Hans Landström hans.landstrom@fek.lu.se Sten K. Johnson Centre for Entrepreneurship

1. Intellectual Foundations of Entrepreneurship ResearchESU Conference 2011 Seville, 14 September 2011 Hans Landström hans.landstrom@fek.lu.se Sten K. Johnson Centre for Entrepreneurship Lund University, Sweden Small Business Management and Entrepreneurship Vienna University School of Economics & Business, Austria

2. Agenda History matters in entrepreneurship research! Evolution of entrepreneurship as a research field Challenge for the future Some learning experiences

3. Agenda History matters in entrepreneurship research! Evolution of entrepreneurship as a research field Challenge for the future Some learning experiences

4. Three eras of entrepreneurship research • 1870-1940 1940-1970 1970 - • Economics Era Social Science Management • Knightian view Era Studies Era • Schumpeterian view - Historical/ • - Kirznerian (Austrian) view sociologist view • - Psychologist/ • sociologist view • 1870 1900 1950 2000

5. The economics era American tradition (eg. Walker, Hawley, Frank Knight Occupational choice models and Clark) (Lucas, Kihlstrom & Laffont) Karl Marx Leon Walras German Historical Research Center in School (eg. Smoller) Joseph Schumpeter Entrepreneurial History Austrian School of Economics (eg. Menger Wieser, and Böhm- Hayek/Mises Israel Kirzner Bawerk)

6. Knightian tradition Knight, F.H. (1916/1921), Risk, uncertainty and Profit, Boston: Houghton Mifflin. Three types of uncertainty: • Risk • Uncertainty • ”True” uncertainty Entrepreneurship is mainly characterized by true uncertainty, i.e. entrepreneurs receives a return for making decisions under conditions of non-insurable uncertainty.

7. Schumpeterian tradition 1st edition 1912, 2nd edition 1926, English edition 1934 (based on 2nd edition), but the 1st and 2nd editions are different. Chapter 2 ”The fundamental phenomenon of economic development” 1. The basic assumption was that economic growth resulted from innovations or ”new combinations”. 2. Innovations in the form of new products, new production methods, new raw material, new markets, and new organizational structure in industry. 3. Innovation implemented by entrepreneurs with a specific personality: driven by a desire to found a private kingdom (power and independence), the will to conquer (succeed), and the joy of creating (getting things done).

8. Kirznerian tradition • The entrepreneurialfunctioninvolves the coordination of information, which is based on identifying the gap betweensupply and demand, as well as acting as the brokerbetweensupply and demand, making it possible toearnmoneyfrom the difference. Thus, the entrepreneurtriestodiscover profit opportunities (entrepreneurialalertness) and helpstorestoreequilibrium on the market by acting on theseopportunities.

9. How is entrepreneurship defined – economics view? What happens on the market when the entrepreneur acts? – a market focus Schumpeterian definition (1934) The entrepreneur is an innovator introducing new combinations of resources, creating a disequilibrium on the market. Prod A Schumpeter Kirzner Prod B Kirznerian definition (1973) Entrepreneurs are alert to identify and act upon profit-making opportunities based on an identification of the gap between supply and demand.

10. Three eras of entrepreneurship research • 1870-1940 1940-1970 1970 - • Economics Era Social Science Management • Knightian view Era Studies Era • Schumpeterian view - Historical/ • - Kirznerian (Austrian) view sociologist view • - Psychologist/ • sociologist view • 1870 1900 1950 2000

11. From economic to social science … Around the Second World War … • The economic science focused more and more strongly on equilibrium models and models in economics became increasingly mathematic oriented. Baumol (1968) made clear that within the framework of market equilibrium, there was no room for the entrepreneurial function.  Entrepreneurship and economics have never been good ’travelling companions’.

12. The social sciences era Center for Research in Entrepreneurial History Arthur Cole Joseph Schumpeter Historical approach Sociologist psychologist Innovation and approach creative destruction Jenks and Cochran McClelland and Hagen Modernization of Psychologists Sociologists societies around the - Traits - Ethnicity world (eg. Cochran, - Categories of - Culture Landes, Jenks, entrepreneurs - Networks Gerschenkron, etc.)

13. David McClelland:The Achieving Society (1961) Research question: Why do certain societies develop more dynamically than others? Hypothesis: The values that prevail in a given society, particularly with regard to the need for achievement (nACH), are of vital importance for the economic development of the society. Result: Economically better developed nations are characterized by lower focus on institutional norms, and greater focus on openness towards other people and a higher nACH in society. Entrepreneur: Major driving force in the development – transform a country’s level of achievement to economic growth. Characteristics: nACH, moderate risk taker, self-confidence, individual problem solving, etc.

14. Traits and categories • Need for Achievement • Risk-taker • Locus of control • Over-optimism • Desire for autonomy • etc. Managers – Entrepreneur (Collins & Moore & Unwalla, 1964) Craftsman entrepreneur – Opportunistic entrepreneur (Smith, 1967) Artisan – Classical – Manager (Stanworth & Curran, 1973)

15. How is entrepreneurship defined – social sciences view? Who is the entrepreneur? and Why do they act? – a individual focus The ‘great person’ definition The entrepreneur has an intuitive ability – a sixth sense and instincts. Psychological trait definition The entrepreneur is driven by some unique values, attitudes, needs and traits (e.g. nACH, LOC, creativity, persistence, etc.). Leadership definition Entrepreneurs are leaders of people.

16. Three eras ofentrepreneurship research • 1870-1940 1940-1970 1970 - • Economics Era Social Science Management • Knightian view Era Studies Era • Schumpeterian view - Historical/ • - Kirznerian (Austrian) view sociologist view • - Psychologist/ • sociologist view • 1870 1900 1950 2000

17. The environment during the 1950s and 1960s • Schumpeter (1942) ”… whatwehave got to accept is that the large-scaleestablishment has come to be the mostpowerfulengineof progress.” (p 106) • Galbraith (1967) Arguedthat innovative activities as well as improvements in products and processesweremosteffecientlycarriedout in the contextoflarge corporations. Therefore, economic policy should focus on large corporations.

18. Social turmoil in the 1960s and 1970s - Dynamics in society (… change in industrial structure) - Economic problems (… unemployment) - Change in fashion (… ”small is beautiful”) - Increased political interest (… Keynes’ ideas questioned) Development in society Entrepreneurship and Small Business research

19. David Birch: The Job Generation Process (1979) Birch’s contribution was that he realized that no data were available to resolve various questions related to job creation, and he utilized and reshaped existing data in a way that they could be used for longitudinal analyses (Dun & Bradstreet data base,1969-1976). • The majority of new jobs were created in firms with 20 or less employees – often independent and young firms (thus, it was not the large firms that created new jobs). • The report (54 pages) was sold in twelve copies, but its influence was enormous (among policy makers as well as research community). • Considerable debate, but many of the findings have proved very robust and have been verified in many later studies (Storey, Kirchhoff, Reynolds, Davidsson).

20. Take-off phase (1980s) The pioneers of entrepreneurship research ■ Low entry field  researchers relied on concepts and theories anchored in their home field of research ■ Diversity in research ”It was an unstructured exploration of the ’elephant’ in which researchers discovered that the animal was different, composed of rather unusual parts and that it was quite large.” (Churchill, 1992) Research community ◘ Research society: small, individualistic and enthusiastic ◘ Creation of arenas for communication ◘ Professional organizations ◘ Academic conferences ◘ Scientific journals

21. Growth phase (1990s) ■ Extensive growth of the field ◙ Migration ◙ Mobility ■ Policy orientation ■ Ambition to understand the ’entire’ phenomenon Highly fragmented research field ■ Building of a strong infrastructure

22. Searching for maturity (2000s) Realization that entrepreneurship is a complex, heterogeneous and multi-level phenomenon Open up for broadening of entrepreneurship as a phenomenon Economic phenomenon  societal phenomenon. Knowledge platform of its own Internal orientation (citations, less influence from ‘outsiders’, etc.). Specific and nuanced language (Karlsson, 2008). New generation researchers (Hjorth, 2008). The return of economics and psychology in entrepreneurship research

23. How is entrepreneurship defined – management studies view? How is entrepreneurship developed – a process focus Opportunities Entrepreneurship investigates how and why some individuals (or teams) identify (business)opportunities, evaluate them as viable, and then decide to exploit them, whereas others do not, and, in turn, how these opportunities result in product, firm, industry and wealth creation. (Brush et al., 2003; Shane and Venkataraman, 2000). Firm creation Entrepreneurship is the creation of organizations, the process by which new organizations come into existence. (Gartner, 1988).

24. Management studies era – summary

25. Agenda History matters in entrepreneurship research! Evolution of entrepreneurship as a research field Challenge for the future: Systematic theoretical works Some learning experiences

26. Theoretical development:Two paths Borrow concepts and theories from other research fields Create concepts and theories of its own

27. Borrow concepts and theories from other research fields Arguments We don’t need to ‘invent the wheel’ in entrepreneurship research. There are concepts and theories in other fields that could be tested in the entrepreneurial context. There is a tradition of migration of scholars anchored in mainstream disciplines, and importing concepts and theories from other fields. Borrowing concepts and theories from other fields might be a necessary first step towards developing unique theories of its own. Problem Entrepreneurship as a ‘bounded’ multi-disciplinary field, i.e. the use of knowledge between different research fields is limited.

28. Comparing three interrelated research fields InnovationEntrepreneurship Jan Fagerberg and Hans Landström, Koson SapprasertGouya Harirchi and Oslo University, Fredrik Åström Norway Lund University, Sweden Science and Technology Studies (S&TS) Ben Martin, Paul Nightingale and Alfredo Yegros-Yegros SPRU, the UK

29. Methodology: ’Handbooks’ in entrepreneurship

30. Core scholars in entrepreneurship

31. Top-15 works in S&TS, Innovation and Entrepreneurship

32. Share of citations between and within fields

33. Comparing three distinct research fields of their own InnovationEntrepreneurship S&TS

34. Suggestions for the future Combine topical and disciplinary knowledge (Davidsson 2003): Entrepreneurship scholars who learn more about theory and methods from other disciplines. Disciplinary scholars who learn about entrepreneurship. Collaboration between topical and disciplinary scholars. Deeper understanding of the assumptions and the intellectual roots from which borrowed concepts and theories have evolved (Landström& Lohrke, 2010).

35. Create concepts and theories of its own Arguments Entrepreneurship is something unique that can’t be understood using concepts and theories from other fields. Stronger knowledge platforms in entrepreneurship: more internally oriented knowledge (Cornelius et al., 2006) and more nuanced language (Karlsson, 2008). A new generation of scholars is entering the field (Hjorth, 2008). Problem Our knowledge is highly fragmented, changeable and contextual dependent, but we have a lot of empirical knowledge about entrepreneurship.

36. Empirical knowledge in entrepreneurship research

37. Suggestions for the future Detailed understanding of the phenomenon is a necessary first step in building theory (Eisenhardt, 1989), and it improves the validity and power of the theoretical models developed (Ghoshal, 2006). We need to make a solid “ground-work” in entrepreneurship research We need to understand the historical and contextual setting within which the entrepreneurs are operating (Lohrke & Landström, 2010)

38. Agenda History matters in entrepreneurship research! Evolution of entrepreneurship as a research field Challenge for the future: Systematic theoretical works Some learning experiences

39. Some learning experiences It is ’whatyouthink’ thatmatters! – Contribution • Read and reflect – solid ’groundwork’ • Challenge existingknowledge/taken-for-grantedassumptions youneedtodevelopsomethinginteresting • Hard workcounts!! It is ’whatyouwrite’ thatmatters! – Communication • Learnhowtowrite – write, write and write • Createyour ’own voice’ in writing (writingmodels) • Chooseright journal - levelof journal in relation toqualityofyour paper - journal impactfactorimportant for citations • Promoteyourworks- accessibility - marketing of the work - citations (influentialscholars/self-citations)

40. Some learning experiences It is ’whoyouknows’ thatmatters! – Contacts • Prestige of the author (Matthews effect) is important • Collaborationwithotherscholars (eg. useyour ’peers’ in the process and writetogetherwithothers [not leastwell-knownauthorswithin the field]) – don’t be afraidofcomments on yourwork! • Social network – centrality and citations Centrality in the network Citations

41. More about the history of entrepreneurship Hans Landström and Franz Lohrke, 2010, Historical Foundations of Entrepreneurship Research, Cheltenham: Edward Elgar ISBN 978-1-84720-919-1 Hans Landström, 2005, Pioneers in Entrepreneurship and Small Business Research, Yew York: Springer ISBN 978-1-4419-1678-5