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Hoselitz Theory of Entrepreneurship

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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". U.S. Coast Guard Photo 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 develo

Withdrawal of status respect theory of entrepreneurship

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What is the withdrawal of status respect theory of entrepreneurship? Everett E. Hagen was a political scientist and economist writing at MIT in the 1950s and 1960s. He sought to explain how traditional societies changed into those with continual technological progress and hence rising incomes. Here we discuss Hagen's (1963) theory of entrepreneurship. Hagen argues that a process eventually leading to entrepreneurship is triggered when a social group loses status in relation to other groups in a society. When members of a given social group perceive that they are given their due respected by the dominant groups in society, it triggers a creative spark that encourages entrepreneurial behaviors (Dana, 1995). Some examples of "withdrawal of status respect" include when: 1) a formerly higher status group is displaced by a new group; 2) a social group's symbols are insulted by the dominant group; 3) a group's symbols become unaligned with their actual economic

Misfit theory

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The misfit theory suggests that individuals who do not share the dominant cultural values of their society are more likely to attempt entrepreneurial careers as an alternative to traditional employment.    Hofstede et al. (2004) propose that individuals who feel like they do not fit in with the dominant culture may be dissatisfied with their job prospects and may be more inclined to start their own ventures. This theory has been used to explain why immigrants are often more entrepreneurial than native-born populations. Immigrants may face challenges in finding lucrative employment due to a variety of factors, including language and cultural barriers, differences in educational and professional credentials, and discrimination (Kahn et al., 2017). As a result, they may be more likely to pursue entrepreneurship as a means of creating their own economic opportunities and achieving financial success. In addition to the challenges faced by immigrants, the misfit theory of entrepreneurship ca

Biculturalism and Entrepreneurship

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What is the biculturalism theory of entrepreneurship? Biculturalism refers to an individual characteristic that develops as a result of exposure to two cultures. The typical case is the immigrant who must learn the host country's local culture and in doing so adopts elements of a second culture. The Al-Shammari team examines individuals with bi-cultural skills and experiences: "those who are exposed to different cultures and environments will experience different types of experiences in their social interactions and thus will accumulate rich knowledge that is diverse" (page 7). They theorize that biculturalism provides advantages in the opportunity recognition, evaluation, selection and exploitation stages . They find that bicultural individuals have advantages in the earlier stages, but struggle with exploitation (due to institutional constraints), unless they are able to build networks in the host country. This is an interesting theory, though obviously lends its

Birth Order Theory of Entrepreneurship

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The Birth Order Theory is a psychological theory that suggests that the order in which individuals are born in relation to their siblings has a significant impact on their personality development and experiences throughout their lives. This theory was popularized by psychoanalysts such as Sigmund Freud, Carl Jung, and Alfred Adler in the 1950s and has since become a widely studied and debated topic in the field of psychology. According to the Birth Order Hypothesis, depending on their position in the birth order, each child in a family goes through a different set of conditions and experiences. For instance, it's well knowledge that first-born children are more mature and goal-oriented, whereas younger siblings may be more inventive and rebellious. Only children may be more self-assured and egocentric, but middle children are regarded to be more autonomous and adaptable. The Birth Order Theory suggests that these differences in personality and behaviour can be traced back to the un

Social identity theory and entrepreneurship

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Social identity theory came out of Henry Tajfel and John Turner (1979) experiments showing that the slightest priming of group membership creates prejudice. “Blue eyes, a preference for the paintings of Wasily Kandinsky over those of Paul Klee, and calling some people over-estimators and others under-estimators were sufficient to produce a preference for fellow group members and to elicit discrimination against outsiders” (Huddy, 2001:132). Social identity theory has been used to explain why human personalities and behaviors seem to be context-specific. A given individual may act differently depending on which groups they perceive themselves to belong. The theory suggests that personal identity plus environmental conditions shape social identity, which in turn leads to categorization of others into in-groups and out-groups. Obschonka et al. (2012) argue that individual beliefs and attitudes are unlikely to be the main drivers of entrepreneurship. Rather, they use social id

Weber's theory of entrepreneurship

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Max Weber was a German sociologist writing in the early 1900s who theorized that religious beliefs are a key determinant of entrepreneurial development. He argued that entrepreneurial energies are driven by beliefs about causes and consequences. In particular, he emphasized how religions encourage investment in economic growth and development (and compound interest). A religious belief in saving for the future was key, he believed, to the capitalistic spirit . Weber distinguished between religions that encourage capitalism from those that do not. In particular, Weber noted that Hinduism, Buddhism and Islam may not be conducive to entrepreneurship. Hinduism and Buddhism purportedly have a focus on the present moment and tend to shun materialism, making them problematic to the pursuit of entrepreneurial goals. He suggested that Islam’s focus on the rewards of the afterlife make material accumulation problematic.    By contrast, he argued that the protestant work ethic prevalent in

Cultural Theory of Entrepreneurship

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Scholars have long been fascinated by differences observed between cultures. For example, Thomas Cochran (1965) proposed that entrepreneurs are influenced by 1) their own attitudes toward their occupation, and 2) the expectations of groups facilitating new ventures, as well as 3) the difficulty level of  the operational requirements of the career. He argues that both attitudes of potential entrepreneurs and the expectations of investors are "culturally determined".   He looked to evidence in historical cases such as the entrepreneurial prominence of Protestants in America , Samurais in Japan , the Yoruba in Nigeria , the Kikuya in Kenya , Christians in Lebanon, the Halai Memon in Pakistan , and the Parsis in India . Each of these cases can be considered imperfect interpretations. Later on, Hofstede (1980) proposed that culture captures the set of values, beliefs, and expectations about behaviours that are shared by a social group. Cultural values can be unconscious or consc

Baumol's Institutional Theory of Entrepreneurship

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William J. Baumol was an American economist at New York University. His theory of entrepreneurship starts with the assumption that every society is endowed with their share of entrepreneurs. However, the way in which entrepreneurs use their energies depends upon the institutions—the rules of the game—in place in a given society. It is also sometimes called a political theory because the regime in a given country or territory may have tremendous influence on incentives. He argues that entrepreneurs may engage in productive (i.e., innovation) or unproductive (rent-seeking and crime) forms of entrepreneurship depending on what a country’s institutions encourage. Baumol argued that the notion of a "spirit of entrepreneurship" is largely useless for policymakers because it is difficult to measure and even more difficult to influence. Instead, Baumol proposed that policymakers should focus on altering the rules of the game to encourage productive entrepreneurship and discourage

Emancipation and Entrepreneurship

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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.

International entrepreneurship

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International entrepreneurship may be unique domain or phenomenon differentiated from mainstream entrepreneurship research by its cross-border and cross-cultural dimensions. It may be viewed as a sub-field of international business, or as a cross-disciplinary areas between international business, entrepreneurship and strategy. It may also be thought of as a taxonomic theory . According to Oviatt and McDougall (2005): "International entrepreneurship is the discovery, enactment, evaluation, and exploitation of opportunities—across national borders—to create future goods and services." Jones et al. (2011) reviewed 323 international entrepreneurship articles and classified them into three types into three major types.  1) Entrepreneurial Internationalization research is concerned with the internationalization process and the role of networks (including social capital), and organizational issues and entrepreneurship. The goal is to understand how entrepreneurs internationalize th

Embeddedness Theory of Entrepreneurship

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What is the embeddedness theory of entrepreneurship? Karl Polanyi was an Austrian-Hungarian economic sociologist in the middle years of the twentieth century. He coined the term 'embeddedness' to mean the extent that economic activity is constrained by institutions that are non-economic. Non-economic institutions may include: 1) kinship or family 2) religious or cultural 3) power and politics Embeddedness can also be thought of as the nature, depth and extent of an individual’s ties into the environment (Jack and Anderson, 2002). Patterns of economic exchange become embedded in webs of social relations that over time leading to the development of trust and reciprocity (Uzzi, 1997). Embeddedness affects decisions about who to transact with including potential investors and customers of entrepreneurs' ventures. For instance, someone that graduates from Stanford may be more likely to get investment from someone in the Stanford venture capital network, but they may also

Locus of control

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Among personality theories used by entrepreneurship researchers, locus of control has received considerable attention. The concept was developed in the 1950s by Julian Rotter who is an American psychologist working on social learning theories. Locus of control refers to an individual’s perception about the causes of their life conditions. External locus of control describes an individual that believes that most of their life conditions are determined by forces outside of their control, such as like deities, governments, power structures, institutions, and also fate or luck. Internal locus of control describes an individual that believes that they are their own master and can act to change their own life conditions. They are viewed as a continuum and most individual are situated between the two extremes of complete external control and total internal control orientations. When applied to entrepreneurs, those with an external locus might believe that their survival or success chance

Born Global Startups

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Born global startups are ventures that start thinking and acting globally in their early stages of development, which utilize international markets and resources to scale their growth. Attention to born global startups comes from a stream of theory and research that examines how startups rapidly internationalize their new ventures (Knight and Cavusgil, 2004). Traditionally, entrepreneurs would focus on domestic markets first and then pursue internationalization gradually as they develop the requisite skills through trial and error. Modern advances in internet technologies, global talent flows, and international supply chains have substantially lowered the cost for entrepreneurs to internationalize (McCormick & Somaya, 2020). They have also made it possible for startups to address global markets from the very beginning of their existence. Entrepreneurs can now bypass many of their home-country constraints such as government inefficiencies and physical location (McCormick & Somay

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