60 ENTREPRENEURSHIP
What happens next? At the end of the process shown in Figure 2.2, the new venture
creation process begins. As we will see in the following chapters, the complement to the
“resource and capabilities approach” is the “opportunity recognition and analysis”
process. In Chapter 3, we will look at the process of opportunity recognition and its
dimensions. For now, we can summarize the pre-entrepreneurial conditions that result
in the entrepreneurial event, that is, in the creation and management of a new venture.
One model of this process comprises five components.^69- Initiative. An individual or team, having been brought to the state of readiness by
personal factors and by perceptions of desirability and feasibility, begins to act.
Evidence of initiative usually includes scanning the environment for opportunities,
searching for information, and doing research. - Consolidation of resources. Levels of resource needs are estimated, alternatives for
procurement are considered, and timing of resource arrival is charted and eventu-
ally consolidated into a pattern of business activity that can be called an organiza-
tion. - Management of the organization. The business’ resource acquisition, transformation,
and disposal are routinized and systematized. Those elements that are not easily sys-
tematized are managed separately. No entrepreneur behaves in an entrepreneurial
manner all the time. There are forces acting on the individual that sometimes make
entrepreneurial behavior appropriate and at other times make administrative or
managerial behavior appropriate.
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The management of the new venture is characterized by free choice of strategy, struc-
ture, and processes—autonomous action. The initiators have put themselves at risk—risk
taking. They are personally affected by the business’ variability of returns and by its pos-
sible success or failure. Each entrepreneur assesses the forces pushing for entrepreneur-
ial action and those requiring administrative action, and then makes the choice that is
best for the new venture.SUMMARY
This chapter presents the basic concepts of the resource-based theory, including the four
attributes of resources necessary to achieve sustainable competitive advantage: rare,
valuable, hard to copy, and nonsubstitutable. Our resource-based theory allows that cer-
tain aspects of entrepreneurship are not analyzable: They are causally ambiguous because
no one, including the founders, quite understands how or why they work. New ventures
created around the possession and controllability of resources with these characteristics
have the potential to be rewarding, forgiving, and enduring.
The chapter also describes the six types of resources: physical, reputational, orga-
nizational, financial, intellectual/human, and technological. These are the basic profit
factors to be used in assessing the potential of the new venture. All of the resources are
important for the new venture, but the ones that are most likely to lead to competitive
advantage are organizational, reputational, and human resources.
The entrepreneur is the primary human resource for the new venture. Although it is
uncertain what, if any, personality traits make the best entrepreneurs, the entrepreneur’s
life history, experience, and knowledge make each founder a unique resource.