Entrepreneurial Contexts

Opportunity vs necessity

When people do become entrepreneurs, they can be classed in one of two groups:

• Opportunity entrepreneurship
  This is where someone has an idea for a new venture which they can choose to pursue or not. It is often associated with more developed countries and larger economies where there is relatively easy access to capital. It can also require a higher degree of education and access to technology, depending on the nature of the idea.

• Necessity entrepreneurship
  This is where someone starts a venture as their only viable option in order to have an income. It is often associated with developing countries and smaller economies where people have less access to career paths. Many of the businesses in this category do not require a high level of education to run or much technology to support them. This has made it especially a great source of empowerment for women in rural areas of the world where they have not had opportunities at all before.

Startup ecosystems

Throughout history, there have been many examples of the right conditions being set in a specific geographic area that has lead to massive entrepreneurial activity there. One of the most famous examples of this is Silicon Valley, where many of the world’s biggest tech companies are based. This is thought to have been spurred by the location of Stanford University and the following innovations in the semiconductor industry, personal computers and the internet. Where there are innovative companies that attract talented and entrepreneurial people, more people then want to work in that environment and culture. In 2018, 45% of all capital investment in the US was in Silicon Valley.

Institutions

An institution can refer to an organisation, but it can also be an established law, practice, custom, culture or set of societal values. It can make a huge difference to an entrepreneur’s success whether the institutions favour them or not. Government policies, legal frameworks and the financial system can make a venture a good idea in one country and a terrible one in another. However, it is important to remember that there have been entrepreneurs who have succeeded despite the systems around them and if the idea is important enough then it should still be pursued.

Everywhere

While in this course we tend to look specifically at entrepreneurship in new ventures, it is also important to understand that entrepreneurial activity can happen anywhere. People with ideas inside existing companies, intrapreneurs, are responsible for a huge amount of innovation across the world. It doesn’t need to be about making money either, social enterprises are a very important part of many important causes that help millions of people. Reform in the public sector can also be called entrepreneurial behaviour when it is done right.