Niche theory of entrepreneurship

What is the niche theory of entrepreneurship?

In ecology, the concept of a niche is crucial to understanding the interactions between species and their environment. Essentially, a niche is a space or role that a particular species occupies within an ecosystem, defined by the specific environmental conditions it needs to survive and thrive. These conditions can include factors like temperature, humidity, available food sources, and predators.

One interesting aspect of the niche concept is the phenomenon of convergent evolution. This occurs when two or more species independently evolve similar adaptations or traits because they occupy similar ecological niches. The marsupial wolf and the placental wolf mentioned in the prompt are a great example of this.

Despite being separated by millions of years of evolution and located on opposite sides of the world, the marsupial wolf of Australia and the placental wolf of North America share remarkable similarities in their physical appearance and ecological roles. Both are apex predators that hunt other mammal herbivores, and both have similar anatomical features such as sharp teeth and strong jaws for killing and tearing apart prey.

The fact that two species from different parts of the world could independently evolve such similar adaptations is a testament to the power of natural selection and the importance of ecological niches in shaping evolutionary trajectories. In both cases, the ecological pressures of hunting in a specific environment with certain prey and predator populations drove the evolution of these similar traits.

The concept of the niche is also important for understanding the dynamics of ecosystems and the ways in which species interact with one another. When two species occupy similar niches, they may compete for resources or even engage in predator-prey relationships, as in the case of the marsupial wolf and the placental wolf.

Overall, the idea of the ecological niche is a powerful tool for understanding the complex relationships between species and their environment. And the phenomenon of convergent evolution serves as a fascinating example of how similar evolutionary pressures can lead to similar adaptations, even in species separated by vast distances and millions of years of evolution.
In entrepreneurship lingo, a niche refers to a narrow market space. Hutchinson (1978) suggests that much like animal species, competitors rarely occupy the same niche because if they do then they compete directly and would result in frequent fights (e.g., price wars). Rather, each species tends to specialize, for instance, one might evolve to prey at night, while the other preys during the day. Similarly, businesses can cater to distinct customer segments by offering differentiated products and services. The theory of population ecology is used to elaborate on the role of entrepreneurship so we point the reader there (Hannan and Freeman, 1977).

Nonetheless, the basic idea is that each niche can only accommodate a fixed population size and mix and that entrepreneurs compete for space in niches with incumbents and other entrepreneurs. The theory points to the need for unique niche exploitation strategies in order to carve out unique space. This is related to blue ocean strategy and disruptive innovation theory, both of which focus on the concept of unique market spaces.


Hutchinson, G. E. (1978). An introduction to population ecology.
Hannan, M. T., and; Freeman, J. (1977). The population ecology of organizations. American journal of sociology, 82(5), 929-964.
Hardesty DL, 1972. The human ecological niche. American Anthropologist, 74: 458- 466.


Anonymous said…
This is interesting, I have heard of niche marketing in business before but I never thought of the parallels with evolution in nature!

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