Monday, May 01, 2006

New Business Creation

As part of my preparation for graduate school this fall, one of my future advisors suggested that I read The Origin and Evolution of New Businesses by Amar V. Bhide.

I have been absorbed in the book on my long train ride from Pittsburgh to Boston (I took the train to catch up on work and reading) and I find that I cannot put the book down. I think it may be the most insightful book that I have yet read about entrepreneurship.

It is not a prescription for becoming a successful entrepreneur. Instead, it is an analysis of how entrepreneurs can be studied.

In the opening pages of the book, the author compares the study of entrepreneurs to Heisenberg's Uncertainty Principle, pointing to the challenges of understanding this diverse population.

The focus of the book is on primarily on entrepreneurs who do not run traditional small businesses (e.g. laundromats, restaurants, etc.), but businesses with unproven models and technologies. The author also discusses intrapreneurship (innovation in large corporation) and follows up on Schumpeter's theory of creative distruction (there are elements of truth to Schumpeter's theory, but his assumption that big businesses will dominate the economy may not be one of the elements of truth).

As the basis for his theory, Bhide uses a study of several years of Inc. 500 companies. Although the book was published in 2000, its analysis has not lost much of its relevance.

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