New Venture Creation Model

Abstract

ABSTRACT This research represents an attempt to elucidate the premise that venture initiation and creation are acts of human volition, and to understand why one human and not another chooses to create a venture. The model developed herein begins with cognition and entrepreneurial drive, couples those with knowledge, creativity and experience, and filters the outcome through intuition to create an entrepreneurial vision. Interactive analysis and iteration results in a refined vision which culminates in the creation of a new venture. INTRODUCTION Much of the attention and effort in the entrepreneurship literature has centered upon the development of a model of entrepreneurship. Bygrave (1989) suggests that this is a natural desire which scientists have, but that the entrepreneurship discipline is far too young for the evolution of a mathematically rigorous model. Such models function poorly when the vagaries of human behavior are interjected into the works. In fact, one of our entrepreneurship colleagues suggests that such desires led to the elimination of the entrepreneur from economic thought. Barreto (1989) examined the roles played by the entrepreneur in economic thought, and concluded that it began in the form of the risk bearer in Cantillon's (1755) view during the eighteenth century, shifting to a perspective as coordinator in the writings of Say (1821) in the early nineteenth century. This progressed to a perspective of the entrepreneur as arbitrator in Kirzner's (1973) view, then, finally, to a role as innovator in the Austrian school of thought. All of these perspectives shared the view of the entrepreneur as the central player in the entrepreneurial function (Barreto, 1989), and were incorporated to varying degrees in development of microeconomic theory in the early neoclassical era between 1870 and 1914. The next stage of microeconomic theory, the mature neoclassical era or orthodox economic era, between 1914 to 1930, featured two of the greatest authors, Schumpeter (1934) and Knight (1921), and the entrepreneur gained broad acceptance and recognition in the science as a key agent in the market system. Barreto (1989) sadly observed that the entrepreneur disappeared during the modern microeconomic era, dating from the 1930s. In Barreto's (1989) view, this resulted from the desire for a perfectly interlocking, self-contained model of microeconomics, which form a grand, unified whole. The four classical roles of the entrepreneur had no place in a world populated with perfectly informed, perfectly rational agents, and so, the entrepreneur was quite deliberately omitted from the orthodox explanatory scheme (Barreto, 1989). The modern trend in economics continues to seek ever more mathematically sophisticated models. Franklin Fisher (1989), when discussing the history of the American rubber tire industry, commented that the job of a theory was to discover the characteristics of an industry. One observer had suggested that one could not really understand the tire industry without understanding something about Harvey Firestone. Fisher (1989) observed that if we had a generalizing theory of oligopoly, we would be able to explain the characteristics of the industry which made Firestone's behavior a successful strategy. Bhid6 (2000) suggests that such reasoning is equivalent to an historian who attempts to explain the evolution of Germany and Italy without mentioning Bismarck and Garibaldi. Sutton (1996) suggests that attempts to explain why things develop one way rather than another rapidly outrun the systematic and measurable influences that models attempt to describe. In fact, such efforts inevitably are drawn into the historian's realm of personalities. In Bhide's (2000) words, to understand economic phenomena, we must examine the issue of the entrepreneurial personality. These authors would argue that the trend has continued, and spread from economists to entrepreneurship researchers who also attempt to remove the entrepreneur from increasingly sophisticated models. …

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