Summary Of Article - Discovery And Creation

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Alvarez. S & Barney. J - Discovery and Creation: Alternative Theories of Entrepreneurial Action Strategic Entrepreneurship Journal, Vol. 1 (2007), pp. 11 - 26 Article Summary According to the authors, there has not been a generalized theory of entrepreneurship despite the various attempts of many scholars to develop theories in entrepreneurship. The authors investigated two sets of assumptions of entrepreneurship about the nature of opportunities, the nature of entrepreneurs and the nature of decision making context within which entrepreneurs operate to describe the similarities and differences between the two theories of Entrepreneurial action i.e., Discovery theory and Creation theory. Also, this paper discusses in detail their implications for the seven different actions of entrepreneurs. The authors not only demonstrate the differences between the two theories, but also explain in-detail how they can be complementary in nature to each other. Analysis The Discovery theory focuses on the existence, discovery and exploitation of opportunities and the influence of individuals and opportunities. The theory assumes that opportunities are objective, individuals are unique and entrepreneurs are risk-bearing. Furthermore, according to this theory, entrepreneurs are those individuals who discover opportunities by recombining resources and they do not create any opportunities. As this process of discovery mostly involves utilizing known resources, the success/failure of the outcome can be estimated approximately and hence, this entrepreneurship process is about risk and not uncertainty. The Creative Theory focuses on the entrepreneur and creation of the firm and assumes that opportunities are subjective, individuals are ordinary people and entrepreneurs are uncertainty bearing. According to this theory, opportunities are not known and must be discovered

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