Innovation and Entrepreneurship Institute
Discussion
Paper, June 2001
David
L. Deeds (Case Western Reserve University, USA)
Ram
Mudambi (Temple University, USA and University of Reading, UK)
Allen
Wilhite (University of Alabama, USA)
In this paper we set up a theoretical
model of the initiation of a new venture. The model is designed to capture the
notion that the population of entrepreneurs develops through time governed by a
hurdle process with feedback. The
hurdles fall into two categories. The
first set of hurdles is generated by a rational decision making process by the
potential entrepreneur. The second
set is generated by the external environment that the entrepreneurial venture
must negotiate during its developmental trajectory.
We argue that the height of these hurdles is determined by institutional
factors. Thus, the variation in
these institutional factors from country to country leads to variation in the
rates of entrepreneurship. We overcome this challenge by using modeling
techniques to test the theory.
Acknowledgements: We would like to thank participants at the Babson-Kauffman Research Conference in Jonkoping, Sweden, June 2001, for helpful comments that significantly improved the paper. The usual disclaimer applies.
Address for correspondence:
Ram Mudambi
Department of General & Strategic Management
Fox School of Business & Management
Temple University
380 Speakman Hall
Philadelphia PA 19122, USA
Voice:
215-204-2099
FAX:
215-204-8029
Email:
rmudambi@sbm.temple.edu