Scott A. Shane: winner of the Global Award for Entrepreneurship Research

While also investigating – and arguing for – the importance of diverse influences, Shane consistently emphasizes that entrepreneurship requires human agency (e.g., Shane 2003). It is thus not surprising that several of his studies look into the characteristics of individual entrepreneurs. Shane’s first contribution in this genre compares corporate venturing champions with non-champions (Shane 1994). In looking at internal champions rather than independent firm founders Shane introduced a novel perspective, and worked with richer data than most contemporaries in using data from over 4,000 individuals in 68 countries. The study found important differences between the two groups, and concluded that these were consistent across cultures.

House, Shane, and Herold (1996) is an early rebuttal of the critique by Gartner (1988; 1989) and others of dispositional (trait) research in entrepreneurship. In a subsequent conceptual piece, Shane sides with Ed Locke in an additional call for re-establishing the role of individual dispositions with a specific focus on entrepreneurship (Shane et al. 2003).

Shane (2000a) – his single most influential, sole-authored work – exploited a unique research opportunity and is an example of an unusually clever and imaginative case study design. Shane uses interviews and archival data to document all the venture start-up attempts based on an advanced MIT technology, namely three-dimensional “printing” (3DP^TM). He examined how this single technology led to different types of innovations and ventures. Holding the technology constant, he avoids success bias as well as much unobserved heterogeneity across the cases. Using Austrian economics’ ideas of private knowledge and a rich set of qualitative data, Shane convincingly demonstrates key insights regarding entrepreneurial opportunities: their non-obviousness (only eight start-up attempts based on a this widely publicized, broadly applicable, novel technology); the prevalence of non-search for the opportunities (cf. Kirzner 1973, regarding “alertness” and “surprise”); and the individual-opportunity nexus (cf. the next section). Regarding the latter, Shane argues that Team A could never have conceived of or succeeded with Opportunity B, and vice versa across all team-opportunity combinations. In each case the discovery and/or exploitation of the opportunity was clearly linked to some particular prior knowledge represented in the founding team.

There is a widespread consensus that this article has had a profound effect on the field, particularly on how researchers now recognize and think about the role of prior experience and how it influences preparedness for specific opportunities, rather than entrepreneurial action in general. The findings also accord with the view that entrepreneurial opportunities are in part inseparable from qualities of the individuals who pursue them (cf. Dimov 2004; McMullen and Shepherd 2006).

Recently, Shane has entered into the novel and controversial territory of the influence of genetic heritage on entrepreneurial behavior. Nicolaou and Shane (2008) outline the four mechanisms by which such effects might work. In Nicolaou et al. (2008) Shane teams up to conduct twin studies with researchers who have rich data and broad experience in this area. The analysis of large samples of monozygotic and dizygotic, same sex twins suggest a relatively strong effect of genetics on various measures of entrepreneurship when the core measure is self-employment. While novel and interesting, this work is all programmatic, containing substantial limitations admitted by the researchers. This line of research needs more investigation, and may represent an important lens through which we can improve our understanding of enterprising individuals.

Shane and Venkataraman (2000) pointed out that relative to the concentration on the influence of characteristics of individuals (and environments), entrepreneurship researchers had severely neglected the characteristics of the entrepreneurial opportunities these individuals pursue. Although their view has received substantial following, their adoption of Casson’s (1982) definition of opportunity has been criticized (Davidsson 2003; Singh 2001). Shane and Eckhardt (2003) heed such criticisms by making three explicit extensions: broadening, clarifying, and updating. In terms of clarifying, they offer an incisive re-formulation of the Cassonian definition of opportunity: “[T]hose situations in which new goods, services, raw materials and organizing methods can be introduced through the formation of new means, ends, or means-ends relationships” and argue that “These situations do not need to change the terms of economic exchange to be entrepreneurial opportunities, but only need to have the potential to alter the terms of economic exchange” (p. 165). In further response to criticism of being overly objectivist, they explain that “discovery” refers to perception of opportunity, and not proof that a “real” opportunity (as defined above) has been found.

In terms of broadening, the authors elaborate on the inadequacy of the price mechanism in relation to decisions involving new means-ends relationships (as opposed to optimization within known means-ends frameworks). They also mention several additional drivers behind discovery and exploitation of opportunities, beyond those already discussed by Shane and Venkataraman (2000). Another interesting extension is their discussion of modes of discovery and modes of exploitation (both in independent vs. corporate contexts). Crossing the two highlights four possibilities: a) fully independent start-ups; b) corporate acquisition of independent discoveries; c) spin-out of corporate discoveries, and d) corporate entrepreneurship. This simple framework regarding what types of opportunities are likely to be discovered and exploited in what type of context could be fertile ground for further theorizing and empirical work.

Further extensions of the theorizing on opportunities are offered in two chapters (2 and 3) of Shane (2003). Here the author seemingly takes another step in the subjective direction by defining opportunity as “a situation in which a person can create a new means-ends framework for recombining resources that the entrepreneur believes will yield a profit.” In the discussion of Schumpeterian vs. Kirznerian opportunities he suggests that creation is involved in the former type (p. 21). This is a less objectivist position than he had previously held. However, here as in all his writings Shane maintains that opportunities have an external component (e.g., p. 42).

Shane’s (and his collaborators) highlighting of the characteristics of opportunities has brought attention to and a clear focus on an essential dimension that was previously sorely under-researched relative to the role of characteristics of environments and individuals. However, while Shane’s work has led to some progress and inspiration for others, considerable conceptual issues remain unresolved and further work is needed in this area.

Shane has made contributions to the study of the new venture creation process in a series of papers in collaboration with Frédéric Delmar and based on the Swedish counterpart study of the Panel Study of Entrepreneurial Dynamics (PSED; see Gartner, Shaver, Carter and Reynolds 2004; Reynolds 2007). In terms of an analytical approach this series of papers represent some of the most sophisticated based on this type of data. The PSED represents an empirical research approach that is likely to remain central to entrepreneurship studies. Therefore, this is an important contribution. First, the authors have pioneered the re-organization of the data set from a panel of four interview waves to a data set consisting of monthly spells, based on the answers to a number of time stamped (by year and month) “gestation activities” in the survey (cf. Reynolds 2007). This is very valuable methodologically because there is no avoiding the hard fact that when first captured some of the cases will be very early in the start-up process while others are close to completing it. The re-organization does not alleviate the issue but certainly facilitates controlling for it, allowing the application of Event History Analysis which makes more effective use of these panel data.

Substantively, Delmar and Shane (2003) theoretically argue – and find – that business planning activity reduces the risk of disbanding of the start-up, while having a positive effect on product development progress and the completion of other organizing activities. In a second, partly overlapping article, Delmar and Shane (2004) regard the development of a business plan as well as the establishment of a legal entity as “legitimating” behaviors that should be completed early in the process. They argue and find that these activities have a negative effect on disbanding and a positive effect on completing other gestation activities. In a third paper, again partly overlapping, Shane and Delmar (2004) argue specifically that planning activities should precede marketing activities in order for the start-up to avoid discontinuation.

Eckhardt, Shane and Delmar (2006) apply multi-stage selection modeling to the problem of predicting which new ventures receive external funding. Conventionally, such a research question would refer to some characteristics of the founders and some characteristics of the venture – and possibly some interaction between the two – in the same regression analysis. Logically, however, receiving external funding requires that the founders first actively seek such funding. Therefore, the multi-stage selection approach may be more valid than the alternative estimation of interaction effects. This approach also acknowledges the process nature of venture funding.

Accordingly, Eckhardt et al. (2006) hypothesize that in the first stage variables reflecting founders’ subjective assessment of the future outlook for the venture determine whether external finance will be sought or not, and estimate these relationships. In a second stage they hypothesize (and estimate) that objectively verifiable characteristics of the venture will determine external investors’ willingness to fund the venture, given that financing is sought. The results come out differently, but in their particular case not very markedly different from a model where in a single analysis external funding is regressed on both founder perceptions and venture characteristics. However, the analytical approach they use is potentially a very important tool for entrepreneurship because it speaks generally to the central fact that entrepreneurship requires human agency (Shane 2003). In many cases, other variables can have their effects but only if the entrepreneur chooses to let them. As a model for how to account for this the article by Eckhardt et al. (2006) arguably deserves more attention than it has so far received.

Shane is co-author of the previously mentioned and extremely influential “conceptual framework” article “The promise of entrepreneurship as a field of research” (Shane and Venkataraman 2000; 2001). The central premise of this work is that “For a field of social science to have usefulness, it must have a conceptual framework that explains and predicts phenomena not explained or predicted by conceptual frameworks already in existence in other fields” (p. 217). The authors aim to provide such a framework, stating that the scholarly domain of entrepreneurship research entails “[T]he scholarly examination of how, by whom, and with what effects opportunities to create future goods and services are discovered, evaluated, and exploited (Venkataraman 1997). Consequently, the field involves the study of sources of opportunities; the processes of discovery, evaluation, and exploitation of opportunities; and the set of individuals who discover, evaluate, and exploit them” (p. 218). They further point out the following three sets of research questions as especially central: 1) why, when and how opportunities for the creation of goods and services come into existence; 2) why, when and how some people and not others discover and exploit these opportunities; and 3) why, when and how different modes of action are used to exploit entrepreneurial opportunities. In the subsequent dialogue they add that the outcomes – on different levels of analysis – of the exploitation process represent a fourth important set of research questions (Shane and Venkataraman 2001).

With regard to the antecedents of the process and its outcomes, they straightforwardly emphasize the characteristics of individuals and opportunities as the first-order forces explaining entrepreneurship, and hold environmental forces to be second order. They describe their perspective as a disequilibrium approach and highlight variations in the nature of opportunities as well as across individuals. Further, they point out that entrepreneurship does not require, but can include, the creation of new organizations. A short list of the many virtues in this way of delineating entrepreneurship research must include (cf. Davidsson 2003):

After having defined the field and its central research questions, the remainder of the conceptual piece elaborates on the possible antecedents of existence, discovery and exploitation of opportunities as well as further highlighting the issue of different modes of exploitation. The result is a significant de-coupling of entrepreneurship from the creation of new, independent firms (only).

Shane’s sole-authored book A General Theory of Entrepreneurship: The Individual-Opportunity Nexus (Shane 2003) is used in doctoral training at many universities and is one of the most influential works in the field in recent years. In the book Shane elaborates and refines the reasoning around the themes in the above-mentioned article. He also provides a very comprehensive review of prior empirical research that is impressive in a number of ways. First, his encyclopaedic mastery of the literature is truly admirable, extending far outside of the realm of narrowly dedicated entrepreneurship journals. Second, for a US-based author, he shows an unusual awareness of and willingness to cite research conducted in a broad range of countries. Third, the review recognizes the role of quality, meaning that he leans more heavily on theory-driven and comprehensive studies. At the same time, there is a clash between Shane’s perspective on entrepreneurship and the empirical evidence he reviews. As described above, his notion of entrepreneurship emphasizes the interacting explanations for the processes of emergence of new and (at least to some extent) innovative economic activity, regardless of organizational or ownership context. In sharp contrast, most of the research he cites employs little of such a process view; generally assumes additive effects rather than interactions, and uses the status of self-employment or the entry of new independent businesses – innovative as well as imitative, but with the latter a marked majority – as the operational criterion of entrepreneurship. While this incompatibility may make the empirical evidence less convincing as support for his theoretical propositions, it also points out the need for more empirical research taking the views developed by Shane and Venkataraman (2000) and Shane (2003) as the vantage point. We would argue that thanks to these contributions, the volume of such work has dramatically increased in recent years.

The background already sketched allows us to appreciate how his recent monograph The Illusions of Entrepreneurship: The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live by (Shane 2008), while in its “packaging” less scholarly than usual, steadfastly aims at getting some basic bearings on the phenomenon right and should help shape the overall direction of the field. Shane’s trailblazing work is evident in his editorship of a comprehensive compilation of foundational works (Shane 2000b); of the entrepreneurship department of Management Science as well as of special issues of other journals, and his giving a one-week doctoral seminar twice a year for participants from around the globe.