The Theory of Entrepreneurship

Entrepreneurship Research Journal, Volume 5, Issue 4, Pages 251-268, September 2015, DOI: 10.1515/erj-2015-0042

26 Pages Posted: 29 Nov 2015 Last revised: 29 May 2017

See all articles by Chandra S Mishra

Chandra S Mishra

Florida Atlantic University

Ramona K. Zachary

City University of New York - Department of Management

Date Written: November 26, 2015

Abstract

The theory of entrepreneurship, namely the entrepreneurial value creation theory, explains the entrepreneurial experience in its fullest form, from the entrepreneurial intention and the discovery of an entrepreneurial opportunity, to the development of the entrepreneurial competence, and the appropriation of the entrepreneurial reward (Mishra and Zachary 2014). The theory of entrepreneurship provides in sufficient detail the interiors of the entrepreneurial process using a two-stage value creation framework. In the first stage of venture formulation, the entrepreneur driven by a desire for entrepreneurial reward (i.e., entrepreneurial intention) leverages the entrepreneurial resources at hand to sense an external opportunity (cue stimulus) and effectuate the entrepreneurial competence that is sufficient to move to the second stage. Several ventures fail at this stage. In the second stage of venture monetization, the entrepreneur may acquire external resources such as venture capital or strategic alliance to effect growth. Investors face an adverse selection problem when entrepreneurial ability and venture quality are difficult to ascertain. Entrepreneurs may use incentive signals to secure a higher valuation offer from the investors. A business model design with embedded dynamic capabilities can reconfigure the entrepreneurial competence to create sustained value and appropriate the entrepreneurial reward.

Keywords: Entrepreneurship Theory

Suggested Citation

Mishra, Chandra S and Zachary, Ramona K., The Theory of Entrepreneurship (November 26, 2015). Entrepreneurship Research Journal, Volume 5, Issue 4, Pages 251-268, September 2015, DOI: 10.1515/erj-2015-0042. Available at SSRN: https://ssrn.com/abstract=2695806

Chandra S Mishra (Contact Author)

Florida Atlantic University ( email )

Boca Raton, FL 33431
United States

Ramona K. Zachary

City University of New York - Department of Management ( email )

NY
United States

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