Entrepreneurship Theories

What is a Born Open Startup? A startup that is born open is one that rejects the notion of proprietary knowledge appropriation (e.g,. obtaining patents ). In fact, software patents are probably the born open crowd's worst abomination.   Instead, a born open startup views itself as a part of a ecosystem of firms that work cooperatively and competitively. They typically are autonomous but have some interconnected goals. Open source startups participate in the development of a community of firms with a shared governing policy to prevent the appropriation of the technology. According to Mekki MacAulay, " Open strategy involves the collective production of a shared good in an open fashion such that the resulting product is available to all, including competitors. In the case of open entrepreneurship, 'born-open' startups are entrepreneurial ventures whose business models are designed specifically based around a collective good. Such business models can be effectiv...

How can feminist theory enlighten us about entrepreneurship? For the most part, women entrepreneurs are in the minority, and they are less likely to be funded by venture capitalists. This naturally leads to criticism of the old boys club in venture capital investment that tends to invest less in women led ventures. There are some indications that these trends are changing but its far from over. Much of the feminist literature that discusses entrepreneurship tends to look at differences between entrepreneurial entry rates and opportunities for women entrepreneurs as well as the systems and structures that cause the disparities between men and women. Hurley (1999): "Traditional anthropological theories stated that the key factor in human evolution was the male’s hunting activities. The men developed the important social skills of  communication, co-operation and tool making, while women contributed little...Feminist theories showed that women’s activities were the key ...

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...

Utility theory was developed by moral philosophers in the early 1900s, including John Stuart Mill. The core concept is that individuals make (or should make) decisions that maximize utility. Utility includes value for one's self and for others (society). Mill's book Utilitarianism sets forth several principles and argues that happiness has utility, as does justice. All sentient beings can experience utility, thus maximizing utility can take into account the interests of animals. But it brings forth a debate about how much utility to give to a deer versus a driver in the decision to construct an expensive nature fence and land bridge. Moreover, there might be "more sentient" beings, such as gifted humans, which some might want to give a higher utility in their calculations. Another problem is that we might give little weight to things that affect many people but only a little bit. For example, if one may litter and affect many people (who will see the trash), but...

The theory of procedural justice was introduced by Thibaut and Walker (1975). Thibaut and Walker propose that procedural justice focuses on the processes of justice rather than the outcomes of such processes (i.e., distributive justice), because the processes are more important in the evaluations of participants.    Procedural justice theory was later been applied to the organizational strategy context by Kim and Mauborgne (1991), who argue that when implementing global strategies, as long as the decision-making process is deemed fair to stakeholders, then even if an outcome is not distributively advantageous, it may accepted as just.   Procedural justice has been used to help explain entrepreneurial success from a financing-availability perspective. Procedural justice may help explain how entrepreneurs successfully manage their investor relationships. According to Sapienza and Korsgaard (1996), w hile entrepreneurs benefit from sharing information with in...

Niccolo Machiavelli  (born 1479) in Italy is an infamous strategist who wrote extensive letters teaching cunning strategies to "princes" that ruled over fiefdoms throughout feudal Europe at the time. 16th century Europe was very divided compared to today, especially in and around Italy, which was composed of a large number of small autonomous and semi-autonomous territories (fiefdoms and kingdoms). Although Machiavelli is often considered as a figure in the history of political science, fiefdoms were ruled by what Baumol (1996) describes as entrepreneurs of their time. Princes would take territory, or castles, rather than fight over money.    Machiavelli's letters can be thought of as elaborating entrepreneurial strategies to get ahead in feudal times, but which are largely inappropriate in the current business context.. Many regard Machiavelli's strategies as unethical, yet his famous book "The Prince" continues to be cited and read within the busines...

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 ...

A stakeholder approach to entrepreneurship has roots in a debate that had occurred between professors Ron Mitchell and S. Venkataraman in 2002, over the connections between stakeholder theory (Freeman, 1984) and entrepreneurship.    Stakeholder theory had largely been born out of studies of large corporations managing their stakeholders to improve incumbent firm performance, and had not been fully applied to the entrepreneurship area to explain entrepreneurial behaviours, processes, or outcomes.   Entrepreneurship and strategy research tends to be about how new wealth is created, whereas stakeholder theory is more about how that wealth should be distributed. For some, the value creation and distribution issues are separate problems, complementary perhaps, but requiring different logics. A stakeholder theory of entrepreneurship seeks to integrate the wealth creation and redistribution problem. In particular, developed economies feature some degree of competition among incu...

Stewardship theory was put forward by Lex Donaldson and James Davis in the late 1980s as an alternative to agency theory, which they viewed as having negative assumptions about managers. Agency theory views agents (managers and entrepreneurs) as self-interested and opportunistic and views the relationship between principals (investors) and agents as necessarily conflicting. Agency theory is the logic behind providing managers and other employees with stock-based compensation to align the interests of the employees with those of the shareholders by making the employees into shareholders. In contrast to agency theory, stewardship theory posits that managers and entrepreneurs are motivated to act in the interests of their organizations and principals. The core idea is that the rewards from pro-social behavior have greater utility than individualistic or self-serving behaviors. The steward receives greater personal satisfaction when the organization is successful and therefore act...