COVER SHEET Davidsson, Per (2005) Methodological Approaches to Entrepreneurship: Past and Suggestions for the Future. Small Enterprise Research 13:pp. 1-21. Copyright 2005 Per Davidsson Accessed from http://eprints.qut.edu.au
Davidsson, P. 2005. Methodological Approaches to Entrepreneurship: Past and Suggestions for the Future. Small Enterprise Research 13, 1-21 Methodological Approaches to Entrepreneurship: Past and Suggestions for the Future1 Per Davidsson Brisbane Graduate School of Business (BGSB) at Queenland University of Technology (QUT), and the Jnkping International Business School, Sweden 1 This manuscript builds heavily on ideas previously developed in Davidsson (2003; 2004) and shares parts of the text with these works.
Introduction This journal aims at developing and sharing some ideas on methodological development in entrepreneurship research, based on the authors experience from two decades of empirical work in this area. As there is no shortage of ideas in the literature as regards what entrepreneurship is, and what entrepreneurship research should study, it may be useful to first set the stage on these issues. In order to facilitate cumulative knowledge building and enhance the legitimacy of entrepreneurship as a scholarly domain it is important that the phenomenon called "entrepreneurship" be defined as unambiguously as possible. The particular view embraced by the author regards entrepreneurship as "the creation of new [to the market] economic activity". This includes launching new products or services, new business models, radically changed price/value relationships, or entering the market as new competitor with essentially imitative products or services. The effects of such actions are that: 1. Customers get new choice alternatives, giving them more value for their money. 2. Incumbent firms get reason to in turn improve what they offer the market. 3. If successful, imitating followers will enter the market, further enhancing the previous two effects. The end result is more efficient and/or effective resource utilization, i.e., increased wealth. As a consequence of adopting this perspective the author prefers to reserve the term "entrepreneurship" for market contexts, or at least market-like contexts. Entrepreneurial processes and behaviour share many of the characteristics of creative behaviour and processes in other domains, but in the absence of customers, competitors and potential followers (or close equivalents), entrepreneurship as portrayed above looses its precise meaning if these also be included. This does not mean that entrepreneurship research should refrain from learning from creative behaviour and processes in, e.g., the arts, sports, politics, or even crime. It is just not necessary to use the label "entrepreneurship" for all manifestations of creativity or change. Neither does the above position mean that entrepreneurship research should confine itself to studying successful cases (that achieve the three effects above). In order to understand success (and the truth of what on the surface looks like 'failure') it is necessary to study unsuccessful cases as well. Therefore it is useful to distinguish between the definition of the phenomenon (new economic activities that lead to the one or more of the effects above) and the delineation of the scholarly domain. As to the latter, the below is suggested (cf. Davidsson, 2003; 2004): Starting from assumptions of uncertainty and heterogeneity, the domain of entrepreneurship research encompasses the study of processes of (real or induced, and completed as well as terminated) emergence of new business ventures, across organizational contexts. This entails the study of the origin and characteristics of venture ideas as well as their contextual fit; of behaviors in the interrelated processes of discovery and exploitation of such ideas,
and of how the ideas and behaviors link to different types of direct and indirect antecedents and outcomes on different levels of analysis. This domain delineation emphasizes the process character of entrepreneurship and allows for failure as well as studies on different levels of analysis (which correspond to knowledge interests in different disciplines). It also deliberately avoids associating entrepreneurship with a specific organizational context. However, the start-up of new, independent businesses remains a particularly central phenomenon in entrepreneurship research and accordingly an independent business context is explicitly or implicitly assumed in much of the remainder of this paper. After this introduction the role of different basic approaches, e.g., qualitative and quantitative research will be discussed. A separate sub-section is devoted to laboratory research methods. The exposition then turns to method implications of accepting the domain delineation just presented. Separate subsections are devoted to general design, sampling, operationalization and analysis techniques. Qualitative and Quantitative studies The Need for Qualitative Entrepreneurship Research Arguably, knowledge development processes are incomplete without theory testing. Nonetheless, both qualitative and quantitative research is helpful for gaining insight into entrepreneurship. Our total knowledge development requires the combination of different types of information. Researchers who say or think I cannot see any meaningful knowledge coming out of that research approach should realize that this may reflect a shortcoming of I and not necessarily of that approach. There are some characteristics of the entrepreneurship research domain that point at a need for qualitative research. One is the relative youth of the field. We have simply not had time enough yet to familiarize ourselves with all facets of this empirical phenomenon, or to develop all the theory we need in an exploratory manner. Another is the heterogeneity of the phenomenon. If we only did research at armslength distance there are the risks that because the relationships are different for different parts of the heterogeneous population the results would be either weak or true on average but not for most individual cases. Close-up information may be needed in order to learn about the heterogeneity, so as to make valid abstractions and generalizations. Further, entrepreneurship research often concerns events that are infrequent, unanticipated and/or extraordinary. Phenomena of this kind may be difficult to capture with conventional, quantitative approaches (cf. Baumol, 1983; Brymer, 1998). It is worth pondering that at the extreme of conventionalism, the most spectacular instances of entrepreneurship would invariably end up as disturbing and possibly deleted outliers in regression analyses (cf. the Analysis Method section). The process character of entrepreneurship may also call for qualitative approaches (cf. Brundin, 2002). For example, virtuous or vicious circles of events would be very hard to capture in quantitative work and entirely impossible with a cross-sectional survey design (Davidsson, 1986). Moreover, for matters that are in
principle possible to capture in broadly based studies insights from cases are often an indispensable input to good design and interpretations. However, qualitative studies based on retrospective interviews share with cross-sectional surveys the severe limitations of selection and hindsight biases. Hence, longitudinal case studies of an ethnographic kind would seem a stronger methodological candidate for making progress in entrepreneurship research. Such studies can capture processes and involve direct and rich observation of real behavior. Hence, there are frequent calls (but little following; Aldrich & Baker, 1997) for intense ethnographic study of (super-) entrepreneurs of the kind (Mintzberg, 1974) did in his classical study of managers. Of course, like all in-depth case approaches such a study would share the limitation that statistical generalizability cannot be obtained. What can potentially be achieved in qualitative work is analytical generalizability the generation of new concepts and suggested contingencies that are worthy of consideration also for cases not investigated. When entrepreneurship is regarded as equal to starting and running an independent business there is little doubt that ethnographic close-up studies of business owner-managers are an excellent tool for generation of new, tentative insights. When entrepreneurship is regarded as the process of creation of new economic activity the value of this approach is, regrettably, more limited. This is because entrepreneur is a transitory role; nobody is an entrepreneur all the time. Therefore, even if focused on an independent businessperson known for repeated success at creating new ventures there is considerable risk that intense, week-long observation of that individual would capture many more managerial than entrepreneurial behaviors. Unless the researcher is extremely persistent or lucky, s/he is likely to capture but a fraction of the entrepreneurial process. Quantitative vs. Qualitativea Confused Debate What entrepreneurship research does not need is the often confused and confusing debate about qualitative versus quantitative research that goes on in business studies. The debate is here called confusing and confused firstly because it rarely recognizes that quantitative (and therefore qualitative) has several distinct meanings, and secondly because it often and non-justifiably equates the nature of the data with issues of philosophy of science, rigor, and depth. Critics who favor qualitative approaches rarely distinguish between three distinct mea