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The Development of Entrepreneurial Learning in Entrepreneurship Research

3. Entrepreneurial Learning under Institutional Context: The Effectiveness of Education

3.2 The Development of Entrepreneurial Learning in Entrepreneurship Research

Human capital attained from education and training can be accumulated over time and transferred between individuals, which results in higher performance and productivity (Becker, 1975). Individual characteristics, such as personality traits, are also a form of inborn human capital, have also been studied throughout in determination of entrepreneurship intention (Chlosta, et al., 2012; Schröder & Schmitt-Rodermund, 2006). However, personality traits have been found to have less impact on entrepreneurial outcomes (Wright, et al., 2007). The development of the theory of entrepreneurial learning has reflected the unconvincing past research of personality traits approach on entrepreneurs’ performance, which excludes an entrepreneur’s ability to learn, adapt, develop and change (Gartner, 1988).

Though the background of entrepreneurs´ is studied intensively, mostly with regards to entrepreneurial intention prior to the foundation of the business, the post start-up study

of entrepreneurs´ learning and adaptation is largely overlooked. Instead of relying solely on pre-start-up background of entrepreneurs, it makes more sense to further study entrepreneurs’ performance based on their learning during the process of formation and management of their business, or in another word, “it is through learning that entrepreneurs develop and grow” (Cope, 2005). Minniti & Bygrave (2001) highlight that entrepreneurship itself is a process of learning, thus further state that “a theory of entrepreneurship requires a theory of learning”. In this regard, defining “who an entrepreneur is” is a less productive view to a contextual process of “becoming” (Rae, 2000). Rather, it is more about “who becomes an entrepreneur”.

The term entrepreneurial learning has been extensively used since 2000, with rising scholar interest from both theoretical and empirical approaches. Systematic literature review from Wang & Chugh (2014) identifies existing literature on entrepreneurial learning context vary in terms of theoretical perceptions, from organisational learning (Lant & Mezias, 1990; Covin, et al., 2006; Wang, 2008), experiential learning (Minniti & Bygrave, 2001; Cope, 2003; 2005; Clarysse & Moray, 2004), social cognitive theory (Erikson, 2003), population ecology (Dencker, et al., 2009), and configuration theory (Hughes, et al., 2007). There are different frameworks for the sources for entrepreneurs to learn from, from positive and negative experience (Minniti & Bygrave, 2001), from past experience (Rerup, 2005; Sardana & Scott-Kemmis, 2010), learning from participation and learning from the experience of others (vicarious learning) (Lévesque, et al., 2009), learning by doing (Lentz & Laband, 1990; Gibb, 1991; Cope, 2003) and learning from past business experience (Lamont, 1972).

Entrepreneurial learning from self-employed individuals is differentiated from routinized work learning from employed individuals in the sense that entrepreneurial learning is more about high-level (Fiol & Lyles, 1985), transformative learning (Mezirow, 1991), or double-loop learning (Argyris & Schön, 1978; Argyris, 1977) rather than single-loop learning. Double-loop learning is where the mental state can be changed after each time a critical learning event takes place, while single-loop learning does not stimulate such feedback mechanism.

Figure 3: Double and Single Loop Learning

Source:Argyris & Schön (1978)

Entrepreneurs learn predominantly through learning by doing (Cope & Watts, 2000), with trial and error, problem solving, discovery, learning from peers, learning by experience, learning from making mistakes (Young & Sexton, 1997; Gibb, 1997; Deakins & Freel, 1998) as the main affective modes of learning processes (Postle, 1993), and there can never be any shortcut or substitute for such experience (Dalley & Hamilton, 2000). In terms of entrepreneurial learning tasks, Sexton, et al. (1997) identify five major learning needs of growth-oriented entrepreneurs, which are: learning about oneself, learning about the business, learning about the environment and entrepreneurial networks, learning about small business management, and learning about the nature and management of relationships.

Prospective entrepreneurs enter start-up phase with a stock of experience (Reuber & Fischer, 1999), each varies with a unique range of skills and abilities in a proactive process (Harvey & Evans, 1995), which prepare individuals for a career in entrepreneurship by shaping their attitudes, beliefs and abilities (Starr & Fondas, 1992). Entrepreneurs´ own function within their business change along with the development of the business, from

Result

Single loop learning (routinized work learning)

Mental state Action

innovator to manager, small business owner, division president etc. (Gartner, 1988). Therefore, the nature and the need of learning of entrepreneurs may change along with the development of their venture. Therefore, it is important to connect the two relevant stages of entrepreneurial learning: learning prior to and during the entrepreneurial process (Cope, 2005).

Lentz & Laband (1990) propose that entrepreneurship skills can be an integrated combination set of skills that can be learned by doing. This is important especially at the start-up stage of business formation when entrepreneurs’ learning curve is extremely steep, much of entrepreneurs’ knowledge absorption is learning by doing (Gibb, 1991), since they need more of practical support of immediate value (Weinrauch, 1984). On a later step of the business development, when entrepreneurs have clearer long-term strategic planning, they can form their own educational strategies (Cope & Watts, 2000), identify what management and specific sectorial knowledge required for personal and organisational growth are needed. This, however, is based on the presumption that personality traits do not change over time, whilst skills can be enhanced through training or classes.

Learning by doing is supported by “Jack-of-all-trades” theory which denotes that entrepreneurs, as individuals who are multifaceted, accumulate a balanced skill-mix across different fields of expertise rather than excel in any one skill (Lazear, 2004; 2005). Silva (2007) questions whether the “Jack-of-all-trades” balance skill mix is innate talent or can be acquired via learning. Analysis from Bublitz, et al. (2015)’s raises the question of potential compensation for jack-of-few-trades entrepreneurs who lack sufficient skills, as in their paper the high market thickness as found in the cities is enacted.

In comparison with employees, entrepreneurs have advantages in skill balance, which is associated with the level of competence across a range of skills instead of excelling in just one skill and lack of expertise in others (Wagner, 2003; Wagner, 2006). Bublitz & Noseleit (2014) find that entrepreneurs who possess higher level of skill balance earn more, and

skill balance is correlated with the skill level and skill scope, which increase with formal education levels but decrease with the number of previous occupations.

Cope & Watts (2000) stress the importance of parallel processes of personal development and organisational growth, with respect to entrepreneurs’ ability to learn new behaviours and learn to think in different ways thanks to the experience of managing developmental crises within the organisation (Greiner, 1972). These crises are extremely important and cause permanent change for both the individual and the business, hence Scott & Bruce (1987) suggest that small business owners need to proactively monitor events that may cause a crisis, with the aim of moving their businesses from one growth stage to another. In order to learn to cope with and predict future organisational crisis, entrepreneurs should engage in higher level learning (Cope & Watts, 2000).