What are the economic theories about entrepreneurship?
Agency TheoryCreative Destruction Theory
Agency theory starts with negative assumptions about entrepreneurs and seeks to govern them.
This theory looks at the effects of clusters on entrepreneurship and how spinouts may lead to more clustering.
This theory argues that entrepreneurial alertness allows entrepreneurs to balance supply and demand by detecting market imperfections and exploiting them.
Famous for the proposition that every country has its share of entrepreneurs, but how their energies are deployed depends on the institutions present.
The notion that entrepreneurs pursue new possibilities through the destruction of old certainties.
What if it's all about what you know?
Jack of all Trades Theory
The jack of all trades theory is controversial because it suggests people should vary their experiences to attain entrepreneurial skills, but evidence suggests that this may be bad advice.
This theory suggests that productive innovation comes from both incumbents and new entrants.
This theory posits that when individuals think they are winning, they become more risk-averse, whereas when they think they are losing, they become inclined to take bigger risks to make up for their losses.
Resource Scarcity Theory
Resource scarcity theory posits that entrepreneurs’ decisions are affected by the costs of accessing scarce resources in a market and institutional environment.
Strategic disagreements theory explains spinouts as the interplay between the preferences of employees and their parent organizations.
Transaction Cost TheoryUncertainty-Bearing Theory
The notion that all economic exchange results in transaction costs and thus the optimal organizational structure is one that minimizes these costs.
This theory suggests that bearing more business uncertainty creates more profits. It also looks at ways in which entrepreneurs can bear different levels of uncertainty.
X-efficiency theory posits that entrepreneurial opportunities come from incumbents’ inefficient use of resources that entrepreneurs discover and exploit.