1. Complex explanations of order creation, emergence and sustainability as situated entrepreneurship Ted Fuller and Lorraine Warren RENT XVIII LOK-CBS Copenhagen 2004

2. Thesis (work in progress) Entrepreneurship as a causal mechanism Entrepreneurship is structurally and historically ‘situated’, not random Emergent (structural) properties arise / emerge / become within this situated-ness through entrepreneurship A salient concept of situated-ness is Community of Practice A salient concept of ‘structuring’ is emergent hierarchical ontologies Processes of ‘entrepreneurship’ situated in these structures cause the emergence of ‘new’ enterprises; new structures, new ventures, novel practices… * e.g. Fuller 2004, Fuller Warren and Argyle 2004

3. The ‘complexity’ perspective Complex Adaptive Systems: Order creating interactions between heterogeneous ‘agents’ Emergent properties from interaction Inherent critique of (Schumpeterian) entrepreneurship as an individualistic concept It’s not the ‘agent’ but the interactions that cause emergence Hence, the process of order creation is analytically irreducible to individual agents

4. The critical realist perspective (Bhaskar et al) ‘Causal mechanisms’ that are not observable empirically, nor necessarily ‘active’, i.e. latent powers

5. The ‘constructionist’ perspective Meaning is emergent and negotiated through discourse; language… personal interpretations… inter-subjectivity… Social construction of knowledge…

6. Emergence A key concept in complexity science is emergence (Holland 1998) Compare this with the discourse of entrepreneurship as the emergence of new enterprise, The notion of emergence is that ontological properties are formed by the interactions of an historically situated ontology: that is, the next moment is connected to the previous one.

7. Multi-level models… …is a methodological strategy for connecting ‘units of analysis’ to their wider environment in recognition, or expectation, of causal relationships between macro and micro; agent and structure, or process and context Cf. complexity and emergence… …rather than each layer being seen as an independent ontology for study, it is the inter-relationships between layers and in particular the mechanisms underlying those relationships that should be studied.

8. Schema of emergent properties (Fuller and Moran 2001)

9. The emergence of novelty in entrepreneurial organisations e.g the case of Flight Directors Ltd 1. History of the business over 15 years constructed by the owner, using the ‘layered’ model 2. Analysis of this led to proposing the ‘EROS’ model of emergence (Fuller et al 2004).

10. EROS: A model for understanding “becoming” in entrepreneurial organisations Experiments Experiments - small scale models testing for fitness in the landscape, often co- evolutionary in nature Reflexivity Reflexivity - the continuous reshaping of the meaning of what the owner and the business ‘are’ in relation to others Organising DomainsOrganising Domains - the breaking and reforming of patterns of doing business everyday Sensitivity to conditions Sensitivity to conditions - the detection and evaluation of environmental change and the motivation to respond

11. Experiments Operationalised as a range of diverse behaviours (projects) at any one time by the firm. Experiments in this case were projections from existing patterns or models which create new patterns. They were created because of an anticipated need from the close stakeholders, i.e. co-evolutionary in their foundation. Some experiments worked and some did not, i.e. some enhanced the ‘coupling’ of the firm to its stakeholders gaining rents or resources from these relationships, and some failed to do this EROS Cf. ‘Relationship Mean Everything” (Fuller and Lewis 2003)

12. Reflexive construction of identity Operationalised as motivations, learning processes and re-identification of behavioural imperatives. The continuous self-reflection on the identity of the firm and the self-identity of its owner(s) through the discourses within the business and with stakeholders is central to the thesis of becoming. EROS

13. Organising domains Operationalised as the speed at which a change is constituted as consistent and sustainable (energy attracting) patterns of behaviour. ‘Fitness’ requires efficient operations. The speed at which new patterns of activity can be put into place, to increase efficiency of operations, contributes to the sustainability of the enterprise. The tension between innovative (symmetry breaking) practices and recursive practices (symmetries) requires managerial judgement EROS

14. Sensitivity to conditions Operationalised in terms of (i) the threshold of environmental change that triggers change in the agent and (ii) the length of time before change occurs. These involve the cognitive capability to detect difference and the relative imperative (motivation or incentive) to change EROS

15. A research question… Is ‘EROS’ a generalisable model? Is there a plausible notion of these activities transcending a single organisation? If so, does this help understand and explain emergence? Does this relate to ‘enterprise’ as a form of agency in society?

16. Connecting the ‘layers’ - Relationships mean everything? Individual (entrepreneur’s) reflexive self identity and related every-day practice Recursive (repetitive) activities of the entrepreneur’s firm Recursive (repetitive) activities in a network or cluster of firms The entrepreneur’s reflexive engagement with ‘their’ own enterprise produces the emergent structures of that ‘enterprise-in-context’. Their apparently idiosyncratic, voluntaristic acts are shaped by the nature of the coupling to the environment, i.e. the everyday structures and their sense- making of those structures.

17. ‘Community of Practice’ provides a perspective that transcends ontologically multiple emergent ‘layers’ Rooted in social theories of learning and innovation (Lave and Wenger 1991, Brown and Duguid 1991, Fox 2000, Cox 2004) Developing a practice, of any kind, requires the formation of a community (however loosely defined) whose members can engage with one another and thus acknowledge and legitimise each other as participants – a process of becoming, not just encountering; reflexive…socially constructed….emergent… A social process view in other words The relevance of CoP to this thesis is that the notion transcends individual, individual firm and inter-firm relationships

18. Notion of a Community of Practice transcends multiple levels - Negotiation of identity at the local level impacts at the global level. Individual (entrepreneur’s) reflexive self identity and related every-day practice Recursive (repetitive) activities of the entrepreneur’s firm Recursive (repetitive) activities in a network or cluster of firms Experiments Reflexive Identity Organising Domains Sensitivity to conditions

19. Emergence through ‘EROS’ New organisational symmetries emerge from new CoP interactions initiated and developed at the level of the individual entrepreneur The new CoPs with which these interactions take place are likely to be (though not exclusively) located in other firms, that is, at the level of inter-firm networks and alliances

20. (Just) Hot Air? ‘Hot Air’ inflatable music speakers… Multi-membership of CoPs as a mechanism for emergence of new patterns and symmetries

21. Students undertaking projects Academic staff – general academic/career development advice, degree show managers Academic staff – subject specialists, project supervisors University business support staff – expertise in IP, company law, PR, funding, marketing Academic staff – subject specialists and Business school staff Local/regional agency support – business links, RDA’s Local/regional professional services community – lawyers, accountants, banks, financiers, management consultants Student domain Community of practice Innovation domain Community of practice John Saxon Alan Booth CoP membership and linkages Key: Hot Air CoP Emergence Peripheral participation Member of CoP

22. The emergence of ‘HotAir’:evidence Experiments were clearly taking place, in terms of concept formation and visioning, around both the potential new products and the nature of the new firm – what will work and what will not? Reflexive identity was also in transition as new career pathways were considered – do I have what it takes to become an entrepreneur? Organising Domains were restructured as working towards the degree show was replaced by developing the possibilities of the new business – will this new structure work for me? Sensitivity to change took place as possibilities and stakeholder imperatives were explored through new contacts – what are the environmental challenges I will have to face?

23. Summary Processes of emergence take place across ontological hierarchical structures, through discourse, and produce new meanings that create tensions and disturb symmetries Local voluntaristic actions has global coupling, and this coupling is articulated through the meanings of the communities of practice in which the entrepreneur, and the firm, are situated. The processes of entrepreneurship appear to contribute to new symmetries within the networks in which the enterprise is situated, i.e. the model has applicability at different emergent structural level.

24. Discussion 1.Emergent properties… … as renewable ‘structures’ 2. Not ‘the cause of entrepreneurship’, but ‘entrepreneurship as a cause…’ 3. Study of entrepreneurship… the reflexive shaping of recursive or repeating patterns, and patterns of new pattern formation… …grounded in an interpretative paradigm because the reflexive engagement between agent and structure – between agent and agent, between the entrepreneur and the firm, the firm and its networks etc. – is a social process, albeit that such processes include an economic dimension

25. Axioms based on the outcomes of entrepreneurship constrain theory building… …tends to deny the creation of new enterprise as in some way a by-product of more enduring human and social qualities … tends to deny the unwanted consequences of entrepreneurship

26. Complexity science… informs us that initial conditions form part of the explanation of end-states. Our interpretation of this is that structure- breaking acts of entrepreneurship are informed by the structures they break… …entrepreneurship is historically entangled within existing structures. This entanglement permits the human agent to have insights into pre-existing symmetries and the inefficiencies of such structures… … is an interpretative and socially negotiated process.

27. This paper contributes: a model of entrepreneurship within a generalisation of context, that includes: - co-evolutionary or inter-subjective small scale activities, in the form of experiments; - the continual shaping and reshaping of identity, giving rise to direction, meaning and motivation; - patterns of re-patterning of everyday activity and - the responsiveness to environmental change. The model can only be understood in context; and the generalisation of context in this paper is a) one of emergent structures (emergent properties) and b) negotiated through a mutable community of practice.

28. A theory of entrepreneurship from a complexity science perspective … …would, we suggest, assume that the production of sustained novelty (i.e. as in entrepreneurial activities) has multiple (theoretically knowable) causes, is socially situated, is non-linear and generates unpredictable diversified patterns or symmetries.

29. Understanding entrepreneurship [how] “strategies are constructed, molded and adapted in processes of interaction with environments”. (Aldrich and Martinez 2001:52) What we are suggesting is that the mechanisms for the emergence of such practices and the negotiation and selection of the successful ones of these, involve deep social process with multiple relational causes, and unpredictable outcomes, i.e. they are complex but are not random nor uninformed.