The field of entrepreneurship research: what is the promise where is the future?

In an article published earlier this year in the Academy of Management Review Scott Shane, Professor of Entrepreneurship Studies at Case Western Reserve University reviewed the achievements of the previous decade in the field of entrepreneurship (Shane 2012). It had been a ten years since he and Professor Sankaran Venkataraman had published an article in the same journal outlining “the promise of entrepreneurship as a field of research” (Shane and Venkataraman 2000).

So what had been accomplished by the many thousands of academics employed within universities around the world as specialists in entrepreneurship? This is an important question given that the field of entrepreneurship has exploded since the early 1990s.

According to Shane’s analysis the field of academic research into entrepreneurship still has much to do before it can truly identify itself as a distinct domain. There remain problems in relation to definition and even a lack of agreement over the units of analysis that should be studied. Much attention has been given to the individual and the psychology of the entrepreneur. Yet it is now considered by most that the process of entrepreneurship is of greater importance than the person in seeking to understand what is a complex and multifaceted phenomenon.

However, in examining the entrepreneurial process the primary focus within academic research has been on new venture creation. There remains little reliable information on the process of entrepreneurship within established organisations. Further, Shane cautioned that there is no “optimal” approach to the entrepreneurial process. Academic textbooks that seek to offer best-practice approaches to the foundation and management of entrepreneurial ventures should be viewed with scepticism. Put simply there is insufficient empirical evidence to support this.

What seems to be a key role played by entrepreneurs is their ability to reconfigure or recombine existing resources to exploit opportunities. They therefore do much more than simply arbitrage the acquisition of resources at one price and their sale at another. This observation seems to Shane to be a key revelation after a decade of research, yet he suggests that it remains a new area for future research.

The rise and rise of entrepreneurship as a field of academic study

In reading this article I became somewhat despondent about the current state of art for academic research into entrepreneurship. Without doubt the field has grown substantially in the past twenty years. In an article published in the Journal of Small Business Management in 2008, Professor Jerome A. Katz from the University of St Louis noted that the field of entrepreneurship and small business management was fully mature, but still only partially legitimate (Katz 2008).

Katz noted that the first university course in entrepreneurship within the United States was taught as far back as 1947. Since that time the number of university business schools offering courses in entrepreneurship and small business management across the United States has grown substantially. However, as shown in Figure 1, the growth rate of such programs remained fairly static until the 1980s when it started to rise. It took 30 years for the number of entrepreneurship programs to rise to 93. Less than a decade later the number had jumped to 586. This number had more than doubled within 6 years and by the end of the century had continued to rise although the growth rate had slowed.

Much of the early growth in entrepreneurship and small business programs took place outside business faculties. According to Katz the main focal point were Agricultural Colleges where small business management training was supplied to farmers as a form of industry outreach. The shift of interest to the business schools emerged in the 1980s. The high rates of unemployment that plagued the US and other economies during the 1970s and early 1980s were a cause of concern for governments. A study by David Birch (1987) into job creation and destruction suggested that most new jobs in the United States were due to small business start-ups rather than large companies. This triggered a rethinking of how to address the problem of unemployment and gave new impetus to the field of entrepreneurship and small business management.

This combination of government policy interest and an emerging growth in business schools as major centres within universities helped to expand the entrepreneurship and small business management area as a field of study. The growth of such programs seen in the United States was paralleled around the world including Australia. By the end of the 1990s 74% of Australian universities were offering entrepreneurship and small business courses (Breen and Bergin 1999).

Entrepreneurship as a field of scholarly inquiry

The challenge for any new field of academic discipline is to gain legitimacy. For a field of study to be deemed worthy to be a separate academic discipline it must be taught and researched at a college or university level, and its research output published in peer reviewed journals. Scholarly academies are also usually formed around the discipline. For the field of entrepreneurship all these elements have emerged over the past thirty years.

The Entrepreneurship (ENT) Division within the Academy of Management is an example of the current state of play for the discipline of entrepreneurship at an academic level. In 2012 the ENT Division boasted over 2,700 members worldwide of which 80% were engaged in entrepreneurship as their primary field of scholarly activity, and 25% were students. The mission of the ENT Division is to: “grow entrepreneurship scholars”. Its specific domain statement reads:

Specific domain: (a) the actors, actions, resources, environmental influences and outcomes associated with the emergence of entrepreneurial opportunities and/or new economic activities in multiple organizational contexts, and (b) the characteristics, actions, and challenges of owner-managers and their businesses.

Another major focal point for research into entrepreneurship and small business management is the International Council for Small Business (ICSB). Founded in 1955, the ICSB seeks to draw together educators, researchers, policy makers and practitioners into a community of practice to share knowledge for mutual benefit. Each year the ENT Division of the Academy of Management and the ICSB hold academic conferences around the world. These are attended primarily by academics that present papers and use the opportunity for networking. In addition there are numerous other academic conferences on entrepreneurship and small business held around the world.

However, while the level of academic interest in this area has increased, of key importance for those within the broader management and policy support field is what benefit can be provided by this academic research effort?

In the past decade several authors have sought to review the state of academic research into entrepreneurship. A paper by Lowell Busenitz, Dean Shepherd, Teresa Nelson, Gaylen Chandler and Andrew Zacharakis, published in the Journal of Management in 2003 reviewed papers published in academic journals over the period 1985-1999 (Busenitz et al 2003). A principal finding from this study was that entrepreneurship was an emerging field of inquiry across universities, but that few papers were being published in major management journals.

This relatively poor showing by entrepreneurship researchers was attributed to the need for a more solid foundation of theory to “claim a respected and well-developed voice in management’s conversation”. Obstacles to achieving this were the lack of agreement over what should be investigated, how to define entrepreneurship as a discipline, and how to approach what is essentially a “multi-level phenomenon”. They recommended academics focus on “the nexus of entrepreneurial opportunities, enterprising individuals or teams, and mode of organizing within the overall context of dynamic environments” (Busenitz et al 2003, p.28).

This need to develop the field of entrepreneurship as a legitimate scholarly discipline has been echoed by others throughout the past decade. For example, in an editorial column within the Academy of Management Journal in 2005, Duane Ireland, Christopher Reutzel and Justin Webb reviewed the coverage of entrepreneurship within the journal since its establishment in the early 1960s. Their analysis revealed that the number of entrepreneurship related papers had increased dramatically throughout the 1990s (see Figure 2). They concluded that entrepreneurship research was “alive and well” (Ireland, Reutzel and Webb 2005).

Ensuring that there is rigor in the “science” of entrepreneurship

However, in a subsequent article published in the journal Research Methodology in Strategy and Management during the same year, Ireland, Webb and Joseph Coombs (2005) cautioned that the entrepreneurship field lacked sound theory and method. They argued that theory and methodology were intertwined and called for entrepreneurship to become more “theory-centric”. Their aim was to see the entrepreneurship field develop a more consistent line of theory to focus and guide future research. However, they also cautioned that “theory-driven research alone is susceptible to criticism” (p. 136). They called for the discipline to make use of appropriate methodologies to ensure that theory was valid.

Yet an analysis undertaken by Dave Bouckenooghe, Dirk De Clercq, Annick Willem and Marc Buelens of 275 papers on entrepreneurship published in highly ranked journals from 1999 to 2003 found serious flaws in validity. Published in The Journal of Entrepreneurship in 2007, this study found that most papers were based on cross-sectional rather than longitudinal data, using surveys. There were significant problems with internal, external, construct and statistical validity across many papers. A lack of control measures and non-experimental design were concerns raised by this analysis.

Although they did report a positive trend emerging in the research within the entrepreneurship field, they recommended more experimental and longitudinal studies, with greater reporting of construct validity (e.g. how valid are the measures used in the surveys). They also called for greater sophistication in the statistical techniques used by researchers.

As noted by Shane, there are still many problems with the field of entrepreneurship as it struggles for academic legitimacy. This was noted by Ramona Zachary and Chandra Mishra in their inaugural article in the Entrepreneurship Research Journal published in 2011. In that paper they observed that the field of entrepreneurship research had commenced with observation and progressed to “an eclectic and disjointed collection of research studies anchored in the individual and created business venture, but without rigorous theory building as a foundation”.

The excessive focus on the lone entrepreneur as an agent of creative change was dismissed by them as a myth. They also suggested that too much focus has been given to the narrow study of individual entrepreneurial orientation and psychology, with an excessive focus on opportunity recognition and exploitation. This they believed “risks crippling the field of inquiry”.

According to this view, far too much attention has been devoted to entrepreneurial creation, opportunity recognition and new venture creation. A much broader view is required, with a focus on how entrepreneurship operates within groups and social networks. This is broadly consistent with the perspectives offered by Shane in his paper from this year.

Small business has become the poor relation

In the emergence of entrepreneurship as a field of academic inquiry the separate but related field of small business management has been left behind. Although small business management was the original foundation for the field of entrepreneurship, it is now largely overshadowed. To illustrate this I conducted a study using the “One Search” function offered by the library of the University of Western Australia. This search engine provides online access to a vast range of journals, books and other information. It includes items whether or not they are available through the UWA library system and is therefore highly comprehensive.

Using the keywords “entrepreneurship” and “small business management” within the subject field, and filtering for only peer reviewed journal articles, the results generated were revealing. As illustrated in Figure 3 the number of papers focusing on these two sub-disciplines was roughly equal prior to 1984. In fact there were slightly more papers on small business management than entrepreneurship. However, from the mid-1980s the field of entrepreneurship begins to take off, accelerating rapidly in the 1990s and growing incredibly fast since 2005.

This was a concern noted by Justin Tan, Eileen Fischer, Ron Mitchell and Phillip Phan in a paper published in the Journal of Small Business Management in 2009. In that wide ranging paper the field of small business research was specifically addressed as compared to that of entrepreneurship. Here their concerns were that despite small businesses often being the foundation for entrepreneurship studies, there is a “paucity of published research that is specifically dedicated to theory building” in the small business area. Their study found that in the preceding five years only seven of some 150 papers published in the Academy of Management Review offered any theoretical insights of relevance to small business.

The decline of small business research at the expense of entrepreneurship studies has some important implications. Small businesses comprise the vast majority of all businesses across most economies. According to the OECD (2010a) small to medium sized enterprises (e.g. those with fewer than 250 employees) comprise around 99% of all businesses, employ approximately two-thirds of the workforce and contribute over half the value added across the 34 countries that constitute their membership. These firms are important and can play a significant role in the development of their national economies.

According to the OECD (2010a) there has been much attention given to the so called “Silicon Valley Business Model” and the idea of fast growth or “Gazelle” firms. These areas of inquiry are often the preserve of entrepreneurship studies, they are glamorous and exciting. However, such enterprises represent only a tiny proportion of all businesses within the economy. There is also some question as to whether pursuing research into these abnormal examples is really worthwhile.

For example, despite considerable effort, the replication of the Silicon Valley environment in other locations has not been successful (OECD 2010a). Further, Gazelle firms comprise less than 1% of all firms by employment and high-growth firms around 3-6% (OECD 2010b). Nevertheless, such businesses attract a disproportionate amount of interest from the academic research community.

Research that makes a difference

As discussed above, the academic field of entrepreneurship has expanded significantly since the 1990s and the number of researchers and journals specialising in this relatively new discipline is now substantial. However, the theoretical and methodological foundations of the discipline remain shaky. This is recognised by the academic community as exemplified by the authors cited here. Further work is needed by academics in the way they define measure and analyse entrepreneurship and small business management issues.

However, a key challenge facing those who study entrepreneurship is to generate research that is able to make a genuine difference to practicing entrepreneurs and the governments who seek to use entrepreneurship as a mechanism for economic growth. The substantial investment made into the university sector that funds academic research demands that the output is relevant and useful to solving real world problems. There is little perceived value in academic researchers writing purely for other academic researchers.

Although it is important for academic research to build well-founded theory and sound methods for measurement, the focus of these efforts should be upon the generation of findings that can be of benefit to end-user communities. The recipients of academic research output should not be primarily other academics, which is currently the case. There is a need for high quality research to help guide government policy and to assist small business operators and entrepreneurs seeking to found and manage business ventures.

The Global Financial Crisis (GFC) of 2008/2009 has left many of the world’s economies in a parlous state. Unemployment is high and the small business community is doing it tough. Interest in entrepreneurship and small business management amongst policy makers is at an all-time high. Yet what is the response from the academic community dedicated to the study of entrepreneurship?

The growth of ignorance

Writing in the International Small Business Journal back in 2000, Alan Gibb from Durham University suggested that the growth in entrepreneurship and small business research he had witnessed during the 1980s and 1990s was paralleled by a “growth of ignorance”. He identified five “mythical” concepts that were underpinning this rise of ignorance. The first of these was the notion of entrepreneurship, enterprise and enterprise culture. The remaining four were network development, the idea of the ‘growth’ company, local ‘bottom up’ development and finally competency and learning.

According to Gibb’s assessment there was a lack of understanding of the nature of entrepreneurship, enterprise and enterprise culture. There was also a general ignorance of the reality of small business management as compared to management within large corporate and government organisations. He was also critical of government initiatives to promote networking amongst small firms and entrepreneurs, as well as mechanisms for providing support to such businesses. Further, it was a myth that growth companies were the major job creators and that the majority of newly created businesses fail.

In Gibb’s view there was insufficient research on growth firms and a lack of understanding as to the managerial competencies required to successfully operate a small business. A major challenge was the ignorance gap between government policy makers, academics and the small business entrepreneurs about each other.

Where to from here?

Little has changed in the past decade since Gibb published his paper. In fact it might be argued that the gaps between policy, practice and academic research have actually widened. Shane’s review of the entrepreneurship field over the past ten years, while generally positive, provides little comfort to those who seek some practical outcome from the many thousands of academics who research and teach within the domains of entrepreneurship and small business management.

In conclusion although progress has been made the gaps identified by Gibb remain. Too much attention has been given to the pursuit of entrepreneurship at the expense of small business management. The former is largely conceptual and strategic in nature. In fact it has become so wide in its coverage that it risks becoming meaningless. It can be applied to business and non-business contexts and has spawned new sub-fields such as social entrepreneurship and sustainable entrepreneurship. By comparison, small business management studies, the poor relation, are about how to manage such enterprises and the policy or support mechanisms that might be employed to assist small business operators.

There is a need for the academic community to focus their research on making a difference to the ‘end-user’ communities, namely the small business owners, entrepreneurs and the relevant policy and support organisations. The massive growth in entrepreneurship research since the 1980s has done little to enhance our understanding of how to own and operate a small business venture more effectively, or the success factors for entrepreneurial growth.

References

Birch, D. (1987). Job Creation in America: How Our Small Companies Put the Most People to Work. New York, The Free Press.   

Bouckenooghe, D., De Clercq, D., Willem, A., and Buelens, M. (2007). "An Assessment of Validity in Entrepreneurship Research." Journal of Entrepreneurship 16(7): 147 - 171.

Busenitz, L., West, G.P., Sheperd, D., Nelson, T., Chandler, G.N., and Zacharakis, A. (2003). "Entrepreneurship Research in Emergence: Past Trends and Future Directions." Journal of Management 29(3): 285-308.          

Breen, J., and Bergin, S. (1999). Small Business and Entrepreneurship Education in Australian Universities. Melbourne, Small Business Research Unit, Victoria University of Technology.

Gibb, A. A. (2000). "SME policy, academic research and the growth of ignorance, mythical concepts, myths, assumptions, rituals and confusions." International Small Business Journal 18(3): 13-35.

Ireland, R. D., Reutzel, C.R., & Webb, J.W. (2005). "From the Editors: Entrepreneurship Research in AMJ: What Has Been Published, and What Might the Future Hold?" Academy of Management Journal 48(4): 556-564.

Ireland, R. D., Webb, J. and Coombs, J.E. (2005). "Theory and Methodology in Entrepreneurship Research." Research Methodology in Strategy and Management 2(1): 111-141.

Katz, J. A. (2008). "Fully Mature but Not Fully Legitimate: A Different Perspective on the State of Entrepreneurship Education." Journal of Small Business Management 46(4): 550-566.

OECD (2010a). SMEs, Entrepreneurship and Innovation. Paris, Organisation for Economic Co-operation and Development.

OECD (2010b). High-Growth Enterprises: What Governments can do to make a Difference? Paris, Organisation for Economic Co-operation and Development.

Ritchie, B., and Lam, W. (2006). "Taking stock of small business and entrepreneurship research", International Journal of Entrepreneurial Behaviour & Research. 12(6): 312-332.

Shane, S. (2012). "Reflections on the 2010 AMR Decade Award: Delivering on the Promise of Entrepreneurship As a Field of Research." The Academy of Management Review 37(1): 10-20.

Shane, S., and Venkataraman, S. (2000). "The Promise of Entrepreneurship as a Field of Research." The Academy of Management Review 25(1): 217-226.

Tan, J., Fischer, E., Mitchell, R., and Phan, P. (2009). "At the Center of the Action: Innovation and Technology Strategy Research in the Small Business Setting." Journal of Small Business Management 47(3): 233-262.

Zachary, R. K. a. M., Chandra S. (2011). "The Future of Entrepreneurship Research: Calling All Researchers." Entrepreneurship Research Journal 1(1): Article 1.