Abstract
Entrepreneurship, Growth, and Economic Development, edited by Mário Raposo, David Smallbone, Károly Balaton, and Lilla Hortoványi, brings together the 10 best papers presented at the XXIII Research in Entrepreneurship and Small Business (RENT) conference in November 2009. The conference had the overarching theme: “Entrepreneurial Growth of the Firm.” Published as a part of Frontiers in European Entrepreneurship Research series, the book mostly includes contributions by European authors.
The volume comprises theoretical and empirical chapters that employ diverse methodologies and highlight individual, firm level, industry level, and regional dimensions of entrepreneurship. Considered as a whole, the book vividly illustrates the complex multilevel nature of both the entrepreneurial phenomenon and entrepreneurial research. In general, the chapters deal with three broad concepts: (a) empirical determinants of entrepreneurship, (b) theoretical and practical measures of firm performance, and (c) methodological and measurement issues in entrepreneurial research.
The largest part of the book is devoted to entrepreneurship determinants in a range of contexts. Chapter 5 by Lepoutre, Van den Berghe, Tilleuil, and Crijns tests empirically the effects of entrepreneurship education programs in the Flemish part of Belgium on pupils’ entrepreneurial creativity and perceived desirability and feasibility of starting a new firm. The authors use retrospective pre and posttest design. They conclude that participation in the programs promotes self-reported entrepreneurial inclinations among students. This relationship appears to be stronger in the case of more time-consuming and experiential programs. The research design of this study, however, does not include a nonparticipant control group and is unable to factor out possible maturation and history effects. While chapter 5 attests to the potential role of entrepreneurship education in future firm formation, in chapter 10 Finn and O’Gorman demonstrate how individual knowledge, networking, and resultant knowledge spillovers have led to the emergence of the radio frequency identification industry in the United States and Europe. Individual inventors and entrepreneurs created new knowledge and codified it at the early stages of industrial life cycle. Mobility of engineers, publication of patent applications, and discontentment steered vigorous pursuit of market opportunities and knowledge spillovers that were conducive to formation of this new research-intensive industry.
In chapter 4, Hogan and Hutson focus on the financing of prototype development by Irish software product start-ups. The researchers seek to understand differences in the likelihood to generate owner revenues and to use external funds to complete prototype development among companies that are backed by venture capital (VC) and that are self-financed. Both VC-backed and non-VC-backed firms rely on revenues from consulting. Unlike VC-backed companies, non-VC-backed firms are more likely to self-finance prototype development and to receive their first revenues from product sales.
Three chapters look at regional determinants of entrepreneurship, which is measured by new venture creation in Swiss regions (chapter 8), by the number of independent start-ups and new subsidiaries in Japanese prefectures (chapter 6), and by cross-border cooperation (chapter 7). Becker, Kronthaler, and Wagner divide 106 Swiss mobilité spatiale regions into clusters based on entrepreneurship potential and discuss their strengths and weaknesses in relation to the ability to generate new business establishments. Agglomeration, urbanization, and a young, educated, and diversified population emerge as the main regional determinants of firm formation in this study. Ikeuchi and Okamuro relate entry rates of independent start-ups and new subsidiaries to the structure of human capital available in prefectures. In manufacturing, the proportion of college graduates appears to promote independent firm formation, whereas the proportion of professional and technical workers hinders it. Human capital structure is not a significant predictor of entry rate for new subsidiaries. In services, subsidiaries choose to start operations in the prefectures with higher levels of college graduates. Such localities, conversely, are characterized by a lower rate of independent start-ups in the service sector. Smallbone, Xheneti, and Welter compare international entrepreneurship in a region with a “soft” national border and in a region with a “hard” national border. The study reveals the shaping role of institutions and individual characteristics of entrepreneurs in cross-border cooperation.
Another theme addressed in the book is theoretical and practical measures of firm performance. Chapter 3 proposes a typology of growth strategies employed by entrepreneurial IT service firms (EISFs). Witmeur and Fayolle identify seven “ideal” types of strategic configurations and apply them to four companies. Besides entrepreneurial characteristics and willingness to grow, market conditions, resource availability, and organizational structure determine the selection of growth strategies adopted by EISFs. Growth strategies, in turn, are able to predict firm evolution in IT services. In chapter 9, Szerb and Ulbert introduce a conceptual model of SME competitiveness composed of 21 individual variables and 7 pillars. The researchers demonstrate how the model can be used to calculate a competitiveness score for a small firm, and they apply the methodology to cluster and firm-level analysis of Hungarian SMEs.
Chapters 2 and 11 concentrate on methodological and measurement issues in entrepreneurial research. Kiviluoto, Brännback, and Carsrud demonstrate divergent operationalization of entrepreneurial growth. The authors review 118 empirical studies focused on firm growth, profitability, and performance that were published between 1981 and 2009 in five top-tier journals in the fields of entrepreneurship and management. In these studies, “growth” and “performance” are usually approximated by sales growth, and the two terms are used interchangeably. Other measures of performance include profitability, changes in employment, and market share. The researchers suggest that a lack of consistency may be a reason for conflicting empirical results presented by entrepreneurial growth studies. The concluding chapter of the book calls for more qualitative disequilibrium-based entrepreneurial research. Streb and Gupta correctly describe entrepreneurship as a nonlinear, complex phenomenon loaded with outliers. They argue that econometric analysis, prevalent in the literature, is unable to capture “process-intensive, context-rich, temporally oriented entrepreneurial phenomena” (p. 263). The authors propose a hermeneutical approach to qualitative methodology for entrepreneurship research and show that some existing studies, in fact, use certain elements of this approach.
A reader needs to know the basics of statistical testing and regression analysis to understand some chapters. Otherwise, the book reads easily. It will be useful for researchers, practitioners, and students interested in current theoretical and empirical perspectives on entrepreneurship and growth.