Entrepreneurship research A missing link in our understanding of the knowledge economy

8/12/2019 Entrepreneurship research A missing link in our understanding of the knowledge economy

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Entrepreneurship researchA missing link in our understanding of the

knowledge economyHans Landstrom

Institute of Economic Research,Lund University School of Economics and Management, Lund, Sweden

Abstract

Purpose A great deal of policy thinking in the last ten to 15 years has been driven by the insightsgained from the so-called new growth theory. The theory emphasizes that investments in knowledgeand human capital generate economic growth through spillover of knowledge, and the policy implicationis that investments in knowledge and human capital are the best way to stimulate growth. However, thereis a couple of missing links in the spillover argument in that the theory seems to disregard the role of theentrepreneur. The paper aims to answer the question: Why havent entrepreneurship researchers becomea strong voice regarding the understanding of the development of the knowledge economy?

Design/methodology/approach The author argues that a dynamic and innovative research fieldis characterized by a balance between the pursuit of new issues and knowledge in research, forexample, by being sensitive for changes in society, and the development of existing knowledge, byintegrating and validating the knowledge base already existing within the field.

Findings The paper shows that one important reason for the lack of visibility of entrepreneurshipresearch can be found in an internal scientific development of the research field entrepreneurshipresearch has become more and more theory-driven and shows less sensitivity and openness forchanges in society.

Originality/value The article gives a critical reflection on the development of entrepreneurship asa research field. In this sense the article provides an increased understanding of the knowledge that iswithin the field, and gives also suggestions for the future development of the research field.

KeywordsKnowledge economy, Social change, Entrepreneurialism

Paper typeGeneral review

1. IntroductionThe economy is changing. . .There is ample evidence that we are currently going through a dynamic era of change insociety. Adam Smith (1776/1976) in his An Inquiry into the Nature and Causes of theWealth of Nations defined land, labor and capital as the key input factors of the economy,

Joseph Schumpeter (1934) inTheory of Economic Developmentadded innovation as onemore input factor, and Poul Romer and Robert Lucas, among others, identified

knowledge as a fifth important driver of economic growth and prosperity in society.In the last decades, intangible resources such as knowledge, know-how and socialcapital have become the breeding ground for the development in society, and this trendis punctuated by, for example (Carayannis et al., 2006):

. a widespread adoption of innovative technologies in order to create new businessmodels;

. the development of a service-based economy with activities demandingintellectual content has become more pervasive;

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. an increased emphasis on higher education and life-long learning; and

. massive investments in research and development, training and education.

We are talking about the knowledge economy in which innovation through the

creation and use of knowledge has become a driver of economic growth. In this respect,we can rely on Schumpeters reasoning (1942) about creative destruction in whichnew technologies revolutionizes the economic structure from within and in theknowledge economy this creative destruction is supported by the rapid development ofinformation and communication technologies (ICTs) that can be regarded as theenablers of change.

Following this development in society, a great deal of policy thinking in the last 10-15years has been driven by the insights gained from the so-called new growth theorycoined by Paul Romer (1986, 1990) and Robert Lucas (1988). In the previous neoclassicalmodel of economic growth, the conclusion was that labor and capital investments werethe main drivers of growth. On the other hand, the new growth theory emphasize thatinvestments in knowledge and human capital generate economic growth throughspillover of knowledge firms invest in knowledge to gain growth and return on theirinvestments, and if successful, they will create knowledge spillovers, i.e. exchange willoccur between organizations in the region and knowledge will disseminate that possiblewill benefit other firms as well. The policy implication is that investments in knowledgeand human capital are the best way to stimulate growth.

However, as pointed out by Acs et al. (2004), and of central importance for thediscussion in this article, there is a couple of missing links in the spillover argument.For example, the growth theory seems to disregard the role of the entrepreneur.Research and development is not enoughper se someone has to combine the resultsfrom R&D with other production factors in order to generate growth, i.e. someone hasto convert knowledge into economic growth, and it is in this aspect the entrepreneur

become of decisive importance. For example, neither Henry Ford nor Bill Gatesinvented the technologies on which they built their successes. What they did was to useexisting resources and new available knowledge in a new and more valuable way they were entrepreneurs and it was their way of exploit new knowledge that createdgrowth, not new knowledge per se.

. . .but entrepreneurship researchers are not a part of the conversationEntrepreneurship is about the entrepreneur that recognizes economic opportunitiesand takes action to exploit them into a market. Seen in this way, entrepreneurshipought to be of great importance when talking about the changes towards a knowledgeeconomy during the last decades, and as a link between knowledge and economicgrowth in society. However, and interestingly, entrepreneurship research has not been

a loud voice in the discussion of the changes in society, and entrepreneurshipresearchers have not paid particular attention to this development.

The adequate question is of course: Why havent entrepreneurship researchersbecome a strong voice regarding these emerging and important phenomena in society,which obviously are of core importance in entrepreneurship research?

In this article my intention is to elaborate on this why-question. Of course, theremight be a lot of different explanations for the lack of presence and visibility ofentrepreneurship researchers in the vital debate about the development of the

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knowledge economy and growth in the society. However, in this article I will argue thatone important reason can be found in an internal intra-scientific explanation in thatentrepreneurship research has become more and more theory-driven and show signs ofa normal-science approach with weak links to and less sensitivity and openness for

changes in society.My argument (based on Landstrom, 2005) will be that entrepreneurship is a

relatively new field of research, not more than 20-25 years old or little more than halfan academic career that during the last few decades has gained extensive interestbeyond the usual areas of management studies. As in many other fields of research insocial sciences, entrepreneurship research has its roots in the development of andchanges in society. In this case we can go back to the 1970s and 1980s, decades duringwhich we experienced huge structural changes in society worldwide, an emergingdevelopment of the knowledge economy, and far reaching political changesemphasising stronger market-oriented ideologies. It was in this context that theinterest in entrepreneurship research grew, and entrepreneurship research wasstrongly rooted in society. The topics raised were strongly linked to the development ofsociety and entrepreneurship researchers showed a strong practical orientation, i.e. itwas a question of making the phenomenon visible in society and to help individualventures to better performance.

In the 1990s, entrepreneurship research grow exponentially in terms of number ofresearchers, articles, conferences, journals, etc., and we can find an increasedfragmentation of the field with many parallel conversations in research. However, theresearch was still rooted in society and the expanding knowledge economy of the1990s. In many countries entrepreneurship became an important part of the politicalagenda, and entrepreneurship research became a vehicle to solve regional and nationalproblems and to stimulate entrepreneurship, and a lot of entrepreneurship research, notleast in Europe, was financed by policy-linked organisations.

But as many other research fields, the field of entrepreneurship research hasmatured a maturity that, as I will argue, has made entrepreneurship research lesssensitive for changes in society, and the research has been more inward looking,research topics have stabilised focusing on some core questions of interest withinentrepreneurship research, and research has been more specialised and groups ofresearchers are focused more narrowly on particular theoretical research issues, whichalso indicate that there are stronger theory-driven approaches within the field. Thus,the field has attained the characteristics of a more normal science approach (Aldrichand Baker, 1997) a development of the field that counteract its original opennesstowards stimulus from and interaction with important changes in society.

In the following sections of the article I will further elaborate on the development ofentrepreneurship as a research field. In the next section I will show the development of

the research field from a research field that was highly open for changes in society to amore mature field of research where research has become more inward looking and lesssensitive for changes in society. The development of entrepreneurship research will bedivided into three phases: the emergence of the research field, the exponential growthof entrepreneurship research, and the domain orientation approach to research. In thefinal section I will discuss what could be done in entrepreneurship research to maintaina strong linkage to the development of society, and to research the important questionsin society.


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2. The development of entrepreneurship researchResearchers in different disciplines have long taken an interest in entrepreneurship,represented by precursors such as Richard Cantillon, Jean Baptiste Say, Carl Mengerand Alfred Marshall in the eighteenth and nineteenth centuries. Among economists, at

the beginning of the twentieth century there was already an extensive theoretical basearound the concept, even if it was difficult to identify a consensus that would enable usto speak of a theory. For example, we can identify two traditions in economic theory:the Schumpeterian tradition and the Austrian tradition.

Joseph Schumpeter recognized the role of innovation in economic growth, and heunderstood that innovation had to be implemented by someone the entrepreneur.The entrepreneur creates imperfections and growth in the market by introducinginnovations. On the other hand, the Austrian tradition, with roots in the thoughts ofAustrian economists such as Carl Menger, Frederick von Hayek and Ludwig vonMises, and today, with Israel Kirzner as the leading exponent, sees the entrepreneur asa seeker of imbalances in the economy an entrepreneur is alert in identifyingprofit-making opportunities and help to restore equilibrium to the market by acting onthese opportunities.

However, in the course of the last half century, it seems that entrepreneurship hasmore or less been overlooked in economic models. Economics as a scientific disciplineseems to more and more strongly focus on equilibrium models which constitutes thedominant paradigm in the field, and in which there does not seem to be any room forthe entrepreneur. The economist William Baumol (1968) expressed it asentrepreneurship and economics have never been good travelling companions.

Instead, during the 1950s and 1960s behavioural science researchers assumedresponsibility for continuing the development of entrepreneurship research. Theirpoint of departure was: Why do some individuals tend to start their own businesswhereas others do not? The answer was: it depends on the fact that some individuals

have certain qualities that others lack. In order to understand the entrepreneur as anindividual we could find an interest in entrepreneurship among psychologist such asDavid McClelland and Everett Hagen, but also social anthropologists like FredrikBarth and Clifford Geertz, and historians as David Landes. Thus, in the 1950s and1960s we can find a strong behavioural science tradition in entrepreneurship research,but the interest was limited to a few individual researchers in different main streamdisciplines.

It was not until the end of the 1970s and beginning of the 1980s that we can identifyan emerging group of scholars from different disciplines interested inentrepreneurship, and we could also find some seminal studies on entrepreneurshipthat made the phenomenon visible and which attracted other researchers to startresearch projects on entrepreneurship. The development of entrepreneurship research

that followed these pioneering studies has been divided into three phases: emergingphase, growth phase, and domain phase (see Table I), and below I will elaborate onthese phases.

2.1. Phase 1 the emerging field of entrepreneurship research2.1.1. Social turmoil. After the Second World War, Keynesian economic theory,suggesting increased government interventions to manage cyclical fluctuations,seemed to be working, and there was a positive economic development in society. The

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importance of entrepreneurship and small businesses seemed to fade away, and manyscholars supported Schumpeters (1942) declaration that what we have got to accept is

that the large-scale establishment has come to be the most powerful engine ofprogress (p. 106). At the same time, during the 1950s and 1960s in the USA there wasalso a widespread fear of the Soviet Union, due to its ability to concentrate economicresources and utilize economies of scale (Acs, 1992). In order to compete, many westernsocieties, not least the USA, assumed industrialization and economic development to bebased on mass production, and large companies were seen as superior in efficiency aswell as the most important driving force behind technological development. It wasargued that economies of scale were of paramount importance for industrialdevelopment, that only large firms could produce output in sufficient quantities to takeadvantage of these economies and that, as a consequence, government policies in manycountries favoured large businesses.

The notion that large-scale production and a social order with strong collectivisticelements were conducive to economic development was firmly established amongsocial scientists at the time and beliefs in the potential of economies of scale can betraced back to economists like Adam Smith and Karl Marx. One of the most influentialthinkers at that time was John Kenneth Galbraith who, in his books AmericanCapitalism (Galbraith, 1956) and especially in The New Industrial State (Galbraith,1967), provided an important rationale for an economic policy oriented toward the largecorporations. Galbraith argued that innovative activities as well as improvements inproducts and processes were most efficiently carried out in the context of largecorporations. Similarly, inThe Rise of the Western World (North and Thomas, 1973)Nobel Laureate Douglass North gave the entrepreneur a very minor role in economicdevelopment and hardly mentioned the topic at all, while Servan-Schreiber (1968)

warned Europeans to be aware of The American Challenge in the form of thedynamism, organization, innovation, and the boldness that characterize the giantAmerican corporation (p. 153).

Of course, not all researchers accepted this interpretation of reality. There were alsoresearchers that were skeptical to the large-scale production argument, many of whichcould be found in strategy and organization theory, such as Chandler (1962) andrepresentatives of the contingency theory on organization: Burns and Stalker (1961),Woodward (1961) and Lawrence and Lorsch (1967) who state that when an

Emerging phase Growth phase Domain phase

1980s 1990s 2000s

Strong link to societyIndividualismPioneers

Strong link to the topicSocial infrastructureFragmentation

Strong link to the domainCognitive developmentSegmentation and emergingresearch circles

Explorative drivenPractical orientation/societyorientation

Empirical drivenPolicy orientation

Theory drivenKnowledge orientation

Pragmatic approach Multi-disciplinary approach Normal science approachImportation of exportation ! Exportation of knowledge

Table I.The development of

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organization facing turbulence and heterogeneity in the environment more organicstructures and diversification would be preferable, making smaller units possible.

However, during the 1970s visible changes began to appear and with them strongersigns that large systems are not always preferable. The twin oil crises triggered an

appraisal of the role of small and medium-sized firms. Many large companies were hitby severe economic difficulties, and unemployment became a major problem in manywestern societies. Large companies were increasingly seen as inflexible and slow toadjust to new market conditions. During the 1970s changes in the industrial structurein the USA began to emerge, primarily in the manufacturing sector, where there wasevidence that small firms were outperforming their larger counterparts. At the sametime, many sectors of the economy that were related to new technologies in informationand biotechnology showed an increased small firms share of employment (Acs et al.,1999). Thus, there were a major shift in the industrial structure in favour of smallcompanies, a phenomenon that appeared not to be specific to the USA it was a trendin most developed Western countries.

There may be several explanations for this shift in focus from large companies tosmall firms. Carlsson (1992), for example, found two explanations:

(1) a fundamental change in the world economy, related to the intensification ofglobal competition, the increase in the degree of uncertainty, and the growth ofmarket fragmentation, and

(2) changes in the characteristics of technological progress, i.e. the recession of the1970s and 1980s initiated a series of technological waves first thedevelopment of information technology followed by the biotechnological wave.

According to Audretsch and Thurik (2000), globalization and technological advanceswere the necessary preconditions for the knowledge economy becoming the driving

force behind the move from large to small businesses in the economy. In addition, therewere other trends in the economy that gave rise of a larger proportion of smallbusinesses, such as changes in consumer tastes and a privatization movement thatswept over the world, but maybe most important, the fact that it was a period ofcreative destruction in which new technologies were gaining grounds theemergence of what we later on would define as the knowledge economy (Brock andEvans, 1986, 1989).

As a consequence of this shift, new areas of interest emerged, and topics such asentrepreneurship, innovation, industrial dynamics, and job creation (Acs, 1992)increasingly came to dominate the political debate. This development receivedadditional support from politicians such as Ronald Reagan in the USA and MargaretThatcher in the UK, who pursued a policy strongly in favour of promoting small

business and entrepreneurship. For example, President Reagan referred to the decadeas the Age of the entrepreneur in his 1985 address to the nation.

Thus, during the 1960s and 1970s some major societal transformations took placeresulting in questions being raised about the efficiency of large systems, whichcoincided with a political will to create change changes that were driven byentrepreneur-ship, industrial dynamics and job creation. In this context, someresearchers could see what was happening and could challenge the assumptions of thepast, and we could identify a couple of pioneer researchers within entrepreneurship

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research researchers that could show that the future differs from the past, not least interms of the importance of entrepreneurship, innovation and industrial dynamics.

2.1.2. Pioneers in entrepreneurship research. It was in this context that David Birch(1979) presented his seminal workThe Job Generation Process. Birch was interested in

understanding how jobs were created. The main problem was to obtain adequate data existing databases were not equipped to cope with large longitudinal data. Birchused Dun & Bradstreet data in the USA, and considerable efforts were made tofacilitate the analysis of the data over time Birch and his research group had datafrom 1969 to 1976. The study focused on job creation, and some interesting findingsemerged. For example, migration of firms from one region to another played anegligible role, and job losses seemed to be about the same everywhere. Thus, it wasnot the rate of closures that varied from one region to another it was the rate of jobreplacements that was crucial for the growth or decline of a region. But what kinds offirms played a critical role in job creation? Birch found that the majority of new jobswere created by firms often independent and young firms with 20 or lessemployees. The conclusion was that it was not the large firms that created new jobs,but the small and young firms in the economy.

The report was only sold in 12 copies, but its influence was enormous, not least onpolicy-makers. The report was in line with the new political winds that had started toblow across the western world with Reagan and Thatcher as the most prominentprotagonists. The report alerted not only the Congress in the USA but politicians andpolicy-makers all over the world. However, the report also had an enormous impact onthe research community even if it has been a source of considerable controversy andcriticism (see, e.g. Storey and Johnson, 1987; Storey, 1994; Kirchhoff, 1994). It providedthe intellectual foundation for researchers throughout the world to incorporate smallerfirms into their analyses of economic development. A number of researchers interestedin small firms and job creation, for example, David Storey in the UK, and Catherine

Armington and Marjone Odle in the USA, to mention a few, followed in David Birchsfootsteps.

In addition, there were researchers who showed a more general interest in new andsmall businesses. In this context, William Brock and David Evans bookEconomics ofSmall Business (Brock and Evans, 1986), in which the authors took a holistic view ofsmall business economics as a distinct research area, deserves to be mentioned, as doesRobert Hebert and Albert Links (1982) book The Entrepreneur describing thehistory of economic thought and the role of entrepreneurship. In general, and notsurprisingly due to the fundamental technological changes and dynamics experiencedin society at that point in time, many researchers took the Schumpeterian view oninnovation as a framework for their studies.

For a long time economists were embedded in the idea of mass production and

economies of scale. However, reality looked different and there was a need for a moredynamic approach to study the development of the economy. Richard Nelson andSidney Winter (1982) provided a new framework that helped researchers to understandthe economy in a more dynamic way. A number of researchers started to examine theevolutionary process regarding: the size distribution between large and small firms; thedynamic process from the entry of new firms into industrial markets, their survivaland growth or their exit from the industry; and the importance of knowledge thatgenerates innovative activities in different industries.


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Another theme of interest was small business and regional development. A looseconfiguration of researchers emerged, who studied the regional development in Italy,for example, researchers like Giacomo Becattini and Sebastiano Brusco two Italianeconomists, who resurrected the concept of industrial districts, originally formulated

by Alfred Marshall at the turn of the 19th century. The empirical work of Becattini wasmainly based on the development of the Tuscan economy, whereas Brusco studied theindustrial district of Emilia Romagna. However, their results about the importance ofsmall firms for regional development were not internationally recognized until MichaelPiore and Charles Sabel (Piore and Sabel, 1984) published their book The SecondIndustrial Divide in 1984, in which they performed a macro-historical analysis of thetransformation from Fordist mass production to flexible specialization using theItalian industrial districts as the main example. The concept of industrial districts hasprompted many researchers to draw attention to the region as a vehicle for economicgrowth. Of course, Michael Porter has exerted the greatest influence, but alsoresearchers like AnnaLee Saxenian (Silicon Valley) and Ray Oakey, Doreen Masseyand David Storey in the UK have received a lot of attention.

Finally, David Audretsch and Zoltan Acs can be regarded as pioneers in theirstudies of the connection between smallness and innovation. Zoltan Acs (1984) bookThe Changing Structure of the US Economy: Lessons from the US Steel Industryargued that small firms should not be viewed as less efficient copies of largeenterprises, since small firms have an innovative role in the economy. Acs empiricaldata were collected from the US steel industry, and to elaborate on the findings fromthis industry, Zoltan Acs together with David Audretsch began to systematicallyinvestigate the determinants of innovative activities in different industries. DavidAudretsch and Zoltan Acs also played a crucial role in bringing together researcherswith an interest in small business economics and organizing a number of seminars atthe Wissenschaftszentrum Berlin fur Sozialforschung in Berlin, where David

Audretsch was active at that time. Later (1989) they also established Small BusinessEconomicsas an outlet for researchers interested in the economics of new and smallfirms.

The conclusion that can be made is that in the late 1970s and early 1980s wewitnessed the publication of a number of pioneering scientific studies, not least in thearea of what can be termed small business economics, and in Table II some of thesepioneers are presented. The studies highlighted some important changes in the societytowards a more knowledge-based economy, and the importance of entrepreneurshipfor societal dynamics and development.

As we have seen, a number of pioneering studies were published in the late 1970sand early 1980s, primarily within small business economics. A factor contributing tothe cognitive development of the field was the building of different databases of

information about young and small companies, making it possible for researchers toidentify new patterns that could not previously be discerned. The development ofdatabases on young and small companies must also be linked to the increase in datacapacity it was not until the 1970s that it became possible to process large amountsof data. This aspect also contributed to making the research field attractive toresearchers outside the management area. Researchers within the fields of economics,industrial organization, and economic geography became aware of the advantages ofstudying large amounts of data on small companies, which was not possible when

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studying large companies. Therefore, several of the researchers who opened up theresearch field and contributed to highlighting the importance of new and smallcompanies for societal development both to policy-makers and members of theresearch community had a background in what we can call small businesseconomics, with an academic grounding in disciplines such as economics, industrialorganization, and economic geography.

2.1.3. Social development of entrepreneurship research. At the same time as we can

identify a cognitive development founded on small business economics, a communityof academic scholars emerged within the field of entrepreneurship. This socialdevelopment of the field had its academic origins in the area of management studies.Entrepreneurship gained a foothold in the curriculum at US business schools andamong scholars within management studies. Management studies are in themselves aneclectic research field, or what Whitley (1984) calls a fragmented adhocracy as wellas a research field that lacks a strong paradigm. These facts naturally contributed toentrepreneurship gaining acceptance and legitimacy among scholars in managementstudies. We can also identify an increasing interest in entrepreneurship and smallbusiness management courses in the late 1960s and early 1970s in the USA. However,this was many years before most business schools in the USA and Europe began tooffer such courses (Cooper et al., 1997). It could be argued that the development ofentrepreneurship education was to a high degree demand driven, and Vesper (1982; seealso Cooper, 2003) identified a couple of reasons behind the increase in the number ofentrepreneur-ship courses in the USA. First, a greater interest in entrepreneur-shipcourses on the part of students during the 1960s. Leading schools like Harvard andStanford, where the students are extremely demanding customers, introducedentrepreneurship courses at an early stage, whereas other universities graduallycapitulated to student demand, leading to the introduction of a large number ofentrepreneur-ship courses in the early 1970s. It was primarily the US business schools

Themes Examples of pioneers

The entrepreneurial function in society William Baumol, Mark Casson, Israel KirznerEconomics of innovation Erik Dahmen, Bo Carlsson, Gunnar Eliasson,

Gerhard MenschJob creation and employment David Birch, David Storey, Catherine Armington,

Marjorie Odle, Graham Bannock, David Evans,James Medoff

The dynamic development of industries Richard Nelson, Sidney Winter, Boyan Jovanovic,Giovanni Dosi, William Brock, David Evans

Size distribution William Brock, David Evans, Gary Loveman, RobertLucas

Enter survival growth exit David Evans, Linda Leighton, Bruce Kirchhoff,Boyan Jovanovic, Paul Geroski

Innovation Zoltan Acs, David Audretsch, Bo Carlsson, RoyRothwell

Agglomeration in space Giacomo Becattini, Sebastiano Brusco, Michael

Piore, Charles Sabel, Michael Porter, Paul Krugman,David Storey, AnnaLee Saxenian, Ray Oakey,Doreen Massey

Table II.Pioneers smallbusiness economics


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that were sensitive and responsive to this demand. After this wave of courseintroductions, the development continued every school had at least a few facultymembers who were in favour of the subject of entrepreneurship and many schools,including some of the most respected institutions, launched entrepreneurship courses

which gave the courses a kind of legitimacy. Second, this was also a time when largeresources were directed toward US entrepreneurship education programs mainlyfrom external donors. An inflow of money from wealthy alumni and foundations (e.g.the Coleman Foundation and the Kauffman Foundation) whose wealth was oftenfounded on successful entrepreneurship therefore channelled their interest to fundentrepreneur-ship chairs, centers and awards. Finally, the increasing interest inentrepre-neurship on the part of politicians and policy-makers also led to the initiationof several government support programs across the USA and Europe aimed atstimulating entrepreneurship educations.

Thus, we can identify a whole line of scholars especially in management studies who were deeply involved in the education of students of entrepreneurship as well aspioneers who tried to encourage scholars interested in entrepreneurship to attendseminars, conferences, etc. leading to the start of a community of entrepreneurshipscholars.

2.1.4. Research on entrepreneurship a discovery-oriented research approach.A lotof scholars from different disciplines rushed into this promising field of research. Dueto the newness of the field and lack of identity of its own in terms of concepts, modelsand methods, it was easy for researchers from different disciplines to carry outentrepreneurship research without experiencing obvious deficits in competence itwas a low entry field.

What characterized the field of entrepreneurship research during the 1980s? Oneconclusion that can be made is that entrepreneurship research was deeply rooted in thechanges that occurred in the society during the 1970s and 1980s, but also in the

theoretical roots of earlier entrepreneurship research based on behavioural sciences.Hence, the focus was on the individual, and a lot of attention was paid to thecharacteristics of the entrepreneur. One category of entrepreneurs that attracted a lot ofattention consisted of those who established and managed the technology-based firmsthat emerged out of new technologies such as information and biotechnology.However, researchers soon discovered that the venture process was something morethan an individual phenomenon it was a social one and consequently, the researchon social networks in entrepreneurship became a prominent theme of research.

New technologies created new ventures, and there were a great interest amongresearchers to study the commercialization of new technologies. Already in 1965, HarrySchrage wrote the first work on technology-based entrepreneurship in HarvardBusiness Review (Schrage, 1965), but as new industries emerged, such as computer

technology, semi-conducters, and micro-processors, the interest among researchersgrow significantly. New firms in these industries were often spin-offs from universitiesor research institutes, which developed along Route 128 and in Silicon Valley aphenomenon observed by, for example, Edward Roberts at MIT and Arnold Cooper atPurdue University.

Finally, entrepreneurship researchers had for a long time close links to research onstrategic management several of the pioneers of entrepreneurship research was alsoregarded as pioneers in the field of strategic management which led to an early

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intersection between the two fields, and we can find an early interest amongresearchers in performance, expressed as an interest in finding predictors of successfor new ventures trying to create better performance in the ventures by identifyingsuccess factors of survival and/or growth.

The pioneers in this section have a focus on micro-level analysis with a backgroundin management studies. In Table III some of these pioneers within the field arepresented.

To conclude, the characteristics of entrepreneurship as a research field at that pointin time could be described in the following ways:

. Individualism, i.e. the research community was small and fragmented.Entrepreneurship research was, to a great extent, dependent on individualinitiatives and projects.

. Importation of knowledge, i.e. entrepreneurship research had not developed anidentity of its own. Instead, it was strongly influenced by the mainstreamdisciplines terms, concepts, models and methods.

. Discovery oriented research, i.e. a focus on providing descriptions and insightsabout a phenomenon that was previously unfamiliar. The level of methodological sophistication and theoretical analysis in most of the studieswas quite low.

In the late 1980s, a number of reviews were conducted in order to summarize theachievements made in entrepreneurship research during the decade (see, e.g. Carsrudet al., 1986; Churchill and Lewis, 1986; Wortman, 1987; Low and MacMillan, 1988;Bygrave, 1989: VanderWerf and Brush, 1989; Bygrave and Hofer, 1991; Aldrich, 1992;Amitet al., 1993; Bull and Willard, 1993; Johannisson, 1994). Based on these reviews, itcan be argued that the field was young and the phenomenon complex the research

could to a high degree be regarded as discovery-oriented it focused on providingdescriptions and insights about a phenomenon that was previously unfamiliar(Churchill and Lewis, 1986). Churchill (1992) made an analogy to the story of the blindmen and the elephant, where six men touch different parts of the elephant and give

Themes Examples of pioneers

Individual and social networksGeneral Patrick Liles, Albert Shapero, John Stanworth, Jim

Curran, Robert Brockhaus, Elisabeth ChellTechnical entrepreneurs Arnold Cooper, Edward Roberts, Herbert Wainer,

Isaiah Litvak, Christopher Maule

Social networks Howard Aldrich, Sue Birley, Bengt JohannissonProcess and behaviourVenture process William Gartner, Neil Churchill, Howard Stevenson,

Carl Vesper, Joseph Mancuso, Jeffry TimmonsTechnology-based firms Harry Schrage, Arnold Cooper, Edward Roberts,

James Utterback, Robert Kazanjian, Norman FastPerformanceSurvival and growth Jeffry Timmons, Albert Bruno, Marc Dollinger,

Charles Hofer, William Sandberg, Arnold Cooper

Table III.Pioneers management

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quite different descriptions of its characteristics it was a relatively unstructuredexploration of the elephant, the researchers discovered that this animal was different,that it was composed of a number of rather unusual parts, and that it was quite large.

Entrepreneurship researchers had a pragmatic view on methodology. In their

review of the research, Carsrud et al.(1986) and Wortman (1987) emphasized that thelevel of methodological and statistical sophistication in most of the studies was quitelow. The discovery-oriented character of the field made rigorous researchmethodologies for rigors sake inappropriate (Churchill and Lewis, 1986).

2.2. Phase 2 exponential growth of entrepreneurship research2.2.1. The new competitive landscape.An interest in entrepreneurship within society atlarge remained high in the 1990s. This interest seems to be related to the turbulence ofthe new competitive landscape, resulting from rapid technological advances and theglobalization of world trade. It is the quick changes, the complexity and uncertainty insociety that constitute a hotbed for entrepreneurship, i.e. it is the dynamics in theknowledge economy that facilitate the emergence and utilization of new businessopportunities. These circumstances have meant that societal interest inentrepreneurship has remained high and the subject has featured prominently onthe political agenda in many countries. At the same time, the changes taking place inthe economy have constantly given rise to new research questions old questionsquickly disappear while new ones attract attention. As a consequence the field ofentrepreneurship research developed in many different directions, and it was difficultto achieve a convergent theory development within the field.

2.2.2. The development of a social infrastructure. Since the beginning of the 1990swe can find an enormous growth of entrepreneurship research. This expansion can bemeasured in various ways with respect to the number of researchers, the number ofpublished articles, number of conferences and journals focusing on or opening up to

entrepreneurship contributions and the expansion is obvious, irrespective of themeasurements employed. After a decade of growth, by the late 1990s, there wasevidence of a growing internal culture and knowledge base as well as an increasedsocial structure within the field, expressed in terms of:

. organized forums for communication between researchers (e.g. conferences andscientific journals);

. role models and ideals (e.g. chairs and awards for important scientificcontributions); and

. education programs in entrepreneurship (Landstromet al., 1997).

To give some examples of this improved social structure in entrepreneurship research:

.

At the start of the new millennium there were more than 2,200 courses inentrepreneurship and small business, 277 endowed positions in the USA, and 44English-language refereed academic journals (Katz, 2003).

. The number of trade- and textbooks in entrepreneurship and small business hasincreased dramatically, and in 1998 numbering 3,555 titles in small business and1,132 in entrepreneurship (Katz, 2003).

. We can find an increased number of PhD entrepreneurship programs at variousuniversities but also jointly organized doctoral programs.

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From this development it is also possible to discern an emerging liberation frommainstream disciplines, where the researchers increasingly start to view themselves asentrepreneurship researchers. However, entrepreneurship is a complex phenomenonthat can be studied from many different angles. It is therefore hard to include all

research issues and questions under the umbrella of entrepreneurship. In this respect,we can see a strong fragmentation of the field with several more or less loosely relatedsubgroups researching entrepreneurship (Reader and Watkins, 2001). Thus, during the1990s research on entrepreneurship could be regarded as rather fragmented, withmany parallel conversations in the research field but little convergence andknowledge accumulation, i.e. entrepreneurship as a research field expanded in topicsbut not in depth (or knowledge accumulation).

In addition, many of the researchers in entrepreneurship during this point in timecould be regarded as transient, i.e. researchers who belong to some form ofmainstream research community and who only temporary enter the field ofentrepreneurship research, whereas the number of researchers who work withentrepreneurship research on a continual basis was rather small (Landstro m, 2001).Thus, entrepreneurship research was a fragmented as well as a changeable field ofresearch.

2.2.3. Research on entrepreneurship an empirical-oriented research approach.What changes can we observe in terms of the issues that have constituted the core ofthe research during the 1990s?

On the one hand, and important for the argumentation in this article is that theincreasing number of topics in entrepreneurship research was still rooted in society the new research questions that were generated was often based on new phenomenadeveloped in society. Not least in Europe, entrepreneurship research was ratherpolicy-oriented and entrepreneurship research was in many cases financed bypolicy-linked organizations. As a consequence, the research was often based on

regional or national problem solving, which contributed further to the lack of a generalknowledge accumulation within the field (Landstromet al., 1997).

On the other hand, we can identify a development of issues in entrepreneurshipresearch generated from within the research field, not as a consequence of changes insociety but as a consequence of changes in the research field. One of the morefundamental changes that took place which can more or less be regarded as asystematic shift is that the research interest in the entrepreneur as an individual, i.e.entrepreneurial traits declined in favour of a focus on contextual and processualaspects. The research on psychological characteristics of the entrepreneur seemed toreach a dead-end both on conceptual and methodological grounds. In this shift ininterest, the pioneering works of William Gartner deserve to be mentioned. As early as1988, Gartner claimed Who is the entrepreneur? is the wrong question, arguing that

more relevant questions were: How are new organizations created? (Gartner, 1988). Ina number of articles, Gartner (1990, 1993) has stressed that entrepreneurship is aboutthe creation of new organizations (see similar reasoning in Bygrave and Hofer(1991)). Even if this development toward a process-oriented approach has taken time,Gartners ideas are now firmly anchored within entrepreneurship research.

We can also find other quality changes in entrepreneurship research. For example,Davidssonet al.(2001) argued that the focus of research seems to have shifted towardtopics that open up new possibilities such as behavioral and cognitive aspects of the


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entrepreneur, an increased emphasis on context and the entrepreneurial process(especially concerning the emergence of new entrepreneurial activities), and anintroduction of theoretical perspectives into the research (e.g. the evolutionaryapproach and the resource-based view to mention a few). Davidsson and Wiklund

(2001) modified this line of reasoning somewhat and provided a whole range ofexamples of progress in entrepreneurship research, such as:

. The psychological traits approach has changed to an application of more modernpsychological theory in entrepreneurship research (see, e.g. Sarasvathy, 1999).

. A broader acceptance of entrepreneurship, which is not only restricted toindependent small firms, indicating an increased interest in corporateentrepreneurship and in entrepreneurial strategies.

. Considerable progress has also been made regarding the influence of regionalenvironments on entrepreneurship and small firms (see, e.g. special issue ofRegional Studies, 1994).

.

An increased interest in cross-national studies. This research is still in itsinfancy, but initial attempts to compare institutional and cultural differenceshave been made in the Entrepreneurship Research Consortium (ERC) and GlobalEntrepreneurship Monitoring (GEM).

In a similar way Aldrich and Martinez (2001) argue that we have seen importantadvances in the area of theory a shift in emphasis from the personal characteristicsand intentions of entrepreneurs themselves to a stronger concentration on their actionsand the outcomes. Empirically, the 1990s have led to an increase in our knowledge, notleast regarding how entrepreneurs use knowledge, networks, and resources to launchnew ventures, but also a more sophisticated taxonomy of environmental forces atdifferent levels of analysis (population, community, and society).

In methodological sense, we can establish that, in the 1990s, entrepreneurshipexhibited a progressively higher quality of empirical research. Thus, there seems to beincreased sophistication in the statistical methods employed in entrepreneur-shipresearch, which may be a sign of the internal progress of the field (Chandler and Lyon,2001). However, Gregoireet al.(2002) start to question this progress. In their analysis of104 empirical articles published in six mainstream management journals between 1985and 2001, they found, on the one hand, that the field is converging in the use of someidentifiable methodological practices an increased reliance on archival data andregression-based analysis techniques, in addition to the integration of econometrictechniques but, on the other and, it can be questioned whether this crystallizationis a sign of progress archival data may prevent the observation of many relevantdimensions of entrepreneur-ship and in the development of society.

The conclusions that can be made is that in the 1990s we could see an exponentialgrowth of entrepreneurship research and an increased social structure within the field.The research on entrepreneurship was highly fragmented, a lot of new questionsemerged before earlier issues in research were solved. In many cases these new issueswas rooted in the society and in the development of the knowledge economy asentrepreneurship was highly valued on the political agenda, we can also find a lot ofnew policy-oriented issues in entrepreneurship research. At the same time, we canidentify a stronger and stronger internal intra-scientific development where issues in

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entrepreneurship research were generated from within the research field in itself, not asa consequence of changes in society. Entrepreneurship research had a highly empiricalfocus, and an increased sophistication in statistical methods employed in research. Inmy interpretation, the field of entrepreneurship research started to travel away from

reality and the important questions in society, and the strong societal orientation thathas characterized entrepreneurship research since its beginning.

2.3. Phase 3 a domain oriented approach to research2.3.1. Defining entrepreneurship.For a long time there has been ongoing uncertaintyand debate on what entrepreneurship research is about. Therefore, entrepreneurshipresearchers have different views on the phenomenon we call entrepreneur-ship andform different pictures of it (Brazeal and Herbert, 1999). This uncertainty is alsoreflected in the article by Scott Shane and Sankaran Venkataraman (2000), in whichthey argue that entrepreneur-ship research has become a broad label under which ahodgepodge of research is housed (Shane and Venkataraman, 2000, p. 217). In

addition, entrepreneur-ship seems to be extremely difficult to study. It is a complexphenomenon, which includes many different approaches, levels of analysis, etc., and itis a dynamic phenomenon entrepreneurship is constantly changing. Thisuncertainty in the domain of entrepreneurship research and the complex anddynamic nature of the phenomenon has contributed to a high degree of fragmentationin the field.

However, the article by Shane and Venkataraman (2000) triggered an intense debateregarding the definition of entrepreneurship and the domain of entrepreneurshipresearch. In the area of management studies a process-oriented definition ofentrepreneurship gained a strong foothold, but there has been a lack of consensusregarding what should form the focus of the studies on the entrepreneurial process.Two different streams of interest can be discerned:

(1) the emergence of new organizations, i.e. entrepreneurship starts when theentrepreneur makes the decision to start a company, and ends when theentrepreneur has obtained external resources and created a market niche; and

(2) the emergence of opportunities.

Inspired by Austrian economics, Shane and Venkataraman argue thatentrepreneurship as a scholarly field seeks to understand how opportunities tobring into existence future goods and services are discovered, created, and exploited,by whom, and with what consequences. Thus, Shane and Venkataramans frameworkis much broader than the emergence of new organizations.

2.3.2. Domain focus of entrepreneurship research. At present, the field seems to be

caught between the efforts to overcome the drawbacks of newness and the need toachieve maturity a phase of development that is characterized by what I will call adomain approach to knowledge the creation of a domain of research of its own.

If the field is moving toward maturity, knowledge accumulation should reflect:

. an increasing internal orientation with researchers citing the work of otherentrepreneurship researchers;

. a stabilisation of topics within the field, i.e. some topics will crystallise as keyquestions;


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. an increased level of specialisation among groups of researchers focused morenarrowly on particular theoretical research issues; and

. an identifiable research community led by core researchers that have been highlyinfluential in the fields development.

In Corneliuset al.(2006) these assumptions about the development of entrepreneurshipresearch were tested, and it could be concluded that entrepreneurship research hasbeen increasingly self-reflective. The interest in entrepreneurship research in itself hasgrown as disciplinary specialists examine the state of entrepreneurship research;assess where we have been and where we are going. The number and influence ofoutsiders, of researchers not citing but being cited by entrepreneurship researchers hasdecreased steadily over time.

In addition, the study by Corneliuset al.shows that there seems to be an increasingstabilisation of topics within the field (even if this tendency is less pronounced), andalso related to this, an increased specialisation of entrepreneurship research (a

specialisation that indicates a knowledge accumulation opposite to a fragmentationof research). Entrepreneurship researchers have increasingly specialised thematicallywhich suggests that more autonomous research groupings or research circles willdevelop. These research circles will involve networks where tacit knowledge can bedeveloped and exchanged, in which consensus can be reached regarding the problemsof interest, definitions, methodological approaches etc.

Finally, the research community on entrepreneurship research has grownsignificantly during the last two decades, at the same time we can identify a largenumber of core and contributing authors who have led the research into a more maturefield of research. Assuming that entrepreneurship research will follow the evolutionarypattern of many other research fields, entrepreneurship research today show a strongdomain approach to knowledge characterised by a stronger internal orientation,stabilisation and specialisation of research topics, and a research community led bycore researchers that set the research agenda in entrepreneurship research anincreased hierarchication of the research.

The conclusion that can be made is that entrepreneurship research more and morehas attained a normal science approach (Aldrich and Baker, 1997) with a growingbody of research that builds on specific empirical and theoretical work, and thatdevelops as a separate and distinct field with its own literature and its own journals.My argument is that in this way the methodological openness that for a long time hascharacterized entrepreneurship research, and its sensitivity towards changes in societyand its linkages toward reality has been put at risk there is a risk thatentrepreneurship researchers not anymore focus their attention on important questions

that have an impact on the dynamics of the knowledge economy and on wealthcreation in society.

2.3.3. Disciplinary research vs a separate domain of entrepreneurship research.During the last couple of decades we can discern the development of entrepreneur-shipresearch within existing disciplines toward the establishment of a distinct domain ofresearch. What rationale can we find for this development? It could, for example, beargued that entrepreneurship research is best pursued within established disciplineslike economics, psychology and sociology. The reasoning behind this argument is that:

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. there are few contingencies of interest to entrepreneurship scholars that are notcontained in existing disciplines and therefore there is no need to reinvent thewheel; and

. within existing disciplines entrepreneurship research is required to meet thequality criteria of the respective discipline, which is a way for the research toattain academic legitimacy (Davidsson, 2003).

As a consequence it would be possible for entrepreneurship researchers to use existingtheories from psychology, sociology, etc. and test their explanatory value in theentrepreneurial context (Landstrom, 2001).

On the other hand, entrepreneurship may be regarded as a complex phenomenon.Existing theories may not always be optimal for addressing these characteristics,which indicates a need to pose new questions and build concepts and models to explainthe phenomenon (Landstrom, 2001; Davidsson, 2003). Leaving entrepreneurshipresearch to other disciplines also means the lack of a research community acommunity with deep knowledge of and familiarity with entrepreneurship asphenomena that transient visitors to the field do not possess (Low, 2001). Finally, andmost importantly, if entrepreneurship is left to other disciplines, there is no guaranteethat research will focus on the most central questions in entrepreneurship as a researchfield (Acs and Audretsch, 2003). These arguments are summarized in Table IV.

Based on this development towards a domain oriented approach inentrepreneurship research, Davidsson (2003) argues that in the future we need tocombine topical and disciplinary knowledge. This can be achieved by:

. entrepreneurship researchers who learn more about theory and method from thedisciplines;

. disciplinary researchers who read a great deal of entrepreneurship research; and

. collaboration between disciplinary and entrepreneurship researchers and,according to Davidsson, all three directions are like to be explored in the presenceof a distinct domain of research.

3. What could be done in the future to include entrepreneurshipresearchers into the conversation on the knowledge economy?In this paper I have argued that entrepreneurship as a field of research has disappearedin our understanding and policy discussion regarding the changes toward a knowledge

Disciplinary research ! Domain of entrepreneurship research

Integrated within main stream disciplines Liberation from main stream disciplinesNo need to reinvent the wheel Complex phenomena (existing theories not

always optimal)Entrepreneurship research is required tomeet the quality criteria of the discipline(academic legitimacy)

Research community in entrepreneurship(tacit knowledge)

Focus on the most central questions ofentrepreneurship

Table IV.Entrepreneurship as

disciplinary researchversus domain research


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economy and the transformation of knowledge into growth in society. In this respect,one important explanation can be found in an intra-scientific explanation in thatentrepreneurship research has become more and more theory-driven and show signs ofa normal-science approach with weaker links to and less sensitivity for changes in

society and a less attention towards questions of importance for society. What could bedone in order to create a dynamic and innovative research field with strong links to thechanges that occurs in society, and that constitute a strong voice in the debate aboutthe knowledge economy and the growth of society?

Based on the reasoning in this article, I will argue that a dynamic and innovativeresearch field is characterized by a balance between the pursuit of new issues andknowledge in research, for example, by being sensitive for changes in society, byintroducing new phenomena, concepts and theoretical frameworks to the field, and thedevelopment of existing knowledge, by integrating and validating the knowledge basealready existing within the field.

As indicated, for a long time entrepreneurship research has been very sensitive andopen for changes in society, the dynamics of the knowledge economy, and for new

ideas introduced into the field, and this can be regarded as beneficial for thedevelopment of the field. Based on Welsch and Liao (2003), one can argue that in thisway the field has been enriched by innovative perspectives, new issues in research andmethodological approaches most of them imported from other fields fields thatharbour different philosophies, foci, concepts and theories, and methodologicalapproaches. But entrepreneurship researchers have also been highly innovative infinding ways to understand the complexity of the knowledge economy a complexitythat presupposes a variety of perspectives and methodological approaches. However,this sensitivity, openness and innovativeness have been made at the price of a lack ofconceptual standardization and replication as well as fragmentation of the research.

During the last couple of years, entrepreneurship research has become more inward

looking, research issues have stabilised focusing on some core questions of interestwithin entrepreneurship research, and focused more narrowly on particular theoreticalresearch issues. As a consequence the field has become less sensitive for changes insociety and the development of the knowledge economy a development of the fieldthat counteract its original focus on important questions, and its openness towardsstimulus from and interaction with changes in society.

In order to create this balance between openness and innovativeness, andconceptual robustness and theoretical development, entrepreneurship research needsengaged scholarships (Van de Ven and Johnson, 2006) in which research enrichespractice and vice versa theory that is not informed by practice and sensitive forchanges in society is neither useful nor interesting; similarly, practice without theory isuninformative. Entrepreneurship research should be developed in close connection

with society and the development of the knowledge economy. Only in this wayentrepreneurship research can be a strong voice regarding these emerging andimportant phenomena in society.

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Corresponding authorHans Landstrom can be contacted at: [email protected]

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