Affiliated Organization

University of Amsterdam, Netherlands


This paper addresses one of the core questions in developing entrepreneurship theory,i.e. why and when do some choose to become entrepreneurs. Differing from other researchefforts on it, we look at entrepreneurial decision making as population behavior and theindividuals’ strategy of human capital investment to realize latent ability constrained by certainenvironmental context. Assuming that individuals with/without latent innovative or/andentrepreneurial ability might make corresponding human capital investment and becomedifferent kind of employees or entrepreneurs, we bring forward an evolutionary stable model ofthe individuals ’ entrepreneurial human capital investment from the society lay. We furtherdevelop an evolutionarily game model of the individuals’ human capital investment decisionmakingfrom the point of those who would be an entrepreneur applying replicator dynamicsequation. The analysis and calculation result of the models show that entrepreneurship iscontingent upon environmental context, there will be different entrepreneurial distribution whenindividuals are aware of their latent ability or not, and a government can always improve theentrepreneurial level via paying more attention to education and changing the environmentalcontext.