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Entrepreneurship: is there a blind assumption that this is a new economic domain?

Hilary Nwokeabia | July 01, 2019

The terms ‘entrepreneurs’ and ‘entrepreneurship’ have gained significant popularity in recent years, particularly in development, and it can be said that the ‘entrepreneurship domain’ is to a large extent formed. Despite this, leading authors and intellects are yet to agree on what exactly these terms mean and the parameters that hold this domain together. This uncertainty over what it is we are talking about is not only impeding our knowledge on the subject, it is affecting policy effectiveness and economic performance.

Systematically defining ‘entrepreneurship’ would provide a basis for theory building. It would also help with the sampling process in research, improve the quality and consistency of public policy initiatives aimed at supporting entrepreneurial activities, and, most importantly, guide impact assessments and policy changes. This article argues that it is time to begin developing standard definitions and theoretical tools to enable the domain of entrepreneurship, if accepted as such, to progress.

Given the lack of a common understanding of what entrepreneurship is and who entrepreneurs are, it is ambitious to believe that there can be uniformity when it comes to measuring entrepreneurial activities, either across sectors or economies. It is, thus, helpful to establish standard definitions, parameters and theories. As well as helping with research, such clarity would generate more productive entrepreneurial acts, help evaluate successes and failures more accurately, and may help create environmental conditions favourable to the entrepreneurship agenda.

Among the more than 12,000 publications on entrepreneurship in 2018, almost all authors had variant definitions, even though they claimed that ‘entrepreneurship’ has become the principal engine of economic growth for many countries. Definitions were generally categorized into four groups – humanistic, structuralistic, interpretive, and functionalistic. Despite the variety of definitions, analysts and policymakers have lived with a high tolerance of ambiguity on what constitutes entrepreneurship and who entrepreneurs are. In fact, a large group of research links growing US employment opportunities to a rise in entrepreneurial ventures. This research has, however, been done without a standard global definition and, as a result, the analysis does not capture any consistent and credible reality. The ambiguity of the entrepreneurial domain risks confusing practitioners and technical advisers responsible for helping entrepreneurs throughout the entrepreneurial process. The expansion of the domain thus begs the question: Is there a blind [1] assumption that there is a new economic domain?

Traditionally, economic development is equated with monetary gains and an expanding workforce. This is what economic development professionals and community leaders are familiar with and what they have the tools for, regardless of how successful this approach has been in the past. As such, if we begin to talk about entrepreneurship development – growing the economy by supporting ‘homegrown’ entrepreneurs – we must justify why this shift in strategy is relevant, and without solid definitions and parameters, this is hard to do.

Economic theory talks about providing everything necessary for supplying the wants of society and employing people in such a manner as to naturally create reciprocal relations and dependencies between them in order to supply one another with reciprocal wants. The laws of economics arise from the combined efforts of mankind to produce wealth, in so far as those efforts are not modified by the pursuit of any other object. When the ‘entrepreneurship’ domain is brought into play, one is compelled to ask why supporting ‘homegrown’ entrepreneurs is useful. Given that it is claimed that entrepreneurs account for a large number of businesses and employment, the arbitrariness with which these terms are defined is surprising. Why is this area be treated so distinctly from the domain of economics? Economics already deals with the production, use, and management of resources, so is there a need to redefine these dimensions through the lens of entrepreneurship? 

In the absence of scientific consensus, it is not certain whether entrepreneurship:

  • Is restricted to the commercial sector
  • Can emerge in any area of human behaviour
  • Can be executed in any organization (be it small, new, individually or jointly owned and managed, formal or informal)
  • Has innate characteristics
  • Is outcome driven, purposeful or serendipitous
  • Always requiring innovation and risk taking
  • Involves discovery (exploration) or just exploitation of opportunities
  • And most importantly, is a micro or macro-level phenomenon

Quantification also emerges as an issue. Do entrepreneurs only run small businesses? Once a business becomes medium or large, does it cease to fall within the entrepreneurship domain (e.g. large corporations)?

Considering the high number of definitions of entrepreneurship, selecting one to be used for policy and empirical purposes has proven a strenuous task. Entrepreneurship research has used garnered concepts from many diverse disciplines. But entrepreneurship differs from physics and the other natural sciences, hence, it is doubtful whether these concepts apply. Furthermore, given the many different categories and types of entrepreneurs, it is reasonable to wonder whether there can possibly be elements that are common to all. A few scholars have expressed concern about the lack of universally-accepted definitions, and although the choice of definitions in behavioural sciences generally remains subject to debate, a clearly-stated set of definitions is necessary for scientific understanding, explanation, and prediction.

Hence, to effectively advance our knowledge in this popular domain, eliminate the blind assumption of a new economic domain and produce tools useful in practice, it is necessary to establish standard definitions, parameters and theories that will generate productive empirical research, understand and forecast entrepreneurial acts, evaluate successes and failures, and produce environmental conditions favourable to the entrepreneurship agenda. Until the definitional tussle is dealt with, however, it is hard to see how proponents of the domain can claim a deep understanding of the subject of entrepreneurship. [2]

[1] ‘Blind’ in this paper plays on the idea of a ‘blind taste test’ and is used to refer to a decision or act done without seeing certain objects or knowledge of certain information that could serve as guidance or cause bias.

[2] The author works at the United Nations Conference on Trade and Development. However, the views expressed in this article do not represent those of the organization. They are exclusively those of the author who is responsible for any errors that might have been overlooked. Any comments should be directed to the author at: hnwokeabia@yahoo.com.

Photo credit main picture: Rwanda Government (via Flickr)