A Conceptual Framework for Describing

the Phenomenon of New Venture Creation

This paper emphasizes how new businesses, ranging from small startups to big firms, are
created by understanding the framework. The creation of new ventures has similar meaning to
the development of new organizations. According to the framework, there are four dimensions
that are considered when it comes to describing a new venture creation including;
- Individuals : people who are involved in starting a new organization
- Organization : the firm
- Environment : situations and surroundings that influence new organization
- New venture process : the actions taken to start a firm

Individuals
Starting a new business requires having a person who is involved in all the processes. The
role of an entrepreneur in the process of creating a new venture can be classified as follow:
- Personal backgrounds
- age
- education
- Entrepreneur characteristics
- Innovative
- risk taking propensity
- locus of control
- need for achievement
- Adaptation and learning

Environment
The environment can affect how an entrepreneur performs. There are two views
developed: The first one is environmental determinism states that the venture has to develop to it,
while the second one, strategic choice, views the environment as a reality that the venture has
created. Also there are several other studies that show factors like accessibility to supplier and
customers, labors, venture capital availability, living conditions, government influences, and
many more are shown to affect the venture creation.
Organization
In this framework, the organization plays an important role. To start a business,
individuals need to organize different things, for example money and people. How you organize
these factors is important for success. Being creative and having a good work culture is key.
Leaders who make decisions, teams that work well together, and learning from mistakes also
matter. Organizations influence how all these things work. Even though it's not the main focus,
how you organize your business plays a big role in whether it does well.

Process
Another important thing that is mentioned in this framework is process. Starting a new
business can be compared to starting a new journey. First, entrepreneurs find opportunities by
looking at the world around them and figuring out what people need. Then, they gather resources
like money and a team to make their ideas real. Being creative and making smart decisions is a
big part of the process. Entrepreneurs also have to adapt and learn as they go, and sometimes
they make their business bigger or find new ways to succeed. Lastly, they might decide to sell
the business or change their role in it. So, the process isn't just one step; it's a series of steps that
make up the adventure of starting and running a new business.
 The Theory of Economic Development

The term "Development" in this context signifies substantial and unpredictable

transformations that can permanently reshape a situation which are often observed in industrial
and commercial settings. Businesses must be attentive to evolving consumer demands and
remain adaptable since consumers continually introduce new requirements. Economic
development, in this context, refers to internal changes within an economy driven by its internal
initiatives, distinct from external influences. It differs from economic growth, which primarily
concerns quantitative changes such as population and wealth.

Five fundamental aspects of development encompass:

1. The introduction of new products or qualities.
2. The adoption of novel production methods.
3. The expansion into untapped markets.
4. Gaining access to fresh sources of raw materials.
5. The overhaul of entire industries, involving the creation or dissolution of monopolies.

When discussing spontaneity and discontinuity, it implies that development unfolds

suddenly and without a predetermined pattern. Novel combinations of resources are initiated by
new entities or individuals, not by existing firms. This dynamic nature of development can
impact social and economic hierarchies and is reflected in business cycles. Established firms
typically have routine access to means of production within the circular flow of economic
activity, while new combinations often necessitate external financing. Credit plays a pivotal role
in procuring the necessary resources.

Shifting the focus to the role of banks and credit, financial institutions, particularly banks,
play a crucial role in providing credit, which, in turn, facilitates economic growth by supporting
entrepreneurial ventures. These institutions serve as credit generators, creating purchasing power
for those embarking on new combinations. It's worth noting that savings aren't always the
primary source of capital for new combinations. Much of what is considered savings may result
from successful innovation and entrepreneurial profit, and credit often serves as a more
immediate source of financing for entrepreneurial endeavors.

Lastly, distinguishing between entrepreneurs and capitalists is essential. Entrepreneurs

actively initiate and implement new combinations of resources. They are characterized by their
innovative and risk-taking nature, which drives economic development.
 Business Undertaker or Adventurer
Marshall, 1890
In modern England, some village craftsmen still use old-fashioned ways to make things
they sell in their community. Some educated professionals, like doctors and lawyers, run their
own businesses. Let's look at the good and bad sides of this. Running your own business can be
tough if you're not good at finding clients, so having someone help can be a plus. Also, having
confidence is crucial for jobs that need a lot of thinking.

Now, when it comes to how these businesses are managed, some pros, like English
lawyers, help hire other experts. Teachers usually let schools find students for them, while artists,
even famous ones, often use go-betweens to find customers. In many modern businesses,
managers or go-betweens are really important.

In certain businesses, like construction, individuals might oversee their own projects. But
it often works better when experts like architects and builders are involved. In textile trades,
businesses that deal with fabrics, smart designers mix with good business sense. Some jobs
follow a "cottage industry" model, where people work from home or small workshops under the
guidance of larger bosses. In some businesses, speculators play a big role. They make guesses
about what will happen in markets, like the stock market, without actually doing the work
themselves. What they do can have a big impact on markets.

Being successful in business needs both know-how about the work and skills to lead
others. Just because your family has a successful business doesn't mean you will. Sometimes,
people struggle to do as well as their parents. How you're raised often affects if you'll be good at
running a business. As business owners get older, they often let trusted workers take on more
responsibility. Some even bring those workers into the business as partners to share the work and
make sure the business keeps going. These private partnerships can change how they do things to
fit different tasks and challenges.
 Essai sur la nature du commerce en général
Richard Cantillon
In Europe, undertakers play a crucial role in managing the production, exchange, and circulation
of goods, but they face inherent risks in doing so. Farmers, for instance, promise to pay
landowners a fixed sum without any assurance of their profitability. They can't predict which
crops will be profitable due to fluctuating factors like weather and demand, making their income
uncertain. The majority of a farmer's product is sold in the city, where carriers transport the
goods and pay the farmer a fixed price based on market rates. However, daily price fluctuations
in the city introduce uncertainty into their profits.

To meet the city's demand, many individuals become city merchants or undertakers. These
people purchase goods at one price but must sell them at uncertain prices, making it difficult to
predict demand and profits. The uncertainty extends to shopkeepers and retailers who buy
products at set prices and sell them at varying, unpredictable prices. Consumers often prefer this
arrangement, as they can buy small quantities of goods as needed, rather than maintaining their
own stock.

Undertakers in different fields, for example miners, artisans, and professionals, all live with the
uncertainty of fluctuating incomes. Even those with wealth, like money and goods, ultimately
derive their resources from landowners. Those who gather a lot of valuable things from lending it
out can potentially challenge landowners' power, but they often transition into land ownership
themselves.

To sum up, the only individuals in a state who are naturally independent are landowners.
Everyone else, whether they possess capital or not, lives with uncertainty, and their prosperity
ultimately hinges on land ownership. The exchange and circulation of goods within a state are
facilitated by these undertakers.