Broadening the entrepreneurship lens: beyond gazelles and unicorns Open Access

Since the late 1970s, the academic field of entrepreneurship research has grown from groups of isolated scholars doing research on small businesses to an international community of departments, institutes and foundations promoting research on new and high-growth firms (Aldrich, 2012). Debate over what counted as entrepreneurship has developed since the start of the entrepreneurship discipline in the 1970s. Many such debates in the last years of the 20th century reflected the field's attempt to distinguish itself from the small business studies domain, which had been the early home of those studying business startups. Although the small business literature does take account of a range of everyday businesses that warrant more attention, it also tends to focus more on existing businesses than the creation and development of new ones. Similarly, another related field, the family business domain, also sought influence over the entrepreneurship area. However, family business studies tend to focus on larger and longer-lived businesses and also pay less attention to the starting and development of new businesses and their effects in their early years, especially what policymakers and the public want to know regarding job creation (Wright et al., 2016).

Indeed, as entrepreneurship research grew from its modest beginnings in the mid to late 20th century, it was still commonly believed that the largest firms created almost all new jobs, and startups should be studied more in terms of financing and their development into ongoing concerns. Yet research at MIT in the late 1970s uncovered an unexpected observation about entrepreneurial firms. In examining regional development, the research showed that businesses with fewer than 20 workers created four times as many new jobs as much larger firms did over a period of several years (Birch, 1979). This finding was clarified in subsequent years as Birch and Medoff (1994) found that the new, fast-growing enterprises that began with at least $100,000 in sales in the late 1980s had grown 20% or more annually for four years (more than doubling their annual sales revenue) and creating many new jobs in the process. This led to research shifting to focus on that particular type of entrepreneurial firm, called “gazelles.” During the time they studied from 1989 to 1992, there were about 350,000 gazelles in the USA, representing four percent of all businesses but generating about 60% of the net new jobs in the USA economy (Birch and Medoff, 1994). So much interest in studying the gazelles and related venture capital-funded firms arose, stemming from those findings (Acs, 2011; Wright and Robbie, 2022).

Subsequent research on job generation also suggested that there were different types of entrepreneurial gazelle firms that behaved differently. They showed that gazelles were responsible for much of the net job generation during that time but suggested some more differences. That is, at the beginning of another period studied (1990–1994), some 82% of the gazelles had fewer than 19 employees, while just 3.6% had 100 or more (Birch, 1995). However, that contingent of the larger gazelles, with over 100 employees, generated over half of the net new jobs created by the entire group. Thus, the most prolific job creators among them were not that small at all but were closer to medium-sized organizations. Subsequent work has further confirmed that this group of gazelles is outstanding job creators. On average, gazelles are younger and smaller than other firms, but it is their young age rather than their small size that is associated with rapid growth.

In addition, gazelles can be found outside of the high-tech industries with which they are commonly associated. There is some evidence that they are not overrepresented in high-tech, but many can be found in the service industry, as well as in various contract-based and turnkey operations (Bhidé, 2003; Henrekson and Johansson, 2010). In addition, recent research has emerged on so-called “unicorns,” privately held, recent startups valued at over US$1bn, with some much higher and getting much attention (Lee, 2013). Even other types of bigger unicorns, such as decacorns and hectocorns, have been discussed ^[2].

With entrepreneurship largely differentiated from small business and family business, much focus was given to gazelles and recently to the more than 1,000 unicorns identified. However, it is important to consider the limitations of focusing solely on a narrow sample and outcomes such as job creation alone. Understanding entrepreneurship is not just about job creation, as sometimes jobs are destroyed during times of creatively destructive bursts that improve productivity (Christensen et al., 2016; Schumpeter, 1934). USA farm employment, for example, has been down considerably over the past century, though very few are concerned about “lost jobs” in agriculture ^[3].

While job creation is a significant criterion in the study of entrepreneurship, it is also essential for researchers to consider various types of entrepreneurial firms. A diverse population of such firms exists, which necessitates a broader scope of study beyond the particular focus on job creation. However, an analysis of the leading entrepreneurship journals still shows a regular bias toward high-capitalization and growth businesses, which has increased significantly over the past decade, such that much entrepreneurship research has focused on high-growth firms. Many studies reinforce the idea that entrepreneurship means starting a business with a large amount of funding from outside investors, scaling up and taking the venture public (Aldrich and Ruef, 2018). However, the odds are remarkably small, even for Silicon Valley. Representative samples in the USA put venture capital-backed enterprises at only 0.3% of the owners of USA businesses (Ruef, 2010); raising venture capital funding and going public are fairly uncommon events among entrepreneurial firms (Aldrich et al., 2020). In December of 1996, the number of publicly traded companies in the USA reached a recent peak of 8,025, with this number dropping by about half in recent years (Aldrich and Ruef, 2018), though academic attention on high-capitalization startups has persisted through this decline.

It turns out that many more entrepreneurial firms are low growth, low-return and lifestyle businesses. The overwhelming majority of owners in these new businesses were individuals acting on their own behalf and not on behalf of investors (Aldrich et al., 2020). Furthermore, research emphasizes the importance of studying transition entrepreneurs in distressed economies and other varieties of entrepreneurship, particularly under unusual or challenging circumstances (Hussein and Youssef, 2023; Javadian et al., 2023). The field of entrepreneurship research should reflect such diversity of entrepreneurial enterprises, particularly ordinary (and emerging) entrepreneurial firm-types, rather than focusing primarily on gazelles, unicorns and decacorns and also utilize different research sites, distressed and conflict economies, major refugee camps and other unconventional entrepreneurial ecosystems (Eid and Loon, 2023; Hussein and Youssef, 2023; Khosravi et al., 2023; Sun, 2023).

More specifically, a large proportion of the startup firms in the USA have less than five employees, including the founder (Statistics of US Businesses, 2023). This also implies that the prevalent assertion that liquidity is the primary issue for startups may not be entirely accurate. Many startup efforts begin with $5,000 or less in capitalization (Ruef, 2010) and external funding from investors tends to cause many difficulties, such as interference in operations and increases in the risk of disbanding (Ruef, 2002). Another consequence of a lack of emphasis on the diversity of small startups is that the Silicon Valley startup culture is not a part of or concern for most startups. These enterprises will be put together by a founder's family members, friends and existing business associates (Sarasvathy, 2009).

In addition to studying firms that are not funded by venture capital, such as certain growth firms and gazelles, entrepreneurship research commonly focuses on other areas of activity as well. One such stream of research is the view of entrepreneurs as unusual, even heroic, personalities. Scholars have argued that opportunity recognition is a key aspect of entrepreneurship (Shane, 2003; Short et al., 2010). This view argues that entrepreneurship opportunities need to be discovered and exploited by skilled entrepreneurs in the same way that prospectors search for oil or gold. The perspective seems to indicate that thriving entrepreneurs should have exceptional cognitive or perceptual skills and even heroic personalities. Yet roughly 40% of American men experience a spell of self-employment or entrepreneurial activity before retirement age, and few would contend that nearly half of a large population possesses high levels of perceptiveness or creativity (Kaufman et al., 2016; Müller and Arum, 2004).

A more concrete approach would concentrate on entrepreneurs who plan and develop a product from the ground up (Sarasvathy, 2009). Moreover, this may represent the wide swath of entrepreneurship that makes up both the USA and global society (Javadian et al., 2023). Others suggest an additional focus, that is, examining what it is that entrepreneurs are trying to do, which is often to create a particular product and, along with that, a new organization, which seeks to solve a key problem that individuals or firms are having (Aldrich and Ruef, 2018; Christensen et al., 2016). Many of these attempts end in failure and frustration, which is also a source for future research as scholars focus on the failed products and organizations (Christensen and Raynor, 2013; Dunbar and Ahlstrom, 1995). Though entrepreneurship is purposeful and outcome-oriented, it is an evolutionary process of trial and error, making “small bets,” and then learning from the errors. As Steve Jobs once said, “We will find the mistakes, and we will fix them” (Jobs, 1997).

We suggest refining the topic of firm emergence (entrepreneurship) by focusing on identifying a broader spectrum of entrepreneurial firms. This extends beyond the usual focus on venture capital-backed, high-growth gazelles that often receive extensive attention in both the public and academic spheres (Aldrich and Ruef, 2018). Moreover, beyond job creation or (apparently heroic) opportunity recognition, what exactly constitutes entrepreneurial actions and experimentation under uncertainty? How do these actions contribute to the creation of new product markets and firms (Bhidé, 2024) and what could be studied?

First, through what process do founders construct new organizations? Treating entrepreneurship as the creation of new (types) of organizations changes the focus of entrepreneurship research from studying outcomes to studying the important initiation of enterprises, from single-employee “gigs” and small “boutique organizations” that want to be dominant in a niche area in their region to growth firms.

Second, how do entrepreneurs identify problems that need addressing and develop products to address these challenges (Christensen et al., 2016)? Is it better for an entrepreneur to be a “veteran” in their industry before starting a firm? There are obviously exceptions to this, but research is needed on the skills, experience and professional “upbringing” of the entrepreneur in relation to the new business (Christensen and Raynor, 2013; McCall, 1998; Simarasl et al., 2024).

Third, what are the regular steps entrepreneurs must take to actually get a business off the ground? Research on effective entrepreneurship, particularly the affordable loss principle, addresses this. It involves raising an amount of money and other capital that the entrepreneur can afford to lose, as well as securing support from people who can help, either formally or on an occasional or voluntary basis (Sarasvathy, 2009). Startup success stories often overemphasize rare events like the founding of Apple, Microsoft and Facebook, and such selection bias toward successful ventures overlooks the more mundane yet quite crucial aspects of the entrepreneurial life cycle. Entrepreneurship researchers should focus more on the typical processes of startup development and potential failure rather than predominantly on rapidly growing new ventures, which often receive more study and attention. Correcting the strong skew of the literature and selection biases favoring growing and profitable firms will provide scholars and policymakers with a more representative understanding of entrepreneurs and the process of entrepreneurship.

Fourth, contemplating the spectrum of entrepreneurial firms, what specific and distinctive entrepreneurial behaviors contribute to their survival and prosperity? In this regard, an emerging area of research lies in the study of the behavioral aspects of entrepreneurship, particularly focusing on concepts like bricolage, effectuation, passion and imaginativeness. Bricolage, the art of improvisation with available resources (Baker and Nelson, 2005; Garud and Karnøe, 2003), is a fundamental aspect of entrepreneurship that needs further exploration, especially in contexts of resource scarcity. Researchers should examine how entrepreneurs in diverse cultural and economic settings employ bricolage to navigate challenges and spur innovation (Lee et al., 2023). This approach would shed light on the adaptability and resilience of entrepreneurs in various environments. Effectuation, a method of goal setting and planning based on available means (Sarasvathy, 2001), is another key area ripe for exploration. Understanding how effectuation varies across industries and business stages can offer insights into the factors that influence startup success and scalability.

Alongside, the role of passion in entrepreneurship, often a driving force behind persistence and energy, needs further study (Lee and Herrmann, 2021). How does entrepreneurial passion affect decision-making, risk assessment and business outcomes? These questions could unlock a deeper understanding of the motivational aspects behind entrepreneurial ventures. Imaginativeness in entrepreneurship, particularly in lean startups, is another intriguing subject. Lean startups focus on rapid prototyping and iterative product releases to test market demand quickly and efficiently. Research could delve into how imaginativeness impacts the lean startup process and the role it plays in innovation and market adaptation.

Lastly, entrepreneurship research should expand to include less-explored contexts such as hidden champions, incubators, university programs and cross-cultural studies. Hidden champions, small yet market-leading firms, present a unique opportunity to study successful, sustainable business strategies that lie outside of the mainstream gaze. Their business models, innovation strategies and leadership styles could provide valuable insights for emerging entrepreneurs (Jain, 2022; Prabhu and Jain, 2015). For the emergence of early-stage startups, incubators and university programs play a crucial role. Future research should evaluate the effectiveness of various incubator models and university entrepreneurship programs in different cultural and economic contexts. This includes examining their role in providing resources, mentorship and networking opportunities and how they influence the success rates of startups. Cross-cultural and contextual studies are also crucial for a holistic understanding of entrepreneurial firms (Ahlstrom and Ding, 2014; Ahlstrom et al., 2008; Jain et al., 2015). Comparative research among different countries and cultures can illuminate how varied norms, economic conditions and regulatory environments shape entrepreneurial activities. This includes identifying the unique challenges and opportunities that entrepreneurs face in emerging economies compared to more developed economies (Ahlstrom and Bruton, 2001; Bruton et al., 2008).

Together, these research directions emphasize the need for a broader and more nuanced understanding of entrepreneurship and entrepreneurial firms, moving beyond traditional foci to include diverse entrepreneurial types, behaviors, contexts and (challenging) conditions, not to mention non-traditional forms of entrepreneurship (Hussein and Youssef, 2023; Sun, 2023). This approach not only aligns with the evolving discipline of entrepreneurship as it becomes more distinct from family and small business domains but also responds to the growing complexity and diversity of the global entrepreneurial landscape and the demands of policymakers and other academic and research disciplines to understand the phenomenon of entrepreneurship and its effects much better (McCloskey, 2016).

In conclusion, this paper has underscored the imperative for a more inclusive and comprehensive approach to entrepreneurship research. Our exploration reveals that entrepreneurship transcends the traditional boundaries of high-growth, venture capital-backed firms, extending to a spectrum of entrepreneurial activities that significantly impact economies and societies. The entrepreneurial landscape is not just about “unicorns” or “gazelles,” but also encompasses small, often overlooked firms that play a vital role in job creation, innovation and economic resilience.

Furthermore, the study of entrepreneurship must delve into the diverse motivations, processes and challenges faced by entrepreneurs, acknowledging the complexities and nuances of entrepreneurial endeavors in various contexts. By broadening the scope of research to include the full spectrum of entrepreneurial activities and contexts, we can gain a more holistic understanding of entrepreneurship's role in fostering economic growth and addressing societal challenges. This expanded perspective is not only essential for academic discourse but also crucial for informing policymakers and practitioners who seek to support and leverage entrepreneurial activities for broader economic and social benefit.