Entrepreneurship Theories

Do slackers have an advantage in entrepreneurship? This theory is passed around more as rumour than formal theoretical framework. The theory starts with a premise about how entrepreneurial ventures come about. Entrepreneurial opportunities are viewed as difficult to discover or create, requiring a lot of time and trial and error. Perhaps slacker have nothing more important to do, allowing them the resilience to keep trying, even after repeated failures.   Perhaps individuals who are not particularly motivated or hardworking can still become successful entrepreneurs. By embracing a more laid-back approach to work, entrepreneurs may find creative and innovative solutions to problems that others might overlook. The idea of the slacker theory of entrepreneurship challenges the conventional wisdom that success in business requires long hours and a relentless work ethic. Instead, it suggests that entrepreneurs who are willing to take risks and think outside the box can find success even...

There exists much confusion about the difference between "employee spinouts" and "corporate spinoffs". It is due to the ambiguous use of these terms both in practice and in academia (Yeganegi et al., 2024).    The following is an attempt to differentiate these phenomena based on who enjoys ownership benefits. At a basic level, spinouts involve employees that turn into entrepreneurs that launch startups, whereas spinoffs are corporate divisions/units turned independent companies.   An Employee spinout ("spinout") is the outcome of the independent decisions of employees that leave their employment to start a new venture or company (i.e., employees-turned-entrepreneurs). Neither the parent organizations nor their investors typically receive any ownership shares in a spinout (although they may sometimes take a small equity stake in exchange for IP rights). Spinouts are owned and controlled by former employees and their own investors (e.g., venture capitalists...

What is Hoselitz theory of entrepreneurship? Burt F. Hoselitz was a professor of economics at the University of Chicago. Hoselitz argues that entrepreneurship tends to come from socially marginalized groups in a given society. This is very similar to the withdrawal of status respect theory and the misfit theory of entrepreneurship , which both deal with marginalized populations. Hoselitz (1963) assumes that entrepreneurship can only come out of a developed cultural base. His theory is that marginalized populations must be considered culturally developed in order to be considered eligible for entrepreneurship. He refers to entrepreneurship by marginalized groups as "pariah entrepreneurship". Hoselitz claimed that his theory helps to explain to the highly entrepreneurial behaviors of Greeks and Jewish people in medieval Europe, Lebanese in West Africa, Chinese in Southeast Asia, and Indians in East Africa. The concept of cultural development is ambiguous and potent...

The concept of social entrepreneurship is relatively new and may not be thought of as a theory. It is more like a domain or niche phenomenon that may deserve attention. According to Dees (2017), social entrepreneurship has largely emerged out of discontent with the performance of government and charitable organizations in tackling social problems. Governments are often underfunded, ineffective, and too political to do what is right for all. Charities are busy fighting for funds and justifying their existence and many successful such organizations use many of their donors funds for internal development purposes. If governments and charities would be more effective at tackling poverty, health issues, and inequality, then there would not be a need for social entrepreneurs to try to pick up the slack. This is also a core idea in the stakeholder theory of entrepreneurship . Social entrepreneurs bring market logic and business acumen to bear in combating social problems. They are chan...

Mathew Hayward and colleagues (2006) introduce a hubris theory to entrepreneurship. Their aim is to explain why so many new ventures are started despite a very high background failure rate. After all, most businesses fail within the first few years of founding. So why do entrepreneurs keep trying to create new ones? Individuals overestimate the personal wealth they may attain by starting new ventures. The theory assumes that individuals have information about their likelihood of success, but think that they can beat the odds. Hayward and colleagues (2006) suggest that overconfident individuals may harm their ventures by depriving them of resources. Thus, while overconfidence may help in starting a venture, it does not help much with operating a business. Cassar (2010) finds empirical evidence that prospective entrepreneurs are indeed overconfident. Hogarth and Karelaia (2012) find that overconfident entrepreneurs have lower success chances. Thus, overall, there is some support for the ...

The term emancipation has roots in Roman era practices of buying, selling and keeping slaves, but also wives and children. In Roman times, a son needed to be freed from the legal authority of the father to make his own way in the world. The term is also associated Lincoln’s Emancipation Proclamation, which, in the U.S., was used to criminalize slavery. In the women’s liberation movement, emancipation is associated with breaking free from bonds of marriage to a man. In a very interesting paper, Rindova and associates (2009) propose that entrepreneurship can be thought of as means of emancipation. They take a positive spin on a critical theory perspective. They define entrepreneuring as efforts to create new economic, social, institutional and cultural environments via the actions of groups or individuals. To bolster their arguments, they point out three key way in which entrepreneuring resembles emancipation processes. These are seeking autonomy, authoring, and making declarations. ...

Agency theory was developed in the 1980s by economist Michael C. Jensen at the Harvard Business School for the purposes of explaining and predicting the behaviors of investors and managers. Agency theory distinguishes between principals and agents, the former being parties that delegate responsibility for some set of actions to the latter. For instance, entrepreneurs and managers are often the agents of investors, who delegate the responsibility over a business organization. The theory’s underlying assumption is that both parties are self-interested and that the interests of principals and agents diverge or are in conflict. Therefore, agents may make decisions on behalf of principals that are not in the principals’ interests, which is called an agency problem. For instance, agents may take greater risks than principals would want them too because agents are betting with the principals’ capital. Agency problems are exacerbated when there is information asymmetry between pri...