Researchers into entrepreneurship have a powerful incentive to identify new insights about how businesses grow and thrive.
Happily for everyone involved in business and innovation, entrepreneurial research is thriving, blossoming, and flourishing.
Professor Vishal Gupta’s book, Great Minds In Entrepreneurship Research, surveys thirty or more years of research papers that were awarded what is colloquially known as the Nobel Prize in Entrepreneurship Research (formally known as the Global Award for Entrepreneurship Research: GAER). The research field is deep, rich, dynamic and expanding.
Research identifies and examines entrepreneurship in every business size and type as a fundamental economic activity.
In its earliest days, entrepreneurship research focused a lot on small business but, today, business size and stage are not the constraints. The research identifies entrepreneurship in corporations, non-profits, and many more business sectors.
Much of the research focus is on entrepreneurial contribution — to growth, to job creation, to innovation, to progress.
Entrepreneurship is identified as the great economic contributor to betterment and well-being, measured via GDP growth in countries large and small, the creation of new and better jobs for people worldwide, new innovations and new business directions, and individual progress in general. As Mises stated, entrepreneurship is the driving force of the market system.
New entry, properly understood, is one way to characterize entrepreneurship.
The search for a single characteristic of entrepreneurship risks missing critical insights. However, one that garners broad support is “new entry” — entering new markets, entering existing markets with new value propositions, entering established product fields with new innovations, or entering into existing customer mindsets with new ideas.
Economic productivity is another.
A rich vein of entrepreneurship research has measured the efficiency that entrepreneurs bring to the use of resources — producing more with less. For example, research has measured innovation efficiency as the number of innovations per employee, and has found that smaller, more nimble firms are far more efficient on this metric than big corporations, even if the latter launch more new products in total (and generate more PR).
The research has uncovered a new type of firm and business model, and new business ratios that result.
NTBF is the acronym for New Technology Based Firms, those that innovate with new business models and new ways to facilitate service experience via dematerialized delivery. One of the results of these new models is new sets of business ratios — for example, revenue per employees which, with software based companies on the internet, can now reach never-before realized levels. This evolution has forced researchers to re-think some of their models. For example, the biologically-derived product life cycle (PLC) model of business maturity — birth, life and death — has to be revised because dematerialized companies can easily be re-born, even after near-death experiences. Think Apple — the founder died and, at one time, it was thought that the company might, but it was reborn.
Research opens up entirely new ways to think about business.
New research fields such as complex adaptive systems (or complex creative systems as Professor Todd Chiles prefers to call them) represent a new way to think about business — focusing less on individual firms and more on the value networks and service systems of which they are a part.
New ways of evaluating business potential are also emerging from research.
Professor Gupta discussed characteristics of firms such as knowledge absorption and absorptive capacity. Extending the Hayekian concept of distributed specialized knowledge, researchers have identified the ability to quickly absorb and apply new knowledge as a critical capacity of successful adaptive firms, and have shed light on many of the internal constraints this absorptive capacity.
Research recognizes the role of entrepreneurial imagination and subjectivity, although it doesn’t always get it right.
Austrian economics highlights subjectivity and views entrepreneurial opportunity as a subjective phenomenon, based in the imagination of the entrepreneur. Not all entrepreneurship researchers have been able to become comfortable with this idea, continuing to see opportunity as objectively identifiable. Austrians seem to be in the ascendancy on this controversy.
Importantly, entrepreneurship research is becoming interdisciplinary.
Systems thinking requires an interdisciplinary approach. Researchers in sociology, psychology, finance and even anthropology are examining entrepreneurship via their own research lenses. This development can only help the advance of entrepreneurship across a broad front of society and culture, as well as economics.
“What Entrepreneurship Is (and Isn’t)” (PDF): Mises.org/E4E_96_PDF
Download our eBook, Austrian Economics in Contemporary Business Applications, featuring a chapter from Vishal (PDF): Mises.org/E4B_eBook