at the center of the action: innovation and technology ... · at the center of the action:...

At the Center of the Action: Innovation andTechnology Strategy Research in the SmallBusiness 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. Thesecomments cover a range of issues unique to the future of small-business-focusedresearch from “somewhat-broad” to “more-narrow,” and address: (1) the problemsand promise of better theory building, (2) the range of opportunities for theory-building research, (3) new vantage points for theory-building using the “socialresponsibility” of small business as a research lens, and (4) the future direction ofresearch in technological entrepreneurship. We conclude with a summary of this“look to the future,” and call for the innovative and provocative research that cankeep contemporary small business management research at the center of the aca-demic action.

In big business change is smallIn small business change is big(Welsh and White 1981)

IntroductionContemporary small business research

is the beneficiary of a dramatic change in

theoretical perspective. When, in their1981 Harvard Business Review article,Welsh and White popularized the notionthat “a small business is not a little bigbusiness,” it signaled a movement fromthe static view of small business as beingsuboptimal because of scale limitations,toward the dynamic view of small

Justin Tan is professor of management and Newmont Chair in Business Policy in theSchulich 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 inManagement 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 JohnsHopkins University.

Address correspondence to: Justin Tan, Schulich School of Business, York University, 4700Keele Street, Toronto, Ontario CANADA M3J 1P3. E-mail: [email protected].

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

TAN et al. 233

mailto:[email protected]

businesses being agents of change(Audretsch 2001, 1995). As we looktoward the future of innovation and tech-nology strategy research in the smallbusiness setting, we anticipate the matur-ing of this dynamic view, which castssmall business as a main character at the“center of the action” in technology andinnovation.

As chronicled in Table 1, the literaturethat marks the milestones along this pathof change since 1981 spans a periodfrom the early 1980s to the early 21stcentury.

We note several themes in this litera-ture that provide the outlines, we think,of a future research agenda for scholarsin this domain. For example, over thepast 25 years the emphasis has shiftedaway from trying to distinguish a “small”business from an “entrepreneurial”business, and also away from the des-criptive research necessary to articulatethe importance of small businesses tosociety. Instead, emphasis has shiftedtoward the attributes and strategies thatenable small businesses to grow, to con-tribute to economic value creation, andto flourish at the center of the innovationand technology-based calculus.

For example, we know that during theearly stages of new business formationall ventures are small, but necessarilyhigh-growth (Figure 1). Hence, mid-range theoretical frameworks are neces-sary to explain the differences betweensmall and high-growth firms or moreimportantly the divergence in growthpaths that can occur as small firmsmature.

The Future of SmallBusiness Research

With the earlier observations as ourfoundation, we offer the following fourrelated essays that provide perspectiveson the future of small business research inthe area of innovation and technologystrategies. These comments cover arange of issues unique to the future of

small-business-focused research from“somewhat-broad” to “more-narrow,” andaddress: (1) the problems and promiseof better theory building, (2) the rangeof opportunities for theory-buildingresearch, (3) new vantage points fortheory-building using the “social respon-sibility” of small business as a researchlens, and (4) the future direction ofresearch in technological entrepreneur-ship. We conclude with a summary of this“look to the future,” and call for moreinnovative and provocative research thatcan keep contemporary small businessmanagement research at the center ofscholarly attention.

The Problems and Promise ofBetter Theory Building

For at least the last 20 years, the fieldof small business research has played aunique role in the development of entre-preneurship research. Przeworski andTeune (1969) suggest that “. . . the crite-ria of generality . . . imply that the sametheories must be evaluated in differentsystemic settings and that social sciencetheories can gain confirmation only iftheories formulated in terms of thecommon factors constitute the point ofdeparture for comparative research(p. 22).” By testing theories in small busi-ness settings, which were originallydeveloped in some other context, wehave thereby advanced our knowledgeabout the external validity, or generaliz-ability, of current theory. For example, inorganizational research, managerial para-digms developed and tested among largefirms may be assessed and refined andnew theories developed, where they areexposed to comparative testing in thesmall-enterprise setting—which presentswide variation in organizational features.

Somewhat problematically, however,this approach has yielded many diversepositions on the transferability of man-agement principles into small businessesbecause of the wide variations in thequality of research execution. For small

JOURNAL OF SMALL BUSINESS MANAGEMENT234

Table 1Small Business Research Examples—A 25-Year

Chronological Snapshot

Year Research Description Reference

1983 The authors . . . build a frameworkconsisting of five stages throughwhich small companies pass.

Churchill, N. C., and V. L. Lewis(1983). “The 5 Stages of SmallBusiness Growth,” HarvardBusiness Review 61(3), 30–39.

1984 . . . although there is an overlapbetween entrepreneurial firms andsmall business firms, they aredifferent entities.

Carland, J. W., F. Hoy, W. R.Boulton, and J. A. C. Carland(1984). “DifferentiatingEntrepreneurs from SmallBusiness Owners—AConceptualization,” Academy ofManagement Review 9(2),354–359.

1988 . . . (This paper examines) . . .how well . . . theories of smallbusiness management meet therequirements of good theory.

Damboise, G., and M. Muldowney(1988). “Management Theory forSmall Business—Attempts andRequirements,” Academy ofManagement Review 13(2),226–240.

1990 . . . (small businesses) do change.but not necessarily in anyprescribed sequence . . . futureresearch should be focused ondeveloping theories which betterdescribe the heterogeneity of thesmall business sector . . .

Birley, S., and P. Westhead(1990). “Growth and PerformanceContrasts between Types of SmallFirms,” Strategic ManagementJournal 11(7), 535–557.

1994 . . . across a broad spectrum ofEuropean countries . . . a shiftaway from large firms andtowards small business has takenplace . . .

Schwalbach, J. (1994). “SmallBusiness Dynamics in Europe,”Small Business Economics 6(1),21–25.

1994 The article provides an inventoryof the strengths and weaknessesof small firms in a dynamiccontext.

Nooteboom, B. (1994).“Innovation and Diffusion inSmall Firms—Theory andEvidence,” Small BusinessEconomics 6(5), 327–347.

1995 The use of new management andproduction technologies isessential for most smallbusinesses if they are to improvetheir competitiveness.

Julien, P. A. (1995). “NewTechnologies and TechnologicalInformation in Small Businesses,”Journal of Business Venturing10(6), 459–475.

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Table 1Continued


1995 . . . entrepreneurial firms engagein more sophisticated planningthan small firms overall . . .however, as perception ofenvironmental uncertaintyincreases, strategic andoperational planning decrease.

Matthews, C. H., and S. G. Scott(1995). “Uncertainty and Planningin Small and EntrepreneurialFirms—an Empirical-Assessment,”Journal of Small BusinessManagement 33(4), 34–52.

1996 Given that a firm has some salesof innovative products, the shareof such products in a firm’s totalsales tends to be higher insmaller firms.

Brouwer, E., and A. Kleinknecht(1996). “Firm Size, Small BusinessPresence and Sales of InnovativeProducts: A Micro-EconometricAnalysis,” Small BusinessEconomics 8(3), 189–201.

1996 This paper (suggests): (1) theeffect of firm size on the causesand (2) the consequences ofinnovation or their focus onthe role small firms play inreshaping the industriallandscape.

Thurik, A. R. (1996). “Innovationand Small Business—Introduction,” Small BusinessEconomics 8(3), 175–176.

1997 (This paper) examines therelationship between productinnovation and growth inGerman, Irish and U.K. smallfirms. In each country theoutput of innovative smallfirms was found to growsignificantly faster than that ofnon-innovators.

Roper, S. (1997). “ProductInnovation and Small BusinessGrowth: A Comparison of theStrategies of German, UK andIrish Companies,” Small BusinessEconomics 9(6), 523–537.

1998 This paper develops a structuralmodel of the relationshipsbetween entrepreneurialcharacteristics, firms’ strategicchoices and performance. Theresults suggest a markeddifference between thedeterminants of strategicinitiatives related to managementand control and those related toproducts, markets or managerialsystems.

——— (1998). “EntrepreneurialCharacteristics, Strategic Choiceand Small Business Performance,”Small Business Economics 11(1),11–24.


Table 1Continued


1999 The goal of this (paper) is tosynthesize disparate strands ofliterature to link entrepreneurshipto economic growth.

Wennekers, S., and R. Thurik(1999). “Linking Entrepreneurshipand Economic Growth,” SmallBusiness Economics 13(1),27–55.

2000 A panel analysis of 48 U.S. Statesfor a ten-year period . . . revealedthat states with higherproportions of very small businessemployment do indeedexperience higher levels ofproductivity growth, and GrossState Product growth, whilehaving less wage inflation andlower unemployment rates.

Robbins, D. K., L. J. Pantuosco,D. F. Parker, and B. K. Fuller(2000). “An Empirical Assessmentof the Contribution of SmallBusiness Employment to US StateEconomic Performance,” SmallBusiness Economics 15(4),293–302.

2001 (We) considered ways in whichentrepreneurs can bedifferentiated from small businessmanagers . . . based on theentrepreneur’s desire to grow thebusiness rapidly.

Gundry, L. K., and H. P. Welsch(2001). “The AmbitionsEntrepreneur: High GrowthStrategies of Women-OwnedEnterprises,” Journal ofBusiness Venturing 16(5),453–470.

2001 . . . while inventions andinnovations make significantcontributions to the growth andcompetitiveness of nationaleconomies, there are problems inthe U.K. surrounding independentinventors (often a small, oneperson business) and theirmarketing, where there has beenfailure to stimulate and exploitinventions compared to otherindustrialised countries. There arelong term implications foreconomic competitiveness whennew ideas are lost.

Wright, L. T., and C. Narrow(2001). “Improving MarketingCommunication & InnovationStrategies in the Small BusinessContext,” Small BusinessEconomics 16(2), 113–123.

2001 This paper examines how andwhy the role of small businesshas become more important overtime.

Jovanovic, B. (2001). “NewTechnology and the Small Firm,”Small Business Economics 16(1),53–55.

TAN et al. 237

Table 1Continued


2001 The role that small firms play inindustrial organization hasevolved considerably since theSecond World War. This paperseeks to document how and whysmall business plays a verydifferent role in industrialorganization research todaythan it did some three decadesago.

Audretsch, D. B. (2001).“Research Issues Relating toStructure, Competition, andPerformance of SmallTechnology-Based Firms,” SmallBusiness Economics 16(1), 37–51.

2001 (This paper) focuses on howantitrust enforcement helpspreserve two freedoms: thefreedom to engage inentrepreneurship, and thefreedom to innovate.

Golodner, A. M. (2001).“Antitrust, Innovation,Entrepreneurship and SmallBusiness,” Small BusinessEconomics 16(1), 31–35.

2002 Our study proposed and tested anentrepreneurial process modelthat examined theinterrelationships among a smallfirm owner’s personality, strategicorientation, and innovation.

Kickul, J., and L. K. Gundry(2002). “Prospecting for StrategicAdvantage: The ProactiveEntrepreneurial Personality andSmall Firm Innovation,” Journalof Small Business Management40(2), 85–97.

2003 This study explores heterogeneityin how firms have achieved highgrowth . . . (and) identified sevendifferent types of firm growthpatterns. These patterns wererelated to firm age and size aswell as industry affiliation.

Delmar, F., P. Davidsson, and W.B. Gartner (2003). “Arriving atthe High-Growth Firm,” Journalof Business Venturing 18(2),189–216.

2003 . . . tested in a small businesscontext, prospect theory (which)suggests that managers who areless satisfied may be more likelyto introduce products with riskiercharacteristics, (t)he current studyconfirmed this finding thatmanagers who were less satisfiedintroduced products into lessfamiliar markets and requiredmore resources.

Simon, M., S. M. Houghton, andS. Savelli (2003). “Out of theFrying Pan . . . ? Why SmallBusiness Managers IntroduceHigh-Risk Products,” Journal ofBusiness Venturing 18(3),419–440.


Table 1Continued


2004 (This paper suggests) that: (1) ifonly risk capital is injected, itflows straight to low-qualityentrepreneurship . . . and (2)(s)ound legal systems, capitalmarkets, and other structuralfeatures are necessaryprerequisites fortechnopreneurship . . .

Venkataraman, S. (2004).“Regional Transformation throughTechnological Entrepreneurship,”Journal of Business Venturing19(1), 153–167.

2005 This article focuses upon theemergence of Virtual Teams thatincreasingly form the competitivecore . . . (and) identifies andconsiders the stages andprocesses specific to VirtualTeams.

Matlay, H., and P. Westhead(2005). “Virtual Teams and theRise of E-Entrepreneurship inEurope,” International SmallBusiness Journal 23(3), 279–302.

2005 The purpose of the study was todraw from the narratives a list ofempirically groundedgrowth-related attributes that areassociated with rapid-growthfirms. The findings of the studyresulted in the advancement of aconceptual model of the attributesof rapid-growth firms in fourareas: founder characteristics, firmattributes, business practices, andhuman resource management(HRM) practices.

Barringer, B. R., F. F. Jones, andD. O. Neubaum (2005). “AQuantitative Content Analysis ofthe Characteristics ofRapid-Growth Firms and TheirFounders,” Journal of BusinessVenturing 20(5), 663–687.

2006 The intensity of small-businessowners and the environmentaldifficulties they encountered wereinvestigated as predictors ofgrowth intentions inTurkey . . . found owner intensityto be significantly related to thethree growth plan factors oftechnology improvement, resourceaggregation, and marketexpansion.

Kozan, M. K., D. Oksoy, and O.Ozsoy (2006). “Growth Plans ofSmall Businesses in Turkey:Individual and EnvironmentalInfluences,” Journal of SmallBusiness Management 44(1),114–129.

TAN et al. 239

business research to move forward alongthe learning curve of its scientific devel-opment, and to take small businessresearch to the next level with moreprominent intellectual stature, more rigorneeds to be added in theory building,method development, and hypothesistesting, and with more attention to issuesthat have been largely overlooked, suchas technology, innovation, and corporatesocial responsibility.

Although some may favor promotingsmall business research as distinctivefield of study that is isolated fromcompanion disciplines, it is clear to usthat what is needed instead is to drawfrom various disciplines and research

traditions where theories and researchmethods have been more developed, andutilize small business as a context onwhich to test existing theories and tobuild new ones. For example, takingsmall business research as a “subfield” ofmanagement research, we could takewhat we already know and examine theextent to which this knowledge is appli-cable in the small business setting and, ifnot, ask ourselves: “Why?”; “What arethe moderating factors and contextualfactors that basically alter or moderatethis relationship?”; “How, if at all, we canmodify the existing theories that willhelp explain issues in small businessareas?”; and “What is the extent to which

Table 1Continued


2006 This study explores thehomogeneity of small firms thathave achieved and sustained highgrowth . . . We find that,controlling for location andperformance, the high-growthsmall firms in our populationexperience similar managementchallenges regardless of thespecific firm size, revenue level,or industry.

Chan, Y. E., N. Bhargava, and C.T. Street (2006). “Having Arrived:The Homogeneity of High-GrowthSmall Firms,” Journal of SmallBusiness Management 44(3),426–440.

2007 This article examines to whatextent recent empirical evidencecan collectively and systematicallysubstantiate the claim thatentrepreneurship has importanteconomic value . . . (e.g.) thatentrepreneurs have a veryimportant—but specific—functionin the economy. They engenderrelatively much employmentcreation, productivity growth andproduce and commercializehigh-quality innovations.

van Praag, C. M., and P. H.Versloot (2007). “What Is theValue of Entrepreneurship? AReview of Recent Research,”Small Business Economics 29(4),351–382.


we need to introduce a new theoreticalprospective from still other disciplines?”Additionally, we need to ask how wecan modify measures and refine researchmethodology so that we can betterexplain the phenomenon in question.

Accordingly, we suggest that “goodresearch” in the small businesses settingshould be guided by “good theories” andexecuted with “good methods.” Weick(1989) suggested three criteria: (1) gen-eralizability, (2) simplicity, and (3) accu-racy, by which such questions might beanswered. We observe that there is rarelyany extant theory or method that cansatisfy all three criteria simultaneously.As each method has its own advantagesand limitations, there are inevitablytradeoffs. For instance, in recent years,complexity theory rooted in naturalscience and social network theory origi-nating in sociology, have drawn moreand more attention in mainstream man-agement research, because the complexnetwork and complex adaptive systemperspectives offer new lenses for observ-ing the coevolution between environ-

ment and firm strategy. According toWeick’s criteria, complexity theory, forexample, which relies on computer simu-lation, provides high level of generaliz-ability and simplicity, but compromiseson accuracy. In contrast, the traditionalcase-study approach can be highly accu-rate with detailed records and descrip-tions, but has inevitable problems insatisfying the simplicity and generaliz-ability criteria.

A simple simile helps to illustrate thepoint that mismatches continue to beproblematic. Let us consider researchphenomena to be like nails, and that ourtask is to drive them into boards. Then inscientific research, theories and methodsare the hammers. We choose differenthammers for different nails, so they canwork well together. However, what weincreasingly observe in managementresearch in general, and small businessresearch in particular, is that students aretrained with certain theoretical perspec-tives and research methods, and theyhold tightly to these hammers lookingfor proper nails that fit their hammers.

Figure 1A Small vs. High Growth Comparison

Growth HIGHER GROWTH

LOWER GROWTH

STARTUP SB

Time

TAN et al. 241

Though we recognize the importance oftheory building and theory testing, the“theory-to-theory” formula, if not utilizedproperly, may mislead researchers tocling to a given hammer while searchingto find a suitable nail, and forget thatdifferent hammers are used to drivematching nails and must therefore bechosen according to the size and shapeof the nail. By attending to the matchbetween theory-hammers and methods-nails, we are more likely to generatesignificant and novel research.

The mismatch issue is observablewhen, for example, the current norm isto favor empirical research dominated bysurvey and statistical analyses. Such aresearch tradition essentially encouragesresearchers to focus only on “nails” thatfit the hammer. Furthermore, one reasonmanagement research (including smallbusiness research) has been viewed byother academic disciplines as being too“soft” and “less scientific” may have to dowith the situation that most of theempirical research presently being gen-erated is resistant to repetition and veri-fication. One source of this problem isthe bias within the field of managementagainst repetition of previous research.As scientific research is a cumulativeprocess, the existence of this bias isunfortunate. As Popper reminds us, “weshould not take even our own observa-tions seriously, or accept them as scien-tific observations, until we have repeatedand tested them” (Popper 1959, p. 45).Given such biases, many researchers,instead of focusing on phenomenon andon dependent variables, have usedtheory and method as starting points andhave focused on adding new indepen-dent variables to existing empiricalresults. As a result, the research resultscannot be replicated, compared and veri-fied, and the field becomes increasinglyfragmented.

To alleviate this problem, scholarsstudying small businesses should alsolook for phenomena with implications

for theory and practice, and draw fromtheories and utilize methods appropriateto solve the problems observed (i.e., findhammers that fit the nails). If no“hammer” in management field can drivethe “nail,” we then must borrow“hammers” from other disciplines ordesign appropriate new “hammers” withthem to then drive the “nail.” Forinstance, industry clustering is widelybelieved to foster small business creationand facilitate technology transfer andinnovation. To take this line of researchto the next level would require morefine-tuned understanding on the emer-gence, formation and evolution of clus-ters. This will require more dynamicmodels and temporal data in order toreveal the underlying mechanism at dif-ferent stages of cluster evolution (Tan2006), and this is where computationalsimulation may lend its unique strengths.In the meantime, as computational mod-eling often relies on a set of assumptions,which may compromise accuracy, usingthe case method will enrich our under-standing about the “initial condition” andthe simulation process, and compensatefor the missing details.

Similarly, how small businessesmanage social responsibility is highlydependent on stakeholder-environmentalcharacteristics (Mitchell, Agle, and Wood1997). As a result, “initial conditions”in corporate social performance (CSP)models matter tremendously, and thesocial performance of small businessesmay therefore be highly “path depen-dent.” However, environments aredynamic and change over time, and man-agers do not simply react to the environ-ment as they manage the stakeholderrelationship; they learn from the environ-mental changes and “enact” the environ-ment proactively (Tan and Tan 2005).Consequently, researchers may need toadd the temporal dimension and examinethe evolution of corporate social perfor-mance over time in stages. Thus, there aremany opportunities for theory-building


research that need attention in the smallbusiness setting.

The Opportunity forTheory-Building Research

One of the most significant opportu-nities now facing those doing entre-preneurship research in general, andinnovation and technology strategyresearch in small business contexts inparticular, is to engage in more system-atic pursuit of theory-building researchusing the setting of small entrepreneurialfirms as a context to generate theory.This theory-building opportunity is par-ticularly important to recognize to theextent that Welsh and White (1981) arecorrect when they suggest that small,entrepreneurial businesses are not justlittle big businesses, but are ratherdistinctive agents of change relative tolarger, older firms.

Glaser and Strauss (1967), in theirhighly influential book on developinggrounded theories, observe that in orderto effectively understand phenomena inparticular contexts—such as the contextrepresented by small entrepreneurialfirms in comparison with large estab-lished firms—it is necessary to buildtheories that are in the first instance“grounded” in the context under consid-eration. Yet to date, it is arguablethat relatively little of our energies asresearchers studying small entrepreneur-ial firms have been devoted specificallyto theory building. To a much greaterextent, we have tested, and occasionallymarginally refined, theories developed toexplain the behavior of larger firms. Forexample, considerable research on smallentrepreneurial ventures has adopted theresource-based view or its variant, thedynamic capabilities perspective (e.g.,Brush, Edelman, and Manolova 2008).Similarly, theories of top managementteams and their impacts on firms’ behav-iors and outcomes have been adapted toexplain the performance of small entre-preneurial firms (e.g., Lester et al. 2006)

as have theories regarding social net-works and structural holes (e.g., BarNirand Smith 2002).

Clearly, programmatic research thatextends extant theories to explain vari-ance in outcomes in small businesses iscrucial. But if small entrepreneurial firmsreally are a distinctive context, we shouldexpect to see some original theories orconcepts emerging from within the field.And indeed, there are already somenotable notions that appear to have beencreated and advanced by researchersworking within the small entrepreneurialfirm context. For example, the concept ofopportunity identification appears tohave been advanced largely by thosestudying emerging entrepreneurial ven-tures, and is regarded by some as amongthe central pillars of study of entrepre-neurship (e.g., Shane and Venkataraman2000). The related but distinct notion ofeffectuation (Sarasvathy 2001) seems alsoto have been advanced based on consid-eration of entrepreneurial ventures, asdoes the concept of the “internationalnew venture” (Oviatt and McDougall1994). Other theories that have been sig-nificantly refined if not originally identi-fied through the study of small or newventures are theories of entrepreneurialorientation (Lumpkin and Dess 1996) andbricolage (Baker and Nelson 2005). Yetthe number of theoretical contributionsgenerated by those studying such firmsremains relatively small.

As evidence of this point, Table 2,adapted from Mullen, Budheza, andHafermalz (2008), indicates the portionof research that was specifically devotedto theory building between 2003 and2006 in three of the most impactful entre-preneurship journals, Journal of SmallBusiness Management, Entrepreneur-ship: Theory and Practice and Journal ofBusiness Venturing. As this table indi-cates, 66 percent of published articleswere devoted to primarily to theorytesting, judging by the fact that theydeployed quantitative methods suitable

TAN et al. 243

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Res

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Res

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2003–2

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Journ

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2004

2005

2006

Tota

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Per

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Per

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Per

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Per

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Count

Per

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al7

293

1418

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30

85

JBV

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4123

2455

27Q

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510

36

168

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ptu

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6357

2666

47Q

ual

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00

516

75

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4428

2313

928

Qual

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56

48

316

Quan

tita

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6849

6970

328

66Tota

l10

010

010

010

049

810

0


for such purposes. In contrast, only 28percent of published papers wereconceptual and presumably thereforedevoted to theory building. An evensmaller portion, only 6 percent, werequalitative in nature, which is particu-larly significant given Glaser andStrauss’s assertion that inductiveresearch based on the analysis of quali-tative data is critical to the creation oftheories that credibly account for system-atic variation in distinctive contexts.

Evidence of the paucity of publishedresearch that is specifically dedicated totheory building is also apparent if weexamine publications in major journalsthat devote a portion of their page spaceto entrepreneurship research. Academyof Management Review (AMR) publishesonly articles aimed at contributing newtheory. In the past five years, it isarguable that only seven of theroughly 150 articles published in AMRhave provided theoretical insight on phe-nomena of special relevance to smallentrepreneurial firms. In Academy ofManagement Journal (AMJ), which pub-lishes only empirical papers, we mightexpect to find relevant theory deve-lopment in those that are based onqualitative data collected in small entre-preneurial firms. Over the last five years,it appears that five papers clearly fittingthis description have been published inAMJ. In Administrative Science Quarterly(ASQ), the number appears even smaller:over the last five years, only three papersdeveloping theory inductively from quali-tative data gathered in small or emergingfirm contexts were published in ASQ. It isvitally important to note that there is noimplication here that entrepreneurshipresearch, conceptual, qualitative, or oth-erwise is being unfairly rejected or other-wise ill-served by these three journals.Rather, the point being made is that thereappears to be a paucity of theory-buildingpapers concerned with entrepreneurialphenomena being submitted to thesejournals.

These observations thus lead to thequestion: Where do the richest opportu-nities lie for more theory-building workthat will inform our understanding ofentrepreneurial phenomena in generaland of innovation and new firm technol-ogy strategy in particular? The answeroffered here is as follows. It is surelynecessary for us as a community ofscholars to engage in writing bothconceptual papers and inductive papersbased on qualitative data. However, asomewhat stronger case can be made forthe latter, simply because many concep-tual papers which start with extant theo-ries and adapt them may be accordinglyconstrained in the extent to which theyfully address the distinctive phenomenathat are to be found in the small entre-preneurial firm context. This assertion ismade simply because the theories induc-tive conceptual papers often adapt arethose that have evolved with a focus onexplaining actions in large, establishedfirms. Thus, inductive conceptual workmay often start with an a priori set ofideas that is somewhat more limitingthan that entailed in inductive theorybuilding based on qualitative data.

Conversely, theory building thattakes full account of the small entrepre-neurial firm context is precisely whatqualitative research—or at least qualita-tive research in some traditions—isgood for. As those conversant with themany diverse traditions of qualitativeresearch know, some variants eschewexplicit theory building and insteadprovide rich descriptions of livedexperiences or narratives analyses ofdiscourse that offer insight into thesocially constructed nature of phenom-ena without claiming to develop theoryper se (see Prasad [2005] for a usefulaccount of a range of non-positivist tra-ditions of qualitative research). Qualita-tive research that has goals other thantheory building has much to offer, ashas been argued elsewhere (e.g.,Gartner 2007). Here, however, our

TAN et al. 245

concern is with qualitative research thatis explicitly concerned with theorydevelopment.

Broadly speaking, there are two majortraditions of qualitative research thathave an explicit goal of theory building.The first is positivist qualitative research,and a considerable portion of theresearch that has been published in theentrepreneurship journals as well as insuch journals as the AMJ and the ASQ fitsrecognizably within this tradition. In thefield of management, this research tradi-tion gained early credibility throughthe work of Eisenhardt (1989) whodescribed a method for analyzing quali-tative data that was much influenced byGlaser and Strauss (1967) and who advo-cated explicit attempts to build theory ofa positivist nature via systematic analysisof qualitative data collected from mul-tiple case studies of organizations.

The other major tradition of qualita-tive work which also aims explicitlyto build theory and which informs aconsiderable portion of the qualitativeresearch in management and entrepre-neurship journals draws influence fromsociologists such as Anthony Giddens(e.g., Giddens 1984), Pierre Bourdieu(e.g., Bourdieu 1984), and MichaelBurawoy (e.g., Burawoy 1998). Thesesociologists take for granted a sociallyconstructed reality, but argue that thereare patterned regularities in a givensociohistorical setting. For convenience,we refer to this as the “structurationist”tradition: those working with the struc-turationist tradition make the case thatphenomena of interest can be analyzedso as to build context specific theorieswhich have an acknowledged temporaland social situatedness.

Though there are differences betweenthese traditions, both are vital to advanc-ing the enterprise of building theory thatwill help us understand patterned regu-larities that occur in small entrepreneur-ial firm contexts. Yet, as was alreadynoted, relatively little work in either of

these traditions is being published in thejournals noted. Why might this be thecase? Two answers seem to make sense.First, most management scholars are stillgiven methodological training only inquantitative methodologies. Few schoolshave courses in qualitative methods, andthose that do often combine philosophyof science with exposure to qualitativemethods, effectively minimizing theextent to which doctoral studentsreceived training in the diverseapproaches to gathering, analyzing andbuilding theory from qualitative data. Asa consequence, there are few who aretrained to create or review theory-building qualitative research. Too manyaspiring qualitative researchers submitmanuscripts that fail to offer clearresearch questions, fail to take priorresearch into account, and that fail toconvince readers that they are contribut-ing to the literature (Suddaby 2006;Gephardt and Rynes 2004), effectivelydiminishing the chances that their paperswill meet the standards of the peer-reviewed journals. Equally problematic,too few reviewers know how to con-structively critique qualitative papersthey receive.

The second reason that there may be apaucity of theory-building qualitativeresearch is that even though there aremany texts that instruct students of quali-tative research on the diverse ways ofcollecting and analyzing qualitative data,there is less guidance available on whatkinds of “theoretical products” may begenerated from the analysis of qualitativedata. In the following paragraphs, someobservations are offered regarding thevarious ways that qualitative researchmay be structured when the goal istheory building.

One of the most obvious and popularforms of theory generated from the analy-sis of qualitative data is a propositionalinventory. Such inventories are particu-larly common in, but far from exclusiveto, qualitative research in the positivist


tradition. This approach to contributingto theory has much to recommend it, inthat the propositional format mirrors thehypothesis format familiar to those con-versant only with quantitative researchpractices. Moreover, propositions may becrafted so as to be testable, which againmakes for a rapprochement betweenquantitative and qualitative approaches totheory development and refinement. Arecent example that illustrates this rap-prochement very effectively can be foundin Martens, Jennings, and Jennings(2007). In their paper, Martens et al. firstgenerate a series of propositions regard-ing narrative techniques that entrepre-neurial firms may use and that are likelyto be influential on resource providers.They then test these propositions in aquantitative study of IPO issuers.

Perhaps the second most commontype of theoretical contribution is theprocess theory. Process theories are par-ticularly common in the structurationisttradition of theory-building qualitativeresearch. Langley (1999) highlightsdiverse strategies for building theoryfrom process data, and stresses the par-ticular strengths of qualitative data forsuch purposes. A recent paper that hascontributed to our understanding of pro-cesses in small entrepreneurial firms isBaker and Nelson (2005). In the paper,Baker and Nelson provide a detailedanalysis of the steps through whichentrepreneurial firms go in creatingresources via a process of bricolage.

Two other types of theoretical contri-butions that are perhaps less well recog-nized, but that are also extremelyimportant, can be discerned in a varietyof qualitative papers. One of these isconcept or construct development orrefinement. The term concept is beingused here to connote a network ofinterrelated set of constructs. Why areconcept and construct contributions soimportant? Precisely because the distinc-tiveness of small, entrepreneurial busi-ness contexts means they are likely to be

fertile grounds for identifying constructsor concepts that have not surfaced inresearch conducted in other businesssettings. When an entire conceptualnetwork of interrelated constructs isintroduced, it can frame or reframe theway a phenomenon is understood. Whena theoretical contribution focuses morenarrowly on one or two constructs, it canrefine existing nomothetic networks in amanner that makes them more able toaccount for the kinds of relationshipsthat exist in types of businesses thanwere previously taken into consider-ation. An example of a theoretical con-tribution that is comprised of conceptand construct development can be foundin a recent paper by Graebner andEisenhardt (2004) where they inductivelyidentify an alternative to existing con-cepts of acquisitions that contrasts withthe common notion of a takeover as anacquisition. They also identify a range ofconstructs that are relevant to dynamicswithin the “acquisition as courtship”concept.

A final type of theoretical contribu-tion, often offered in conjunction withother theoretical components, is a typol-ogy. Though it can be (fairly) argued thata typology is not a theory, there is astrong case to be made that a good typol-ogy is a theoretical contribution. Miller(1996, 1986) has offered an insightfulanalysis of what constitutes a good typol-ogy. In brief, good typologies can distin-guish between related but distinct typesof a construct or process, and identifyclusters of related contingent variables orcontextual influences that co-occur withspecific types. A review of qualitativepapers indicates that typologies are oftendeveloped and prove useful for contrast-ing existing constructs with new ones,or contrasting patterns of relationshipsobservable in contexts with differingcharacteristics. An example can be foundin Fischer and Reuber (2004) who iden-tify different types of industry environ-ments in which entrepreneurial firms

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may operate, and corresponding differ-ences in the ways that customer engage-ment may benefit firms or detract fromtheir performance.

Though this enumeration of strategiesfor building theory from qualitativeresearch may not be exhaustive, itshould provide readers with a sense ofthe range of strategies that exist for theo-rizing from qualitative research, andencourage more efforts of this muchneeded type. To achieve the kinds oftheory that will improve our understand-ing of small entrepreneurial firms andcontribute more broadly to the literatureson innovation and technology strategy,we will benefit from being both moresophisticated and more systematic in ourapproach to theory development.

Theory building can also be encour-aging by posing new research questionsabout small business, and by revisitingresearch that has been predominantlyconducted with samples of large busi-nesses. Examples of each are illustratedin the third and fourth sections of thispaper. In section three, new researchquestions are posed about what thesocial responsibilities of small businessesmay be, and whether better ways ofensuring businesses meet these respon-sibilities can be devised. In section four,the literature on technology-based entre-preneurship is examined with a view tounderstanding how theories of the rela-tionship between technology and entre-preneurship may need to be revised totake into account small versus large busi-ness contexts.

A New Research VantagePoint: Small Businesses’ SocialResponsibility to Live and Diewith Meaning

For provocative research, we needuniqueness—especially new constructsthat upon examination, and throughgreater understanding, actually make adifference in our thinking. Fortunately,in this Special Issue, we have been given

a charge by the JSBM Editorial Board, toconsider the “future of small businessresearch” . . . to think together about thefuture of small business research fromnew and challenging perspectives.

To invoke new vantage points, webegin with Milton Friedman’s (1970)assertion that the social responsibility ofbusiness is to increase its profits; and wemodify and extend this notion to includethe social responsibility of small business.We have termed it: “small business socialresponsibility.” And furthermore, in thespirit of “futurity,” we invite readersspeculate together with us concerningwhat the notion of “small business socialresponsibility” might mean to the futureof small business research. In particular,we ask readers to consider the question:What if we were to envision the socialresponsibility of small business to: (1) notlive in vain and (2) not die in vain.

What would enacting this vision entailfor new research vantage points?

We observe that most of the “action”in the life cycle of businesses (business“births” and business “deaths”) actuallyhappens in “small” business. As to births:most businesses start small. Very few arefull blown at 20 or 30 thousandemployees—at least in Western marketeconomies. And as to business deaths,we observe that: by the time it is “over”there are not too many people left tolock up and turn out the lights. So whatwe have implicated in this small businessphenomenon is a very interestingelement about “smallness” that may giveinterested scholars and practitioners anopportunity to conduct research we havenever thought about before—whichcould directly examine the implication ofsmall businesses’ “not living in vain” and“not dying in vain.”

Such a suggestion implicates at leasttwo new comprehensive research initia-tives. The first: live with meaning, sug-gests venture creation should start withlife in mind. We wonder how manysmall-business new venturers in fact do


start with the life of their business inmind. We might expect that all ventureinitiators intend for their small businessto live; but unfortunately (as it ap-pears from failure-rate statistics, e.g.,Bresnahan [2005]), many do not actuallyknow how to do it, and therefore fail. Toour knowledge at present, there is nosuch thing as a small business “APGAR,”1

which asks every new venture foundercritical “live-with meaning” questions,such as: To what extent does this busi-ness have a pulse (e.g., is there a viablebusiness model)? To what extent can itprocess economic oxygen (e.g., transac-tions)? etc. So, as one suggestion thatarises from this new stance, we mightsuggest the need for all concerned tobetter understand the things we need toknow to start with life in mind. Forexample, once such research topic wouldbe to better understand what it means toassess new small businesses early andoften. This is not something that isyet well-enough done, nor is it well-documented in the research literature.We acknowledge that in the practitionercommunity, some authors (e.g., in thepopular press) have put forward busi-ness plan evaluation systems and successrecipes; and that small business develop-ment center checklists and a variety ofhelpful hints are available. And we alsoacknowledge that the bankers and theventure financing community also havecheck-list-type tools. But at the presentstage of development, we observethat living-with-meaning-assessmentsdeal primarily with analyses that com-prise a relatively narrow sliver of what isin fact involved in sustaining the life of asmall business.

Methods that ought to be suggested,tested, explored, and developed would,for example, examine key factors: they

would establish new venture analysisstandards to answer questions such as:What should this business be able to dobefore we “plug it in”? And we shouldthen be able to apply these standardsconsistently: to, for example, build atrack-record database. This makes sensewithin the larger business communitywhere the uses of best practices compari-sons are common. So as a beginningpoint for provoking new, unique, andhelpful small business research wesimply inquire: Where is the “live-with-meaning” best-practices database? Andwe observe, in answer, that to ourknowledge there is not one (yet). Part ofthe “futurity” of small business researchis to get on with creating such data, andthen to undertake the systematic analysisthat can add much more meaning to thelife of new small businesses.

We next inquire about dying withmeaning, and ask: what is intended bythe idea that a small business should “diewith meaning”? Possibly a first stepwould be that, should a new venture fail,this failure should count for somethingother than grief and embarrassment andtrauma. We consider this to be an impor-tant social and economic issue. Somesources suggest that 80 percent of newbusinesses fail (Bresnahan 2005).Reynolds (1995) delved further into thisreporting puzzle, and suggests that if onerigorously compares statistics, removesdouble-counting, etc., the success/failure ratio of new small businesses maybe more in the neighborhood of 50/50.Let us therefore make a simple compari-son that places this failure-rate intoanother context. If, for example, youwent to the car lot and bought your newLexus, and as you were about to turn thekey, the salesperson said, “By the waythere is a 50 percent chance it won’t

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

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start,” what would you respond? Youmay say: “But I paid all this money!” Andthe salesperson might counter: “Wellstill, that is the best we can do right now;take it or leave it.” When we apply sucha scenario to small business (That’s thebest we can do!—and frankly at presentit is the best we can do); this begs afuture question for small businessresearch: is such a status quo goodenough?

So we therefore return to the thought-provoking idea: dying with meaning.What would be involved for a small busi-ness to die with meaning? Our sense isthat small business research needs touncover an entirely different way ofthinking. It might mean, for example,that we need to better understand entre-preneurial expertise. These researchquestions have been under study for justabout 15 years (e.g., Mitchell 2005, 2003,1996, 1994; Mitchell and Chesteen 1995;Mitchell and Seawright 1995; Mitchellet al. 2009 Forthcoming; Mitchell, Mitch-ell, and Smith 2008; Mitchell et al. 2007,2002, 2000). So, to help us to see howthe study of entrepreneurial expertiseleads us to better understand the ideathat a small business might die withmeaning, let us as an example, considerthe questions: What is entrepreneurialexpertise, how is it acquired, and how isit applied?

Recent work (e.g., Mitchell, Mitchell,and Smith 2008) confirms that failurerecognition creates a kind of opportunitycreation mindset that only develops as aresult of a new venture failure. We invitereaders to imagine the potential payoff:If we can understand how to compose,classify, and create entrepreneurialexpertise (e.g., Mitchell 1994), we canthen begin to aspire to develop the entre-preneurial opportunity-creation mindsetas a national asset. In this respect, then,dying with meaning does not mean thata business terminates and the entrepre-neur walks off this stage embarrassed,angry, and with few remaining relation-

ships (business or personal). Rather(based upon the further development ofthis example line of research), when theventure dies, society might develop amore productive response and take theview that the learning store of expertisehas grown, is valued, and prepares manysuch individuals for greater opportunity-creation effectiveness in the future.Such a remarkably new response wouldconvey to an entrepreneur-in-training,the following affirmation: “I now havethis very big part of my mind that under-stands all kinds of things not to do,” butalso the message: “most things that Iknow—as an entrepreneur who termi-nated a business—are still recyclable!” “Afew decisions may have caused theventure to become disabled, to have toexit, but most of that knowledge isstill there.” “It can be tweaked.” “It’s anational asset!”

And, to continue in the spirit of pro-voking new research pathways, wefurther inquire as follows: What if wethen do the research needed to begin todevelop the opportunity-creation entre-preneurial mindset as a national asset?Can we consequently aspire to use thebankruptcy courts evermore effectively:for example, as a gatekeeper and allowus to be able to salvage the nationaltreasury of entrepreneurial expertise.Presently, we observe that a person/business shows up at bankruptcy courtto admit that s/he/it ran out of cash.Unfortunately, we forget the other sideof the equation—the things that wereadded to the national balance sheet suchas experience, expertise, and the lowerprobability of mistake repetition in afollow-on venture.

If we were to therefore study how touse the bankruptcy-courts function asgatekeeper, we would need research tosupport a new profession called, forexample, “venture forensics,” to isolatethe source of a business failure, validatethe expert-capital still available to thenational venturing treasury, and thereby


create opportunity-creation entrepre-neurial mindsets. Debriefing processeshave a long tradition of applicability inscientific exploration. Under such a sce-nario, we might envision that—basedupon the extensive new and unique smallbusiness research generated to fill thisneed—neither individual entrepreneursnor their businesses would be releasedfrom bankruptcy until conducting adebriefing mandated by the courts (asgatekeeper acting for society). Such adebriefing process would be an asset-creating process; and its conceptualiza-tion suggests that we further inquireconcerning examples of processes suchas the ones we have been suggestingto assist with small businesses “livingwith meaning” and “dying with meaning.”

We first present an example of livingwith meaning familiar to one of theauthors: the NVT (New Venture Tem-plate) project (Mitchell 1998, 1995) thatis a system for helping new small busi-nesses to live with meaning—to startwith life in mind. Using a comprehensiveliterature review and in-depth case studymethodology, Mitchell investigated thecauses of new venture failure muchbeyond the standard venture capitalquestions: (e.g., “is this venture going tomake money and can these entrepre-neurs run it?”). The data were collectedand made available by the WBI (WayneBrown Institute), which holds capital-raising events, in the IntermountainWest, Silicon Valley, and in Hawaii forthe Pacific Rim. Over the years thismethod has been used to assess manynew ventures early and often, and also toassist in removing known constraints toventure survival. Tracking of the resultsshows at least a tripled hit rate (Main-prize et al. 2003). The process is con-ducted as follows.

The WBI, randomly assigns venturesto development teams of venture capi-talists. Team A uses the standardmethods which basically ask the ques-tions: “Is the venture going to make a

profit?” and “Can the management teamrun the venture over time?” Team Buses the NVT, which “drills down” twomore levels: from two elements (Is theventure a “business”?/profitable; andCan you keep it?/management), withinwhich are nested six elements (levelsof: innovation, value, persistence, scar-city preservation, appropriability protec-tion, and flexibility), within which arefurther nested a 15-element array ofcriteria that can provide much morefine-grained distinctions among newventures (Mitchell et al. 1998). All theventure capital assessors were veryfamiliar with assessing developing ven-tures. The primary idea was to askenough questions (e.g., the NVT15-question array), such that a distinctdescriptive pattern can emerge (a15-element vector of ratings). This dis-tinctive pattern could then be simulta-neously compared with various ventureprototypes represented by standard15-element vectors or “templates.”Using a comparison algorithm that pro-duces a first-moment correlation statis-tically standardized between 0 and 1,the assessors obtained a like-kind-basiscoefficient for evaluation and for sug-gesting action that is needed for theventure to be more likely to “live withmeaning.” An example of results fromthis comparison is shown in Figure 2.

Results of the study show that venturesthat went through team A had an approxi-mate 17 percent hit rate (which is theaverage of one really bright success, onemedium, one break-even, and 7 progres-sively “lousies”: a net of 17 percent). Forteam B, which used the NVT, the hit ratewhen last checked, was in the 54 percentrange: approximately triple the opportu-nity for a venture to “live with meaning.”

A follow-on analysis in greater depth(used more for research than for practicepresently) involves the examination ofin-depth assessments on a vector-by-vector basis (element-by-element) acrossventures within an industry group. In

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Figure 3, represented in n-dimensionalspace is a visualization of an analysis ofthe computer-services industry new ven-tures in the database mapped in threedimensions.

The extent to which the lines are neareach other means closer correlation.Those vectors at right angles are the

orthogonal variables; and those at 180°are inversely correlated (e.g., variables 6and 12 are negatively related). In thethree-dimensional simulation that wehave constructed, the researcher canrotate the sphere and get a look at therelationships from every possible per-spective; and in this manner it is easier to

Figure 2The Two-Dimensional New Venture Template

Visual Comparison across Venture Types


conceptualize what might be needed tomake a difference in new ventures suchthat they can “live with meaning.”

To further provide the context, wenote that the WBI has actually started thecooperative venturing network with aninitiative called Venture Analysis Stan-dards 2000 at its core.2 Living withmeaning, then—one version of the new

venture APGAR—has been in use nowfor approximately 15 years. As research-ers we have been tracking results, andare now in a position to assert that ifactors within the small business arenafollow and apply this standard consis-tently, we might aspire to ISO-type crite-ria for new ventures—quality standardsthat can make a difference in the sur-

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

Figure 3The Three-Dimensional New Venture TemplateVisual Comparison across Venture Attributes

6.5 / 7.2 target

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http://www.venturecapital.org/fundamentals.htm

vival of new ventures: compliance withexpected standards. Put in terms of thequality movement—essentially Deming’sfounding premise (e.g., Deming 1986)to simply focus on variability (theupper and lower control limit), such anapproach has a simple and highly appli-cable logic when applied to a new smallbusiness living with meaning. This isbecause in small business formation, wehave a quality control problem the cre-ation of new ventures that may (unfortu-nately) live in vain because we don’tassess early and often. With qualitycontrol of the type suggested, we couldthen build a track record database. Pres-ently, as we understand it, the databaseincludes about 400 companies, and thedata are sufficient such that we now havea credible conceptual foundation fromwhich to teach new venture “living withmeaning” to students in our entrepre-neurship programs, and within SBDCnetworks, etc.

And now, turning attention toward anexample of an initiative that might besuggested in response to the challenge tohelp small businesses die/terminate withmeaning we recall to the mind of thereader the idea of a venture forensicsinitiative, as previously introduced. Suchan approach would be essentially meta-cognitive: thinking about thinking (Mitch-ell et al. 2005). That is, we mightinvestigate how people think about theirnew venture experience. Kruger andDunning (1999) suggest that unskilledpersons inflate self-assessments, andskilled persons inflate others’ assess-ments. Through a venture forensics initia-tive that examines failed new ventures,these thinking errors can be removedthrough better calibration of attributionsfor all concerned.

In a typical situation—before theventure starts—a first-time entrepreneurwould be expected to be unskilled andunaware. People often just plungein—sometimes called the “entrepreneur-ial seizure” (Gerber 1986) moment.

Then, on the other end of the typicalsituation (to complete the cycle) afteran entrepreneur has failed, instead ofhaving an inflated self-assessment, wewould expect to see self-assessments tobe very low, with entrepreneurs actuallymiscalibrating in the other direction—actually inflating other’s assessments.And based on this repetitive behaviora failure rate in an economy can becomputed. Venture forensics couldlower this, by helping recalibrate bothunskilled and unawareness elements(toward a more realistic self-assessment).What would a venture forensics initiativedo? Essentially in practice, (as noted) thebankruptcy process could be enlistedto support this recalibration processthrough venture forensics; and therebyassist small business in its social respon-sibility to die with much more meaning—not to die in vain.

The small business live-with-meaningand die-with-meaning initiatives wouldhave the following implications forresearch. As regards living with meaning(i.e., keeping new small business life inmind), we could and should create nor-mative theory building with assessment,we could increase audits with methods,and we could do instrumental empiricalresearch. Using such tools like the key-factors-analysis-based NVT approach,we could do focused descriptive re-search with the standards. And from apractitioner-focused standpoint, we couldfocus on several crucial “enactment”-typequestions, such as: How, as a field, do weactually enact the needed changes? Howcan a grassroots broad-scope apprecia-tion for the importance of small businesslife be brought about? From a practical“how might we get this done?” stand-point, we wonder if the answer lies withinapproaches that are being suggestedwithin the newly emerging institutionalentrepreneurship research stream, whereinstitutional entrepreneurs enact changesthe underlying meanings within society.According to some of the recent literature,


institutional entrepreneurs act uponunderlying beliefs and values to createand transform institutions (Greenwoodand Suddaby 2006; Maguire, Hardy, andLawrence 2004; Garud, Jain, andKumaraswamy 2002). In fact, Hoffman(1999) suggests that institutional entre-preneurship occurs as organizational-field configurations (such as underlyingbeliefs and values) are changed, therebyresulting in the alteration of the corre-sponding institutions (p. 353). This isthe practical process we see unfoldingas the result of the new research we aresuggesting.

To add clarity to our point, we might(with yet another simile) compare insti-tutional entrepreneurship to the processof managing luggage in an airport: Whensomebody gets a new venture rolling, it’slike putting your belongings in rollerboard carry-on luggage, so you can get itthrough the airport faster. Institutionalentrepreneurship is like getting you andyour roller board suitcase on one ofthose moving sidewalks, where you actu-ally move everybody with the rollerboard forward. Institutional entre-preneurship moves everyone on thewalkway. Applied consistently with largesample empirics, we might then envisionthe track-record database, and instead ofthe FAA, we would have the FVA, whichwould stand for (hypothetically) theFederal Venture Administration. Or if weare anti-regulation, we might insteadsuggest something like a “Google-Venture” so that people can entertradeoff information into an analyticalwebsite and actually begin to assessthemselves. Our point: plenty of pro-vocative research opportunities exist forexploring how new small businessesmight better live with meaning.

Now as respects research initiativesthat can arise from framing new questionsin terms of dying with meaning, we couldundertake normative theory building sothat we can better understand expertise,which would really give us a new vision,

for example, for public education.Presently, we observe that we havepeople starting businesses who couldhave learned to avoid all the standardpitfalls, had we enabled this type of edu-cation within the elementary schools. Wecould enable the failure recognition/opportunity creation process introducedearlier, by changing the way people thinkabout their having to go bankrupt—toactually preserve what was learned (e.g.,Mitchell, Mitchell, and Smith 2008).Instrumental research could develop theentrepreneurial mindset as a nationalasset, using the bankruptcy courts; andthen new descriptive research could useventure forensics for economic planningbecause of the possibilities that arise froma much higher-veracity database. Wecould, with explicit attributions andincredible data, accelerate the opportu-nity options learning cycle (ibid.).

So, as a suggestion for a “futuristic”vision of small business research, mightwe therefore renew our beginning asser-tion that the social responsibility of smallbusiness is to neither live nor die in vain?Of course we need to learn a great dealmore to enable us to fully shoulder thisresponsibility. Small business socialresponsibility is one notion that suggestsan important future for a small businessresearch, especially as small businessconfronts the ever-changing techno-logical landscape, which dramaticallyimpacts the living and dying of new ven-tures. We therefore further refine ourfocus to look specifically at the future ofresearch in technology entrepreneurship.

Wither Research in TechnologicalEntrepreneurship?

Schumpeter’s (1934) notion of eco-nomic creative destruction comes closestto a description of the relationshipbetween technology and entrepreneur-ship. It posits the emergence of novelcombinations wherein macroeconomicor technological forces trigger “reforms. . . [in] the pattern of production . . .

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and reorganize an industry” by entrepre-neurs. Since that time, research hasfocused on the mechanisms by whichbusinesses respond to such events.Today, accepted theories view busi-nesses as configuration of resources thatare seamlessly manipulated to create andclaim emerging value propositions.However, these theories, notablydynamic capabilities, have not properlydelineated the relative importance ofinformation, technology, human ability,human motivation, organizational design,or the processes by which these elementsare (re)combined to form the sorts ofemerging businesses contemplated bySchumpeterian theorists. More funda-mentally, theories of the relationshipbetween technology and entrepreneur-ship have not made a distinction betweentechnological entrepreneurship in smalland large businesses. Is the technologydriven value creation in small businessesthe same as in large businesses but writsmall? Our theories have not yet consid-ered this question in part because theboundaries between the two are not theo-retically defined.

Serious research in technologicalentrepreneurship became prominentonly when scholars in the managementof technology and engineering manage-ment began to consider the centralityof the entrepreneur. Theories of pro-duction subsumed the individual actor.In the old world, managing technologywas largely about technological andorganizational choices. How innovationarose in such a world was unclear and itwas only when the technological entre-preneur, a hybrid of scientist/engineerand businessperson, was included in theequation that a proper understandingcould be attempted.

Technological entrepreneurship re-search is foremost about understandingthe conditions and drivers that lead tothe exploitation of scientific discoveriesfor value creation, typically in small firmsettings (although attention on corporate

entrepreneurship in large firms has gaintraction). The process of opportunitysearch is heavily influenced by the entre-preneur’s background as well as the taskenvironment in which the entrepreneurfinds himself. Therefore, a large partof the extant research is focused onopportunity identification. Theories inopportunity identification recognize theimportance of bounded rationality anddifferences in risk preferences amongentrepreneurs. Bounded rationality notonly determines the limits to individualinformation processing but also the envi-ronmental conditions that create uncer-tainty. Risk preferences are therefore afunction of both individual differencesand the environmental conditions con-fronting the decision-maker. Thereforewhat is important is to understand whentechnology exploitation does not occuras much as when it occurs.

There are three levels of analyses intechnological entrepreneurship research.At the individual level the focus is on thescientist-entrepreneur, venture capitalist,and other individuals that incite anddrive innovation. At the organizationallevel the research is on entrepreneurialteams, structures, processes, and interor-ganizational relationships that enablevalue creation and appropriation. At thesystems level it is about exchangesacross value networks; constrained orenabled by governing conditions suchas technology and competition policy,industry standards, and the economics ofgeographic location. Properly executed,technological entrepreneurship researchis therefore interdisciplinary, multilevel,and incorporate dynamic systems withnegative and positive feedback loops. Todate, few theories of technological entre-preneurship posit models that includenegative feedback loops.

In sum, we should think about howthe impact of a change in one variablecascades through an entrepreneurialsystem and leads to changes in the rela-tionships between the other variables.


For example, a scientist may becomealert to commercialization opportunitiesin his research when he encountersthe need to create more resources forfuture research. As the market potentialof these opportunities improves, thescientist-entrepreneur may become morewilling to consider riskier opportunities.His risk propensity may, however, betempered by life-stage considerationssuch as the need to accumulate an inher-itance for an offspring. As he gainsexperience at venturing, the scientist-entrepreneur’s network grows moredense and complex, leading to a widerrange of opportunities. Networks alsobring resources that attenuate risk andthus enhance opportunity exploitation.Hence, the types of ventures an entrepre-neur finds attractive shifts with changesin his individual differences, whichimpacts the way in which these oppor-tunities can be pursued.

One area that deserves more attentionin the literature is the emergence ofopportunities, individuals and busi-nesses that arise from technologicalchange. Emergence is the spontaneousappearance of ordered social and orga-nizational structures. Past researchershave identified, though not always con-sciously, the phenomenon of emergencein the discovery and exploitation of eco-nomic opportunities, the coming-into-being of new firms, the unexpectedgrowth spurt of small businesses, and inthe creation of new industries. In theabstract, a small business can be definedas the coming together of formerly dis-persed knowledge about opportunityand technology at a specific location in apoint in time. However, what is yet to beexplicated in this research is the processby which emergence occurs. Moreimportantly, we do not yet know theconditions under which small businesseswill not emerge. We suspect these arenot simply the absence of the enablingconditions that foster emergence. Forexample, government policies that favor

technology transfer and foreign directinvestment by multinationals may in factmilitate against the emergence of adomestic technology-based small busi-ness sector.

The concept of emergence helps usarticulate the suddenness of the organiz-ing processes that entrepreneurs encoun-ter prior to the commencement ofproduction. Therefore, a theory of howtechnology drives or is driven by entre-preneurship should be capable of mod-eling the prefirm formation stage, whichhas till now been poorly articulated inthe literature. Note that organizationalemergence can also describe suddenchanges to technological trajectories thatrepresent something novel and unantici-pated for the growing business.

Another area that deserves more atten-tion in future research is that of the inter-actions among actors in a value network.We know from the research in nationalinnovation systems that actors in theecology of value creation can be riskarbitragers, resource providers, andknowledge generators. The impact oftechnology change and shifts in legalinstitutions and social norms can impede,enhance or alter the roles of these actors.When these roles are altered (e.g., knowl-edge generators becoming risk arbitrag-ers, as is the case when scientists becomeentrepreneurs) the cycle of value creationis altered, sometimes with unintendedconsequences.

The role of public policy is anotherimportant research area that deservesmore attention. For example, competi-tion policy can reduce the incentives forentrepreneurial activity by reducing thegains from risk arbitrage or innovation.On the other hand, economic policy tar-geting specific technologies for govern-ment support can create economies ofscale and scope in research and develop-ment and give rise to entire populationsof new businesses. We believe that theimpact of government interventiondepends on the stage of development of

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an industry and might prove beneficialduring the early stages of organizationwhen markets fail to form. Initial condi-tions matter and high levels of generalhuman capital engendered by education,reliable and low cost infrastructure andfairly enforced legislation can reducetransactions costs and startup costs.

In doing research on technologicalentrepreneurship, some of the tech-niques that deserve more attentioninclude critical events analysis with itsfocus on phase changing events,dynamic multi-agent games employingobjective based optimization routines,evolutionary modeling with complexsystems theory, process mapping, multi-case clinical studies, panel data analysisusing probabilistic models, and com-puter simulation. These types of tech-niques can account for population andidiosyncratic emergence processes,which means that they can account forthe simultaneous existence of estab-lished and small businesses that face thesame economic and sociological condi-tions in a population.

With respect to data requirements,dynamic models require temporal dataand statistical procedures capable of han-dling such data. Industries evolve at dif-ferent rates, and experience technologicalshocks at different time periods. Addi-tionally, dynamic models are necessarilyrecursive, which demand sophisticateduse of non-linear estimation techniquesthat are capable of operating at multiplelevels of analyses. However, the real chal-lenge in entrepreneurial research isto obtain such data as they are likely tobe proprietary, noisy, and difficult tocompare across organizations, timeperiods, and industrial contexts.

In sum, because technological entre-preneurship is a multilevel phenomenon,theory building and testing has to payattention to the interactions betweenindividual, group, formal organization,and industry levels of analyses, eventhough testable models tend to isolate

these levels. Each level of analysis can berepresented as a system of interdepen-dent components. At higher levels thesecomponents combine to form a system,itself a component in the next higherlevel of analysis. Hence, one cannot fullyunderstand opportunity recognition andexploitation as a co-evolutionary emer-gent phenomenon without being sensi-tive to its higher contexts—culture,institutional arrangements, and political-economic exigencies. This, we believe, isthe direction in which the researchshould proceed.

ConclusionOne of the hallmarks of provocative

research is that it generates more ques-tions with continuing research, than itdoes answers. Yet as a field, the systemwithin which new scholarship emergeshas not yet been perfected—and in someways is following a direction that is lessthan productive, and is certainly notprovocative. A brief anecdote from oneof the authors—although somewhat injest—illustrates this point.

I was invited to a highly respecteduniversity to talk to a group ofdoctoral students who are learn-ing to do empirical research:what we might call mainstreammanagement research. In theirprogram they had all learned howto conduct a literature review,write a paper, develop hypoth-eses, gather and test data, getresults and then produce a discus-sion and implications section forthat paper. I asked them: “So howdoes it work for your project?”They answered: “We collecteddata, we tested the model, we gotthe results, and we find that ourhypotheses were not supported.”Then I asked: “What do you dothen?” They said: “We go back andrevise the model.” I then asked:“What if it still doesn’t work?”


They answered: “We go back andrevise the hypotheses.” But I per-sisted, and asked: “What if it stilldoes not work? Are you going torevise the data?”

Yes, it is an anecdote, but it still leadsus to ask: To what extent does this anec-dote (or some portion of it) actually existin research practice? And if, at least apartial hint of reality can be expected,what does this mean for the creationof provocative research? Certainlysuch practices are at variance with thetraditional expectations, which go some-thing like:

• One first reads the literature tounderstand what is known withrespect to theory.

• Then you find unique concept totest the theory according to what isnot yet known and propose it as ahypothesis.

• From theory design appropriateresearch that will test the theory orhypothesis.

• If you truly develop a set of hypoth-eses grounded in good theory, andyour research design is rigorousand solid; but the result do notsupport the theory, well you actu-ally have a significant finding,because either the previous theoryis wrong, or your research design iswrong; and if you can successfullyassert that there is nothing wrongwith your design and execution,you’ve got a significant finding, atleast according to logical-positivistfalsification theory (e.g., Stinch-combe 1968).

Presently, however, it is the prefer-ence of the research community toexpect scholars to try to support some-thing that somebody else has alreadydone, or to propose yet another alterna-tive hypotheses; so as a result, we havelong rigorously designed and crafted

empirical papers that basically maketrivial contributions, do not offer pro-vocative ideas, and do not inspire othersto think. Accordingly, the researchbecomes more standard, more standard-ized, and more fragmented.

What does this mean for the future ofsmall business research, especially for thematuring of the dynamic view of smallbusiness research, where small businessis the main character at the “center of theaction” in technology and innovation? Inthe foregoing sections we have presentedchallenges, perspectives, and observa-tions that eschew “business as usual.” Infact, they dimensionalize a set of wide andvaried opportunities for the rising genera-tion of entrepreneurship, small business,and technology and innovation strategyscholars to challenge existing paradigmsand do something that’s truly innovative.It is toward this future that we look; andwe invite interested colleagues to conductan investigation that lives up to the poten-tial of the newly-emerging stream smallbusiness management research: to trulyextend our understanding of theattributes and strategies that enable smallbusinesses to grow, to contribute and toflourish at the center of the innovationand technology-based action.

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