Entrepreneurship has long been considered pivotal to the field of business history.Footnote 1 An entrepreneurial function or role, most business historians would agree, is crucial to understanding the origins and evolution of businesses, markets, industries, and economic systems. And numerous efforts have been made to identify and promote entrepreneurship as a field of research for further development within business history.Footnote 2
Yet, despite the recognition of its importance, research on entrepreneurship within business history still lacks a coherent set of conceptual premises and agreement about the objects of study—foundations that are essential for the creation of a coherent subfield. This stands in contrast to a number of other approaches commonly applied in business history, most notably (i) Chandlerian organizational business history, (ii) the new institutionalism often associated with Douglass North, and (iii) the new economic histories of business. These three approaches build on clearly formulated precepts and core questions that allow for comparisons between studies and facilitate conversation among scholars. In contrast, entrepreneurship has been treated variously as a subject related to the study of individual business people, startup organizations, or innovation. It is therefore not surprising that few articles in leading business history journals engage in analytical or historiographical discussions of entrepreneurship.
We find the lack of coherent dialogue on entrepreneurial history troubling for at least two reasons. First, entrepreneurship has been of great and growing interest in both the academic and business world over the last four decades. Indeed, entrepreneurship has become a central language—perhaps the central language—of contemporary capitalism and crucial to how economic actors understand business. The belief and premise that entrepreneurial processes are crucial to the future of capitalism is pervasive—arguably more widespread than faith in organizations/management, in transactions and markets, or even in institutions.Footnote 3 The adjacent fields of management, economics, sociology, finance, and anthropology have all developed significant subfields devoted to the study of entrepreneurship, while entrepreneurial history has languished. Second, historians and historical thought played a crucial role in the early development of the concept of entrepreneurship over the late nineteenth and early twentieth centuries, laying the groundwork for a historically sensitive approach to the study of entrepreneurship. Ironically, it was only in the last half century that economic and business history abandoned the study of entrepreneurship as an object of significant analytical focus, just as it was becoming more important to how economic actors viewed their world.Footnote 4
In this article, we address this situation by building on recent scholarship focused on the historical study of entrepreneurship with the explicit goal of fostering a dialogue on what we call “new entrepreneurial history.” We use the term “new entrepreneurial history” to distinguish these efforts, in premises and purpose, from the “old entrepreneurial history,” an earlier wave of scholarship that emerged after World War II. We approach this task from four angles. First, we examine the strengths and weaknesses of the earlier scholarly work and find that over time “old” entrepreneurial history became increasingly structural and functional in its premises, undermining its original promise as a way of interpreting historical change. Second, we seek to revive the original potential of entrepreneurial history and establish its conceptual coherence by articulating its premises and distinguishing these premises from those used in other approaches to business history. Keeping in mind the fundamental historical task of explaining change over time, we define entrepreneurial history as the study of the creative processes that propel economic change. This conceptualization foregrounds entrepreneurial processes rather than focusing on particular actors, institutions, or technologies. The approach allows us, in the third section, to identify three specific processes as the objects of study in entrepreneurial history: (i) envisioning and valuing opportunities, (ii) allocating and reconfiguring resources, and (iii) legitimizing novelty. Finally, we elaborate on the unique contributions new entrepreneurial history could make to business history.
Entrepreneurship Lost
To define the intellectual space available for entrepreneurial history, it is useful to turn briefly to its historiography to explain why, despite history's early-mover status in the development of entrepreneurship as a concept, it plays such a marginal role in thought on the topic today. To understand what was lost and what might be creatively regained, we must recognize why historical reasoning was pivotal to the development of entrepreneurship in the first place, as well as why economic and business historians moved away from it in the last third of the twentieth century.
Entrepreneurship, as it is understood today, contains strong connotations of a process that pertains to dynamism and change in markets. Understood in this way the concept of entrepreneurship owes much to the historical tradition in economic thought, which traces its roots to the “Historical Schools” of Economics, and particularly the German Historical School.Footnote 5 Its proponents, most notably Gustav Schmoller (1838–1917), argued that the classical economists had created a body of theory divorced from the realities of economic life, focusing on universally applicable and abstract economic processes with little regard to actors or their agency.Footnote 6 Historical School scholars instead emphasized the agency of particular actors in specific contexts in explaining economic and social processes. They also rejected the assumption of the economically optimizing actor in favor of accounting for a diverse array of motives and sensemaking processes. And, perhaps above all, they emphasized the evolutionary nature of economic relationships and practices, rather than accepting that markets were inherently stable and equilibrating.Footnote 7 Modern understandings of entrepreneurship grew out of this critique of classical economics' failure to capture both the embeddedness of economic activities and the will and capabilities of economic agents to propel change.Footnote 8
Initially shaped by Schmoller's methodological ideas, the German Historical School's scholarship was highly inductive and empiricist. It was only with the next generations of historically minded social scientists—Max Weber, Georg Simmel, Werner Sombart, and most notably Joseph Schumpeter—that the Historical School's premises were transformed into more general conceptual claims about historical change focused on entrepreneurial processes. Weber and Sombart sought to identify the future orientation of entrepreneurial mindsets within shifting religious beliefs, while Simmel examined how the “distance” of strangers introduced commercial novelty to economies and societies.Footnote 9 Schumpeter's theorization of entrepreneurship as the engine driving the evolution of capitalism fundamentally drew on the historicists' claim that the imagination and will of actors was central to the operation of markets and the dynamics of economies.Footnote 10 The assumption of actors' maximization of pure economic utility was rejected in favor of an understanding of what Schumpeter described as “the whole [range] of human motivations as historically displayed, the specifically economic ones not more than the rest.”Footnote 11
In their holistic understanding of human existence, the German Historical School was influenced by and itself influenced the contemporaneous historian and philosopher Wilhelm Dilthey (1833–1911), who also claimed to take “the whole man—in the multiplicity of his powers: this willing-feeling-perceiving being—as the basis for explaining knowledge and its concepts.”Footnote 12 Moreover, it was Dilthey who stressed man as a “historical being” and engaged extensively in questions of the temporality of human experience, both individually and collectively. Temporality, to Dilthey, was experienced not as a sequence of present moments, but as the present seen in a continuum between the past and the future, and it was the essential historicity of human experience, he argued, that lay the foundation for “historical science.”Footnote 13
By the mid-twentieth century, these intellectual developments had led to the emergence of entrepreneurial history as a distinct field of research. Schumpeter himself emphasized the need for historical research in studying what he called the “mechanisms” of “creative response.” Whereas economics focused on “adaptive response,” that is the process by which changes in supply and demand led to predictable adjustments in markets, “creative response” took place when resources were used or combined in novel value-creating ways that could not readily be predicted in advance. Historical perspective, Schumpeter argued, was needed in order to go “into the details of its modus operandi, into the mechanisms through which it acts.”Footnote 14 A Research Center in Entrepreneurial History was established at Harvard Business School, under the direction of Arthur Cole, and Explorations in Entrepreneurial History was set up as the first academic journal devoted to entrepreneurship. The field (and the center) began by fostering a diverse array of views on entrepreneurship and attracted a number of young, rising stars, who would go on to shape economic and business history for the rest of the century, including Alfred Chandler, Douglass North, and David Landes.Footnote 15
But as it evolved, postwar entrepreneurial history became increasingly structural and normative, strengthening some strains of the earlier historical critique while muting or marginalizing others. In particular, under the influence of mid-twentieth-century structural functionalism, it increasingly focused on how norms, laws, and other institutions shaped entrepreneurial roles and functions in national environments, as could be seen most clearly in the work of Thomas Cochran and David Landes.Footnote 16 It diluted the equally important emphasis of the Historical School on the ability of economic actors to reshape their contexts as central to entrepreneurial processes. Entrepreneurial history was also strongly influenced by modernization theory, and increasingly adopted a linear and normative notion of entrepreneurship's relationship to time and change.Footnote 17 Critics, like Alexander Gerschenkron, pointed out that such a focus undermined the original promise of entrepreneurial history.Footnote 18
By the late 1960s, entrepreneurial history was being abandoned by economic and business historians in favor of approaches that seemed methodologically and conceptually more rigorous by the social scientific standards of the day. This was clearly apparent in business history, where Chandler's focus on organizational form and managerial hierarchies offered a clearly delineated scope and object of observation. But it was also a development that shaped economic history, as data on prices, transactions, and markets offered concrete observations that avoided the tricky and seemingly intractable issues that the Historical School had raised about the agency, perceptions, and will involved in entrepreneurship. The new institutionalism of North offered still another path that emphasized the role of context and environment over the agency of the entrepreneurial process.Footnote 19 Though historians occasionally continued to revisit the question of how to integrate entrepreneurship into the field, no sustained scholarly conversation or stream of work reemerged after the decline of the postwar experiment in entrepreneurial history.Footnote 20
Ironically, it was exactly when historians were moving away from entrepreneurship as a major area of research that business schools and subsequently social scientists were engaging more intensively in its study. Since the 1970s, entrepreneurship has provided the framing language with which business people and policymakers describe what drives markets and economies. Since the 1980s, the study of entrepreneurship has flourished, at first in business schools and then in a number of social sciences. Business and economic history has played a marginal role, at best, in this work, despite its early-mover status in shaping the concept.Footnote 21
Although entrepreneurial history had strong support in its time, today few historians refer to it or consider the trajectory it could have offered to business and economic history. What remains is an array of weakly and inconsistently defined notions of entrepreneurship, associated with the study of individuals or leaders, with startup companies or with technological innovation rather than the processes by which human actors imagine and pursue future opportunities that lead to economic change. Not surprisingly, then, for many historians today the notion of entrepreneurship smacks of a kind of Whig history, with hagiographical tendencies, that has long been discredited. When it does appear as a key term in scholarly business history articles, entrepreneurship often remains undefined and lacks conceptual depth. The Appendix Table shows all articles published in Business History Review between 1954 and 2015 that mention “entrepreneurship” in their full text, including references (44 out of 1,044 published research articles, or 4.2 percent). If we exclude the eighteen articles that referred to entrepreneurship in their citations alone, we are left with only twenty-six articles that mention the term entrepreneurship at all, a surprisingly small number. The vast majority of these articles do not define entrepreneurship and many simply focus on one individual entrepreneur rather than engage with the concept of entrepreneurship or what it may mean. While eight articles reference Joseph Schumpeter, often without much further discussion, the more recent pieces that clarify their definition of entrepreneurship mostly follow Mark Casson (six total) and see the entrepreneur as a specialist in making judgmental decisions. (Only one article referred to the definition by Howard Stevenson that entrepreneurship is the pursuit of opportunities beyond resources currently controlled.)
One can conclude from this that over the past few decades, entrepreneurship has been largely ignored in business history and has only survived within the economics-based framework of Casson's theory. Casson conceptualizes the entrepreneur as an expert decision-maker, who excels in judgment in the face of the uneven distribution of information in markets. Because information is distributed, costly, and hard to obtain, entrepreneurs fulfill an important function for society, synthesizing and exploiting economic information advantages using exceptional judgment and coordinating resources based on this judgment, thus improving the overall allocation of societal resources.Footnote 22 Casson's theory of entrepreneurship is influential and has played an exceptional role in providing historians a conceptual language.Footnote 23 It has proven valid in a variety of organizational settings and historical contexts and a number of business historians have used Casson's theory in their work.Footnote 24 However, against the background of the rich and more heterodox historiographical tradition discussed previously, his focus on the uneven distribution of information and the related coordination problems limits the set of broader questions entrepreneurial history could address beyond the boundaries of economic theory. The interesting questions raised by the Historical School about the plurality of motives, creativity and the temporality of entrepreneurial action are not primary objects of analysis in Casson's framework, and for now remain scholarly opportunities awaiting rediscovery by entrepreneurial historians.
Recent developments suggest that this is an opportune time to revisit entrepreneurial history. First, several scholars, including Robert Cuff and Thomas McCraw, have rekindled an interest in the historiographical relationship between entrepreneurship and business history.Footnote 25 McCraw, both in his highly praised biography of Schumpeter and in related work, emphasized the close relationship between historical exploration and theory development in our understanding of entrepreneurship. Second, several historians, such as Andrew Popp and Daniel Raff, have considered the creative microlevel processes by which entrepreneurs exercise agency when interpreting time.Footnote 26 In entrepreneurship theory, scholars have also devoted greater attention to context and to the temporal nature of opportunities.Footnote 27 Third, at the macrolevel, other historians, including Lou Galambos, Franco Amatori, Walter Friedman, Geoffrey Jones, and Margaret Graham, have renewed interest in the consequences of entrepreneurship for structural change, such as industrial revolutions and globalization.Footnote 28 These recent developments, we suggest, offer us the opportunity to reinvent entrepreneurial history as a coherent subfield in business history.
New Entrepreneurial History: Definition and Premises
While historians have devoted little conceptual attention to what they mean by entrepreneurship, entrepreneurship scholars and related social scientists have offered an array of different definitions for their fields of research. One such approach defines entrepreneurship based on individual traits or actions and addresses the question, “Who is the entrepreneur?”Footnote 29 A second focuses on the creation of (new) organizations.Footnote 30 A third, arguably the most widely used, sees the domain of entrepreneurship research as the study of the pursuit of opportunities, or the nexus of “lucrative opportunities and . . . enterprising individuals.”Footnote 31
While each of these approaches to entrepreneurship research point to important elements of the entrepreneurial process, none focuses on the relationship between entrepreneurship and historical change. Nor do these definitions emphasize the mechanisms of creative response and their role in propelling change, for which Schumpeter had suggested that historical research was especially well suited. We therefore begin by suggesting that the unique domain of entrepreneurial history lies in explicitly exploring the intersection of entrepreneurial processes and historical change.Footnote 32 We define entrepreneurial history as the study of the creative processes that propel economic change. Without excluding the study of enterprising individuals, organization creation, and opportunity recognition, the definition focuses on the study of entrepreneurial processes and their relationship to change.
Three key premises make the domain of entrepreneurial history unique and relevant to understanding historical change: the temporal foundations of agency, multiplicity in the forms of value, and the collective and cumulative character of entrepreneurship.
The temporal foundations of agency
A core premise embedded in our proposed definition is that entrepreneurial actors are agentic and that this agency arises from their future orientation. While the actors we study may be situated in a particular time and place, we follow Andrew Popp and Robin Holt as well as Jens Beckert in positing that understanding their agency hinges on examining the processes by which they envision and pursue possible futures beyond the constraints of their present context.Footnote 33 Such a premise builds on the understanding—articulated by business historian Raff and entrepreneurship theorist Dimo Dimov—that grasping the creative agency of actors requires reincorporating actors' own temporal perspectives into analyses of their choices and actions.Footnote 34 As a consequence, entrepreneurial history also recasts Frank Knight's binary conceptualization of the future as involving either insurable risks or unknowable uncertainties.Footnote 35 It instead shifts the focus to entrepreneurs' efforts to shape the seemingly unpredictable future through sensemaking and rhetorical processes.
In emphasizing temporal orientation, we draw attention not only to how actors imagine and pursue futures, but also to how these imagined futures relate to interpreted pasts. In other words we draw on Reinhart Koselleck's claim that human actors' “horizon of expectation” is related to their “space of experience.”Footnote 36 Thus, new entrepreneurial history moves beyond the overly contextualized assumption that entrepreneurs are trapped in their present, and instead highlights the unexpected and creative ways they use the past to imagine the future.
The implication is that the strong structural assumption that actors' choices are predetermined by their institutional context is incomplete at the very least.Footnote 37 Whereas much of the previous work in “old” entrepreneurial history focused on the constraining effects of institutions, as exemplified in the work of William Baumol and David Landes, we follow Schumpeter in emphasizing not only the “shaping” influence of institutions on entrepreneurship but also the “bursting” influence of the entrepreneur on institutions.Footnote 38 Moreover, unlike approaches to business history built on the premise that actors optimize resources or coordinate them efficiently, entrepreneurial history considers how they seek to creatively build novel futures beyond the resource constraints of the present.
Multiplicity in the forms of value
Entrepreneurial actors are driven to identify and pursue untapped, future forms of value. This premise recognizes both the plurality of entrepreneurial motives and diversity in the forms and contexts of value. Entrepreneurial action may be motivated by a range of notions of future value, including the pursuit of civic, environmental, esthetic, academic, and industrial forms of worth; it need not be limited to commercial value.Footnote 39 Concomitantly, entrepreneurial efforts and processes are not limited to the context of markets, but may also operate in other fields, such as academia, the state, and the charitable world, or at the intersection between these worlds.
The premise of the multiplicity of motives and forms of value is partly what distinguishes new entrepreneurial history from approaches based on neoclassical economics, which embrace the assumption of an optimizing agent, motivated by the efficient use of resources within markets, and from those, such as Chandler's, that ascribe a single kind of rationality to management within the context of hierarchies. Rather than assuming a single form and measure of value, new entrepreneurial history posits that the question of how entrepreneurial actors determine desirable and plausible futures is an empirical one requiring historical research, rather than a behavioral premise that can be assumed.
The collective and cumulative character of entrepreneurship
A third premise is that the agency of actors rests in sequences and collections of action that cumulatively drive historical change. The cumulative nature of entrepreneurial agency has been highlighted in concepts such as the entrepreneurial stream by Cole, the sequential process by R. Daniel Wadhwani and Geoffrey Jones, and the entrepreneurial multiplier by Galambos and Amatori.Footnote 40 Building on actors' sense of their place in time, entrepreneurial action may also be inspired and shaped by feelings of belonging to a generation, group, or epoch.Footnote 41 The premise shifts the focus of attention from individuals to groups, networks, or sequences of actors as the locus of entrepreneurial action.
The central assumption is thus that structural and historical change—such as the rise of big business or the integration of global markets—can only be accounted for by tracing the actions of multiple actors, often as they build upon previous actions or experiences. It is the domino effect—the process by which the exploitation of one entrepreneurial opportunity allows for the pursuit of new ones—that makes change in economies and societies possible.
This premise contrasts with the treatment of the entrepreneur as a heroic individual, as has sometimes been the case in historical literature. While the actions of individuals matter, new entrepreneurial history highlights the cumulative entrepreneurial processes across multiple actors and over time (sometimes referred to as “distributed” agency) that propel historical change.Footnote 42 This does not mean that entrepreneurial biographies inevitably lose their explicatory power. As a genre, entrepreneurial biographies are well positioned to examine concrete and carefully contextualized entrepreneurial processes, including entrepreneurs' temporality and understandings of value, as work by Carlos Dávila, Werner Abelshauser, and Uwe Spiekermann (to name just a few) shows.Footnote 43 But the premise does raise skepticism about the extent of individual agency sometimes ascribed to heroic protagonists in uncritical entrepreneurial biographies.
Entrepreneurial Processes as Objects of Study
Our definition and assumptions point us to three processes as the primary objects of study in entrepreneurial history: (i) how entrepreneurial opportunities are imagined and valued, (ii) how resources are allocated and reconfigured to pursue such entrepreneurial ends, and (iii) how these entrepreneurial actions are legitimized. These processes, and the empirical questions they raise, are explored in this section.
Envisioning and valuing opportunities
Envisioning opportunities refers to how entrepreneurs imagine futures in terms of new forms of value and determine the plausibility and desirability of these futures. The imagined future may be manifested in a variety of different ways, including as new products or services, as new organizational types, as new markets, or as new practices. In contrast to Scott Shane and Sankaran Venkataraman as well as Casson, who understand opportunities as objective, discoverable conditions of the environment, we follow Saras Sarasvathy, Sharon Alvarez, and Dimov in their more agentic view of opportunities as enacted.Footnote 44
Part of why we see entrepreneurial opportunities as enacted rather than as discovered is because of the premise, posited earlier, that actors value and evaluate worth in different ways; particular futures may be deemed valuable for their efficiency, or profitability, or beauty, or the civic or environmental good they create. Even goods that appear to have intrinsic worth may be valued and evaluated fundamentally differently over time.Footnote 45 Recognizing the possibility of competing types of value draws our attention to the ways in which different perspectives on future worth arise and how contestations between these different understandings are resolved, or not, in the entrepreneurial process.Footnote 46 For instance, recent business history research has examined the historical origins of the motivations of “green entrepreneurs” seeking environmental sustainability and how academic entrepreneurs envisioned novel forms of value related academic knowledge.Footnote 47 Judgments about what constitutes an opportunity hence involve sensemaking that cannot be reduced to the discovery of objective gaps in the market, but involve subjective and rhetorical processes that incorporate claims by entrepreneurs about the kinds of value worth pursuing.
History is particularly well suited to studying how actors in the present envision and value opportunities for their future. Historical methods are attentive to differences in temporal perspective between scholar and subjects and to analyzing what R. G. Collingwood called the “inside” of human action.Footnote 48 As a discipline, history has a long tradition of grappling with the situated perspective of human actors in interpreting their motivation and meaning.Footnote 49 Such a perspective is crucial for studying how entrepreneurs identify opportunities that they deem worth pursuing. As Dimov points out, an uncritical retrospective point of view wipes away the uncertainty faced by entrepreneurs and the judgmental processes involved in opportunity identification because the actors' future has become revealed, the categories of events and developments are known and calculable and simply lie in a future waiting to be discovered.Footnote 50 Historical methods that allow scholars to see opportunities from the perspective of actors situated in time and place are hence especially useful for understanding how futures are envisioned and uncertainty is borne.Footnote 51 By placing actors in their own moment in historical time, historians can address two relevant research questions regarding opportunities: how entrepreneurs made sense of the plausibility and desirability of future opportunities despite the uncertainties they faced, and how such envisioned opportunities came to be shared and reshaped over time.Footnote 52
One way of studying these processes is to examine the construction and dissemination of narratives regarding future opportunities. Such an approach posits that “historical narrative” is not simply a literary or fictional device imposed onto the past but is rather an integral part of how human actors make sense of their moment in time.Footnote 53 Storytelling about the past not only makes sense of it, but also provides a guide to purposeful action directed toward the future. It may occur in different forms, including as narrated monologue, dialogue, or role playing.Footnote 54 Historians could analyze more extensively how actors renarrate the past, or produce counternarratives, in order to imagine entrepreneurial opportunities pertaining to the future.Footnote 55
A second approach considers the ways in which history serves as a form of metaphorical reasoning for actors, through which the past renders novel analogies that speak to the present or future. Metaphors introduce novelty and imagination because they create what Paul Ricœur termed “semantic innovation,” by which the familiar is seen in new light.Footnote 56 In this way, historical experience serves as a foundation for creativity because it allows actors to introduce new analogs by which they can project plausible and desirable futures. As with narrative, therefore, history-as-metaphor serves as a way for historians to explore both the temporal and creative nature of entrepreneurial sensemaking.Footnote 57
A third area that remains to be more fully explored is the role of emotions. Judgments about desirable and plausible futures are often inseparable from sentiment, and entrepreneurial history must grapple with the role of the irrational in the entrepreneurial process.Footnote 58 Emotional reactions to loss or injustice in the past may shape the entrepreneur's vision of what the future should hold. Such emotions may be embedded not only in discursive forms, such as narratives, but also in practices and material objects, which could be an equally useful source for historians studying entrepreneurship.Footnote 59
Finally, historical work that explores how envisioned opportunities are shared and reshaped over time would be particularly useful to not only entrepreneurial history, but to entrepreneurship scholarship more generally. Research on opportunities has often focused on particular moments in time, hence leaving largely unexplored the question of how they are reshaped in the process of being pursued or how the pursuit of one opportunity creates new ones. Given the cumulative character of entrepreneurship, studying the processes by which opportunities are disseminated and reshaped could be particularly important in understanding its role in historical change.
Allocating and reconfiguring resources
To pursue the development of future goods, services, practices, and organizations, entrepreneurial actors must find ways to prioritize the allocation of resources to uncertain future-oriented endeavors over present-oriented ones. They may also reconfigure how resources are combined to serve some future value or purpose. Research in entrepreneurial history can hence explore the processes and mechanisms by which actors allocated and reconfigured resources toward such uncertain, future ends.
One approach would be to examine how actors were historically able to convince others to dedicate resources to their ventures. An entrepreneur pitching a new enterprise has to persuade prospective investors, employees, and partners that they should allocate resources to the project. From the perspective of economic theory, promises of “entrepreneurial profits” of course figure prominently. However, if we take entrepreneurial uncertainty seriously, for any new venture determining a comparative return on the allocation of resources will be as much a matter of judgment as of data analysis.Footnote 60 New entrepreneurial history thus has the opportunity to examine the rhetorical processes and calculative devices that were historically used to justify investments in imagined futures.
Incorporating an institutional perspective into new entrepreneurial history provides a second approach to studying entrepreneurial resource allocation in historical perspective. Institutional theory allows historians to identify how prevailing rules, norms, and cognitive frames shaped the flow of resources at particular moments in time. Formal laws and regulations—such as bankruptcy law—help explain resource allocation to entrepreneurial rather than operational endeavors.Footnote 61 Informal institutions—such as social norms and taken-for-granted cognitive or semantic perspectives—allow historians even greater explicatory power in explaining tendencies to take or avoid risks. Historical studies on changing norms regarding failure and uncertainty, for instance, can add considerable depth to explaining how resources were deployed.Footnote 62
That said, traditional institutional theory has significant limitations as an approach to studying entrepreneurial resource allocation. Because it assumes that actors tend to follow institutional rules and norms, it fails to consider historical cases in which entrepreneurs bend rules or break norms in pursuing the creation of new forms of value. Indeed, it is often the cases of unconventional resource allocation or combination that reflect Schumpeterian creative response and that drive historical changes in economic practices. Thus, a third, and arguably the most promising, approach to studying entrepreneurial resource allocation would be to consider historical patterns by which entrepreneurs engaged in the unconventional allocation or combination of resources in order to pursue their ventures.
Entrepreneurs may, for instance, redeploy an existing resource in a new way. Entrepreneurship scholars have pointed out the importance of “bricolage”—redeploying technologies and tools towards novel ends—as an approach to resource acquisition.Footnote 63 Such research suggests follow-on opportunities to historically examine how entrepreneurs have redeployed existing resources in new ways over time. Likewise, historians are well positioned to consider how entrepreneurs may try to reinterpret the symbolic or semantic understanding of a resource or good in order to lend it new value.Footnote 64
Resource reconfiguration and the creation of “new combinations” by entrepreneurial firms constitute another form of nonconforming resource allocation subject to historical research. Recent work in strategy, drawing in particular on conceptual frameworks in the areas of evolutionary economics and dynamic capabilities, have brought attention to the value of historical methods in explaining the evolution of routines and capabilities.Footnote 65 An entrepreneurial perspective allows us to consider how new routines and capabilities emerge.Footnote 66 Recent work by Raff, Philip Scranton, and colleagues promises to provide some grounding to this approach by elaborating on the value of historical cases in examining the emergence of routines.Footnote 67
Entrepreneurial processes of resource reconfiguration, however, extend beyond the development of new firm-level routines and capabilities. Entrepreneurs sometimes engage in new institution development or push for institutional change in order to establish rules and processes pertaining to the allocation of resources and risks in ways that conform to their vision. The role of entrepreneurial processes in new institution formation and institutional change represents a particularly fruitful subject of entrepreneurial history precisely because such processes often involve multiple actors and organizations and unfold over long periods of time. For instance, historical research in this area has examined how academic entrepreneurship in twentieth-century Western Societies led to the formation of new institutions to fund scientific endeavors.Footnote 68 Examining the processes by which sequences of entrepreneurial actors and actions change institutions can provide insights into resource allocation at the field and societal level.
Legitimizing novelty
Entrepreneurs confront the challenge of legitimizing their endeavors. Legitimacy poses a problem in the entrepreneurial process because the new forms of value and new combinations of resources entrepreneurs introduce often fail to conform to widely shared expectations regarding rules, norms, beliefs, and definitions. Legitimation processes thus form another important focus of research in entrepreneurial history.
Legitimacy can be defined as the “perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.”Footnote 69 Legitimation processes thus pertain to the question of how entrepreneurial actors address the pressures created by existing institutions.
While entrepreneurs who conform to existing institutions may encounter less resistance in establishing their legitimacy, research in new entrepreneurial history would be more likely to deal with nonconforming entrepreneurial ventures since these are at the heart of Schumpeterian creative response and the process of historical change. Specifically, such research would be most productive not in identifying legitimate or illegitimate entrepreneurial actions but rather in examining the process of legitimation because it addresses how institutional and societal change occurs. Two broad sets of research questions are pertinent in this regard.
First, what kinds of behaviors have entrepreneurial actors historically engaged in to legitimize novel forms of value or combinations of resources? Management and organizational research has suggested that actors often engage in rhetorical or discursive strategies to shape their legitimacy with particular audiences—consciously framing their actions or reinterpreting texts in order to legitimize novel practices.Footnote 70 Design elements, for instance, can be used to enhance the legitimacy of a product that appears new and unfamiliar. Andrew Hargadon and Yellowlees Douglas show how Thomas Edison introduced the electric light by producing bulbs in the shape of flames to make it resemble gas lighting.Footnote 71 The use of such skeuomorphs—design elements that make innovative products appear familiar by introducing them in known shapes and forms—provides an example of such a legitimizing move. Abstractions, such as market categorization or theorization, can further propel the entrepreneurial process of legitimation by creating shortcuts in the process of meaning-making and helping to diffuse novel goods, practices, and organizations.Footnote 72 Not all mechanisms of legitimation have to be conscious; they can be intuitive and open to emotional-affective influences, as recent research highlights.Footnote 73 Historical analysis of emotions, icons, symbols, and music in legitimation processes could greatly enhance our understanding of this particular entrepreneurial challenge.
Second, how do existing institutions and actors adapt to novelty and incorporate it into the social order? Entrepreneurial history is particularly well suited to explaining how such processes unfold slowly over time, as several existing studies have shown.Footnote 74 New entrepreneurial history can address the complex interplay between entrepreneurship and institutional change, exploring how novelties come to be “normalized” by actors within a given field, or across fields. Such complex legitimation processes can be best studied historically by tracing developments across multiple actors and over time. Accounts of heroic or “hypermuscular” entrepreneurs, who single-handedly legitimize new products, practices, categories, or organizational forms, can disguise the complex historical process and the “distributed agency” of multiple actors building on one another.Footnote 75 Changes in legal institutions or in the established processes for the allocation of political power, for example, often require organized collective action or social movements. Other types of institutional change involve a variety of nonfirm actors—intermediaries, professional associations, nonprofit organizations, media—thus indicating the need to examine legitimation from a multilevel process perspective.Footnote 76
What seems in hindsight at the societal level to be consensual and inevitable processes of legitimation, appear at the individual and group level to be deeply contested and uncertain. Whereas legitimacy is often conceptualized as a collective judgment, historical actors may experience controversy and contestation in their everyday interactions. It is an inherently historical question how disagreement at the microlevel eventually leads to a perceived consensus and institutional change.Footnote 77 New entrepreneurial history can bridge these micro- and macrolevel perspectives through its focus on how sequences of microlevel interactions shape collective judgment and perception.
Potential Contributions
Clarifying the premises and objects of the study of entrepreneurial history not only offers opportunities for more systematic comparison between studies and dialogue among scholars, but also points to what may be the unique contributions of such an approach to business history. In this section, we compare entrepreneurial history to Chandlerian business history, new institutional business history, and the new economic histories of business to highlight entrepreneurial history's distinct contributions. A summary of the comparison can be found in Table 1. The lines between these basic approaches are sometimes blurry. Thus, our categorization should not be seen as a set of irreconcilable schools of thought but rather as a stylized comparison designed to highlight what unique contributions entrepreneurial history could make.
New Entrepreneurial History in Comparison to Other Approaches to Business History
Source: Authors' compilation.
Each approach to business history has made significant intellectual contributions rooted in the premises and objects of study that characterize them. Chandlerian business history has contributed to deepening our understanding of the development of firm hierarchies and the growth of large-scale firms; it has also allowed us to explore international varieties of managerial hierarchies and consider their effectiveness.Footnote 78 It did this based on the assumption that managers are motivated by the efficient coordination of resources (rather than, for instance, acting politically in response to struggles for control of the corporation) and that firm strategies and organizational structures reflected rational planning processes. In contrast, new institutionalist approaches have contributed to our understanding of how laws, norms, and culture affect economic behavior and have deepened our understanding of the origins of variations in institutions.Footnote 79 They have done this based on the premises that institutions determine incentives, that incentives govern behavior, and that behavior can be productive or unproductive for economic growth.Footnote 80 Finally, new economic history approaches to business, particularly those that focus on transaction costs and economic trade-offs, have contributed to our understanding of variations in organizational form over time and place and the role of information in the expansion of markets and exchange relationships.Footnote 81 They have done so by embracing the premises that information is asymmetric or distributed.
The premises and objects of study that we propose as the focus of entrepreneurial history, in contrast, hold the promise of four kinds of unique contributions to business history. First, new entrepreneurial history offers an opportunity for business historians to examine more deeply and analytically the mechanisms through which human imagination and creativity work. In doing so, it responds to Schumpeter's plea to analyze “creative response” by “going into the details of its modus operandi, into the mechanisms through which it acts.”Footnote 82 By exploring and comparing how actors project and pursue futures beyond their present within different historical contexts, entrepreneurial history can explore the variety of modes of human agency that lie beyond the pursuit of efficiency and optimization and to unpack the mechanisms by which these work (or fail to work) in creating change.
Second, by incorporating the premises that actors may be driven by diverse kinds of motives and that value may be conceived and justified in different ways, we believe that entrepreneurial history offers a path for analytically integrating the moral judgments of economic actors into business history. As with analyzing creativity, entrepreneurial history could move business historians beyond treating morality as a set of norms or rules of conduct to analyzing moral judgment and justification as a process inherent in markets and embedded in the question of how actors imagine and justify desirable futures. Such an approach, we believe, could contribute to business history by moving the issues of value and morality out of their relegation to a separate sphere of philosophical consideration and toward integrating them more centrally into the practicalities of business and economic processes. Doing so would allow us to understand how moral judgments and justifications shape the origins and evolution of businesses and industries.
Third, entrepreneurial history offers opportunities to deepen how time and temporality are treated in business history. It does so by moving beyond the treatment of time as “clock time” and the treatment of history as merely evolutionary “change over time,” contributing depth to both the conceptual and methodological issues that temporal perspectives raise. Conceptually, entrepreneurial history foregrounds the temporal perspective of the actors we study, taking seriously the question of how their projections of the future relate to their interpretations of the past. In doing so, it allows us to examine not only how actors are situated “in time” (in their context) but also how they “use time.” In short, this approach creates the opportunity for us to consider how business actors use history and how and why these uses have changed over time and place.Footnote 83 Methodologically, it provides an opportunity to address more reflexively how we treat and interpret sources. Because entrepreneurial processes look different in hindsight than they do from the perspective of actors facing a fundamentally uncertain future, the need to develop novel and more reflective techniques for interpreting entrepreneurship can contribute to innovations in historical methodology, such as Popp and Holt's use of dual reading.Footnote 84
Finally, we believe entrepreneurial history offers opportunities to investigate structural shifts and nonlinear processes of change in markets instead of limiting our focus to economic growth. Beyond merely allowing us to explore reasons for relative wealth and poverty, it offers us insight into the kind of productive wealth and capacity created and to help us explain why those particular forms appeared or failed to do so. It asks why entrepreneurial actors seek the creation of particular forms of wealth and value over others. And, in doing so, we can think about economic change, not only growth, by considering the paths to new value creation that businesses did not take as well as those that they did.Footnote 85
New entrepreneurial history, like the other approaches to business history shown in Table 1, will render at times associated weaknesses. In focusing on entrepreneurial processes and their cumulative effects, we by necessity shift attention away from entrepreneurial history's traditional attention to heroic individuals. Perhaps even more significantly, we extend the application of entrepreneurship to various domains of social life, such as the state, the academic world, and civil society, among others. Whereas economic theories suggest that entrepreneurs' initiatives face a “market test”—a validation of their businesses by customers and investors—our more eclectic approach suggests that entrepreneurs can acquire resources in different types of domains, such as through research councils, state largess, and similar allocation mechanisms. This “resource test” stretches the field of entrepreneurial history beyond its traditional focus on competitive markets into domains that some scholars may criticize as irrelevant to entrepreneurship. Finally, critics may point out that entrepreneurship rhetoric has permeated into many aspects of contemporary social life and that our plea for a wide-ranging entrepreneurial history contributes to an uncritical endorsement of this “concept creep.” While any single approach has its limitations and blind spots, we believe entrepreneurial history holds untapped promise for historians, if they exhibit awareness of these critiques and take up the challenge of responding to them.
Conclusion
Despite its importance, entrepreneurial history remains underdeveloped today. Yet, as we have pointed out, business historians are in a position to provide a unique perspective on entrepreneurship, one that could sensibly be called new entrepreneurial history because we can build on an intellectual tradition of historical reasoning and provide a historical perspective on how time and context shape entrepreneurial processes and their relationship to historical change.
On the first point, we have shown that historical research and reasoning on entrepreneurship have a much deeper tradition than is commonly recognized. Earlier waves of scholarship can offer an important intellectual resource for revitalizing entrepreneurial history. Historicism—the analytical tradition of contextualizing behavior and cognition in time and place—shaped the conceptions of entrepreneurship we use today. It provides intellectual roots to treat entrepreneurship as a dynamic force of change. Reengaging this scholarly tradition offers historians a unique voice in conversations with other disciplines.
On the second point, we have emphasized that deeper conceptual engagement is crucial for starting a new dialogue on entrepreneurship in business history. We have explicated the key premises and highlighted processes of envisioning and valuing opportunities, allocating and reconfiguring resources, and legitimizing novelty as crucial topics for research in entrepreneurial history. These premises and research topics lead to unique intellectual contributions to the field. They help explain the mechanisms of imagination and creativity, encompass moral value justification into economic processes, and include the systematic analysis of temporality and historical change.
In distinguishing entrepreneurial history from other approaches to business history, we do not argue for the inherent superiority of one approach over another. Rather, we claim that an entrepreneurial perspective on historical time and context is necessary if business historians are to contribute to and provide a unique perspective on the scholarly and public discourse on entrepreneurship today. The marginal status of entrepreneurship within business history, and history more generally, is fundamentally out of step with a central concern that many scholars and practitioners have about the nature of capitalism and business in our time. This does not mean one should adopt, uncritically, the popular notions and narratives of entrepreneurship that have become so pervasive; nor does it mean that historians should imitate other disciplines in their approaches to studying entrepreneurship. On the contrary, as we have pointed out, historians have both their own deep intellectual traditions and a unique perspective on which to draw in providing what ought to be a critical stance on the current moment.
The opportunity is also an obligation. Historians cannot ignore the way in which actors today as well as at different points in the past have embraced (or potentially rejected) entrepreneurship as a way of seeing the world and acting in it. Indeed, exploring the mechanisms by which entrepreneurial processes propel historical change ought to be a central intellectual concern in business history. Not to do so would be to miss the chance to engage one of the more important questions of our time—and one for which historical reasoning has long had something valuable and unique to say.
Appendix
Articles in Business History Review with “Entrepreneurship” in Full Text, 1954–2015 (Total: 44 out of a total of 1,044 articles)
