Entrepreneurship Theories

When we think about a digital entrepreneur, we might imagine a single person making millions of dollars through a fully automated website or app. That seems very different from the traditional view of entrepreneurship as a process of organization-building. Where is the organization in digital entrepreneurship? Zaheer et al. (2019) review the literature and find that focus on 'digital entrepreneurship' is relatively new, starting in 2013. Before that, the research attention was on the transformation of business models due to the spread of the internet and the rise of e-commerce. It only became a big topic when entrepreneurs in the digital space started making waves with digital business models that have very small human organizational footprints. There has been a growing movement to distinguish digital entrepreneurship from traditional types of entrepreneurship. For example, Kraus et al. (2019) stimulate attention to digital entrepreneurship by suggesting that we need new the...

The External Enabler Framework (Davidsson, Recker & von Briel, 2020) is a conceptual toolbox developed for analyzing the strategic and fortuitous influence of changes to the business environment in entrepreneurial pursuits. External Enabler (EE) refers to significant changes to the business environment, such as new technologies, regulatory changes, macroeconomic shifts, demographic and sociocultural trends, changes to the natural environment, and the like. The basic assumption of the EE body of work is that every such change will benefit some entrepreneurial initiatives even if it disadvantages other economic activities. EE analysis focuses on those enabled; other frameworks are needed for analyzing negative consequences of change. The EE concept was introduced as a more workable alternative to “objective opportunity” for realizing the idea of entrepreneurship as a nexus of enterprising agents and favorable environmental conditions (Davidsson, 2015). Unlike the notion of objective ...

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...

Distinct from the popular medical/psychological definition of generativity, which defines the concept as a need to nurture and guide younger people and contribute to the next generation, the generativity theory in relation to entrepreneurship focuses on the development of technology stemming from the foundations set by previous innovations.   Think of platforms that enable entrepreneurs to create ventures that fit that very specific platform niche. Amazon, for example has millions of independent sellers, there's a whole cohort of software developers exploiting Apple's watch platform. Immediately after Apple first announced that the watch would have physical sensors on it, thousands of sport and medical tech startups flocked to the space. Thus, not only do new platforms create spaces for entrepreneurship, but changes to platform features can also create new spaces for entrepreneurial entry.   Unplanned melody No one is really in charge of scientific or engineering discoveries t...

Architectural innovation focuses on changes in product architecture and their advantages/disadvantages for incumbents and new entrants (Henderson and Clark, 1990), where many of those new entrants are going to be entrepreneurs and their startups. The bottom line of the theory for entrepreneurs is that "architectural innovation" is a promising avenue for new entrants to go after because it is difficult for incumbent to pursue such innovations. Architectural innovation is usually competence-destroying for incumbents to follow. By contrast, other types of innovations benefit incumbents, such as incremental innovations (improving components), modular innovations (swapping components) and even radical innovations (developing new capabilities in areas without legacy products). Theory basics The theory starts with the idea that a product or service is made up of components that fit together according to a type of design called "product architecture", which is either modula...

Competence destroying innovations are expected to be brought to market more successfully by new entrants than competence enhancing innovations (Tushman & Anderson, 1986). Competence = Abilities + Resources An incumbent firm's competence is destroyed when a technological innovation obsolesces the abilities and or resources that previously composed the competences of the firm. For instance, Blockbuster's retail competence was undermined by Netflix's online model. The theory goes that incumbents are reluctant to adopt competence destroying innovations because they prefer to preserve and enhance their existing competences. Besides, developing new competences often means shedding the old and that can involved painful layoffs or divestitures. These difficult organizational changes and the coalitions that form within organizations to try to stop them, create a friction that impairs adoption. Instead, the new entrant benefits from adopting competence-destroying innovations beca...

Actor-network theory was created by Bruno Latour, Michel Callon, and John Law. It describes a “material-semiotic" method of analysis that is distinct from mainstream network analysis in that it includes non-human objects in networks as nearly equally important as human actors. According to Latour (1999): “You are different with the gun in your hand; the gun is different with you holding it. You are another subject because you hold the gun; the gun is another object because it has entered into a relationship with you.” According to Korsgaard (2011), Latour’s point is that neither the gun nor the person kills alone, but the combination of person and gun can execute the sinful act. The conclusion is that human agency is not merely a human phenomenon, because it relies on non-human elements too be executable. Korsgaard applied actor-network theory (ANT) to entrepreneurship. He argues that ANT is superior to the older ‘ discovery theories ’ that have dominated the entrepreneurship li...

The diffusion of innovations has been studied by many scholars over the ages, but notably from 1970 onward by American sociologist Everett Rogers. Dr. Rogers was interested in trying to get farmers to adopt innovations (like farm equipment) that could better their lives and make their businesses more productive. He pondered the forces that lead some to adopt and others to abstain. He suggests that different types of adopters: innovators, early adoptions, early majority, late majority and laggards have different adoption criteria. For instance, a strategy that may attract early adopters may not attract the early majority because they want different things. The size distributions of the different types of adopters (i.e., number of members of a particular adopter category), grow and then shrink giving rise to an inverted u-shaped curve, giving rise to the famous s-curve of total adoption. Image source: Wikicommons Rogers noted that it is not always the best technologies that get...

    “The crossing or hybridizations of the media release great new  force and energy a s by fission or fusion…” (1964:48).  Marshall McLuhan was a Canadian academic and celebrity who famously coined the phrase “the medium is the message” back in the 1960s to express his thesis about the effect of new technologies (extensions of ourselves) on culture and society. He and his son are known together for the McLuhan Tetrad, which suggest that careful analysis of the extensions, amputations, retrievals and reversals inherent in innovations help to reveal their effects. At a time when critics railed against sex, violence, and blasphemy on vacuum tube televisions, McLuhan claimed that the content of television was irrelevant, as it is the medium of television that really changes us by creating new audio/visual tribes, and seating us passively in front of the tube. New environments! He also suggested that the radio is the preferred of violent agitators--wonder what...

What is the disruptive innovation theory of entrepreneurship? Disruptive innovation theory of was developed by Harvard Business School professor Clayton Christensen in his famous book entitled The Innovator’s Dilemma (2003) . Christensen’s core argument is that new entrants succeed when they pursue disruptive innovation whereas incumbents tend to pursue sustaining innovations. Disruptive innovations are technologies, products and business models that are lower performing than incumbent offerings along traditional dimensions of performance, but compensate with increased simplify, convenience, customizability, or affordability. For example, the Nintendo Wii disrupted the Xbox and Sony Playstation by offering lower quality graphics in exchange for the simplicity in the intuitive movements offered by gyroscopic technology added to the controllers. This allowed younger children, game novices, and older gamers to be able to learn to play with a minimal learning curve. Sustaining inn...