The Theory-Based View: Entrepreneurial Microfoundations, Resources, and Choices

Abstract

We build on the theory-based view and highlight how an entrepreneur’s theory can enable the creation of value. We point to three types of theories: theories of resource arbitrage, resource recombination, or resource investment that specializes resources to particular uses. However, possessing a unique theory is not enough. The realization of an entrepreneur’s theory is contingent on matching it with the right organizational and governance-related choices. Entrepreneurs must make consequential decisions about protecting intellectual property, running experiments, acquiring resources, composing teams, and securing financing. We develop a contingent approach that enables entrepreneurs to match their theory of value with the appropriate forms of action, thereby providing entrepreneurs with a level of guidance to downstream choices that the current literature fails to provide.

Keywords: Entrepreneurship, theory-based view, entrepreneur as scientist, theory of the firm, resource origins, experiments, new venture teams, entrepreneurial finance