What Is Entrepreneurship? A Proposal for a Data-Based Methodology

By Parker, Simon C. | Academy of Entrepreneurship Journal, January-July 2003 | Go to article overview

What Is Entrepreneurship? A Proposal for a Data-Based Methodology


Parker, Simon C., Academy of Entrepreneurship Journal


ABSTRACT

Despite the growing importance of entrepreneurship as a subject, researchers and practitioners still do not agree about what precisely entrepreneurship is. Instead of offering another definition or taxonomy, we propose a data based methodology, grounded in principal components analysis, which seeks to clarify the issue by thinning out the field of existing theories. We suggest that our approach may be capable of identifying the salient aspects of entrepreneurship in an objective way by discarding those aspects that are not central to the concept. We briefly illustrate the methodology using a large sample of British survey data.

INTRODUCTION

What is entrepreneurship? Despite the dramatic increase over the last 20 years in research dedicated to answering this important question, we appear to have made relatively little progress towards understanding the essence of the concept. The current state of the literature is characterised by a proliferation of theories, definitions and taxonomies which often conflict and overlap, resulting in confusion and disagreement among researchers and practitioners about precisely what entrepreneurship is.

The contribution of this paper is to propose a different approach to the problem of trying to understand entrepreneurship. Unlike previous contributions that have been mainly theoretical in nature, we do not seek to enlarge the set of theories about entrepreneurship. Instead, we propose a data based methodology designed to thin out the field of existing theories, by identifying (1) Whether an empirical representation of entrepreneurship exists, (2) If so, what its composition is (i.e., what theories receive empirical backing), and (3) What theories do not seem to be central to the entrepreneurship concept. We do this by using principal components analysis to identify coherent representations of entrepreneurship within a rich data set that contains proxies for many of the aspects of entrepreneurship that have been highlighted in previous research.

We argue that the new approach possesses several potential advantages over the common practice of advancing new theories or combining existing ones into new taxonomies or typologies. One advantage is that it does not presume that entrepreneurship is a coherent concept to start with. That is treated as a testable hypothesis in the present context. Second, it is useful to be able to discard as well as to support particular theories. By cutting through the chaff, a clearer representation of the entrepreneurship concept might come into view. If so, future researchers would be enabled to economise on effort by focusing on the salient aspects of entrepreneurship identified by applications of the methodology. Third, the approach can be applied irrespective of how a researcher defines the sample group. Thus, although our empirical illustration of the approach utilises a sample of self-employed business owners, this is not a necessary assumption of the approach. Indeed, we go on to apply it to a sample of employees as well. The key point is that entrepreneurship principal components are only likely to be observed in sample groups where entrepreneurship is practised. And that is precisely what we find in our empirical application.

The remainder of the paper is set out as follows. The next section provides some background about defining entrepreneurship. The one after contains the principal contribution of the paper, namely the proposed methodology. The penultimate section provides the illustrative application of the methodology using a large data set from Britain. The final section concludes.

BACKGROUND

There are many theories of and views about what entrepreneurship entails. For example, consider the following illustrative and abbreviated set of viewpoints about what entrepreneurship involves:

1. Exercising leadership, motivation, and the ability to resolve crises
(Leibenstein, 1968). … 

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