Journal of Small Business Management 2009 47(3), pp. 233–262

At the Center of the Action: Innovation and Technology Strategy Research in the Small

Business Settingjsbm_270 233..262 by Justin Tan, Eileen Fischer, Ron Mitchell, and Phillip Phan

In this essay, we offer perspectives on the future of small business research. These comments cover a range of issues unique to the future of small-business-focused research from “somewhat-broad” to “more-narrow,” and address: (1) the problems and promise of better theory building, (2) the range of opportunities for theory- building research, (3) new vantage points for theory-building using the “social responsibility” of small business as a research lens, and (4) the future direction of research in technological entrepreneurship. We conclude with a summary of this “look to the future,” and call for the innovative and provocative research that can keep contemporary small business management research at the center of the aca- demic action.

In big business change is small theoretical perspective. When, in their In small business change is big 1981 Harvard Business Review article, (Welsh and White 1981) Welsh and White popularized the notion that “a small business is not a little big business,” it signaled a movement from Introduction the static view of small business as being Contemporary small business research suboptimal because of scale limitations, is the beneficiary of a dramatic change in toward the dynamic view of small

Justin Tan is professor of management and Newmont Chair in Business Policy in the Schulich School of Business at York University. Eileen Fischer is professor of marketing and Anne and Max Tanenbaum Chair of Entrepre- neurship and Family Enterprise in the Schulich School of Business at York University. Ronald K. Mitchell is professor of entrepreneurship and Jean Austin Bagley Chair in Management in the Jerry S. Rawls College of Business at Texas Tech University. Phillip H. Phan is professor in The Johns Hopkins Carey Business School at The Johns Hopkins University. Address correspondence to: Justin Tan, Schulich School of Business, York University, 4700 Keele Street, Toronto, Ontario CANADA M3J 1P3. E-mail: [email protected].

TAN et al. 233 businesses being agents of change small-business-focused research from (Audretsch 2001, 1995). As we look “somewhat-broad” to “more-narrow,” and toward the future of innovation and tech- address: (1) the problems and promise nology strategy research in the small of better theory building, (2) the range business setting, we anticipate the matur- of opportunities for theory-building ing of this dynamic view, which casts research, (3) new vantage points for small business as a main character at the theory-building using the “social respon- “center of the action” in technology and sibility” of small business as a research innovation. lens, and (4) the future direction of As chronicled in Table 1, the literature research in technological entrepreneur- that marks the milestones along this path ship. We conclude with a summary of this of change since 1981 spans a period “look to the future,” and call for more from the early 1980s to the early 21st innovative and provocative research that century. can keep contemporary small business We note several themes in this litera- management research at the center of ture that provide the outlines, we think, scholarly attention. of a future research agenda for scholars in this domain. For example, over the The Problems and Promise of past 25 years the emphasis has shifted Better Theory Building away from trying to distinguish a “small” For at least the last 20 years, the field business from an “entrepreneurial” of small business research has played a business, and also away from the des- unique role in the development of entre- criptive research necessary to articulate preneurship research. Przeworski and the importance of small businesses to Teune (1969) suggest that “. . . the crite- society. Instead, emphasis has shifted ria of generality...imply that the same toward the attributes and strategies that theories must be evaluated in different enable small businesses to grow, to con- systemic settings and that social science tribute to economic value creation, and theories can gain confirmation only if to flourish at the center of the innovation theories formulated in terms of the and technology-based calculus. common factors constitute the point of For example, we know that during the departure for comparative research early stages of new business formation (p. 22).” By testing theories in small busi- all ventures are small, but necessarily ness settings, which were originally high-growth (Figure 1). Hence, mid- developed in some other context, we range theoretical frameworks are neces- have thereby advanced our knowledge sary to explain the differences between about the external validity, or generaliz- small and high-growth firms or more ability, of current theory. For example, in importantly the divergence in growth organizational research, managerial para- paths that can occur as small firms digms developed and tested among large mature. firms may be assessed and refined and new theories developed, where they are The Future of Small exposed to comparative testing in the Business Research small-enterprise setting—which presents With the earlier observations as our wide variation in organizational features. foundation, we offer the following four Somewhat problematically, however, related essays that provide perspectives this approach has yielded many diverse on the future of small business research in positions on the transferability of man- the area of innovation and technology agement principles into small businesses strategies. These comments cover a because of the wide variations in the range of issues unique to the future of quality of research execution. For small

234 JOURNAL OF SMALL BUSINESS MANAGEMENT Table 1 Small Business Research Examples—A 25-Year Chronological Snapshot

Year Research Description Reference

1983 The authors...build a framework Churchill, N. C., and V. L. Lewis consisting of five stages through (1983). “The 5 Stages of Small which small companies pass. Business Growth,” Harvard Business Review 61(3), 30–39. 1984 . . . although there is an overlap Carland, J. W., F. Hoy, W. R. between entrepreneurial firms and Boulton, and J. A. C. Carland small business firms, they are (1984). “Differentiating different entities. Entrepreneurs from Small Business Owners—A Conceptualization,” Academy of Management Review 9(2), 354–359. 1988 . . . (This paper examines)... Damboise, G., and M. Muldowney howwell...theories of small (1988). “Management Theory for business management meet the Small Business—Attempts and requirements of good theory. Requirements,” Academy of Management Review 13(2), 226–240. 1990 . . . (small businesses) do change. Birley, S., and P. Westhead but not necessarily in any (1990). “Growth and Performance prescribed sequence...future Contrasts between Types of Small research should be focused on Firms,” Strategic Management developing theories which better Journal 11(7), 535–557. describe the heterogeneity of the small business sector... 1994 . . . across a broad spectrum of Schwalbach, J. (1994). “Small European countries...ashift Business Dynamics in Europe,” away from large firms and Small Business Economics 6(1), towards small business has taken 21–25. place... 1994 The article provides an inventory Nooteboom, B. (1994). of the strengths and weaknesses “Innovation and Diffusion in of small firms in a dynamic Small Firms—Theory and context. Evidence,” Small Business Economics 6(5), 327–347. 1995 The use of new management and Julien, P. A. (1995). “New production technologies is Technologies and Technological essential for most small Information in Small Businesses,” businesses if they are to improve Journal of Business Venturing their competitiveness. 10(6), 459–475.

TAN et al. 235 Table 1 Continued

Year Research Description Reference

1995 . . . entrepreneurial firms engage Matthews, C. H., and S. G. Scott in more sophisticated planning (1995). “Uncertainty and Planning than small firms overall... in Small and Entrepreneurial however, as perception of Firms—an Empirical-Assessment,” environmental uncertainty Journal of Small Business increases, strategic and Management 33(4), 34–52. operational planning decrease. 1996 Given that a firm has some sales Brouwer, E., and A. Kleinknecht of innovative products, the share (1996). “Firm Size, Small Business of such products in a firm’s total Presence and Sales of Innovative sales tends to be higher in Products: A Micro-Econometric smaller firms. Analysis,” Small Business Economics 8(3), 189–201. 1996 This paper (suggests): (1) the Thurik, A. R. (1996). “Innovation effect of firm size on the causes and Small Business— and (2) the consequences of Introduction,” Small Business innovation or their focus on Economics 8(3), 175–176. the role small firms play in reshaping the industrial landscape. 1997 (This paper) examines the Roper, S. (1997). “Product relationship between product Innovation and Small Business innovation and growth in Growth: A Comparison of the German, Irish and U.K. small Strategies of German, UK and firms. In each country the Irish Companies,” Small Business output of innovative small Economics 9(6), 523–537. firms was found to grow significantly faster than that of non-innovators. 1998 This paper develops a structural ——— (1998). “Entrepreneurial model of the relationships Characteristics, Strategic Choice between entrepreneurial and Small Business Performance,” characteristics, firms’ strategic Small Business Economics 11(1), choices and performance. The 11–24. results suggest a marked difference between the determinants of strategic initiatives related to management and control and those related to products, markets or managerial systems.

236 JOURNAL OF SMALL BUSINESS MANAGEMENT Table 1 Continued

Year Research Description Reference

1999 The goal of this (paper) is to Wennekers, S., and R. Thurik synthesize disparate strands of (1999). “Linking Entrepreneurship literature to link entrepreneurship and Economic Growth,” Small to economic growth. Business Economics 13(1), 27–55. 2000 A panel analysis of 48 U.S. States Robbins, D. K., L. J. Pantuosco, for a ten-year period...revealed D. F. Parker, and B. K. Fuller that states with higher (2000). “An Empirical Assessment proportions of very small business of the Contribution of Small employment do indeed Business Employment to US State experience higher levels of Economic Performance,” Small productivity growth, and Gross Business Economics 15(4), State Product growth, while 293–302. having less wage inflation and lower unemployment rates. 2001 (We) considered ways in which Gundry, L. K., and H. P. Welsch entrepreneurs can be (2001). “The Ambitions differentiated from small business Entrepreneur: High Growth managers...based on the Strategies of Women-Owned entrepreneur’s desire to grow the Enterprises,” Journal of business rapidly. Business Venturing 16(5), 453–470. 2001 . . . while inventions and Wright, L. T., and C. Narrow innovations make significant (2001). “Improving Marketing contributions to the growth and Communication & Innovation competitiveness of national Strategies in the Small Business economies, there are problems in Context,” Small Business the U.K. surrounding independent Economics 16(2), 113–123. inventors (often a small, one person business) and their marketing, where there has been failure to stimulate and exploit inventions compared to other industrialised countries. There are long term implications for economic competitiveness when new ideas are lost. 2001 This paper examines how and Jovanovic, B. (2001). “New why the role of small business Technology and the Small Firm,” has become more important over Small Business Economics 16(1), time. 53–55.

TAN et al. 237 Table 1 Continued

Year Research Description Reference

2001 The role that small firms play in Audretsch, D. B. (2001). industrial organization has “Research Issues Relating to evolved considerably since the Structure, Competition, and Second World War. This paper Performance of Small seeks to document how and why Technology-Based Firms,” Small small business plays a very Business Economics 16(1), 37–51. different role in industrial organization research today than it did some three decades ago. 2001 (This paper) focuses on how Golodner, A. M. (2001). antitrust enforcement helps “Antitrust, Innovation, preserve two freedoms: the Entrepreneurship and Small freedom to engage in Business,” Small Business entrepreneurship, and the Economics 16(1), 31–35. freedom to innovate. 2002 Our study proposed and tested an Kickul, J., and L. K. Gundry entrepreneurial process model (2002). “Prospecting for Strategic that examined the Advantage: The Proactive interrelationships among a small Entrepreneurial Personality and firm owner’s personality, strategic Small Firm Innovation,” Journal orientation, and innovation. of Small Business Management 40(2), 85–97. 2003 This study explores heterogeneity Delmar, F., P. Davidsson, and W. in how firms have achieved high B. Gartner (2003). “Arriving at growth... (and) identified seven the High-Growth Firm,” Journal different types of firm growth of Business Venturing 18(2), patterns. These patterns were 189–216. related to firm age and size as well as industry affiliation. 2003 . . . tested in a small business Simon, M., S. M. Houghton, and context, prospect theory (which) S. Savelli (2003). “Out of the suggests that managers who are Frying Pan... ?WhySmall less satisfied may be more likely Business Managers Introduce to introduce products with riskier High-Risk Products,” Journal of characteristics, (t)he current study Business Venturing 18(3), confirmed this finding that 419–440. managers who were less satisfied introduced products into less familiar markets and required more resources.

238 JOURNAL OF SMALL BUSINESS MANAGEMENT Table 1 Continued

Year Research Description Reference

2004 (This paper suggests) that: (1) if Venkataraman, S. (2004). only risk capital is injected, it “Regional Transformation through flows straight to low-quality Technological Entrepreneurship,” entrepreneurship...and(2) Journal of Business Venturing (s)ound legal systems, capital 19(1), 153–167. markets, and other structural features are necessary prerequisites for technopreneurship... 2005 This article focuses upon the Matlay, H., and P. Westhead emergence of Virtual Teams that (2005). “Virtual Teams and the increasingly form the competitive Rise of E-Entrepreneurship in core... (and) identifies and Europe,” International Small considers the stages and Business Journal 23(3), 279–302. processes specific to Virtual Teams. 2005 The purpose of the study was to Barringer, B. R., F. F. Jones, and draw from the narratives a list of D. O. Neubaum (2005). “A empirically grounded Quantitative Content Analysis of growth-related attributes that are the Characteristics of associated with rapid-growth Rapid-Growth Firms and Their firms. The findings of the study Founders,” Journal of Business resulted in the advancement of a Venturing 20(5), 663–687. conceptual model of the attributes of rapid-growth firms in four areas: founder characteristics, firm attributes, business practices, and human resource management (HRM) practices. 2006 The intensity of small-business Kozan, M. K., D. Oksoy, and O. owners and the environmental Ozsoy (2006). “Growth Plans of difficulties they encountered were Small Businesses in Turkey: investigated as predictors of Individual and Environmental growth intentions in Influences,” Journal of Small Turkey...found owner intensity Business Management 44(1), to be significantly related to the 114–129. three growth plan factors of technology improvement, resource aggregation, and market expansion.

TAN et al. 239 Table 1 Continued

Year Research Description Reference

2006 This study explores the Chan, Y. E., N. Bhargava, and C. homogeneity of small firms that T. Street (2006). “Having Arrived: have achieved and sustained high The Homogeneity of High-Growth growth...Wefindthat, Small Firms,” Journal of Small controlling for location and Business Management 44(3), performance, the high-growth 426–440. small firms in our population experience similar management challenges regardless of the specific firm size, revenue level, or industry. 2007 This article examines to what van Praag, C. M., and P. H. extent recent empirical evidence Versloot (2007). “What Is the can collectively and systematically Value of Entrepreneurship? A substantiate the claim that Review of Recent Research,” entrepreneurship has important Small Business Economics 29(4), economic value... (e.g.) that 351–382. entrepreneurs have a very important—but specific—function in the economy. They engender relatively much employment creation, productivity growth and produce and commercialize high-quality innovations.

business research to move forward along traditions where theories and research the learning curve of its scientific devel- methods have been more developed, and opment, and to take small business utilize small business as a context on research to the next level with more which to test existing theories and to prominent intellectual stature, more rigor build new ones. For example, taking needs to be added in theory building, small business research as a “subfield” of method development, and hypothesis management research, we could take testing, and with more attention to issues what we already know and examine the that have been largely overlooked, such extent to which this knowledge is appli- as technology, innovation, and corporate cable in the small business setting and, if social responsibility. not, ask ourselves: “Why?”; “What are Although some may favor promoting the moderating factors and contextual small business research as distinctive factors that basically alter or moderate field of study that is isolated from this relationship?”; “How, if at all, we can companion disciplines, it is clear to us modify the existing theories that will that what is needed instead is to draw help explain issues in small business from various disciplines and research areas?”; and “What is the extent to which

240 JOURNAL OF SMALL BUSINESS MANAGEMENT Figure 1 A Small vs. High Growth Comparison

HIGHER GROWTH Growth

LOWER GROWTH

STARTUP SB

Time

we need to introduce a new theoretical ment and firm strategy. According to prospective from still other disciplines?” Weick’s criteria, complexity theory, for Additionally, we need to ask how we example, which relies on computer simu- can modify measures and refine research lation, provides high level of generaliz- methodology so that we can better ability and simplicity, but compromises explain the phenomenon in question. on accuracy. In contrast, the traditional Accordingly, we suggest that “good case-study approach can be highly accu- research” in the small businesses setting rate with detailed records and descrip- should be guided by “good theories” and tions, but has inevitable problems in executed with “good methods.” Weick satisfying the simplicity and generaliz- (1989) suggested three criteria: (1) gen- ability criteria. eralizability, (2) simplicity, and (3) accu- A simple simile helps to illustrate the racy, by which such questions might be point that mismatches continue to be answered. We observe that there is rarely problematic. Let us consider research any extant theory or method that can phenomena to be like nails, and that our satisfy all three criteria simultaneously. task is to drive them into boards. Then in As each method has its own advantages scientific research, theories and methods and limitations, there are inevitably are the hammers. We choose different tradeoffs. For instance, in recent years, hammers for different nails, so they can complexity theory rooted in natural work well together. However, what we science and social network theory origi- increasingly observe in management nating in sociology, have drawn more research in general, and small business and more attention in mainstream man- research in particular, is that students are agement research, because the complex trained with certain theoretical perspec- network and complex adaptive system tives and research methods, and they perspectives offer new lenses for observ- hold tightly to these hammers looking ing the coevolution between environ- for proper nails that fit their hammers.

TAN et al. 241 Though we recognize the importance of for theory and practice, and draw from theory building and theory testing, the theories and utilize methods appropriate “theory-to-theory” formula, if not utilized to solve the problems observed (i.e., find properly, may mislead researchers to hammers that fit the nails). If no cling to a given hammer while searching “hammer” in management field can drive to find a suitable nail, and forget that the “nail,” we then must borrow different hammers are used to drive “hammers” from other disciplines or matching nails and must therefore be design appropriate new “hammers” with chosen according to the size and shape them to then drive the “nail.” For of the nail. By attending to the match instance, industry clustering is widely between theory-hammers and methods- believed to foster small business creation nails, we are more likely to generate and facilitate technology transfer and significant and novel research. innovation. To take this line of research The mismatch issue is observable to the next level would require more when, for example, the current norm is fine-tuned understanding on the emer- to favor empirical research dominated by gence, formation and evolution of clus- survey and statistical analyses. Such a ters. This will require more dynamic research tradition essentially encourages models and temporal data in order to researchers to focus only on “nails” that reveal the underlying mechanism at dif- fit the hammer. Furthermore, one reason ferent stages of cluster evolution (Tan management research (including small 2006), and this is where computational business research) has been viewed by simulation may lend its unique strengths. other academic disciplines as being too In the meantime, as computational mod- “soft” and “less scientific” may have to do eling often relies on a set of assumptions, with the situation that most of the which may compromise accuracy, using empirical research presently being gen- the case method will enrich our under- erated is resistant to repetition and veri- standing about the “initial condition” and fication. One source of this problem is the simulation process, and compensate the bias within the field of management for the missing details. against repetition of previous research. Similarly, how small businesses As scientific research is a cumulative manage social responsibility is highly process, the existence of this bias is dependent on stakeholder-environmental unfortunate. As Popper reminds us, “we characteristics (Mitchell, Agle, and Wood should not take even our own observa- 1997). As a result, “initial conditions” tions seriously, or accept them as scien- in corporate social performance (CSP) tific observations, until we have repeated models matter tremendously, and the and tested them” (Popper 1959, p. 45). social performance of small businesses Given such biases, many researchers, may therefore be highly “path depen- instead of focusing on phenomenon and dent.” However, environments are on dependent variables, have used dynamic and change over time, and man- theory and method as starting points and agers do not simply react to the environ- have focused on adding new indepen- ment as they manage the stakeholder dent variables to existing empirical relationship; they learn from the environ- results. As a result, the research results mental changes and “enact” the environ- cannot be replicated, compared and veri- ment proactively (Tan and Tan 2005). fied, and the field becomes increasingly Consequently, researchers may need to fragmented. add the temporal dimension and examine To alleviate this problem, scholars the evolution of corporate social perfor- studying small businesses should also mance over time in stages. Thus, there are look for phenomena with implications many opportunities for theory-building

242 JOURNAL OF SMALL BUSINESS MANAGEMENT research that need attention in the small as have theories regarding social net- business setting. works and structural holes (e.g., BarNir and Smith 2002). The Opportunity for Clearly, programmatic research that Theory-Building Research extends extant theories to explain vari- One of the most significant opportu- ance in outcomes in small businesses is nities now facing those doing entre- crucial. But if small entrepreneurial firms preneurship research in general, and really are a distinctive context, we should innovation and technology strategy expect to see some original theories or research in small business contexts in concepts emerging from within the field. particular, is to engage in more system- And indeed, there are already some atic pursuit of theory-building research notable notions that appear to have been using the setting of small entrepreneurial created and advanced by researchers firms as a context to generate theory. working within the small entrepreneurial This theory-building opportunity is par- firm context. For example, the concept of ticularly important to recognize to the opportunity identification appears to extent that Welsh and White (1981) are have been advanced largely by those correct when they suggest that small, studying emerging entrepreneurial ven- entrepreneurial businesses are not just tures, and is regarded by some as among little big businesses, but are rather the central pillars of study of entrepre- distinctive agents of change relative to neurship (e.g., Shane and Venkataraman larger, older firms. 2000). The related but distinct notion of Glaser and Strauss (1967), in their effectuation (Sarasvathy 2001) seems also highly influential book on developing to have been advanced based on consid- grounded theories, observe that in order eration of entrepreneurial ventures, as to effectively understand phenomena in does the concept of the “international particular contexts—such as the context new venture” (Oviatt and McDougall represented by small entrepreneurial 1994). Other theories that have been sig- firms in comparison with large estab- nificantly refined if not originally identi- lished firms—it is necessary to build fied through the study of small or new theories that are in the first instance ventures are theories of entrepreneurial “grounded” in the context under consid- orientation (Lumpkin and Dess 1996) and eration. Yet to date, it is arguable bricolage (Baker and Nelson 2005). Yet that relatively little of our energies as the number of theoretical contributions researchers studying small entrepreneur- generated by those studying such firms ial firms have been devoted specifically remains relatively small. to theory building. To a much greater As evidence of this point, Table 2, extent, we have tested, and occasionally adapted from Mullen, Budheza, and marginally refined, theories developed to Hafermalz (2008), indicates the portion explain the behavior of larger firms. For of research that was specifically devoted example, considerable research on small to theory building between 2003 and entrepreneurial ventures has adopted the 2006 in three of the most impactful entre- resource-based view or its variant, the preneurship journals, Journal of Small dynamic capabilities perspective (e.g., Business Management, Entrepreneur- Brush, Edelman, and Manolova 2008). ship: Theory and Practice and Journal of Similarly, theories of top management Business Venturing. As this table indi- teams and their impacts on firms’ behav- cates, 66 percent of published articles iors and outcomes have been adapted to were devoted to primarily to theory explain the performance of small entre- testing, judging by the fact that they preneurial firms (e.g., Lester et al. 2006) deployed quantitative methods suitable

TAN et al. 243 244

ORA FSALBSNS MANAGEMENT BUSINESS SMALL OF JOURNAL Table 2 Proportion of Conceptual and Qualitative Research vs. Quantitative Research Published in Major Entrepreneurship Journals, 2003–2006

Journal Article 2003 2004 2005 2006 Total Design Percent Percent Percent Percent Count Percent

JSBM Conceptual 7 29 3 14 18 11 Qualitative 7 6 3 0 8 5 JBV Conceptual 27 41 23 24 55 27 Qualitative 5 10 3 6 16 8 ET&P Conceptual 55 63 57 26 66 47 Qualitative 0 0 5 16 7 5 Totals Conceptual 27 44 28 23 139 28 Qualitative 5 6 4 8 31 6 Quantitative 68 49 69 70 328 66 Total 100 100 100 100 498 100 for such purposes. In contrast, only 28 These observations thus lead to the percent of published papers were question: Where do the richest opportu- conceptual and presumably therefore nities lie for more theory-building work devoted to theory building. An even that will inform our understanding of smaller portion, only 6 percent, were entrepreneurial phenomena in general qualitative in nature, which is particu- and of innovation and new firm technol- larly significant given Glaser and ogy strategy in particular? The answer Strauss’s assertion that inductive offered here is as follows. It is surely research based on the analysis of quali- necessary for us as a community of tative data is critical to the creation of scholars to engage in writing both theories that credibly account for system- conceptual papers and inductive papers atic variation in distinctive contexts. based on qualitative data. However, a Evidence of the paucity of published somewhat stronger case can be made for research that is specifically dedicated to the latter, simply because many concep- theory building is also apparent if we tual papers which start with extant theo- examine publications in major journals ries and adapt them may be accordingly that devote a portion of their page space constrained in the extent to which they to entrepreneurship research. Academy fully address the distinctive phenomena of Management Review (AMR) publishes that are to be found in the small entre- only articles aimed at contributing new preneurial firm context. This assertion is theory. In the past five years, it is made simply because the theories induc- arguable that only seven of the tive conceptual papers often adapt are roughly 150 articles published in AMR those that have evolved with a focus on have provided theoretical insight on phe- explaining actions in large, established nomena of special relevance to small firms. Thus, inductive conceptual work entrepreneurial firms. In Academy of may often start with an a priori set of Management Journal (AMJ), which pub- ideas that is somewhat more limiting lishes only empirical papers, we might than that entailed in inductive theory expect to find relevant theory deve- building based on qualitative data. lopment in those that are based on Conversely, theory building that qualitative data collected in small entre- takes full account of the small entrepre- preneurial firms. Over the last five years, neurial firm context is precisely what it appears that five papers clearly fitting qualitative research—or at least qualita- this description have been published in tive research in some traditions—is AMJ.InAdministrative Science Quarterly good for. As those conversant with the (ASQ), the number appears even smaller: many diverse traditions of qualitative over the last five years, only three papers research know, some variants eschew developing theory inductively from quali- explicit theory building and instead tative data gathered in small or emerging provide rich descriptions of lived firm contexts were published in ASQ. It is experiences or narratives analyses of vitally important to note that there is no discourse that offer insight into the implication here that entrepreneurship socially constructed nature of phenom- research, conceptual, qualitative, or oth- ena without claiming to develop theory erwise is being unfairly rejected or other- per se (see Prasad [2005] for a useful wise ill-served by these three journals. account of a range of non-positivist tra- Rather, the point being made is that there ditions of qualitative research). Qualita- appears to be a paucity of theory-building tive research that has goals other than papers concerned with entrepreneurial theory building has much to offer, as phenomena being submitted to these has been argued elsewhere (e.g., journals. Gartner 2007). Here, however, our

TAN et al. 245 concern is with qualitative research that these traditions is being published in the is explicitly concerned with theory journals noted. Why might this be the development. case? Two answers seem to make sense. Broadly speaking, there are two major First, most management scholars are still traditions of qualitative research that given methodological training only in have an explicit goal of theory building. quantitative methodologies. Few schools The first is positivist qualitative research, have courses in qualitative methods, and and a considerable portion of the those that do often combine philosophy research that has been published in the of science with exposure to qualitative entrepreneurship journals as well as in methods, effectively minimizing the such journals as the AMJ and the ASQ fits extent to which doctoral students recognizably within this tradition. In the received training in the diverse field of management, this research tradi- approaches to gathering, analyzing and tion gained early credibility through building theory from qualitative data. As the work of Eisenhardt (1989) who a consequence, there are few who are described a method for analyzing quali- trained to create or review theory- tative data that was much influenced by building qualitative research. Too many Glaser and Strauss (1967) and who advo- aspiring qualitative researchers submit cated explicit attempts to build theory of manuscripts that fail to offer clear a positivist nature via systematic analysis research questions, fail to take prior of qualitative data collected from mul- research into account, and that fail to tiple case studies of organizations. convince readers that they are contribut- The other major tradition of qualita- ing to the literature (Suddaby 2006; tive work which also aims explicitly Gephardt and Rynes 2004), effectively to build theory and which informs a diminishing the chances that their papers considerable portion of the qualitative will meet the standards of the peer- research in management and entrepre- reviewed journals. Equally problematic, neurship journals draws influence from too few reviewers know how to con- sociologists such as Anthony Giddens structively critique qualitative papers (e.g., Giddens 1984), Pierre Bourdieu they receive. (e.g., Bourdieu 1984), and Michael The second reason that there may be a Burawoy (e.g., Burawoy 1998). These paucity of theory-building qualitative sociologists take for granted a socially research is that even though there are constructed reality, but argue that there many texts that instruct students of quali- are patterned regularities in a given tative research on the diverse ways of sociohistorical setting. For convenience, collecting and analyzing qualitative data, we refer to this as the “structurationist” there is less guidance available on what tradition: those working with the struc- kinds of “theoretical products” may be turationist tradition make the case that generated from the analysis of qualitative phenomena of interest can be analyzed data. In the following paragraphs, some so as to build context specific theories observations are offered regarding the which have an acknowledged temporal various ways that qualitative research and social situatedness. may be structured when the goal is Though there are differences between theory building. these traditions, both are vital to advanc- One of the most obvious and popular ing the enterprise of building theory that forms of theory generated from the analy- will help us understand patterned regu- sis of qualitative data is a propositional larities that occur in small entrepreneur- inventory. Such inventories are particu- ial firm contexts. Yet, as was already larly common in, but far from exclusive noted, relatively little work in either of to, qualitative research in the positivist

246 JOURNAL OF SMALL BUSINESS MANAGEMENT tradition. This approach to contributing fertile grounds for identifying constructs to theory has much to recommend it, in or concepts that have not surfaced in that the propositional format mirrors the research conducted in other business hypothesis format familiar to those con- settings. When an entire conceptual versant only with quantitative research network of interrelated constructs is practices. Moreover, propositions may be introduced, it can frame or reframe the crafted so as to be testable, which again way a phenomenon is understood. When makes for a rapprochement between a theoretical contribution focuses more quantitative and qualitative approaches to narrowly on one or two constructs, it can theory development and refinement. A refine existing nomothetic networks in a recent example that illustrates this rap- manner that makes them more able to prochement very effectively can be found account for the kinds of relationships in Martens, Jennings, and Jennings that exist in types of businesses than (2007). In their paper, Martens et al. first were previously taken into consider- generate a series of propositions regard- ation. An example of a theoretical con- ing narrative techniques that entrepre- tribution that is comprised of concept neurial firms may use and that are likely and construct development can be found to be influential on resource providers. in a recent paper by Graebner and They then test these propositions in a Eisenhardt (2004) where they inductively quantitative study of IPO issuers. identify an alternative to existing con- Perhaps the second most common cepts of acquisitions that contrasts with type of theoretical contribution is the the common notion of a takeover as an process theory. Process theories are par- acquisition. They also identify a range of ticularly common in the structurationist constructs that are relevant to dynamics tradition of theory-building qualitative within the “acquisition as courtship” research. Langley (1999) highlights concept. diverse strategies for building theory A final type of theoretical contribu- from process data, and stresses the par- tion, often offered in conjunction with ticular strengths of qualitative data for other theoretical components, is a typol- such purposes. A recent paper that has ogy. Though it can be (fairly) argued that contributed to our understanding of pro- a typology is not a theory, there is a cesses in small entrepreneurial firms is strong case to be made that a good typol- Baker and Nelson (2005). In the paper, ogy is a theoretical contribution. Miller Baker and Nelson provide a detailed (1996, 1986) has offered an insightful analysis of the steps through which analysis of what constitutes a good typol- entrepreneurial firms go in creating ogy. In brief, good typologies can distin- resources via a process of bricolage. guish between related but distinct types Two other types of theoretical contri- of a construct or process, and identify butions that are perhaps less well recog- clusters of related contingent variables or nized, but that are also extremely contextual influences that co-occur with important, can be discerned in a variety specific types. A review of qualitative of qualitative papers. One of these is papers indicates that typologies are often concept or construct development or developed and prove useful for contrast- refinement. The term concept is being ing existing constructs with new ones, used here to connote a network of or contrasting patterns of relationships interrelated set of constructs. Why are observable in contexts with differing concept and construct contributions so characteristics. An example can be found important? Precisely because the distinc- in Fischer and Reuber (2004) who iden- tiveness of small, entrepreneurial busi- tify different types of industry environ- ness contexts means they are likely to be ments in which entrepreneurial firms

TAN et al. 247 may operate, and corresponding differ- a charge by the JSBM Editorial Board, to ences in the ways that customer engage- consider the “future of small business ment may benefit firms or detract from research”...tothink together about the their performance. future of small business research from Though this enumeration of strategies new and challenging perspectives. for building theory from qualitative To invoke new vantage points, we research may not be exhaustive, it begin with Milton Friedman’s (1970) should provide readers with a sense of assertion that the social responsibility of the range of strategies that exist for theo- business is to increase its profits; and we rizing from qualitative research, and modify and extend this notion to include encourage more efforts of this much the social responsibility of small business. needed type. To achieve the kinds of We have termed it: “small business social theory that will improve our understand- responsibility.” And furthermore, in the ing of small entrepreneurial firms and spirit of “futurity,” we invite readers contribute more broadly to the literatures speculate together with us concerning on innovation and technology strategy, what the notion of “small business social we will benefit from being both more responsibility” might mean to the future sophisticated and more systematic in our of small business research. In particular, approach to theory development. we ask readers to consider the question: Theory building can also be encour- What if we were to envision the social aging by posing new research questions responsibility of small business to: (1) not about small business, and by revisiting live in vain and (2) not die in vain. research that has been predominantly What would enacting this vision entail conducted with samples of large busi- for new research vantage points? nesses. Examples of each are illustrated We observe that most of the “action” in the third and fourth sections of this in the life cycle of businesses (business paper. In section three, new research “births” and business “deaths”) actually questions are posed about what the happens in “small” business. As to births: social responsibilities of small businesses most businesses start small. Very few are may be, and whether better ways of full blown at 20 or 30 thousand ensuring businesses meet these respon- employees—at least in Western market sibilities can be devised. In section four, economies. And as to business deaths, the literature on technology-based entre- we observe that: by the time it is “over” preneurship is examined with a view to there are not too many people left to understanding how theories of the rela- lock up and turn out the lights. So what tionship between technology and entre- we have implicated in this small business preneurship may need to be revised to phenomenon is a very interesting take into account small versus large busi- element about “smallness” that may give ness contexts. interested scholars and practitioners an opportunity to conduct research we have A New Research Vantage never thought about before—which Point: Small Businesses’ Social could directly examine the implication of Responsibility to Live and Die small businesses’ “not living in vain” and with Meaning “not dying in vain.” For provocative research, we need Such a suggestion implicates at least uniqueness—especially new constructs two new comprehensive research initia- that upon examination, and through tives. The first: live with meaning, sug- greater understanding, actually make a gests venture creation should start with difference in our thinking. Fortunately, life in mind. We wonder how many in this Special Issue, we have been given small-business new venturers in fact do

248 JOURNAL OF SMALL BUSINESS MANAGEMENT start with the life of their business in would establish new venture analysis mind. We might expect that all venture standards to answer questions such as: initiators intend for their small business What should this business be able to do to live; but unfortunately (as it ap- before we “plug it in”? And we should pears from failure-rate statistics, e.g., then be able to apply these standards Bresnahan [2005]), many do not actually consistently: to, for example, build a know how to do it, and therefore fail. To track-record database. This makes sense our knowledge at present, there is no within the larger business community such thing as a small business “APGAR,”1 where the uses of best practices compari- which asks every new venture founder sons are common. So as a beginning critical “live-with meaning” questions, point for provoking new, unique, and such as: To what extent does this busi- helpful small business research we ness have a pulse (e.g., is there a viable simply inquire: Where is the “live-with- business model)? To what extent can it meaning” best-practices database? And process economic oxygen (e.g., transac- we observe, in answer, that to our tions)? etc. So, as one suggestion that knowledge there is not one (yet). Part of arises from this new stance, we might the “futurity” of small business research suggest the need for all concerned to is to get on with creating such data, and better understand the things we need to then to undertake the systematic analysis know to start with life in mind. For that can add much more meaning to the example, once such research topic would life of new small businesses. be to better understand what it means to We next inquire about dying with assess new small businesses early and meaning, and ask: what is intended by often. This is not something that is the idea that a small business should “die yet well-enough done, nor is it well- with meaning”? Possibly a first step documented in the research literature. would be that, should a new venture fail, We acknowledge that in the practitioner this failure should count for something community, some authors (e.g., in the other than grief and embarrassment and popular press) have put forward busi- trauma. We consider this to be an impor- ness plan evaluation systems and success tant social and economic issue. Some recipes; and that small business develop- sources suggest that 80 percent of new ment center checklists and a variety of businesses fail (Bresnahan 2005). helpful hints are available. And we also Reynolds (1995) delved further into this acknowledge that the bankers and the reporting puzzle, and suggests that if one venture financing community also have rigorously compares statistics, removes check-list-type tools. But at the present double-counting, etc., the success/ stage of development, we observe failure ratio of new small businesses may that living-with-meaning-assessments be more in the neighborhood of 50/50. deal primarily with analyses that com- Let us therefore make a simple compari- prise a relatively narrow sliver of what is son that places this failure-rate into in fact involved in sustaining the life of a another context. If, for example, you small business. went to the car lot and bought your new Methods that ought to be suggested, Lexus, and as you were about to turn the tested, explored, and developed would, key, the salesperson said, “By the way for example, examine key factors: they there is a 50 percent chance it won’t

1An “APGAR” is a simple, repeatable method to quickly assess the health of newborn children on five simple criteria on a scale from zero to 10. The five criteria (Appearance, Pulse, Grimace, Activity, Respiration) make up the acronym APGAR.

TAN et al. 249 start,” what would you respond? You ships (business or personal). Rather may say: “But I paid all this money!” And (based upon the further development of the salesperson might counter: “Well this example line of research), when the still, that is the best we can do right now; venture dies, society might develop a take it or leave it.” When we apply such more productive response and take the a scenario to small business (That’s the view that the learning store of expertise best we can do!—and frankly at present has grown, is valued, and prepares many it is the best we can do); this begs a such individuals for greater opportunity- future question for small business creation effectiveness in the future. research: is such a status quo good Such a remarkably new response would enough? convey to an entrepreneur-in-training, So we therefore return to the thought- the following affirmation: “I now have provoking idea: dying with meaning. this very big part of my mind that under- What would be involved for a small busi- stands all kinds of things not to do,” but ness to die with meaning? Our sense is also the message: “most things that I that small business research needs to know—as an entrepreneur who termi- uncover an entirely different way of nated a business—are still recyclable!” “A thinking. It might mean, for example, few decisions may have caused the that we need to better understand entre- venture to become disabled, to have to preneurial expertise. These research exit, but most of that knowledge is questions have been under study for just still there.” “It can be tweaked.” “It’s a about 15 years (e.g., Mitchell 2005, 2003, national asset!” 1996, 1994; Mitchell and Chesteen 1995; And, to continue in the spirit of pro- Mitchell and Seawright 1995; Mitchell voking new research pathways, we et al. 2009 Forthcoming; Mitchell, Mitch- further inquire as follows: What if we ell, and Smith 2008; Mitchell et al. 2007, then do the research needed to begin to 2002, 2000). So, to help us to see how develop the opportunity-creation entre- the study of entrepreneurial expertise preneurial mindset as a national asset? leads us to better understand the idea Can we consequently aspire to use the that a small business might die with bankruptcy courts evermore effectively: meaning, let us as an example, consider for example, as a gatekeeper and allow the questions: What is entrepreneurial us to be able to salvage the national expertise, how is it acquired, and how is treasury of entrepreneurial expertise. it applied? Presently, we observe that a person/ Recent work (e.g., Mitchell, Mitchell, business shows up at bankruptcy court and Smith 2008) confirms that failure to admit that s/he/it ran out of cash. recognition creates a kind of opportunity Unfortunately, we forget the other side creation mindset that only develops as a of the equation—the things that were result of a new venture failure. We invite added to the national balance sheet such readers to imagine the potential payoff: as experience, expertise, and the lower If we can understand how to compose, probability of mistake repetition in a classify, and create entrepreneurial follow-on venture. expertise (e.g., Mitchell 1994), we can If we were to therefore study how to then begin to aspire to develop the entre- use the bankruptcy-courts function as preneurial opportunity-creation mindset gatekeeper, we would need research to as a national asset. In this respect, then, support a new profession called, for dying with meaning does not mean that example, “venture forensics,” to isolate a business terminates and the entrepre- the source of a business failure, validate neur walks off this stage embarrassed, the expert-capital still available to the angry, and with few remaining relation- national venturing treasury, and thereby

250 JOURNAL OF SMALL BUSINESS MANAGEMENT create opportunity-creation entrepre- profit?” and “Can the management team neurial mindsets. Debriefing processes run the venture over time?” Team B have a long tradition of applicability in uses the NVT, which “drills down” two scientific exploration. Under such a sce- more levels: from two elements (Is the nario, we might envision that—based venture a “business”?/profitable; and upon the extensive new and unique small Can you keep it?/management), within business research generated to fill this which are nested six elements (levels need—neither individual entrepreneurs of: innovation, value, persistence, scar- nor their businesses would be released city preservation, appropriability protec- from bankruptcy until conducting a tion, and flexibility), within which are debriefing mandated by the courts (as further nested a 15-element array of gatekeeper acting for society). Such a criteria that can provide much more debriefing process would be an asset- fine-grained distinctions among new creating process; and its conceptualiza- ventures (Mitchell et al. 1998). All the tion suggests that we further inquire venture capital assessors were very concerning examples of processes such familiar with assessing developing ven- as the ones we have been suggesting tures. The primary idea was to ask to assist with small businesses “living enough questions (e.g., the NVT with meaning” and “dying with meaning.” 15-question array), such that a distinct We first present an example of living descriptive pattern can emerge (a with meaning familiar to one of the 15-element vector of ratings). This dis- authors: the NVT (New Venture Tem- tinctive pattern could then be simulta- plate) project (Mitchell 1998, 1995) that neously compared with various venture is a system for helping new small busi- prototypes represented by standard nesses to live with meaning—to start 15-element vectors or “templates.” with life in mind. Using a comprehensive Using a comparison algorithm that pro- literature review and in-depth case study duces a first-moment correlation statis- methodology, Mitchell investigated the tically standardized between 0 and 1, causes of new venture failure much the assessors obtained a like-kind-basis beyond the standard venture capital coefficient for evaluation and for sug- questions: (e.g., “is this venture going to gesting action that is needed for the make money and can these entrepre- venture to be more likely to “live with neurs run it?”). The data were collected meaning.” An example of results from and made available by the WBI (Wayne this comparison is shown in Figure 2. Brown Institute), which holds capital- Results of the study show that ventures raising events, in the Intermountain that went through team A had an approxi- West, Silicon Valley, and in Hawaii for mate 17 percent hit rate (which is the the Pacific Rim. Over the years this average of one really bright success, one method has been used to assess many medium, one break-even, and 7 progres- new ventures early and often, and also to sively “lousies”: a net of 17 percent). For assist in removing known constraints to team B, which used the NVT, the hit rate venture survival. Tracking of the results when last checked, was in the 54 percent shows at least a tripled hit rate (Main- range: approximately triple the opportu- prize et al. 2003). The process is con- nity for a venture to “live with meaning.” ducted as follows. A follow-on analysis in greater depth The WBI, randomly assigns ventures (used more for research than for practice to development teams of venture capi- presently) involves the examination of talists. Team A uses the standard in-depth assessments on a vector-by- methods which basically ask the ques- vector basis (element-by-element) across tions: “Is the venture going to make a ventures within an industry group. In

TAN et al. 251 Figure 2 The Two-Dimensional New Venture Template Visual Comparison across Venture Types

Figure 3, represented in n-dimensional orthogonal variables; and those at 180° space is a visualization of an analysis of are inversely correlated (e.g., variables 6 the computer-services industry new ven- and 12 are negatively related). In the tures in the database mapped in three three-dimensional simulation that we dimensions. have constructed, the researcher can The extent to which the lines are near rotate the sphere and get a look at the each other means closer correlation. relationships from every possible per- Those vectors at right angles are the spective; and in this manner it is easier to

252 JOURNAL OF SMALL BUSINESS MANAGEMENT Figure 3 The Three-Dimensional New Venture Template Visual Comparison across Venture Attributes

6.5 / 7.2 target

conceptualize what might be needed to venture APGAR—has been in use now make a difference in new ventures such for approximately 15 years. As research- that they can “live with meaning.” ers we have been tracking results, and To further provide the context, we are now in a position to assert that if note that the WBI has actually started the actors within the small business arena cooperative venturing network with an follow and apply this standard consis- initiative called Venture Analysis Stan- tently, we might aspire to ISO-type crite- dards 2000 at its core.2 Living with ria for new ventures—quality standards meaning, then—one version of the new that can make a difference in the sur-

2Information is available from http://www.venturecapital.org/fundamentals.htm

TAN et al. 253 vival of new ventures: compliance with Then, on the other end of the typical expected standards. Put in terms of the situation (to complete the cycle) after quality movement—essentially Deming’s an entrepreneur has failed, instead of founding premise (e.g., Deming 1986) having an inflated self-assessment, we to simply focus on variability (the would expect to see self-assessments to upper and lower control limit), such an be very low, with entrepreneurs actually approach has a simple and highly appli- miscalibrating in the other direction— cable logic when applied to a new small actually inflating other’s assessments. business living with meaning. This is And based on this repetitive behavior because in small business formation, we a failure rate in an economy can be have a quality control problem the cre- computed. Venture forensics could ation of new ventures that may (unfortu- lower this, by helping recalibrate both nately) live in vain because we don’t unskilled and unawareness elements assess early and often. With quality (toward a more realistic self-assessment). control of the type suggested, we could What would a venture forensics initiative then build a track record database. Pres- do? Essentially in practice, (as noted) the ently, as we understand it, the database bankruptcy process could be enlisted includes about 400 companies, and the to support this recalibration process data are sufficient such that we now have through venture forensics; and thereby a credible conceptual foundation from assist small business in its social respon- which to teach new venture “living with sibility to die with much more meaning meaning” to students in our entrepre- —not to die in vain. neurship programs, and within SBDC The small business live-with-meaning networks, etc. and die-with-meaning initiatives would And now, turning attention toward an have the following implications for example of an initiative that might be research. As regards living with meaning suggested in response to the challenge to (i.e., keeping new small business life in help small businesses die/terminate with mind), we could and should create nor- meaning we recall to the mind of the mative theory building with assessment, reader the idea of a venture forensics we could increase audits with methods, initiative, as previously introduced. Such and we could do instrumental empirical an approach would be essentially meta- research. Using such tools like the key- cognitive: thinking about thinking (Mitch- factors-analysis-based NVT approach, ell et al. 2005). That is, we might we could do focused descriptive re- investigate how people think about their search with the standards. And from a new venture experience. Kruger and practitioner-focused standpoint, we could Dunning (1999) suggest that unskilled focus on several crucial “enactment”-type persons inflate self-assessments, and questions, such as: How, as a field, do we skilled persons inflate others’ assess- actually enact the needed changes? How ments. Through a venture forensics initia- can a grassroots broad-scope apprecia- tive that examines failed new ventures, tion for the importance of small business these thinking errors can be removed life be brought about? From a practical through better calibration of attributions “how might we get this done?” stand- for all concerned. point, we wonder if the answer lies within In a typical situation—before the approaches that are being suggested venture starts—a first-time entrepreneur within the newly emerging institutional would be expected to be unskilled and entrepreneurship research stream, where unaware. People often just plunge institutional entrepreneurs enact changes in—sometimes called the “entrepreneur- the underlying meanings within society. ial seizure” (Gerber 1986) moment. According to some of the recent literature,

254 JOURNAL OF SMALL BUSINESS MANAGEMENT institutional entrepreneurs act upon for example, for public education. underlying beliefs and values to create Presently, we observe that we have and transform institutions (Greenwood people starting businesses who could and Suddaby 2006; Maguire, Hardy, and have learned to avoid all the standard Lawrence 2004; Garud, Jain, and pitfalls, had we enabled this type of edu- Kumaraswamy 2002). In fact, Hoffman cation within the elementary schools. We (1999) suggests that institutional entre- could enable the failure recognition/ preneurship occurs as organizational- opportunity creation process introduced field configurations (such as underlying earlier, by changing the way people think beliefs and values) are changed, thereby about their having to go bankrupt—to resulting in the alteration of the corre- actually preserve what was learned (e.g., sponding institutions (p. 353). This is Mitchell, Mitchell, and Smith 2008). the practical process we see unfolding Instrumental research could develop the as the result of the new research we are entrepreneurial mindset as a national suggesting. asset, using the bankruptcy courts; and To add clarity to our point, we might then new descriptive research could use (with yet another simile) compare insti- venture forensics for economic planning tutional entrepreneurship to the process because of the possibilities that arise from of managing luggage in an airport: When a much higher-veracity database. We somebody gets a new venture rolling, it’s could, with explicit attributions and like putting your belongings in roller incredible data, accelerate the opportu- board carry-on luggage, so you can get it nity options learning cycle (ibid.). through the airport faster. Institutional So, as a suggestion for a “futuristic” entrepreneurship is like getting you and vision of small business research, might your roller board suitcase on one of we therefore renew our beginning asser- those moving sidewalks, where you actu- tion that the social responsibility of small ally move everybody with the roller business is to neither live nor die in vain? board forward. Institutional entre- Of course we need to learn a great deal preneurship moves everyone on the more to enable us to fully shoulder this walkway. Applied consistently with large responsibility. Small business social sample empirics, we might then envision responsibility is one notion that suggests the track-record database, and instead of an important future for a small business the FAA, we would have the FVA, which research, especially as small business would stand for (hypothetically) the confronts the ever-changing techno- Federal Venture Administration. Or if we logical landscape, which dramatically are anti-regulation, we might instead impacts the living and dying of new ven- suggest something like a “Google- tures. We therefore further refine our Venture” so that people can enter focus to look specifically at the future of tradeoff information into an analytical research in technology entrepreneurship. website and actually begin to assess themselves. Our point: plenty of pro- Wither Research in Technological vocative research opportunities exist for Entrepreneurship? exploring how new small businesses Schumpeter’s (1934) notion of eco- might better live with meaning. nomic creative destruction comes closest Now as respects research initiatives to a description of the relationship that can arise from framing new questions between technology and entrepreneur- in terms of dying with meaning, we could ship. It posits the emergence of novel undertake normative theory building so combinations wherein macroeconomic that we can better understand expertise, or technological forces trigger “reforms which would really give us a new vision, . . . [in] the pattern of production...

TAN et al. 255 and reorganize an industry” by entrepre- entrepreneurship in large firms has gain neurs. Since that time, research has traction). The process of opportunity focused on the mechanisms by which search is heavily influenced by the entre- businesses respond to such events. preneur’s background as well as the task Today, accepted theories view busi- environment in which the entrepreneur nesses as configuration of resources that finds himself. Therefore, a large part are seamlessly manipulated to create and of the extant research is focused on claim emerging value propositions. opportunity identification. Theories in However, these theories, notably opportunity identification recognize the dynamic capabilities, have not properly importance of bounded rationality and delineated the relative importance of differences in risk preferences among information, technology, human ability, entrepreneurs. Bounded rationality not human motivation, organizational design, only determines the limits to individual or the processes by which these elements information processing but also the envi- are (re)combined to form the sorts of ronmental conditions that create uncer- emerging businesses contemplated by tainty. Risk preferences are therefore a Schumpeterian theorists. More funda- function of both individual differences mentally, theories of the relationship and the environmental conditions con- between technology and entrepreneur- fronting the decision-maker. Therefore ship have not made a distinction between what is important is to understand when technological entrepreneurship in small technology exploitation does not occur and large businesses. Is the technology as much as when it occurs. driven value creation in small businesses There are three levels of analyses in the same as in large businesses but writ technological entrepreneurship research. small? Our theories have not yet consid- At the individual level the focus is on the ered this question in part because the scientist-entrepreneur, venture capitalist, boundaries between the two are not theo- and other individuals that incite and retically defined. drive innovation. At the organizational Serious research in technological level the research is on entrepreneurial entrepreneurship became prominent teams, structures, processes, and interor- only when scholars in the management ganizational relationships that enable of technology and engineering manage- value creation and appropriation. At the ment began to consider the centrality systems level it is about exchanges of the entrepreneur. Theories of pro- across value networks; constrained or duction subsumed the individual actor. enabled by governing conditions such In the old world, managing technology as technology and competition policy, was largely about technological and industry standards, and the economics of organizational choices. How innovation geographic location. Properly executed, arose in such a world was unclear and it technological entrepreneurship research was only when the technological entre- is therefore interdisciplinary, multilevel, preneur, a hybrid of scientist/engineer and incorporate dynamic systems with and businessperson, was included in the negative and positive feedback loops. To equation that a proper understanding date, few theories of technological entre- could be attempted. preneurship posit models that include Technological entrepreneurship re- negative feedback loops. search is foremost about understanding In sum, we should think about how the conditions and drivers that lead to the impact of a change in one variable the exploitation of scientific discoveries cascades through an entrepreneurial for value creation, typically in small firm system and leads to changes in the rela- settings (although attention on corporate tionships between the other variables.

256 JOURNAL OF SMALL BUSINESS MANAGEMENT For example, a scientist may become technology transfer and foreign direct alert to commercialization opportunities investment by multinationals may in fact in his research when he encounters militate against the emergence of a the need to create more resources for domestic technology-based small busi- future research. As the market potential ness sector. of these opportunities improves, the The concept of emergence helps us scientist-entrepreneur may become more articulate the suddenness of the organiz- willing to consider riskier opportunities. ing processes that entrepreneurs encoun- His risk propensity may, however, be ter prior to the commencement of tempered by life-stage considerations production. Therefore, a theory of how such as the need to accumulate an inher- technology drives or is driven by entre- itance for an offspring. As he gains preneurship should be capable of mod- experience at venturing, the scientist- eling the prefirm formation stage, which entrepreneur’s network grows more has till now been poorly articulated in dense and complex, leading to a wider the literature. Note that organizational range of opportunities. Networks also emergence can also describe sudden bring resources that attenuate risk and changes to technological trajectories that thus enhance opportunity exploitation. represent something novel and unantici- Hence, the types of ventures an entrepre- pated for the growing business. neur finds attractive shifts with changes Another area that deserves more atten- in his individual differences, which tion in future research is that of the inter- impacts the way in which these oppor- actions among actors in a value network. tunities can be pursued. We know from the research in national One area that deserves more attention innovation systems that actors in the in the literature is the emergence of ecology of value creation can be risk opportunities, individuals and busi- arbitragers, resource providers, and nesses that arise from technological knowledge generators. The impact of change. Emergence is the spontaneous technology change and shifts in legal appearance of ordered social and orga- institutions and social norms can impede, nizational structures. Past researchers enhance or alter the roles of these actors. have identified, though not always con- When these roles are altered (e.g., knowl- sciously, the phenomenon of emergence edge generators becoming risk arbitrag- in the discovery and exploitation of eco- ers, as is the case when scientists become nomic opportunities, the coming-into- entrepreneurs) the cycle of value creation being of new firms, the unexpected is altered, sometimes with unintended growth spurt of small businesses, and in consequences. the creation of new industries. In the The role of public policy is another abstract, a small business can be defined important research area that deserves as the coming together of formerly dis- more attention. For example, competi- persed knowledge about opportunity tion policy can reduce the incentives for and technology at a specific location in a entrepreneurial activity by reducing the point in time. However, what is yet to be gains from risk arbitrage or innovation. explicated in this research is the process On the other hand, economic policy tar- by which emergence occurs. More geting specific technologies for govern- importantly, we do not yet know the ment support can create economies of conditions under which small businesses scale and scope in research and develop- will not emerge. We suspect these are ment and give rise to entire populations not simply the absence of the enabling of new businesses. We believe that the conditions that foster emergence. For impact of government intervention example, government policies that favor depends on the stage of development of

TAN et al. 257 an industry and might prove beneficial these levels. Each level of analysis can be during the early stages of organization represented as a system of interdepen- when markets fail to form. Initial condi- dent components. At higher levels these tions matter and high levels of general components combine to form a system, human capital engendered by education, itself a component in the next higher reliable and low cost infrastructure and level of analysis. Hence, one cannot fully fairly enforced legislation can reduce understand opportunity recognition and transactions costs and startup costs. exploitation as a co-evolutionary emer- In doing research on technological gent phenomenon without being sensi- entrepreneurship, some of the tech- tive to its higher contexts—culture, niques that deserve more attention institutional arrangements, and political- include critical events analysis with its economic exigencies. This, we believe, is focus on phase changing events, the direction in which the research dynamic multi-agent games employing should proceed. objective based optimization routines, evolutionary modeling with complex Conclusion systems theory, process mapping, multi- One of the hallmarks of provocative case clinical studies, panel data analysis research is that it generates more ques- using probabilistic models, and com- tions with continuing research, than it puter simulation. These types of tech- does answers. Yet as a field, the system niques can account for population and within which new scholarship emerges idiosyncratic emergence processes, has not yet been perfected—and in some which means that they can account for ways is following a direction that is less the simultaneous existence of estab- than productive, and is certainly not lished and small businesses that face the provocative. A brief anecdote from one same economic and sociological condi- of the authors—although somewhat in tions in a population. jest—illustrates this point. With respect to data requirements, dynamic models require temporal data I was invited to a highly respected and statistical procedures capable of han- university to talk to a group of dling such data. Industries evolve at dif- doctoral students who are learn- ferent rates, and experience technological ing to do empirical research: shocks at different time periods. Addi- what we might call mainstream tionally, dynamic models are necessarily management research. In their recursive, which demand sophisticated program they had all learned how use of non-linear estimation techniques to conduct a literature review, that are capable of operating at multiple write a paper, develop hypoth- levels of analyses. However, the real chal- eses, gather and test data, get lenge in entrepreneurial research is results and then produce a discus- to obtain such data as they are likely to sion and implications section for be proprietary, noisy, and difficult to that paper. I asked them: “So how compare across organizations, time does it work for your project?” periods, and industrial contexts. They answered: “We collected In sum, because technological entre- data, we tested the model, we got preneurship is a multilevel phenomenon, the results, and we find that our theory building and testing has to pay hypotheses were not supported.” attention to the interactions between Then I asked: “What do you do individual, group, formal organization, then?” They said: “We go back and and industry levels of analyses, even revise the model.” I then asked: though testable models tend to isolate “What if it still doesn’t work?”

258 JOURNAL OF SMALL BUSINESS MANAGEMENT They answered: “We go back and empirical papers that basically make revise the hypotheses.” But I per- trivial contributions, do not offer pro- sisted, and asked: “What if it still vocative ideas, and do not inspire others does not work? Are you going to to think. Accordingly, the research revise the data?” becomes more standard, more standard- ized, and more fragmented. Yes, it is an anecdote, but it still leads What does this mean for the future of us to ask: To what extent does this anec- small business research, especially for the dote (or some portion of it) actually exist maturing of the dynamic view of small in research practice? And if, at least a business research, where small business partial hint of reality can be expected, is the main character at the “center of the what does this mean for the creation action” in technology and innovation? In of provocative research? Certainly the foregoing sections we have presented such practices are at variance with the challenges, perspectives, and observa- traditional expectations, which go some- tions that eschew “business as usual.” In thing like: fact, they dimensionalize a set of wide and varied opportunities for the rising genera- • One first reads the literature to tion of entrepreneurship, small business, understand what is known with and technology and innovation strategy respect to theory. scholars to challenge existing paradigms • Then you find unique concept to and do something that’s truly innovative. test the theory according to what is It is toward this future that we look; and not yet known and propose it as a we invite interested colleagues to conduct hypothesis. an investigation that lives up to the poten- • From theory design appropriate tial of the newly-emerging stream small research that will test the theory or business management research: to truly hypothesis. extend our understanding of the • If you truly develop a set of hypoth- attributes and strategies that enable small eses grounded in good theory, and businesses to grow, to contribute and to your research design is rigorous flourish at the center of the innovation and solid; but the result do not and technology-based action. support the theory, well you actu- ally have a significant finding, because either the previous theory References is wrong, or your research design is Audretsch, D. B. (1995). Innovation and wrong; and if you can successfully Industry Evolution. Cambridge: MIT assert that there is nothing wrong Press. with your design and execution, Audretsch, D. B. (2001). “Research Issues you’ve got a significant finding, at Relating to Structure, Competition, least according to logical-positivist and Performance of Small falsification theory (e.g., Stinch- Technology-Based Firms,” Small Busi- combe 1968). ness Economics 16(1), 37–51. Baker, T., and R. Nelson (2005). Presently, however, it is the prefer- “Creating Something from Nothing: ence of the research community to Resource Construction through Entre- expect scholars to try to support some- preneurial Bricolage,” Administrative thing that somebody else has already Science Quarterly 50(3), 329–366. done, or to propose yet another alterna- BarNir, A., and K. Smith (2002). “Inter- tive hypotheses; so as a result, we have firm Alliances in the Small Business: long rigorously designed and crafted The Role of Social Networks,” Journal

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