Reconceptualizing Necessity Entrepreneurship: A Contextualized Framework of Entrepreneurial Processes Under The Condition of Basic Needs

Abstract

Scholarly interest in necessity entrepreneurship has risen steadily over the last four decades, with much of the research in this area focused on distinguishing individuals who are pushed into entrepreneurship by negative factors such as unemployment, from those who are pulled into it by its attractiveness. Yet, although past research has extended knowledge considerably, the dichotomous framing commonly employed in studies in this realm has limited theoretical development, as it ignores important variation among necessity entrepreneurs and, hence, the processes by which they engage in entrepreneurship. In this paper, we seek to reconceptualize the necessity entrepreneurship construct by drawing on a motivational theory of necessity to predict how variation in founders’ basic needs influences the entrepreneurial process, conditional on the level of their human capital endowments, the environmental context in which they are embedded, and the presence of supportive institutional levers. We conclude by discussing the implications of our study and the potential ways in which our theory can be tested and extended.