A General Theory of Entrepreneurship
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A General Theory of Entrepreneurship

The Individual-Opportunity Nexus

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.
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Chapter 4: Individual Differences and the Decision to Exploit

Scott Shane


After an individual has discovered an opportunity, she must make a decision about whether or not to exploit it. Unlike many sociological explanations for entrepreneurship (for example, Carroll and Hannan, 2000), which tend to ignore the role of human agency in the decision to exploit opportunities, the individual–opportunity nexus underlying this book argues that individual differences, both psychological and demographic, exert a powerful influence over who exploits entrepreneurial opportunities and who does not. I define individual differences as any type of variation among people, whether in their demographic characteristics, such as age or education, or in their psychological make-up, such as motivations, personalities, core self-evaluation or cognitive processing. Individual differences thus include things that are relatively stable over time, like personality, as well as things that change greatly over time, like cognitions. They incorporate things that can be learned, such as knowledge of markets, and things that cannot, like age. The entrepreneurship literature has shown that the people who engage in entrepreneurial activity are not randomly determined. Certain individual-level characteristics are associated with the decision to engage in entrepreneurial activity. Figure 4.1 indicates the ways in which individual differences influence the entrepreneurial process. For example, psychological factors, including human motivation, core evaluation and cognition influence the discovery of opportunities; the willingness of people to exploit opportunities that they have discovered; their resource acquisition processes; and the strategies and organization designs of the entrepreneurs’ new ventures. Although it is possible that demographic factors matter more than psychological factors (or vice...

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