[E2] Entrepreneurship and Theory of the Firm
Coordinators: Aimilia Protogerou
National Technical University of Athens, Greece
Manchester Metropolitan University, UK
It is now widely accepted that entrepreneurial activity is one of the key drivers of industrial dynamism, economic growth, innovation and social welfare (Malerba et al, 2015; Carlsson et al, 2013). Research on entrepreneurship has a long tradition and since the 1980s has grown considerably and is evolving rapidly. Entrepreneurial activities are approached using multiple disciplinary perspectives (such as economics, management, sociology, business and business history etc.) and various methodological tools at diverse levels of analysis (individual or team level, venture or firm level, and macroeconomic level). Therefore, research on entrepreneurship can be understood as a complex system, where each dimension embraced and each separate level of analysis used can be seen to contribute to a more integrated/comprehensive understanding of the heterogeneous phenomena involved.
Despite the progress been made so far, both at a theoretical and empirical level, some research questions of interest that could be addressed are, for example, the following:
- What are the links between innovation and entrepreneurship?
- What is the role of entrepreneurial activity in the formation of innovation systems both at a national and regional level?
- How does entrepreneurship affect industrial development and consequently economic growth and social well-being?
- Which entrepreneurial processes are most effective for creating social value across diverse social entrepreneurship activities?
- What factors drive the internationalisation process of entrepreneurial activities?
- Is there a link between internationalisation of social entrepreneurship and its outreach?
In addition, recent research suggests that only some particular types of entrepreneurship, which are given a number of labels such as ‘high potential’, ‘knowledge intensive’, ‘innovative’, or ‘quality’ entrepreneurship, matter for economic development. It would be interesting to explore the economic and social impact of these types of ‘dynamic’ entrepreneurship as opposed to ‘ordinary’ or ‘static’ entrepreneurship.
Finally, taking into consideration that the recent economic crisis in Europe turned out to be one of the most severe of the last decades, and that economic recovery seems to be rather week, new challenges have emerged at the policy level highlighting the need for designing new, systemic entrepreneurial policies. In this respect, more research is needed to better understand how public policy measures can influence more effectively the diverse determinant factors of the demand and supply side of entrepreneurship and the role of institutions.
Theory of the Firm
The theory of the firm has been hotly debated in the last two decades. Although we talk about the theory of the firm, there is a plurality of theories of the firm ranging from the neoclassical theory of the firm to recent knowledge based theories of the firm. We are interested in different types of firms - from SMEs to TNCs – which are analyzed as interdependent parts of the production structure.'
Traditionally, the theory of the firm has sought to answer the three questions derived from Coase (e.g. Holmström and Tirole 1989; Foss 2000): (1) why do firms exist?, (2) what factors determine their boundaries relative to markets? , and (3) what determines firms’ internal organization?
Following the evolutionary economics’ dictum – "dynamics first" (cf. Dosi, 1997; Hodgson, 2000) – we would also call for providing answers to the more dynamic versions of these questions (Witt, 2005):
- What guides the creation of a firm organization?
- How do firms, and the markets in which they operate, co-evolve, and how is the boundary between them affected?
- What regular paths of internal, organizational development can be identified, and what contingencies determine which of the paths is likely to be taken?
We are thus interested in the emergence, development, but also the exit of the firm from the market. In order to conceptualise the firm, a multidisciplinary perspective offers rich insights: next to economics, business administration, entrepreneurship theory, international business literature, law, sociology, psychology, and cognitive science can make valuable contributions here offering a complementary or enhancing lens.
In this vein, we are particularly interested in researching the interface between theory of the firm and entrepreneurship. Although, these two fields that have been largely developed in isolation they are now beginning to be brought together and each one has much to learn from the other (Casson , 2005; Foss and Klein, 2012, Carlsson et al, 2013 ). The firm exists because of entrepreneurship (Langlois, 2005) and entrepreneurs are inextricably connected to the firm organization (Witt, 1998a). For example, in order to provide a comprehensive answer to the abovementioned question on “how a firm organization is created”, special attention should be drawn to the fact that entrepreneurial input is an important prerequisite to firm creation (Witt, 2005) i.e. one should take into consideration that without entrepreneurial visions, conceptions and actions it is highly unlikely to establish and run a firm organization.