Research

Entrepreneurship through acquisition (ETA), in which individuals become entrepreneurs by buying operating firms rather than founding new ventures, is an increasingly important route into entrepreneurship. ETA changes the problem of entrepreneurial opportunity evaluation. Founders evaluate opportunities they discover or create, whereas acquisition entrepreneurs must judge firms that others built under seller-controlled disclosure. We argue that evaluating an acquisition opportunity requires entrepreneurs to resolve two uncertainties, what they are buying and why the seller is willing to sell. Drawing on the resource-based view and information economics, we predict that disclosing a transferable VRIO resource and disclosing a credible reason for sale independently increase entrepreneurs' willingness to pursue an acquisition. We test these predictions in a preregistered field experiment on a large Indian online marketplace for firm sales, in which 102 acquisition entrepreneurs evaluated experimentally varied listings. Both disclosures increase acquisition interest, and their effects are additive. Our findings develop a theory of opportunity evaluation for entrepreneurship through acquisition. They extend the resource-based view by showing that strategic resources play an ex ante informational role, shaping entrepreneurs' beliefs about opportunity quality before the acquisition decision.

Search funds are an increasingly popular but underexamined form of entrepreneurship through acquisition (ETA) in which an entrepreneur—typically a national of the focal country—raises capital to search for, acquire, and operate a privately held firm within that country. Because investors commit capital before a target has been identified, fundraising occurs under pronounced uncertainty, and the entrepreneur’s own attributes become the primary basis for evaluation. Integrating signaling theory with research on social evaluation, sensemaking, and judgment under uncertainty, we develop a theory of how investors jointly interpret entrepreneurs’ human-capital signals and the characteristics of the country in which the search will unfold. We argue that higher human capital increases the likelihood of raising search capital, but that its signaling value is contingent rather than fixed: the relationship weakens where strong country-level institutions and recent local search fund acquisitions independently build investor confidence, substituting for the assurance that human capital would otherwise supply. We further suggest that this substitution, while adaptive, may shade into evaluative bias, lowering the bar for entrepreneurs in validated markets. Interviews with 16 search fund investors corroborate the centrality of human capital, institutional quality, and prior acquisition activity in investor evaluations. By studying this emerging entrepreneurial route and showing how country-level institutional and market-validation cues condition the value of entrepreneurial signals, we contribute to research on entrepreneurial finance, signaling theory, and investor decision making.

Entrepreneurship research generally assumes that the individual who identifies an opportunity is also the one who exploits it. We examine a setting in which these roles are separated: a digital marketplace for online businesses, where specialized sellers, or ideapreneurs, identify, develop, and package ventures for others to acquire and operate. Using thousands of listing attempts by serial sellers, we examine how a successful sale shapes their subsequent activity. Success is a depleting rather than compounding asset. Sellers who complete a sale are less likely to return to the platform, and those who return perform substantially worse on their next listing. This penalty appears to arise from knowledge displacement. After selling a business, sellers also relinquish the tested playbook embedded in it. They move away from their established domains, enter different industries, and construct new listing narratives. These shifts, rather than lower effort or higher prices, help explain the subsequent decline in performance. Because the platform conceals seller histories, the pattern reflects sellers’ own knowledge and choices rather than reputational dynamics. More broadly, the findings show that opportunity discovery and opportunity exploitation can be unbundled, and that for specialists who discover opportunities, success may consume the knowledge that made it possible.