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 8: Resource Acquisition

Scott Shane


This chapter explores the process by which people acquire financial resources to exploit entrepreneurial opportunities. Because the exploitation of an entrepreneurial opportunity requires the acquisition and recombination of resources before the sale of the output from that recombination, it must be financed. This financing process can and does include financing by the entrepreneur herself. In fact, in the vast majority of cases, founders finance the exploitation of entrepreneurial opportunity out of their own savings (Aldrich, 1999). However, the financing of entrepreneurial opportunities can also involve the acquisition of capital from external sources. External financing can take a variety of forms, including equity investment, debt financing, asset-based financing, and grants from governments and not-for-profit agencies. The amounts of financial resources obtained through external financing can range from a few thousand dollars to hundreds of millions of dollars. The sources of external financing can include friends and family members, business angels, banks, venture capital firms, governments, and even, in very rare cases, public markets. Regardless of the type of financing, source of financing, or the amount of financing, two basic characteristics of the exploitation of entrepreneurial opportunities influence the resource acquisition process – uncertainty and information asymmetry. As I explained in earlier chapters, entrepreneurship is a process in which people identify opportunities to recombine resources to bring future goods and services into existence (Venkataraman, 1997). To discover entrepreneurial opportunities, people must possess idiosyncratic information or beliefs (Kirzner, 1973). Resource owners would not make inputs available at a price that permitted entrepreneurial profit if...

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