Learning and the entrepreneur

Citation

Deakins, D. (1998), "Learning and the entrepreneur", International Journal of Entrepreneurial Behavior & Research, Vol. 4 No. 2. https://doi.org/10.1108/ijebr.1998.16004baa.001

Learning and the entrepreneur

Learning and the entrepreneur

Recent articles have identified our limited knowledge of the factors affecting the learning process and the ability of entrepreneurs to learn in small and medium enterprises (SMEs) (Gibb, 1997; Storey and Westhead, 1996). Despite the received wisdom that intervention through training and or advisory services can impact on entrepreneurial abilities and by implication, small firm performance; Storey and Westhead (1996) have noted, from a survey of the literature, that there is no apparent link between formal training and improved performance of small firms. Indicating that formal personal management development and training of the entrepreneur appears, paradoxically, to have no impact on improved performance. Gibb (1997), however, proposes that development of the entrepreneur is affected by the extent of interaction with "stakeholders" in the small firm environment (for example, customers, bankers, creditors and supply chain relationships). Thus, implying that intervening to improve learning from interaction and experience should improve entrepreneurial ability and performance. "Learning better from experience implies bringing knowledge, skills, values and attitudes together to interact upon the learning process; it therefore fundamentally demands an action-learning approach" (Gibb, 1997, p. 16).

Reconciling these apparently different views can be achieved by recognising that learning outcomes from changed behaviour of the entrepreneur often have subjective outcomes that are not easily measured: such as; changed strategies, changed processes of decision-making and subtle changes in relationships with "stakeholders". However, our limited knowledge and understanding of the interaction of learning and the entrepreneurship process remains one of the neglected areas of entrepreneurial research and (hence) understanding. This is, perhaps surprising given the attention that has been paid to areas such as "the learning organisation". Case studies of the features of learning organisations have been developed in some detail (Kline and Saunders, 1993), yet little equivalent research has been undertaken within small firms; partly because, of the lack of appropriate ethnographic and case study approaches that are capable of revealing the complex and often subtle mix of factors that will affect entrepreneurial learning. This neglect of an important area for entrepreneurial research has stimulated this editorial and this issue of the Journal. These papers were originally presented at a Conference on Enterprise and Learning at the University of Paisley in 1997. It is hoped that this Conference will become an annual forum for discussion on Enterprise and Learning and that it will help to stimulate further research, case studies and innovative investigations into learning and the entrepreneur. Further, it also hoped that the Conference will become a focus for improving our limited knowledge of this process. In this issue, we review the relevance of learning theories to provide a framework for discussion of the contribution of the papers.

Relevance of learning theories

While learning theories can be drawn from a range of disciplines and sources, for this editorial, we limit our consideration to those that might be most relevant to the entrepreneurship process. These are limited to three areas: organisational learning theories, dynamic and evolutionary theories and the impact of networking on entrepreneurial learning.

Organisational learning theories

As with many theories, learning models assume that individuals interact with each other in a large organisation or institution and, while models of the learning process can be useful for capturing the dynamics of individual learning (Kolb, 1984); such models are often not relevant to the small firm entrepreneur. As Gibb (1997) has argued, the entrepreneur must react and change behaviour as result of the interaction with a wide infrastructure of stakeholders; competitors, customers, providers of resources, advice and materials, while operating with a small workforce, which means that concepts involving team-based learning may be too narrow. For example, the concept of learning communities as expressed by Hendry (1996); while a useful approach to the interaction of individuals and the learning process in a large organisation, may not be relevant for a small firm entrepreneur. Theories and concepts which stress interaction within organisations such as acquiring knowledge through improving access and dialogue (Schein, 1993), view communication as critical, yet with the small firm entrepreneur, communication is not restricted by organisational structure, therefore, such theories can be redundant.

The concept of learning loops, has more relevance for the small firm entrepreneur. This stresses the role of experiential learning (McGill et al., 1992), but also the ability of an organisation to learn from experience. Although, there are weaknesses and limitations in this model (Kim, 1993); the cyclical concept of learning from experience and adjusting behaviour is important to the entrepreneurship process. The relevance of the learning company (Pedler et al., 1991) is, however, accepted in the limited literature on entrepreneurial learning in small firms (Hendry et al., 1995) . The entrepreneur must learn how to react to incidents, to changes and learn from problems encountered. A priori we might contend that such a process, for the small firm entrepreneur, will be imperfect, however, we would expect there to be some form of learning in the reaction to business problems; what will be crucial, is the effectiveness of the individual entrepreneur in conducting that process. The more imperfect this process, the greater the probability of small firm failure and the greater the potential role for intervention in the process by a support agency or other institution.

Dynamic and evolutionary theories and learning

While organisational learning theories have limitations regarding their relevance to the learning process in entrepreneurship, there have been developments of economic dynamic and evolutionary theories on the process of entrepreneurial growth. In part, these stem from a Schumpeterian dynamics' analysis of the forces of change and attempt to explain how the entrepreneur can adapt, change and hence learn from dealing with uncertainty (Nelson and Winter, 1982). The interaction between learning and the entrepreneurship process has been highlighted by Levinthal (1996), who stresses the adaptive role of the entrepreneur as he/she adjusts to their environment, to their learning experience and , as a result, change behaviour. For example, Levinthal (1996) claims that "learning tends to result in specialisation. Such specialisation is often lauded and labelled distinctive competence" (Levinthal, 1996, p. 27).

These theories are, essentially, learning-by-doing models since "Learning can only take place through the attempt to solve a problem [however mundane] and therefore only takes place during activity" (Arrow, 1962, p. 155). Additionally, they are evolutionary ­ one explicitly so ­ in the sense that they are not static. Learning is cumulative and history, or path, dependent (Costello, 1996). Further, learning in this context is self-reinforcing (Levinthal, 1996). It is easier to build new knowledge in spheres of existing expertise. It is also easier to recognise and evaluate knowledge in familiar areas. In this way, learning tends towards specialisation and a lack of robustness, unless there exists several distinct knowledge bases from which to build new competencies. Finally, returns to effort are highest in areas of prior familiarity, however, learning associated with repetition or routinisation is subject to rapidly diminishing returns.

Evolutionary theories hold high promise since they stress "learning by doing", we know that entrepreneurs learn from experience, such theories help us to understand how this learning takes place.

Entrepreneurial learning through networks

It has been claimed by a number of writers that the level and sophistication of networking activity affects quality of experiential learning of the entrepreneur (Johannisson, 1986; Szarka, 1990; Shaw, 1997). Indeed this area of literature is characterised by its burgeoning nature and stems from two sources, industrial districts theory and small firm networking theories.

Industrial districts theory also has implications for learning as part of the entrepreneurship process (Pyke et al., 1990). The development of networks in themselves have externalities which include learning from the interaction of small firm entrepreneurs and hence change of behaviour (Simmie, 1997). The importance of effective external networks, lies not just in the reduction of transaction costs and the benefit of external economies, but also in networks:

which enhance the local innovative capability through synergetics and collective learning processes (Camagni, 1991, p. 3).

Local networks have some time been recognised as a source of entrepreneurial learning (Szarka, 1990) with the focus on individual entrepreneurial learning rather than collective learning. Shaw (1997), using ethnographic methods, illustrates the importance of interaction and learning from the exchange process in close knit networks of small firms in the printing industry. The entrepreneurial process, in such situations, can involve the adoption and adaptation of strategies that are modified after experience of the close knit network that is characteristic of such an industry (Shaw, 1997).

Critical factors and entrepreneurial learning

It is hypothesised that the following factors will be critical and affect the ability of the entrepreneur to learn. First, the ability to network, especially at early stages; second, the ability to assimilate experience and opportunity; third, the ability to reflect on past strategy (and mistakes); fourth, the ability to access resources; and fifth the ability of the entrepreneurial team. Four of the papers, in this issue, can be discussed in the light of these propositions. Kirk's case study approach to entrepreneurial behaviour in two contrasting manufacturing firms demonstrates the importance of the ability to use strategy and provide the conditions for divergent learning. In a similar vein, Watts and his colleagues discuss the interaction of strategy, growth and learning, drawing on Greiner's stage model of growth and Ansoff's strategy matrix. The interaction between learning, strategy and growth is developed in the discussion of a number of cases drawn from small firms in the food production sector. Wyer and Mason take an organisational learning perspective and demonstrate from their evidence the importance of critical internal factors on the learning process, including teams, leadership and accessing resources. Choueke and Armstrong demonstrate the importance of the dynamic nature of the learning organisation. These critical abilities must be capable of change as the small firm organisation evolves and learns, hence their metaphor of a journey to describe the dynamic processes in a learning organisation.

Entrepreneurial learning and the scope for intervention

As discussed before; Storey and Westhead (1996) have claimed that the link between training and performance is very weak. This implies that attempts at intervention to improve the ability of the entrepreneur to learn are likely to have little impact. Yet, theoretically, at least, intervention should have an important impact, particularly if the right form of intervention is undertaken at the right time. When and how interventions take place are clearly important issues. For example, current research being undertaken by the author (Deakins et al., 1998); is providing evidence that intervention by non-executive directors (NXDs) during the growth process in small, growing companies can have an important impact through the reduction of uncertainty, by providing information, and more subtly, through the NXDs' ability to persuade the entrepreneur to view problems from different perspectives. However, impacts have not always been positive, indicating the need to identify the right time as well as the right person to intervene.

The fourth paper in this issue by Schamp and Deschoolmeester uses evidence from a management training programme geared at start-ups, to demonstrate that training does have a positive impact. As they say "training does matter". The lack of evidence noted by Storey and Westhead (1996) needs to be seen in the light of studies undertaken which have failed to apply appropriate techniques to discover subtle impacts. Schamp and Deschoolmeester's study compares samples of firms that did receive training and those that did not over the same time period. More research of this type, using careful methodology, is required to identify the impact of training.

Conclusions

The ability of the entrepreneur, or entrepreneurial team to learn, is crucial to the entrepreneurial behaviour and the ability of the entrepreneur to succeed. To be successful, entrepreneurs must be able to learn from decisions, from mistakes, from experience and from their networks. The papers in this issue, demonstrate that entrepreneurship and the growth process is essentially non-linear and discontinuous. It is a process that is characterised by significant and critical learning events. The ability of entrepreneurs to maximise knowledge as a result of experiencing these learning events will determine how successful their firm eventually becomes.

One the characteristics of SMEs is their very diversity, thus attempting to generalise from cases, or from a relatively small number of interviews, will always be problematic. Yet is only by the case approach that insights are gained into factors that affect the dynamic nature of such learning events. There seems little doubt that there are methods of enhancing the learning activity, such as, for example, the careful choice of an entrepreneurial team that have complementary skills. This may have important implications for policy, particularly if the policy objective is to enhance the performance of growth SMEs.

Case study evidence suggests that a large part of entrepreneurial learning is experiential; as we have argued, entrepreneurs need to know how to take advantage of their experience. Pre-start or incubator experience can be a valuable precursor for entrepreneurship. The implication is that there is a role for mentoring support for new and early stage entrepreneurs, mentors who can show entrepreneurs how to reflect from experience and to absorb the knowledge from learning events.

There is a need for further theoretical development. Entrepreneurial behaviour is a dynamic response to a constantly changing environment. Large firm organisational theory does not capture the dynamics of learning in such an environment. Approaches that attempt to model the nature of such dynamic interaction stem from an Schumpeterian dynamic modelling of entrepreneurial response to their experience. Further work and evidence is required in this area. The nature of learning may follow a trial and error and discovery activity, entrepreneurial behaviour becomes adapted in an evolutionary way to the discovery of information from trial and error. It is suggested that such evolutionary theories may be able to model the nature of entrepreneurial behaviour and development and there is a need for further work in this area.

David DeakinsThe Paisley Enterprise Research CentreUniversity of Paisley, High Street, Paisley, PA1 2BE