Entrepreneurship Theories

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...

Most entrepreneurs work for organizations before or while they start their businesses. There is macho entrepreneurship dogma that says you have to go all in, experience "the fear" and dedicate yourself for 80 hours a week to your venture. Implicit in this is the notion that an entrepreneur cannot succeed if they hedge their bets by keeping one foot in employment. But isn't this a bad assumption? Why go all in to a startup if startup success stories are probabilistic events, not givens?    Hybrid entrepreneurship refers to entrepreneurship whereby an employee starts a business on the side and keeps their stable and sustaining day job until the startup reaches a certain size. Ardianti et al. (2022) suggests that hybrid entrepreneurs experience a distinct psychological well-being than other entrepreneurs, perhaps because they are keeping their foot in the door of stability. Once the business is large enough to command the founder's full attention, then the emp...

What is the Lean Launchpad? The Lean Launchpad was developed by Steve Blank (serial entrepreneurs and adjunct professor at Stanford) and colleagues as a repeatable process to create a startup. It is probably the most popular methodology today, featuring in a great number of entrepreneurship programs for students and mature students. It is also the method used at Y-Combinator and other top incubator programs. Despite its popularity, there is little empirical research examining the method. Assumptions behind the Lean Launchpad The theory behind the Lean Launchpad can be described as a discovery theory. The entrepreneurship literature is divided about the nature of entrepreneurial opportunities. At one end of the spectrum is the creationist school that views entrepreneurship as a process of opportunity creation led by teams and individuals (McMullen and Dimov, 2013). At the opposite end of the spectrum, the discovery school defends an objective view of entrepreneurship where opportu...

What is the risk compensation theory of entrepreneurship? Peltzman’s (1975) pioneering study of automobile accidents revealed that expected positive effects of safety regulations rarely materialized upon implementation. He argued that when drivers feel safer, they take more risks, which compensate for the safety interventions. Support for what is now dubbed the ‘Pelzman effect’ (or risk compensation theory) is far reaching and extends to varying contexts including new rules in NASCAR racing, mandated visor use in hockey, consumer vigilance in response to food safety messages, and bike helmet laws. But does this phenomenon also explain greater entrepreneurial risk-taking in the presence of social safety nets? There is emerging evidence that social safety nets can have positive benefits for entrepreneurs by reducing the risk associated with entry. Olds (2016a) finds that states that provided more food stamps have more limited liability company registrations among members of newly ...

Most new ventures are founded by former employees of organizations. Employees make discoveries while working for organizations and decide to exploit them on their own, especially when parent firms do not see the value in their discoveries, or choose not to exploit them due to a lack of fit with the firm’s strategy. When employees leave to start new ventures, we call their ventures employee spinouts .  Ambidextrous behaviors have been observed in entrepreneurs. Entrepreneurs display ambidextrous through boundary-spanning relationships, by avoiding excess exploitation and keeping time aside for exploration, by using platforms for discussing issues related to exploration, and by shifting focus from exploration to exploitation and vice versa as the current situation requires (Volery et al., 2013). The entrepreneurial process is often conceptualized as stage-based. For example, Kazanjian and Drazin (1990) suggest four stages: conception and development, commercialization, growth, ...