Environmental dynamism is the rate at which unpredicted change occurs within a given industry (Dess & Beard, 1984). It has been argued that dynamic industries provide greater potential for individuals to identify and exploit entrepreneurial opportunities than do stable industries (Hayek, 1945; Kirzner, 1997). Dynamic environments, however, present high levels of uncertainty and require large amounts of financial capital (Aldrich, 2000). Furthermore, although there is opportunity for entrepreneurs to “hit it big” in dynamic industries, the majority of startups launched in such environments fail (Markides & Geroski, 2004). We therefore consider why some entrepreneurs, and not others, are able to successfully develop new ventures in dynamic environments.

To address this issue, the resource base view of the firm is applied within an upper-echelons framework. We adopt a view that unique bundles of resources are used by firms to create valuable capabilities, differentiating them from competitors and enabling them to appropriate rents (Barney, 1991). For startups, the personal resources of entrepreneurs are particularly important (Alvarez & Busenitz, 2001). To this end, we investigate the differential roles that lead entrepreneurs’ human, social, and psychological capital play in developing new ventures within dynamic versus stable industry environments.