Entrepreneurship Theories: The Resource Based Entrepreneurship Theory

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The Resource-based theory of entrepreneurship argues that access to resources by founders is an important predictor of opportunity based entrepreneurship and new venture growth. This theory stresses the importance of financial, social and human. Thus, access to resources enhances the individual’s ability to detect and act upon discovered opportunities. Financial, social and human capital represents three classes of theories under the resource – based entrepreneurship theories. (i)Financial Capital/Liquidity Theory, this theory suggests that people with financial capital are more able to acquire resources to effectively exploit entrepreneurial opportunities, and set up a firm to do so. (ii) Social Capital or Social Network Theory, that is, an individual may have the ability to recognize that a given entrepreneurial opportunity exist, but might lack the social connections to transform the opportunity into a business start-up. It is thought that access to a larger social network might help overcome this problem. (iii) Human Capital Entrepreneurship Theory, underlying the human capital entrepreneurship theory are two factors, education and experience. The knowledge gained from education and experience represents a resource that is used by individuals to discover and understand differences in opportunity identification.
(F) X-Efficiency Theory
Many firms face the problem of inefficient utilization of various inputs or resources.

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