3. Entrepreneurship as a scholarly domain

   1. Dimension Overview

      1. Entrepreneurship as a scholarly domain includes a discussion of the central concept “opportunity”.

      2. In this domain, we do not presuppose the outcome.

      3. Focus on the behaviours undertaken in the processes of discovery and exploitation of ideas for new business ventures.

      4. Aims of Scholarly Domain

         1. Better understanding of the societal phenomenon “entrepreneurship”

         2. To study entrepreneurship as it happens (before the outcome is known)

         3. To go deeply into aspects of the process without following up on the outcomes (However, attempts to offer buyers new choices are required for entrepreneurship research.)

   2. Venkataraman’s View

      1. Define Entrepreneurship as “Examination of how, by whom, and with what effects opportunities to create future goods and services”.

         1. Study of sources of opportunities (WHAT)

         2. Processes of discovery, evaluation, and exploitation of opportunities (HOW)

         3. Set of individuals who discover, evaluate, and exploit them (by WHOM)

      2. Set of 3 central research questions (Why, When, and How)  4^th question

         1. Why, When, and How opportunities for the creation of goods and services come into existence

         2. Why, When, and How some people and not others discover and exploit these opportunities

         3. Why, When, and How different modes of action are used to exploit entrepreneurial opportunities

         4. (Result of outcomes of the exploitation process in the 3 questions above) Why, When, and How outcomes on the level of industry and society should be considered

      3. Antecedents of the process and outcomes of process

         1. 1^st Order Forces - Characteristics of individuals and opportunities

         2. 2^nd Order Forces - Environment (The forces to highlight variations in the nature of opportunities as well as variations across individuals)

      4. In short, they depict the economy as fundamentally characterized by heterogeneity.

      5. Advantages of the combination of focus and openness, developed by Shane and Venkataraman’s framework, to solve many of the problems associated with earlier definitions and research streams

         1. Describe the scholarly domain rather than suggesting another definition of the societal phenomenon.

         2. Focus on the creation of future goods and services and direct attention to the problem of emergence entrepreneurship

         3. Put the main focus on goods and services rather than including organisational change or creative behaviour in any context.

         4. Retain an interest in individuals they emphasize their actions and fit with the specific “opportunity” rather than general characteristics of entrepreneurs.

         5. As to openness, their domain delineation includes two partly overlapping processes, 1) discovery and 2) exploitation.

         6. Do not include purposefulness in their domain description. (Avoided overly rationalistic view)

         7. No mention is made of the age, size or ownership of the organizations in which “opportunities” are pursued. And the existence of alternative modes of exploitation for given “opportunities” is focused as an important research question.

         8. Disregarding the definition of opportunity brings about the study open to different types of direct and indirect outcomes of processes of discovery and exploitation.

      6. Comments on the framework of Shane and Venkataraman – Some aspects need further elaboration, clarification, or even modification.

         1. Should study what effects “opportunities” are exploited. Then adopt Casson’s definition of opportunity as “Those situations in which goods, services raw materials, and organizing methods can be introduced and sold at greater than their cost of production.” This makes entrepreneurship become characterized by certainty rather than uncertainty.

            1. Advantage of Casson’s definition = Compatible with the view of entrepreneurship as a societal phenomenon

            2. Disadvantage = Unhelpful for entrepreneurship as a scholarly domain as it is inconsistent with having the outcomes of entrepreneurship

         2. The phrase “discovery, evaluation, and exploitation” contains words with objectivist and abusive connotations.

         3. Although Shane and Venkataraman highlight the possibility of different “modes of exploitation” for an opportunity, this also create an unnecessary divide or make it wider than it needs to be.

   3. Gartner’s View

      1. This choice of focus has two origins. (So Gartner suggested entrepreneurship research should focus on the behaviours in the process of organizational emergence.)

         1. A perceived lack of treatment of organizational emergence in organization theory

         2. Disappointment with the pre-occupation that early entrepreneurship research had with personal characteristics of entrepreneurs

      2. View Advantages

         1. Avoid the risk of over-extending the field.

         2. Inspired a fruitful re-direction of the field from a dispositional to a behavioural view on entrepreneurship.

         3. Strong process orientation

         4. Addresses an ecological void that has been given only cursory treatment in economics and management studies.

         5. It is offered as a minimalist definition. Gartner does not exclude other aspects of entrepreneurship, but argues that organization creation is a situation where we should “all” be able to agree that entrepreneurship is taking place.

         6. His emphasis on behaviour and his involvement in real-time study of start-up processes suggest start-up attempts as the object of study for the scholarly domain

      3. View Disadvantages

         1. Does not emphasize the discovery process of opportunities. (For example, Gartner’s focus on organizing as an incomplete domain delineation of entrepreneurship)

         2. Directs no or only cursory attention to the possibility of alternative modes of exploitation for given “opportunities”.

         3. Does not explicitly restrict what kind of emerging organizations qualify.

         4. Have not found in Gartner’s writings a clear statement regarding whether an attempt to create a new organization has to be successful in order to constitute entrepreneurship.

      4. Creation of a new organization is a special case of organisational change.

         1. Creation of new organisation should not necessarily be read as creation of new owner-managed firms.

         2. Organising is an important aspect of the exploitation process for all new activity regardless of the formal or legal organizational context. (Not necessarily the creation of formal and legally defined organizations)

   4. Combining Gartner’s and Venkataraman’s Perspectives

      1. 3 important foundations (developed by Gartner) for entrepreneurship as a scholarly domain:

         1. Entrepreneurship is about Behaviour (rather than dispositions/characteristics).

         2. Entrepreneurship is Process.

         3. Entrepreneurship is Emergence.

      2. Important broadening of Gartner’s domain (developed by Shane and Venkataraman after applying the 3 foundations)

         1. Entrepreneurial process consists of two sub-processes: discovery and exploitation.

         2. Entrepreneurship leads to emergence of new (independent) organisations and new goods/ services.

         3. Entrepreneurship can have a range of interesting and important outcomes on different levels.

      3. Suggestion developed by Shane and Venkataraman on economic system

         1. Economy is characterized by heterogeneity. (a permanent and fundamental feature of economic actors and environments)

      4. Direction of the combination of 2 perspectives

         1. “The scholarly domain should study the processes of discovery and exploitation from a behavioural perspective under the assumption of heterogeneity, taking an interest in different types of outcomes on different levels of analysis.”

      5. Additional issues to be more elaborated

         1. Concept of “opportunity”

         2. Role of uncertainty

         3. Meaning of “discovery” and “exploitation”

         4. Interrelatedness of the processes of “discovery” and “exploitation”

   5. Uncertainty and the Concept of Opportunity

      1. 8 fundamental points for the scholarly domain of entrepreneurship (7 points from Gartner’s and Venkataraman’s perspectives + 1 point from Davidsson)

         1. Entrepreneurship is about Behaviour (rather than dispositions/characteristics).

         2. Entrepreneurship is Process.

         3. Entrepreneurship is Emergence.

         4. Entrepreneurial process consists of two sub-processes: discovery and exploitation.

         5. Entrepreneurship leads to emergence of new (independent) organisations and new goods/ services.

         6. Entrepreneurship can have a range of interesting and important outcomes on different levels.

         7. Economy is characterized by heterogeneity. (a permanent and fundamental feature of economic actors and environments)

         8. [8^th Point] Economy is characterized by uncertainty. (feature of most economic actions and environments in the context of discovery and exploitation of ideas for new goods and services)

      2. Uncertainty = Situation where the future is not only unknown, but also unknowable

         1. For example, information collection and processing & careful planning and calculation cannot give a conclusive and reliable answer as to whether something will be successful or not. (Only (trial) implementation will tell.)

      3. Concept of opportunity

         1. What bring us to the concept study - In order to understand behaviours in situations, it is important to start from a theoretical perspective that acknowledges or even emphasizes “uncertainty”.

         2. Normally, the term “opportunity” does not point out “uncertainty” as an inescapable aspect of the environment of the emerging activity and/or organization that the entrepreneurship scholar tries to study and understand. At the time, the actors cannot know whether or not what they pursue is an “opportunity”.

            1. According to Casson’s definition, an opportunity is “known” to be profitable.

            2. According to other definitions, an opportunity is mainly known to be a “favourable” situation.

         3. Major problems with the opportunity concept

            1. If only profitable “opportunities” are studied, Shane and Venkataraman’s second and third sets of research questions (about individual differences and different modes of action) would not address why some people pursue unprofitable venture ideas or why in some cases a particular mode of exploitation leads to an unprofitable result.

               1. Solution --- Talk about perceived opportunity as long as a situation’s profitable or favourable nature is unproven.

            2. Perceived opportunity in the solution mentioned above is not an ideal solution because of its inherent ambiguity. (This is the question whether “opportunities” objectively exist or if the actor creates them.)

               1. Solution --- More refined view of “opportunity” and its “components” (There are at least 3 possibilities about this solution.)

         4. 3 possibilities about More refined view of “opportunity” and its “components”

            1. Objectivist --- Opportunities which are

               1. Existing “out there” as individual

               2. “Ready-to-use”

               3. Metaphor: Mushrooms accessible to anybody going to the forest)

            2. Objectivist-Subjectivist --- Opportunities which are

               1. Existing “out there” as individual

               2. “Ready-to-use”

               3. Accessible to the “matched” people (Because of individual differences in perception, knowledge, and skills, all actors do not have access to exactly the same opportunities.)

               4. Metaphor: Mushrooms known “edible” by somebody/ or “adaptable” by chefs (experts)

               5. Supported by Shane and Venkataraman

            3. Subjectivist-Creative --- Opportunity which is

               1. NOT about anything existing “out there”

               2. Created in the entrepreneur’s mind

               3. Metaphor: Mushrooms sculptured or painted by anyone

               4. Supported by Gartner

         5. 3 Points Agreeable to Most Scholars among the 3 Possibilities (Item 3.5.3.4.)

            1. Opportunity, existing out there, do not exist as complete, individual entities.

            2. Venture ideas are the creations of individuals’ minds. They are specific (but changeable and more or less elaborate) entities.

            3. Because of differences in background (e.g. knowledge, skills, and motivations), individuals (and firms) differ from the other.

         6. The entrepreneurial discovery process (in entrepreneurship research) starts with the conception of a venture idea.

   6. Meaning and Interrelatedness of “Discovery” and “Exploitation”

      1. Discovery

         1. Refers to

            1. Conceptual side of venture development = initial idea  applicable business concept (How value is created for the customer and how the business will appropriate the value)

            2. Initial conception and further development (Not just find it) of a venture idea, not a proven opportunity.

         2. Is a process (because the venture idea is not suddenly formed as a complete and unchangeable entity.)

            1. Can be called “idea generation”, “opportunity identification”, “opportunity detection”, “opportunity formation”, and “opportunity refinement”

         3. Sometimes, people try to realise the venture idea at some point in time realised it would not be successful.

      2. Exploitation

         1. Usually have negative meaning in other contexts, but it is a neutral term in this context.

         2. Refers to the decision to act upon a venture idea & behaviours undertaken to achieve its realization (Extract value from the idea)

         3. Exploitation process deals with resource acquisition and co-ordination, as well as market making.

         4. Like discovery, exploitation is a process that may or may not lead to the attainment of profit or other goals.

      3. Interrelatedness of “Discovery” and “Exploitation”

         1. Notions of discovery and exploitation processes as useful conceptual tools for the scholarly domain

         2. Superficially, the process of the actions “discovery, evaluation, and exploitation” is a linear, orderly process.

         3. Deeply, the actions can be complex and take place simultaneously. Or the sequences of the actions can be switched.

            1. For example, 1) Anand finds governmental problems in Russia is possible to be studied in research [Discovery].  2) Anand pays his efforts for feasibility study and goal definition so that his idea can be realised [Exploitation].  3) Anand finds afterwards the research scope is too broad and difficult to be achieved within 1 year [Feedback to Discovery/ Evaluation].  4) Anand adjusts/ changes his research scope/ concept. [Discovery].  5) Anand retries paying his efforts and looks for more resources for feasibility study so that his revised concept will be realised [Exploitation].

   7. Core Research Questions for the Scholarly Domain of Entrepreneurship

1. Referring to Figure 1, “Entre. Research” is the research asking questions about real or manipulated instances of new offer, new competitor, or geographical market dispersion (Q1 and Q4).

2. Relating to the heterogeneity issue, research questions should be in the areas of “characteristics of new venture ideas” and “how these characteristics relate to antecedents, behaviours, and outcomes”

   1. Samuelsson focused on nature and effects of characteristics of venture ideas. (He did something different because research works normally focus on characteristics of entrepreneurs instead of characteristics of the venture ideas.)

3. Referring to Fig. 1, Q2 is the most disputable.

   1. Although not accepted as entrepreneurship, organisational changes (Q2) remain important possible antecedents in entrepreneurship research.

      1. Because the changes sometimes facilitate entre. For example, some activities like buy-outs are associated with increased development of new products

4. Referring to Figure 1, creation of new organizations remains a very central aspect of the exploitation process in entrepreneurship research.

   1. Because at least these new organizations aim at “new offer” or becoming a “new competitor”

5. Referring to Figure 1, Q3 is not entre. However, it can be included in entrepreneurship research for comparative purposes

6. To conclude, Q1, Q2, and Q4 (in Fig. 1) are the most interesting parts for question design in the scholarly domain.

7. Referring to Figure 2 (Focus on outcomes in dimensions of Venture and Society), only success ventures and catalyst ventures are entrepreneurship as we defined the SOCIETAL PHENOMENON.

8. In SCHOLARLY DOMAIN, the study should include also re-distributive ventures and failed ventures (apart from success and catalyst cases).

   1. To show a genuine interest in outcomes on different levels

   2. To provide a more refined and empirically informed view on “failure” (on each perspective of outcome)

   3. From 3.7.8.1 and 3.7.8.2, the questions under 3.7.9 should be asked.

9. Questions Recommended (relevant but seldom asked) for outcome refinement on different levels in SCHOLARLY DOMAIN

   1. When are successful venture level outcomes associated with successful outcomes on the societal level?

   2. When are successful venture level outcomes not associated with successful outcomes on the societal level?

   3. When are successful outcomes on the societal level associated with successful venture level outcomes?

   4. When are successful outcomes on the societal level not associated with successful venture level outcomes?

10. Q2, Q3, and Q4 situations represent important problems of entrepreneurship research.

    1. One of the first things entrepreneurship scholars should try to get rid of is the bias against failure.

11. Questions possibly asked from the perspective of the corporate manager

    1. Why does and does not new venturing?

    2. Successful or not at the venture level?

    3. Contribute to company performance?

12. An alternative point of departure for a discussion of core research questions are the four sets of research questions.

    1. Why, when, where, how and for whom does opportunity for the creation of new goods and services come into existence? (Fig. 3)

1. Main point: “Existence of real entrepreneurial opportunity”

2. In Fig. 3, it is a question that can be asked at different types of entities or levels of analysis (e.g. nation, region, and industry) before building theory about where opportunity will emerge.

3. Learning where to look for opportunity should be one of the most central features.

4. Measure of opportunity density

   1. Whatever measure is used for opportunity density, it will be a proxy measure.

   2. The number of venture ideas that are both acted upon and proven successful is NOT the direct measure (But can only be a proxy measure).

Research questions 2–4 are graphically represented in Fig. 4.

- The middle box is a necessary part of the research design for these questions to be “entrepreneurship research,” whereas the outer boxes may or may not be included in the research design.

- An explicit focus on behaviours in the discovery and/or exploitation processes, or on the existence and/or characteristics of venture ideas as discussed above, or on or both, is required.

- Questions 2–4 have to be addressed for venture ideas rather than only for “opportunities” proven to be profitable.

2. Why, when and how do individuals, organizations, regions, industries, cultures, nations (or other units of analysis) differ in their propensity for discovery and exploitation of new venture ideas (in addition to differences in opportunity density mentioned in Question 1)?

   1. Question 2 remains a core interest for entrepreneurship research, at least when the interest in personality is replaced by an interest in knowledge and cognition.

   2. When the individual is used as the level of analysis, it is often advisable not to have a single event as the dependent variable.

   3. Also, the quality of the enacted ideas has to be considered.

   4. New initiatives will be more required in cognition for the firms having struggling conditions than the firms doing well as usual.

3. Why, when and how are different modes of action used to exploit venture ideas?

   1. Concerns modes of action and all aspects of behaviour in the process.

   2. Sub-sets of Question 3

      1. what individuals and other economic entities actually do in order to come up with ideas for businesses

      2. how they refine those ideas, and make them happen

   3. Applying the “venture idea” as the unit of analysis is one of the important aspect for Question 3.

   4. Studies would not follow samples of individuals and organizations.

   5. Studies follow new emerging activities.

4. What are the outcomes on different levels (e.g. individual, organization, industry, society) of efforts to exploit venture ideas?

   1. For this question, entrepreneurship researchers can make a contribution by employing a more complex and less narrow-sighted view on outcomes.

   2. Focus on following up on outcomes on more than one level. (Both direct and indirect outcomes are of interest.)

   3. Different types of outcomes

      1. Direct outcomes (e.g. financial outcomes)

      2. Indirect outcomes (e.g. satisfaction, learning, imitation, and retaliation)

1. Relative (financial) performance may often not be an adequate outcome measure for entrepreneurship research.

2. Heterogeneity (related to individuals and purposes) is taken seriously, the following situation is conceivable.

Example

A = Anand interested in travelling Russia

B = Tom interested in travelling Finland

X = Venture idea to develop the attraction database for Istanbul, Turkey

Y = Venture idea to develop the attraction database for Helsinki, Finland

Z = Venture idea to develop the attraction database for Saint Petersburg, Russia

The way scenario goes on:

1) Anand chose X instead of Z (Best possible idea for Anand).

2) Tom chose Y (Best possible idea for Tom)

3) X was not suitable for Anand.

4) Tom gained benefits from Y best.

5) After trying Y, Tom is not successful when trying X because of “heterogeneity”.

Conclusion

Heterogeneity = Distinctiveness about individuals and purposes