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Archives of Business Research – Vol. 9, No. 8
Publication Date: August 25, 2021
DOI:10.14738/abr.98.10748. My, P. T. T., & Anh, T. P. (2021). Expanding the Entrepreneurial Value Creation Model of Mishra & Zachary (2014). Archives of
Business Research, 9(8). 202-218.
Services for Science and Education – United Kingdom
Expanding the Entrepreneurial Value Creation Model of Mishra &
Zachary (2014)
Phuong Tran Thi My
Department of Economics-Business Administration
An Giang University, Vietnam National University-Ho Chi Minh city
Tu Phan Anh
School of Economics, Can Tho University, Can Tho Province, Vietnam
ABSTRACT
There have been many theories applied to explain entrepreneurship and its factors.
A majority have not explained an entrepreneurial process entirely. This paper
builds on existing theoretical and empirical studies to detail and expand the
Entrepreneurial Value Creation Model to provide a complete theoretical model of
the entrepreneurship process for empirical studies in the future. Three main
contributions of the research include: (1) a detailed entrepreneurial value creation
model; (2) a review of 8 types of research related to Entrepreneurial Value Creation
theory; and (3) seven factors influencing entrepreneurial intention and five factors
influencing opportunity recognition added to the model.
Keywords: Entrepreneurial Value Creation Model, intention, opportunity, competency,
business model.
INTRODUCTION
In recent years, entrepreneurship has gained the attention of economists, governments,
educational institutions, and researchers worldwide because of its critical role in high
innovation-driven growth. Countries like the USA, Japan, Germany consider entrepreneurship
a vital factor for society and economic development (Prakash, Chain & Chauhan, 2015). In Asia,
countries like China, Indonesia, Malaysia, and Thailand own the most robust entrepreneurial
ecosystem because they combine different conditions for entrepreneurs to thrive, such as
finance, government policies, programs, and education and training.
Over the period, most studies were designed to discover the individual’s intention to start a
business venture. In doing so, many factors influencing entrepreneurial intention were
explored through models such as a model for implementing entrepreneurial ideas (Bird, 1988);
model of the entrepreneurial event (Shapero & Sokol’s, 1982); and theory of planned behavior
(Ajzen, 1991). Some parts of research focus on the opportunity existing around individuals and
their capability of exploring and exploiting that opportunity. Others are interested in
identifying specific factors in entrepreneurial competency which individual owns to start their
business. Notable contributions include Model of the entrepreneurial opportunity recognition
process (Ardichvili & Cardozo, 2000), Theory of entrepreneurial opportunity identification and
development (Ardichvili, Cardozo, & Ray, 2003), Individual-Opportunity Nexus theory
(Eckhardt & Shane, 2010), and Entrepreneurial Cognition Theory (Baron, 2006). Despite their
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My, P. T. T., & Anh, T. P. (2021). Expanding the Entrepreneurial Value Creation Model of Mishra & Zachary (2014). Archives of Business Research, 9(8).
202-218.
URL: http://dx.doi.org/10.14738/abr.98.10748
outstanding contribution to the current entrepreneurship literature, it brings us an
unpredictable picture about how to ultimately interpret the entrepreneurial process and the
factors that determine this entrepreneurial creation value process.
Therefore, this paper aims to propose a model of the entrepreneurial value creation process
based on the theory of entrepreneurial value creation (Mishra & Zachary, 2014). Our
contribution is twofold: (a) we present in detail the factors influencing three components of the
model: intention, opportunity, and competence; (b) we extend the theory of entrepreneurial
value creation by adding an integrated model to demonstrate the entrepreneurship process
from the stage of intention emerged to the stage of a business building.
RESEARCH METHODOLOGY
To understand the entrepreneurial value creation model, we reviewed relevant insights in
highly regarded entrepreneurship journals in Vietnamese and English. The searching
procedure began with the SCOPUS database to identify all the major contributions related to
entrepreneurial value creation theory (Mishra and Zachary, 2014). The primary searching tool
is Google Scholar with the keywords “entrepreneurial value creation theory,” “entrepreneurial
value creation model,” “entrepreneurship theory,” “entrepreneurial intention,”
“entrepreneurial opportunity,” “entrepreneurial competency.” We significantly focused on the
reliability and validity of the papers by checking the name of the journal and the citation
number. After reviewing the entrepreneurial value creation theory, we searched the empirical
studies that applied this theory. These studies provide many valuable data for the theory.
LITERATURE REVIEW
Entrepreneurship
Prior entrepreneurship research focused on how a person tries to translate their vision into a
business venture successfully. For example, Drucker (1985) defined entrepreneurship as
innovative activity, including empowering existing resources with a new wealth-producing
capacity. Lately, entrepreneurship is known to combine unique resources to exploit
opportunities to create value then. For example, Shane and Venkataraman (2000) suggested
that entrepreneurship discussed how someone recognized opportunities and what means they
used to exploit opportunities to create new things such as new products or services, new
markets, new production processes, or new ways of organizing. Additionally, Korsgaard and
Anderson (2011) assumed that entrepreneurship is primarily about economic value creation.
To conclude, entrepreneurship plays a vital role in economic development and researchers are
encouraged to explore entrepreneurship determinants at different levels.
Entrepreneurial values
According to Mishra and Zachary (2014), an entrepreneurial model can create several values
in terms of economy, society, environment, politics, but business rewards are the most
important. An entrepreneurial model can produce different values for entrepreneurs and
related people, including investors, employees, management, customers, suppliers, and other
strategic partners. And this profit relationship is mutual. For example, the customers create
value for business in terms of revenue, and, in turn, the business creates value for customers in
terms of product quality and efficiency.
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Archives of Business Research (ABR) Vol. 9, Issue 8, August-2021
Services for Science and Education – United Kingdom
Theory of entrepreneurial value creation
The entrepreneurial value creation theory describes a framework including Stage 1-Venture
formulation and Stage 2- Venture monetization.
Figure 1. Entrepreneurial value creation model (Mishra & Zachary, 2014)
Stage 1 begins with the entrepreneurial intention, which refers to a desire for reward. This
intention encourages the individual to explore the opportunity rather than a foundation for
venture formulation This is consistent with the Global Entrepreneurship Monitor (GEM), which
distinguishes between opportunity- based entrepreneurship and necessity-based
entrepreneurship. Entrepreneurs may start a business because they have no other work option
and need to earn money. While others may start a business because they recognize
opportunities. Kelly et al. (2011) stated that opportunity recognition gradually becomes a
motivator with greater economic development levels.
According to Mishra and Zachary (2014), most of the venture is unsuccessful in the first stage.
It may take a long time for others to invest sufficient entrepreneurial competence to move to
Stage 2-Monetization. The primary goal of Stage 2 is an entrepreneurial reward, which refers
to the value created by the business model. In this stage, the entrepreneur has to carry out
various activities such as raising capital, conflicting choices, risk and profit, moral hazard,
encouragement, and risk minimization.
More in detail, the following sections will present four elements of Entrepreneurial Value
Creation Theory: (1) Entrepreneurial Intention (EI), (2) Entrepreneurial Opportunity (EO), (3)
Entrepreneurial Competence (EC), and (4) Business Model (BM).
Entrepreneurial intention
Using mainly cognitive theory, Bird (1988) defined intentionality as a state of mind driving
attention, experience, and action towards a particular target to accomplish something. It is a
crucial input to understand the entrepreneurial process. Entrepreneurial intention is also
considered the first step of discovering, creating, and exploiting opportunity processes
(Gartner, Shaver, Gatewood, & Katz, 1994). Although entrepreneurial intention has been
studied profoundly by many scholars, less research on the relationship between intention and
other critical aspects of the entrepreneurial process has been found. According to Mishra &
Zachary (2014), the intention is accumulated from thinking and acting depending on
adaptability, and then it will be developed to form a business venture.
Researchers also suggest different methods to measure the factors influencing an individual’s
entrepreneurial intentions. They propose many analyzing models, among which The
Entrepreneurial Event Model by Shapero & Sokol (1982) and The Theory of Planned Behavior