Seminal Ideas for the Next Twenty-Five Years of Advances

Jerome A. Katz, Andrew C. Corbett, Jerome A. Katz, Andrew C. Corbett

• Publisher: Emerald Publishing Limited
• Year: 2019
• Print ISBN: 9781789732627
• eBook ISBN: 9781789732634
• Topic: Business
• Subtopic: Business General
• Index: Business

Advances in Entrepreneurship, Firm Emergence and Growth provides an annual examination of the major current research, theoretical and methodological efforts in the field of entrepreneurship and its related disciplines, including firm emergence and growth research. It is a key source of articles-of-record for major concepts in the discipline of entrepreneurship.  

Seminal Ideas for the Next Twenty-Five Years of Advances is the second of two volumes exploring and celebrating some of the most long-lasting and influential contributions to Advances in Entrepreneurship, Firm Emergence and Growth. Written and edited by some of the world's leading entrepreneurship academics, this anniversary volume showcases three chapters from the series, along with author reflections, and three new papers showing how these classic ideas connect and energize leading-edge contemporary research in entrepreneurship and related fields. 

For any researcher and student of entrepreneurship or related disciplines, this is a fundamental text that celebrates the past, while exploring the future.

CHAPTER 1

THE DISTINCTIVE DOMAIN OF ENTREPRENEURSHIP RESEARCH

S. Venkataraman

ABSTRACT

In this chapter an argument is made for a clear articulation for the exclusive domain of entrepreneurship research. To date, the entrepreneurship academic community has neglected to define clear boundaries as to what distinguishes entrepreneurship scholarship from other closely related fields. It is argued here that the well-worn constructs of firm performance or success and failure of the individual entrepreneur do not provide the field the clarity of purpose and unique domain it desires. Similarly, the context of small business is not what will bring singular clarity for the field. Instead, this chapter argues that entrepreneurship research should be focused upon understanding how opportunities to bring future goods and services into existence occur.

Keywords: Opportunities; discovery; creation; research

Interest in entrepreneurship has heightened in recent years, especially in business schools. Much of this interest is driven by student demand for courses in entrepreneurship, either because of genuine interest in the subject, or because students see entrepreneurship education as a useful hedge given uncertain corporate careers. This demand for entrepreneurship education has attracted attention to the intellectual content of the field, especially at the more research-oriented universities. And with this attention comes a challenge. The researchers and educators in the field must confront the question “what is the distinctive contribution of our field to a broader understanding of business enterprise?” To the extent that our answer to this question is unclear, delayed, and overlaps with other sub-fields, our legitimacy and our very survival in the world of business research and education is seriously threatened.

A general reading of the entrepreneurship journals shows a pre-occupation with the success or failure of individual entrepreneurs and firms.

While the issue of performance is certainly important, what qualifies these studies as entrepreneurship seems to be the context of the investigation, namely, small business or corporate venture initiatives. As I noted elsewhere (Venkataraman, 1994), much water has flowed under the relative performance bridge in other fields. By pursuing the relative performance theme ad nauseam, we neither stake out a unique territory for entrepreneurship research nor clearly distinguish ourselves from our sister fields in the business school.

The issue of our distinctive contribution naturally raises the question of what exactly is the subject matter of entrepreneurship. To many the field of entrepreneurship is a mystery. Although most people would agree that it is an important area of inquiry, many are not sure about its claims for intellectual legitimacy. The distinctive domain of the field is far from clear.

The main problem is the lack of a well-accepted definition of the boundaries of the field. Although numerous definitions have been offered, none have prevailed. Scholars have traditionally tried to define the field in terms of the entrepreneur or what the entrepreneur does but because there are fundamentally different interpretations of these two concepts, consensus on a definition of the field is perhaps not possible. (See Gartner, 1988, for some compelling statements on this topic.)

This chapter takes a different tack in defining the field of entrepreneurship. Economists do not define economics by defining the resource allocator, nor do sociologists define their subject matter by defining society. Likewise, it would be a mistake for us to define our field by defining the entrepreneur. It would be more useful to define the field in terms of the central issues that concern us as an invisible college. Our field is fundamentally concerned with understanding how, in the absence of current markets for future goods and services, these goods and services manage to come into existence.¹ Thus, entrepreneurship as a scholarly field seeks to understand how opportunities to bring into existence “future” goods and services are discovered, created, and exploited, by whom, and with what consequences. As researchers we approach the subject using different perspectives, theories and methods. But it cannot be denied that what unites us as a distinctive, although invisible, college is a concern with the central issues in the definition above.

At its core the field is concerned with (1) why, when, and how opportunities for the creation of goods and services in the future arise in an economy; (2) why, when, and how some are able to discover and exploit these opportunities while others cannot or do not; and, finally, (3) what are the economic, psychological, and social consequences of this pursuit of a future market not only for the pursuer, but also for the other stakeholders and for society as a whole. I submit that the connection between the pursuit of a product-market in the future and the creation of social wealth offers both a distinctive voice and a worldview and thus constitutes a legitimate domain for our field. Within these boundaries there are several interesting questions that have been largely neglected by scholars in the field.

CENTRAL PREMISES

Although our invisible college does not share a consensus definition, most scholars of entrepreneurship would acknowledge two fundamental premises. The first, which I call the weak premise of entrepreneurship, holds that in most societies, most markets are inefficient most of the time, thus providing opportunities for enterprising individuals to enhance wealth by exploiting these inefficiencies. The second, which I call the strong premise of entrepreneurship, holds that even if some markets approach a state of equilibrium, the human condition of enterprise, combined with the lure of profits and advancing knowledge and technology, will destroy the equilibrium sooner or later.

The weak premise, although present implicitly in most works on entrepreneurship, reached its clearest articulation in the works of Kirzner (1979, 1985), while the strong premise is probably most familiar to people as Schumpeter’s (1976) “process of creative destruction.” These two premises are based on the underlying assumption that change is a fact of life. And the result of this natural process is both a continuous supply of lucrative opportunities to enhance personal wealth, and a continuous supply of enterprising individuals seeking such opportunities. Two issues are of particular interest to scholars in entrepreneurship: the sources of opportunities and the nexus of opportunity and enterprising individuals.

OPPORTUNITIES AND INDIVIDUALS

In an important paper called “The use of knowledge in society” Hayek (1945) pointed out that the central feature of a market economy is the partitioning of knowledge among individuals, such that no two individuals share the same knowledge or information about the economy. Hayek specifically referred to day-to-day knowledge (and not necessarily to scientific knowledge), such as that associated with particular occupations; resources that are lying fallow; a better way of doing a particular job; a key resource that is becoming scarce; the discovery of a breakthrough in the laboratory that leads to a new technique, method of production, or technology; the existence of a critical need in a particular segment of society, and so forth. The key is that this knowledge is diffused in the economy and is not a “given” or at everyone’s disposal. Thus, only a few people know about a particular scarcity, or a new invention, or a particular resource lying fallow, or is not being put to best use. This knowledge is typically idiosyncratic because it is acquired through each individual’s own circumstances including occupation, on-the-job routines, social relationships, and daily life. It is this particular knowledge, obtained in a particular “knowledge corridor,” that leads to some profit making “insight” (Kirzner, 1985; Nelson & Winter, 1982). The dispersion of information among different economic agents who do not have access to the same observations, interpretations, or experiences (Arrow, 1974) has two fundamental implications for entrepreneurship research: first, opportunities for discovering or creating goods and services in the future exist precisely because of the dispersion of information. It is this dispersion that created the opportunity in the first place. Second, the very same dispersion presents hurdles for exploiting the opportunity profitably, because of the absence or failure of current markets for future goods and services. It is therefore necessary to understand first how opportunities for the creation of new goods and services arise in a market economy; and second, it is necessary to understand how and in what ways individual differences determine whether hurdles in the process of discovering, creating and exploiting opportunities are overcome.

One of the most neglected questions in the entrepreneurship literature is where opportunities to create goods and services in the future come from. Although this question should form the core of the field, none of the journals contain articles that mention this issue. Drucker (1985) has identified three classes of opportunities. The first is inefficiencies within existing markets due either to information asymmetries among market participants, or to the limitations in technology to satisfy certain known but unfulfilled market needs. The second is the emergence of significant changes in social, political, demographic, and economic forces that are largely outside the control of individual agents. The third source is inventions and discoveries that produce new knowledge. Research on the taxonomy and sources of opportunities, their characteristics, the relative incidence of different opportunities in different contexts and countries, and the relative profitability of different sources of opportunities are all virgin territories for the field of entrepreneurship.

It is one thing for opportunities to exist, but an entirely different matter for them to be discovered and exploited. Opportunities rarely present themselves in neat packages. They almost always have to be discovered and packaged. Thus, the nexus of opportunity and enterprising individual is critical to understanding entrepreneurship. At the core of the two premises outlined above is the belief that people are different and these differences matter. These differences give rise to many of the interesting questions in entrepreneurship. Indeed, by emphasizing and illuminating individual differences entrepreneurship can emerge as a legitimate field with its own distinctive domain within the broader field of business research and education.

A related question is what separates those who exercise individual enterprise from those who don’t. Or, in more operational terms, what triggers the search for and exploitation of opportunities in some, but not in others? By triggers, I am referring not to the psychological or sociological traits that may propel people to certain actions that can be called entrepreneurial. Although the “traits” approach (Aldrich, 1991) is definitely within our domain, the findings of this research over the past 30 years have been at best inconclusive (see Shaver & Scott, 1991, for a good review). I would like to draw attention to three other areas that have been largely ignored by entrepreneurship researchers, namely knowledge (and information) differences, cognitive differences, and behavioral differences.

The role of specific knowledge and “knowledge corridors” in motivating the search for profitable opportunities has received little attention since Hayek’s (1945) observation about the dispersion of information in society. This topic is critical to our understanding of what triggers the search for and exploitation of opportunities by some individuals but not others.

The possession of useful knowledge varies among individuals and these differences matter. This variable strongly influences the search for and the decision to exploit an opportunity, and it also influences the relative success of the exploitation process.

Specific knowledge by itself may only be a sufficient condition for the exercise of successful enterprise. The ability to make the connection between specific knowledge and a commercial opportunity requires a set of skills, aptitudes, insight, and circumstances that is not either uniformly or widely distributed. Thus, two people with the same knowledge may put it to very different uses. It is one thing to have an insight, but an entirely different matter to profit from it. The incentive, capability, and specific behaviors needed to profit from useful knowledge or insight all vary...

Table of contents

• Cover
• Title
• Introduction
• Chapter 1: The Distinctive Domain of Entrepreneurship Research
• Chapter 2: The Distinctive Domain as a Durable Way Forward
• Chapter 3: Is it Worth It? The Relevant Performance Yardstick for the Entrepreneur
• Chapter 4: From Traits to Rates: An Ecological Perspective on Organizational Foundings
• Chapter 5: Revisiting “Traits to Rates” After 25 Years: Organizational Ecology’s Limited Impact on Entrepreneurship Research
• Chapter 6: Toward a Theory of Entrepreneurial Competency
• Chapter 7: Reflection on Entrepreneurial Competency
• Chapter 8: Nurturing Entrepreneurial Competencies Through University-Based Entrepreneurship Centers: A Social Constructivist Perspective
• Afterword