Exploring Entrepreneurship

Richard Blundel, Nigel Lockett, Catherine Wang, Suzanne Mawson

• Publisher: SAGE Publications Ltd
• Year: 2021
• Print ISBN: 9781529733723
• eBook ISBN: 9781529765564
• Edition: 3
• Topic: Business
• Subtopic: Organisational Development
• Index: Business

A detailed and critical analysis of the multiple types of entrepreneurship, helping students to understand the practical skills and theoretical concepts needed to create their very own entrepreneurial venture. Split into two parts, the book provides an even balance between theory and practice. Part 1 covers the practical activities involved in new entrepreneurial ventures, and Part 2 uses the latest research to explore entrepreneurship from different perspectives. The expanded third edition of Exploring Entrepreneurship includes: •Additional coverage of entrepreneurship and the United Nations Sustainable Development Goals (SDGs), corporate entrepreneurship, variety and diversity in entrepreneurship, and entrepreneurial approaches to the delivery of public services
•New and updated Case Studies that tackle cutting-edge practical issues
•New and updated Researcher Profiles from leading international scholars
•Enhanced Recommended Reading sections in each chapter with concise introductions to the latest research findings Essential online resources for students, including selected SAGE journal articles, pre-reading suggestions, self-assessment questions and revision tips, plus a range of lecturer resources, are available. Suitable reading for students taking modules in Entrepreneurship or Small Business Management at upper undergraduate and postgraduate levels.

1 Introduction

Learning outcomes

After reading this chapter you should be able to:

• Appreciate the economic, social and environmental significance of enterprise and entrepreneurship in the twenty-first century.
• Identify different interpretations of the terms ‘entrepreneur’, ‘entrepreneurship’ and ‘enterprise’, including ‘social’ and ‘commercial’ forms, and adopt suitable working definitions.
• Understand the distinctive approach to studying entrepreneurship that has been adopted in this textbook, the purpose of its two-part structure, and how to make use of various components, including case studies, in order to connect entrepreneurial thinking, practice and reflection.
• Explore entrepreneurship in greater depth in the remaining chapters by engaging with entrepreneurial practice, with a particular focus on new venture creation (Part I) and by critically reviewing different research perspectives (Part II).

1.1 Introduction: Entrepreneurship in the twenty-first century

Welcome to Exploring Entrepreneurship. This short opening chapter will provide you with a general introduction to entrepreneurship, an outline of our approach to the subject and some essential tools and guidance for exploring the subject further. Exploring Entrepreneurship is concerned with the real world of entrepreneurial policy and practice. Though there is an enormous amount of variety in our subject, there are also some common patterns to discover and many useful lessons to be drawn from the research evidence.

The rest of the chapter is organised as follows. In Section 1.2, we consider the scope of entrepreneurship as a field of study, and how to define some of its core terms (i.e. ‘entrepreneur’, ‘entrepreneurial’, ‘entrepreneurship’ and ‘enterprise’). Section 1.3 takes a closer look at the rich variety of ways in which entrepreneurial activity takes place, and includes some discussion of the differences between commercial and social entrepreneurship. In Section 1.4, we introduce our distinctive approach to studying entrepreneurship, which builds on a combination of practical experience (both direct and indirect), critical reflection and drawing on a variety of perspectives.

1.2 Scoping and defining entrepreneurship

1.2.1 The ‘slippery concept’

So, what is it that you are studying? It might be reasonable to expect a textbook to be mapping out the scope of the field at this point, and providing its readers with some clear, unambiguous definitions of the key terms. Unfortunately, things are not that simple. Many years ago, the economist Edith Penrose commented that, ‘Enterprise, or “entrepreneurship” as it is sometimes called, is a slippery concept, not easy to work into formal economic analysis, because it is so closely associated with the temperament or personal qualities of individuals’ (Penrose [1959] 2009: 33). Today, entrepreneurship researchers, policy-makers and practitioners are still struggling with this slippery concept, and there is a continuing lack of agreement over the meaning of these terms. So how should we approach the terminology? Clearly, it would be easier if we provided you with one universally accepted definition, but that would also be very misleading. The best approach is to recognise that people may use the same words, yet understand them differently. This is not a major problem because, as we shall discover, the range of interpretations is quite limited. However, it is important to be aware of these differences as you read about entrepreneurship, or listen to people talking about the subject. If you are not sure how they are using terms like ‘entrepreneur’, ‘entrepreneurial’, ‘entrepreneurship’ or ‘enterprise’, try to check their understanding. If you are still not sure about the definition that is being used, bear this in mind when you interpret their comments.

1.2.2 Key terms: ‘Entrepreneur’, ‘entrepreneurship’ and ‘enterprise’

In this section we review some of the key terminology and provide working definitions of three key terms: ‘entrepreneurship’, ‘entrepreneur’ and ‘enterprise’. Additional explanations of these and other key terms can be found in the Glossary at the end of the book.

These three words derive from the same linguistic source, the French transitive verb ‘entreprendre’ (meaning literally to begin, tackle or undertake something) and the associated noun, ‘entreprise’ (meaning a company or business). The Irish-born writer Richard Cantillon described the entrepreneur as someone who specialises in taking on a financial risk in his celebrated, Essai sur la Nature du Commerce en Général, first published (posthumously) in 1755. Other eighteenth-century figures, such as English philosopher and political economist, John Stuart Mill experimented with alternatives such as ‘undertaker’ (see Chapter 12), but over time it was the original French word ‘entrepreneur’ that became firmly established in the English language.

Given their widespread use in twenty-first-century politics, economics and popular culture, the terms ‘entrepreneur’, ‘entrepreneurship’ and ‘enterprise’ are surprisingly ill-defined, and you can sometimes find people using the same word to mean entirely different things! Since our book is called Exploring Entrepreneurship, we are keen for you to keep an open mind on their precise meaning and scope for the time being. However, it also seems reasonable to offer you some working definitions as a starting point for your studies. Then, as you discover more about entrepreneurship in the remaining chapters, you can develop a more fully rounded understanding of each term.

‘Entrepreneur’

The term ‘entrepreneur’ has a variety of meanings. For example, in North America, it is often used to describe anyone who establishes their own business, whatever its size. But does it make sense to use the same word to describe a 30-year-old billionaire who has set up five Internet businesses and the 70-year-old, the semi-retired owner of a small picture-framing business, or a 40-year-old who sets up a community-based enterprise to provide work opportunities for homeless people? Some people argue that the term ‘entrepreneur’ should be more tightly defined. For example, they would only use it to describe people like the Internet tycoon, and opt for alternatives such as ‘small business owner’ for everyone else. The main counter-argument is that, while there may be considerable differences between them, there are also some common features that are worthy of more detailed examination.

The Organisation for Economic Cooperation and Development (OECD) and Eurostat have considered this issue at length. They operate an ‘Entrepreneurship Indicators Programme’ (EIP) in order to collect better statistics on entrepreneurial activity in OECD member states and around the world. Their definition of the term ‘entrepreneur’, which builds on previous reviews of the entrepreneurship research literature, covers people engaged in a wide range of entrepreneurial activities, including those who set up a new business:

Entrepreneurs are those persons (business owners) who seek to generate value, through the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets.

We will adopt this OECD wording as our working definition, but how do we resolve the problem of distinguishing between different types of entrepreneur? The most common solution is to insert adjectives based on the sort of activity that is taking place. For example, our Internet tycoon might be described as a ‘serial’ (i.e. repeat) entrepreneur, while the picture-framer as a ‘lifestyle’ entrepreneur, and the founder of the community-based enterprise as a ‘social’ entrepreneur.

‘Entrepreneurship’

The OECD and Eurostat’s EIP team have also agreed on the following definition of the term ‘entrepreneurship’, which we can adopt as a starting point:

Entrepreneurship is the phenomenon associated with entrepreneurial activity, which is the enterprising human action in pursuit of the generation of value, through the creation or expansion of economic activity, by identifying and exploiting new products, processes or markets. In this sense, entrepreneurship is a phenomenon that manifests itself throughout the economy and in many different forms with many different outcomes, not always related to the creation of financial wealth; for example, they may be related to increasing employment, tackling inequalities or environmental issues. (OECD 2016: 12–13)

This definition describes entrepreneurship as a phenomenon that is ‘associated with’ entrepreneurial activity. It recognises that, while the activities of individual entrepreneurs clearly play a central role, the entrepreneurship process extends beyond the individual, to teams, organisations, social networks and institutions (e.g. rules and regulations, cultural norms). But what does it mean to describe a particular activity, or set of activities, as ‘entrepreneurial’? While founding a small firm or social enterprise might in itself be described as an entrepreneurial act, the owners and managers often settle into a relatively stable routine and may even actively resist opportunities for further growth. The OECD–Eurostat definition recognises this distinction between entrepreneurial activity, which it sees as generating additional value by expanding economic activity, and the ongoing management of an existing firm. It is also interesting to note how the OECD–Eurostat definition acknowledges different outcomes of entrepreneurial activity, other than simply the generation of financial wealth. This is important because it recognises the role that both social enterprises and commercial ventures can play in creating ‘social’ value, either by contributing to social well-being or by reducing our negative impacts on the natural world.

‘Enterprise’

This term is often found in discussions alongside entrepreneurs, entrepreneurial activity and entrepreneurship. Though this English word is clearly derived from the same French source, a great deal of time and effort has been spent in attempts to differentiate it from the others. Another complication arises because the meaning of the word ‘enterprise’ differs depending on whe...

Table of contents

• Cover
• Title Page
• Copyright Page
• Contents
• About the Authors
• Preface
• Acknowledgements
• How To Use the Online Resources
• Praise for the Book
• 1 Introduction
• 2 Varieties of Entrepreneurship
• PART I Entrepreneurship in Practice
• 3 Visions: Creating New Ventures
• 4 Opportunities: Nurturing Creativity and Innovation
• 5 People: Leading Teams and Networks
• 6 Markets: Understanding Customers and Competitors
• 7 Operations: Implementing Technologies, Processes and Controls
• 8 Accounts: Interpreting Financial Performance
• 9 Finances: Raising Capital for New Ventures
• PART II Perspectives on Entrepreneurship
• 10 Research Matters: Introduction and Overview
• 11 Individual Perspectives: Beyond the ‘Heroic’ Entrepreneur
• 12 Social Perspectives: Understanding People and Places
• 13 Economic Perspectives: Influences and Impacts
• 14 Historical Perspectives: The ‘Long View’
• 15 Political Perspectives: From Policy to Practice
• 16 Reflections: Entrepreneurial Learning
• Glossary
• Index