Entrepreneurial Capital: The Emerging Venture's Most Important Asset and Competitive Advantage

Posted: 18 Nov 2009

See all articles by Truls Erikson

Truls Erikson

Norwegian University of Science and Technology

Date Written: 2002


A model of entrepreneurial capital is presented.Extending the idea of intellectual capital, entrepreneurial capital is definedas a multiplicative function of entrepreneurial competence and entrepreneurialcommitment. The relationship between competence and commitment is argued to bemultiplicative, instead of additive, because both elements must be stronglypresent for development to occur. Commitment without competence is a waste oftime and resources, whereas presence of both is the foundation for enterprisegeneration and performance. Entrepreneurial capital can also be thought of asthe present value of future entrepreneurial behavior or as the present value ofan infinite series of shadow options. The empirical support for the model comes from the results ofquestionnairesgiven to 65 prospective MBAs in the United Kingdom. Sixmeasures were devisedto reflect perceived opportunity, capability, andcontrol. Three practical implications are identified: (1) for society,educators, investors, and prospective entrepreneurs, training should be focusedon the drivers of the components in the equation; (2) for venturers, it isvital to demonstrate competence and motivation; and (3) investors should mainlybe concerned about competence and motivation in potentialentrepreneurs.(TNM)

Keywords: Nascent entrepreneurs, Skills, Research opportunities, Motivation, Entrepreneurial orientation, Opportunity recognition, Entrepreneur types, Intellectual capital

Suggested Citation

Erikson, Truls, Entrepreneurial Capital: The Emerging Venture's Most Important Asset and Competitive Advantage (2002). Journal of Business Venturing, Vol. 17, Issue 3, p. 275-290 2002. Available at SSRN: https://ssrn.com/abstract=1508299

Truls Erikson (Contact Author)

Norwegian University of Science and Technology ( email )

Trondheim NO-7491, 7491

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