Entrepreneurial learning

About the Guest Editors

Alistair R. Anderson, PhD, is a lecturer and deputy director of the Centre for Entrepreneurship at Aberdeen University. Before entering academe, he started, owned and managed a variety of businesses. His research interest is small firms, with a focus on rural entrepreneurship. He has a particular interest in developing an understanding of entrepreneurship He enjoys teaching both the theory and the practice of entrepreneurship and management.

Professor David Deakins holds the Renfrewshire Enterprise Chair in Enterprise Development at the University of Paisley and is director of Paisley Enterprise Research Centre (PERC). He is responsible for curriculum development, research, seminars and conferences connected with enterprise development and entrepreneurship at the University of Paisley. PERC was established in September 1994 and has gained an international reputation for innovative teaching and learning in enterprise and applied research. Current research projects of PERC include an ACCA-funded project on the role of non-executive directors of small firms, the role of mentors and a project on financial management in small firms. David Deakins holds an ESRC award for a successful seminar group on the finance of small firms. Previously, he has carried out research and published papers on finance and small firms, ethnic minority entrepreneurship and has published a well received text on entrepreneurship and small firms, which will be published as a second edition in 1999. David Deakins is currently president of the Institute for Small Business Affairs (ISBA), a UK networking body whose mission is to provide a bridge between academics and policy makers in small business and enterprise development.

Entrepreneurial learning

This editorial builds on two themes that arose from the presentation of papers at the 2nd Enterprise and Learning Conference, held at the University of Aberdeen and organised by the Centre for Entrepreneurship. Entrepreneurial learning can be seen to be dependent on two broad themes. First, on individual skill development of the entrepreneur (or entrepreneurial team) and his/her employees. Second, on the ability of the firm as an "organisation" to acquire knowledge of the environment, competition and successful strategies. These two themes are examined in the context of individual papers that are published in this, and the next subsequent, issues of the International Journal of Entrepreneurial Behaviour and Research, and discussed in more detail below. However, it is significant that these two themes concerned with organisational and individual learning are clearly defined in the literature.

Despite the considerable literature that now exists on organisational and individual executive learning, drawn from a number of different ontological perspectives (Easterby-Smith, 1997), most of this literature focuses on large organisations. Although there is discussion of the dichotomy between individual and organisational learning, when executive learning is discussed, this is usually in the context of large organisations(Argyris and Schon, 1978). In small companies executive learning will closely influence and mirror organisational learning. The firm may not develop unless the entrepreneur is able to learn. It is arguable that the processes that influence the extent of learning in small companies will be different. For example, it has been claimed that level and sophistication of networks affect the quality of the experiential learning of the entrepreneur (Johanisson, 1986;Szarka, 1990). The importance of the external environment for small companies has been highlighted as well by Gibb (1997), who has argued that relationships with external stakeholders (customers/ bank managers/suppliers and others)govern the learning climate in small companies. Thus, theoretically; external directors, however appointed in small companies, are likely to have an important impact on entrepreneurial and firm learning.

Developments in the modelling of executive and entrepreneurial learning are concomitantly notable by their absence in the literature. Alternatively, entrepreneurship can be viewed as a"learning experiment" (Jovanovic, 1982) in which the executive entrepreneur's survival and success depends on their ability to learn. The importance of the acquisition of knowledge has been recognised in individual learning, including the distinction between tacit or implicit knowledge which is not codified(Polanyi, 1967) and explicit knowledge which is codified (Fleck, 1996).

In entrepreneurial companies which may be undergoing rapid change, it could be that learning is dictated by reaction to critical events. Indeed, such approaches assume that the growth pattern of companies follows a life-cycle pattern of development where each stage or phase is preceded by a management "crisis" (Greiner, 1972). How the company resolves that crisis determines their ability to progress to the next stage of this life cycle. The growth patterns and development of small companies are poorly understood. Central to successful entrepreneurial development will be individual executive learning.

External factors

Entrepreneurial learning will be particularly influenced by the external environment and the role of external factors in that environment. For example, the way that finance is raised is known to have a bearing on future entrepreneurial development. The same sum raised as a bank loan or as venture finance can have very different effects on entrepreneurial learning and development. As a bank loan, no change will be made to the entrepreneurial team which will be left to develop their strategy fairly independently of the bank, except for increased monitoring of performance and the requirement for additional monitoring of accounts. If venture finance is involved, however, this is likely to change the composition of the company directors; an outside (or non-executive director) will be placed on the board to represent the interests of the funder. It is known that, although circumstances will vary with individual companies, such external directors can add considerable value to an entrepreneurial company and alter subsequent performance (Sapienza, 1992; Rosenstein, 1988; Rosenstein et al. 1993). Although there has been an additional cost from the introduction of an additional director; such an introduction can still make significant changes to the strategic decision-making of the entrepreneur. The entrepreneur can learn how to deal with strategic issues ­ especially, for example, growth through acquisitions. The additional expertise brings experience and knowledge as well as additional skills.

Although self-reliance can be identified as an attribute of entrepreneurs, it has also been frequently acknowledged that entrepreneurs face isolation problems in decision making(Storey, 1994). Such isolation can limit learning and development. Thus, the importance of the nature and quality of the external environment will affect entrepreneurial learning since it will determine the extent to which an entrepreneur can engage in networks or with stakeholders. Indeed, it can be argued that the nature of community and the quality of "learning communities"directly impinges on entrepreneurial learning, both individually and through firms as organisations. This issue of the nature and extent of entrepreneurial activity within a community is discussed in one of the papers in the next,subsequent issue by Haugh and Pardy.

Industrial sector

An approach sometimes adopted to entrepreneurial learning and development is to prescribe solutions based on preconceived notions of sector-specific needs. For example, entrepreneurs in high technology are assumed to lack marketing knowledge and skills. It is assumed that they will be engineers/scientists (Oakey, 1994). It is often assumed that they will be high growth. Reality can be very different from such stereotypical views. Policy, however, can often be predicated on such assumptions. In practice what is the characteristic of entrepreneurs and small firms in whatever sector is diversity. Non-high tech firms achieve high growth;technology-based entrepreneurs may possess marketing/financial and business knowledge and skills as discussed in the paper by Boussouara and Deakins. Thus,diversity and variability will be characteristic of entrepreneurial learning within different sectors. This is a phenomenon that should be recognised in policy through flexibility of provision. This is a theme, for example, that has been echoed in a recent review of regional incubator provision in the UK by North and Vickers (1998).

Stage of entrepreneurial development

While not subscribing to a life-cycle approach to the development of the firm (Churchill and Lewis, 1983),nevertheless it is recognised that the needs and learning of entrepreneurs change immensely during early stage development. Again the nature and quality of the external environment will be crucial to ensure entrepreneurial learning. At such a stage, theoretically, policy can have an important role. It is noticeable, in the UK at least, that start-up support appears to be back on the agenda after a previous period of absence (DTI, 1998). Research by Reynolds and White (1997) with nascent and start-up entrepreneurs in the USA has demonstrated how the environment and support can impact upon entrepreneurial learning and development.

Entrepreneurial learning, skill development and education

We have already discussed the importance of the external environment, networking and their relationship to skill development. Obviously, how entrepreneurs learn bears a close relationship to action learning (Revans, 1978). Entrepreneurs have to learn how to react with their environment and learn from critical events. One paper in this issue, by Leitch and Harrison, discusses the nature of learning by individual executives and entrepreneurs.

In terms of the "individual" theme discussed in the introduction, the papers presented raise some interesting issues about teaching entrepreneurship as an individual skill set. Primarily the questions of how, and if, entrepreneurship can be taught. There seems to be little argument about the importance of entrepreneurship as an economic factor(Gorman, Hanlon and King, 1997). Nor is there much disagreement on the benefits and value of teaching the topic (Curran, 1986, Hynes, 1996). However, there seems to be much more scope for debate about the "how" question. As Rosa (1992)argues there has been more faith than strategic reasoning in the development and implementation of entrepreneurial education. In part this must be a reflection of Baumol's comment (1983, p. 30): "how can we analyse and teach acts whose nature is not yet known and whose effectiveness relies to a considerable degree on the difficulty others have in foreseeing them?"

One response to this dilemma is to teach small business management. While this has undoubted value, not least in improving the sustainability of small businesses, it also avoids many of the trickier issues within new business creation. Yet, and arguably, the elements of new venture creation ­ job creation, wealth creation and even new industry creation ­ are those which are critical to the development of new businesses, in turn essential elements of economic development. It could then be argued that small business management is almost a secondary issue, because it is these creative elements which are crucial for economic development. Unfortunately they are much harder to actually teach.

Another response is to use the new business plan as a vehicle for the development framework of the skills,knowledge, abilities (and, of course, resources) which are required to start a new business. Many academic courses in enterprise successfully use this business planning exercise as the framework to make students aware of these more creative elements. Yet this approach also raises issues ­ there is, for example, a danger that business planning becomes a mechanistic procedure. Johannison (1992)points out that entrepreneurial knowledge may be soft and personal; if this is so it is clearly not amenable to a routinised form of planning. Similarly Casson(1995, p.50) argues that "judgmental decisions are decisions for which no correct procedure exists". Moreover we might also add Rosenstadt's comments(1990, p. 80) that: "Entrepreneurship education should not be viewed as some mechanistic or technical process but as a holistic and integrative process".

Kourilsky and Carlson, (1997, p. 194) offer sound advice. They consider that specific entrepreneurial programmes(in contrast to more general business education), should consist of three progressive elements:

• 1.

  Entrepreneurial awareness, is characterised as the introduction of basic entrepreneurial concepts and skills and introduces awareness of entrepreneurship as a career option.

• 2.

  Entrepreneurial readiness is about promoting comprehension and the application of concepts and skills and develops recognition of personal venture opportunities.

• 3.

  Entrepreneurial application applies advanced skills to the planning and preparation for implementing a personal business venture.

The components of this ideal structure include the following:

• a knowledge base supporting a focus on attributes and skills as well as tasks;

• an element of concrete experience derived from active participation through projects and the like; and

• content directed to venture development and emphasising functional integration.

This follows Hannon's point (1998)that entrepreneurial learning processes should be embedded in an adaptive environment. We would do well to note:

I would suggest that successful entrepreneurship is an art form as much as, or perhaps more than, it is an economic activity, and as such it is as difficult as any other artistic activity to explain in terms of original method or environmental influence(Livesay, 1982, p. 13).

To discuss the papers presented at Aberdeen in more detail we return to our two themes of:

• 1.

  skill development; and

• 2.

  organisational learning in the context of the entrepreneurial firm.

This issue contains four papers linked to the former theme and the next issue will contain four papers linked to the latter theme.

The papers in context

The paper by Leitch and Harrison discusses the dichotomous approach between organisational and individual learning. The authors review pedagogic approaches to capture these forms of learning in management education and conclude that a number of deficiencies have characterised traditional pedagogic approaches. In the light of this review,they provide evidence from an action learning approach with one executive programme in Northern Ireland. After a description of the programme, and a discussion of some of the impacts, the authors conclude that the action learning approach can successfully marry the different approaches characterised by management education in university business schools and organisational learning in businesses.

The theme of developing more appropriate pedagogic approaches in university business schools that might more accurately reflect learning environments in the business world is continued with the paper by Jack and Anderson. The authors review approaches to entrepreneurship education ­ noting that increased demand has yet to produce an accepted model of entrepreneurial education. The authors discuss features of the approach at Aberdeen University which include not just the use of entrepreneurs in education, but also the use of entrepreneurs as mentors to participants on the entrepreneurship courses. The authors conclude that the pedagogic difficulties of teaching entrepreneurship means that an eclectic approach, involving a range of elements, encourages students to be reflective learners and better prepared for entrepreneurial and business careers.

The third paper, by Mukhtar, Oakey and Kippling continues the focus of this issue on developing appropriate pedagogic approaches to improve individual and organisational learning. The authors examine how organisational learning and skill needs of SMEs can be met through science and technology graduates. The authors comment on limited SME capabilities which could be enhanced through better utilisation of science and technology graduates. The authors review developments and initiatives to address this capability gap ­ such as the UK STEP programme. They conduct a survey of students to determine career attitudes, including those to working with SMEs. Their results suggest that programmes such as STEP provide a valuable means to change perceived attitudes to SME and entrepreneurial careers.

Finally, in this issue, the paper by Freel examines innovative SME capabilities through survey work undertaken with manufacturing SMEs in the West Midlands region of the UK. Freel finds that employment of graduates is more likely in the more innovative SMEs, although they are no more likely to employ science and technology graduates ­a point that reinforces the comments of Mukhtar et al. on SME failure to employ science and technology graduates. Freel echoes the comments of the authors of the other paper when he calls for more flexible approaches to learning that are appropriate to SME careers and to enhance SME capabilities.

Summary

All the papers in this issue examine and review possible approaches to entrepreneurial learning involving our two themes of individual and organisational learning. The common thread that unites all the papers is the conclusion that approaches to entrepreneurial learning, whether with nascent or existing entrepreneurs, must be flexible and reflect the often rapid pace of change in the entrepreneurial environment. Traditional management education approaches based on prescriptive and large firm models are obviously inappropriate. Business schools need to adopt different models that may contain radical alternatives. In some cases these alternative approaches have existed on a small scale before ­ such as the STEP programme. These approaches need to be expanded and brought into the core of university programmes. The next issue will continue some of these themes with a review of an additional four papers.