Corridor Principal – Definition

Cite this article as:"Corridor Principal – Definition," in The Business Professor, updated April 7, 2020, last accessed June 5, 2020, https://thebusinessprofessor.com/lesson/corridor-principal-definition/.

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Corridor Principal Definition

The Corridor Principle is a relatively new concept that states that the creation of a venture or firm by an entrepreneur opens it up to opportunities and ideas it could not see before the start of the business.

This principle also explains the possibility of an entrepreneurial venture taking advantage of so many opportunities in the market to the extent of changing its initial focus. Leveraging opportunities in the industry corridors will also lead to the creation of multiple ventures.

A Little More on What is the Corridor Principal

There are six major observations and hypotheses that lead to the development of the Corridor Principle. These hypotheses test the initial focus or goal of an entrepreneurial venture, the creation of multiple ventures and the length of time it took an entrepreneur to create many ventures. The major findings of these hypotheses are that;

  • Entrepreneurship is a dynamic concept
  • An entrepreneur is in a constant battle between creating a second venture and having a longer entrepreneurship career, hence the creation of overlapping ventures.
  • A significant number of entrepreneurs established their second venture at the early stage of their careers.

The above findings or observations show how entrepreneurs can have a prolonged career and also have multiple ventures created through the corridor principle. It is important for entrepreneurship practitioners, researchers and even advisors to consider a long-term vote of an entrepreneurial career that features the possible creation of multiple ventures.

References for Corridor Principal

The Corridor Principle: Why Some People Succeed—And Others Don’t

https://www.sciencedirect.com/science/article/pii/0883902688900286

https://www.researchgate.net/publication/223584165_The_Corridor_Principle

Academic Research on Corridor Principal 

Characteristics of opportunities search of entrepreneurs versus executives: Sources, interests, general alertness, Kaish, S., & Gilad, B. (1991). Characteristics of opportunities search of entrepreneurs versus executives: Sources, interests, general alertness. Journal of business venturing, 6(1), 45-61. A recent article by Low and MacMillan (1988) suggests that at the current stage of entrepreneurship research, empirical studies that “are not theory driven and do not test hypotheses are no longer acceptable” (p. 155). This paper is written in the spirit of this directive. It starts with an explicit theory of entrepreneurship developed by Israel Kirzner, and tests three hypotheses derived from the theory.

The corridor principle, Ronstadt, R. (1988). The corridor principle. Journal of Business Venturing, 3(1), 31-40. This article discusses how many entrepreneurs create multiple ventures, and thereby apparently lengthen the duration of their entrepreneurial careers. A new concept, called the Corridor Principle, is proposed as a possible explanation of the multiple venture phenomenon. The Corridor Principle states that the mere act of starting a venture enables entrepreneurs to see other venture opportunities they could neither see nor take advantage of until they had started their initial venture. The Corridor Principle presents an alternative model to the linear single venture career model, embodied by such celebrity entrepreneurs as Ray Kroc of MacDonald’ s and Kenneth Olsen of Digital Equipment Corp. Six hypotheses test expectations about the timing and duration of entrepreneurial careers, as well as the relationship between entrepreneurial career length and the creation of multiple ventures.

Opportunity recognition, Hills, G. E., & Singh, R. P. (2004). Opportunity recognition. Handbook of entrepreneurial dynamics: The process of business creation, 259, 272.

Towards an understanding of “opportunity”, Hulbert, B., Berman, B. R., & Adams, S. (1997). Towards an understanding of “opportunity”. Marketing Education Review, 7(3), 67-73. The understanding of what constitutes an opportunity is a key factor of business life, whether it occurs at the start-up of a business by a sole entrepreneur, in the development of growth strategies, or in maintaining corporate momentum in the well-established business. Because the recognition of business opportunity is fundamental to the entrepreneurial process and to successful marketing in the established business, this paper probes the meaning of “opportunity”, and examines the nature of the opportunity recognition process. It proposes that opportunity recognition forms one of the basic continuums between “marketing” and “entrepreneurship,” and is a useful basis on which to analyze and understand the marketing/entrepreneurship interface and its application to teaching business students.

The corridor principle and the near failure syndrome: two generic concepts with practical value for entrepreneurs, Ronstadt, R. (2007). The corridor principle and the near failure syndrome: two generic concepts with practical value for entrepreneurs. Industry and Higher Education, 21(4), 247-252. In this article, the author defines the Corridor Principle, which explains how entrepreneurs are able to use knowledge and insight from earlier ventures to see new venture opportunities that they could not have seen and/or pursued had they not started an earlier venture. He discusses its importance to practitioners in allowing them to anticipate what is likely to happen, and shows how combining the Corridor Principle with the Near Failure Syndrome (the propensity of start-ups to survive but nearly fail) changes the goal for starting a first business from profit maximization to “survival maximization.” While awareness of these two phenomena is no guarantee of success, it does appear that the odds of success often improve as entrepreneurs learn their trade–which is done by getting into business and staying alert for the corridor opportunities that will undoubtedly be revealed; knowing what to do about the near failures that will undoubtedly be revealed; and knowing what to do about the near failures that will probably occur when those opportunities are pursued.

OPTIONS AND THE ENTERPRISE: TOWARD A STRATEGIC THEORY OF ENTREPRENEURIAL WEALTH CREATION., McGrath, R. G. (1996, August). OPTIONS AND THE ENTERPRISE: TOWARD A STRATEGIC THEORY OF ENTREPRENEURIAL WEALTH CREATION. In Academy of Management Proceedings (Vol. 1996, No. 1, pp. 101-105). Briarcliff Manor, NY 10510: Academy of Management. Real options theory is used to extend extant perspectives on social capital and the principle of asset parsimony in the accumulation of resources for new businesses. This is done to move toward development of a predictive theory of wealth creation from the entrepreneurial process.

Explaining the formation of international new ventures: The limits of theories from international business research, McDougall, P. P., Shane, S., & Oviatt, B. M. (1994). Explaining the formation of international new ventures: The limits of theories from international business research. Journal of business venturing, 9(6), 469-487. International new ventures (INVs) represent a growing and important type of start-up. An INV is defined as a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries (Oviatt and McDougall 1994). Their increasing prevalence and important role in international competition indicates a need for greater understanding of these new ventures (Oviatt and McDougall 1994).

Modelling entrepreneurial career progressions: concepts and considerations, Katz, J. A. (1995). Modelling entrepreneurial career progressions: concepts and considerations. Entrepreneurship Theory and Practice, 19(2), 23-39. Studying entrepreneurship longitudinally is in effect a study of entrepreneurial careers, but there is little vocational theory specific to self-employment, much less entrepreneurship. Using Edgar Schein’s Career Anchor Theory as a starting point, the existing anchors of autonomy and entrepreneurship are adapted to facilitate secondary analysis using existing longitudinal datasets. A model of career progression or trajectory, which would permit analysis of the self-employed as well as others, is developed using six variables. The first three come from Schein’s “career cone” model of vocational movement–-hierarchy, function, and centrality. Three new variables are derived from a diverse literature on entrepreneurship–-employment duration, job multiplicity, and self-employment emergence. One approach to the operationalization of these six variables Is shown using the Panel Study of Income Dynamics, and implications for future research and theorizing on entrepreneurial career progression are given.

A contingency model of new manufacturing firm performance, Box, T. M., White, M. A., & Barr, S. H. (1994). A contingency model of new manufacturing firm performance. Entrepreneurship Theory and Practice, 18(2), 31-45. A survey of new manufacturing firms yielded significant support for hypothesized relationships between psychological differences, background characteristics, and scanning behavior of the owner/founder and firm performance. In addition, a proposed contingency model of new manufacturing firm performance was tested using moderated regression analysis. This model suggests that a linear combination of psychological, background, and scanning characteristics of the owner/founder acting on firm performance may be moderated by industry dynamics.

Creativity: A key link to entrepreneurial behavior, Ko, S., & Butler, J. E. (2007). Creativity: A key link to entrepreneurial behavior. Business Horizons, 50(5), 365-372. While entrepreneurial creativity is a desired behavior in most firms, it is difficult to understand both how this complex phenomenon occurs and how to increase its rate of occurrence. Understanding and increasing managerial creativity is important not only in developed economies, but also in developing economies, where the research discussed herein was conducted. This article argues that a solid knowledge base, a well-developed social network, and a strong focus on identifying opportunities are all necessary inputs toward entrepreneurial behavior. High-technology entrepreneurs that we interviewed in Hong Kong, however, indicated that creativity also plays a critical and important role in the entrepreneurial process. Attesting to this, they credited the competence with their being able to make the associations and bisociations needed to develop new products, which led to their entrepreneurial success.

Venture capitalists and serial entrepreneurs, Wright, M., Robbie, K., & Ennew, C. (1997). Venture capitalists and serial entrepreneurs. Journal of business venturing, 12(3), 227-249. Habitual entrepreneurship is receiving growing attention, much of which has focused on entrepreneurs who have started more than one venture. This paper examines the importance of habitual entrepreneurs to the venture capital industry, with particular emphasis on those who have exited from an initial investment in the venture capitalist’s portfolio, termed serial entrepreneurs. As venture capital markets mature, increasing numbers of entrepreneurs are likely to exit from their initial enterprises, creating a pool of entrepreneurs with the potential for embarking on subsequent ventures. Venture capitalists making investments may invest both in entrepreneurs starting new ventures and those who purchase a venture through a management buy-out or buy-in. On this wider basis, the paper develops a classification of types of serial venture. A number of issues are raised for venture capitalists, notably the relative attractiveness of reinvesting in exited entrepreneurs and the policy they adopt in tracking and assessing such individuals.

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