Entrepreneurship Theories

Serial Entrepreneurship Theory: Why Founders Build Again and Again Serial entrepreneurship refers to the repeated behavior of starting new ventures. However, in the academic literature, the distinction is more specific. Plehn-Dujowich (2010) categorizes founders into two main groups: Novice Entrepreneurs: Individuals launching a business for the first time. Habitual Entrepreneurs: This group includes Serial Entrepreneurs (who launch businesses sequentially) and Portfolio Entrepreneurs (who run multiple businesses concurrently). The Learning Curve Advantage Plehn-Dujowich argues that serial entrepreneurs differ substantially from first-time founders because they develop new capabilities over time. Experience allows them to develop heuristics (mental shortcuts) that guide their decision-making processes. While a novice might suffer from "analysis paralysis," a serial entrepreneur can assess risks quickly and effectively. These co...

Hybrid Entrepreneurship: Why You Shouldn't Quit Your Day Job There is a pervasive "macho" dogma in the startup world that says you have to go all in, experience "the fear," and dedicate 80 hours a week to your venture to succeed. Implicit in this is the notion that you cannot succeed if you hedge your bets. But isn't this a bad assumption? Why go all-in on a startup if success is statistically improbable? What is Hybrid Entrepreneurship? Hybrid entrepreneurship refers to the process where an employee starts a business on the side while retaining their stable, wage-paying job. This "straddle" strategy continues until the startup reaches a size that commands the founder's full attention. According to Folta et al. (2010) , this isn't just a hobby; it is a distinct entry strategy: "In contrast to previous efforts to model the individual's movement from wage work into entrepreneurship, we consider that individuals migh...

The Lean Launchpad: A Scientific Approach to Entrepreneurship What is the most reliable way to build a startup today? For many, the answer is the Lean Launchpad . Developed by Steve Blank (serial entrepreneur and adjunct professor at Stanford), this methodology is designed as a repeatable process to create a startup. It has become the gold standard in entrepreneurship education, featuring heavily in university curricula and top accelerator programs like Y-Combinator . The Core Premise: "Get Out of the Building" Unlike traditional business models that focus on writing lengthy business plans, the Lean Launchpad focuses on testing hypotheses. It operates on the belief that founders do not know what the customer wants until they leave the office and ask. [Image of Steve Blank customer development model] The Theoretical Basis: Discovery vs. Creation To understand why the Lean Launchpad works, we must look at the academic theories behind it. Entrepreneurship litera...

Spinout vs. Spinoff: What is the Difference? | Entrepreneurship Theory There exists significant confusion regarding the difference between "employee spinouts" and "corporate spinoffs." This is largely due to the ambiguous use of these terms in both business practice and academia (Yeganegi et al., 2024). The Core Distinction: At a basic level, spinouts involve employees who leave to launch startups (creating new ownership), whereas spinoffs are corporate units turned into independent companies (distributing existing ownership). 1. The Employee Spinout An Employee Spinout (or simply "spinout") is the result of independent decisions by employees to leave their jobs and start a new venture. These are "employees-turned-entrepreneurs." Ownership: Neither the parent organization nor its investors typically receive shares. The new venture is owned by the founders and their new investors (VCs or Angels). Rela...

Experiential Learning in Entrepreneurship: Kolb & Corbett's Models Experiential Learning Theory (ELT) defines learning as "the process whereby knowledge is created through the transformation of experience" (Kolb, 1984). Unlike rationalist or cognitive theories that emphasize rote memorization and recall, ELT focuses on subjective experience. It is the bridge between reading about business and actually doing business. 1. Knowledge vs. Know-How To understand ELT, one must distinguish between two types of understanding: Explicit Knowledge: Facts learned through language, textbooks, and formal education. Know-How (Tacit Knowledge): Skills acquired through hands-on practice, trial, and error. In entrepreneurship, know-how is often the deciding factor. An entrepreneur may have deep market knowledge (data) but lack the practical know-how to bring a product to market. This gap can only be closed through the risks and mistakes ...

The Stages Theory: Understanding the Entrepreneurial Life Cycle The entrepreneurial process is often conceptualized as a life cycle. Borrowed from biology, where the life cycles of flora and fauna are studied extensively, this theory views a business as a living organism. By definition, a life has a beginning (birth) and an end (decline/death). The "Stages Theory" attempts to map the critical transitions that happen in between. The Biological Analogy In ecology, these theories start with the assumptions of Birth, Growth, Maturity, and Decline . The core argument is that the drivers and resistors of entrepreneurship are different at each stage. What works for a newborn startup (e.g., product development) will kill a mature company (e.g., lack of process). [Image of business life cycle stages graph] Model 1: The Kazanjian & Drazin Framework (1990) Kazanjian and Drazin focused on technology-based ventures. They proposed that the focus s...

The Harvard School Theory: Entrepreneurship as Strategy While some theories view entrepreneurship as a personality trait (Psychology) or a market function (Economics), the Harvard School Theory views it as a strategic process. Often described as a Process Theory , this framework argues that entrepreneurship is not about "magic" or "luck," but about the rigorous analysis of internal and external forces. The Core Definition Pradhan and Nath (2011) define the Harvard School approach as: "All such activities that initiates, maintains and results in a profit oriented enterprise for production or distribution of economic goods or services and which is consistent with internal and external forces." In simple terms: Successful entrepreneurship happens when a founder finds a "Strategic Fit" between what they *can* do (Internal) and what the market *needs* (External). [Image of SWOT analysis diagram] The Two-Step Analysis Accordi...

Emancipation Theory: Entrepreneurship as the Ultimate Freedom The term emancipation has deep historical roots, from Roman laws regarding sons leaving their fathers' authority to Lincoln’s Emancipation Proclamation and the women’s liberation movement. Fundamentally, it means breaking free from bonds. In a groundbreaking paper, Rindova et al. (2009) propose that entrepreneurship is not just an economic activity, but a means of emancipation. They define "entrepreneuring" as efforts to create new environmental conditions by breaking free from the status quo. The Three Elements of Emancipation Rindova identifies three key processes through which entrepreneurship resembles emancipation: Seeking Autonomy , Authoring , and Making Declarations . 1. Seeking Autonomy (Breaking Free) Autonomy has long been considered a primary motive for self-employment. Emancipation is defined as breaking free from an authority figure or system. Rindova suggests that Google’s founding...

Bricolage Theory: Making Something Out of Nothing How do entrepreneurs build companies when they have zero capital, no investors, and limited resources? They practice Bricolage . The concept is credited to French anthropologist Claude Lévi-Strauss (1962) . In his book The Savage Mind , he introduced the concept to show that indigenous peoples were just as innovative as "civilized" peoples, but their method of innovation was different. He compared two distinct archetypes: the Engineer and the Bricoleur . The Great Debate: Bricoleur vs. Engineer This analogy is the foundation of the theory. It describes two opposing ways of solving problems: The Engineer (Rational Planning): The engineer plans ahead. Before starting a project, they gather the exact raw materials and tools designed for the specific task. If they lack a resource, they wait until they can acquire it. The Bricoleur (Radical Experimentation): The bricoleur "makes do" with whatever ...

Dr. Saras Sarasvathy is a business school professor at the University of Virginia who proposed the Theory of Effectuation in the early 2000s. After studying a sample of expert entrepreneurs, she identified a specific "logic" they use to solve problems. Effectuation is considered a process theory because it explains how entrepreneurs create new ventures. Effectuation vs. Causation Effectuation logic contrasts with "Causation" logic. Causation (Managerial Thinking): Starts with a specific goal and then acquires the resources needed to achieve it. (e.g., "I want to build a $10M app, so I need to raise $2M.") Effectuation (Entrepreneurial Thinking): Starts with the resources available today and imagines what goals can be made from them. (e.g., "I have a laptop and coding skills; what can I build right now?") The 5 Core Principles Sarasvathy suggests that expert entrepreneurs rely on five core principles: 1. Bird in the Ha...