Indigenous Theories
Indigenous Theories of Entrepreneurship (Field-Specific)
Note on Terminology: To avoid confusion, there also exists research on "Indigenous Entrepreneurship," where Indigenous refers to descendants of people inhabiting a land prior to colonization. However, this page is about theories that are indigenous to the academic field of entrepreneurship—concepts created specifically to explain venturing phenomena rather than borrowed from economics or psychology.
Indigenous entrepreneurship theories are frameworks developed from the ground up to address venture creation. Thus, an indigenous theory is the opposite of a borrowed theory. Below are the key concepts:
1. Actualization Theory
This theory proposes that opportunities are real but exist only as propensities. They remain worthless unless they are actualized (made real) through the specific care, skills, and execution of an entrepreneur.
2. Alertness Theory (Kirzner)
This theory argues that entrepreneurial alertness allows individuals to balance supply and demand. It focuses on the ability to detect market imperfections and exploit them without a deliberate search process.
3. Bricolage Theory
Derived from the concept of "tinkering," Bricolage suggests that entrepreneurs create ventures by making do with the resources at hand, recombining them to create new value rather than waiting for perfect resources.
4. Effectuation Theory
Proposed by Saras Sarasvathy, this theory describes how expert entrepreneurs create ventures through an iterative process. It contrasts with "causation" (planning) and focuses on controlling the future through partnerships and affordable loss.
5. External Enabler Theory
This contemporary theory asks: How does the environment trigger entrepreneurship? It looks at how external changes (regulatory, technological, or demographic) provide the specific support needed for new ventures to succeed.
6. Individual-Opportunity Nexus Theory
This theory suggests that entrepreneurship cannot be explained by the person or the market alone. Instead, it is the specific interaction (nexus) between an enterprising individual and a specific opportunity that drives action.
7. Jack-of-All-Trades Theory
This theory suggests that entrepreneurs are generalists. To succeed, they must vary their experiences to attain a broad set of skills (marketing, finance, product), rather than specializing in a single domain.
8. Necessity Versus Opportunity Theory
This framework distinguishes between two motivations: those who start businesses because they have no other option (Necessity), and those who start businesses to exploit a specific market gap (Opportunity).
9. Misfit Theory
Often called "Blocked Mobility," this theory suggests that immigrants or marginalized groups start businesses because they are unable to secure lucrative employment in the traditional labor market of their host country.
10. Strategic Disagreements Theory
This theory explains the phenomenon of spinouts. It posits that new ventures are born when employees disagree with their parent organization regarding the value of a new idea, leading them to leave and pursue it independently.
11. Uncertainty-Bearing Theory
Based on the work of Frank Knight, this theory suggests that the entrepreneur's profit is the reward for bearing Uncertainty (which cannot be calculated) rather than simple Risk (which can be insured against).
