Complex explanations of order creation, emergence and sustainability as situated

entrepreneurship

Ted Fuller and Lorraine WarrenRENT XVIII

LOK-CBS Copenhagen 2004

Thesis (work in progress)Entrepreneurship as a causal mechanism

Entrepreneurship is structurally and historically ‘situated’, not randomEmergent (structural) properties arise / emerge / become within this situated-ness through entrepreneurshipA salient concept of situated-ness is Community of PracticeA salient concept of ‘structuring’ is emergent hierarchical ontologies Processes of ‘entrepreneurship’ situated in these structures cause the emergence of ‘new’ enterprises; new structures, new ventures, novel practices…

* e.g. Fuller 2004, Fuller Warren and Argyle 2004

The ‘complexity’ perspective

Complex Adaptive Systems:Order creating interactions between heterogeneous ‘agents’Emergent properties from interaction

Inherent critique of (Schumpeterian) entrepreneurship as an individualistic concept

It’s not the ‘agent’ but the interactions that cause emergenceHence, the process of order creation is analytically irreducible to individual agents

The critical realist perspective (Bhaskar et al)

‘Causal mechanisms’ that are not observable empirically, nor necessarily ‘active’, i.e. latent powers

The ‘constructionist’ perspective

Meaning is emergent and negotiated through discourse; language… personal interpretations… inter-subjectivity… Social construction of knowledge…

Emergence

A key concept in complexity science is emergence (Holland 1998)

Compare this with the discourse of entrepreneurship as the emergence of new enterprise,

The notion of emergence is that ontological properties are formed by the interactions of an historically situated ontology: that is, the next moment is connected to the previous one.

Multi-level models…

…is a methodological strategy for connecting ‘units of analysis’ to their wider environment in recognition, or expectation, of causal relationships between macro and micro; agent and structure, or process and context

Cf. complexity and emergence……rather than each layer being seen as an independent ontology for study, it is the inter-relationships between layers and in particular the mechanisms underlying those relationships that should be studied.

Schema of emergent properties (Fuller and Moran 2001)

Macro-economy

……………………………………………………………………………...

Layer 1: Networks/clusters/micro-economies

Layer 2: Business-to business relationships

Layer 3: Business Model (concept/strategy/vision)

Layer 4: Internal ‘functional’ activities/relationships

Layer 5: Individual capabilities/motivations

Layer 6: Individual cognitions/mental models/constructs/values

……………………………………………………………………………..

Physiology

Etc.

The emergence of novelty in entrepreneurial organisations

e.g the case of Flight Directors Ltd1. History of the business over 15 years constructed by the owner, using the ‘layered’ model 2. Analysis of this led to proposing the ‘EROS’ model of emergence (Fuller et al 2004).

EROS: A model for understanding “becoming” in entrepreneurial organisations

Experiments - small scale models testing for fitness in the landscape, often co-evolutionary in natureReflexivity - the continuous reshaping of the meaning of what the owner and the business ‘are’ in relation to othersOrganising Domains - the breaking and reforming of patterns of doing business everyday Sensitivity to conditions - the detection and evaluation of environmental change and the motivation to respond

A research question…Is ‘EROS’ a generalisable model?

Is there a plausible notion of these activities transcending a single organisation?

If so, does this help understand and explain emergence?

Does this relate to ‘enterprise’ as a form of agency in society?

Connecting the ‘layers’ - Relationships mean everything?

Individual (entrepreneur’s) reflexive self identity and related every-day practice

Recursive (repetitive) activities of the entrepreneur’s firm

Recursive (repetitive) activities in a network or cluster of firms

The entrepreneur’s reflexive engagement with ‘their’ own enterprise produces the emergent structures of that ‘enterprise-in-context’.

Their apparently idiosyncratic, voluntaristic acts are shaped by the nature of the coupling to the environment, i.e. the everyday structures and their sense-making of those structures.

‘Community of Practice’ provides a perspective that transcends ontologically multiple emergent ‘layers’

Rooted in social theories of learning and innovation (Lave and Wenger 1991, Brown and Duguid 1991, Fox 2000, Cox 2004)

Developing a practice, of any kind, requires the formation of a community (however loosely defined) whose members can engage with one another and thus acknowledge and legitimise each other as participants – a process of becoming, not just encountering;reflexive…socially constructed….emergent…A social process view in other words The relevance of CoP to this thesis is that the

notion transcends individual, individual firm and inter-firm relationships

Notion of a Community of Practice transcends multiple levels - Negotiation of identity at the local level impacts at the global level.

Individual (entrepreneur’s) reflexive self identity and related every-day practice

Recursive (repetitive) activities of the entrepreneur’s firm

Recursive (repetitive) activities in a network or cluster of firms

Experiments

Reflexive Identity

Organising Domains

Sensitivity to conditions

Emergence through ‘EROS’

New organisational symmetries emerge from new CoP interactions initiated and developed at the level of the individual entrepreneur

The new CoPs with which these interactions take place are likely to be (though not exclusively) located in other firms, that is, at the level of inter-firm networks and alliances

(Just) Hot Air?

‘Hot Air’ inflatable music speakers…

Multi-membership of CoPs as a mechanism for emergence of new patterns and symmetries

Students undertaking projects

Academic staff – general

academic/career development advice,

degree show managers

Academic staff – subject specialists, project supervisors

University business support staff – expertise in IP, company law, PR,

funding, marketing

Academic staff – subject specialists and Business

school staff

Local/regional agency support – business links,

RDA’s

Local/regional professional services community – lawyers, accountants, banks,

financiers, management consultants

Student domain Community of practice

Innovation domain Community of practice

John Saxon

Alan Booth

CoP membership and linkages

Key:

Hot Air CoPEmergence

Peripheral participation

Member of CoP

The emergence of ‘HotAir’:evidence

Experiments were clearly taking place, in terms of concept formation and visioning, around both the potential new products and the nature of the new firm – what will work and what will not?Reflexive identity was also in transition as new career pathways were considered – do I have what it takes to become an entrepreneur?Organising Domains were restructured as working towards the degree show was replaced by developing the possibilities of the new business – will this new structure work for me?Sensitivity to change took place as possibilities and stakeholder imperatives were explored through new contacts – what are the environmental challenges I will have to face?

Summary

Processes of emergence take place across ontological hierarchical structures, through discourse, and produce new meanings that create tensions and disturb symmetries Local voluntaristic actions has global coupling, and this coupling is articulated through the meanings of the communities of practice in which the entrepreneur, and the firm, are situated. The processes of entrepreneurship appear to contribute to new symmetries within the networks in which the enterprise is situated, i.e. the model has applicability at different emergent structural level.

Discussion

1.Emergent properties…… as renewable ‘structures’2. Not ‘the cause of entrepreneurship’, but ‘entrepreneurship as a cause…’3. Study of entrepreneurship… the reflexive shaping of recursive or repeating patterns, and patterns of new pattern formation… …grounded in an interpretative paradigm because the reflexive engagement between agent and structure – between agent and agent, between the entrepreneur and the firm, the firm and its networks etc. – is a social process, albeit that such processes include an economic dimension

Axioms based on the outcomes of entrepreneurship constrain theory building…

…tends to deny the creation of new enterprise as in some way a by-product of more enduring human and social qualities

… tends to deny the unwanted consequences of entrepreneurship

Complexity science…

informs us that initial conditions form part of the explanation of end-states.

Our interpretation of this is that structure-breaking acts of entrepreneurship are informed by the structures they break… …entrepreneurship is historically entangled within existing structures. This entanglement permits the human agent to have insights into pre-existing symmetries and the inefficiencies of such structures… … is an interpretative and socially negotiated process.

This paper contributes:a model of entrepreneurship within a generalisation of context, that includes:

- co-evolutionary or inter-subjective small scale activities, in the form of experiments; - the continual shaping and reshaping of identity, giving rise to direction, meaning and motivation; - patterns of re-patterning of everyday activity and - the responsiveness to environmental change.

The model can only be understood in context; and the generalisation of context in this paper is a) one of emergent structures (emergent properties) and b) negotiated through a mutable community of practice.

A theory of entrepreneurship from a complexity science perspective …

…would, we suggest, assume that the production of sustained novelty (i.e. as in entrepreneurial activities) has multiple (theoretically knowable) causes, is socially situated, is non-linear and generates unpredictable diversified patterns or symmetries.

Understanding entrepreneurship

[how] “strategies are constructed, molded and adapted in processes of interaction with environments”. (Aldrich and Martinez 2001:52) What we are suggesting is that the mechanisms for the emergence of such practices and the negotiation and selection of the successful ones of these, involve deep social process with multiple relational causes, and unpredictable outcomes, i.e. they are complex but are not random nor uninformed.