Entrepreneurship: A Sociological Study of Economic Action
The inadequate conceptualization and consensus on entrepreneurship in sociology renders it necessary to urgently develop a model of entrepreneurial action in the market (Swedberg 2009: 24).
Sociological scholarship surrounding entrepreneurship has focused merely on a descriptive approach, like for example how the supply and demand for entrepreneurship manifests across societies. The supply-side of entrepreneurship assumes that the possession of certain psychological traits by the individual increases the likeliness to become an entrepreneur within a society. The demand-side defends the argument according to which individuals’ structural embeddedness in an entrepreneurial environment increases the likeliness to become an entrepreneur because they are encouraged by the availability of opportunities (Thornton 1999; Ruef and Lounsbury 2007; Ruef 2010, 2015). Mainstream sociological scholarship has largely avoided conceptualizing the actions of those entrepreneurs, much less their central role in the market. With Max Weber’s crucial contribution of economic action, the first steps in the study of entrepreneurship have been taken, but have since plateaued. While situating economic action in a process of ends-means, Weber’s theory of entrepreneurship frames economic action as the operation of modern business enterprise for profit, as opposed to a single individual’s activity. Entrepreneurship, for Weber, is when an enterprise takes over part of an economy, in which people’s needs are satisfied through exchange, to make profit while bearing risk (Weber 1978). While there are examples of insightful literature, such as The Protestant Ethic and The Spirit of Capitalism (Weber 1930 [1904]), that address how environment and culture fostered entrepreneurship across Western civilization, what remains relevant today—for individual entrepreneurs as well as patrons of firms—is the decision-making process and what influences it. Unfortunately, a practical understanding of entrepreneurs has remained less well addressed.Building a coherent theory of entrepreneurship in sociology today requires going back to the fundamentals within the science of human action, especially individual economic action in the market. From there, the theory must have a clear understanding of what entrepreneurship is, what influences it, and how entrepreneurs operate. Sociology, through a well-elaborated conceptualization of markets and the actors’ decisionmaking processes and action schemes, has a solid framework upon which to build a cohesive conception of entrepreneurship. Through these approaches, sociology can make sense of the dynamic and complex nature of entrepreneurship and its cognitive dimension. An exploration of the practical implications of entrepreneurship within that constellation undeniably follows the Weberian tradition of emphasizing the individual’s mind—the purposive character of action—and the meaning individuals attach to the plans and sources of this rationality (Lachmann 1971; Weber 1978). This framework of action takes a cognitive-sociological stance by considering the knowledge structure within individuals. it examines how action is adjusted in a dynamic process of knowledge acquisition and how individuals adapt to new knowledge (Lachmann 1971: 36).
cognitive sociology emphasizes the social stock of knowledge and how culture, defined as the historically transmitted pattern of meanings embodied in symbols, forges the individual’s perception and interpretation of the world (Berger and Luckmann 1966; Schutz 1967; Mauss 1973; Geertz 1973). Cultural traditions provide value-orientations and serve as standards when selecting between open and situation-based alternatives, directing human action to some ends rather than others (Parson 1951: 11-12). In this sense, culture helps define what people want, what they do, and their capacity to choose among alternative lines of action. individuals generally select from various cultural values to construct lines of action.
This explains why particular sensibilities and expertise are developed according to different circumstances. in this process, the individual acquires a singular biography via their subjective stock of knowledge. This store of knowledge, in turn, is made up of unique experiences, as well as learned tasks, capabilities and interpretations, which the individual draws from when faced with future decisions and situations, novel or otherwise (Schutz and Luckmann 1973: 100). The individual then acts, using this personal and collective biography, within the market, where sets of formal and informal rules govern relations among competitors, suppliers and customers. These rules structure actors’ interests, thoughts and actions (DiMaggio and Ostrower 1990; Burt 1992; Steiner 2005; Foucarde 2007; Fligstein and McAdam 2015).An individual’s knowledge is important within the market as well. Market actors need certain cognitive capabilities that align with the logic of the market in order to interpret actions and expectations of others, and to cope with structural uncertainties. The ability to cope with and adapt to these endogenous market uncertainties allows one to find room for opportunities, profit and entrepreneurial action (Knight 1921; Fligstein 2015). Consequently, a conceptualization and analysis of entrepreneurship in the market is necessarily found through the study of the endogenous nature of the uncertainties actors face and the social resources they use (Beckert 2002, 2009). it is also a conception where the interaction between entrepreneurial cognition and social structures is emphasized. In this constellation, a causal link between culture and action is established by conceptualizing culture as a “tool kit” that people may use in varying configurations to solve different kinds of problems. It is a causal relation wherein culture, instead of directly determining the end action, provides components that are used for the construction of strategies of action (Swidler 1986).
This approach raises the legitimate question of what sort of capacities particular cultural patterns give to those who hold them. Beyond that, this approach also investigates the kind of capabilities an individual will develop based on their social or ethnic group—in which all members share specific mental models (Denzau and North 1994)—particularly relating to their entrepreneurial and market endeavours. Cognitive sociology offers additional analytical frameworks for this exploration that help to explain how and why some social groups are supposedly more entrepreneurial than others. Furthermore, in the pursuit of incorporating a mainstream entrepreneurship theory—particularly the alertness and entrepreneurial opportunity discovery concept—into cognitive sociology, there is a real opportunity to shape a long-desired sophisticated theoretical model that addresses how culture shapes or constrains action, and how culture interacts with social structures (Swidler 1986: 273-284). Such an approach would continue strengthening the bridge between sociology and the theory of entrepreneurship put forth by the Austrian School of Economics, and advance the research on both sides regarding key tenets such as methodological individualism, and knowledge and its subjectivity (Langrill and Storr 2015; Chamlee-Wright and Storr 2015). This approach would also advance research on the division of knowledge among individuals and the processes by which relevant knowledge is acquired and expectations are formed in the economy (Hayek 1945). In addressing the under-researched central role of the entrepreneur in the market, the concept of alertness and opportunity discovery appears to be a strong model of entrepreneurial action in sociology.