A General Theory of Entrepreneurship

A General Theory of Entrepreneurship

The Individual-Opportunity Nexus

New Horizons in Entrepreneurship series

Scott Shane

In the first exhaustive treatment of the field in 20 years, Scott Shane extends the analysis of entrepreneurship by offering an overarching conceptual framework that explains the different parts of the entrepreneurial process – the opportunities, the people who pursue them, the skills and strategies used to organize and exploit opportunities, and the environmental conditions favorable to them – in a coherent way.

Chapter 10: The Organizing Process

Scott Shane

Subjects: business and management, entrepreneurship


To exploit an opportunity for which she has gathered resources, an entrepreneur must engage in organizing. Organizing involves creating the routines and structures that support the goal-directed, boundary-maintaining system of collective activities that recombine resources according to the entrepreneur’s conjectures (Aldrich, 1979). In contrast to much of the static description of organization in the academic literature, organizing is a process, not a state. It takes place over time, as founders engage in a set of activities, such as obtaining equipment, establishing production processes, attracting employees and setting up legal entities (Katz and Gartner, 1988). Although the range of time that this organizing process can take is quite large, and varies with the nature of the opportunity being pursued, Reynolds and White (1997) provide evidence to suggest that the average organizing process – the time until a new venture organizing effort is an operating firm – takes about one year. Researchers have observed that organizing efforts are fairly common in modern society. In fact, Reynolds and White (1997) report that between 4 and 6 per cent of the working age population in the United States is engaged in organizing a new firm at any point in time. Because many entrepreneurs exploit opportunities through market mechanisms, this estimate likely understates the true amount of organizing activity that is occurring at any point in time. Moreover, this high level of organizing activity means that more than 40 per cent of the population engages in organizing activity at some time during their careers (Aldrich, 1999). In...

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