Entrepreneurship Theories

What is the resilience theory? Resilience is the ability to get up after you fall down, whether it be physically, psychologically, cognitively, financially, socially, or economically. Resilience is expected to be an important capability of entrepreneurs because they typically face numerous failures on their way to eventual success. The idea of resilience as a virtue for entrepreneurs is appealing because it soothes the failed or failing entrepreneur. It involves a belief that continuing on despite setbacks is better than withdrawing from entrepreneurial activities. For example, the popular idea of the pivot implies the need to change directions as reality comes into focus. Ayala and Manzano (2014) find that Spanish small business owners are more resilient than the general population, highlighting the sub-construct of resourcefulness.  Bullough, Renko and Myatt (2014) focus on entrepreneurs during times of war, who show great resilience in the face of conflict. Entrepreneur...

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...

Learning involves the transformation of experience into potential knowledge, cognition, behaviours or actions (Kolb, 1984). Experiential learning can be differentiated from rationalist (e.g., cognitive theories).  Rather than emphasize the role of acquiring, manipulating, and recalling, experiential learning theory embraces subjective experience.  Know-how   The concept of subjective experience is often used to describe personal and individual experiences that cannot be fully captured or understood through objective observation or measurement. While there are many different types of subjective experiences, one useful way to think about them is through the lens of "know-how." Unlike knowledge, which can be learned through language and formal education, know-how is often acquired through hands-on experience and practice. This type of experiential learning is particularly important in areas like entrepreneurship, where success often depends on a deep understanding of th...

Prospect theory was developed by behavioural economists Daniel Kahneman and Amos Tversky in the 1970s. Their aim was to better understand decision making processes by looking at how individuals assess the potential gains and losses from a decision separately. The most famous hypothesis tied to the theory is that most individuals fear losses more than they value gains. The theory posits that when individuals think they are winning (gain domain frame), they become more risk-averse, whereas when they think they are losing (loss domain frame), they become inclined to take bigger risks to get back to a break-even position. According to Hsu et al. (2017): "So essentially, whether a person frames a situation as associated with gains or losses influences his or her attitude toward engaging in risky behaviors such as reentering entrepreneurship."    Entrepreneurs judge whether they are in a gain or loss position based on a reference point. For instance, Hsu et al. use the entrepre...