ARTICLES FOUNDATIOND AND FORMS OF ENTREPRENEURSHIP
Audia and Rider ‘05
A Garage and an Idea: What More Does an Entrepreneur Need?
Entrepreneurs are often organizational products. They acquire psychological and social
resources necessary to form new companies through prior experiences in the industry.
However, some people become successful entrepreneurs without related prior experience
(e.g., garage entrepreneurs), but they are the exception (around 30%).
The garage belief is nationally supported. The garage is a symbol of entrepreneurship that
reveals common understanding among business professionals.
Entrepreneurs are often organizational products. 3 reasons why organizational experience
increases the opportunity that an individual may start a new company:
1. Organizations create opportunities for individuals to build confidence in their abilities
to create and run a new company.
a. They accumulate mastery experiences through success on tasks important to
organizational functioning.
b. Vicarious experiences expose employees to peers succeeding through
sustained effort who then become social models.
2. Organizations provide access to broad industry knowledge and fine-grained
information about entrepreneurial opportunities, neither of which are readily
available to outsiders.
a. The motivation to create a new organization is strengthened by an
individual’s access to information about entrepreneurial opportunities (e.g.,
knowing the customers preferences). The same for possession of knowledge.
3. Organizations help individuals form social networks that facilitate the mobilization of
resources necessary to form a new company.
a. Entrepreneurs rely upon social relationships for mobilizing resources to build
new companies. Especially with people in the industry.
b. It can also provide information that helps entrepreneurs pitch the new
company in a way that appeals to potential customers, suppliers and resource
providers.
c. Social ties help in forming a management team and attracting financing for a
new company.
2 bodies of academic research strongly support the notion of entrepreneurs as
organizational products:
1. Career history studies
a. Focus on individuals’ experiences prior to entrepreneurship, pre-existing
organizations in similar industries.
2. Spatial distribution studies
a. Focus on geographic variation in entrepreneurial activity.
b. Geographic areas that have a greater number of organizations of a certain
kind tend to generate a greater number of new organizations of that same
1
, kind. This is because people tend to rely upon supportive social ties that are
geographically localized.
The legend of the garage inculcates an under socialized view of the entrepreneurial process.
It evokes the image of the lone individual who relies primarily on his/her extraordinary
efforts and talent to overcome the difficulties inherent in creating a new organization. In
contrast, the process of creating new organizations is especially social.
4 conditions of employment are leading to launching an entrepreneurial career:
1. Employees are exposed to information that may signal the existence of
entrepreneurial opportunities (e.g., new technologies, unmet customer needs)
around which a new organization may be built.
2. Employees have opportunities to fulfill a broad number of roles crucial to the
operations of entrepreneurial organizations so that they can build confidence in their
ability to create a new organization.
3. Employees have opportunities for close contact with colleagues in other functional
areas with whom they might form founding teams.
4. Employees have direct access to key resource providers such as suppliers, customers,
or investors who might be willing to support the new venture.
small and young firms are more likely to offer this. The individuals’ position within the
organization is important.
2
Audia and Rider ‘05
A Garage and an Idea: What More Does an Entrepreneur Need?
Entrepreneurs are often organizational products. They acquire psychological and social
resources necessary to form new companies through prior experiences in the industry.
However, some people become successful entrepreneurs without related prior experience
(e.g., garage entrepreneurs), but they are the exception (around 30%).
The garage belief is nationally supported. The garage is a symbol of entrepreneurship that
reveals common understanding among business professionals.
Entrepreneurs are often organizational products. 3 reasons why organizational experience
increases the opportunity that an individual may start a new company:
1. Organizations create opportunities for individuals to build confidence in their abilities
to create and run a new company.
a. They accumulate mastery experiences through success on tasks important to
organizational functioning.
b. Vicarious experiences expose employees to peers succeeding through
sustained effort who then become social models.
2. Organizations provide access to broad industry knowledge and fine-grained
information about entrepreneurial opportunities, neither of which are readily
available to outsiders.
a. The motivation to create a new organization is strengthened by an
individual’s access to information about entrepreneurial opportunities (e.g.,
knowing the customers preferences). The same for possession of knowledge.
3. Organizations help individuals form social networks that facilitate the mobilization of
resources necessary to form a new company.
a. Entrepreneurs rely upon social relationships for mobilizing resources to build
new companies. Especially with people in the industry.
b. It can also provide information that helps entrepreneurs pitch the new
company in a way that appeals to potential customers, suppliers and resource
providers.
c. Social ties help in forming a management team and attracting financing for a
new company.
2 bodies of academic research strongly support the notion of entrepreneurs as
organizational products:
1. Career history studies
a. Focus on individuals’ experiences prior to entrepreneurship, pre-existing
organizations in similar industries.
2. Spatial distribution studies
a. Focus on geographic variation in entrepreneurial activity.
b. Geographic areas that have a greater number of organizations of a certain
kind tend to generate a greater number of new organizations of that same
1
, kind. This is because people tend to rely upon supportive social ties that are
geographically localized.
The legend of the garage inculcates an under socialized view of the entrepreneurial process.
It evokes the image of the lone individual who relies primarily on his/her extraordinary
efforts and talent to overcome the difficulties inherent in creating a new organization. In
contrast, the process of creating new organizations is especially social.
4 conditions of employment are leading to launching an entrepreneurial career:
1. Employees are exposed to information that may signal the existence of
entrepreneurial opportunities (e.g., new technologies, unmet customer needs)
around which a new organization may be built.
2. Employees have opportunities to fulfill a broad number of roles crucial to the
operations of entrepreneurial organizations so that they can build confidence in their
ability to create a new organization.
3. Employees have opportunities for close contact with colleagues in other functional
areas with whom they might form founding teams.
4. Employees have direct access to key resource providers such as suppliers, customers,
or investors who might be willing to support the new venture.
small and young firms are more likely to offer this. The individuals’ position within the
organization is important.
2
