FRUCTUOSO T. SABUG JR.Leadership and Strategy Department

Ateneo

CORRELATES OF SUCCESSFUL ENTREPRENEURSHIP: THE CASE OF THE PHILIPPINES

Introduction

• Adversities are part of our everyday life, and does happen unexpectedly– Has three levels:

• Societal• Workplace, and • Individual

• Most papers on entrepreneurship deal with processes• Papers on the entrepreneurs are scant• The researcher attempts to answer how adversity plays a

significant role in modeling a successful entrepreneur and its effects on the budding entrepreneur set in the Philippine context

• How does adversity play a significant role in modelling a successful entrepreneur and its effects on the budding entrepreneur set in the Philippine context?

• Stoltz’ Adversity Quotient theory has been tested and validated for several years already across the globe.

The Problem

Entrepreneurship

Review of Related LiteratureEntrepreneurship

• There is “[no] universal theory on entrepreneurship because of different assumptions of various disciplines and the difficulty of explaining and predicting the behavior of entrepreneurs”

» Virtranen, “The Role of Different Theories in Explaining Entrepreneurship”

Review of Related LiteratureEntrepreneurship

Shepherd•Learning is not automatic and depends in grief and grief recovery

Hayes•Strong need for having psychological perspective on economic behavior of entrepreneurs

Criss, Pettit, Bates, Dodge and Lapp

•Overall acceptance of peers and extensivity of network contribute to resilience

Fr John J. Caroll, SJ

•Relationship between entrepreneurship and factors such as educational attainment, proximity to cities, and exposure to influence of foreign companies

Review of Related LiteratureEntrepreneurship

Levine and Greene

•Clarity of purpose is highly desirable for institutions searching for opportunities

Jack Schuster

•Contends findings of Levine and Greene•Focused mission statements provide "no more than a partial remedy, and probably not the most critical part at that."

Brooks D.•Notes the characteristics of US General Ulysses S. Grant as he went on to become one of the most influential figures despite adversities

Kitch•Focusing on adversity "can impede growth, stifle self-reflection, inhibit innovation, and invite internal dissension."

Review of Related LiteratureEntrepreneurship

Frantzen•Used a superset model approach that recognizes “the constant factors that allow for the creation of a superset of activities that can be gathered together in a process model and used as a generic model of the development process.”

Patel•Importance of Personal Critical Framework or PCF•Reflection on knowledge and practice as important tools for the function of Information systems design

Theory of Constraints

•An assumption that every system has at least one constraint limiting it from getting more of what it strives for. If this were not true, then the system would produce infinite output

Senge•Author puts forward the idea that systems are inevitably incomprehensible and the earlier one realizes this, the better one can sift through complex systems

Review of Related LiteratureSystems Analysis and Thinking

McNamara

•viewing systems as interrelated parts (i.e. viewing a company as having interrelated connections and relationships among its divisions) give managers a superior perspective

Silver•System development has five phases:•Planning•Analysis•Design•Development•Implementation

Sterman•Author writes on advanced topics in modeling in a business environment perspective

Shelly•Designing systems are composed of five phases:•Planning•Analysis•Design•Implementation•Operation and Support

•Integrates Operations Management tools such as PERT and CPM in system development

Review of Related LiteratureSystems Analysis and Thinking

The Theoretical Framework

• Authored by Dr. Paul Stoltz, a result of 19 years of rigorous research

• Stoltz puts forward that by improving response to adversity vis-à-vis understanding, measuring, and raising one’s AQ, one can improve his ability to overcome it and persevere in the long run.

The Adversity Quotient

The Theoretical Framework

• He furthers the idea that a person’s success in his work and in life is largely determined by his own AQ by: – telling how well one can withstand

adversity and his ability to surmount it; – predicting who will overcome adversity

and who will be crushed; – predicting who will exceed expectations

of their performance and potential and who will fall short; and

– predicting who will give up and who will prevail.

The Adversity Quotient

The Theoretical FrameworkThe Adversity Quotient

Cognitive Psychology

Neurophysiology

Psychoneuroimmunology

AQ

• Stoltz writes that AQ takes three forms:– First, it is a new conceptual framework for

understanding and enhancing all facets of success as it redefines what it takes to succeed.

– Second, how one responds to adversity can be measured, understood and changed.

– Lastly, it is a scientifically-grounded set of tools for improving how to respond to adversity while looking into the personal and professional effectiveness as a result

• AQ can be learned and is formed through influences of parents, teachers, peers, among others, during childhood

• There is a dearth of literature focusing on the entrepreneurs, and even less on the theory’s applicability to Philippine context

The Theoretical FrameworkFramework for Analysis

• A system is – any organized collection of parts united by prescribed

interactions and designed for the accomplishment of specific goals or general purposes.

• Systems theory views an organization as a complex set of dynamically intertwined and interconnected elements

• Systems theorists see organizations as always-changing processes of interactions among organizational and environmental elements

The Theoretical FrameworkFramework for Analysis

• Reasearcher will adopt Robert Wiener’s model of an organization, from the book Cybernetics– actions by the system or organization cause

change in the system’s environment, and that change is communicated back to the system, consequently allowing the system to change its behavior

The Theoretical FrameworkFramework for Analysis

INPUTAdversities[Societal]

[Workplace][Individual]

Other Factors

PROCESSAdversity Quotient

OUTPUTSuccessGrowth in

Revenues Net Income

Total Assets Net Worth

Re-evaluation

Failure

• Measure success of entrepreneur in terms of growth in following:• Sales revenue, Net Income, Total Assets,

and ROI of the business(es)• Stoltz’ AQ Measurement Instrument

Survey

• Case study of three to four entrepreneurs• Possible selection criteria:

• Size of business• Number of years as an entrepreneur• Age bracket• Geographical location• Gender• Educational attainment and/or special training• Form and amount of capitalization and/or support system

during business start-up

Interviews

The Design Methods and ProceduresResearch Design

Results and Analysis

At 95% confidence level, there is a moderate negative correlation between the increase in capitalization, Net income, and ROI and AQ

Amount of Increase in AQCapitalization Correlation Coeffi cient -.433*

Sig. (2-tailed) 0.12N 0.33

Assets Correlation Coeffi cient -.187Sig. (2-tailed) 0.298N 33

Revenues Correlation Coeffi cient -.264Sig. (2-tailed) 0.132N 34

Net Income Correlation Coeffi cient -.377*Sig. (2-tailed) 0.031N 33

Return on Investment Correlation Coeffi cient -.385*Sig. (2-tailed) 0.27N 33

Market Share Correlation Coeffi cient -.181Sig. (2-tailed) 0.314N 33

• Based on initial results:– Moderate correlation between Adversity

Quotient (AQ) and performance of the business or businesses an entrepreneur owns and manages.

– entrepreneurs with low adversity quotients tend to have businesses with lower growth in capitalization, net income and return on investment .

Conclusion

• As it is hypothesized, increase in capitalization, assets, revenues, net income, return on investments, and market share have a very strong positive correlation among each other, and is significant at the 0.01 level. This may indicate that a business that has increase in capitalization may also have increase in other success indicators.

Conclusion

• JG School of Management – Declared as Center of Excellence in

Entrepreneurship by Philippines’ Commission on Higher Education

– Requires our students to set up a business venture project

• in teams, • formulate their business concept, • business model and strategies and • implement their business plans within the school

year.

Educational Significance

FRUCTUOSO T. SABUG JR.Leadership and Strategy Department

Ateneo

CORRELATES OF SUCCESSFUL ENTREPRENEURSHIP: THE CASE OF THE PHILIPPINES