Entrepreneurship in Theory and in Practice

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Identifies the continuum from theory to practice, and some Austrian economics theories applicable to business design.

Problem To Solve: It's necessary to establish a sound theory before embarking upon business model design.

How To Use This Tool

What theories are you applying in your business design? It’s important to have them clear in your mind.

  • Begin with the assumptions that are inherent in your imaginary construct for a business.
    • What do you assume about the ends that customers are seeking (sometimes called needs)? People act ONLY to accomplish chosen ends. Are you sure about your identification of those ends?
    • How do they choose means to achieve their ends? What emotional benefits are they seeking? What functions do they require?
    • How will they evaluate your proposition?
  • What theories or human behavior, of motivation, of markets, etc., are your assumptions based on?
  • We identify a few examples for you to use as stimulus:
    • Means-Ends Ladder
    • The law of diminishing returns (or in special market cases, the law of increasing returns)
    • Network theory
    • Uncertainty theory
  • What entrepreneurial history is relevant, firms that have succeeded in meeting similar customer ends, or firms that have failed and provided lessons as a result?