Enterprise society

Enterprise society

Entrepreneurship as an academic pursuit – what does it deliver to the end user?

Entrepreneurship has been one of the fastest growing fields of academic research and education over the past twenty years. Throughout the world there are thousands of academics like me who teach and research in this particular area. For example, the Entrepreneurship Division of the Academy of Management has over 2,700 members worldwide.

Government policy makers find entrepreneurship attractive due to its promise of wealth and job creation. For example, in a recent report published by the United States Council on Competitiveness it was stated that: “Entrepreneurship drives job creation, productivity growth and innovation, which, in turn, are the key determinants of U.S. competitiveness”.

This type of sentiment is what conjures up research funding and inspires students to enrol in education programs designed to teach them how to become entrepreneurs. Yet what is the state of play within the field of entrepreneurship as an academic discipline and how useful is it to the real world of entrepreneurs and small businesses?

The growth of entrepreneurship as an academic pursuit

Today entrepreneurship studies are principally centred within Business Schools. However, this was not always the case. Some of the first courses were founded in the late 1940s by the Agricultural Faculties of American universities who ran small business management programs for farmers.

Number of business schools in the United States offering courses in entrepreneurship and small business management: 1947-2011. Katz (2008) Journal of Small Business Management

Interest in entrepreneurship within universities remained fairly static until the 1980s. In 1979 Professor David Birch from MIT published a report suggesting that the majority of new jobs were being created by small business start-ups not large firms. As illustrated in the diagram above, this triggered a significant interest in the field of entrepreneurship. There was a similar pattern of growth around the world. For example, by the end of the 1990s 74% of Australian universities were offering courses in entrepreneurship and small business management. Commensurate with this growth in entrepreneurship courses was a rapid expansion of research activity in the area.

By 2000 the academic field of entrepreneurship was about to take off. Writing in the Academy of Management Review, Professors Scott Shane and Sankaran Venkataraman suggested that the new discipline offered much promise as an area of research. However, in the same year Professor Alan Gibb, writing in the International Small Business Journal expressed a less optimistic view. Reflecting on the trends witnessed during the 1980s and 1990s, Gibb identified what he called a “growth in ignorance”.

Although the field of entrepreneurship had expanded rapidly, he suggested that there remained a great degree of ignorance and a lack of understanding between academics, government policy makers, and business owners and entrepreneurs. According to Gibb there were too many “myths” and insufficient knowledge about how small businesses and entrepreneurs actually worked.

Among these myths was much of the accepted wisdom about small business growth, entrepreneurial networking and learning, plus the notion that fast growth companies are the major source of job creation.

The current state of play for entrepreneurship as an academic discipline

Over the past decade, as the academic pursuit of entrepreneurship has expanded, several academics have expressed similar concerns to those of Professor Gibb. Reviews of academic works in the field identified problems relating to methodology, definition and focus. For example,in 2007 Dave Bouckenooghe, Dirk De Clercq, Annick Willem and Marc Buelens published a study in The Journal of Entrepreneurship that raised these concerns.

They reviewed 275 papers on entrepreneurship that had been published in highly ranked academic journals over the period 1999 to 2003. They found serious flaws in methodology. Most studies were cross-sectional in nature and suffered from problems of internal, external, construct and statistical validity. There were also problems in the control measures used and a lack of experimental design.

Writing in the Entrepreneurship Research Journal in 2011, Professors Ramona Zachary and Chandra Mishra suggested that the academic field of entrepreneurship had become too focused on the individual entrepreneur as an agent of creative change. This they dismissed as a “myth”. They also suggested that the field had commenced with observation of what entrepreneurs do and progressed to what they described as “an eclectic and disjointed collection of research studies anchored in the individual and created business venture, but without rigorous theory building as a foundation”.

In their view too much attention has been given to new venture creation, the psychology of the entrepreneur and how entrepreneurs recognise opportunity. This focus they said “risks crippling the field of inquiry”.

Earlier this year Scott Shane, wrote an invited paper for the Academy of Management Review in which he reviewed what has been achieved over the past decade. Shane agreed that there were problems with definition, measurement and validity. He also suggested that there has been too much emphasis by academics on the psychology of the entrepreneur and the role of the individual.

Too much attention has been given to the process of new venture creation and insufficient attention to the management of the venture once launched. He cautioned that there was no “optimal” approach to how an entrepreneurial business might operate. There simply was insufficient empirical evidence to support this. Textbooks proposing best practice models of entrepreneurship should, he claimed, be treated with caution.

So who has been leading the field?

A study published this year in Research Policy by Hans Landstrom, Gouya Haririchi and Fredrik Astrom comprises a comprehensive survey of the development of the academic field of entrepreneurship and who have been the leaders of the discipline.

This paper suggests that the discipline of entrepreneurship is “rather changeable” and remains closely linked to the more mature domains of economics and management. While many of its key theoreticians have come from outside the domain, it has progressively cultivated its own cohort of “insiders”. Despite this the entrepreneurship area remains highly dependent on “fairly old theoretical frameworks imported from mainstream disciplines”.

As shown in the following diagram, the leading authors in the field of entrepreneurship are predominately Americans and most come from the leading universities. Harvard Business School is one of these as is New York University and Stanford University. A review of 135 publications that were deemed to represent the “core” works of the entrepreneurship discipline, found that American academics comprised around 85% of the authors. By comparison European scholars constituted only 15.2% and Asian scholars only 0.2%.

Figure 2: Top research institutions in entrepreneurship (total J-index) Landstrom, Harirchi and Astrom (2012)

Another interesting set of findings from this study are the resumes of the leading academic researchers in the entrepreneurship field. A total of 14 individuals were profiled, all were men. Only two had any past experience working within business or industry. In both cases these individuals had around 20 years of “real world” employment experience before taking up their academic appointments. Another had some experience working as a consultant and another within the area of government policy. The average age of these leading entrepreneurship academics was 29 years when they completed their PhD’s and commenced their academic careers.

In concluding this paper they addressed the question “what constitutes a core work in entrepreneurship research?” The authors noted that scholars are often regarded as “great” not because their theories are true, but because their work is interesting, or challenging to the status quo. They noted that a large proportion of the core works found in entrepreneurship are “interesting” for their ability to challenge conventional wisdom.

They also suggested that despite its weaknesses the field of entrepreneurship has begun to mature and develop its own body of theories generated from “insiders” emerging from within the discipline. Yet they suggest that entrepreneurship remains “surprisingly disconnected from the neighbouring field of innovation studies”.

So what practical value is it to anyone in the real world?

What then is the practical value of all this investment into entrepreneurship studies by academics, their universities, their students and the tax payers who provide much of their research funding to the real world of business?

To address this question we can refer to a paper published in the Academy of Management Review as far back as 1982 by Ken Thomas and Walter Tymon. They provided five critical tests of relevancy in research studies for management and the organisational sciences: i) descriptive relevance; ii) goal relevance; iii) operational validity; iv) non-obviousness; and v) timeliness.

Descriptive relevance refers to the accuracy of the research findings to capture the phenomena encountered by the business practitioner within their organisational setting. This means that research into entrepreneurs and small businesses needs to collect reliable data that is drawn from the real world experiences of these business people. Data collected from experiments undertaken with university students enrolled in entrepreneurship courses are a common example of this. Such data collection offers the researcher a controlled environment and a more accessible sample. However, it may have dubious external validity to organisational settings.

Goal relevance refers to the ability of the research to align with the objectives or outcomes that the end-user practitioner is seeking to achieve. It is common for academics to pursue areas of research interest that are of theoretical or intellectual interest to them, but that have little direct benefit or relevance to small business managers, government policy makers or other potential “end-user” communities. This “town-versus-gown” dichotomy is a commonly raised issue when academics seek to engage with business or government organisations that hope to get benefit from university-based research. A major problem is that “applied” research is generally perceived within academic circles to be of a lower order of priority and less likely to secure tenure and promotion than theoretical work.

Operational validity is concerned with the ability of the practitioner to implement action from the research findings by manipulating the independent variables and influencing the dependent variable. This links back to the issue of “applied” versus “theoretical” research. Many academic journals now ask authors to outline managerial and policy implications of their research. Yet although there are some papers that provide clear and potentially implementable findings, many do not. Too often the findings are inconclusive, or the research design is not able to provide end-user managers with a well-considered road map for improving their business or policy goals. Perhaps the most effective mechanism for delivery of this is the textbook or practitioner handbook. However, these types of publication typically garner little academic kudos for their authors.

Non-obviousness refers to the extent to which the findings from the research provides information that is more informative than the common sense theory already use by the practitioner. In reading many recently published papers from leading small business and entrepreneurship journals I have been struck by the tendency for many studies to produce findings that are little more than common sense.

Timeliness is whether the findings are published in a manner that allows the practitioner to use it to deal with real world problems when they need it. Here lies a significant problem due to the current situation facing academic publishing. Academics are recognised and rewarded primarily through publishing in well-regarded peer-reviewed journals. The pressure on journal editors and their volunteer peer reviewers has resulted in significant delays in getting work published. It is now common for journals within the management area to take about 2.5 years to publish a paper.

It would be incorrect to say that academic research into entrepreneurship is of no value to real world entrepreneurs and those who would seek to support them. However, the rapid growth of entrepreneurship as an academic pursuit over the past three decades has not significantly reduced the level of ignorance that Professor Gibb identified over a decade ago. As a field of study there remains much to be done to better understand how small business works and what might be done to assist these important but generally neglected organisations.

As noted by some of the leading scholars in the field, too much attention has been given to the entrepreneur as an individual and not enough to how entrepreneurship applies to teams. Far too much attention has also been given to entrepreneurial opportunity recognition and new venture creation, with insufficient attention to the process of managing small firms and the nexus between entrepreneurship and innovation.

There is a need to recalibrate the field of entrepreneurship as an academic pursuit and refocus attention on undertaking research that makes a difference. If entrepreneurship is the driver of job and wealth creation, productivity growth and innovation then research into this area should be worth the investment. Yet we need to encourage academic research in the field to meet the five tests of relevancy in assessing whether we are getting an appropriate value for such investment.

Further commentary on this can be found at “The Innovator Blog”.