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Entrepreneurs' Decisions on Timing of Entry: Learning from Participation and from the Experiences of Others

24 Pages Posted: 27 Apr 2009  

Moren Lévesque

University of Waterloo

Maria Minniti

Syracuse University - Whitman School of Management

Dean Shepherd

University of Colorado at Boulder - Department of Management

Abstract

Depending on the type of industry, an entrepreneur's decision of when to enter an industry may be a crucial one. The longer entrepreneurs wait, the more they learn from others. However, by waiting, they reduce their ability to learn directly and the possibility of locking in competitive advantages. We suggest that the optimal time of entry depends on the hostility of the learning environment since the latter has an impact on dimensions of performance, such as profit potential and mortality risk. The environment for entrepreneurial learning is less hostile when the information to be learned is abundant and when learning from others is relatively more effective at increasing performance than learning from participation. Our results suggest that delaying entry is desirable when the environment is less hostile. Entrepreneurs, however, cannot wait forever. We show that, under some general conditions, an optimal time of entry can be determined, and discuss the specific situations in which, instead, multiple equilibria may arise.

Suggested Citation

Lévesque, Moren and Minniti, Maria and Shepherd, Dean, Entrepreneurs' Decisions on Timing of Entry: Learning from Participation and from the Experiences of Others. Entrepreneurship Theory and Practice, Vol. 33, Issue 2, pp. 547-570, March 2009. Available at SSRN: https://ssrn.com/abstract=1376562 or http://dx.doi.org/10.1111/j.1540-6520.2009.00303.x

Moren Lévesque (Contact Author)

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

Maria Minniti

Syracuse University - Whitman School of Management ( email )

721 University Avenue
Syracuse, NY 13244-2130
United States

Dean Shepherd

University of Colorado at Boulder - Department of Management ( email )

Boulder, CO 80309-0419
United States
303-492-5962 (Fax)

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