Prescriptive Entrepreneurship

Prescriptive Entrepreneurship

James O. Fiet

In the only known programme of prescriptive entrepreneurship, James Fiet provides a marked contrast to the standard descriptive focus of entrepreneurship studies. Instead of the anecdotally based pedagogies that have dominated the teaching of entrepreneurship (and which do not control for luck-based success), the author lays out a programme of research to develop and test theoretically derived guidelines for how to improve the success rate and performance of aspiring entrepreneurs. Rather than describing what entrepreneurs do, he prescribes and tests what they ought to do.

Chapter 4: Measuring and Predicting Wealth Creation

James O. Fiet

Subjects: business and management, entrepreneurship


Key ideas One of the most overlooked topics in the study of entrepreneurship is how to measure and predict future wealth creation. It may be possible to describe what entrepreneurs do in the present without evaluating future wealth creation, but it certainly is not possible to conduct prescriptive research intended to improve performance without knowing how to measure this critical dependent variable. Cynics would say, there you go; you have made our case that prescriptive entrepreneurship is impossible because you cannot predict “the future.” However, I am not trying to predict the future per se, I am trying to understand and test the relationships among a limited number of independent variables that are relatively slow to change, and which are relatively simple to measure. This chapter reports on the testing of a theoretically-based approach for predicting the wealth creating potential of future ventures. Using hidden, but known historical cases, it successfully classified 31 out of 31 venture capital funded ventures into three levels of performance. Moreover, the results accounted for 74 per cent of the variance above the expected return on investment (ROI) to investors. DEVELOPING A THEORY OF WEALTH CREATION Entrepreneurs are vital to economic development because they often create new wealth from sources that did not exist previously (Schumpeter, 1971; Spence, 1974). In ways that are not completely understood, they combine existing or potentially available resources, sometimes in the absence of a market for their products and services, hoping to be rewarded for their efforts and...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information