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ASKING THE ENTREPRENEUR: AN
ENQUIRY INTO ENTREPRENEURIAL BEHAVIOUR
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Christine R. Woods
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Management
and
Employment Relations Department
University of Auckland,
New Zealand
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Abstract
Israel Kirzner’s work on
alertness to opportunity has formed the centre of Austrian thinking on
entrepreneurship and his contribution has lead to significant insights
into the
workings of the market. However, the process of entrepreneurial
behaviour that
intrigues many in the field of entrepreneurship research has been
largely
unexplored within the Austrian tradition and indeed within economics in
general
(Endres & Woods, 2006). Theoretical
and operational insight into entrepreneurial behaviour can be gained by
using
Personal Construct Psychology (PCP). PCP provides one means of
operationalising
Kirzner’s theory of entrepreneurial alertness. This paper will outline
the
research methods used to explore the entrepreneur’s construct system
and report
findings from empirical work outlining some of the constructs
influencing
entrepreneurial behaviour.
Key words: Austrian
economics, entrepreneurship, personal construct psychology |
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INTRODUCTION
Alertness to opportunity
distinguishes the actions of the entrepreneur from those of other
market
actors. Israel Kirzner (1973, 1979, 1985, 1992, 1997) was the first to
articulate an economic theory of entrepreneurship based on the concept
of
alertness. His work was path-breaking, laying the theoretical
foundation for a
theory of entrepreneurship placing the entrepreneur at the centre of
the market
process (Vaughn, 1992). While Kirzner articulated a theory of market
process
based on entrepreneurial discovery, alertness has become a convenient
means of
describing entrepreneurial behaviour. The process of entrepreneurial
behaviour
that intrigues many in the field of entrepreneurship research has been
largely
unexplored within the Austrian tradition and indeed within economics in
general
(Endres & Woods, 2006). Behavioural economics takes the view that
when
examining behaviour ‘it is necessary to assume that actions are
preceded and
determined by some form of cognitive information processing’ (Earl,
1990, p.
725). Indeed the general contribution of psychological work to economic
thinking is increasingly being recognised within the field of economics
(Kahneman, 2003). Kaish and Gilad (1991) and Busentiz (1996) draw on
economics
and a behavioural approach to empirically explore Kirzner’s theory of
alertness. Empirical research examined differences in how individuals
noticed opportunities
“without search” comparing the behaviour of corporate managers and new
venture
founders. Results were mixed and researchers concluded that improved
theoretical and operational precision were required.
The purpose of this
article is to explore entrepreneurial behaviour in more detail focusing
on
entrepreneurial alertness. I suggest that theoretical and operational
insight
into entrepreneurial behaviour can be gained by using Personal
Construct
Psychology (PCP), an area of psychology that has been used to good
effect by
some economists (Earl, 1983, 1990, 1999; Loasby, 1983, 1986, 1991;
Harper &
Earl, 1996). PCP provides one means of operationalising Kirzner’s
theory of
entrepreneurial alertness. This paper will briefly discuss Kirzner’s
understanding of alertness to opportunity and the appropriateness of
PCP as a
means of exploring entrepreneurial behaviour. It will then outline the
research
methods used to explore the entrepreneur’s construct system and report
findings
from empirical work that outline some of the constructs influencing
entrepreneurial behaviour.
ENTREPRENEURIAL
ALERTNESS AND PERSONAL CONSTRUCT PSYCHOLOGY
Building on the work of
von Mises (1949), Kirzner was the first to articulate a theory of
market
process based on the concept of entrepreneurial alertness (Gaglio &
Katz,
2001; Woods, 2002). Responding to a perceived gap in mainstream
neoclassical
microeconomic theory, Kirzner sought to contribute a better
understanding of
the forces operating within the market process. He articulated a
theoretical
understanding of the entrepreneurial role within the market process
subsequently labelling this approach ‘the modern Austrian
entrepreneurial
discovery theory of the market process’ (Kirzner, 1997, p. 69). The
essence of
this theory is that alertness to opportunity defines entrepreneurial
behaviour.
The entrepreneur is ‘a decision-maker whose entire role arises out of
his alertness
to hitherto unnoticed opportunities’ (Kirzner, 1973, p. 39). For
Kirzner,
entrepreneurial alertness is a discovery process. The entrepreneur
discovers
‘which ends to strive for and which means are available’ (Kirzner,
1973, p.
34).
While the entrepreneur
is always ‘scanning the horizon’, about to make these discoveries, how
or why
an entrepreneur suddenly notices an opportunity is not explained by
Kirzner
(Kirzner, 1997, p. 72). His purpose was to develop a theory of
entrepreneurship
that was sufficient to explain how the market process works. He avoided
discussion of any behavioural process that would be compatible with the
notion
of the alert entrepreneur. Rather he describes entrepreneurial
alertness as a
‘gift’ (Kirzner, 1979, p. 148). However, Gaglio (1997) argues that
Kirzner’s
discussion of entrepreneurial alertness clearly directs attention to
the
underlying cognitive dynamics of the opportunity identification
process, which
includes insight, perception, assessment and breaking the ends-means
framework.
Indeed, Kirzner appreciated that empirical research could result in
crossing
the disciplinary boundaries into psychology. Entrepreneurial alertness
‘expresses and reflects the entrepreneur’s dreams, aspiration and
imagination,
his expectations and his knowledge, his hunches and his biases’
(Kirzner, 1992,
p. 131).
Entrepreneurial
behaviour centres on alertness to opportunity (Shane, 2003). However,
rather
than see opportunities as existing like “Mt. Everest” waiting to be
“discovered” by those possessing some type of gift, I suggest that
opportunities are constructed through experience in the market –
through
interaction between the entrepreneur and the environment (Ardichvili,
Cardozo
& Ray, 2003; Chell, 2000; Keh, Foo & Lim, 2002; Krueger, 2000).
This
process could be called entrepreneurial action: constructing worthwhile
opportunities for gain and acting upon them in the market. The
entrepreneurial
process begins when alert individuals identify potential opportunities
requiring the formulation of a new mean-ends framework (Shane, 2003).
The task
then is to explore the specifics of entrepreneurial action, more
commonly
described as entrepreneurial behaviour. Personal Construct Psychology
provides
one means of doing this.
PCP provides an integrated
overview of the nature of the person and is based on the premise that
people
endeavour to anticipate the future, ‘reaching out and beating the world
to the
punch’ (Bannister & Fransella, 1980, p. 17). It is a theory that
has
already been used within economics and in research on entrepreneurial
behaviour
(Hisrich & Jankowicz, 1990; Watson, Ponthieu & Doster, 1995)
and is
consistent with Kirzner’s definition of alertness as ‘a motivated
propensity of
man to formulate an image of the future’ (Kirzner, 1985, p. 56).
This focus on
anticipating the future is consistent with Kirzner’s understanding of
alertness. For Kirzner, the concept of alertness accommodates the
action of
entrepreneurs oriented toward the future. The entrepreneur works not
only to
envisage his future but also to see it realised.
He is thus motivated to
bring about correspondence between the envisaged and the realised
futures. Not
only are man’s purposeful efforts to better his condition responsible
for his
choices as constructed against a given envisaged future, that
purposefulness
is, perhaps even more importantly, responsible for the remarkable
circumstance
that that envisaged future does overlap significantly with the future
as it
actually unfolds. (Kirzner, 1985, p. 55-56)
PCP emphasises the
creative change aspect inherent in the way people live; it views the
building
and testing of constructs as a creative endeavour. A person does not
merely
respond to what is going on in the world. Rather, she actively
represents the
environment through the way she formulates her own construction of
events.
Kelly (1970) describes a five-phase experience cycle as a means of
representing
this construction process. The phases are: anticipation, investment,
encounter,
confirmation or disconfirmation, and construct revision. As an
entrepreneur
constructs an opportunity she is engaged in revising and replacing
constructs
in light of her experiences in the market process. Reality is not
revealed to
the entrepreneur directly; it is subject to the many alternative
constructions
that may be imagined. That entrepreneurs are alert to opportunities
does not
necessitate that the opportunities are static, predetermined entities
waiting
to be discovered. Rather, they are constructed by the entrepreneur and
subject
to alternative constructions. Change in the market process is not the
result of
the entrepreneur reacting to, then acting upon, a discovered
opportunity; it is
the result of a process of construction. Opportunities are construed as
entrepreneurs participate in the market process, as they engage in
entrepreneurial action.
METHOD
Empirical research was
conducted using qualitative case study methods. The approach is
summarised as
collective case study: the extension of an instrumental case study
approach
over a number of cases. An instrumental case study examines a
particular case
providing insight to assist in developing or refining theory. The
individual
case plays a supportive role in facilitating an understanding of
entrepreneurial behaviour and provides illustrative empirical examples.
I have suggested that a
key aspect of entrepreneurial behaviour is the construction of
worthwhile
opportunities that are then acted upon in the market process.
Establishing an
enterprise is often the most significant action an entrepreneur takes
and is
perhaps one of the best examples of entrepreneurial behaviour. Thus the
participants chosen for this research were involved in establishing an
enterprise [1]. Twenty-four entrepreneurs were
interviewed twice; all operated
businesses in the greater Auckland
area of New Zealand;
twelve were in retail, two were wholesalers and sixteen were involved
in the service sector.
Interview approach
Two in-depth interviews
were conducted with each participant. The first interview was a
face-to-face
interview carried out as an unstructured open-ended discussion. The
purpose was
for the participant to “tell me your story” in her own words. The
interview
began with the question: “how and why did you start your enterprise?”.
To analyse the findings
of the interview, two reviews of the data were conducted [2].The
first was a
within case analysis, involving detailed case study write-ups. This
enabled
familiarisation with each case and provided an opportunity for any
patterns or
themes to emerge. To facilitate this process the concept of mind
mapping was
used [3]. The second review of the data was a
cross-case comparison; its
purpose was to highlight patterns and themes emerging across case
studies.
It is important to note
that interview data is never raw; it is situated in a context
(Silverman,
1993). Emergent themes are often recurrent themes informed by the
researcher’s
theoretical framework and construct system. While the subjective nature
of data
cannot be avoided, data can be explored from different perspectives
using
multiple research techniques or triangulation (Denzin & Lincoln,
1994). The
use of triangulation reflects the need to add depth to the
investigation by
engaging with the participant in a variety of ways. In addition to the
open-ended interviews carried out in the first phase of the research,
construct
elicitation techniques were used in the second interview. This took the form of a semi-structured
interview using PCP laddering and triadic sorting techniques.
The personal construct
is an interpretation of events experienced by the entrepreneur that
serves to
assist her in understanding the current situation and anticipate the
future. In
Kelly’s original formulation of PCP the main events in a person’s life
were
other people. Kelly’s elicitation procedures concentrated on the use of
groups
of people as the prompt for eliciting bipolar constructs. He suggested
several
techniques to elicit a person’s constructs using triadic sorting
procedures
where three elements (people) are used, two of which are similar in one
way and
one that is dissimilar. While these adjective pairings are useful,
constructs
form part of a larger structure called personal construct systems.
Superordinate constructs organise or structure subordinate constructs.
To
elicit these structures a laddering procedure can be used.
Starting with the
elicited construct, the researcher begins the laddering procedure by
deciding
which way she would like to move along the ladder. “Why” questions move
the
researcher and participant up the ladder toward superordinate and core
constructs. Core constructs are central to a person’s behaviour and may
include
such things as nationality or religion. “How” questions move them down
the
ladder to more subordinate constructs. During the second interview
constructs
were elicited using triadic sorting. The constructs were then laddered
and
discussed with each participant [4].
RESULTS
First interview: “tell
me your story”
Three themes
arose from the data reviews: “doing the entrepreneurial act”, alertness
to
opportunity and the entrepreneur’s learning methods. To maintain that
these
themes were independent of theory-based research would obviously be
misleading.
The notions of alertness to opportunity had already been presupposed as
part of
the conceptual framework and discussion with the participants
reinforced the
belief that these concepts were important influences on entrepreneurial
behaviour. More precisely, even though participants did not use this
terminology, equivalent conceptual content is evident in the
expressions they
provided.
The theme of doing the entrepreneurial act
arose from discussion with
entrepreneurs. This theme is better summarised by the quote ‘get off your butt
and do it’ [5]. All the participants expressed
the view that it was important
to ‘just get out there and do it’.
Exactly what ‘getting out there and
doing
it’ meant was more difficult to ascertain. One possible
understanding was that
entrepreneurial action is very much a doing behaviour as compared to
more
passive behaviour of reflection, reaction, analysis and planning; it
was doing
the entrepreneurial act. This is also consistent with Schumpeter’s
description
of the entrepreneurial function; it ‘consists in getting things done’
(Schumpeter, 1976, p. 132). All participants concentrated the
discussion on
actions taken, as this seemed to be a measure of what their enterprise
was
about. More specifically, the entrepreneurial act is best described by
active
verbs. It is the doing of the act that is important for the
entrepreneur rather
than the planning, reacting, reflecting or analysing.
What encapsulates the entrepreneurial act is
difficult to ascertain.
What does the entrepreneur do that incorporates the need for action and
thus
results in an entrepreneurial act? The second theme to emerge was
closely
linked to doing the entrepreneurial act. The concept of alertness to
opportunity was implicit in every enterprise start-up discussed.
Participants ‘saw a gap in the
market’,
were in ‘the right place at the
right time’ and had ‘peripheral
vision to see
opportunities'. However, the fact that the
opportunities existed was not the central issue; it was that the
entrepreneurs
acted to take advantage of these opportunities that resulted in ‘things happening’.
As suggested earlier, the entrepreneurial act can be described as the
culmination of a process that involves being alert to opportunity and
then
acting on this opportunity to bring about some type of result or
change. Also
the opportunity was not a static entity; rather it changed and grew as
a result
of ‘getting out there and doing it’.
The third theme related to the idea of
learning. The impression gained
from many of the entrepreneurs was that if, at the point of
establishing an
enterprise, ‘I had known how much I
didn’t know, I would never have started!’.
How then were they able to establish and run the enterprise? One
participant
spoke of ‘building up the knowledge’.
The view of some participants was that
they had often ‘seen how not to do
it’, thought they could ‘do
it a better way’
and they would ‘make it work’.
The participants expressed the view that the
enterprise ‘will be successful’
with several stating ‘I cannot let
this fail,
it will succeed’. This did not imply a “bloody-minded” attitude
in every aspect
of their enterprise. Participants highlighted strategies used to make
the
enterprise succeed. If they did not know how to do something ‘I will ask the
dumb question’ or consider ‘what
mistakes did I make?’ They
‘realised from
experience’ thus ‘building up
the knowledge’. Another important strand to these
strategies was the concept of intuition. Comments like ‘I just knew’, ‘I felt’, ‘I just trusted my
intuition’ or ‘my gut feeling
told me’ were integral to the
stories of many participants.
Bhide (1994) considers these themes when
exploring ‘How Entrepreneurs
Craft Strategies that Work’. While not explicitly discussing the need
for
entrepreneurs to ‘just do it’,
he points out that many successful entrepreneurs
spend little time researching and analysing. Instead they seize
opportunities,
taking action without endless planning. Entrepreneurs integrate action
and
analysis and do not wait for all the answers before making a decision.
Second interview:
eliciting constructs
The focus of the second
interview was to elicit constructs about entrepreneurial behaviour,
informed by
the first interview. Doing the entrepreneurial act was a difficult
concept to
build into the construct elicitation process. It appeared too abstract
and
lacked the practical ring of ‘get
off your butt and do it’. It was necessary to
operationalise the concept in some way so that it had relevance to the
participants. Given the focus on the ‘just
do it’ aspect of entrepreneurial
behaviour, eliciting constructs about self-perception seemed an
appropriate way
of examining the entrepreneurial act. Alertness to opportunity is a
more
concrete concept. Using this concept as one pole of a construct, the
intention
was to first elicit the opposite pole and see if participants
identified with
the alertness aspect and then explore how they expressed alertness to
opportunity.
The second interview was
carried out in four stages. The first part focused on self-perception.
The
entrepreneur was asked to write the names of six people who owned and
operated
their own enterprise. Three names were then selected randomly by the
interviewer and placed in front of the entrepreneur. They were then
asked to
state how two were “the same” and the other “different”, focusing on
how they
operated their enterprise. The entrepreneur was then asked which of the
two
poles she identified with and why. The “why question” was repeated
until a core
construct was elicited.
The most significant
constructs to emerge were linked to the idea of taking action and ‘making
things happen’. Over half the entrepreneurs (14 of the 24) used
these words or
some variation of them in the construct ladders elicited in this first
stage.
When examining constructs, both poles of the construct need to be
considered.
For example, the construct that has
organised growth as one pole may not, at
first glance, appear to link to the concept of make things happen. However, the
other pole of the construct is go
with the flow. The entrepreneur chose organised growth
rather than go with the flow
as an element that influenced her
behaviour. Organised growth is
a way to make things happen
rather than going
with the flow.
Table 1 lists all of the
constructs provided by participants in the make things happen category.
Table 1: ‘Make Things
Happen’ Construct
Favoured Pole |
Opposite Pole of the construct
|
Doing and doing it well
|
Waste of time
|
Doing it |
Not wanting to go the next
step |
Move on person
|
Bogged down
|
Start things
|
Same thing
|
Make things happen
|
Having no impact
|
Plunge into it
|
Giving up
|
Organised growth
|
Go with the flow
|
Do more |
Stand still, go backwards
|
Doing something different
|
Rut |
Go somewhere
|
Go with the flow
|
Doing different things
|
Lack of choice
|
Initiate |
Doing nothing
|
Make things happen
|
Stagnation
|
Growth |
Stagnation
|
The make things happen
construct influences entrepreneurial behaviour; when faced with a
decision the
entrepreneur is likely to choose to
make things happen in preference to stagnation or being bogged down. As stated above,
while not all of the
entrepreneurs used this exact phrase, equivalent conceptual substance
was
apparent following content analysis and reference to the first
interview. These
constructs and the behaviour guided by them connect with the earlier
theme that
entrepreneurs choose to ‘just do it’.
Also making things happen is
theoretically
consistent with Schumpeter assertion that entrepreneurship is about
“getting
things done”. Grouping these self-perception constructs under the label
of
‘make things happen’ was one way to operationalise the entrepreneurial
act.
In the second stage of
this interview participants were asked to identify one of the six names
selected by them that was, in their opinion, “entrepreneurial” and
state what
it was that made this person entrepreneurial. They were asked to give
the
opposite of the entrepreneurial characteristic and state which end of
the
construct they identified with. The 24 constructs are listed in Table 2.
Table 2: Entrepreneurial
constructs
Favoured Pole |
Opposite Pole |
Mind always working
|
Cannot achieve
|
Make it happen (two
participants) |
Sitting back, doing nothing
|
See possibilities
|
Easy route
|
Looking for a new edge
|
The same |
Think outside the square
|
Safety |
Streetwise
|
Naïve
|
Take on all sorts of
opportunities (two participants) |
Stagnant, blinkered
|
Innovative ideas
|
Always done that way
|
Cutting a deal
|
Accepting a deal
|
Creation |
Maintainer
|
Try new things
|
Just the same
|
Leading edge
|
Static |
Finish task
|
Shift around
|
Try new things
|
Nothing |
Risk taker
|
Plodder |
Full on
|
Bland |
Listener |
Not wanting to hear
|
Challenge
|
Acceptance
|
On the edge
|
Safety |
Growth |
Ticking over
|
Hunger |
Complacent, comfortable
|
New Ways |
Same things
|
No one overriding
construct emerged from this elicitation process. However, the idea of trying
new things as opposed to doing
the same thing emerged in many of the
constructs. Once again trying new
things was sometimes more apparent when
examining the opposite pole of the construct, the pole not chosen as
entrepreneurial. Several of these constructs were also consistent with
the ‘make things happen’
constructs elicited in the first part of the interview.
From a broad Austrian
theoretical perspective, the function of the entrepreneur within the
market
process is to bring about change by being alert to opportunities for
gain.
Building on findings from the first interview, the third part of the
interview
elicited constructs using alertness
to opportunity. This pole was supplied by
the interviewer and the participant asked to state the opposite pole.
Each
participant’s response is listed in Table 3.
Table 3: Opposite Pole to Alert
to opportunity
Opposite
Pole
Blinkers
Unfortunate
Stagnant
Happy working for others
At risk of being passed
Closed
Blinkered
Conforming
Failure
Stuck
Blind
Blinkered |
Just a bump on a log
Locked in, narrow outlook
Blind, unawake
Closed
Bowling along
Closed minded
Going day to day
Giving up
Closed Minded
Not wanting to go the next step
Lack of awareness
Switched off
|
The last phase of the
interview considered the “how” aspect of alertness to opportunity. If
being
alert to opportunity is entrepreneurial, how are entrepreneurs alert to
opportunity? The participants each gave one or more responses to this
question,
a summary of which is provided in Table 4.
Table 4: How are entrepreneurs
alert to opportunity?
Response |
Frequency |
Ask questions |
8 |
Listen |
12 |
Seeing, looking, watching
|
8 |
Copying |
3 |
Reading
|
4 |
Thinking ahead
|
1 |
Networking
|
1 |
Intuition
|
3 |
Vision |
2 |
Have a go
|
3 |
Participants were then
asked to focus on the relationship between alertness to opportunity and
learning. The response of participants in describing ways of learning
was the
same as their response to the question that examined the way
entrepreneurs were
alert to opportunity. ‘I sometimes
feel like a Martian, with little antennae
scanning for opportunities’. Participants talked of copying
others, listening,
talking to people who have experience, learning from experience and
doing
things. Entrepreneurs use all of their sensory modalities – they are
auditory,
visual, tactile and kinaesthetic learners [6]. Based
on these illustrative
comments it appears that entrepreneurs use a variety of sensory
modalities to
survey the environment guided by the construct alert to opportunity.
Illustrative case
Chris is an entrepreneur
who established her enterprise in 1981 after being ‘in the right place at the
right time’. Unhappy paying $25 every two to three weeks to have
her false
nails maintained, she notices that her local bank was shifting premises
and
that retail space is available for lease. How does Chris construct a
profitable
opportunity? She does so by imagining a future situation where she owns
and
operates an enterprise that provides false nails. Chris ‘saw the opportunity’, and
constructs this opportunity based on her own need and her knowledge of
the
availability of retail premises ‘just
up the road’ from where she lives after
listening to the conversation in her local bank.
Using a laddering approach,
a construct ladders was constructed with Chris. The laddering process
began
with a comment made by Chris in the first interview where she stated she ‘saw
the opportunity’ to open up the salon. The opposite pole to this
was not
wanting to go the next step. Chris was then asked a series of
‘why’ questions
that resulted in the part of the ladder that includes: challenge, doing
it and
being successful. Being successful was fundamental to Chris and was the
core
construct in this ladder. ‘How’ did Chris see the opportunity? By
listening and
seeing what was going on around her and then acting on this to become a
salon
owner. Table Five is Chris’s construct ladder elicited from the
construct saw
the opportunity – not wanting to go the next step.
Table 5: Chris’s construct
ladder
Favoured
Pole
Opposite
Pole
Successful
-
Mediocre
↑
Doing it
-
Not doing it
↑
Challenge
-
Same thing
↑
Saw the
opportunity
- Not wanting to
go the next step
↓
Salon owner
-
Housewife
↓
Listens and sees what is
-
Blinkered
going on around her
The purpose of this
paper is to gain operational and theoretical insight into
entrepreneurial
behaviour. The main theoretical assertion is that opportunities are
constructed
through experience in the market – through interaction between the
entrepreneur, their construct system and the environment. The
entrepreneurial
process begins when alert individuals “see” opportunities that require
the
formulation of a new mean-ends framework. PCP’s five-phase experience
cycle
provides a useful means of theoretically describing the interaction
involved in
constructing a new ends-means framework. Combining this cycle with
examples of
the construct system and the environment found by asking entrepreneurs
provides
us with one possible way of operationalising entrepreneurial behaviour.
Chris’
construct ladder and “story” provide one illustrative example of the
construction process involved in developing a new ends-means framework
for a
business opportunity.
Beginning with alertness
to opportunity, described by Chris as
saw the opportunity, Chris constructs the
opportunity to be a salon owner providing false nails based on a
construct of
salon owner – housewife. This construct is then tested through the
five-phase
experience cycle that involves anticipation, investment, encounter,
confirmation and revision. Chris anticipates
that being a salon owner will
enable her to better anticipate the future. She invests in the construct of
salon owner, amongst other things, acquiring a lease on premises,
employing a
nail technician and importing the necessary raw material to make the
nails. Her
encounter with experience suggests that the construct of salon owner is
confirmed as a way of successfully engaging in the future. However,
Chris
revises the salon owner construct to one of importer/distributor. The
reason for
this is that once Chris had successfully imported the raw material to
make
false nails for her own salon, other salon owners throughout New
Zealand approached her to buy the raw
material directly from
her. Faced with a decision, Chris decided to go the next step and start
importing and distributing the raw material, eventually supplying over
360
customers and closing her own salon. Feedback from market experience
resulted
in the construction of a new ends-means framework, one where the end
aspect
changed from salon owner to importer/distributor. The opportunity of
being a
major player in this market was the result of the interaction between
the
entrepreneur and the environment, a process informed by the
entrepreneur’s
construct system.
CONCLUDING COMMENTS
What then does this
empirical exercise and illustration imply for the Kirznerian theory of
entrepreneurial alertness? As stated in the opening paragraph, the
purpose of
this work was to use PCP to provide one means of operationalising
Kirzner’s
theory of alertness. Specifically, exploration of entrepreneur’s
construct
systems allows us to gain access to constructs that guide the
construction of
the ends-means framework. According to Kirzner the entrepreneur is able
‘to
identify which ends to strive for and which means are available’ (1973,
p. 34).
Any ends-means framework must be ‘actively chosen’ by the entrepreneur
(Kirzner, 1992, p. 131). Our understanding of entrepreneurial action is
synonymous with the process of constructing the ends-means framework, a
central
tenet of an Austrian understanding of the entrepreneurial discovery
process.
The choice of the end aspect of the framework is achieved through
alertness to
opportunity. Through exploring an entrepreneur’s construct system we
find that
while alertness to opportunity is necessary, it is not sufficient when
describing entrepreneurial behaviour. Action is taken to make things happen –
that is choosing and allocating means to achieve the chosen end. For
Chris this
was opening a new salon. The constructs that guide this process are
part of a
system focused on correctly anticipating the future. As part of this
process
the end aspect can be changed; in Chris’ case this involved changing
from a
salon owner to being an importer and distributor as a result of
feedback from
the market. Kirzner’s concept of alertness to opportunity needs to be
placed in
a wider context that explicitly takes action into account. The
illustrative
example also supports the assertion that reality is not revealed the
entrepreneur
directly. Opportunities are not static, predetermined entities waiting
to be
discovered.
While one purpose of
entrepreneurial behaviour is to make
things happen, it can’t be ‘just
anything’. Entrepreneurial action is contrasted strongly with doing the same
thing. This expression is reminiscent of Kirzner’s claim that
entrepreneurs are
‘routine resisting’ (Kirzner, 1997, p. 71). Entrepreneurial behaviour
is more
than just making things happen; it is about making new or different
things
happen as opposed to doing the same thing. While participants did not
offer one
key phrase to summarise entrepreneurial action, the constructs connoted
change.
Entrepreneurs choose the opposite pole of the construct to doing the same
thing. Their behaviour is guided by construct systems that
emphasises change.
Therefore it is consistent to describe entrepreneurs as change-actors
in the
market process, guided by some type of change construct system. While
this
claim is not new, the constructs elicited from the entrepreneurs help
us to
examine the influences on entrepreneurial behaviour in more detail; in
particular, alertness is not a gift, but a construct that is part of
the
overall construct system used by the entrepreneur.
The entrepreneur strives
to formulate an image of the future and bring this image to fruition in
the
market process. Opportunities do not exist like Everest waiting to be
“discovered” by those who possess some type of “gift”. Rather they are
shaped
by entrepreneurial action as the entrepreneur interacts with the
market. PCP
provides a fertile empirical method for exploring the entrepreneur’s
construct
systems, which are integral to understanding entrepreneurial behaviour.
The
focus of empirical work was to begin the process of gaining access to
these constructions
in order to improve our understanding of entrepreneurial behaviour.
Further research is
obviously required to extend this preliminary exploration. For example,
the
research presented in this paper is cross-sectional; detailed
information would
be gained from a longitudinal study that explored the change in
entrepreneur’s
construct systems over time. This paper has focused on alertness to
opportunity
and the ‘make things happen’ aspect of the entrepreneurial process. No
attention
was paid to risk taking behaviour although this appeared in several of
the
constructs. Examining constructs specially related to risk taking
within the
experience cycle would provide valuable insight into the
entrepreneurial
process. Also the empirical inquiry explored “how and why did you start
your
enterprise?”. While establishing an enterprise is a significant change
in
resource allocation, other critical incidents in enterprise development
are
also worth exploring in relation to entrepreneurial behaviour. Research
might
focus on product or service innovation, technology transfer or export
development. PCP provides a means of carrying out this exploration to
gain
greater access to the detail of entrepreneurial behaviour.
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ENDNOTES
1. |
Only
one of the
participants had not been involved in establishing an enterprise but
had been
involved in major changes subsequent to the purchase of the enterprise.
|
2. |
Eisenhardt
(1989)
describes both of these processes in more detail. |
3. |
The
use of mind maps
is similar to the use of rich pictures in Soft System Methodology
(Checkland
& Scholes, 1990; Hicks, 1991). While the mind map summaries may
appear
basic, a pictorial representation has a number of advantages over
written
descriptions when carrying out empirical research: 1) a picture can
show far
more information in the same space; 2) it shows patterns, arrangements,
connections and relationships far better; 3) the researcher is less
likely to
overlook vital links and connections as she is able to see the whole
situation
in all its complexity and 4) it provides a representation that can be
shared
readily with participants (Hicks 1991: 235). For a complete summary of
mind
mapping techniques see Buzan (1995). |
4. |
For
further
discussion of construct elicitation methods see Epting, Probert and
Pittman
(1993) and Caputi and Reddy (1999). Neimeyer, Anderson and Stockton
(2001)
provide support for the construct validity of the laddering technique
and also
recommend various guiding heuristics that are consistent with the
approach used
in this paper. |
5. |
In
the remainder of
this paper italicised quotations indicate statements made by
participants. The
paper draws on these quotes as a means of authentically representing
the
subjective knowledge of the entrepreneurs. Italicised words without
quotation
marks represent the pole of a construct. |
6. |
These
four sensory
modalities are further subdivided into nine submodalities: auditory
learning
comprises talking and discussing, listening and self talk; visual
comprises
reading, imagination, seeing and watching; kinaesthetic learning is
made up of
intuition and experiencing. For further discussion on this matter see
Prashnig
(1999). |
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ABOUT THE
AUTHOR
Christine Woods is
a lecturer in the Department of
Management and Employment Relations at the University of Auckland
Business
School, New Zealand. Her academic background is in Economics; her PhD
examined
entrepreneurial action from an Austrian and PCP perspective. Currently,
Christine’s research interests are focused on family business and
entrepreneurship. E-mail: cr.woods@auckland.ac.nz
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REFERENCE
Woods, C. R.
(2006). Asking the entrepreneur: an enquiry into entrepreneurial
behaviour. Personal
Construct Theory & Practice, 3, 1-11.
(Retrieved from http://www.pcp-net.org/journal/pctp06/woods06.html)
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Received: 11 January 2006 – Accepted: 5 April 2006 -
Published: 8 May 2006
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