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Lecture2: Context
Nowadays, there is a growing recognition that entrepreneurship can be better
understood within its context
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The purpose of this essay is to illustrate how a contextualized view of entrepreneurship
contributes to our understanding of the phenomenon
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Context can
be an asset and a liability for the nature and extent of entrepreneurship, but
entrepreneurship can also impact contexts
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It is important to understand what context is
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In other words, context concerns
the situation in which something happens
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In order
to correctly theorise context, we are going to help us from the concept of
embeddedness
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Political and cultural embeddedness put the
emphasis on the institutional environment
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Cultural embeddedness refers to informal
institutions, which contain the collective understanding of a society that influence the
economic behaviour
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Social embeddedness refers to the economic context in
relation to interpersonal relations while cognitive embeddedness refers to ways in
which mental processes limit the exercise of economic reasoning
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The “when” perspective draws attention to temporal and historical contexts
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Where refers to the locations in which entrepreneurship happens
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(Mowday and Sutton, 1993)
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Social capital and the social network context: Networks can provide financial capital,
information, potential employees, or access to clients, but also the emotional
understanding, encouragement, and support that family and friends are able to offer
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In fact, one way of accessing resources and identifying business opportunities is to look
at the household and family contexts
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However, access to resources may be restricted for some social groups such as ethnic
minorities, young entrepreneurs or women entrepreneurs
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The spatial context: entrepreneurship also happens in spatial or geographical contexts
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A variety of local factors influence and individual`s decision to act entrepreneurially, like
for example the local neighbourhoods, institutional set-up and the support available
within the region, as well as family and friends living close
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A shared cultural understanding assists in building relations that help start-ups with
information or develop contacts with suppliers and clients
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For example,
research on women entrepreneurs in the former Soviet Union highlights how the local
context influences women entrepreneurs, oftentimes restricting their scope of action
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However, in the long run, this entrepreneurial
behaviour may contribute to change local norms of some places
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North`s (1990) distinguishes between formal institutions and informal institutions
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Formal institutions can create or restrict opportunities for
entrepreneurship and can be a major influence on the existence of entrepreneurship
and the forms that it takes
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Informal institutions exert an indirect influence on entrepreneurship as they may have
an impact on opportunity recognition and exploitation as well as access to resources
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Julien (2007) states that context provides individuals with entrepreneurial opportunities
and boundaries simultaneously
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For
example, cognitive proximity allows entrepreneurs to share knowledge and know-how
but simultaneously could result in conformity and collusion, thus hindering individual
business development
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All in all, this essay discussed the real world of the entrepreneur, outlining different
contexts in which entrepreneurship takes place and giving particular importance to the
impact that these contexts have on entrepreneurship
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Household and family structures, spatial and institutional
environments, all have an impact on the nature and extent of entrepreneurship
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Therefore, entrepreneurs are rooted beyond the business
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