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Forgiving Business Models for New Ventures

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  • James O. Fiet
  • Pankaj C. Patel

Abstract

We set forth the attributes of forgiving business models that entrepreneurs can use to minimize losses while exploiting ideas to launch new ventures. Venture ideas possessing these attributes have greater potential because they can shift risk to resource providers. Thus, the success of a venture partially depends on the market conditions for others, which affects how an opportunity can be exploited. We emphasize combinations of outside options for resource providers together with their market interaction costs. Finally, we discuss the contributions of this research for entrepreneurs, its theoretical implications, and future research possibilities.

Suggested Citation

  • James O. Fiet & Pankaj C. Patel, 2008. "Forgiving Business Models for New Ventures," Entrepreneurship Theory and Practice, , vol. 32(4), pages 749-761, July.
    • Handle: RePEc:sae:entthe:v:32:y:2008:i:4:p:749-761
    DOI: 10.1111/j.1540-6520.2008.00252.x
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    References listed on IDEAS

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    1. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, August.
    2. James Fiet & Alexandre Piskounov & Pankaj Patel, 2005. "Still Searching (Systematically) 1 for Entrepreneurial Discoveries," Small Business Economics, Springer, vol. 25(5), pages 489-504, December.
    3. Gompers, Paul & Lerner, Josh, 1996. "The Use of Covenants: An Empirical Analysis of Venture Partnership Agreements," Journal of Law and Economics, University of Chicago Press, vol. 39(2), pages 463-498, October.
    4. Bhide, Amar & Stevenson, Howard, 1992. "Trust, uncertainty, and profit," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 21(3), pages 191-208.
    5. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    6. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69(3), pages 213-213.
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    Cited by:

    1. Brettel, Malte & Strese, Steffen & Flatten, Tessa C., 2012. "Improving the performance of business models with relationship marketing efforts – An entrepreneurial perspective," European Management Journal, Elsevier, vol. 30(2), pages 85-98.
    2. Peng, Mike W. & Lee, Seung-Hyun & Hong, Sungjin J., 2014. "Entrepreneurs as intermediaries," Journal of World Business, Elsevier, vol. 49(1), pages 21-31.
    3. William Gartner & Casey Frid & John Alexander, 2012. "Financing the emerging firm," Small Business Economics, Springer, vol. 39(3), pages 745-761, October.
    4. Zhang, Teng & Xu, Zhiwei, 2023. "The informational feedback effect of stock prices on corporate investments: A comparison of new energy firms and traditional energy firms in China," Energy Economics, Elsevier, vol. 127(PA).
    5. Gerard George & Adam J. Bock, 2011. "The Business Model in Practice and its Implications for Entrepreneurship Research," Entrepreneurship Theory and Practice, , vol. 35(1), pages 83-111, January.

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