Contextualizing Theory Building In

Abstract

Theory development and testing are central to the advancement of entrepreneurship as a scholarly field. For nearly three decades now, researchers have borrowed popular theories from other disciplines and adapted them to the study of diverse entrepreneurship phenomena. This has enhanced the rigor of research findings. Future studies can achieve greater rigor and relevance by paying more attention to the context of their investigations. Understanding the nature, dynamics, uniqueness and limitations of this context can enrich future studies. This article describes common problems revealed in recent entrepreneurship research when applying existing and new theories to well known vs. emerging and novel phenomena. The article also suggests strategies to enrich creative and constructive theory building.

Keywords: Theory building; Entrepreneurship; Context of entrepreneurial phenomena

1. Executive summary

Theory drives the evolution of scholarship in an academic discipline. It also shapes the academic conversation by delineating a field’s boundaries, the core questions to be examined and preferred research methods. Research in entrepreneurship has benefited from borrowing theories from other disciplines, notably sociology, psychology and economics. Yet, for many entrepreneurship researchers building and testing theory remain an onerous challenge, leading some to ignore theory in conducting their research, arguing that entrepreneurial phenomena fall outside the boundaries of known theories. Other researchers have failed to invoke theory in innovative ways that enrich the academic conversation. Still, others have imported theories from other disciplines without considering the key and distinguishing qualities of entrepreneurial phenomena.

This article discusses ways that researchers can use to better apply existing and emerging theories by anchoring their analyses in entrepreneurial phenomena and their contexts. It also identifies key pitfalls of applying theories that have been developed in other disciplines to the study of fundamental entrepreneurial research questions and issues. The article also highlights the major challenges researchers might encounter as they introduce and develop new theories when examining established and emerging entrepreneurial phenomena. The discussion outlines several strategies that researchers can use to develop or introduce these theories, while safeguarding against over-

generalizations that limit the relevance and rigor of their findings.

Effective strategies that link theory to entrepreneurial contexts center on: delineating the boundaries and sources of newness of these contexts; questioning and probing widely held assumptions about a given theory and prior findings using it; and recognizing key contingencies that influence relationships within a given context. One approach is to question the key assumptions underlying a particular theory or even relax those assumptions, opening the door for more creative applications of the theory. This article proffers that the usefulness and efficacy of these strategies vary between variance and process theories that address different entrepreneurial phenomena and research questions. Process and variance theories can complement each other, adding to the rigor and

relevance of emerging research in the field of entrepreneurship.

Theory-based research can contribute greatly to our understanding of complex

entrepreneurial phenomena and the challenges entrepreneurs confront as they conceive, develop and manage their new firms. Rigorous and theoretically grounded research can give entrepreneurs important insights into what works and does not, reducing the odds of their failure. It can also give policy makers an effective foundation on which they can map out their plans to nurture, support and harvest entrepreneurial activities in ways that improve our quality of life.

2. Introduction

Theory building is a process of creativity and imagination. It demands careful reflection on the importance and uniqueness of the phenomenon at hand, the questions explored, and the context of the research. Theories serve as signposts that tell us what is important, why it is important, what determines this importance, and what outcomes should be expected. Theories also guide the reader through what was found and why it enriches or even challenges our understanding. Theoretically grounded studies pay particular attention to the context of their research and account for its complexity, uniqueness and richness. These studies also offer compelling arguments, provide a fair test of these arguments, and use findings to refine and enrich the theory they have invoked.

Reading recent entrepreneurship papers, however, one rarely gets a sense of the substance, magnitude or dynamics of the research context. These variables are often described in terms of summary statistics that are easy to understand but leave the reader wanting more information about the context of the research. Readers have no sense of what the researchers have observed, felt or thought. Alternative arguments or explanations are often omitted. Thus, theories are applied to sterile and highly sanitized settings, leaving a major gap in our understanding. As in silent movies, there is actionвЂ"but readers have to

watch carefully to infer what actors say and do. They need to read the actors’ lips in order to decipher what is happening. Few entrepreneurship papers give us enough clues about the nature of their research settings and, instead, ask us to use our imagination to appreciate what has been done.

The sterility of our description of research sites and context is compounded by another problem. Entrepreneurship researchers frequently apply theories developed in other disciplines with different phenomena in mind. As such, these theories are grounded in assumptions that reflect the nature of distant phenomena, actors and sites. These assumptions may or may not apply to entrepreneurial contexts. A mismatch between theory and context can result in false leads and inconclusive findings. As often happens, inconclusive results encourage authors to question the utility of their chosen theories, invite calls for further research and lead to confusion about the relationships of interest.

Even meta-analyses can prove inconclusive, magnifying concern about the theories used and phenomena examined. Some of these issues could be overcome by linking the theory of choice with the phenomenon being explored. Entrepreneurship researchers miss an opportunity to enrich