Taxonomic Theories
Taxonomic Theories: Classifying Types of Entrepreneurship
Taxonomic theories classify what kind of entrepreneurship is taking place. These frameworks categorize ventures based on innovation style, speed of growth, or founder motivation.
1. Architectural Innovation
This taxonomy classifies innovation based on how components are linked. It identifies four types: Incremental, Modular, Architectural, and Radical. Architectural innovation is distinct because it changes the way components interact without changing the components themselves.
2. Born Global Startups
The "Born Global" theory identifies a specific class of ventures that do not wait to build a domestic presence. Instead, they seek competitive advantage by selling in multiple countries from their very inception.
3. Competence-Destroying Innovation
This theory categorizes innovations as either Competence-Enhancing (helping incumbents) or Competence-Destroying (rendering incumbent skills obsolete). Entrepreneurs usually succeed by leveraging the latter.
4. Digital Entrepreneurship
This classifies ventures based on their reliance on digital technologies. It defines digital entrepreneurship as the creation of value through digital business models, characterized by distinct economics compared to physical goods.
5. Disruptive Innovation
Clayton Christensen's famous taxonomy distinguishes Sustaining Innovation from Disruptive Innovation. Disruptive ventures start by serving low-end or ignored customers before moving upmarket to displace incumbents.
6. Hybrid Entrepreneurship
This classifies entrepreneurs based on employment status. A "Hybrid" is someone who starts a business while retaining a day job to mitigate risk, often transitioning to full-time entrepreneurship only after the venture proves viable.
7. International Entrepreneurship
Unlike domestic entrepreneurship, this category involves crossing national boundaries. It studies how entrepreneurs navigate foreign cultures, regulations, and markets to create value.
8. Necessity versus Opportunity Entrepreneurship
This taxonomy looks at motivation. Opportunity Entrepreneurs are pulled by a desire for profit, while Necessity Entrepreneurs are pushed into business due to a lack of other employment options.
9. Serial Entrepreneurship
This categorizes founders by their career path. It distinguishes between Novice (first-time), Serial (one after another), and Portfolio (running multiple businesses simultaneously) entrepreneurs.
10. Social Entrepreneurship
Social entrepreneurship posits that firms with a primary social mission belong to a different class. These ventures operate with a double or triple bottom line, balancing profit with people and the planet.
11. Spinout versus Spinoff
This differentiates ventures based on their origin. A Spinoff is a top-down divestiture by a corporation, while a Spinout is typically an employee-led initiative to leave a parent firm and start a new venture.
