Foundations of Entrepreneurship
Required readings
Lecture 1 – Topic 1: The individual: Who becomes an entrepreneur?
Shane, S. and Venkataraman, S. (2000), “The Promise of Entrepreneurship as a Field of
Research”, Academy of Management Review, 25(1): 217-226.
Lecture 2 – Topic 2: What characterizes an entrepreneur?
Zhao, H. & Seibert, S.E. (2006). “The Big Five Personality Dimensions and Entrepreneurial
Status: A meta-analytical Review”, Journal of Applied Psychology, 91(2): 259-271.
Lazear, E.P. (2005). Entrepreneurship. Journal of Labor Economics, 23(4): 649-680
Lecture 2 – Topic 3: The incentives of an entrepreneur
Hamilton, B. H. (2000), “Does Entrepreneurship Pay? An Empirical Analysis of the Returns to
Self-employment”, Journal of Political Economy, 108(3): 604-631.
Fairlie, R. W. (2002). “Drug Dealing and Legitimate Self‐Employment”, Journal of Labor
Economics, 20(3): 538-537.
Lecture 3 — Topic 4: Identifying entrepreneurial opportunities
Kirzner, I. M. (1999), “Creativity and/or alertness: A reconsideration of the Schumpeterian
entrepreneur”, The Review of Austrian Economics, 11: 5–17.
Baron, R. A. (2006), Opportunity Recognition as Pattern Recognition: How Entrepreneurs
“Connect the Dots” to Identify New Business Opportunities, Academy of Management
Perspectives, Vol. 20(1): 104-119.
Lecture 3 — Topic 5: Effectuation and multiple opportunities
Sarasvathy, S. D. (2001). Causation and effectuation: Toward a theoretical shift from economic
inevitability to entrepreneurial contingency. Academy of Management Review, 26(2): 243-263
Gruber, M., MacMillan, I. C., & Thompson, J. D. (2008). Look before you leap: Market opportunity
identification in emerging technology firms. Management Science, 54(9), 1652-1665.
Lecture 4 — Topic 6: Contextual factors & entrepreneurial spawning
Gompers, P., Lerner, J., & Scharfstein, D. (2005). Entrepreneurial spawning: Public corporations
and the genesis of new ventures, 1986 to 1999. The Journal of Finance, 60(2): 577-614.
Elfenbein, D. W., Hamilton, B. H., & Zenger, T. R. (2010). “The small firm effect and the
entrepreneurial spawning of scientists and engineers”, Management Science, 56(4): 659-681
Lecture 4 — Topic 7: Social factors, networks and clusters
Chatterji, A. K. (2009). Spawned with a silver spoon? Entrepreneurial performance and innovation
in the medical device industry. Strategic Management Journal, 30(2), 185-206.
Dahl, M. S., & Sorenson, O. (2012). Home sweet home: Entrepreneurs' location choices and the
performance of their ventures. Management Science, 58(6), 1059-1071.
Lecture 5 — Topic 8: Cognitive bias
Foundations of Entrepreneurship – required readings Pagina 1
,Hmieleski, K. M., & Baron, R. A. (2009). Entrepreneurs’ optimism and new venture performance:
A social cognitive perspective. Academy of Management Journal, 52(3), 473–488.
Busenitz, L. W., & Barney, J. B. (1997). Differences between entrepreneurs and managers in
large organizations: Biases and heuristics in strategic decision-making. Journal of Business
Venturing, 12(1), 9–30.
Lecture 5 — Topic 9: Failure
Gimeno, J. et al. (1997). “Survival of the Fittest? Entrepreneurial Human Capital and the
Persistence of Underperforming Firms”, Administrative Science Quarterly, 42, 750–783.
Eggers, J. P., & Song, L. (2015). Dealing with Failure: Serial Entrepreneurs and the Costs of
Changing Industries Between Ventures. Academy of Management Journal, 58(6), 1785–1803.
Lecture 5 — Topic 10: Financial resources
Kerr, W. R., Lerner, J., & Schoar, A. (2014). The Consequences of Entrepreneurial Finance:
Evidence from Angel Financings. Review of Financial Studies, 27(1), 20–55.
Moedl, M. M. (2019). The Crowd for Lemons: Venture Investors’ Perceptions of an Equity Pecking
Order, in: Guclu Atinc (Ed.), Proceedings of the Seventy-ninth Meeting of the Academy of
Management, Online ISSN: 2151-6561.
Lecture 6 — Topic 11: Entrepreneurial thinking
Lecture 7 — Topic 12: Course wrap-up
Bhide, A. (1996). “The question every entrepreneur must answer”, Harvard Business Review,
120-130.
Foundations of Entrepreneurship – required readings Pagina 2
,Shane & Venkataraman (2000): The Promise of Entrepreneurship as a Field of Research
Core Argument & Purpose
The authors argue that entrepreneurship research has historically lacked a unique conceptual
framework, often becoming a "hodgepodge" of research housed under other labels like small
business or strategic management.
To legitimize the field, they propose a distinct framework that focuses not just on "who the
entrepreneur is" (the individual) or "what they do" (the firm), but on the nexus of two
phenomena:
1. The presence of lucrative opportunities.
2. The presence of enterprising individuals
1. Definition of Entrepreneurship
The authors define the field of entrepreneurship as the scholarly examination of "how, by whom,
and with what effects opportunities to create future goods and services are discovered,
evaluated, and exploited".
This definition shifts the focus from simply "creating new organizations" to a broader process that
involves:
• Sources of opportunities.
• The processes of discovery, evaluation, and exploitation.
• The set of individuals who engage in these activities.
Key Research Questions:
• Why, when, and how do opportunities come into existence?
• Why, when, and how do some people (and not others) discover and exploit these
opportunities?
• Why, when, and how are different modes of action (e.g., firm creation vs. market sale)
used to exploit them?
2. The Existence of Opportunities
To have entrepreneurship, you must first have opportunities. An entrepreneurial opportunity is a
situation where new goods, services, raw materials, or organizing methods can be introduced and
sold at greater than their cost of production.
• Objective vs. Subjective: While the recognition of an opportunity is subjective, the
opportunity itself is an objective phenomenon—it exists whether or not anyone sees it.
• The Role of Information Asymmetry: Opportunities exist because different people
possess different beliefs about the relative value of resources. If everyone knew the same
information, competition would eliminate the profit potential immediately 11.
• Sources of Opportunities:
o "Errors": Inefficient allocation of resources allows alert individuals to buy low and
sell high (Kirzner’s perspective).
Foundations of Entrepreneurship – required readings Pagina 3
, o Disequilibrium/Change: Technological, political, or social changes offer new
information. Those who get this information early can reconfigure resources for
profit (Schumpeter’s perspective).
3. The Discovery of Opportunities
Why do some people find these opportunities while others miss them? It is not just blind luck; it
depends on two factors:
A. Information Corridors (Prior Information)
People have different "stocks of information" based on their life experiences. To recognize an
opportunity, a person needs prior information that complements the new information they
encounter.
• Example: You need specific knowledge about a market or technology to realize that a new
invention has commercial value.
B. Cognitive Properties
Even with the right information, not everyone spots the opportunity. It requires the cognitive ability
to identify new "means-ends relationships".
• Seeing Connections: Some people are better at combining existing concepts into new
ideas.
• Risk Perception: Successful entrepreneurs often see opportunities where others see
risks.
• Counterfactual Thinking: Entrepreneurs may be less likely to spend time thinking about
"what might have been" (regret), allowing them to move forward.
4. The Decision to Exploit Opportunities
Discovering an opportunity is necessary but not sufficient; one must decide to act on it. This
decision relies on the joint characteristics of the opportunity and the individual.
A. Nature of the Opportunity
People are more likely to exploit opportunities that have higher expected value, such as those
with:
• Large expected demand.
• High profit margins.
• Young technology life cycles.
• Low cost of capital.
B. Individual Differences
Not all individuals will exploit the same opportunity. Factors influencing this include:
• Opportunity Costs: People with lower opportunity costs (less to lose) are more likely to
pursue entrepreneurship.
• Resources: Those with financial capital or strong social ties to resource providers are
more likely to act.
• Psychological Factors:
Foundations of Entrepreneurship – required readings Pagina 4
Required readings
Lecture 1 – Topic 1: The individual: Who becomes an entrepreneur?
Shane, S. and Venkataraman, S. (2000), “The Promise of Entrepreneurship as a Field of
Research”, Academy of Management Review, 25(1): 217-226.
Lecture 2 – Topic 2: What characterizes an entrepreneur?
Zhao, H. & Seibert, S.E. (2006). “The Big Five Personality Dimensions and Entrepreneurial
Status: A meta-analytical Review”, Journal of Applied Psychology, 91(2): 259-271.
Lazear, E.P. (2005). Entrepreneurship. Journal of Labor Economics, 23(4): 649-680
Lecture 2 – Topic 3: The incentives of an entrepreneur
Hamilton, B. H. (2000), “Does Entrepreneurship Pay? An Empirical Analysis of the Returns to
Self-employment”, Journal of Political Economy, 108(3): 604-631.
Fairlie, R. W. (2002). “Drug Dealing and Legitimate Self‐Employment”, Journal of Labor
Economics, 20(3): 538-537.
Lecture 3 — Topic 4: Identifying entrepreneurial opportunities
Kirzner, I. M. (1999), “Creativity and/or alertness: A reconsideration of the Schumpeterian
entrepreneur”, The Review of Austrian Economics, 11: 5–17.
Baron, R. A. (2006), Opportunity Recognition as Pattern Recognition: How Entrepreneurs
“Connect the Dots” to Identify New Business Opportunities, Academy of Management
Perspectives, Vol. 20(1): 104-119.
Lecture 3 — Topic 5: Effectuation and multiple opportunities
Sarasvathy, S. D. (2001). Causation and effectuation: Toward a theoretical shift from economic
inevitability to entrepreneurial contingency. Academy of Management Review, 26(2): 243-263
Gruber, M., MacMillan, I. C., & Thompson, J. D. (2008). Look before you leap: Market opportunity
identification in emerging technology firms. Management Science, 54(9), 1652-1665.
Lecture 4 — Topic 6: Contextual factors & entrepreneurial spawning
Gompers, P., Lerner, J., & Scharfstein, D. (2005). Entrepreneurial spawning: Public corporations
and the genesis of new ventures, 1986 to 1999. The Journal of Finance, 60(2): 577-614.
Elfenbein, D. W., Hamilton, B. H., & Zenger, T. R. (2010). “The small firm effect and the
entrepreneurial spawning of scientists and engineers”, Management Science, 56(4): 659-681
Lecture 4 — Topic 7: Social factors, networks and clusters
Chatterji, A. K. (2009). Spawned with a silver spoon? Entrepreneurial performance and innovation
in the medical device industry. Strategic Management Journal, 30(2), 185-206.
Dahl, M. S., & Sorenson, O. (2012). Home sweet home: Entrepreneurs' location choices and the
performance of their ventures. Management Science, 58(6), 1059-1071.
Lecture 5 — Topic 8: Cognitive bias
Foundations of Entrepreneurship – required readings Pagina 1
,Hmieleski, K. M., & Baron, R. A. (2009). Entrepreneurs’ optimism and new venture performance:
A social cognitive perspective. Academy of Management Journal, 52(3), 473–488.
Busenitz, L. W., & Barney, J. B. (1997). Differences between entrepreneurs and managers in
large organizations: Biases and heuristics in strategic decision-making. Journal of Business
Venturing, 12(1), 9–30.
Lecture 5 — Topic 9: Failure
Gimeno, J. et al. (1997). “Survival of the Fittest? Entrepreneurial Human Capital and the
Persistence of Underperforming Firms”, Administrative Science Quarterly, 42, 750–783.
Eggers, J. P., & Song, L. (2015). Dealing with Failure: Serial Entrepreneurs and the Costs of
Changing Industries Between Ventures. Academy of Management Journal, 58(6), 1785–1803.
Lecture 5 — Topic 10: Financial resources
Kerr, W. R., Lerner, J., & Schoar, A. (2014). The Consequences of Entrepreneurial Finance:
Evidence from Angel Financings. Review of Financial Studies, 27(1), 20–55.
Moedl, M. M. (2019). The Crowd for Lemons: Venture Investors’ Perceptions of an Equity Pecking
Order, in: Guclu Atinc (Ed.), Proceedings of the Seventy-ninth Meeting of the Academy of
Management, Online ISSN: 2151-6561.
Lecture 6 — Topic 11: Entrepreneurial thinking
Lecture 7 — Topic 12: Course wrap-up
Bhide, A. (1996). “The question every entrepreneur must answer”, Harvard Business Review,
120-130.
Foundations of Entrepreneurship – required readings Pagina 2
,Shane & Venkataraman (2000): The Promise of Entrepreneurship as a Field of Research
Core Argument & Purpose
The authors argue that entrepreneurship research has historically lacked a unique conceptual
framework, often becoming a "hodgepodge" of research housed under other labels like small
business or strategic management.
To legitimize the field, they propose a distinct framework that focuses not just on "who the
entrepreneur is" (the individual) or "what they do" (the firm), but on the nexus of two
phenomena:
1. The presence of lucrative opportunities.
2. The presence of enterprising individuals
1. Definition of Entrepreneurship
The authors define the field of entrepreneurship as the scholarly examination of "how, by whom,
and with what effects opportunities to create future goods and services are discovered,
evaluated, and exploited".
This definition shifts the focus from simply "creating new organizations" to a broader process that
involves:
• Sources of opportunities.
• The processes of discovery, evaluation, and exploitation.
• The set of individuals who engage in these activities.
Key Research Questions:
• Why, when, and how do opportunities come into existence?
• Why, when, and how do some people (and not others) discover and exploit these
opportunities?
• Why, when, and how are different modes of action (e.g., firm creation vs. market sale)
used to exploit them?
2. The Existence of Opportunities
To have entrepreneurship, you must first have opportunities. An entrepreneurial opportunity is a
situation where new goods, services, raw materials, or organizing methods can be introduced and
sold at greater than their cost of production.
• Objective vs. Subjective: While the recognition of an opportunity is subjective, the
opportunity itself is an objective phenomenon—it exists whether or not anyone sees it.
• The Role of Information Asymmetry: Opportunities exist because different people
possess different beliefs about the relative value of resources. If everyone knew the same
information, competition would eliminate the profit potential immediately 11.
• Sources of Opportunities:
o "Errors": Inefficient allocation of resources allows alert individuals to buy low and
sell high (Kirzner’s perspective).
Foundations of Entrepreneurship – required readings Pagina 3
, o Disequilibrium/Change: Technological, political, or social changes offer new
information. Those who get this information early can reconfigure resources for
profit (Schumpeter’s perspective).
3. The Discovery of Opportunities
Why do some people find these opportunities while others miss them? It is not just blind luck; it
depends on two factors:
A. Information Corridors (Prior Information)
People have different "stocks of information" based on their life experiences. To recognize an
opportunity, a person needs prior information that complements the new information they
encounter.
• Example: You need specific knowledge about a market or technology to realize that a new
invention has commercial value.
B. Cognitive Properties
Even with the right information, not everyone spots the opportunity. It requires the cognitive ability
to identify new "means-ends relationships".
• Seeing Connections: Some people are better at combining existing concepts into new
ideas.
• Risk Perception: Successful entrepreneurs often see opportunities where others see
risks.
• Counterfactual Thinking: Entrepreneurs may be less likely to spend time thinking about
"what might have been" (regret), allowing them to move forward.
4. The Decision to Exploit Opportunities
Discovering an opportunity is necessary but not sufficient; one must decide to act on it. This
decision relies on the joint characteristics of the opportunity and the individual.
A. Nature of the Opportunity
People are more likely to exploit opportunities that have higher expected value, such as those
with:
• Large expected demand.
• High profit margins.
• Young technology life cycles.
• Low cost of capital.
B. Individual Differences
Not all individuals will exploit the same opportunity. Factors influencing this include:
• Opportunity Costs: People with lower opportunity costs (less to lose) are more likely to
pursue entrepreneurship.
• Resources: Those with financial capital or strong social ties to resource providers are
more likely to act.
• Psychological Factors:
Foundations of Entrepreneurship – required readings Pagina 4
