Entrepreneurship

Conceptual Overview

Entrepreneurship is of primary interest for organization studies because it does not take the existence of organizations for granted but allows for the study and explanation of how organizations come into existence, either as individual new firms or as new industries, and to emphasize that organizations always need to develop new products and services and to innovate in order to perpetuate their existence. To describe the significance of the concept of entrepreneurship for organization studies, it is important to indicate that entrepreneurship has developed into an academic field in and of itself, as Scott Shane and Sankaran Venkataraman suggest, implying that entrepreneurship studies and organization studies share an interface with organizational emergence at its core. Entrepreneurship is thus both related to both small and medium-sized firms, since new venture creation focuses on how young and (for that reason) smaller firms are started up, develop, and grow, as well as to organizational change and innovation processes of larger and more established organizations. Entrepreneurship thus brings creativity and newness under the attention of organization studies. The focus on newness and innovation for the most part goes back to Joseph Schumpeter who defined entrepreneurship as the creation of new combinations in the form of new goods and services, new methods of production, new markets, new sources of supply, and new organization of the industry. For Schumpeter, creative destruction is central, since entrepreneurship both overwrites current products, services, and markets and develops new ones. For instance, the mobile phone replaced the practice of wired phoning and reorganized the sector of telecommunication.

Within the field of entrepreneurship studies, it is debated whether the creation of new combinations requires the creation of a new organization or if it is also made possible through innovation in existing organization. William Gartner sees entrepreneurship as the study of the creation of organizations or so-called new venture creation. He conceives entrepreneurship as organizational emergence and hence shifts the focus from the individual entrepreneur to the more complex process of how organizations are created through the interplay of four perspectives: characteristics of the individuals who start the venture, the organization that they create, the environment surrounding the new venture, and the process by which the new venture is started. Historically, entrepreneurship has been reduced to characteristics of the entrepreneurs, trying to identify personality features and cognitive abilities to distinguish entrepreneurs from other people, such as managers. However, there is no empirical support that can identify such discriminating personality characteristics or cognitive styles. Gartner therefore suggests studying the behaviors and activities that lead to the creation of a new organization.

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