Why Do People become Entrepreneurs? Aspiration and Market Explanation

Authors try to answer the following question, “Who are entrepreneurs and why do they want to become entrepreneurs?” In order to identify answers to the question, we argue that researchers need to focus on the decision making problem of an individual instead of environmental factors. In this article, we propose a different theoretical framework, similar to the “prospective theory” in economics, from existing theories in entrepreneurship. People usually have two types of opportunities, which are entrepreneurial and non-entrepreneurial opportunities. First, using a formal model, we try to prove that different individuals who have different “aspiration levels” tend to have different sets of opportunities, entrepreneurial and non-entrepreneurial. Authors claim that people become entrepreneurs because of the divergences between an individual’s aspiration level and the market evaluations of the individual. Then, we offer a couple of cases of when and how an individual’s aspiration level and the market evaluation of the individual can be different.