RESEARCHMETHODS IN ENTREPRENEURSHIP

ByMahdi kazemi

Presented to the Faculty of EntrepreneurshipUniversity of Tehran

Under the Supervision of Professor A.Arabiun, PhD,arabiun@ut.ac.ir

March 2010Tehran, Iran

This slides is an abstract for chapter one (Pages 35-40) from:Handbook of Qualitative Research Methods in EntrepreneurshipEdited byHelle Neergaard(Associate Professor of Entrepreneurship and Small Business Management, the Aarhus School of Business, Denmark)

John Parm Ulhøi(Professor in Organization and Management Theory, theAarhus School of Business, Denmark)Published ByEdward Elgar Publishing Limited

Chapter One :

The entrepreneurship paradigm (I)

Newtonian philosophy of nature

Physics (or natural philosophy as it used to be called) has always played a central role in shaping the way we think about the world. Newton was thefirst modern scientist. His influence on philosophy was immense. As Dewey(1949) wrote, ‘Modern thought, largely under the influence of a Newtonianphilosophy of nature, tended to treat all existence as determinate.

Science’s basic biasesAccording to Stephen Jay Gould (1984), scientists have four majorbiases.

BIAS EXPLANATION• PROGRESS • WORLD AND SOCIETY ARE

HEADINGSOMEWHERE The science revolutionthat began with

Newton has been responsible for mankind’s rapidprogress ever since

BIAS EXPLANATION• DETERMINISM • IDEAS HAVE CAUSES • WORLD AND SOCIETY ARE

ORDERED • OUTCOMES ARE PRODUCED BY

DEFINITE CAUSES • RANDOMNESS IS SCARY.

ITDOES NOT PRODUCE PATTERNS; IT PRODUCES CONFUSION

determinism is one of our basic biases. It says that a specific set of conditionswill produce a specific outcome. If those conditions are present thenthe outcome is predictable. Models have dominated science since Newton.They are the Laplacian fantasy of a deterministic world (Gleick, 1987).

BIAS EXPLANATION • INCREMENTALISM • PROGRESS IS SLOW,

STEADY, SMALL STEPSinfinitesimal calculus, which Newton inventedfor analyzing deterministic systems, made incremental reasoning a centraltool of science.

BIAS EXPLANATION • ADAPTIONISM • WHAT ADAPTS SURVIVES

• IT ALL FITS TOGETHERadaptionism, stems from Darwin’stheory of natural selection. What adapts to its environment survives.Unfortunately, adaptionism leads us to believe that everything fits together,it is here for a reason, it all works.

Our biases influence how we view the world. The predominant philosophy in theoretical and empirical research holds that there is inherent, incremental progress in which things happen for a reason, leading to a system in which everything fits (Figure 1A.8). As Gould stated it, ‘The world is logical, the world is rational, the world is well-ordered, it’s there for a reason.’ This view of the world helps us to deal with the major question of natural philosophy: what is the physical nature of the universe?

Predominant philosophy in theoretical and empirical research

INHERENT PROGRESS

THINGS HAPPEN FOR A REASON

LEADS TO A SYSTEM WHERE EVERYTHING FITS

WORLD IS LOGICAL, RATIONAL, DETERMINISTIC,WELL ORDERED

physics envy

when we apply it to the social sciences(Figure Above), especially the business sciences, we are frequently guilty of physics envy Management science suffers from some severe cases of physics envy. That will now be illustrated with the example of business strategy.

Physics envy in business strategy research

one of the most cherished theories in business science, Chandler’s (1962) strategy–structuremodel and its enhancements, is an example of physics envy. In Chandler’smodel, a firm scans the environment, determines what strategies it needs tosucceed in that environment, puts in place its structure to implement thosestrategies, and it is on the route to prosperity.

Chandler’s strategy–structuremodel’s guilts

Well, Chandler’s rational, deterministic model may have worked once upon a time for DuPont, Standard Oil of New Jersey, General Motors, and Sears (Chandler’s sample) when they were growing in the relatively benign environment of thefirst decades of this century, but it bears little resemblance to how businesses start and survive in the hostile environment of the 1980s.

By looking at the education of many of the leading management scholarswho have made major contributions to the strategy paradigm, shown that they are educated as an engineer, or are very empathetic to engineering. For example:

Examples for engineers in Business strategy•One of the strategy pioneers, Ansoff, was once an engineer. •Hofer wastrained in mathematics and Schendel in engineering.•Hatten, who drove the first vector through strategic groups, was trained as an engineer•Porter, who has done more to influence the competitive strategy field thanany other over the last decade, has an undergraduate degree in engineering(Porter, 1980).• Cooper (1979),• McMillan (1978),• and Vesper (1980) have engineering degrees• and there are many more.

Engineering education effects

Engineers, natural scientists, and mathematicians are steeped in the four basic biases at a very impressionable age. Their education givesthem schemata that are rooted in Newtonian mechanics. No wonder their methods and theories have produced a strategy paradigm that is very mechanistic with scant recognition of the whims and vagaries of the humanactor. For example, the strategists’ bible, Competitive Strategy (Porter, 1980), contains only a few pages on how the executive should implement Porter’s normative prescriptions for a successful strategy.

Physics envy for entrepreneurship

There is a warning in all this for entrepreneurship. Physics envy assumes that business progress can be described by smoothly changing, linear, deterministic models than can be analyzed with regression equations. That philosophy is unable to handle entrepreneurship’s disjointed events that disrupt stability. It either relegates the acts of the entrepreneur to a dummy variable or, worse yet, leaves them lurking in the ubiquitous error term (Rumelt and Wensley, 1981; Wensley, 1982).

classic’ dissertation

The ‘classic’ dissertation An outcome of our four basic biases is a belief that there is a right and wrong way of conducting research. It leads toanother bias, the ‘classic’ dissertation. Many of the dissertations in the business sciences follow an archetype

The ‘classic’ dissertation: a product of our basic biases

DEFINITION OF TOPICLITERATURE SURVEY

LIMITED FIELD RESEARCHTHEORY DEVELOPMENT

PROPOSITION(S)HYPOTHESES

QUESTIONNAIREDATABASE

STATISTICAL TESTSCONCLUSIONS

This figure assumes that ‘good’ research follows a fixed sequence. First we select a theory; from that we deduce models from which testable hypotheses can be developed. Then we develop instruments to test those hypotheses on a database with statistical tools – preferably regression analysis that is shown in next slide.The ‘classic’ dissertation is seldom the most suitable format for an emerging paradigm such as entrepreneurship because it is too rigid.

Classic dissertation is a problem in an infant paradigm

IT IS DRIVEN BYTHEORYMODELS

HYPOTHESESINSTRUMENTS

STATISTICAL TOOLSTIME CONSTRAINTS

emerging paradigms

The history of science teaches us that in emerging paradigms, successful science rarely follows the sequence of the ‘classic’ dissertation. Thus at the beginnings of a paradigm, inspired inductive logic (or more likely enlightened speculations) applied to exploratory, empirical research may be more useful than deductive reasoning from theory. Natural sciencehas recognized this for three centuries (e.g., Polanyi, 1964). For some unfortunate pioneers guesswork can be a risky path, as Jones et al. (1989) and Fleischmann, Pons and Hawkins (1989) found when their putative discovery of cold fusion turned out to be a mirage (Maddox, 1989).

Examples for emerging paradigmsDarwin did not have a theory until he ‘happened to read for amusement Malthus on Population’ seven years after he embarked on his field work, and fifteen months after he began his systematic enquiry into the variation of animalsand plants (Darwin, 1959). The origins of nuclear physics began with Becquerel’s accidental discovery of radioactivity. His discovery was pursued in a spirit of pure empiricism by scientists working with little or no theory to guide them. Madame Curie laboriously separated grams of radioactive radium from tons of pitchblende (an endeavour that eventually caused her death). Rutherford, Soddy, and others carefully investigated the elements that came from radioactivity. It took two decades of experiments before Rutherford produced the ‘modern’ theory of the nucleus. Similarly, in biophysics, Crick and Watson did not unravel the mystery of the DNA molecule until others, such as Franklin, had made many painstaking experiments with x-ray crystallography. A few years ago, Bednorz and Muller (1986) discovered high-temperature superconductors by experimenting with a variety of materials. They were guided much more by intuition than by theory.

Hypotheses non fingo

s the inductive method that Newton (1687)prescribed when he wrote ,‘ Hypotheses non fingo .’ The meaning of this famous statement has been debated ever since. I think Duhem’s (1953) explanation is as good as any:in the General Scholium which crowns his [Principia],[Newton] rejected so vigorously as outside Natural Philosophy any hypothesis that induction did notextract from experiment ; when he asserted that in a sound physics every proposition should be drawn from phenomena and then generalized by induction.

emphasis in an emerging paradigmthe emphasis in an emerging paradigm should be on empiricalobservations with exploratory or, preferably, grounded research , rather than on testing hypotheses deduced from flimsy theories. As has been noted, the ‘classic’ dissertation emphasizes theory building and the deduction of hypotheses that are tested with an empirical study. And that is a problem. It is too rigid. Bernard (1865) recognized that when he wrote:Men who have excessive faith in their theories or their ideas are not only poorly disposed to make discoveries but they also make poor observations. They necessarily observe with preconceived ideas and, when they have begun to experiment, they want to see in its results only confirmation oftheir theory. Thus they distort observation and often neglect very important facts because they do not race totheir goal.

‘classic’ dissertation ’s problems

The ‘classic’ dissertation stifles imagination.As Bloom (1987) put it in The Closing of the American Mind, ‘Cleverness in proposing hypotheses and finding proofs, inventing experiments is not creativity.’

THE END