Rediscovering Entrepreneurship in a Complex World: A Nonlinear Framework for Organizing

By Hench, Thomas J. PhD | Journal of Business and Entrepreneurship, March 1999 | Go to article overview

Rediscovering Entrepreneurship in a Complex World: A Nonlinear Framework for Organizing


Hench, Thomas J. PhD, Journal of Business and Entrepreneurship


ABSTRACT

Today, many researchers are turning to Nonlinear Dynamical/Complex Adaptive Systems (ND/CAS) theories to explain the dynamics of entrepreneurship and entrepreneurial processes. However, most researchers have dealt with these theories at only the level of informing metaphor and guiding principles. This paper extends this work by presenting a comprehensive, systematic, theory-based framework comparing the newly emerging ND/CAS paradigm with the received Newtonian-Mechanical paradigm. This framework identifies the underlying assumptions, views of management, and metaphors associated with each and examines their differences relative to entrepreneurship. This study adds to our theoretical understanding of ND/CAS as they apply to the study and practice of entrepreneuship.

INTRODUCTION

Discovery commences with the awareness of anomaly, i.e., with the recognition that nature has somehow violated the paradigminduced expectations that govern normal science.

Thomas Kühn (1970): The Structure of Scientific Revolution

The author begs to add another more exact definition, which he is in the habit of using: what we are about to consider is that kind of change arising from within the system which so displaces its equilibrium point that the new one cannot be reached from the old one by infinitesimal steps.

Joseph Schumpeter (1934): The Theory of Economic Development

For much of the past five decades, entrepreneurship has occupied a distinguished, but arguably marginal, position within both the economic and organizational sciences (Teece, 1998; Kirzner, 1984, 1985). Today, however, this position is changing, as matters of entrepreneurship and entrepreneurial processes move again to center stage as critical elements in the quest for economic rents and strategic competitive advantage (Teece, 1998).

This rediscovery of entrepreneurship and entrepreneurial processes is driven in part by at least two factors. The first concerns recent advances in nonlinear dynamical/complex adaptive systems (ND/CAS) theories and how these theories inform our understanding of entrepreneurship and entrepreneurial processes (see especially Bygrave, 1989; Stevenson and Harmeling, 1990; Bygrave and Hofer, 1991; Nelson, 1995). The second concerns a broad-based recognition within the organizational sciences of the need for a new paradigm to better explain the complex dynamics of organizational life and the market place (Daft and Beunger, 1990; Daft andLewin, 1990, 1993; Schendel, 1994; Levy, 1994; Macmillan, 1994)-dynamics that mirror the same complex patterns of behavior as entrepreneurship and entrepreneurial processes (Hayek, 1988).

Nonlinear processes have been at the heart of our understanding of entrepreneurship ever since Schumpeter (1934: 64) described the creative destruction of the entrepreneurial process as a "spontaneous and discontinuous change in the channels of the flow...which forever alters and displaces the equilibrium state previously existing." But only in the last decade have entrepreneurship researchers begun to develop the tools and insights necessary to advance the understanding of ND/CAS beyond the level of the intuitively obvious. This paper extends this earlier work born by contributing additional theorizing about ND/CAS within the context of entrepreneurship and entrepreneurial processes and by placing this broadened perspective into a systematic, comparative framework.

SETTING THE STAGE

Until recently, mainstream economic thought tried to explain both entrepreneurship and entrepreneurial processes through primarily mechanistic and equilibrium-based models of change (Anderson, Arrow, and Pines, 1988; Stevenson and Harmeling, 1990; Kirchoff, 1991; Nelson, 1995). Such attempts met with only partial success, leading Stevenson and Harmeling (1990: 1) to observe that "there exists an unfortunate gap between management theory as it is developing and management theory as it must be if it is to be of use. …

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