25NewVenture - New Venture Creation in the Realm of...

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By Robert Desman The entrepreneurial event is a contingency from which entrepreneurial behavior precipitates. It is a temporal confluence among some external cue that implies an extant, potential, or possible opportunity; a perception of the cue implications; and, an entrepreneurial response. It begins with recognizing and evaluating an opportunity and ends with a venture concept and entity to harness that opportunity (Stevenson, Roberts & Grousbeck, 1989). New venture creation is, thus, the product of a decision process. And, these decisions are often fraught with biases (Wickham, 2003). This raises an important question. What conditions dictate practicable reasons for starting a new venture? Heretofore, the corpus of new venture contributions has focused on the variables that seem associated with launch decisions. Conspicuously absent is an examination of the decisions themselves and the conditions that dictate if they reflect objectively sound judgment. Background An enterprise of a business nature was first labeled a venture around 1584 (OEM, 2001). Once the term was established, it languished for about 170 years until Richard Cantillon (1755) endeavored to understand how such ventures might be founded. In the process of disciplined inquiry, Cantillon simultaneously, and inexorably, linked new venture formation to what he identified as entrepreneurship . He, and those who followed in his wake, envisioned entrepreneurship as an economic institution in which some individuals are induced to hazard uncertainty and create value for the promise of handsome personal gains (Cantillon, 1755). By combining factors of production secured from others (Say, 1803) and selling their produce, they pay the economic rents and retain the residuals as profits (Liggio, 1983). Implicit in the process is the notion that the greater the uncertainty, the greater the profit potential must be for the new venture to be founded. Interestingly, little of the mainstream entrepreneurship literature written since 1960 makes much mention of new venture creation (Bird, 1992; Byers, Krist & Sullivan, 1997; Covin & Kuratko, 2008; DeVries, 1980; Folsum, 1987; McClleland, 1961; Pinchot, 1985; Zahara & George, 2002). On the other hand, little of the new venture literature written over the same period omits the key role played by the institution of entrepreneurship. Ronstadt (1984) offers some insight into this schism by admonishing that the primary creation parented by entrepreneurship is not new ventures, products, or services, but, instead, “incremental wealth” and means for achieving it. Another contemporary split between the new venture and entrepreneurship communities devolves upon the quest for a concise, operational, definition. Over the past 50 years, the boundaries of entrepreneurship have become progressively more amorphous and the definitions more inclusive. In 1978, the Strategic Planning Institute (p. 1-2) provided specific guidance for defining a new venture: 1. An independent entity. 2.
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25NewVenture - New Venture Creation in the Realm of...

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