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...

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...

Necessity vs. Opportunity Entrepreneurship: Push or Pull? Not all startups are created equal. While popular media celebrates the visionary founder who leaves a cushiony job to change the world, the reality of global entrepreneurship is far more diverse. Scholars (Harding et al., 2002) divide entrepreneurs into two distinct categories based on motivation: Necessity and Opportunity . This is often referred to as the "Push vs. Pull" theory. The Two Types of Motivation Basically, if you have one of these two motives, you are statistically more likely to become an entrepreneur. However, the economic impact of your venture will differ significantly depending on which one drives you. 1. Necessity Entrepreneurship ( The "Push") These individuals start businesses because they have no other choice. They cannot find a decent job, or they have been fired. They are "pushed" into self-employment to survive. Goal: Income replacement and survival. ...

Disruptive Innovation Theory: Why Giants Fall How did Netflix kill Blockbuster? Why did iPhones replace Nokia? The answer often lies in Disruptive Innovation Theory . Developed by Harvard Business School professor Clayton Christensen in his famous book, The Innovator’s Dilemma (2003) , this theory explains why seemingly successful, well-managed companies often fail when faced with new technologies. The Two Types of Innovation Christensen’s core argument is that innovation comes in two forms: Sustaining Innovations: These improve existing products along traditional dimensions of performance. They make good products better. Example: A new smartphone with a faster processor and a better camera. These appeal to existing, high-end customers. Disruptive Innovations: These are initially lower performing along traditional metrics, but compensate with increased simplicity, convenience, customizability, or affordability. They appeal to new, often overlooked, custo...