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Sociology Department Seminars14 May 2014

Comparative entrepreneurshipand the

sociology of markets

Hugh WhittakerDep.t of Management and International Business,

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Motivation

• Research on Japanese and UK small businesses (vs large)

• Are entrepreneurs and processes of entrepreneurship essentially similar, or do they differ in important ways?

• Are they shaped by their respective environments, and if so what environments, and how?

3Source: Global Entrepreneurship Monitor 2003 Executive Report, p.10

GEM’s view of entrepreneurship

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• Hypothesize that ent.p is influenced by the institutional environment

• Select sector and highlight different focuses or types of innovative/ ent.l activity

• Cf Hall and Soskice 2001

• ….. danger of confirmation of prejudice

(Qualitative) institutional/VoC approaches

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Entrepreneurship (working definition)

‘processes in which opportunities are discovered or created, and turned into market outcomes by organizational means’

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Research design

• Compare like with like, seek to explain differences and similarities

• Focus on ‘high tech’ defined by industry, SMEs - less than 200 employees

• ‘Combined method’ research - quantitative (2 Japanese, 2 UK surveys) and qualitative (25 Japanese, 25 UK interviews)

• (Difficulty of researching ‘processes’: Approach used in this study is one of ‘snapshots’ or ‘frames’ provided by surveys, interpreted and linked by interview data)

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Research design and data set

1st J Quest.July-Aug. 1996‘Venture’ 308

valid resp. (13.3%)

1st UK Quest.Jan. 1998

‘High tech’ 510 valid resp. (26.9%)

2nd J Quest.Feb.-March. 2002

‘Venture’ 349 valid resp. (9.4%)

2nd UK Quest.Dec.2000-Jan.2001

‘High tech’ 237 valid resp. (34.2%)

UK., Japan cases

Selection of 25 UK, 25 J. cases (‘theoretical sampling’)

UK interviews 2001,

J. interviews 2003-04

Comparative Entrepreneurship data set

UK n = 113; Japan n = 223

Integrated (quantitative-qualitative) data

Founders & Founding data set

UK n = 148; Japan n = 90

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Similarities

• Average founding age 37 - importance of employment background

• Most start out as ‘reproducers’ not ‘innovators’ - ‘soft’ start (some get stuck in ‘soft’ stage) e.g. subcontracting; exceptions were serial entrepreneurs, MBO/MBI (UK), successors (Japan). Become more innovative over time

• Majority started with co-founders, former employer support common

• Gradualists, cautious approach to growth

• Becoming rich was not a major motivation; over-riding concern was to establish a viable and trusted business

• CONTRAST with VC-backed, ‘home run’ product-oriented, fast-growth-and-exit (‘SV’) model

but salient differences as wellbut salient differences as well….….

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Differences

• Founding teams: ex colleagues vs family/relations, greater vs less resource contribution

• Attitudes to growth, risk, innovation: more vs less growth, voluntary vs involuntary view of risk, product vs product and process focus

• Competitive orientations: external focus on customer needs vs building internal competences

• HRM orientations and leadership: entrepreneur as conductor vs locomotive

• Collaborations: more vs less collaborations, no.s of partners, reasons

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Underlying differences

Project entrepreneurship Lifework entrepreneurship

(Market focus)

Logic of choice

Logic of ‘responsivity’

(horizontal)

Programmed time

(Technology focus)

Logic of commitment

Logic of control

(vertical)

Open-ended time

More prevalent in the UK More prevalent in Japan

differences maintained or even heightened by high performers…

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Why these differences?

Different environments (population ecology)

Backgrounds of entrepreneurs (technology vs management)

Markets/institutions(utility vs relational markets)

What can be brought to the market? Who can participate? What are the terms of participation and exchange?

(Cultural factors)

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Changing Japan?

• Comparison of post-industrial (or post-Fordist) UK with industrial (or Fordist) Japan?

• Anecdotal evidence of change from finance, IT, biotech, etc.

• Some differences in terms of business objectives, orientations

• But overall, much continuity as well (cf high performers)

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The ‘shadow of Silicon Valley’

• Influence of (supposed) Silicon Valley model on Japan, the UK and other countries

• Should policy aim to change the nature of entrepreneurship (to match the SV model), or should it attempt to build on the existing model? (A fundamental dilemma)