State of the art in entrepreneurship research

Transcription

1 State of the art in entrepreneurship research A policy-oriented review with particular emphasis on the gender perspective and the Norwegian context This report is developed by Maria Theresa Norn*, Morten Wied*, Trine Fuglsang* and René Chester Goduscheit**, and commissioned by the Programme on Entrepreneur Research (MER) under the Research Council of Norway, February 2011 * DAMVAD a/s, Badstuestræde 20, 1209 Copenhagen, Denmark. ** Department of Marketing & Management, University of Southern Denmark, Campusvej 55, 5230 Odense M, Denmark 1

2 Contents 1 Introduction Background and purpose Approach and scope of the review Why do we need a review of entrepreneurship research? Summary of findings and implications 7 2 What do we know about entrepreneurship? The field of entrepreneurship research The economic importance of entrepreneurship Determinants of entrepreneurial decisions and success Entrepreneurship policy: approaches and lessons learned Summary and discussion 48 3 What do we know about entrepreneurship from a gender perspective? About entrepreneurship research in a gender perspective The underrepresentation of women in entrepreneurship Determinants of entrepreneurial decisions and success Entrepreneurship policy in a gender perspective Summary and discussion 71 4 Acknowledgements 75 5 References 75 2

3 1 Introduction 1.1 Background and purpose This report has been commissioned by the Research Council of Norway and written by DAMVAD in collaboration with René Chester Goduscheit, Assistant Professor at the University of Southern Denmark. It presents a state of the art review of research on entrepreneurship in general and on female entrepreneurship in particular, with special emphasis on research which is relevant in a Norwegian context. The review is the result of a preliminary study under the research program More Entrepreneurship (Mer Entreprenørskap, or MER). The program aims to strengthen knowledge about entrepreneurship in general and among women in particular that can help establish a more robust basis for Norwegian entrepreneurship policy. The purpose of the review is to provide a sound knowledge foundation that can support the MER program s efforts to support future research in entrepreneurship and to further knowledge of how to design policies to promote entrepreneurship, particularly among women. The MER program was established in 2009 as part of a plan of action to promote female entrepreneurship put forth by the Norwegian government in This plan was prompted by findings from empirical studies that women are underrepresented amongst Norwegian entrepreneurs. For example, the Global Entrepreneurship Monitor s 2007 report on entrepreneurship in Norway states that only 4.3 percent of women in Norway, compared to 8.6 percent of men, are involved in early-stage entrepreneurial activities; moreover, women account for just one third of sole proprietor start-ups and one sixth of entrepreneurs in limited liability companies (Kolvereid et al. 2007). These findings indicate that there is an underutilized economic potential for the Norwegian economy that can be activated by stimulating female entrepreneurship and thus contribute to overall economic growth and job creation. Thus, reaping the full entrepreneurial potential of the Norwegian economy calls for an increase in the proportion of women who engage in entrepreneurship. Recent empirical studies also point to a need to support entrepreneurship in general in Norway. The Global Entrepreneurship Monitor s 2008 report on entrepreneurship in Norway identified a number of challenges for entrepreneurship policy in the country, including not just the need to strengthen female entrepreneurship but also to foster a more entrepreneurial climate in general and to encourage young people to choose entrepreneurship as career path (Bullvåg et al. 2008). To enable the development of effective policies to support entrepreneurship in general and among women, it is necessary to have an overview of existing knowledge about the determinants and effects of entrepreneurial activity. The field of entrepreneurship research is however vast, multidisciplinary and fragmented. There is therefore a need to gather, assess and synthesize the existing body of research on entrepreneurship. As such, one of the objectives of the MER program is to identify and synthesize existing knowledge on entrepreneurship in Norway and internationally, to provide a solid knowledge foundation for further research on entrepreneurship and for the development of policies and initiatives to support entrepreneurship. The purpose of this review is therefore to identify and analyze relevant existing knowledge on entrepreneurship theory, practice and policy. In addition to commissioning the study behind this review, the MER program also provides financial support for research projects on entrepreneurship policy and aims to strengthen the quality of future knowledge production in the field of entrepreneurship. The program has already provided funding for two large-scale research projects that will exploit data on entrepreneurial individuals, firms and activities in Norway. This review is therefore also intended to identify research gaps that may provide inspiration for research questions and research directions in these and any potential future research projects funded by the MER program. 3

4 1.2 Approach and scope of the review The review presents an overview of the state of the art in entrepreneurship research and identifies knowledge gaps that point to promising future research directions. Although this review primarily focuses on academic research, it is not in itself an academic paper. Rather, the aim of this review is to provide an overview and a roadmap of entrepreneurship research that it is relevant and useful for policymakers. The review is primarily intended to provide civil servants and policymakers in the Research Council, relevant ministries, and other funding agencies with an overview of existing knowledge on entrepreneurship. It is also hoped that the review will be of use to Norwegian research environments in identifying research directions in ongoing and future research projects on entrepreneurship. The review is intended to function as a map of the field of entrepreneurship research that can guide further, more in-depth investigations of the many topics covered in the review, by policymakers and academics alike. The review therefore does not cover all existing work on each topic; instead, it condenses selected studies and analyses. In our review of the literature and our selection of articles and analyses to be included, we have focused on covering the state of the art in knowledge about entrepreneurship, understood as research from 1995 onwards. We have also sought to include references to relevant and influential prior work that has helped shape the current state of the art. Moreover, we have had special focus on identifying studies based on Norwegian data and reviewing them in light of findings from general research on entrepreneurship, in order to increase the relevance of the review for policymakers and researchers working on entrepreneurship in Norway. The review focuses on articles published in international peer-reviewed scientific journals. This is because such publications constitute the main means of dissemination of academic research. Moreover, because they are peer-reviewed, they have been subjected to expert scrutiny of their arguments, methods and results. The review also draws on several other forms of publications, including academic books and working papers but also non-academic reports, analyses and policy documents. This approach has been selected because a broad coverage of Norwegian research on entrepreneurship is important in order to identify empirical results and insights that are particular to the Norwegian context and therefore valuable inputs to the MER program. Much empirical and policy-oriented research is however not published in scientific journals, but instead disseminated through e.g. reports and working papers. Moreover, reports and analyses targeted towards policy makers often include syntheses of key research findings that carry relevance in a policy oriented context, and were therefore deemed to be an important complement to academic publications for the purposes of this review. Because of the vastness of the entrepreneurship literature, an exhaustive survey is neither feasible nor the aim of this report. However, in accordance with the objectives of the MER program and the requirements of this report, the review places particular emphasis on entrepreneurship research in a gender perspective and in a Norwegian perspective. In view of resource and time constraints, several streams of research on entrepreneurship and on related entrepreneurship have not been included in this review. Notably, this includes research on entrepreneurship in developing or transitional economies, social entrepreneurship and sustainable entrepreneurship, corporate entrepreneurship (or intrapreneurship) and strategic entrepreneurship. We also exclude research focused on small and medium sized enterprises (SMEs) rather than entrepreneurship; while this literature is also highly relevant for the purposes of the MER program, it is also very extensive and warrants a review of its own. Finally, because of the scope of the review, we try to minimize confusion regarding definitions, concepts and indicators of entrepreneurship by staying as close as possible to reviewed authors own choice of terms and concepts. This approach has been chosen as the main aim of this review is to provide a roadmap of entrepreneurship research rather than to propose our understanding and reinterpretation of research on the topic. 4

5 The identification of publications to be included in this review was undertaken through four distinct but overlapping and parallel processes: A review of Norwegian research on entrepreneurship. In preparation for the review, we undertook a broad identification and selective retrieval and analysis of both academic and non-academic publications based on research on entrepreneurship (in general and from a gender perspective) by researchers with an affiliation to a Norwegian research institution. The identification and retrieval of these publications was conducted in three steps: (1) questionnaires were sent out to representatives from 25 Norwegian research institutions with definite or possible research activities within the field of entrepreneurship (ten responded) (2) Supplementary desk research on Norwegian research environments (primarily based on their webpages and available staff and publication lists) (3) Systematic search and analysis of scientific journal publications by Norwegian research environments in three electronic journal databases: ScienceDirect, Business Source Premier and JSTOR. These three databases were selected because they cover all but one of the main journals on entrepreneurship research. Searches were moreover conducted based on the two strategies: (a) combined searches for search terms related to entrepreneurship (e.g. entrepreneur* or venture*) and author affiliations with a Norwegian address, and (b) individual searches for publications by approximately 70 academic researchers from the most active Norwegian research environments in the field of entrepreneurship research, identified through desk research on the environments webpages. A systematic review of research on entrepreneurship from a gender perspective. This process involved the systematic identification of publications on entrepreneurship from a gender perspective in internationally-recognized, peer-reviewed journals during the period relevant articles published in top journals were identified and analyzed. Subsequently, 121 were subjected to further, more in-depth analysis. 1 The search was undertaken in the ISI Web of Science Social Science Citation Index (SSCI) database. This database was selected because it is one of the most comprehensive bibliometric databases of publications in internationally-recognized, peer-reviewed scientific journals. However, it has a relatively limited coverage of social science research. Searches were therefore also undertaken in the three electronic journal databases: Business Source Premier, Science Direct and JSTOR. A selective review of research on entrepreneurship. We undertook a selective identification, retrieval and analysis of publications on entrepreneurship that appeared in internationally-recognized peer reviewed journals, with particular emphasis on recent articles, i.e. published in 1995 or later. These searches were focused on entrepreneurship in general and on particular sub-topics of entrepreneurship covered in this review. The searches were conducted in the three electronic journal databases: Business Source Premier, Science Direct and JSTOR. Supplementary research of policy-oriented publications on entrepreneurship. A selective identification, retrieval and analysis of non-academic reports, analyses and evaluations of entrepreneurial activity and entrepreneurship policy was undertaken using web-based search engines, primarily Google. Finally, the review benefited from ongoing discussions with staff from the MER program, as well as valuable inputs from other Research Council employees, academic researchers and other stakeholders. 1 The results of this review are also reported separately in the academic paper A systematic academic review of recent research on entrepreneurship from a gender perspective, which has been written in connection with this project. 5

6 1.3 Why do we need a review of entrepreneurship research? Entrepreneurship is widely recognized as an engine of economic and social development throughout the world (Audretsch 2003: 5). We seek to better understand the entrepreneurial process because it is the crucial driver of innovation and economic change (see e.g. Schumpeter 1911, 1942; Shane & Venkatamaran 2000) and thus provides the foundation for the long-term viability and competitiveness of national economies (OECD 2009). But what is entrepreneurship really? In the Norwegian government s plan of action to promote entrepreneurship among women (Departementa 2008: 7), entrepreneurship is defined as a dynamic and social process where individuals, alone or in collaboration, identify economic opportunities and exploit these opportunities by establishing and developing new enterprise. Entrepreneurship refers to a broad range of activities that generate economic activity based on new products, new services and new ways of doing things. It also spans a vast range of organizational forms and levels of analysis. This is because entrepreneurship essentially refers to the activities of an individual or a group of individuals within the same network, project or firm. At the same time, however, these activities are also embedded within an industry, a city, a region and even a country. Multiple levels of analysis are therefore needed to understand the dynamics and effects of entrepreneurial behavior (see e.g. Audretsch 2003). In addition, entrepreneurship is not only an economic phenomenon, but also a social one. Entrepreneurial ideas and ventures stem from the ideas and actions of individuals. Moreover, they may be reinforced, enabled or even hindered through social processes, whereby the entrepreneur interacts with peers, investors and other stakeholders that thus influence the outcome of the entrepreneurial process. Finally, both the decision to pursue an entrepreneurial idea as well as the long-term survival and success of the entrepreneurial venture are influenced by (among many other things) the motivations, ambitions and competences of the individual entrepreneurs behind them. Thus, entrepreneurship is a very complex and multifaceted phenomenon (Audretsch 2003). As a result, efforts to understand and explain entrepreneurial activity are equally complex in nature. Research on entrepreneurship is essentially concerned with understanding the individuals, companies and activities that drive innovation and economic growth. Because of the economic importance of entrepreneurial activities, much research is also concerned with understanding how policymakers can stimulate and support entrepreneurship. The field of entrepreneurship research is vast, fragmented and highly multidisciplinary (Bull & Willard 1993; Bruyat & Julien 2000; Audretsch 2003; Grilo & Thurik 2004; Ireland et al. 2005). As a result, it s difficult to gain an overview of current knowledge on the determinants, characteristics and effects of entrepreneurial activities. There is therefore a need to synthesize state of the art knowledge on entrepreneurship so as to provide a sound basis for future research and policymaking on entrepreneurship. The latter is particularly important, since collaboration in Norway between policy makers and researchers in the field of entrepreneurship is rather weak; while there has been some improvement in recent years, there are no regular meetings between researchers and the government to discuss knowledge from research in the area of entrepreneurship (Rotefoss & Nyvold 2008). However, knowledge about entrepreneurship can play an important role in helping policymakers support entrepreneurial processes in individuals and firms, and societies more effectively (Busenitz et al. 2003). There is also a need to devote special attention to the state of the art in research on female entrepreneurship. Like entrepreneurship on research in general, research on female entrepreneurship is a multidisciplinary and fragmented stream of research (Holmquist & Carter 2009). This review therefore builds on and extends previous reviews of entrepreneurship in general and female entrepreneurship in particular. The main contribution of this report is to deliver a state of the art review, which is tailored to the needs of the MER program. 6

7 1.4 Summary of findings and implications This review is divided into two parts, presented in two separate chapters: chapter 2 presents a review of entrepreneurship research in general, while chapter 3 presents a review of research on entrepreneurship from a gender perspective. Before we turn to these chapters, this section presents the key findings of the review. The overall conclusion of the review is that there is a large and ever-growing number of studies that each shed a small ray of light on the vast, multifaceted and highly complex phenomenon of entrepreneurship. We still do not have a clear overview of the phenomenon as a whole, but we begin to be able to make sense of particular aspects of entrepreneurial decisions and activities and of their importance for innovation and economic growth. The review shows that the mounting evidence on the dynamics and effects of entrepreneurship is fascinating, but generally very mixed; it therefore provides an inconsistent and unclear knowledge foundation for future policymaking. The review also indicates that research tends to cluster around a number of key themes and issues, which also carry relevance for policymaking (e.g. the role of education or access to risk capital). The main challenge ahead, as we see it, therefore lies in building evidence that can generate robust insights into these themes and issues and thus provide a sound basis for entrepreneurship policy. As such, there is still a great need for research to shed further light on the dynamics and effects of entrepreneurship. The main contribution of the part of the review that focuses on entrepreneurship from a gender perspective is to confirm that significant differences do seem to exist between male and female entrepreneurs, at least in certain respects. This points to a need for further research as well as for policies aimed at promoting and supporting female entrepreneurs. However, the review also identifies a number of circumstances under which the differences among female entrepreneurs are greater than the differences between male and female entrepreneurs; this indicates a need to target policies at particular subgroups of female entrepreneurs rather than to treat all women entrepreneurs as a homogeneous group. In addition, the review points to the following, overall directions for future research: Greater interdisciplinarity and more holistic, problem-oriented research Greater cross-fertilization between quantitative and qualitative research methods More sophisticated empirical analyses More nuanced research and targeted policy implications. Taken together, the above recommendations would, in our opinion, help move the research front in the field forward by stimulating more holistic approaches to problem-solving and enabling more targeted and thereby more effective policies to stimulate and support entrepreneurship. The four recommendations for future research directions are presented in more detail in the following. Greater interdisciplinarity and more holistic, problem-oriented research. Overall, the review indicates that research on entrepreneurship in general and from a gender perspective has made significant progress over the past two to three decades during which this field of research has taken shape. However, the research front is characterized by many different topics and approaches. As a result, the research field remains highly multidisciplinary and fragmented. Disciplinary differences in perspectives and method contribute a richness to the field, but also have two disadvantages: First, they reinforce the vast and fragmented nature of the research landscape, which makes it difficult for researchers and policymakers to command an overview of the full state of the art in the field. Second, they discourage attempts at more holistic, problem-oriented analysis that are necessary to enable the further advance of our understanding of the phenomenon of entrepreneurship. Based on this review, we therefore argue that there is a potential to promote greater interdisciplinarity in entrepreneurship research. The aim hereof would be to promote more holistic research focused on problems and key issues in entrepreneurship rather than on theory-derived questions and perspectives generated by distinct research disciplines. 7

8 Greater cross-fertilization between quantitative and qualitative research methods. The review also lends support to the hypothesis that there is a growing trend towards more sophisticated and particularly quantitative research methods in the field, partly due to the increased focus on publication in top North American journals, many of which traditionally favor quantitative research. While this trend contributes to a higher degree of sophistication and greater potential explanatory power by incorporating a larger number of relevant variables in robust analyses, it does however divert attention from the benefits of greater cross-fertilization between quantitative and qualitative studies. Both types of methods provide valuable insights into entrepreneurship and should therefore be seen as complementary rather than competing. This review points to the need to foster a more productive interplay between quantitative and qualitative research methods not necessarily within the individual research group, but at least within the research community as a whole to thereby promote a more complete understanding of entrepreneurial decisions and activities. More sophisticated empirical analyses. The results of the review, however, also emphasize the benefits of sustaining the current development toward more sophisticated analyses quantitative as well as qualitative that build on findings from prior research by incorporating as many relevant variables as possible in comprehensive, yet parsimonious models of entrepreneurial phenomena. The field of entrepreneurship research has in the past been criticized for a lack of rigor in its empirical studies and for relying on anecdotal evidence. This review indicates that the quality of empirical work in the field has improved substantially, but that there is still potential to further develop methodological approaches, for example through longitudinal studies and cohort analyses in quantitative analyses, and more rigorous methods of data collection and analysis in qualitative studies. More sophisticated methods will support both more holistic analysis as well as enable the further exploration of the many nuances that have emerged from recent work, a point which we address in the next recommendation. More nuanced research and targeted policy implications. Finally, the review shows that empirical findings on many topics of investigation are mixed and often seemingly contradictory. However, research also indicated that many of these apparent contradictions reflect differences across entrepreneurial sectors, or cultural or national differences or that they can be resolved through more holistic and sophisticated analyses. The most important implication hereof is that policy to promote or support entrepreneurial activity needs to be as sophisticated and nuanced as the research on entrepreneurial phenomenon. For example, several studies indicate that the differences among female entrepreneurs are greater than differences between male and female entrepreneurs. This suggests that entrepreneurship policies to support entrepreneurship among women should, at least in many cases, be targeted at particular subgroups of female (and possible also male) entrepreneurs with specific needs or challenges, rather than aimed at stimulating female entrepreneurship in general. A more targeted approach to entrepreneurship policy can thus be expected to be more effective in achieving policymakers goals to strengthen economic development based on entrepreneurial activity. However, this also necessitates that academic researchers focus on formulating research designs and implications from their research that enable such targeted policies. For a summary and discussion of the review of entrepreneurship research in general, please see section 2.5. For a condensation of the main findings from the review of research on entrepreneurship from a gender perspective, please see section

9 2 What do we know about entrepreneurship? 2.1 The field of entrepreneurship research This section presents a brief introduction to the field of entrepreneurship research. We begin with a short discussion of the origins of the field and of its development over time (section 2.1.1). We then discuss the fragmented and multidisciplinary nature of the research field (section 2.1.2) and the trend towards greater interdisciplinarity and new methodological approaches in entrepreneurship research (section 2.1.3). Finally, we turn our attention to a brief comment on entrepreneurship research in Norway (section 2.1.4) before outlining the contents of the rest of the chapter (section 2.1.5) Origins and development of the field Research on entrepreneurship dates back to the work of the Austrian economist Joseph Schumpeter in the beginning of the 20th century. 2 In a seminal treatise from 1911, The Theory of Economic Development, Schumpeter proposed that the central driving force behind economic development in capitalist economies is a process of creative destruction. According to this theory, entrepreneurs are the source of inventions that cause fundamental changes in technologies, products or processes. Essentially, entrepreneurs introduce new ways of doing things that change the rules of the game. As a result, entrepreneurs may displace incumbent firms who are unable or unwilling to adapt to these changes. In another classic publication from 1942, Capitalism and Democracy, Schumpeter (1942: 13) argued that large, incumbent firms tend to resist innovation because their organizational structures and routines are better suited to sustaining existing activities: The function of entrepreneurs is to reform or revolutionize the pattern of production by exploiting an invention, or more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way To undertake such new things is difficult and constitutes a distinct economic function, first because they lie outside of the routine tasks which everybody understand, and secondly, because the environment resists in many ways. Therefore, Schumpeter argues, entrepreneurs are forced to start new firms to pursue and market their innovative ideas. The entrepreneurial process therefore simultaneously entails creation in that it involves new ways of doing things and creating economic value and destruction in that it obsoletes established routines, activities and possibly even firms. This process of creative destruction is, according to Schumpeter, the principal engine of long-term economic growth. The Schumpeterian view of entrepreneurship and innovation is still highly influential in modern research on entrepreneurship, which started taking shape in the 1970s, but took off in 1980s. According to several scholars, the growth in interest in entrepreneurship during the 1970s and 1980s is connected to a general shift in the economy at the time, where large firms who had previously been seen as the main drivers of economic growth experienced a period of downturn and downsizing, while entrepreneurial rates reversed a long-term downward trend (Blau 1987; Wennekers & Thurik 1999; Grilo & Thurik 2004). Audretsch & Thurik (2001) refer to this general shift in the economy as a transition from the managed economy dominated by large firms to the entrepreneurial economy. The increase in the number of self-employed and small businesses in developed economies propelled a renewed interest in understanding entrepreneurship (see e.g. Low & MacMillan 1988; Chandler & Lyon 2001), which has now lasted for more than three decades. 2 Hebert & Link (1988) credit the Irish economist Richard Cantillon with making the first references to entrepreneurship in the 18th century. In 1732, Cantillon identified the entrepreneur as someone who exercises business judgment in the face of uncertainty. However, Schumpeter is usually recognised as the starting point for modern research on entrepreneurship and innovation and therefore the focus of this report. 9

10 Overall, the late twentieth century has witnessed a massive increase in the attention paid by academics, but also by policymakers, to the determinants and importance of entrepreneurship. It therefore stands in sharp contrast to the period stretching from the early twentieth century and up till the 1970s, where entrepreneurship and small businesses were considered to be outdated research and policy topics of limited economic importance (Uhlander 2003). During the late 1980s and the 1990s, the focus in research however shifted from understanding the role of large enterprises to small businesses as key drivers of economic growth (Dahlstrand & Stevenson 2010). Growing recognition of the economic value of entrepreneurs caused entrepreneurship to reemerge as a key agenda item for national as well as international policymakers (see e.g. OECD 1998 and European Commission 1999, as cited in Uhlander 2003). As a result, the number of academic researchers working on entrepreneurship has been increasing steadily during the 1980s and 1990s, alongside the growing interest of governments in entrepreneurship (Welter & Lasch 2008). Also, Busenitz et al. (2003) documented an upward trend in the number of entrepreneurship articles published in leading management journals from 1985 to 1999, although the percentage of entrepreneurship articles remained low compared to other, related fields of research. In the 2000s, entrepreneurship research has continued to gain prominence (Welter & Lasch 2008). This decade also witnessed the establishment of the Global Entrepreneurship Monitor (GEM) Consortium. GEM is a nonprofit research consortium that was initiated in 1999 (see Reynolds et al. 1999, 2000) with the aim of providing high quality data on global entrepreneurial activity. Although it originally started in the U.S., GEM quickly spread to other countries; today, GEM s annual reports are based on research conducted in 59 countries and function as a key source of internationally comparable data on entrepreneurial activity A fragmented and multidisciplinary research field Because of the complex and multifaceted nature of the phenomenon of entrepreneurship, research on entrepreneurship is very multidisciplinary, consisting of multiple approaches that together contribute to our collective knowledge and understanding of entrepreneurship. The literature focuses on several units and levels of analysis, ranging from the individual entrepreneur to groups of individuals in networks, projects, firms and industries; it also addresses entrepreneurship in its spatial dimensions, that is, entrepreneurial activity and effects in clusters, cities, regions and nations (Audretsch 2003). Also, the multidisciplinary nature of the field means that entrepreneurship research takes many different forms. Originally, entrepreneurship research was concentrated in business and management studies, but it has since spread to many other fields of research, notably psychology and sociology. Today, the entrepreneurship literature represents a broad and heterogeneous range of approaches and methods, from game theoretical modeling to social network analysis, large-scale statistical analyses of panel data on individuals and companies, and in-depth qualitative studies. All these approaches bring different types of insights that, taken together, help us paint a picture of the state of the art in knowledge on entrepreneurship. Each discipline brings its own valuable and often unique insights and perspectives on entrepreneurship. For example, psychologists have focused on understanding the motives and character traits of actual and potential entrepreneurs, while economists have studied the impact of the economic climate and technological developments on entrepreneurial activity (Grilo & Thurik 2004). However, this heterogeneity of research approaches also comes at a cost, namely that it becomes difficult to gain a clear overview of the combined, cumulative state of knowledge on entrepreneurship. This is largely because many of the disciplines advance distinctly of each other s progress, and knowledge development therefore takes place on multiple, parallel research fronts, with no unifying conceptual framework or research paradigm to guide it (Busenitz et al. 2003; Cooper 2003; Ireland et al. 2005; Gartner et al. 2006). 10

11 Even in the academic community of entrepreneurship scholars, there is therefore much debate about where the field is, how well-defined it is, and what stage of development and understanding of entrepreneurship that has been reached so far (Busenitz et al. 2003; Shane & Venkatamaran 2000). Moreover, entrepreneurship research has been described as a relatively young field (Cooper 2003) and as an adolescent field (Low 2001). Clearly, the search for an actual theory of entrepreneurship continues (Phan 2004). There are, however, a number of recurring themes in research on entrepreneurship, for example what motivates individuals to become entrepreneurs, or the importance of risk capital for the performance of entrepreneurial businesses. In addition to these predominant and classic themes, research agendas are also shaped by a number of tangential research themes, such as for example regional development and entrepreneurship policy. Busenitz et al. (2003) argued that because the field of entrepreneurship research is so varied and has highly permeable boundaries, this facilitates intellectual exchanges with other research fields. However, they also suggested that these same traits may discourage the development of a distinct theory of entrepreneurship, thus making it more difficult to establish the legitimacy of the field. Other scholars also argue that the field of entrepreneurship research is in need of a unifying conceptual framework. For example, Shane & Venkatamaran (2000) argued that a framework that explains and predicts empirical phenomena, which is not is explained or predicted by other fields, is necessary for a research field to be useful. Moreover, they criticized the field of entrepreneurship for having become a broad label under which a hodgepodge of research is housed (Shane & Venkatamaran: 217), and called for greater focus on a unique set of empirical phenomena. They therefore introduced a conceptual framework, which centers on an understanding of entrepreneurship as the discovery and exploitation of economic opportunities and which will be discussed in further detail in section of this review. The framework put forth by Shane and Venkatamaran (2000) has been highly influential in entrepreneurship research over the past decade; however it has not succeeded in unifying the field. Other scholars have suggested alternative unifying frameworks. For example, Audretsch et al. (2002) proposed the Eclectic Framework, a model which, like the framework by Shane & Venkatamaran, seeks to integrate insights from different research streams in the entrepreneurship field. Their framework is however focused on identifying and understanding the determinants of entrepreneurship, that is, the factors that shape the supply of entrepreneurs on the one hand and the demand for entrepreneurship on the other. As such, this framework is also concerned with understanding how government policy can promote and support entrepreneurial activity by identifying the channels through which policy instruments shift either the demand or supply side curves. None of the attempts to develop a unifying conceptual framework for entrepreneurship research have, however, succeeded. While they can be quite influential on subsequent research, they have failed to bring together entrepreneurship researchers. This suggests that it is extremely difficult to capture all the dimensions of entrepreneurship research in a satisfactory way within a single framework. 11

12 2.1.3 A move towards greater interdisciplinarity and new methodological approaches Partly in response to the lack of a unified research agenda, and partly to reap the benefits of cross-fertilization between disciplines, recent years have seen a greater move towards interdisciplinary research in the field of entrepreneurship. In a recent review, Minitti and Lévesque (2008) even suggest that a new mainstream may be emerging in entrepreneurship research, as the distance between economics and other social sciences is declining, and as cross-disciplinary research (e.g. bridging economics and psychology) becomes more common. The past decade or two have also witnessed the growing use of new, more rigorous research methods. Early entrepreneurship research was criticized for a lack of rigor in methods (see e.g. Cooper 2003). However, as in many other research fields in the social sciences, the past decade or two have brought about an increasing focus on more sophisticated scientific methods and rigorous data collection and analysis (Chandler and Lyon 2001). The field of entrepreneurship research is characterized by a broad range of methodological approaches, from case studies to narrative analysis to multivariate statistical analyses. European research on entrepreneurship has however traditionally been associated with the use of qualitative research methods and a strong interest in the contextual dimensions of entrepreneurship, while American studies have been more heavily oriented toward quantitative studies (Aldrich 2000; Gartner & Birley 2002; Welter and Lasch 2008) 3. This is in large part due to historical differences in publication channels, where European research has placed far more emphasis on dissemination through e.g. edited volumes and conference proceedings, and to a growing trend towards academic publication in English rather than other languages (Welter & Lasch 2008). This trend is further reinforced by the more recent, increased focus in European research institutions on increasing research productivity and boosting publications in top journals, many of which are from the U.S. (Gartner & Birley 2002). As suggested by Brush et al. (2008), the increased use of quantitative data may also be explained by the growing availability of such data, e.g. large-scale collaborative studies such as the Global Entrepreneurship Monitor (GEM). Several recent reviews find indications of an increasing convergence towards quantitative studies, including longitudinal multivariate analyses and hypothesis testing, as well as an increased focus on reliability and validity (e.g. Brush et al. 2008; Chandler & Lyon 2001). These reviews however also stress the need for continued, further improvements to the research methods used in the field. More specifically, scholars call for a more robust methodological base in the field, characterized by greater emphasis on sampling issues (addressing both sample size and potential biases), multiple source data sets, increased emphasis on reliability and validity issues, the development of more sophisticated theoretical models, and more longitudinal research (Low & MacMillan 1988; Chandler & Lyon 2001; Bouckenooghe et al. 2007). More recently, based on an analysis of 275 empirical articles published in the highest-rated academic journals between 1999 and 2003, Bouckenooghe et al. (2007) assessed the current state of entrepreneurship research in terms of its validity. They found that entrepreneurship studies were mainly cross-sectional using surveys or field study as methods, but found evidence of a positive trend towards more longitudinal research and triangulation in data sources. They concluded that the field could benefit from more triangulation in research strategies, more advanced analytical techniques and methodologies, and from more longitudinal research, all of which would help strengthen the validity of entrepreneurial research further. Welter & Lasch (2008: 245) do however argue that there are important benefits of having several methodological approaches in the field of entrepreneurship research, and they caution against the taken-forgranted assumption that rigor is only achieved by using multivariate data techniques. They raise the question of whether or not the convergence of methods is a desirable achievement for the entrepreneurship field and 3 For a review of studies examining the difference in thematic and methodological approaches between U.S. and European research on entrepreneurship, see Welter & Lasch (2008) or Brush et al. (2008). 12

13 they answer the question in the negative by highlighting the strengths of sophisticated qualitative research as well as combinations of quantitative and qualitative approaches. Similar reflections are presented by Gartner & Birley (2002), who argued that there are substantive issues in entrepreneurship, which are rarely addressed and which are best explored through qualitative research. The authors therefore stress the importance of combining quantitative and qualitative methods Entrepreneurship research in Norway Entrepreneurship research in Norway was off to a late start compared to the rest of Europe and the U.S., where the research field took off in the 1980s. In Norway, as in the rest of the Nordic countries, this take-off came about a decade later, in the 1990s (Hjorth 2008). In an analysis of Nordic research on entrepreneurship, Hjorth (2008: 313) emphasized that entrepreneurship research in the Nordic countries is closely linked to Nordic culture, and thus to a focus on the local and particular. According to Hjorth, this is seen by the focus in the Nordic approach to entrepreneurship research on micro-level processes, qualitative methods (especially case studies) and the influence of organization studies. Though Hjorth found Nordic research to be primarily oriented towards qualitative methods, he concluded his article by suggesting that the strong policy-orientation in Nordic entrepreneurship research is likely to push future research more towards quantitative studies. This push is likely to be further strengthened by the aforementioned growing focus on publications in U.S. journals, which have traditionally been more heavily oriented toward quantitative studies such as multivariate, applied statistical analyses (Welter and Lasch 2008). Hjorth (2008) also pointed out that the Nordic entrepreneurship research field has seen a significant growth in critical mass, as indicated by increases in the number of scholars, PhD students and scientific publications. In regards to Norwegian research in particular, Hjorth (2008) stated that central, recurrent themes in entrepreneurship studies are financing and state intervention/stimulus. The most common theme across the Nordic countries to emerge from Hjorth s analysis, however, is also the subject of this review, namely the status and development of entrepreneurship research. Welter & Lasch (2008) moreover explain that entrepreneurship researchers in the Nordic countries were relatively outgoing and internationally-oriented from an early stage onwards, compared to larger countries such as France, the United Kingdom and Germany, where large internal economies and national academic publication channels reduced incentives to engage with researchers beyond the national border Structure of the chapter The chapter presents the results of the review of research on entrepreneurship. We begin in section 2.2 by examining the economic importance of entrepreneurship, before moving on to an analysis of empirical findings regarding the determinants of entrepreneurial decisions and success in section 2.3. Section 2.4 reviews prior work concerning entrepreneurship policy and discusses implications of entrepreneurship research for the formulation and implementation of initiatives to stimulate and support entrepreneurial activity. Finally, section 2.5 summarizes key conclusions from the chapter and highlights some promising research directions. 13

14 2.2 The economic importance of entrepreneurship Because of the multidisciplinary nature of the entrepreneurship field, there are many alternate and even competing definitions of entrepreneurship and approaches to studying it (e.g. Gartner 1990; Bull & Willard 1993; OECD 1998; Grilo & Thurik 2004; Ireland et al. 2005). 4 As Audretsch (2003: 2) states, The failure of a single definition of entrepreneurship to emerge undoubtedly reflects the fact that it is a multidimensional concept. The actual definition used to study or classify entrepreneurial activities reflects a particular perspective or emphasis. As Audretsch (2003) also argued, however, entrepreneurship is essentially about change, just as entrepreneurs are agents of change. This corresponds to the definition of entrepreneurship proposed by the OECD (1998: 11): Entrepreneurs are agents of change and growth in a market economy and they can act to accelerate the generation, dissemination and application of innovative ideas (.) Entrepreneurs not only seek out and identify potentially profitable economic opportunities but are also willing to take risks to see if their hunches are right. To better understand the phenomenon of entrepreneurship and thus to provide a more informed basis for entrepreneurship policy, it is necessary to develop methods of operationalizing and measuring entrepreneurship. This task is particularly challenging because of the lack of a generally accepted definition of entrepreneurship (OECD 2009). Thus, the use of the concept of entrepreneurship is complicated by the lack of widely accepted indicators (OECD 1998). In reaction to this, empirical studies have sought to develop a broad range of indicators for levels and types of entrepreneurial activity as well as for the performance of entrepreneurial ventures e.g. as indicated by job creation, turnover and exits (see e.g. Audretsch 2003 or OECD 2009 for a review of previously used indicators). Some of the most often used measures of entrepreneurship are self-employment rates, business ownership rates, new firm start-ups, as well as other measures of industry demography, such as simultaneous births and exits. However, these measures all have both advantages and limitations. Business ownership rates, for example, are seen as a useful and internationally comparable proxy for entrepreneurial activity (e.g. Carree et al. 2002); nonetheless, they have the disadvantage of treating all businesses the same and not taking the stock of businesses or new firm formation into account (Audretsch 2003). It has also been pointed out that the entrepreneurship literature has tended to focus on early phases of business formation, that is, on entrepreneurs start-up decision and on the dynamics and performance of nascent firms (Audretsch 2003). Audretsch (2003: 5) argued that this is an important limitation in entrepreneurship research, as it restricts entrepreneurial activity to the process of the firm startup ; it thus neglected important processes of entrepreneurial activity and innovation that occur in incumbent firms, also referred to as intrapreneurship or corporate entrepreneurship. As stated in chapter 1, this review has the same limitation, as it does not cover corporate entrepreneurship but focuses on entrepreneurial start-up firms. Moreover, it is important to recognize that such start-ups may take many firms a recognition which is reflected in several (especially more recent) empirical studies of entrepreneurship. This is for example the case in Berglann et al. (2010), who distinguish between entrepreneurs as self-employed and entrepreneurs as investors and employees in limited liability companies. Berglann et al. (2010) argue that it is important to include the owners of limited liability companies whether they work alone or are engaged in a partnership in seeking to measure entrepreneurial activity more accurately. 4 See e.g. Hebert & Link (1989) or Bull & Willard (1993) for a review of some of the competing definitions of entrepreneurship. 14