Entrepreneurship Theories

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...

  Another biological theory is the childhood adversity theory. While researchers have looked at resilience in adults, few have examined the how childhood adversity may affect entrepreneurial entry later in life. Using a variant of the underdog theory, which looks at how negative experience shape an individual's resilience. Recent research has looked at samples of entrepreneurs from a famine in China (1959–1961) and from war-torn Vietnam. Both studies find that individuals who endured childhood adversity are more likely to become entrepreneurs.  Churchill et al. measure adversity as the bombing intensity experienced by the entrepreneurs in early childhood. They find that as the bombing intensity increased, so did the chance that the children grow up to become entrepreneurs. The effect size is about 5% increase in entrepreneurial entry for a 10% increase in bombing intensity. Cheng et al. measure adversity as the experience of starvation during the societal upheavals of C...

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...