Entrepreneurship as a significant factor in societal quality of life

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Entrepreneurship as a Significant Factor in Societal Quality of Life Michael

H. Morris

Pamela

S. Lewis

University

of Central Florida

This study investigates the relationship between entrepreneurship and societal quality of life by examining both the functional and dysfunctional effects of entrepreneurship on seven major components of societal quality of life. A framework for further theory development and hypothesis testing concerning the entrepreneurship/quality of life interface is presented and discussed. Key research issues are identified based on this framework.

Introduction Although the term “entrepreneurship” has been around for centuries, the attention given the area in recent years is virtually unprecedented. Not only is there a general recognition of the valuable contributions made by the small business sector to the economy, but there is also a growing emphasis on the need for an entrepreneurial orientation in companies of all sizes and types (e.g., Bird, 1989; Brandt, 1986; Kao, 1989; Peters, 1988; Pinchot, 1985). Underlying the current popularity of entrepreneurship among academics, policy makers, and business professionals is the inherent assumption that entrepreneurship is a societal good whose benefits far outweigh any costs. In fact, some would go so far as to suggest that entrepreneurship represents the principle solution to problems in product quality, productivity, and declining competitiveness afflicting American industry (e.g., Enis, 1987; Drucker, 1985; Gilder, 1988; Waterman, 1987). At the same time, there have been a number of criticisms leveled at the entrepreneurial function. Most of these have originated from within the discipline of economics (e.g., Hebert and Link, 1988; Macdonald, 1971; Schumpeter, 1934; Tuttle, 1927). Recently, however, additional questions regarding dysfunctional aspects of entrepreneurship have issued from the corporate sector (d’Arbeloff and VanVeen, 1986; Ferguson, 1988; Reich, 1987). The purpose of the present study is to more formally and systematically assess

Address FL 32816.

correspondence

to Michael H. Morris, Department

Journal of Business Research 23, 21-36 (1991) 0 1991 Elsevier Science Publishing Co., Inc. 655 Avenue of the Americas, New York. NY 10010

of Marketing.

University

of Central

Florida.

Orlando,

0148-2963/91/$3.50

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M. H. Morris and P. S. Lewis

the relationship between entrepreneurship and quality of life (QOL) at the societal level. The nature of entrepreneurship is examined, and it is argued that entrepreneurship should be conceptualized from a process perspective. Linkages are proposed between the entrepreneurial process and 7 major components of societal QOL. Based on these linkages, a framework is presented for the development of an entrepreneurship/Q01 theory.

Perspectives

on the Entrepreneur

and Entrepreneurship

What is entrepreneurship? A review of the literature suggests it to be an elusive concept that resists precise definition (see, for example, Hebert and Link, 1988; Bird, 1989). The traditional perspective was to view entrepreneurship as the efforts of an individual who goes against the odds in translating a vision into a successful business enterprise. Even here, though, considerable controversy exists concerning the extent to which the entrepreneur assumes risks, supplies capital, innovates, manages, owns the enterprise, allocates resources, or engages in arbitrage. In a related vein, entrepreneurship has been approached as a trait of the individual behind the venture. Studies suggest, for instance, that entrepreneurs tend to be independent, hard-working, dedicated, well-organized, nurturing of aggressive, their vision, reward-oriented, takers of calculated risks, achievement-oriented, optimistic, and have a strong internal locus of control (e.g., Bird, 1989; Brockhaus, 1982; Burch, 1986). An alternative perspective has been to conceptualize entrepreneurship as the starting and operating of a new business (e.g., Hisrich and Peters, 1989; Olm and Eddy, 1985). The focus is on the principles and techniques of small business management, with all such efforts defined as entrepreneurial. The more contemporary viewpoint is to approach entrepreneurship as a process that occurs within an organizational context, and which has both attitudinal and behavioral components. It is a process that is distinct from, but dependent upon, specific individuals, and applicable to organizations of all sizes and types (Brandt, 1986; Burgelman, 1983; Kao, 1989; Miller, 1983; Murray, 1984; Peters, 1988; Pinchot, 1985; Stevenson and Gumpert, 1985; Waterman, 1987). Accordingly, entrepreneurship can be defined as the process of creating value by bringing together a unique package of resources to exploit an opportunity (Carland et al., 1984; Cornwall and Perlman, 1990; Drucker, 1985; Kao, 1989; Kanter, 1983; Stevenson et al., 1989). From a behavioral standpoint, the process includes the set of activities involved in evaluating an opportunity, defining a business concept, assessing and acquiring the necessary resources, and managing and harvesting the venture. Attitudinally, entrepreneurship represents the willingness of an individual or organization to embrace new opportunities, take chances, and persist in affecting creative change. Ultimately, the entrepreneurial venture seeks to redefine the strategic parameters within which business is conducted.

Underlying

Dimensions

of Entrepreneurship

Both as an attitudinal orientation and as a behavioral phenomenon, entrcpreneurship appears to have 3 underlying dimensions. These include innovativeness,

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risk-taking, and proactiveness (Covin and Slevin, 1989; Miller and Friesen, 1983; Morris and Paul, 1987). Innovativeness refers to the seeking of creative, unusual, or novel solutions to problems and needs. This includes the development of new products and services, as well as new processes and technologies for performing organizational functions (e.g., production, packaging, delivery, sales, promotion, administration). The innovativeness dimension is missing from the large number of small business startups that do little more than mimic existing establishments. Similarly, many socalled “new” products and services are imitative replications of proven market successes. The risk-taking dimension involves the willingness of management to commit significant resources to opportunities that have a reasonable chance of costly failure. These are not extreme, uncontrollable risks, but instead, are moderate and calculated. Entrepreneurship does not entail reckless decision-making, but rather, an awareness of the risks involved, and an attempt to manage these risks. Proactiveness is concerned with implementation, on making events happen through whatever means are necessary. Obstacles arise in virtually any attempt at innovativeness, and must be overcome. This frequently means breaking with established or even accepted ways of accomplishing a task. Bending or ignoring rules, and asking for forgiveness rather than permission, are commonplace occurrences in successful entrepreneurship. The proactiveness dimension implies a “hands-on” management style, where the entrepreneur works with employees, customers, suppliers, and others to overcome obstacles. There are, further, degrees to which any new venture demonstrates innovativeness, risk-taking, and proactiveness, indicating that there are degrees of entrepreneurship. To label a given effort as entrepreneurial is not an either/or determination, but instead a question of “how much.” Certain conditions produce efforts that are highly entrepreneurial, whereas others result in moderately or nominally entrepreneurial efforts. As a variable phenomenon, then, entrepreneurship occurs to some extent in all societies, and all organizations. Entrepreneurship, in any amount, is generally assumed to have a beneficial impact on society, and particularly on QOL (e.g., Gilder, 1988). In actuality, the entrepreneurial process would seem to have both positive and negative implications. What is needed is a comprehensive assessment of the net impact of entrepreneurship on the QOL enjoyed by members of society. Such a task requires that we first delineate the nature and underlying dimensions of societal QOL.

Societal

QOL Although it has been observed that there are as many definitions of societal QOL as there are people (e.g. Liu, 1976), dimensions such as “well-being” and “life satisfaction” are discussed by most who have studied the topic (Campbell, 1976; Dalkey and Rourke, 1972; Granzin, 1987; Liu, 1976; Sirgy et al., 1985; Wish, 1986; Withey, 1972). For example, Sirgy et al. (1985) described societal QOL as a composite of both psychological (i.e., life satisfaction) and physical (i.e., life expectancy) well being. Granzin (1987) suggested that perceived QOL is a function of the degree of satisfaction that one finds in a certain state of affairs as compared with a desired state of affairs. In addition, recent research has discussed QOL in

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relation to need satisfaction theories. Using Maslow’s hierarchy of needs, Sirgy (1986) and Zinam (1989) discussed improvements in QOL as a movement from satisfaction of lower order needs (i.e., physiological needs, safety needs) towards higher order needs (i.e., self-actualization). For our purposes, societal QOL can be defined as the general state of well-being experienced by society’s members. It is comprised of both objective (material conditions of life) and subjective (perceptions/evaluations of well-being) components (Campbell, 1976). While these components appear distinct, they are, in fact, very closely interrelated (Withey, 1972). Although the overall concern is society’s general well-being, the specific dimensions that constitute societal QOL are less apparent. The totality of life has been defined by Rice et al. (1985) as a “mosaic field consisting of many specific domains of life in which an individual participates.” Many observers have attempted to define specific domains (e.g., Andrews and Withey, 1976; Campbell et al., 1976; Sirgy et al., 1985), but no consensus has been reached. In an attempt to synthesize the major research to date, Day (1987) provided a summary listing of 13 lifeexperience domains. However, his focus was at the level of the individual. When applied at a societal level, these experiences can be collapsed into 7 domains:

Economic

the general state of the economy as reflected by economic vitality; economic stability; the position of the economy within the world economy; and the availability and quality of goods and services.

Health

the general state of the mental and physical well-being of the society and the quality and availability of medical products, services, and facilities.

Social

the general state of security, values, attitudes, lifestyles, and norms as related to human development and need satisfaction.

Technological

the general state of effectiveness/efficiency of techniques and processes for converting resource inputs to goods and services.

Work

the general state of well-being in the work/organizational environment in terms of such issues as job satisfaction, job security, and job safety.

Institutional

the general state of societal institutions such as governmental (national security; welfare services; taxes, etc.), educational, religious, business, and family units in terms of their ability to meet societal needs.

Ecological

the general state issues as resource

of the natural environment in terms preservation and conservation.

of such

These domains are reasonably comprehensive, given their broad definitions, but not mutually exclusive. To assess the net impact of entrepreneurship on societal QOL, we must draw implications for each. Impact

of Entrepreneurship

on Societal

QOL

Whereas entrepreneurship produces a variety of both functional and dysfunctional effects in each of the domains, some of the more salient implications are summarized in Table 1. Each is discussed in more detail below.

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Table 1. The Effects of Entrepreneurship

on Societal Quality of Life Effects

QOL

Dimensions

Economic

of Entrepreneurship Dysfunctional

Functional Greater economic vitality via increases GNP and the creation of jobs Increased societal wealth standards of living

in

Creation of individual societal wealth Higher

and higher

wealth

More pronounced economy

Health

Medical product, innovations

Social

Improvements in material affluence leading to increased emphasis on the higherorder needs of society Greater societal confidence progress and security

Technological

and process

in state of

Proactive, “cutting edge” technological innovations and transfers Greater resource productivity as a result of improved production techniques Improved competitive position global business environment

Work

life

Organizational behavioral entrepreneurial cultures

within

a

cyclical

due to

Superior organizational performance due to improved productivity, quality and the development of new products, services & processes

Institutions

Ecological

Increased tax base and lower costs of government services

position

of large,

Greater stress levels as a result incidence of change

of greater

Disruptions of existing and lifestyles

attitudes,

to

Business organizations have greater to meet consumer/societal needs

ability

scarcity

and

norms,

Unethical and/or immoral business behaviors in an attempt to quickly capitalize on profit opportunities becomes an acceptable standard Acceleration of technology life cycles resulting in higher product and business failure rates Dynamic, unpredictable. environment

competitive

organizational

Job dissatisfaction on the part of employees with high resistance both to idiosyncratic behavior of the entrepreneurial personality and to organizational change Rapid

obsolescence

of employee

Greater emphasis on individual group or division Challenges missions

Increased opportunities for exposure education and religion

Creative solutions to resource environment crises

swings in the

Disruptive technostructural change may occur

benefits

versus

risk use of resources

Loss in the competitive established firms service,

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to the structure, of many societal

work skills rather

than

roles, and institutions

Need for new rules and procedures which complicate administrative processes Anti-managerial

biases

may develop

Wasted resources as a result of rapid product obsolescence Depleted growth

resources

due to rapid

Damage to natural environment unfettered economic growth

economic

from

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Economic Entrepreneurship increases economic vitality through the creation of new products and services (Gilder, 1988). Additional jobs are generated to support the production and delivery of these goods and services. For instance, it is estimated that 80% of new jobs created in the past 2 decades resulted from entrepreneurial efforts (e.g., Birch, 1981). The economic activity that results from these additional jobs results in greater overall societal wealth and a higher standard of living. Schumpeter (1950) has suggested that entrepreneurship, not price competition, is the driving force behind economic development in market economies. Specifically, entrepreneurs produce the dynamic innovations that keep the capitalist engine in motion. These innovations serve to continually revolutionize the economy, at the same time making existing products and methods obsolete. Hence, entrepreneurs are involved in a process of “creative destruction.” Foster (1986) has echoed this argument in claiming that successful companies are those willing to replace profitable product lines with potentially more profitable lines. Critics of the entrepreneurial process argue that increases in wealth that result from entrepreneurial efforts are at an individual level and of little benefit to the aggregate economy. In fact, optimization of wealth at an individual level may be suboptimal for society. Marx (see Heilbroner, 1980) went further, in arguing that entrepreneurship is predicated on private property, individualism, and self greed, where entrepreneurs are in an endless race with one another to “accumulate or be accumulated.” They extort the surplus value of labor in the form of profits, pay artificially low wages, and are forced over time to replace labor with capital. In addition, entrepreneurship has been criticized for its reliance on high-risk resource utilization, as evidenced in the high rate of new product/service failures. As a result, entrepreneurship has the potential to magnify the peaks and troughs of business cycle activity. Discontinuous innovation not only makes existing products and processes obsolete, but generates significant investment as other firms seek to imitate the innovations. Expectations can be raised beyond the levels justified by the nature of the innovation, ultimately resulting in over-production and recession. Further, as the criticisms of Ferguson (1988) and Reich (1987) illustrate, an economic system that facilitates small, entrepreneurial companies at the expense of large, established firms may weaken the global competitiveness of a nation by fragmenting industries. Entrepreneurs capitalize on the huge investments and technological developments of established firms to create profitable ventures. However, in an attempt to remain competitive, they undermine the larger firms and society as a whole by selling the technology (and/or themselves) to the highest bidderoften an offshore competitor. Moreover, entrepreneurial firms stress breakthrough innovations to the exception of more incremental product and process improvements necessary for companies to sustain a competitive edge over time.

Health Entrepreneurial societies produce high rates of innovation in medical processes, products, and services, which leads to greater physical and mental well-being for most societal groups. Many historically terminal diseases now have cures or treat-

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ments, and there is optimism that most disease will one day be remedied. The development of advanced pharmaceutical and medical products has extended average life spans and reduced physical suffering in most societies. On the dysfunctional side, entrepreneurship often leads to greater levels of stress for those affected by the significant and sometimes dramatic change that results from the entrepreneurial process. Current medical beliefs suggest that stress is associated with a substantial portion of all physical and mental illnesses. In addition, an inability to cope with the societal pressures that accompany entrepreneurial change can result in heightened levels of alcoholism and drug abuse.

Social In societies where the functional aspects of entrepreneurship are evident, material affluence leads to the satisfaction of lower order needs (i.e., physiological and security). As a result, societal goals can be focused on the fulfillment of higher order needs. In addition, confidence in the state of societal progress and security may improve as a result of entrepreneurial advancements. The end result is that human development is enhanced. At the same time, entrepreneurship can lead to the disruption of societal attitudes, norms, and lifestyles. New products and services have the potential not only to speed the pace of life, but also to change the way it is lived. An example is the development over the past 20 years of a “disposable society” in the United States. In addition, new innovations can create ethical dilemmas, such as medical advances that have the ability to perpetuate human life. A different perspective was provided by Veblen (1950), who criticized entrepreneurs for purposely disrupting or undermining the established social order and reaping profits from the resulting confusion. In his view, entrepreneurs are saboteurs who create chaos for self-gain. The preoccupation of some entrepreneurs with immediate profits also has dysfunctional social implications (e.g., Tujela, 1985; Velasquez, 1982). Unbridled entrepreneurship can lead to a preoccupation with doing whatever is necessary to achieve success. The entrepreneur’s obsession with making it happen, combined with the primacy placed on individualism and independence, and a disdain for the rules and constraints of societal institutions, can encourage more than rule-bending. Tacitly unethical or illegal behavior is sometimes a by-product, and, where the entrepreneur is held in high esteem, society may come to believe that such behavior is acceptable. Similarly, the entrepreneurial quest for material gain may produce a societal focus on materialism.

Technological Entrepreneurship is a major factor behind the increased pace of technological progress today. Entrepreneurs have been responsible for both technological innovations (the development of new processes and methods) and technological transfers (the application of new processes and methods to the development and delivery of products and services). Also, where resources are scarce, entrepreneurial efforts that result in new production techniques can lead to greater productivity per resource unit. As a consequence, successful entrepreneurial efforts result in

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greater satisfaction of consumer needs via the efficient production of a larger set of higher quality products and services. In addition, through major technological advances, a society can significantly enhance its competitive position within world markets. As Young (1985) has noted, much of the U.S.‘s declining global competitive position may be attributed to a failure to both develop and apply new technologies. Drucker (1985) concludes that no country can have a viable high-tech sector without having an entrepreneurial economy. Yet, rapid technological advancements give rise to greater environmental turbulence and complexity. As entrepreneurship spawns new and better technologies for delivering products and services, a higher rate of business failure is likely to occur. Functionally useful products are made obsolete. The competitive arena for the organizations affected becomes more dynamic and less predictable. Technological forecasting becomes critical. Firms are forced to implement technostructural changes that may be highly disruptive to the operations of the organization in the short-term, and sometimes permanently.

Work Quality of work life is affected in a variety of ways by entrepreneurship. Firms that encourage and support entrepreneurial efforts typically develop cultures that focus on identifying and capitalizing on new opportunities (Stevenson and Gumpert, 1985). Employees find ample rewards for innovative and creative ideas that facilitate the exploitation of such opportunities. Employee independence is encouraged; flat management structures with multiple informal networks typically prevail. Employees retain greater individual freedom to make the decisions necessary to accomplish their work goals. Where employees appreciate and desire relative independence, significant organizational behavioral benefits can occur. Higher productivity, improved quality, and a faster rate of new product/service introduction are the end result. Such freedoms are not always perceived as positive, however. As many industries have matured, associated organizations have evolved into relatively bureaucratic institutions with well-defined work rules and procedures. Employees of organizations such as these have become comfortable with the level of predictability and stability in their work routine. For such employees, the challenges of being involved in a truly entrepreneurial firm may not be appealing. Entrepreneurs create change, make new rules, demand resource support, and set new standards of performance. Their charisma, while inspiring, may also be perceived as threatening. Further, entrepreneurial managers can alienate subordinates with behaviors that reflect their personal need for control, sense of distrust, need for applause, and overall defensiveness (Kets de Vries, 1985). Employees can also find that the organizational changes brought about by the entrepreneurial process lead to rapid obsolescence of work skills. For individual employees who feel secure in stable and predictable work environments, the organizational instabilities that result from entrepreneurial efforts can lead to deteriorating job satisfaction and job security. Reich (1987) posited that entrepreneurship suffers from a preoccupation with the individual. The entrepreneur is glorified, whereas the critical others who con-

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tribute to his or her success are assumed to be replaceable. As a result, entrepreneurship tends to produce major new breakthroughs and cutting-edge scientific discoveries, but not the incremental improvements and cost reductions that result from collective action over time. Reich (1987) suggested that the latter type of progress can best be achieved by an emphasis on collective entrepreneurship or the “team as hero.”

Institutional In any society, institutions (e.g., governmental, educational, religious) exist to serve specific needs of the aggregate population. Institutional QOL is improved to the extent that entrepreneurship has a positive effect on the functioning of such institutions. For example, entrepreneurial ventures create an enhanced tax base that can be used by governmental bodies to support social services. Further, entrepreneurial attempts at privatization have the potential to reduce the cost of many government functions. Innovations in technology make it possible to provide more universal educational opportunities, including opportunities for the economically disadvantaged and the handicapped. Religious institutions find that they are able to communicate and tailor their services to larger numbers of people. Businesses are able to employ more people and produce a wider array of goods and services. At the same time, entrepreneurial efforts challenge the structure, mission, and roles of many institutions. For instance, advances in medical technology have created challenges to the role of organized religion in family planning, while opportunities for female entrepreneurship have challenged the role and functioning of the family unit. Unions have found their power undermined by the rapid growth in entrepreneurial start-up ventures. Moreover, the need for new rules and procedures to facilitate entrepreneurship complicates the administrative processes in such institutions and may lead to ineffective performance. In a related vein, Kaplan (1987) claimed that entrepreneurship produces an antimanagerial bias, wherein large firms and corporate managers are denigrated. He concluded that entrepreneurship would not be possible in modern society without the stability provided by huge, private conglomerates, public utilities, and charitable institutions.

Ecological Environmentalists speak of ecological problems that will eventually invade the daily lives of people in all societies. Concerns are voiced about the population crisis, pollution crisis, resource scarcity, and related problems that form the basis of the limited growth thesis. And yet, where entrepreneurship has led to more rapid increases in production than in consumption, the arguments of the limited growth thesis proponents are weakened. Entrepreneurial ideas have spurred important and unique mechanisms for conserving and, in some cases, creating additional resources. For example, Enis (1987) discussed the impact of the development of a heavy manufacturing industry in outer space on the ecological position of this planet. Innovations have permitted more to be produced with less, eliminated sources of pollution, and replaced natural resources with synthetic substitutes. In contrast, entrepreneurship can aggravate ecological problems when failed

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ENVIRONMENTAL INFRASTRUCTURE

DEGREE OF ENTREPRENEURSHIP

ENVIRONMENTAL TURBULENCE

*

SOCIAL QUALITY OF LIFE

LIFE EXPERIENCES OF SOCIETY’S MEMBERS

Figure 1. A theoretical

framework for the entrepreneurship4201

Interface.

ideas and efforts lead to wasted resources. Even entrepreneurial successes can produce wasted resources when new products and services cause perfectly functional goods and services to become obsolete. Additionally, the fast pace of economic growth resulting from entrepreneurial efforts can lead to rapid depletion of societal resources. Where entrepreneurship is intense, growth becomes more uncontrolled, and the assets of the environment can be damaged or destroyed.

Toward

a Theory

of Entrepreneurship

and

QOL

As we have seen, there are costs and benefits associated with the impact of entrepreneurship on each of the major QOL dimensions. It is our position that the net impact is not only positive, but that entrepreneurship is a driving force in societal QOL. The success of entrepreneurial efforts is ultimately predicated on their ability to satisfy needs in the marketplace. Entrepreneurship represents institutionalized change, a continuous quest for better methods, products, and services. In the absence of such efforts, society does not maintain a steady state, nor does QOL. Populations continue to grow, expectations rise, resources are depleted, and the forces of bureaucracy and economic tyranny prevail. To paraphrase Enis (1987), entrepreneurship is to societal relationships what speed is to an athlete: it permits correction of mistakes. There are negative side effects, but like the athlete who can recover in time to make a play, an entrepreneurial economy can better cope with the inevitable conflicts between progress and equality. What is now needed is a genera1 framework for assessing these relationships and for ongoing theory development and hypothesis testing at the entrepreneurship/ QOL interface. An initial attempt at formulating such a theoretical framework is presented in Figure 1. The essence of the proposed framework is that environmental factors are the primary determinants of the aggregate level of entrepreneurship, and that the level of entrepreneurship has a causal influence on societal QOL. While environmental

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factors also have a direct impact on QOL, these relationships are tangential to the framework. The behavior patterns, motives, objectives, and success rates of entrepreneurs display considerable variation among persons, industries, nations, and geographic regions (e.g., Hoselitz, 1960). In the United States, for instance, entrepreneurial efforts resulted in sizeable contributions to the gross national product and the standard of living in the latter halves of both the 19th and 20th centuries (Drucker, 1985; Hughes, 1986; Wilken, 1979). Alternatively, such efforts were relatively insignificant in neighboring Mexico during the same time period (Baklnoff and Brannon, 1984; Hewlett and Weinert, 1982; Reynolds, 1970). Such situational results can be traced to the environmental context within which entrepreneurship occurs. The tendency toward innovation, risk-taking, and proactiveness is not so much innate to mankind or to a society as it is environmentally determined. For simplicity, we have grouped the key environmental factors into 3 categories: the environmental infrastructure, the personal life experiences of society’s members, and the degree of environmental turbulence. The environmental infrastructure includes the economic, political, legal, financial, and logistical structures that characterize a society. Certain structures appear to facilitate both entrepreneurial attitudes and behaviors. For instance, in countries (e.g., Hong Kong) having relatively free, competitive market economies, available pools of capital, and liberal political freedoms, entrepreneurship is more in evidence (Friedman and Friedman, 1980; Wilken, 1979). Further, it appears that the entrepreneurial process is fostered under conditions of environmental turbulence. Rapid change in the technological, economic, customer, competitive, legal, and social environments has produced both threats and opportunities for those engaged in commerce. The contemporary manager is confronted with short decision windows, diminishing opportunity streams, changing decision constituencies, increased resource specialization, lack of predictable resource needs, fragmented markets, greater risk of resource and product obsolescence, and a general lack of long-term control (Hayes and Abernathy, 1980; Jain, 1983; Stevenson and Gumpert, 1985). The result has been intensified pressure for innovation, and a dramatic increase in societal entrepreneurship over the past 2 decades (Gilder, 1984; Kaplan, 1987). Entrepreneurship is more than a response to the environment, however. It represents a kind of institutionalized societal change, in which firms initiate changes in technology, marketing, or organization, and strive to maintain the lead in changes over competitors. Hence, as the degree of entrepreneurial effort intensifies, so too does the rate of environmental change. Finally, entrepreneurship tends to be more prevalent among those individuals whose family, social, educational, and job environments (i.e., life experiences) encourage individualism, experimentation, persistence, and an achievement orientation (Burch, 1986; Kent et al., 1982). There is not, then, a class of entrepreneurs whose success is genetically determined. Entrepreneurship originates from all segments of society and at different times in life. Furthermore, a person can alternate between entrepreneurial and nonentrepreneurial modes of behavior. The combined effect of these environmental influences is the level of entrepreneurship in society. As the amount of entrepreneurial effort varies, so too does

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societal QOL. The exact relationship remains unclear, but is probably nonlinear. For instance, it may be that at extremely high levels of entrepreneurship the dysfunctional implications begin to outweigh the functional. This and other questions are subjects for continued research.

Conclusions

and

Future

Research

Needs

Although research has been directed at identifying cross-cultural differences in societal QOL, and the underlying determinants of these differences, little focus has been given to entrepreneurship itself as a causal influence. To say that capitalist economies enjoy higher QOL than many socialist regimes, or vice-versa, misses a fundamental point. The ultimate source of dynamism within capitalism is the entrepreneurial function. To the extent that this function has applicability to all societies, it can serve a meaningful role in affecting QOL in those societies. This article has argued that entrepreneurship is a societal variable, the level of which is determined by environmental conditions at a given point in time. As a variable, the focus must be on the process nature of entrepreneurship, and its underlying dimensions. Specifically, as environmental conditions foster greater degrees of innovativeness, risk-taking, and proactiveness among the members of society, QOL is affected. The nature of this impact depends upon the QOL domain on which we focus. For instance, entrepreneurship may well have an immediate and fairly dramatic impact on the economic, technological, and work life domains, and a more indirect or long-term impact on institutional or social QOL. Furthermore, the impact on each domain is both positive and negative. Considerable research is needed to uncover the nature of these relationships, and to draw implications for theory development, managerial practice, and public policy. The framework presented in this article provides a beginning point. Some of the more salient research issues include the following: l

l

l

l

l

Efforts must be directed toward quantifying levels of entrepreneurship throughout a society, and to then correlating these levels with existing QOL measures for different nations and global regions; Progress is needed in identifying the relative impact of the 3 environmental dimensions on societal entrepreneurship, and the ways in which these dimensions interact in influencing entrepreneurship; To the extent that environmental factors drive entrepreneurship, research should examine whether these factors (e.g., the degree of environmental turbulence) influence the degree to which the impact of entrepreneurship on QOL domains is positive or negative; Attention should be given to assessing entrepreneurship within society;

whether

there

are optional

Research should examine whether the stage of economic society determines the relative impact of entrepreneurship optimum level of entrepreneurship;

. Insights

are needed

regarding

how QOL is affected

levels

of

development of a on QOL, and the

by each of the underlying

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and Quality of Life

dimensions of entrepreneurship, the dimensions; l

as compared

with the composite

impact

of

Given its role as agent of change, research must determine whether entrepreneurship has a differential impact on expected QOL compared with actual QOL;

l

And finally, once a given level of QOL is attained, devoted to determining whether a subsequent decline ultimately leads to a lower QOL.

investigations should be in entrepreneurial effort

In sum, the entrepreneurship construct holds much promise for our understanding of QOL, and particularly for developing normative insights regarding how QOL can be improved. Opportunities are rich for both theory development and the establishment of a body of empirical findings. References Andrews, F. M. and Withey, S. B., Social Indicators of Well-Being: America’s Perception of Life Quality, Plenum, New York. 1976. Baklnoff, E. N. and Brannon, J. T., Forward and Backward Linkages in a Plantation Economy: Immigrant Entrepreneurship and Industrial Development ico, The Journal of Developing Areas, 19 (October 1984):83-94. Birch,

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Burgelman, R. A., A Model of the Interaction of Strategic Behavior, Corporate and the Concept of Strategy, Academy of Management Review, 8 (1983).

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Burgelman, R. A. and Sayles, L. R., Inside Corporate Innovation: Strategy, Structure, and Managerial Skills, Free Press, New York. 1986. Campbell, 124.

A., Subjective

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