conflict between team members can lead to healthy debate and the exploration of different perspectives and ideas. This can ultimately lead to better decision-making and outcomes for the team. However, it is important for the conflict to be managed effectively and for all team members to feel heard and respected. Unresolved or poorly managed conflict can be damaging to the team and its goals.

Question 19

The best measure of success of a new business is the number of employees it has by the end of its second year.

Accepted Answer

The number of employees a new business has by the end of its second year is not necessarily the best measure of success. There are multiple factors that can determine the success of a business, including revenue, profitability, customer satisfaction, market share, and growth potential. The number of employees alone does not paint a complete picture of a company's success.

Question 20

Corporations are usually required by law to have a board of directors;unincorporated new businesses are required by law to have a board of advisers.

Accepted Answer

Unlike corporations, unincorporated businesses are not required by law to have a board of advisers. It is up to the discretion of the business owner whether or not to establish an advisory board.

Quiz 5: Assembling the Team: Acquiring and Utilizing Essential Human Capital