Handbook of Entrepreneurship – Review
Shaker A. Zahra
Donald L. Sexton and Hans Landstrom, eds. Oxford: Blackwell Business, 2000, 468 pp. $99.95.
The Handbook of Entrepreneurship is an excellent volume that attests to the maturity of entrepreneurship research and the growing stature of the field. Scholarship in entrepreneurship continues to blossom and grow in scope, depth, and impact. This volume reflects the diversity of the issues discussed in the field of entrepreneurship and the theories used in analyzing them. It codifies and clarifies our current knowledge of entrepreneurship and does a remarkable job in identifying gaps in what we know and how to fill these gaps.
Combining conceptual and empirical chapters, this edited volume consists of five sections. Part 1, “Setting the Stage for International Research in Entrepreneurship,” discusses national differences in entrepreneurship research, the challenges researchers encounter as they analyze firm growth, the growing intersection of the fields of strategic management and entrepreneurship, and the importance of supportive public policy in spurring entrepreneurship research. Aldrich provocatively discusses the fast-disappearing gaps between European and U.S. models of entrepreneurship. He also does an excellent job in highlighting the pitfalls in existing research and identifies ways to build on the growing convergence between European and U.S. research traditions. Next, Davidsson and Wiklund observe a growing convergence in the study of firm growth, an area that has not been the subject of rigorous research. Hitt and Ireland compellingly argue for and show the importance of the increasing convergence between strategy and e ntrepreneurship scholars, highlighting five areas: innovation, networks, learning, top management teams and governance, and change. Finally, Dennis tackles the complex issue of the role of public policy in promoting research and scholarship into entrepreneurship. Dennis concludes that U.S. policy makers have been slower than their European counterparts in promoting entrepreneurship research.
Part 2, “Government Impacts on Entrepreneurship,” consists of five chapters. De analyzes the factors that have shaped the European Union (EU) states’ policies relating to entrepreneurship and the importance of job creation and improved competitiveness as drivers of these policies. Audretsch highlights German unification as a turning point in that country’s economic growth, concluding that recently Germany has not promoted the development of new firms and industries. Next, Van der Horst, Nijsen, and Gulhan discuss the costs and implications of regulatory policies governing small and medium enterprises (SMEs), especially in the EU. Regulatory policies are viewed as being burdensome, and the authors believe that there is a need to revamp them to promote the growth and success of SMEs. Mugler then examines the effect of the economic climate in Europe on entrepreneurship. Observing that many of the European countries are undergoing major transformations, Mugler suggests that this process is lengthy, and changes wi ll take time to bear fruits. In the final chapter, Storey offers a methodology for evaluating the impact of public policies intended to assist small business firms. Storey argues that there is a clear absence of well-defined public policy objectives, complicating the evaluation of the net contributions of these policies on companies.
Part 3, “Financing Growth,” contains four chapters that discuss the importance of formal and informal sources of finance and the effect of these sources on new companies’ success. Researchers also observe significant difficulties in conducting research in this area. Donckles analyzes multiple conceptual, methodological, and practical issues that have limited past research on financing growth. Mason and Harrison examine the differences between formal and informal venture capital and discuss patterns of the two groups’ funding behavior. Manigart and Sapienza evaluate the evidence on the effect of venture capital on the economic development of Europe. They also call for theories that explain value creation from venture capital. Finally, Amit, Brander, and Zott analyze the role of venture capitalists. They also suggest that information asymmetries offer a good basis for studying venture capital financing.
Part 4, “Achieving Growth: Internal and External Approaches,” includes seven chapters focusing on the internal and external strategies companies follow to achieve growth. Birely and Stockley emphasize that new ventures’ success is often due to the presence of a team, rather than a single founder. These authors examine the contributions, characteristics, and composition of entrepreneurial teams and how these variables influence growth. Next, Arbaugh and Camp analyze the stages and points of transition in the life of a young firm. They also identify several gaps in research into organizational transitions and suggest that failure to adequately address the problems of transitions can limit the firm’s growth. In the next chapter, Autio examines technology-based firms and argues that developing new technologies is an important way to achieve growth. Cooper and Folta extend this theme, however, by emphasizing where hightechnology companies locate their operations. Geography has important implications for new firms’ resources, innovative capabilities, and company performance.
The next three contributions of part 4 examine externally oriented strategies companies can use to achieve growth. Johannisson explores the effect of networks on new venture success through legitimization and building cultural and emotional capital. Weaver examines the role of formal and informal cooperative ventures as a means of achieving growth, highlighting the role of alliances in gaining access to resources, especially technology. Hoy, Stanworth, and Purdy analyze the contributions of franchising to firm growth, especially through international expansion.
Part 5, the “Conclusions” section, is the final chapter. Here, Landstrom and Sexton look back and evaluate the key contributions of the different chapters in this volume and then identify key issues that deserve attention.
From this review of the key themes covered in the Handbook, it is clear that this is a “must read” for researchers and advanced graduate students, especially those with an interest in entrepreneurship and strategic management. Public policy makers also will find this book insightful. The authors bring considerable expertise to their discussions of the most important issues in the field. They also do a wonderful job in synthesizing what we know and in identifying areas that require attention. Authors also discuss central issues of interest to researchers, while highlighting their important implications for managers and public policy makers. The Handbook’s discussion of the effect of public policy on entrepreneurship research is also noteworthy. Frequently, such discussions have been limited to footnotes and perfunctory calls for greater attention to these issues in future research. This is not the case here; authors and editors have devoted considerable energies to exploring these issues, which is commendable. Finally, the recognition of convergence between entrepreneurship and strategic management researchers is another noteworthy accomplishment. This convergence has important implications for research and teaching in business schools.
The Handbook has a clear international focus in its content, contributors, and target audience. This international focus serves as a key organizing framework that connects the various contributions in the book. Remarkably, as is clear in several chapters, scholars from the two sides of the Atlantic agree that theory, style, and method are converging with greater frequency than in other parts of organizational sciences. This convergence opens the door for greater and more fruitful collaboration and scholarly exchange.
An important book like this has some limitations, however. Coverage of international issues and regions is sometimes uneven, leaving room for involving scholars from Asian, Australian, African, and South American universities. Undoubtedly, future volumes will address this shortcoming. Another area for future improvement lies with the two sections on public policy and venture capital. Competently written and well presented, these sections cover several major issues, some of which require thorough “local” knowledge. Perhaps a more elaborate editorial distillation of areas of similarities and differences across regions and countries would be instructive. The Handbook of Entrepreneurship is nevertheless a timely and important contribution to the field. It captures the growing depth, breadth, and rigor of research being conducted in the field. I compliment the editors and authors on a job very well done.
COPYRIGHT 2001 Cornell University, Johnson Graduate School
COPYRIGHT 2001 Gale Group
