Discovery and Creation: Alternative Theories of Entrepreneurial Action

Abstract

Two theories of entrepreneurial action - Discovery Theory and Creation Theory - are discussed. While Discovery Theory and its assumptions have been addressed in the literature, neither the assumptions of Creation Theory nor how they are related to the assumptions of Discovery Theory have yet been discussed. The empirical implications of these two theories for research on entrepreneurial action, generally, and for three specific entrepreneurial actions - entrepreneurial decision making, business planning, and new venture financing - in particular, are then discussed. It is shown that these two theories will often make contradictory predictions about the effects of entrepreneurial actions on the ability of entrepreneurs to produce new products or services.

Keywords: Entrepreneurial Action, Risk, Ambiguity, Entrepreneurial Decision Making