A theory of nascent entrepreneurship and organization

Abstract

In this paper, we develop a theory and model of organizational founding and the emergence of collective beliefs and strategies. We explicate how collective beliefs, resulting in the formation of new organizations, emerge via three social mechanisms: sorting or matching, interaction, and selection. We specifically highlight how value homophily, social processes, and threshold effects contribute to the actualization (or not) of entrepreneurial beliefs and ideas. Our theory and model highlight not only the emergence of collective beliefs but also the socially interdependent nature of belief realization, choice, and strategy in nascent organizations. © 2012 John Wiley & Sons, Ltd.