Contextualizing Entrepreneurship Theory

Ted Baker, Friederike Welter

• Publisher: Taylor & Francis
• Year: 2020
• Print ISBN: 9781032174471
• eBook ISBN: 9781351110617
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

As the breadth and empirical diversity of entrepreneurship research have increased rapidly during the last decade, the quest to find a "one-size-fits-all" general theory of entrepreneurship has given way to a growing appreciation for the importance of contexts. This promises to improve both the practical relevance and the theoretical rigor of research in this field. Entrepreneurship means different things to different people at different times and in different places and both its causes and its consequences likewise vary. For example, for some people entrepreneurship can be a glorious path to emancipation, while for others it can represent the yoke tethering them to the burdens of overwork and drudgery. For some communities it can drive renaissance and vibrancy while for others it allows only bare survival. In this book, we assess and attempt to push forward contemporary conceptualizations of contexts that matter for entrepreneurship, pointing in particular to opportunities generating new insights by attending to contexts in novel or underexplored ways.

This book shows that the ongoing contextualization of entrepreneurship research should not simply generate a proliferation of unique theories – one for every context – but can instead result in better theory construction, testing and understanding of boundary conditions, thereby leading us to richer and more profound understanding of entrepreneurship across its many forms.

Contextualizing Entrepreneurship Theory will critically review the current debate and existing literature on contexts and entrepreneurship and use this to synthesize new theoretical and methodological frameworks that point to important directions for future research.

Part I Understanding Contexts and Entrepreneurship

1 Why Contexts Play an Ever-Increasing Role in Entrepreneurship Research

In this chapter we briefly present some arguments regarding why we need to continue progress on building a contextualized perspective in entrepreneurship research, drawing on Welter (2011, p. 166) who stated that “(. . .) context is important for understanding when, how and why entrepreneurship happens and who becomes involved”. As context has attracted increased attention in recent years, entrepreneurship scholars have begun to critically examine approaches and applications. Building on lessons about context from other disciplines, we make some suggestions—that we develop throughout the rest of the book—about how to avoid some of the pitfalls experienced in other fields and instead harness the “contextual turn” in entrepreneurship research in a theoretically interesting and practically useful way. Let’s start by asking what context is before we begin making claims about why and how we should go about contextualizing our work.

Defining Contexts—Or Not

Context and Entepreneurship: The Prequel

There are two perspectives we will describe here on the complexities of context. The first comes from anthropology and related disciplines as well as from philosophers of social science and is focused on what has been often been called “cultural relativism”. The second comes from organization studies and is more focused on questions and variables, functional form and model specification. These two perspectives provide challenges and opportunities to entrepreneurship researchers both alone and in combination.

Anthropologists, as well as scholars from a variety of liberal arts disciplines such as philosophy (Scharfstein, 1988) and literary studies (Akman, 2000; Felski, 2011), have struggled over how to choose and delimit how they contextualize their work. As Dilley (1999a, p. 1) points out, “Ever since Malinowski, anthropologists have chanted the mantra of ‘placing social and cultural phenomena in context’ ”. Ongoing debates about how to do this, which are too rich and varied to summarize easily, have persisted through the rise of structuralism, post-structuralism, postmodernism and a variety of other competing schools of thought and have resulted both in rich insights and many dead ends.

From one broad and persistent perspective, a key issue for anthropologists and other social scientists remains: what are the limits of understanding and “translating” one culture to make it understandable for members of another? For example, a large body of relevant research centers on the manner in which different languages may structure and shape how native-born speakers perceive and understand the world and the extent to which the meanings and understandings that result are commensurable (e.g., Bates, 1976; Duranti & Goodwin, 1992; Labov, 1970; Levinson, 2003). Such arguments extend as well to cultural and linguistic subgroups.

Some “standpoint” theorists suggest that members of dominant and advantaged groups in any society are unlikely to be able to understand the perspectives or lived experiences of disadvantaged members. The disadvantaged members, however, are likely to be better able to understand their own experiences, those of more privileged members and, in turn, the society as a whole, because their disadvantage requires them to take into account both the position of the dominant members and their own (e.g., Collins, 1986; Harding, 2016; Hartsock, 1983). While such perspectives focus on showing how one “standpoint” can be epistemologically superior to others, generating something close to objective truth, others suggest that there is no such defensible standpoint for anyone to inhabit. Many authors have pointed out how an emphasis on contextualizing research therefore can lead easily to extreme forms of relativism (Culler, 1983; Dilley, 1999b; Scharfstein, 1989) and an infinite regress in which any attempt to apply a contextualizing lens on existing theoretical or descriptive claims is itself immediately subject to being undermined by its own failure to be fully contextualized.

Other behavioral scientists have had similar debates, for example, discussing “contextualism” as a concept and highlighting contextualizing processes through an emphasis on the interactions between contexts and individuals. Such discussions were particularly active during the 1980s. Rosnow and Georgoudi (1986, p. 3) pointed to the Latin root “contex-tus” as meaning “a joining together”, asserting that this draws attention to a continously changing reality, the “relative and interpersonal nature of human understanding” and the “inseparable link between practical knowledge and fundamental knowledge”. For them, human activity “is rigorously situated within a sociohistorical and cultural context of meanings and relationships”, emphasizing that neither contexts nor actions can be assessed without consideration of the other (Rosnow & Georgoudi, 1986, p. 4). They explain their view of contexts as constructed (Ros-now & Georgoudi, 1986, p. 19): “Contextualism views human beings not as separate from the world they know”; individuals are active in constructing contexts and contexts are not out there, but “part of the act” (p. 6).

Context Comes and Appears Unbounded in the Management Disciplines

Coming at things from a less explicitly philosophical angle, organization studies was one of the first management disciplines to treat contexts as an object of focus. Johns’s essays provide coherent and influential statements of why and how context matters to our understanding of organizations (Johns, 2006, 2017, 2018). The first is a theoretical piece in the Academy of Management Review (AMR). The second represents John’s reflections on the first paper after it won AMR’s “decade” award as the most important paper the journal published in 2006. The third nicely describes ways that “although context enables a demarcation of what is distinctive about situations, it also permits integration across research areas and levels of analysis, identifying what they have in common as settings for organizational behavior” (Johns, 2018, p. 21).

Although it is disciplined and grounded in its focus on specific bodies of empirical research, much like earlier work in anthropology and other fields, Johns’s arguments nonetheless suggest that a commitment to con-textualization can become unbounded both theoretically and empirically. Drawing on and synthesizing the approaches of some earlier scholars (e.g., Capelli & Sherer, 1991; Mowday & Sutton, 1993; Rousseau & Fried, 2001), he defines contexts as “situational opportunities and constraints that affect the occurrence and meaning of organizational behavior as well as functional relationships between variables” (Johns, 2006, p. 386). He then shows how quickly contextualization can become unbounded, pointing out that the effects of any element we label context is itself likely dependent on context. He explains that elements of context can have offsetting effects and that in different “system” states, which become the context in which organizational behavior takes place, small changes can have small or very large effects. In his distinction between “discrete” and “omnibus” contexts, Johns (2006) shows that context writ large includes everything that might matter but that is not included in our models as well as whatever specific variables we might model. Any modeling strategy we might choose therefore includes within its “omnibus context” a universe of “omitted variables” (Johns, 2006, p. 388). High r-squared values do not signal an escape from this situation. Johns notes, for example, the problem of sampling-induced range restriction on key variables, suggesting that, when curvilinear effects exist, a high level of a variable effectively represents a different context than a low value on that same variable. Any model that fails to contain the full range of values on a variable that has curvilinear effects is therefore contextually constrained.

Context is typically used to point to characteristics at a higher level of analysis than the focus of a given study (e.g., how an industry affects an organization within it) but Johns elaborates how context can also point to characteristics at a lower level (e.g., how employee demographics affect organizations). He also provides several striking examples of context-driven “sign reversals”, in which the effect of some variable—for example, the effect of tuition reimbursement programs on turnover— switches from positive to negative depending on context; in this case, the presence or absence of associated promotion activities.

The multidimensionality of context makes understanding and accounting adequately for it more challenging. Describing Allport’s (1937) “list of 17,953 trait names to describe people”, Johns (2006, p. 391) suggests that these and more have been usefully consolidated to the “Big Five” in many studies. He points to the extreme multidimensionality of context—noting, for example, that as early as 1963 Sells provided a “list of 236 elements that might describe a total stimulus situation” and notes that no consolidation of contextual dimensions as useful as the “Big Five” has yet to occur. A quick scan of recent studies in micro-organizational behavior suggests that consolidation around the Big Five may be overstated. Many studies focus on specific traits with no clear ties to the Big Five. But all of that is just an oversimplification and a warmup to the challenges of contextual-izing our work. Complex configurations—such as those in which “context effects can comprise both main effects and interactions between context variables and substantive variables of interest”—generate possibilities in which even a simple recitation of the permutations and combinations that might be expected to matter could quickly become overwhelming. Of course, everything is not connected to everything else. But even the question of which elements do not matter to some configuration—sometimes labeled “loose coupling”—boggles the mind.

Mind-boggling or not, we argue that Johns’s list actually understates the magnitude of the challenge of contextualizing our research, even as these traits are implied by his own definition. Recall that he defines context as “situational opportunities and constraints that affect the occurrence and meaning of organizational behavior as well as functional relationships between variables” (Johns, 2006, p. 386). Organization scholars discussing context have focused their attention mainly on the last part of this, on functional relationships between variables and how they affect the occurrence of behavior. In a broad sense, however, as we described earlier, much of the serious scholarly reflection on context in other fields—perhaps especially by cultural anthropologists, linguists and philosophers of science—has tousled with issues and differences of meaning. This adds to both the challenges and the opportunities we face in thinking about how entrepreneurship researchers might usefully continue the process of contextualizing our work.

How Entrepreneurship Researchers Define Contexts

Drawing from the movement towards taking “environments” into consideration that swept organization theory during the 1970s (Aldrich & Pfeffer, 1976), early entrepreneurship research talked about environments for entrepreneurship, treating these largely as objective differences in the situations entrepreneurs faced. This is still commonplace in organization studies. For example, in a review of research on extreme contexts the authors introduce extreme contexts as “environments” (Hällgren, Rouleau, & de Rond, 2018, pp. 113, 115, building on the definition by Hannah et al. 2009). In a great deal of work, context still equals the common and objective environment to which organizations respond with more or less agency. For entrepreneurship research, we think the pattern is similar. An analysis of the reception of Welter (2011) by one of the authors of this book and her team shows that, out of 446 articles citing Welter’s context article as of 31 July 2019, the majority (258) still reflected an understanding that “contexts are out there”. We have no specific quarrel with such a common usage, but rather two concerns. First, work that treats context as “out there” and to be defined and measured without regard to the varied ways entrepreneurs might “do context” (on which we will elaborate much more throughout the book) leads us away from theorizing and studying the richness of entrepreneurial agency. Second, and more simply, such usage typically signals that work will understand context as something to be “controlled for” and taken into account or modeled in some very limited way.

We don’t know why context and environment are still taken as synonyms by so many entrepreneurship researchers. This may be undergoing a generational change. When one of us asked doctoral students from several different cultural and disciplinary backgrounds to explain how they defined context, none of them mentioned “environment”. Instead, their responses showed a wide and creative understanding ...

Table of contents

• Cover
• Half Title
• Series Page
• Title Page
• Copyright Page
• Contents
• Preface: Our Journey Towards Contextualizing Entrepreneurship Theory
• PART I Understanding Contexts and Entrepreneurship
• PART II Theorizing Contexts
• PART III Studying Contexts
• PART IV Going Forward
• Author Biographies
• Index