Entrepreneurship: Theory Vs Practice (Series 1c)
Today’s entrepreneurship: theory vs practice series will focus on The Entrepreneurial Event Model
What makes people want to become entrepreneurs has been a subject of debate and at the centre of that debate are two key authors: Albert Shapero and Lisa Sokol.
Shapero and Sokol (1982) proposed a model of the entrepreneurial event (shown below).
The model assumes that most people are bound to a given life path by inertia (a tendency to do nothing or to remain unchanged), but that major life changes otherwise called triggers or displacements (e.g. loss of job, extreme poverty, attending an incubation or accelerator programme etc.) can alter the binding inertia.
Shapero and Sokol (1982) categorise these life changes and/or displacements into three, 1. negative displacements, 2. between things and 3. positive pull.
Negative displacements include things like getting divorced, being fired from work, being forcefully emigrated etc.
Between things include situations like graduating from university or college and remaining unemployed, being released from jail or finishing a formal military training.
Lastly, the positive pull refers to pull from one’s mentor, incubation or acceleration programmes, partner, customer, investors etc.
Further, Shapero and Sokol postulate that people’s answers to the external events and/or displacements described above will depend on their PERCEPTIONS about the available alternatives and their propensity to act.
There are two basic kinds of perceptions: perceived feasibility and perceived desirability.
Perceived feasibility refers to the level of competence that an individual is perceived to have to start a business. It is the confidence that a person has in his or her abilities and skills to execute a task.
Several authors believe that self-efficacy is the anchor of an individual feasibility perception and intention to start a business. Entrepreneurial self-efficacy has been described by Zhao and colleagues (2005) as the confidence that an individual has in his/her ability to start a business successfully.
Perceived desirability, on the other hand, can be defined as the level to which an individual finds the idea of starting a business attractive. In other words, it shows one’s affection towards self-employment through entrepreneurship.
Lastly the propensity to act refers to an individual predisposition to act on an idea, decision and/or business venture. It is an individual willingness to take a risk and/or action in the midst of uncertainty.
In conclusion, the entrepreneurial event model can be a useful model to explain why most people venture into entrepreneurship and why we have seen the rise in the number of entrepreneurs around the world.
About the Series
Entrepreneurship Theory Vs Practice is a series to demonstrate the interlink between entrepreneurship theories and practice.
A lot has been said about the relevance and practicability of academic knowledge with specific reference to the discipline of entrepreneurship. Some have argued that we don’t need an academic knowledge to succeed in the formation and growth of an enterprise.
As an academic and practitioner of entrepreneurship and a strong believer of the relevance of both, I will be presenting a brief abstract of some of the prominent academic studies on entrepreneurship and how they can help you in the formation and growth of your venture.
