Posts

Showing posts from September, 2018

Hubris theory of entrepreneurship

Image
Mathew Hayward and colleagues (2006) introduce a hubris theory of entrepreneurship. Their aim is to explain why so many new ventures are started despite a very high background failure rate. After all, most businesses fail within the first few years of founding. So why do entrepreneurs keep trying to create new ones?

The theory hangs on the idea of confidence. More confident individuals have the bravado to be able to start businesses and allocate resources in challenging situations, while less confident individuals may not be moved to start ventures or grow them.

Individuals overestimate the personal wealth they may attain by starting new ventures. The theory assumes that individuals have information about their likelihood of success, but think that they can beat the odds.

Hayward and colleagues suggest that overconfident individuals may harm their ventures by depriving them of resources. Thus, while overconfidence may help in starting a venture, it does not help much with operating a …

Critical theory of entrepreneurship

Image
Critical theory may be attributed to Max Horkheimer's 1937 essay Traditional and Critical Theory. The Frankfurt School of sociology has developed critical theory from a combination of Marxian and Kantian ideas about critiquing traditional theories.

Alvesson and Willmot (1992: 89) state that:
"Emancipation describes the process through which individuals and groups become freed from repressive social and ideological conditions, in particular those that place socially unnecessary restrictions upon the development and articulation of human consciousness". The majority of the entrepreneurship literature takes a functionalist (rational or empirical) perspective, where there is an objective reality that can be measured and hypotheses that can be tested against that reality. However, there are many problems with scientific methods in the social sciences. For one, theories that work in one temporal-spacial context may not work in another.

Very few studies have adopted alternat…

The Great Man theory of entrepreneurship

Image
One of the most popular 19th century theories of entrepreneurship is the "great man theory". The theory's popularity is probably owing to the historian Thomas Carlyle. Yes, I know, it sounds sexist from the start, but let us stretch the meaning and say it's the great people theory, and try to move it along from there.

Great people theories are often heard in historical tales of WW2, with Hitler, Stalin, Churchill, Eisenhower, Roosevelt, and a few others leading the way. In reality, tens of millions of people were involved in the war and a myriad of events occurred over time that may have impacted the outcomes of the war. The same is done with entrepreneurs, pitting Bill Gates against Steve Jobs in the battle for the PC, for instance.

The great people theory holds that most of the important decisions about how the economic and political world works today were made by just a handful of people. These gifted individuals are the heroes and heroines of every age.

Another …