Entrepreneurship Theories

As always, we should take new theories with a grain of salt. In this case, you might get a little grossed out! The Toxoplasma gondii parasite is carried by felines (cats) and has be found to infect their human masters too. The parasite can be caught through contact with the animals and their bodily fluids and solids. The parasite causes brain cysts that last a lifetime and lead to behaviors including bipolar disorder, reduced fear, and lower IQ. Some have estimated that over 2 billion humans have been infected, though infection rates differ greatly by country. For instance, the U.S. infection rate is around 3%, while it may be as high as 50 to 70% in France and Mexico. Petr Houdek at University of Economics in Prague reviewed the literature in a 2017 paper published in the Academy of Management Perspectives . Research by Stefanie Johnson (Leeds School of Business) and colleagues (a gang of non-biologists) suggests that those infected by the virus are 1.7 times more likely to ch...

Should entrepreneurs strive to be first? This is an important question that is relevant to myriads of decisions that entrepreneurs make involving commitments of resources and attention. For instance, given the option to implement two ideas, one with early entry potential and the other with late entry potential, which should an entrepreneur run with? According to Kerin et al. (1992), "studies purport to demonstrate the presence of a systematic direct relationship between order of entry for products, brands, or businesses and market share." First mover advantage theory posits that new entrants that are earliest to a new market niche get several advantages, such a brand awareness and a reputation for innovativeness. Followers can built great brands too, though at a greater cost. Another first movers advantage is the ability to tie up factor markets by engaging in long term contracts with key suppliers, which makes it harder for followers to acquire the necessary complementary as...

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...

What is the ambiguity tolerance theory of entrepreneurship? Ambiguity tolerance theory can be traced back to Polish psychologist  Else Frenkel-Brunswik , whose work in 1949 focused on authoritarianism and ethnocentrism in children. Ambiguous information is everywhere and it can lead to the conclusion that there is no way out, no way to understand, or no viable way to proceed. The decision-making process can become paralyzed by ambiguity that prevents conclusive prescriptions. When there exist high levels of uncertainty about a particular entrepreneurial venture, those individuals that exhibit higher levels of tolerance of ambiguity, are more likely to succeed. The ability to tolerate conflicting information and deal with missing information makes the difference. The more uncertain a particular business opportunity, the more important it is that individuals are capable of tolerating the demands of conflicting information and vague information. We might expect that vent...

What is the individual-opportunity-nexus theory of entrepreneurship? There is a long standing debate about the origins of entrepreneurial opportunities. There is a divide between scholars that think entrepreneurs create opportunities, and those that believe they merely discover them. Scott Shane and Jonathan Eckhardt (2003) make the case that opportunities are found and discovered, not made or created. They propose that the foundation of the field of entrepreneurship relies upon the objectiveness of opportunities and would otherwise be on shaky ground. "[W]e define entrepreneurial opportunities as situations in which new goods, services, raw materials, markets, and organizing methods can be introduced for profit." - Eckhardt and Shane (2010) The theory suggests that it is the constant pivoting of the entrepreneur that lands him or her on an opportunity that exists out there, objectively. Although it resembles a process of search it appears from the outside to be a cr...