From laborer to founder: Entrepreneurs’ fundamental transitions at the nexus of individual and opportunity
Strategy & Business Policy
Speaker: Christopher RIDER
Professor U Michigan
We offer a general framework for studying entrepreneurial opportunities and inferring how individuals transition from laborer to founder. Extending the opportunity-discovery perspective, we propose that an opportunity’s profitability potential depends upon a component that is common to all observers as well as factors that are specific to individual observers. We theorize how an opportunity’s profitability potential varies across individuals who differ in access to market information and motivate three distinct, mechanism-specific predictions through which individuals and opportunities intersect to generate new businesses: discovery, discernment, and exploitation. Empirical analyses of an online platform for freelance labor demonstrate our contributions. We find that, in this context, discovery and exploitation mechanisms shape freelancers’ transitions from the supply side to the demand side of the labor market. We conclude by discussing applications of our framework in other settings.