Description
In this brief paper about entrepreneurship learning to evolve dermot breslin.
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Entrepreneurship; Learning to Evolve
Dermot Breslin
Lecturer
Sheffield University Management School
Mushroom Lane
Sheffield
S10 2TN
Tel 0114 2223386
Email: [email protected]
www.sheffield.ac.uk/management/staff/profile/breslin.html
Colin Jones
Senior Lecturer
University of Tasmania,
Private Bag 108, Hobart,
Tasmania, 7001
Email: [email protected]
Abstract
Objectives: The aim of the paper is to present an evolutionary perspective on entrepreneurial learning whilst
also accounting for fundamental ecological processes.
Prior Work: The paper builds on both evolutionary / ecological approaches to present a multi-level
perspective on entrepreneurial learning. At the micro-level the paper focuses on the development of key
recurring, knowledge components within the nascent and growing small business (Aldrich, 1999; Breslin,
2008; Burgelman, 1991; Jones, 2005; Penrose, 1959). A range of hierarchical levels (Baum and Singh, 1994)
and different types of selection (Amburgey et al., 1994) are accounted for in our approach, as are various
mechanisms (Weber and Depew, 2003) that account for entrepreneurial learning.
Approach: The paper presents a timely review of literature in the fields of organizational evolution and
general ecology. Key developments within the approach are then related to current research on
entrepreneurial learning, with arguments presented in favour of adopting a multi-level evolutionary perspective
that captures and explains hidden ecological process, such as niche-construction.
Results: Our evolutionary approach focuses attention on the multi-level development of key recurring
knowledge components over time. While aspects of the approach share many features with the notion of
entrepreneurial learning, the perspective can be used to develop a representation of the complexity of
entrepreneurial learning at multiple levels (individual, group, organisation, industry, population) using the
mechanisms of variation, selection and retention and other ecological mechanisms to outcome for learning
processes.
Implications: An evolutionary approach offers researchers the opportunity to use the framework of variation-
selection-retention to develop a multi-level representation of organizational and entrepreneurial learning. In
combination with reference to various ecological concepts, we explain the nature of the context of such
learning. Building on research from a wide variety of traditions from language, psychology, economics,
behaviour, culture and organization science, the conceptualization of entrepreneurial learning in this manner
can shed new light on a well studied phenomenon and led to the cross-fertilization of ideas across domains.
Value: If entrepreneurial learning within small and growing businesses is conceptualized as a multi-level
struggle for survival amongst competing knowledge components, this might have some interesting
implications for the way in which entrepreneurs behave and make decisions. Future research should explore
the extent to which interpreting survival and growth in these terms can impact upon the eventual evolution of
small businesses.
Key Words: Evolutionary Theory: Entrepreneurial Learning: Ecology
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What is Evolution?
Many scholars in a wide range of traditions have explored the possibility of using an evolutionary approach to
study socio-economic change, and in particular organisational change and entrepreneurship (Aldrich, 1999;
Breslin, 2008; Brittain & Freeman, 1983; Campbell, 1965; Hannan & Freeman, 1977; Jones, 2005; Nelson &
Winter, 1982). While the work of some has been described as evolutionary (e.g. Schumpeter, 1934; Penrose,
1959), the approach adopted is more loosely associated with change in general (at the population and
organisational level). Others have delved deeper into the mechanisms driving this change over time, drawing
from evolutionary processes in other domains of science. In this way, scholars have used the mechanisms of
variation, selection and retention as the starting point for the development of theory to explain phenomena
such as organisational change and learning (Aldrich, 1999; Breslin, 2008; Burgelman, 1991; Jones, 2005;
Loasby, 2003; Murmann, 2003). In the biological world evolution occurs over time through these key
mechanisms of variation (of genotypes), selection (of the consequent phenotype) and retention (of the
underlying genotype), where the genotype is defined as the information inherited by an individual from its
parents (i.e. genes), which has the potential to be transmitted to future generations. The phenotype on the
other hand is the developmental expression of the genotype in a particular environment, as manifest through
the physical characteristics of the organism. However care must be taken in transferring concepts across
disciplines through the use of analogies given the clear differences between biological evolution and
‘organisational evolution’ (Breslin, 2011a). As a result organisational scholars have adopted the generalised
mechanisms of variation, selection and retention, and then using concepts appropriate to the domain of
organisation science have developed these mechanisms to describe the phenomena under study (Aldrich et
al., 2008; Breslin, 2011a; Hodgson & Knudsen, 2010).
Clearly one key concept to be identified in developing an evolutionary account of entrepreneurship is the
notion of the evolving unit, or ‘what is evolving?’ As noted above the genotype evolves in biology, through the
interaction of its phenotype and the environment around it. When studying entrepreneurship identifying this
evolving unit becomes more difficult. Does the entrepreneur evolve? Clearly the entrepreneur evolves in a
biological sense, as a member of a society passing on key genes to successive generations. In this way
researchers might seek to unpick aspects of behaviour which are ‘linked’ to the genetic make-up of the
entrepreneur, in a manner similar to how evolutionary psychologists and socio-biologists seek to explain the
evolution of an individual’s behaviour (Shane, 2010; Sober & Wilson, 1998; Tooby & Cosmides, 1992). In this
approach, clearly genes are the focus of attention, alongside its phenotypic expression in behaviour. Others
have abstracted further and conceptualised an evolutionary system where ‘cultural entities’ evolve over time
(Dawkins 1983; Dennett 1995; Plotkin 1994), including concepts such as memes, knowledge, skills, practices
and ideas. Indeed some have even studied the co-evolution of these cultural units alongside genetic units
(Richerson & Boyd, 2005; Durham, 1991). In this thesis scholars introduce the concepts of the ‘replicator’ and
‘interactor’ as abstracted versions of the genotype and phenotype in biological evolution (Dawkins 1976; Hull
1988). The replicator is thus defined as anything in the universe of which copies are made such as genes in
the biological world. Interactors are defined as entities that interact as a cohesive whole with their environment
in a way that causes differential replication of these elements (Hull 1988).
Adopting this cultural evolutionary approach, researchers have put forward a number of different candidates
for the unit of evolution to study organisational change and entrepreneurship. These definitions of replicator
and interactor have varied according to the level of analysis. In this way population ecologists study the
evolution of organisational forms (Hannan and Freeman 1977) over time. Others focusing on the level of the
organisation have proposed a number of concepts for the replicator including routines and competences
(Aldrich, 1999), comps (McKelvey, 1982), routines (Nelson & Winter, 1982), strategic initiatives (Burgelman,
1991), ideas/knowledge (Murmann, 2003) and techniques (Mokyr, 2000). The interactor, or expression of
these replicators, has been defined as the organisation (Aldrich, 1999), routine (Nelson & Winter, 1982) and
artefacts (Murmann, 2003).
Entrepreneurial Learning
Clearly this account of ideas, knowledge, competences and routines evolving over time shares many features
with general accounts of entrepreneurial learning. When studying small businesses, the behaviour of the
organisation is dominated by the entrepreneur, and the study of learning in this context becomes inseparable
from the study of the learning at the level of the entrepreneur (Deakins & Freel, 1998; Kim, 1993). Underlying
this entrepreneurial behaviour are a number of key knowledge components retained within the head of the
small business founder. In this way, the entrepreneur uses heuristics or simple rules of thumb to deal with the
uncertainties of starting the small business (Baron, 1998; Busenitz & Barney, 1997; Loasby, 2007; Shane &
Venkataraman, 2000). Some argue that the entrepreneur learns key ‘entrepreneurial skills’ as they launch a
new venture, through a process of learning by doing (Cope, 2005; Deakins & Freel, 1998; Gartner, 1984;
Politis, 2005), with more successful entrepreneurial learning better adapted skills. Similarly others refer to
entrepreneurs acquiring ‘entrepreneurial knowledge’ through the experiences of start-up (Deakins & Freel,
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1998; Politis, 2005) as they discover and exploit opportunities. However, increased complexity of learning
(McKelvey, 1982) may result in firms struggling to acquire, comprehend and implement knowledge associated
with such newly favoured routines and competencies. Therefore, entrepreneurs also learn entrepreneurial
knowledge through the experiences of trial and error, learning from mistakes and interpreting feedback from
the environment (Gibb, 1997). So entrepreneurs develop skills and competences to complete tasks in the
production and delivery of products and services (Aldrich, 1999) as they exploit opportunities over time
(Shane & Venkataraman, 2000), and the entrepreneur acquires and develops these various knowledge
components as the needs of the business dictate. Entrepreneurs also develop unique cognitive
representations or frameworks of the world around them (Kirzner, 1997), allowing them to identify new means
ends relationships in the discovery of opportunities (Shane & Venkataraman, 2000). So in addition to the
learning of skills needed to exploit opportunities, entrepreneurs might develop unique ways of viewing the
world around them and in so doing spot underexploited opportunities. In this manner entrepreneurial learning
processes also include the development of higher level cognitive frameworks which are altered to identify and
discover new links and means-ends relationships (Cope, 2005; Dutta & Crossan, 2005; Kirzner, 1997), in the
same sense in which Kolb (1984) describes abstract conceptualization.
A key element in the development and survival of small businesses relates to learning within the fledgling
team of individuals, and not just the entrepreneur. In order to continue to explore and exploit opportunities, the
entrepreneurs need to also develop skills and knowledge within this team, in order to free up valuable
cognitive resources to deal with key challenges in the business’ survival. In this way, successful skills
developed by the entrepreneur need to be ‘transferred’ to others within the company. Researchers have
conceptualised this transferral and collectivisation of ‘tacit knowledge’ (Nonaka, 1994), mental models (Kim,
1993) and knowledge (Crossan et al., 1999), and some have directed their attention to the study of such
processes in small businesses (Dutta and Crossan, 2005; Jones & Macpherson, 2006; Macpherson & Holt,
2007). As noted above the entrepreneur is viewed as learning through doing, and this ‘transferral’ of
knowledge is likewise shown to typically involve a process of action learning. In this sense, individuals work
closely together sharing and interpreting collective experiences, as they develop a distinct group identity
through participation and socialisation (Jones & Macpherson, 2006; Lave & Wenger, 1990). A key issue that
has yet to be addressed is the notion of how such learning alters the learning environment within a firm to
facilitate future profitable learning. We intend to address this issue within our discussion through the inclusion
of the process of niche construction (see Odling-Smee, Laland & Feldman, 2003).
In summary, a key theme which emerges from research on entrepreneurial learning is the central importance
of key entrepreneurial skills, heuristics and frameworks being acquired and developed over time to meet the
demands of the business, with research largely focusing on the entrepreneur as a level of analysis. Given the
importance of these knowledge components to the survival of the business one might argue that surely they
should become the focus of attention, rather than the entrepreneur. As noted above knowledge develops
within the boundaries of the small firm (and beyond), not only in the head of the entrepreneur, but within the
entrepreneurial team (Dutta and Crossan, 2005; Jones & Macpherson, 2006; Macpherson & Holt, 2007), and
indeed wider network (Gibb, 1997). Some of this knowledge assumes a ‘collective nature’, and a study of the
entrepreneur alone would fail to capture its evolving nature and development over time. Moreover, each
element of knowledge is uniquely adapted for its role in the exploration and exploitation of opportunities, and
for the organisation and industry in which it operates. So by focusing attention directly on these knowledge
components, and how they develop in line with changes in the external world, lessons can be drawn for other
small businesses and the field in general. Importantly, a genealogy of learning within a firm can be
constructed to reveal the influence of the entrepreneur/s upon such knowledge components. We will attempt
to advance this idea within our discussion here with specific reference to the process of niche construction.
Entrepreneurial Evolution
As noted above evolution describes the development over time of key units of analysis, through the
mechanisms of variation, selection and retention. When using the approach to develop theory to describe the
entrepreneurial process, the focus of attention shifts to evolving units of knowledge. Some of this knowledge
is retained within the head of the entrepreneur, given the latter’s dominance of the new venture creation
process. However collective knowledge will also emerge within the fledgling organization. While a learning
approach focuses its attention on the entrepreneur and individuals within the team, an evolutionary approach
focuses on the development of these knowledge components. In this way it tries to identify the emergence of
evolving entities at a lower level of analysis (some of which may develop a ‘life’ of their own). Entities, which
through their very presence alter the process of selection within and across the process of learning. The
entrepreneur and team are still relevant in the study of this evolutionary process, not as units of analysis, but
through their behaviour as manifest through the mechanisms of variation, selection and retention. Behaviour
that feeds back into the prevailing learning environment to alter the nature of selection occurring. A simple
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illustration can be given using these mechanisms to describe the development of the entrepreneurial process
as follows:
- Variation: During the entrepreneurial process entrepreneurs continually adapt to changes in the
external world by varying skills, heuristics and frameworks. This variation might be orientated towards
the exploration and/or exploitation of opportunities. So in some instances this might result in new
means-ends relationships being created in response to a changing world or indeed in anticipation of a
changing world (Gartner, 1989; Kirzner, 1997; Shane and Venkataraman, 2000). By continually
varying the firm’s ‘replicators’ the entrepreneur generates more options for selection, and in so doing
the chances of finding an effective strategy in a changing business environment are increased.
- Selection: While the environment will ultimately select the organization based on its offering of
products and services, at a micro-level the entrepreneur selects particular skills, heuristics and
frameworks when completing key entrepreneurial activities. The enactment of these components of
knowledge results in behaviours, and ultimately products and services which are presented to the
external world to be selected for or against. However choices made by the entrepreneur during the
selection of skills, heuristics and frameworks are complicated by a number of factors, including the
misinterpretation of environmental feedback as a result of cognitive bias, where positive outcomes are
attributed to the actions of the entrepreneur and negative outcomes to external factors beyond their
control (Baron, 1998; Busenitz and Barney, 1997).
- Retention: The entrepreneur retains chosen skills, heuristics and frameworks over time based on the
interpretation of environmental feedback. This retention of knowledge, allows the entrepreneur to free
up scarce cognitive resources for generating new knowledge needed to meet the demands of a
changing world (Loasby, 2007). In this way as the firm grows the individual skills of the entrepreneur
must be transformed into collective ‘routines’ within the fledgling team (Loasby, 2007). Indeed, it could
be argued that an entrepreneur’s failure to establish a ‘library of replicators’, can overload these
scarce cognitive resources. As Loasby (2007) argues ‘entrepreneurship defies routine; but it requires
routine and results in routine’ (Loasby, 2007, p. 1104), and a failure to achieve a balance between
routinisation and creativity is a major difficulty which few entrepreneurial ventures overcome.
Until recently (see Jones, 2006; Luksha, 2009), the concept of niche construction has not been applied
directly to the process of entrepreneurial learning. Whilst niche construction represents but just one ecological
process through which this discussion can be advanced, we believe it to be critical to understanding the
underlying evolutionary process of variation, selection and retention. The work of Odling-Smee, Laland and
Feldman (2003) builds on the seminal work of Lewontin (1983) who sought to refute the assertion that an
entity proposes (a set of predefined) solutions to the problems found in its environment. The traditional
assumption being that the environment like a machine efficiently rewards or punishes those solutions that
prove beneficial or injurious to the entity. Alternatively, Lewontin suggested that an explanation of the process
of adaptive change (or in our case learning), must cater for the ongoing reciprocal interaction between the
entity, its generative mechanism and the environment. He asserted (with specific reference to organisms) that
entities determine relevance, alter their external world, and transduce physical signals from their external
environment. Applying the essence of Lewontin’s ideas to our thinking leads us to conclude that rather than
merely being on the receiving end of natural selection, entities both make and are made as a consequence of
interaction with their environment.
To paraphrase Odling-Smee, Laland and Feldman (2003, 41) in this respect, we contend that contrary to the
accepted traditional view that entities adapt to their environment, but environments do not adapt to their
entities is problematic. Figure 1 below illustrates the difference between the standard evolutionary theory
models and that of the extended theory of evolution that incorporates the process of niche construction,
defined as; “when an organism [or entity] modifies the feature-factor relationship between itself and its
environment by actively changing one or more of the factors of its environment, either by physically perturbing
factors at its current location in time and space, or by relocating to a different space-time address, thereby
exposing itself to different factors”.
Figure 1 – The Process of Niche Construction
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Adapted from : Jones (2006)
In Figure 1, it is assumed that both change internal to the entrepreneur and employees (i.e. habits of thought)
and external change (i.e. entities) is possible due to interaction with a learning environment (LE). The
illustrated process begins with the interaction between an individual and other employees within the learning
environment (E
t
). During this first period of time, each entrepreneur and/or their employees will engage in
various learning activities, which will be selected for or against in terms of fitness (perceived or real). During
this ongoing process of selection, the fitness of the routines used individually by each entrepreneur and/or
their employees will be selected either for or against. Such routines represent the mechanisms responsible for
the ultimate development of entities through which their firm’s ultimate fitness against its operating
environment will be determined. As a consequence, the habits of thought (Veblen, 1925) of each individual
are subject to differential selection (for or against) on the basis of their contribution to the entities created.
So we argue the process begins with the individuals’ habits of thought (derived from their habits of life) being
subject to revision as they determine what mental capabilities will best assist their progress. Altered habits of
thought are then inherited from one learning environment to the next (i.e. LE
t
to LE
t
+1) either via the behaviour
of specific individuals or through their contribution the firm. Second, those aspects of the modified entity
(deemed to be favourable) and related to any changed habits of thought, are inherited within the learning
process from one learning environment to the next (i.e. LE
t
to LE
t
+1). Third, and perhaps most importantly, the
behaviours of the individuals have the potential to alter the nature of future interaction between the learning
environment and all entities to be selected. That is, niche construction provides a process through which
individuals alter their learning environment within their time and space and/or at least place significant
pressure on the learning environment within their time and space.
Let us dwell on this idea in more detail. The nature of such ideas was first discussed by Baldwin (1896) in his
pioneering work on social heredity. In promoting a neo-Lamarckian form of inheritance, Baldwin was
essentially alluding to the possibility of “the acquisition of behaviors through reinforcement learning” (Weber
and Depew, 2003, 195) via the process of natural selection. Weber and Depew identify Baldwin’s initial
thinking as being consistent with the process of niche construction, as discussed herein. So, we hold that from
the collective thinking occurring within the firm, various ideas and thoughts emerge, some that are deemed
worthy of retention and others that offer little long-term value. The key is that any such thinking holds the
potential to alter the nature of selection for the output of such thinking. That, as such mental endowments are
developed and encouraged, the process of social heredity evolves in such a way to support higher levels of
problem solving and organizational learning. Consider the organization within which the nature of thinking and
dialogue is not judged against a constant measure, but rather where such thinking also alters the process of
judgement used to select for and/or against certain ideas and firm level processes. So selection for ideas and
therefore processes within the firm can be viewed as a process influenced by the nature of the thinking it acts
upon. Said another way; the environment that selects for or against a beaver is quite frequently and
environment that has been altered through the natural behaviour of the beaver (i.e. dam building abilities).
This shift in emphasis away from the entrepreneur towards evolving components of knowledge has important
consequences for both research and practice. In the former it requires researchers to delve deeper into the
small business, and identify and study the development of knowledge vis-à-vis skills, skills, heuristics and
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frameworks that are themselves modified and inherited over time. Researchers need to also develop a rich
picture of the context surrounding the development of these knowledge components. In terms of practice, the
approach views the entrepreneurial process as an emergence and development of key knowledge
components to suit the changing demands of the external world. In this narrative the entrepreneur is viewed
as the evolutionary engine or artificial breeder shaping this evolutionary system. An engine that is also altered
through interaction with the environment that selects without favour or fear. Importantly the evolving units (or
entities) are viewed in the context of this evolutionary system, and not necessarily the entrepreneur himself.
Thus, our position adds balance to the debate over what is the unit being selected and also provides a means
to understand the process of how entrepreneurs actively alter and are altered by the environments they
encounter and/or create.
Learning to Evolve
There are many similarities between the conceptualisation of evolution through the mechanisms of variation,
selection and retention, and different models of learning (Jones, 2005; Miner, 1994). Both approaches study
the process in which knowledge develops over time in response to endogeneous and exogenous changes.
Both approaches also consider the directional, path-dependant nature of this development and incorporate
multiple levels of analysis including the entrepreneur, team and organisation (Crossan et al., 1999; Dixon,
1999; Kim, 1993). Finally both also put socio-political, behavioural and cognitive dimensions at the core of this
process, in which individuals are viewed as boundedly rational (Simon, 1991). However the evolutionary
approach offers researchers the opportunity to develop theory using the same key mechanisms of variation,
selection and retention regardless of the level of analysis, unit of analysis, or contextual circumstances
surrounding the phenomena under investigation. Essentially, an evolutionary approach focused on what
evolves and how this evolves over time in relation to changes in the environment, with the key question being
fitness between the evolving entity and the particular environment at that time. Ultimately the performance of a
small business is determined by this matching of the firm’s knowledge and the changing demands of the
external environment. The mechanisms of variation, selection and retention have been used to conceptualise
phenomena as diverse as cultural evolution (Dawkins 1983; Dennett 1995; Durham, 1991; Plotkin 1994;
Richerson & Boyd, 2005), organisational change (Burgelman, 1991; Langton, 1984), industrial change
(Murmann, 2003), new venture creation (Aldrich, 1999; Breslin, 2008; Jones, 2005; Loasby, 2003) and
ecology (Hannan & Freeman, 1977; Brittain & Freeman, 1988). This potential to harmonise and unify the
conceptualisation of phenomena across levels and disciplines, offers significant opportunities for scholars.
Essentially the evolutionary approach can be used to describe the development over time of any complex
system as entities are varied, differentially selected based on feedback at different levels of analysis and
retained and replicated within the system. Said another way, learning behaviours are viewed as experimental
trial-and-error incursions into tomorrow (see Jones, 2005). Behaviours that are context specific, and born from
the interaction of entrepreneurial behaviour and the environment within which such behaviour occurs. Such
behaviours are unpredictable, but reconcilable to the generic evolutionary processes of variation, selection,
and retention. But to advance our understanding we must consider more the process of variation, selection
and retention. We must become immersed within the interacting ecological processes related to the
entrepreneur, other related stakeholders and all aspects of the environment in question. We cannot not know
in advance what knowledge will be hold useful fitness, but we can seek to understand the process through
which such knowledge is created.
Implications for Research
As noted above the evolutionary approach focuses its attention on evolving and interacting units over time.
However there is lack of consensus regarding the definition of these units, when using the approach to study
small businesses. As noted above researchers have proposed a number of candidates including routines and
competences (Aldrich, 1999), comps (McKelvey, 1982), routines (Nelson & Winter, 1982), strategic initiatives
(Burgelman, 1991), ideas/knowledge (Murmann, 2003) and techniques (Mokyr, 2000). Some evolutionary
‘realists’ put forward an evolutionary narrative in which knowledge components are viewed as having an
‘existence’ and evolutionary life of their own (Breslin, 2011b). Drawing on Popper, Campbell (1974) describes
an evolutionary process in which an ecology of socially constructed entities evolves through variation,
selection and retention, filling niches in population spaces. Other more ‘interpretivist’ evolutionary scholars
(Breslin, 2011b) argue that individuals actively perceive, construct and make these “realities” (Kuhn, 1996),
with the mechanisms of variation, selection and retention merely representing a linguistic tool used to present
one interpretative view of changing entrepreneurial behaviour in a kind of language game (Wittgenstein,
1953). In this latter view, evolving knowledge components are socially constructed and cannot exist outside
the context-specific, historical and socio-political interpretations of the entrepreneurial team. Whether one
views knowledge as having an existence in ‘reality’, or as being socially constructed, both camps agree that
its evolution can be explained/described using the mechanisms of variation, selection and retention. In the
realist narrative, these generative mechanisms explain the development of knowledge components over time,
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whereas in the interpretivist account these mechanisms represent an interesting linguistic structure describing
and interpreting this same development. Clearly the ontological position one takes will have a profound affect
on the research design and empirical methods chosen to investigate the same phenomena. However,
ontology aside, the current inclusion of niche construction as an ecological process contained within the
ongoing evolutionary process of variation, selection and retention provides a vehicle to encapsulate all of the
considerations contained within the above-mentioned approaches.
Finally, if the focus of attention is shifted towards knowledge components and what is going on inside the
entrepreneur’s head, this will have implications for the methods used in research (see Rouse and
Daellenbach, 1999). While interviews can capture some aspects of this knowledge, the entrepreneurs
themselves may not be aware of what they’re doing and how. Observations may also be needed, through in-
depth ethnographic studies. This stresses the need to get inside companies, understand their context and
how individuals work, as skills, heuristics and frameworks evolve over time.
Implications for practitioners
If changing behaviour with small and growing businesses is conceptualised as a multi-level struggle for
survival amongst competing knowledge components, this might have some interesting implications for the
way in which entrepreneurs behave and make decisions. In this perspective the entrepreneur must manage
the evolution of skills, heuristics and frameworks through the evolutionary processes of variation, selection
and retention. In this sense, the entrepreneur must firstly create an environment in which skills, heuristics and
frameworks are continually varied, as these variants become the raw material for future competences. The
entrepreneurial team must then correctly select skills, heuristics and frameworks for enactment over time. The
alignment between this internal selection mechanism and the external selection of the company’s products
and services becomes critical to the firm’s longer term survival. In this sense the entrepreneur must strive to
improve the ‘accuracy’ of his/her understanding of the marketplace, and the interpretation of feedback from
that environment. Finally the entrepreneur must ensure that ‘successful’ competences are retained and
collectivised within the team. However, our inclusion of the niche construction raises the issue of the
entrepreneur, team and firm being shaped by their ongoing interaction with their environs. Clearly, as the
small business grows, such ecological and evolutionary process becomes further complicated with the
broadening of the management team, and the involvement of more individuals in key operational and strategic
decision-making. In this way, the evolutionary entrepreneur acts to innovate and experiment with different
practices, by changing routines and frameworks used by the team. Crucially the entrepreneur strives to clearly
understand and interpret feedback from the marketplace based on the enactment of these knowledge
components, and select those which lead to desired performances. Finally the evolutionary entrepreneur acts
to retain those successful skills, heuristics and frameworks. In this manner the entrepreneur acts as an
artificial breeder, continually varying, selecting and retaining desired knowledge within the organization to
meet the changing needs of the marketplace in much the same manner as Darwin’s pigeon fanciers vary,
select and retain desired characteristics in their prize pigeons. The entrepreneur must also attempt such
behaviour against increasing inert conditions within which the retention of past practice dominates the
consideration of new variants of behaviour. Interpreting survival and growth in these terms might have some
interesting implications for the eventual evolution of businesses. Ecology is essentially the study of interacting
entities in a given environment. To the extent that the entrepreneur has a capacity to go beyond observing
what has changed or remained the same, to also consider the nature of interaction, he/she has great
opportunities to learn.
Gartner (1989) argued that successful entrepreneurs develop the skill of learning to learn. This is an
interesting argument, with the successful entrepreneur becoming a more powerful learner or faster adaptor
than other business leaders. This notion of learning to learn reflects aspects of absorptive capacity (Cohen &
Levinthal, 1990), which is defined as the set of routines and processes by which firms acquire, assimilate,
transform, and exploit knowledge to produce a dynamic organizational capability (Zahra & Gerard, 2002). So
as the entrepreneur learns key entrepreneurial skills or knowledge through experience, he/she also begins to
learn the ‘skills’ of learning itself. However clearly these higher level skills are also context specific, and while
the ability of the entrepreneur to evaluate and utilize knowledge is a function of prior related knowledge
(Cohen & Levinthal, 1990), learning becomes more difficult in novel domains. In this way even serial
entrepreneurs tend to be specific in a limited number of industrial sectors. Perhaps their familiarity with what
interacts in their known environments gives them a significant advantage?
A number of researchers have viewed the evolutionary approach as a useful tool, or language when informing
entrepreneurial management practices. In this way Burgelman (1991) developed the variation, selection,
retention framework to guide and inform the development of strategic management practice within Intel, as the
organization adapted to meet the changing needs of their external environment. Likewise Murmann (2003)
saw an evolutionary approach as influencing managerial practice in organizations, as managers establish and
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maintain internal selection criteria guiding the actions of individuals and groups to meet the challenges of the
external world. Indeed Murmann (2003) argued that the organisation’s CEO might be viewed as the Chief
Evolutionary Officer! Clearly parallels can be drawn with the notion of learning to learn, or in this case learning
to evolve. If knowledge evolves through a process of variation, selection and retention, and more importantly if
entrepreneurs become aware of this evolution, they might then use that understanding to inform their actions,
and in the process influence these same evolutionary mechanisms. We observe that very little previous
consideration has been given to the process of niche construction in terms of understanding the nature of
interaction associated with the process of entrepreneurial learning (but see Luksha, 2009). We argue that the
inclusion of this concept would have some very interesting implications on the pace and pattern of
entrepreneurial learning and behaviour over time. The continued conceptual and empirical development of the
approach offers the future prospect of using an evolutionary/ecological language as a constructive tool for
practicing entrepreneurs, as they re-interpret their understanding of the evolution of their business.
Conclusion
There has significant attention given to the use of evolutionary approaches to the study of entrepreneurship.
We have not sought to articulate a specific form of evolutionary approach, but rather to highlight the robust
and dynamic nature of the evolutionary processes of variation, selection and retention. The process of
entrepreneurial learning involves many interacting entities and as such, any failure to account for such
interaction potential reduces the potential value of such an approach. We have discussed the merits of using
the ecological process of niche construction to unify consideration of both change over time and the nature of
interaction also occurring over time. There are other such concepts that also could be introduced (e.g. optimal
foraging theory) to advance our understanding of the process of entrepreneurial learning. We invite others to
consider the opportunities of niche construction as a vehicle to go inside the process of learning and to
capture the processes that are unique to each moment of learning.
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doc_112612069.pdf
In this brief paper about entrepreneurship learning to evolve dermot breslin.
Page 1 of 11
Entrepreneurship; Learning to Evolve
Dermot Breslin
Lecturer
Sheffield University Management School
Mushroom Lane
Sheffield
S10 2TN
Tel 0114 2223386
Email: [email protected]
www.sheffield.ac.uk/management/staff/profile/breslin.html
Colin Jones
Senior Lecturer
University of Tasmania,
Private Bag 108, Hobart,
Tasmania, 7001
Email: [email protected]
Abstract
Objectives: The aim of the paper is to present an evolutionary perspective on entrepreneurial learning whilst
also accounting for fundamental ecological processes.
Prior Work: The paper builds on both evolutionary / ecological approaches to present a multi-level
perspective on entrepreneurial learning. At the micro-level the paper focuses on the development of key
recurring, knowledge components within the nascent and growing small business (Aldrich, 1999; Breslin,
2008; Burgelman, 1991; Jones, 2005; Penrose, 1959). A range of hierarchical levels (Baum and Singh, 1994)
and different types of selection (Amburgey et al., 1994) are accounted for in our approach, as are various
mechanisms (Weber and Depew, 2003) that account for entrepreneurial learning.
Approach: The paper presents a timely review of literature in the fields of organizational evolution and
general ecology. Key developments within the approach are then related to current research on
entrepreneurial learning, with arguments presented in favour of adopting a multi-level evolutionary perspective
that captures and explains hidden ecological process, such as niche-construction.
Results: Our evolutionary approach focuses attention on the multi-level development of key recurring
knowledge components over time. While aspects of the approach share many features with the notion of
entrepreneurial learning, the perspective can be used to develop a representation of the complexity of
entrepreneurial learning at multiple levels (individual, group, organisation, industry, population) using the
mechanisms of variation, selection and retention and other ecological mechanisms to outcome for learning
processes.
Implications: An evolutionary approach offers researchers the opportunity to use the framework of variation-
selection-retention to develop a multi-level representation of organizational and entrepreneurial learning. In
combination with reference to various ecological concepts, we explain the nature of the context of such
learning. Building on research from a wide variety of traditions from language, psychology, economics,
behaviour, culture and organization science, the conceptualization of entrepreneurial learning in this manner
can shed new light on a well studied phenomenon and led to the cross-fertilization of ideas across domains.
Value: If entrepreneurial learning within small and growing businesses is conceptualized as a multi-level
struggle for survival amongst competing knowledge components, this might have some interesting
implications for the way in which entrepreneurs behave and make decisions. Future research should explore
the extent to which interpreting survival and growth in these terms can impact upon the eventual evolution of
small businesses.
Key Words: Evolutionary Theory: Entrepreneurial Learning: Ecology
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What is Evolution?
Many scholars in a wide range of traditions have explored the possibility of using an evolutionary approach to
study socio-economic change, and in particular organisational change and entrepreneurship (Aldrich, 1999;
Breslin, 2008; Brittain & Freeman, 1983; Campbell, 1965; Hannan & Freeman, 1977; Jones, 2005; Nelson &
Winter, 1982). While the work of some has been described as evolutionary (e.g. Schumpeter, 1934; Penrose,
1959), the approach adopted is more loosely associated with change in general (at the population and
organisational level). Others have delved deeper into the mechanisms driving this change over time, drawing
from evolutionary processes in other domains of science. In this way, scholars have used the mechanisms of
variation, selection and retention as the starting point for the development of theory to explain phenomena
such as organisational change and learning (Aldrich, 1999; Breslin, 2008; Burgelman, 1991; Jones, 2005;
Loasby, 2003; Murmann, 2003). In the biological world evolution occurs over time through these key
mechanisms of variation (of genotypes), selection (of the consequent phenotype) and retention (of the
underlying genotype), where the genotype is defined as the information inherited by an individual from its
parents (i.e. genes), which has the potential to be transmitted to future generations. The phenotype on the
other hand is the developmental expression of the genotype in a particular environment, as manifest through
the physical characteristics of the organism. However care must be taken in transferring concepts across
disciplines through the use of analogies given the clear differences between biological evolution and
‘organisational evolution’ (Breslin, 2011a). As a result organisational scholars have adopted the generalised
mechanisms of variation, selection and retention, and then using concepts appropriate to the domain of
organisation science have developed these mechanisms to describe the phenomena under study (Aldrich et
al., 2008; Breslin, 2011a; Hodgson & Knudsen, 2010).
Clearly one key concept to be identified in developing an evolutionary account of entrepreneurship is the
notion of the evolving unit, or ‘what is evolving?’ As noted above the genotype evolves in biology, through the
interaction of its phenotype and the environment around it. When studying entrepreneurship identifying this
evolving unit becomes more difficult. Does the entrepreneur evolve? Clearly the entrepreneur evolves in a
biological sense, as a member of a society passing on key genes to successive generations. In this way
researchers might seek to unpick aspects of behaviour which are ‘linked’ to the genetic make-up of the
entrepreneur, in a manner similar to how evolutionary psychologists and socio-biologists seek to explain the
evolution of an individual’s behaviour (Shane, 2010; Sober & Wilson, 1998; Tooby & Cosmides, 1992). In this
approach, clearly genes are the focus of attention, alongside its phenotypic expression in behaviour. Others
have abstracted further and conceptualised an evolutionary system where ‘cultural entities’ evolve over time
(Dawkins 1983; Dennett 1995; Plotkin 1994), including concepts such as memes, knowledge, skills, practices
and ideas. Indeed some have even studied the co-evolution of these cultural units alongside genetic units
(Richerson & Boyd, 2005; Durham, 1991). In this thesis scholars introduce the concepts of the ‘replicator’ and
‘interactor’ as abstracted versions of the genotype and phenotype in biological evolution (Dawkins 1976; Hull
1988). The replicator is thus defined as anything in the universe of which copies are made such as genes in
the biological world. Interactors are defined as entities that interact as a cohesive whole with their environment
in a way that causes differential replication of these elements (Hull 1988).
Adopting this cultural evolutionary approach, researchers have put forward a number of different candidates
for the unit of evolution to study organisational change and entrepreneurship. These definitions of replicator
and interactor have varied according to the level of analysis. In this way population ecologists study the
evolution of organisational forms (Hannan and Freeman 1977) over time. Others focusing on the level of the
organisation have proposed a number of concepts for the replicator including routines and competences
(Aldrich, 1999), comps (McKelvey, 1982), routines (Nelson & Winter, 1982), strategic initiatives (Burgelman,
1991), ideas/knowledge (Murmann, 2003) and techniques (Mokyr, 2000). The interactor, or expression of
these replicators, has been defined as the organisation (Aldrich, 1999), routine (Nelson & Winter, 1982) and
artefacts (Murmann, 2003).
Entrepreneurial Learning
Clearly this account of ideas, knowledge, competences and routines evolving over time shares many features
with general accounts of entrepreneurial learning. When studying small businesses, the behaviour of the
organisation is dominated by the entrepreneur, and the study of learning in this context becomes inseparable
from the study of the learning at the level of the entrepreneur (Deakins & Freel, 1998; Kim, 1993). Underlying
this entrepreneurial behaviour are a number of key knowledge components retained within the head of the
small business founder. In this way, the entrepreneur uses heuristics or simple rules of thumb to deal with the
uncertainties of starting the small business (Baron, 1998; Busenitz & Barney, 1997; Loasby, 2007; Shane &
Venkataraman, 2000). Some argue that the entrepreneur learns key ‘entrepreneurial skills’ as they launch a
new venture, through a process of learning by doing (Cope, 2005; Deakins & Freel, 1998; Gartner, 1984;
Politis, 2005), with more successful entrepreneurial learning better adapted skills. Similarly others refer to
entrepreneurs acquiring ‘entrepreneurial knowledge’ through the experiences of start-up (Deakins & Freel,
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1998; Politis, 2005) as they discover and exploit opportunities. However, increased complexity of learning
(McKelvey, 1982) may result in firms struggling to acquire, comprehend and implement knowledge associated
with such newly favoured routines and competencies. Therefore, entrepreneurs also learn entrepreneurial
knowledge through the experiences of trial and error, learning from mistakes and interpreting feedback from
the environment (Gibb, 1997). So entrepreneurs develop skills and competences to complete tasks in the
production and delivery of products and services (Aldrich, 1999) as they exploit opportunities over time
(Shane & Venkataraman, 2000), and the entrepreneur acquires and develops these various knowledge
components as the needs of the business dictate. Entrepreneurs also develop unique cognitive
representations or frameworks of the world around them (Kirzner, 1997), allowing them to identify new means
ends relationships in the discovery of opportunities (Shane & Venkataraman, 2000). So in addition to the
learning of skills needed to exploit opportunities, entrepreneurs might develop unique ways of viewing the
world around them and in so doing spot underexploited opportunities. In this manner entrepreneurial learning
processes also include the development of higher level cognitive frameworks which are altered to identify and
discover new links and means-ends relationships (Cope, 2005; Dutta & Crossan, 2005; Kirzner, 1997), in the
same sense in which Kolb (1984) describes abstract conceptualization.
A key element in the development and survival of small businesses relates to learning within the fledgling
team of individuals, and not just the entrepreneur. In order to continue to explore and exploit opportunities, the
entrepreneurs need to also develop skills and knowledge within this team, in order to free up valuable
cognitive resources to deal with key challenges in the business’ survival. In this way, successful skills
developed by the entrepreneur need to be ‘transferred’ to others within the company. Researchers have
conceptualised this transferral and collectivisation of ‘tacit knowledge’ (Nonaka, 1994), mental models (Kim,
1993) and knowledge (Crossan et al., 1999), and some have directed their attention to the study of such
processes in small businesses (Dutta and Crossan, 2005; Jones & Macpherson, 2006; Macpherson & Holt,
2007). As noted above the entrepreneur is viewed as learning through doing, and this ‘transferral’ of
knowledge is likewise shown to typically involve a process of action learning. In this sense, individuals work
closely together sharing and interpreting collective experiences, as they develop a distinct group identity
through participation and socialisation (Jones & Macpherson, 2006; Lave & Wenger, 1990). A key issue that
has yet to be addressed is the notion of how such learning alters the learning environment within a firm to
facilitate future profitable learning. We intend to address this issue within our discussion through the inclusion
of the process of niche construction (see Odling-Smee, Laland & Feldman, 2003).
In summary, a key theme which emerges from research on entrepreneurial learning is the central importance
of key entrepreneurial skills, heuristics and frameworks being acquired and developed over time to meet the
demands of the business, with research largely focusing on the entrepreneur as a level of analysis. Given the
importance of these knowledge components to the survival of the business one might argue that surely they
should become the focus of attention, rather than the entrepreneur. As noted above knowledge develops
within the boundaries of the small firm (and beyond), not only in the head of the entrepreneur, but within the
entrepreneurial team (Dutta and Crossan, 2005; Jones & Macpherson, 2006; Macpherson & Holt, 2007), and
indeed wider network (Gibb, 1997). Some of this knowledge assumes a ‘collective nature’, and a study of the
entrepreneur alone would fail to capture its evolving nature and development over time. Moreover, each
element of knowledge is uniquely adapted for its role in the exploration and exploitation of opportunities, and
for the organisation and industry in which it operates. So by focusing attention directly on these knowledge
components, and how they develop in line with changes in the external world, lessons can be drawn for other
small businesses and the field in general. Importantly, a genealogy of learning within a firm can be
constructed to reveal the influence of the entrepreneur/s upon such knowledge components. We will attempt
to advance this idea within our discussion here with specific reference to the process of niche construction.
Entrepreneurial Evolution
As noted above evolution describes the development over time of key units of analysis, through the
mechanisms of variation, selection and retention. When using the approach to develop theory to describe the
entrepreneurial process, the focus of attention shifts to evolving units of knowledge. Some of this knowledge
is retained within the head of the entrepreneur, given the latter’s dominance of the new venture creation
process. However collective knowledge will also emerge within the fledgling organization. While a learning
approach focuses its attention on the entrepreneur and individuals within the team, an evolutionary approach
focuses on the development of these knowledge components. In this way it tries to identify the emergence of
evolving entities at a lower level of analysis (some of which may develop a ‘life’ of their own). Entities, which
through their very presence alter the process of selection within and across the process of learning. The
entrepreneur and team are still relevant in the study of this evolutionary process, not as units of analysis, but
through their behaviour as manifest through the mechanisms of variation, selection and retention. Behaviour
that feeds back into the prevailing learning environment to alter the nature of selection occurring. A simple
Page 4 of 11
illustration can be given using these mechanisms to describe the development of the entrepreneurial process
as follows:
- Variation: During the entrepreneurial process entrepreneurs continually adapt to changes in the
external world by varying skills, heuristics and frameworks. This variation might be orientated towards
the exploration and/or exploitation of opportunities. So in some instances this might result in new
means-ends relationships being created in response to a changing world or indeed in anticipation of a
changing world (Gartner, 1989; Kirzner, 1997; Shane and Venkataraman, 2000). By continually
varying the firm’s ‘replicators’ the entrepreneur generates more options for selection, and in so doing
the chances of finding an effective strategy in a changing business environment are increased.
- Selection: While the environment will ultimately select the organization based on its offering of
products and services, at a micro-level the entrepreneur selects particular skills, heuristics and
frameworks when completing key entrepreneurial activities. The enactment of these components of
knowledge results in behaviours, and ultimately products and services which are presented to the
external world to be selected for or against. However choices made by the entrepreneur during the
selection of skills, heuristics and frameworks are complicated by a number of factors, including the
misinterpretation of environmental feedback as a result of cognitive bias, where positive outcomes are
attributed to the actions of the entrepreneur and negative outcomes to external factors beyond their
control (Baron, 1998; Busenitz and Barney, 1997).
- Retention: The entrepreneur retains chosen skills, heuristics and frameworks over time based on the
interpretation of environmental feedback. This retention of knowledge, allows the entrepreneur to free
up scarce cognitive resources for generating new knowledge needed to meet the demands of a
changing world (Loasby, 2007). In this way as the firm grows the individual skills of the entrepreneur
must be transformed into collective ‘routines’ within the fledgling team (Loasby, 2007). Indeed, it could
be argued that an entrepreneur’s failure to establish a ‘library of replicators’, can overload these
scarce cognitive resources. As Loasby (2007) argues ‘entrepreneurship defies routine; but it requires
routine and results in routine’ (Loasby, 2007, p. 1104), and a failure to achieve a balance between
routinisation and creativity is a major difficulty which few entrepreneurial ventures overcome.
Until recently (see Jones, 2006; Luksha, 2009), the concept of niche construction has not been applied
directly to the process of entrepreneurial learning. Whilst niche construction represents but just one ecological
process through which this discussion can be advanced, we believe it to be critical to understanding the
underlying evolutionary process of variation, selection and retention. The work of Odling-Smee, Laland and
Feldman (2003) builds on the seminal work of Lewontin (1983) who sought to refute the assertion that an
entity proposes (a set of predefined) solutions to the problems found in its environment. The traditional
assumption being that the environment like a machine efficiently rewards or punishes those solutions that
prove beneficial or injurious to the entity. Alternatively, Lewontin suggested that an explanation of the process
of adaptive change (or in our case learning), must cater for the ongoing reciprocal interaction between the
entity, its generative mechanism and the environment. He asserted (with specific reference to organisms) that
entities determine relevance, alter their external world, and transduce physical signals from their external
environment. Applying the essence of Lewontin’s ideas to our thinking leads us to conclude that rather than
merely being on the receiving end of natural selection, entities both make and are made as a consequence of
interaction with their environment.
To paraphrase Odling-Smee, Laland and Feldman (2003, 41) in this respect, we contend that contrary to the
accepted traditional view that entities adapt to their environment, but environments do not adapt to their
entities is problematic. Figure 1 below illustrates the difference between the standard evolutionary theory
models and that of the extended theory of evolution that incorporates the process of niche construction,
defined as; “when an organism [or entity] modifies the feature-factor relationship between itself and its
environment by actively changing one or more of the factors of its environment, either by physically perturbing
factors at its current location in time and space, or by relocating to a different space-time address, thereby
exposing itself to different factors”.
Figure 1 – The Process of Niche Construction
Page 5 of 11
Adapted from : Jones (2006)
In Figure 1, it is assumed that both change internal to the entrepreneur and employees (i.e. habits of thought)
and external change (i.e. entities) is possible due to interaction with a learning environment (LE). The
illustrated process begins with the interaction between an individual and other employees within the learning
environment (E
t
). During this first period of time, each entrepreneur and/or their employees will engage in
various learning activities, which will be selected for or against in terms of fitness (perceived or real). During
this ongoing process of selection, the fitness of the routines used individually by each entrepreneur and/or
their employees will be selected either for or against. Such routines represent the mechanisms responsible for
the ultimate development of entities through which their firm’s ultimate fitness against its operating
environment will be determined. As a consequence, the habits of thought (Veblen, 1925) of each individual
are subject to differential selection (for or against) on the basis of their contribution to the entities created.
So we argue the process begins with the individuals’ habits of thought (derived from their habits of life) being
subject to revision as they determine what mental capabilities will best assist their progress. Altered habits of
thought are then inherited from one learning environment to the next (i.e. LE
t
to LE
t
+1) either via the behaviour
of specific individuals or through their contribution the firm. Second, those aspects of the modified entity
(deemed to be favourable) and related to any changed habits of thought, are inherited within the learning
process from one learning environment to the next (i.e. LE
t
to LE
t
+1). Third, and perhaps most importantly, the
behaviours of the individuals have the potential to alter the nature of future interaction between the learning
environment and all entities to be selected. That is, niche construction provides a process through which
individuals alter their learning environment within their time and space and/or at least place significant
pressure on the learning environment within their time and space.
Let us dwell on this idea in more detail. The nature of such ideas was first discussed by Baldwin (1896) in his
pioneering work on social heredity. In promoting a neo-Lamarckian form of inheritance, Baldwin was
essentially alluding to the possibility of “the acquisition of behaviors through reinforcement learning” (Weber
and Depew, 2003, 195) via the process of natural selection. Weber and Depew identify Baldwin’s initial
thinking as being consistent with the process of niche construction, as discussed herein. So, we hold that from
the collective thinking occurring within the firm, various ideas and thoughts emerge, some that are deemed
worthy of retention and others that offer little long-term value. The key is that any such thinking holds the
potential to alter the nature of selection for the output of such thinking. That, as such mental endowments are
developed and encouraged, the process of social heredity evolves in such a way to support higher levels of
problem solving and organizational learning. Consider the organization within which the nature of thinking and
dialogue is not judged against a constant measure, but rather where such thinking also alters the process of
judgement used to select for and/or against certain ideas and firm level processes. So selection for ideas and
therefore processes within the firm can be viewed as a process influenced by the nature of the thinking it acts
upon. Said another way; the environment that selects for or against a beaver is quite frequently and
environment that has been altered through the natural behaviour of the beaver (i.e. dam building abilities).
This shift in emphasis away from the entrepreneur towards evolving components of knowledge has important
consequences for both research and practice. In the former it requires researchers to delve deeper into the
small business, and identify and study the development of knowledge vis-à-vis skills, skills, heuristics and
Page 6 of 11
frameworks that are themselves modified and inherited over time. Researchers need to also develop a rich
picture of the context surrounding the development of these knowledge components. In terms of practice, the
approach views the entrepreneurial process as an emergence and development of key knowledge
components to suit the changing demands of the external world. In this narrative the entrepreneur is viewed
as the evolutionary engine or artificial breeder shaping this evolutionary system. An engine that is also altered
through interaction with the environment that selects without favour or fear. Importantly the evolving units (or
entities) are viewed in the context of this evolutionary system, and not necessarily the entrepreneur himself.
Thus, our position adds balance to the debate over what is the unit being selected and also provides a means
to understand the process of how entrepreneurs actively alter and are altered by the environments they
encounter and/or create.
Learning to Evolve
There are many similarities between the conceptualisation of evolution through the mechanisms of variation,
selection and retention, and different models of learning (Jones, 2005; Miner, 1994). Both approaches study
the process in which knowledge develops over time in response to endogeneous and exogenous changes.
Both approaches also consider the directional, path-dependant nature of this development and incorporate
multiple levels of analysis including the entrepreneur, team and organisation (Crossan et al., 1999; Dixon,
1999; Kim, 1993). Finally both also put socio-political, behavioural and cognitive dimensions at the core of this
process, in which individuals are viewed as boundedly rational (Simon, 1991). However the evolutionary
approach offers researchers the opportunity to develop theory using the same key mechanisms of variation,
selection and retention regardless of the level of analysis, unit of analysis, or contextual circumstances
surrounding the phenomena under investigation. Essentially, an evolutionary approach focused on what
evolves and how this evolves over time in relation to changes in the environment, with the key question being
fitness between the evolving entity and the particular environment at that time. Ultimately the performance of a
small business is determined by this matching of the firm’s knowledge and the changing demands of the
external environment. The mechanisms of variation, selection and retention have been used to conceptualise
phenomena as diverse as cultural evolution (Dawkins 1983; Dennett 1995; Durham, 1991; Plotkin 1994;
Richerson & Boyd, 2005), organisational change (Burgelman, 1991; Langton, 1984), industrial change
(Murmann, 2003), new venture creation (Aldrich, 1999; Breslin, 2008; Jones, 2005; Loasby, 2003) and
ecology (Hannan & Freeman, 1977; Brittain & Freeman, 1988). This potential to harmonise and unify the
conceptualisation of phenomena across levels and disciplines, offers significant opportunities for scholars.
Essentially the evolutionary approach can be used to describe the development over time of any complex
system as entities are varied, differentially selected based on feedback at different levels of analysis and
retained and replicated within the system. Said another way, learning behaviours are viewed as experimental
trial-and-error incursions into tomorrow (see Jones, 2005). Behaviours that are context specific, and born from
the interaction of entrepreneurial behaviour and the environment within which such behaviour occurs. Such
behaviours are unpredictable, but reconcilable to the generic evolutionary processes of variation, selection,
and retention. But to advance our understanding we must consider more the process of variation, selection
and retention. We must become immersed within the interacting ecological processes related to the
entrepreneur, other related stakeholders and all aspects of the environment in question. We cannot not know
in advance what knowledge will be hold useful fitness, but we can seek to understand the process through
which such knowledge is created.
Implications for Research
As noted above the evolutionary approach focuses its attention on evolving and interacting units over time.
However there is lack of consensus regarding the definition of these units, when using the approach to study
small businesses. As noted above researchers have proposed a number of candidates including routines and
competences (Aldrich, 1999), comps (McKelvey, 1982), routines (Nelson & Winter, 1982), strategic initiatives
(Burgelman, 1991), ideas/knowledge (Murmann, 2003) and techniques (Mokyr, 2000). Some evolutionary
‘realists’ put forward an evolutionary narrative in which knowledge components are viewed as having an
‘existence’ and evolutionary life of their own (Breslin, 2011b). Drawing on Popper, Campbell (1974) describes
an evolutionary process in which an ecology of socially constructed entities evolves through variation,
selection and retention, filling niches in population spaces. Other more ‘interpretivist’ evolutionary scholars
(Breslin, 2011b) argue that individuals actively perceive, construct and make these “realities” (Kuhn, 1996),
with the mechanisms of variation, selection and retention merely representing a linguistic tool used to present
one interpretative view of changing entrepreneurial behaviour in a kind of language game (Wittgenstein,
1953). In this latter view, evolving knowledge components are socially constructed and cannot exist outside
the context-specific, historical and socio-political interpretations of the entrepreneurial team. Whether one
views knowledge as having an existence in ‘reality’, or as being socially constructed, both camps agree that
its evolution can be explained/described using the mechanisms of variation, selection and retention. In the
realist narrative, these generative mechanisms explain the development of knowledge components over time,
Page 7 of 11
whereas in the interpretivist account these mechanisms represent an interesting linguistic structure describing
and interpreting this same development. Clearly the ontological position one takes will have a profound affect
on the research design and empirical methods chosen to investigate the same phenomena. However,
ontology aside, the current inclusion of niche construction as an ecological process contained within the
ongoing evolutionary process of variation, selection and retention provides a vehicle to encapsulate all of the
considerations contained within the above-mentioned approaches.
Finally, if the focus of attention is shifted towards knowledge components and what is going on inside the
entrepreneur’s head, this will have implications for the methods used in research (see Rouse and
Daellenbach, 1999). While interviews can capture some aspects of this knowledge, the entrepreneurs
themselves may not be aware of what they’re doing and how. Observations may also be needed, through in-
depth ethnographic studies. This stresses the need to get inside companies, understand their context and
how individuals work, as skills, heuristics and frameworks evolve over time.
Implications for practitioners
If changing behaviour with small and growing businesses is conceptualised as a multi-level struggle for
survival amongst competing knowledge components, this might have some interesting implications for the
way in which entrepreneurs behave and make decisions. In this perspective the entrepreneur must manage
the evolution of skills, heuristics and frameworks through the evolutionary processes of variation, selection
and retention. In this sense, the entrepreneur must firstly create an environment in which skills, heuristics and
frameworks are continually varied, as these variants become the raw material for future competences. The
entrepreneurial team must then correctly select skills, heuristics and frameworks for enactment over time. The
alignment between this internal selection mechanism and the external selection of the company’s products
and services becomes critical to the firm’s longer term survival. In this sense the entrepreneur must strive to
improve the ‘accuracy’ of his/her understanding of the marketplace, and the interpretation of feedback from
that environment. Finally the entrepreneur must ensure that ‘successful’ competences are retained and
collectivised within the team. However, our inclusion of the niche construction raises the issue of the
entrepreneur, team and firm being shaped by their ongoing interaction with their environs. Clearly, as the
small business grows, such ecological and evolutionary process becomes further complicated with the
broadening of the management team, and the involvement of more individuals in key operational and strategic
decision-making. In this way, the evolutionary entrepreneur acts to innovate and experiment with different
practices, by changing routines and frameworks used by the team. Crucially the entrepreneur strives to clearly
understand and interpret feedback from the marketplace based on the enactment of these knowledge
components, and select those which lead to desired performances. Finally the evolutionary entrepreneur acts
to retain those successful skills, heuristics and frameworks. In this manner the entrepreneur acts as an
artificial breeder, continually varying, selecting and retaining desired knowledge within the organization to
meet the changing needs of the marketplace in much the same manner as Darwin’s pigeon fanciers vary,
select and retain desired characteristics in their prize pigeons. The entrepreneur must also attempt such
behaviour against increasing inert conditions within which the retention of past practice dominates the
consideration of new variants of behaviour. Interpreting survival and growth in these terms might have some
interesting implications for the eventual evolution of businesses. Ecology is essentially the study of interacting
entities in a given environment. To the extent that the entrepreneur has a capacity to go beyond observing
what has changed or remained the same, to also consider the nature of interaction, he/she has great
opportunities to learn.
Gartner (1989) argued that successful entrepreneurs develop the skill of learning to learn. This is an
interesting argument, with the successful entrepreneur becoming a more powerful learner or faster adaptor
than other business leaders. This notion of learning to learn reflects aspects of absorptive capacity (Cohen &
Levinthal, 1990), which is defined as the set of routines and processes by which firms acquire, assimilate,
transform, and exploit knowledge to produce a dynamic organizational capability (Zahra & Gerard, 2002). So
as the entrepreneur learns key entrepreneurial skills or knowledge through experience, he/she also begins to
learn the ‘skills’ of learning itself. However clearly these higher level skills are also context specific, and while
the ability of the entrepreneur to evaluate and utilize knowledge is a function of prior related knowledge
(Cohen & Levinthal, 1990), learning becomes more difficult in novel domains. In this way even serial
entrepreneurs tend to be specific in a limited number of industrial sectors. Perhaps their familiarity with what
interacts in their known environments gives them a significant advantage?
A number of researchers have viewed the evolutionary approach as a useful tool, or language when informing
entrepreneurial management practices. In this way Burgelman (1991) developed the variation, selection,
retention framework to guide and inform the development of strategic management practice within Intel, as the
organization adapted to meet the changing needs of their external environment. Likewise Murmann (2003)
saw an evolutionary approach as influencing managerial practice in organizations, as managers establish and
Page 8 of 11
maintain internal selection criteria guiding the actions of individuals and groups to meet the challenges of the
external world. Indeed Murmann (2003) argued that the organisation’s CEO might be viewed as the Chief
Evolutionary Officer! Clearly parallels can be drawn with the notion of learning to learn, or in this case learning
to evolve. If knowledge evolves through a process of variation, selection and retention, and more importantly if
entrepreneurs become aware of this evolution, they might then use that understanding to inform their actions,
and in the process influence these same evolutionary mechanisms. We observe that very little previous
consideration has been given to the process of niche construction in terms of understanding the nature of
interaction associated with the process of entrepreneurial learning (but see Luksha, 2009). We argue that the
inclusion of this concept would have some very interesting implications on the pace and pattern of
entrepreneurial learning and behaviour over time. The continued conceptual and empirical development of the
approach offers the future prospect of using an evolutionary/ecological language as a constructive tool for
practicing entrepreneurs, as they re-interpret their understanding of the evolution of their business.
Conclusion
There has significant attention given to the use of evolutionary approaches to the study of entrepreneurship.
We have not sought to articulate a specific form of evolutionary approach, but rather to highlight the robust
and dynamic nature of the evolutionary processes of variation, selection and retention. The process of
entrepreneurial learning involves many interacting entities and as such, any failure to account for such
interaction potential reduces the potential value of such an approach. We have discussed the merits of using
the ecological process of niche construction to unify consideration of both change over time and the nature of
interaction also occurring over time. There are other such concepts that also could be introduced (e.g. optimal
foraging theory) to advance our understanding of the process of entrepreneurial learning. We invite others to
consider the opportunities of niche construction as a vehicle to go inside the process of learning and to
capture the processes that are unique to each moment of learning.
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