Per Davidsson: recipient of the 2023 Global Award for Entrepreneurship Research

The Global Award for Entrepreneurship Research was initiated in 1996 and has since become the most prestigious prize in entrepreneurship research. It consists of 100,000 Euros and a statuette designed by the internationally renowned Swedish sculptor Carl Milles. According to the original statutes, the award should be given to “a person who has produced scientific work of outstanding quality and importance, thereby giving a significant contribution to theory-building concerning entrepreneurship and small business development, the role and importance of new firm formation and the role of SMEs in economic development.” The main aims of the award are (1) to highlight the importance of research produced in the areas of entrepreneurship and small business, (2) to further stimulate and promote research within these fields, and (3) to diffuse state-of-the-art research amongst scholars, practitioners, and people involved in small business development.

The domain of entrepreneurship research is broad (Carlsson et al., 2013), which means entrepreneurship research that can be considered for the award is undertaken in several different disciplines, including economics, management, sociology, history, business administration, geography, and psychology. Any aspect of entrepreneurship research is eligible, including the environment and the organizations in which entrepreneurship is conducted, the character of the entrepreneur (personality, cognitive and affective aspects), the entrepreneurial process, or the role of the entrepreneur and/or the entrepreneurial function in a wider sense (at the level of the community, region, country, or industry).

One ambition of the Prize Committee is that the award-winning contributions, seen together over a longer time span, reflect the extraordinary breadth of entrepreneurship as a research field in the social sciences. The key criteria for prize-worthy contributions are originality and influence (Braunerhjelm & Henrekson, 2009). It is recognized that contributions can be influential in many ways. A contribution can, for example, be influential because it has had a significant impact on subsequent scientific work, furthered entrepreneurship as a field (through creating important databases or by starting influential journals, scientific communities, etc.), furthered entrepreneurship education and training at the academic level, and/or influenced policymaking and society more broadly.

When selecting prize-worthy contributions, the prize committee emphasizes the qualitative aspects of the contributions of candidates. Quantitative metrics, such as citation counts and impact factor-adjusted publication volumes, do provide important information about candidates, but they will never replace qualitative judgment. This means that quantity will never substitute for quality, and it is even possible for a scholar to receive the award for a single landmark contribution.

Per Davidsson was born in Sweden in 1958. Educated at the Stockholm School of Economics, he received his Ph.D. in economic psychology in 1989 and became a full professor at Jönköping International Business School (JIBS) in 1996.

During 1998–2001, Davidsson was the program director and research principal for the Research Program on Entrepreneurship and Growth in SMEs, a major research program funded by the Knut and Alice Wallenberg Foundation. In 2004, he became Professor in Entrepreneurship and Research Coordinator at the Brisbane Graduate School of Business, Queensland University of Technology (QUT), Australia (while always retaining a partial affiliation with JIBS). Following a period as Assistant Dean (research) at the Faculty of Business, he became Director of the Australian Centre for Entrepreneurship Research (ACE) at QUT in 2010, a position that he held until 2018. His international assignments have included affiliations with Zhejiang University (China) and the University of Louisville (USA). In addition, he holds an honorary doctorate from Leuphana University, Germany.

Through numerous and varying professional appointments, Professor Davidsson has been deeply engaged in the development of the entrepreneurship field. He was Elected Officer of the Academy of Management Entrepreneurship Division (2007–2012). His involvement in leading journals in the field includes positions as Editor at Entrepreneurship Theory and Practice, Associate Editor at Small Business Economics, and Editorial Board Member at Journal of Management, Organizational Research Methods, Journal of Management Studies, Zeitschrift für KMU und Entrepreneurship, and Foundations and Trends in Entrepreneurship. He has received numerous prizes and awards and has given lectures, seminars, and keynote addresses at over 50 universities and research institutions across the globe.¹

Stimulated by the work of David Birch, Per Davidsson began with an interest in two of Birch’s findings.² The first was that new and small firms were major contributors to job creation and were therefore worthy of attention; the second was that, amongst new and small firms, some were disproportionately important in terms of job creation. These major contributors to job creation were called “high-growth” SMEs or gazelles.

This interest in the growth of SMEs, particularly of exceptionally fast-growing SMEs, has remained a key theme of Davidsson’s work and one where he has made significant theoretical and empirical contributions. His much-cited work, with Delmar and Gartner (Delmar et al., 2003), draws upon the excellent Swedish data provided by Statistics Sweden.³ It examines a large number of limited companies and their employment change between 1987 and 1996; it then selects those that were amongst the top 10% that grew most rapidly on at least one criterion.

The core finding has always been the heterogeneity of these growth patterns. Indeed, the term “growth patterns” has always seemed a misnomer since it is the absence of such patterns that is most striking. Delmar et al. (2003) demonstrate this stunning diversity–and then valiantly seek to place these gazelles into seven groups. The numerically largest group is what they called the “one shots,” i.e., those firms that grew exceptionally quickly in one year but never again repeated that growth.

This work clearly demonstrates that, even amongst the gazelles, almost no firms exhibit linear or stage growth patterns. Unfortunately, the inferences drawn from this work are, too frequently, not the ones that we draw. For example, despite “stage models” having almost no empirical support, they continue to be inflicted upon generation after generation of entrepreneurship and management undergraduates.

The scholarly response in much subsequent research has been to assume that this performance diversity reflects a diversity or heterogeneity within the sample of gazelles. To address this, efforts have been made to homogenize samples by, most notably, excluding those that grew from acquisition rather than organically. Davidsson, in conjunction with Wiklund (Davidsson & Wiklund, 1999), has investigated this heterogeneity and obtained a key finding. They observed the crucial distinction between firms which grew rapidly in terms of job creation through acquisition and those that grew organically. They argued, very plausibly, that the former group of firms were less obviously contributing to net job creation in Sweden because their growth reflected an ownership change which was likely to be fully compensated by a job decline elsewhere in the economy.⁴ This distinction between organic growth and growth by acquisition is also addressed by Davidsson in his work with Lockett et al. (2011).

It is therefore important to distinguish between different “types” of growth, there being no merit in combining apples with oranges (Shepherd & Wiklund, 2009). However, adopting this approach runs a serious risk. It is that growth heterogeneity and volatility become an irritant that does not fit comfortably with explanatory variables that are theorized to influence the performance of entrepreneurial ventures, but which are either fixed or change little over time–such as attitudes, prior experience, education, age, and gender. The risk is that these patterns are not as well explored because they fail to fit with favored theories.

However, the exploration of temporal volatility has been explored in more recent work strongly influenced by the earlier Davidsson findings. Using Swedish data, Daunfeldt and Halvarsson (2015) show that the probability that an enterprise in Sweden that is amongst the top 3% of fastest growers in 1999–2000 will still be in that group 6 years later is 0.3%. This emphasizes the difficulty of using variables with limited or zero temporal volatility to “explain” performance which is essentially volatile.

A third dimension of growth examined by Davidsson is its link with profitability. An important recurrent theme of this work, discussed in more detail in the next section, has been to recognize the dangers of inferring that correlation reflects causation. Being able to separate the two in real time is a key strength of the Davidsson et al. (2009) paper. It questions whether “sustained” growth can be achieved if it is not preceded by profits. Drawing on the resource-based view (RBV), it argues that profitability must come first–a point that is also made in Steffens et al. (2009)–because profitability reflects the ability of an enterprise to “create value” which is at the heart of the RBV. Davidsson et al. (2009) demonstrate this well using both Australian and Swedish data, showing that later-period firms which were both profitable and fast-growing were significantly more likely to have had high profit than high growth in the base year.  A recent, massive replication study across 28 countries has confirmed the original results (Ben-Hafaïedh & Hamelin, 2023).

Overall, therefore the Davidsson contribution–frequently in conjunction with others, which we return to below–has been to carefully document the scale and nature of the growth of SMEs. From Birch’s original agenda, this work finds the contribution to job creation in Sweden is considerable, although the contribution made by Swedish gazelles appears to be less than in several other OECD countries (Davidsson & Henrekson, 2002). Another conclusion was the realization that it was not so much small but new firms that contributed to job growth–most (established) firms are neither great innovators nor job creators (Davidsson, 2023). This insight has also been supported by John Haltiwanger (Haltiwanger et al., 2013)–another recipient of the Global Award for Entrepreneurship Research.

The entrepreneurial process or journey has been another area where Davidsson has made considerable theoretical and empirical contributions. This work involves identifying those individuals, from a larger population, who have begun the entrepreneurial journey by taking some steps such as seeking premises or funding but who have yet to start in business. The term “nascent entrepreneurs” is applied to this group. This approach was pioneered in the USA by Paul Reynolds and is referred to as the Panel Study of Entrepreneurial Dynamics (PSED).⁵ A review by Davidsson and Gordon (2012) found 83 eligible articles using this format, based on nine data sets from Canada, China, the Netherlands, Norway, Sweden, and the USA.

The collection of such data is massively time-consuming and requires considerable care over definitions and sampling procedures. But, once acquired, it can provide insights into the entrepreneurial journey which are available from no other source. Davidsson and Gordon (2012, p. 854) say the approach has three key advantages:

The sampling of ventures before they could be considered operational reduces issues of survivor bias. The longitudinal design permits the study of process issues as well as time separation of independent (IV) and dependent variables (DV) for improved tests of causality. Further, the real time following of the development of the start-up process reduces issues of memory decay and hindsight bias.

PSED studies can offer valuable insights into the factors that influence both the journey to entrepreneurship and, more questionably, the performance of the enterprise once it commences trading. Samuelsson and Davidsson (2009) use a Swedish data set to examine the factors influencing the speed of venture creation and the extent to which this varies according to whether the enterprise is “imitative” or “innovative.” They conclude that the innovative group has generally undertaken more “steps” than the former, and that the human capital of the individual founder(s) is more closely linked to completion.

Davidsson has established an Australian study referred to as the Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE). This was modelled closely upon PSED II in the USA (Reynolds & Davidsson, 2009) and has been used to better understand the scale, speed, and impediments on the entrepreneurial journey. For example, Davidsson and Gordon (2016) examined the extent to which the Global Economic Crisis (GEC) had influenced nascent entrepreneurs. It concludes that the effects are less than might have been expected, with only those nascents considering establishing a tech venture being significantly discouraged. As the authors note, this may, in part, reflect the Australian experience of the GEC, which was less scarring than in many other OECD countries, but it may also be that optimistic individuals continue to be optimistic almost irrespective of circumstances. This again points to an area worthy of further investigation.

A key component of much theorizing about the entrepreneurial journey is the positive role played by networks and social capital. Here, the contribution of Davidsson is considerable, as reflected in his most frequently cited article with Benson Honig (Davidsson & Honig, 2003).⁶ It examines the role of social and human capital in influencing individuals in three steps on the entrepreneurial journey. The first two steps are discovery and exploitation. The third step is “successful exploitation”–defined as the enterprise having achieved profitability or sales within 18 months of start-up. The paper examines if individuals with more human capital and social capital are more likely to succeed in any of these three steps and be better at, for example, identifying opportunities and/or benefitting from using their social networks.

The evidence base for the study is an early Swedish PSED-type study which was undertaken with great care. Although many cite the article as providing evidence for the power of social networks, its results do not point to the “easy” conclusion that more and stronger networks consistently facilitate all stages in the entrepreneurial journey. Instead, what Davidsson and Honig show is that human and social capital plays only a small role in explaining which individuals make the final step of “successful conversion.” Where social and human capital plays a clearer role is in the earlier stages of discovery and conversion, implying that it is primarily in these stages, but not later, when entrepreneurship is a social game. Too frequently, those that cite this excellent work do not emphasize the weaker link between networks and social capital in explaining “successful conversion.”

In a delightfully politically incorrect statement, Davidsson (2004) confesses to being “a sinner over this thing called theory,” primarily because he sees it as a guide to empirical direction, rather than as a desirable end in itself. It is perhaps for that reason that Davidsson has comparatively few “theory-only” articles, even if one of them (Zahra et al., 2006) can make a valid claim to be a highly influential articulation of the link between entrepreneurship and dynamic capabilities.

This paper defines dynamic capability as the ability to reconfigure the resources of a firm in a manner envisaged and deemed appropriate by its principal decision-maker. However, it acknowledges there is no necessary/automatic link between dynamic capability and performance, because this also depends upon the “substantive capabilities” of the firm and on its knowledge base. Learning is at the heart of the model. This is achieved through experimenting and observing, with the owner-managers being “in control” since it is their vision that influences performance.

The paper distinguishes between dynamic capabilities in new firms and in established businesses but perhaps does not distinguish sufficiently clearly between the two types of enterprise. The former is significantly more likely to be risky, without a track record, lacking credibility, and with their owners not only having very different levels of talent but often insufficient time to signal their abilities before their enterprise ceases. Crucially, having time to “experiment and observe” is not open to most new firms, since about 40% cease within 3 years. The challenge here remains to articulate a theory of new firms that captures these characteristics, without a reliance on learning (Storey, 2011).

From an early stage in his career, Per Davidsson has been interested in, and contributed to, the question of why entrepreneurship within the same country was so unevenly distributed. The Reynolds et al. (1994) study, which drew upon evidence from Sweden set out by Davidsson et al. (1994), showed one striking consistency–in the six countries covered, the within-country business birth rates consistently varied by a factor of three.

This concern with spatial issues also appears in Delmar and Davidsson (2000), who compare nascent entrepreneurs in Sweden with those in Norway and the USA. This was a pioneering study for its time by drawing upon the PSED approach. Delmar and Davidsson set out many of the factors likely to raise the likelihood of being a nascent entrepreneur that became “standard” in subsequent studies. These include individuals who are better educated, those more likely to currently be self-employed, and those with more managerial experience, who live in Stockholm, and are male.

A third, very neat, contribution also tangentially addresses the topic of research geographies. The research question posed by Davidsson (2013) could have stemmed from a–possibly heated–discussion at an entrepreneurship conference somewhere in the world where an experienced academic from Europe is making the case–perhaps loudly–that their work is not appreciated in front-rank journals where referee reports are characterized by North American spelling of certain words and claiming this is because of a bias against the “European tradition” of work in this area. The case made by Davidsson (2013) addresses this issue head-on and once more demonstrates his ability to offer wise counsel to young–and sometimes not-so-young–researchers. He shows just how difficult it is to capture what is meant by the “European tradition” and then shows the powerful and increasing editorial roles played by Europeans in key journals. He is too diplomatic to say so explicitly, but the message is clear to all: no system is perfect, and much good work frequently encounters publication problems, but the editors of top journals are very keen to include the next “big thing” wherever it comes from. The onus upon all, from whatever part of the globe we come, is to deliver high-quality work which makes a clear contribution to knowledge.

It is appropriate to end this review of Per Davidsson’s output by examining the directions in which it has been progressing more recently.

Three examples of more recent work indicate important “directions of travel” for Per Davidsson. The first is the work with Crawford et al. (2015) which points to a continual scaling-up of both the data and analytical techniques required to make real contributions to entrepreneurship scholarship. This paper reviews four datasets–PSED II in the USA; CAUSEE: An Australian Study of Entrepreneurial Emergence; KFS: The Kauffmann Firm Survey in the USA; and INC 5000: Fast growth firms identified by INC Magazine. It shows that not only performance data are non-normally distributed but also a wide range of input variables, raising questions over the validity of the use of statistical techniques that assume normality–such as OLS. The implications of this non-normality are considerable. At its most basic, it requires considerably larger sample sizes than is characteristic of most empirical work in this area. Secondly, it requires explicit recognition that, for example, those in the top deciles may be radically different from elsewhere in the distribution. The classic example is the work of Hurst and Lusardi (2004), showing that wealth only influences entrepreneurial choice for the top 10% of the population.

To some extent, it might be argued that, for decades, there has been some awareness on the part of some researchers of the performance of “outliers.” This is most clearly reflected in the discussion of gazelles above. However, as noted in our discussion of that literature, there has been either a lack of awareness of its significance or a theoretical framework to take it fully into account. The wholly valid inference drawn by Crawford et al. (2015) is that the expunging of outliers–especially those exhibiting high performance–is misleading because it fails to spell out to policymakers the importance and contribution of these exceptional firms. But it is not only policymakers that can be mesmerized by “outliers.” The danger may be much greater of “gung-ho” individuals believing there was a good chance of them becoming the next Amazon/Google.

A second “direction of travel” exhibited by Davidsson is his linking with theorists to develop and test new and novel ideas. An example of this is a paper by Senyard et al. (2014). This work considers the concept of bricolage–defined as “making-do by applying combinations of the resources at hand to new problems and opportunities” (Senyard et al., 2014, p. 211). It examines whether bricolage has a positive or negative impact upon the innovativeness of new and nascent enterprises. The strength of the paper is its ability to convert what might be considered a slippery concept into testable hypotheses and then to draw upon a dataset to undertake some preliminary testing (cf. Davidsson et al., 2017). The authors claim to show the use of bricolage enhances different forms of innovativeness.

A third example we draw on here is Davidsson (2015). In this sole-authored work, Davidsson critiques the literature on entrepreneurial opportunities arguing it has a “favorability” connotation, defined as an inability to be other than successful. This “Hollywood version of entrepreneurship” is reflected in, for example, even failure being viewed as a success (Coad, 2014) or the vastly greater number of articles on SME growth than on the much more characteristic outcomes such as closure, bankruptcy, decline, or stability (Davila et al., 2015).⁷

The Davidsson critique is, however, highly specific. It argues that “opportunity” is not a suitable construct for the entrepreneurial process. This is partly because it has lacked a consistent definition, partly because it combines more than a single construct, and partly because of its favorability. By the latter, he means that “opportunity” is defined in such a way that competently exploited by a suitable actor, the outcome must be successful. So, a successful outcome is the creation of a new venture implying that if the opportunity is exploited, then it is successful by definition. If an actor fails to act upon what is objectively an opportunity (for them), this cannot be explained by the characteristics of the opportunity. The risk of tautology is close at hand, and Davidsson makes the case for the concept of opportunity to be unpacked.

This line of reasoning has evolved into work that specifically deals with the concept of enablers, or, as expressed in Davidsson’s (2015) paper, the distinct, external circumstances that play an essential role in enabling a variety of entrepreneurial actions by several potential actors. To some extent, rectifying his self-proclaimed stature as a theoretical sinner, the follow-up work elaborates on the nature of external enablers and the mechanisms by which they are connected to (potential) entrepreneurial action (Davidsson et al., 2020). This work undoubtedly bears the mark of someone who has debated and been at the forefront of pushing the entrepreneurship agenda for decades.