ENTREPRENEURSHIP IS ONLY A CONSTRUCT

  • Category:
    Management
  • Document type:
    Essay
  • Level:
    Undergraduate
  • Page:
    3
  • Words:
    1628

Entrepreneurship is only a Construct

Entrepreneurship is only a Construct

Entrepreneurship is a concept that is increasingly used in public debate because it is considered to be a way to build prosperity. Notwithstanding its common usage, there are numerous definitions of entrepreneurship (Covin & Lumpkin, 2011). For example, entrepreneurship has been defined as working for oneself and not for someone else. It has also been defined as the capability to organize resources in a way that leads to the seizure of business opportunities (Iversen, Jørgensen, & Malchow-Møller, 2008). Lumpkin and Dess (1996) note that that the lack of consensus has had a negative impact on research on entrepreneurship. However, they argue that the common feature of entrepreneurship is getting into new and established markets with new or existing products and services. Using this underlying characteristic of entrepreneurship, this paper argues that entrepreneurship is only a construct that is defined using other constructs.

In order to define entrepreneurship as a construct, it is worth defining what a construct is. A construct is a mental abstraction that is used to simplify a theory, explain its components, and find a way to measure its behavior (Reynolds, 2013). As stated, entrepreneurship is a complex concept that lacks a universally accepted definition (Lumpkin & Dess, 1996). This complicates the creation of a direct method of observing and measuring entrepreneurship since different people will use different criteria to measure entrepreneurship due to the different meanings. The complexity and the lack of a clear definition mean that entrepreneurship is a construct that is used to simplify one of the key drivers of economic growth and prosperity.

By definition, a construct explains the components or dimensions of theories, ideas, or objects (Reynolds, 2013). Lumpkin and Dess (1996) note that the process of entrepreneurship, which in this case is the introduction of existing or new products and services into established or new markets, has several domains. These domains can be defined as the components of entrepreneurship which assists scholars to simplify the complexity of entrepreneurship and measure it through observing the domains. The domains that can indicate an entrepreneurial orientation are autonomy, innovativeness, proactiveness, risk taking, and competitive aggressiveness (Lumpkin & Dess, 1996). However, it is worth noting that all the five domains do not have to be present for a firm to be considered entrepreneurial (Lumpkin & Dess, 1996).

Innovativeness refers to the likelihood that an organization will develop and nurture experimentation and new ideas that might result in novel products, services, and processes. It is apparent from the definition that innovation is itself a construct that is difficult to measure. This argument is confirmed by Lumpkin and Dess (1996) as they note that innovation can be measured along a continuum that ranges from interest to experiment with new ideas to intense commitment to acquire and utilize the latest technologies or products. The lack of an empirical measure of innovativeness and its ambiguity means that it can be considered to be a construct. In the same way, entrepreneurship can be considered as a construct since its definition is based on an understanding of innovativeness.

Autonomy is another factor that is used to indicate the presence of entrepreneurship (Lumpkin & Dess, 1996). As stated, one of the early definitions of entrepreneurship noted that it defined individuals who opted to work for themselves and not others (Iversen et al., 2008). According to this definition, these independent-minded have the tendency to come up with new ideas since they do not have to answer to superiors (Lumpkin & Dess, 1996). As in the case of innovativeness, it is difficult to come up with a way to measure autonomy. This is because individuals within an organization can still come up with radical and new ideas that match and surpass the individuals who decide to work outside organizational settings. The difficulty in measuring autonomy is illustrated by Lumpkin and Dess (1996) who note that the level of autonomy can be judged by looking at factors like the size of an organization, the ownership structure, centralization, and management style. These factors make it easy to understand the signs of autonomy, indicating that autonomy can also be considered to be a construct. This facilitates the argument that entrepreneurship, whose domains include autonomy, is a construct.

Lumpkin and Dess (1996) propose proactiveness as the other domain of entrepreneurship. It is an acceptable fact that the first firm to bring a product to market stands the chance to reap enormous profits. However, there are cases where a company reaps even higher profit margins when they become the second firm to implement an idea and bring it to the market. A case in point is Apple, a firm that has grown to be one of the most profitable technology business despite not being the first to offer products like digital music, smartphones, and tablets (Anthony, 2012). By being proactive, Apple can be considered to be an entrepreneurial firm. However, the level of proactiveness cannot be measured in absolute terms. As in the case of innovation, proactiveness can be measured on a continuum that ranges from being indifferent to market opportunities to being responsive to changes in the business environment. The difficulty in measuring proactiveness means that it can be considered as a construct. This implies that entrepreneurship is also a construct that can be simplified and explained using a combination of other constructs.

Competitive aggressiveness is a concept that is related to proactiveness. However, the focus of proactiveness is on market opportunities while competitive aggressiveness concentrates on competitors (Lumpkin & Dess, 1996). As in the case of proactiveness, evidence of competitive aggressiveness can take several forms. For example, a firm can be considered to be aggressive by examining whether its marketing policy sets the goal of capturing market share through strategies like price wars. Aggressiveness can also be determined by the speed with which a firm enters new and existing markets (Lumpkin & Dess, 1996). It follows that competitive aggressiveness is a construct whose presence can indicate that a firm has an entrepreneurial orientation. The fifth dimension that seeks to define entrepreneurship is risk taking (Lumpkin & Dess, 1996). In addition to displaying an autonomous nature, entrepreneurs are expected to assume personal risk and uncertainty. Like the other domains of entrepreneurship, it is difficult to define a risk and what constitutes a risk-taking inclination. As such, it can be argued that risk-taking is a domain that simplifies ideas like high leverage, large resource commitments, and high probabilities of loss (Lumpkin & Dess, 1996). This means that there would be numerous methods of assessing risk, a factor that supports the argument that risk taking is a construct that is used to support entrepreneurship as a construct.

In addition to using innovation, proactiveness, autonomy, risk taking, and competitive aggressiveness to illustrate that entrepreneurship is a construct, the same goal can be achieved by looking at strategic entrepreneurship. According to Ireland, Hitt, and Sirmon (2003), entrepreneurship is related to strategic management given that they both focus on the creation of wealth and growth. The correlation between strategic management and correlation allows the creation of a strategic entrepreneurship construct to develop a better understanding of wealth creation (Ireland et al., 2003). As stated, the aim of a construct is to develop a better understanding and a way of measuring an idea, event, or object (Reynolds, 2013). By defining strategic entrepreneurship as a construct, Ireland et al. (2003) indicate that entrepreneurship on its own can also be considered to be a construct. This is because entrepreneurship is a concept that has been developed to get a better understanding of the process of identifying and exploiting opportunities. Furthermore, entrepreneurship attempts to measure the degree to which a firm can leverage opportunities to create wealth. This supports the view that entrepreneurship is only a construct.

In conclusion, this paper began by noting the lack of an agreed-upon definition of entrepreneurship and entrepreneurial orientation (Covin & Lumpkin, 2011). The paper then defines a construct as a mental creation that organizes ideas so that they can be understood and measured. An examination of entrepreneurship shows that it is composed of five domains; innovativeness, proactiveness, autonomy, risk taking, and competitive aggressiveness. A further examination of these five domains shows that they fall within the definition of constructs owing to their complexity and the lack of an agreed upon method of measuring these factors. For example, innovation is a construct as it has different definitions and can only be measured by looking at other factors. The examination of the five domains shows that entrepreneurship is only a construct that can be defined in terms of other constructs rather than being observable. The paper also examines the concept of strategic entrepreneurship and notes that it has been defined as a construct. The clear relationship between strategic entrepreneurship and entrepreneurship means that entrepreneurship can also be referred to as a construct that seeks to explain, simplify, and measure the way in which firms and individuals create wealth and growth.

References

Anthony, S. (2012). First mover or fast follower? Harvard Business Review. Retrieved 29 April 2016 https://hbr.org/2012/06/first-mover-or-fast-follower

Covin, J. G., & Lumpkin, G. T. (2011). Entrepreneurial orientation theory and research: Reflections on a needed construct. Entrepreneurship Theory and Practice, 35(5), 855-872.

Ireland, R. D., Hitt, M. A., & Sirmon, D. G. (2003). A model of strategic entrepreneurship: The construct and its dimensions. Journal of Management, 29(6), 963-989.

Iversen, J., Jørgensen, R., & Malchow-Møller, N. (2008). Defining and measuring entrepreneurship. Foundations and Trends in Entrepreneurship, 4(1), 1-63.

Lumpkin, G. T., & Dess, G. G. (1996). Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1), 135-172.

Reynolds, C. & Brown, R. T. (2013). Perspectives on bias in mental testing. New York, NY: Springer Science & Business Media.