to Schumpeter's (1934) ‘creative destruction’ metaphor. The metaphor describes entrepreneurship as a driver of economic change. Since then, scholars have employed various theories in entrepreneurship to develop a better understanding of the phenomenon in different contextual settings. Scholars have also immensely contributed to the entrepreneurship research field from the perspective of distinctive entrepreneurial action by individuals faced with acute resource scarcities. As a result, prominent theories emerged and have since been used to understand entrepreneurial action and behaviour in dynamic, uncertain and
resource-2.3 Theoretical lenses for entrepreneurship under resource scarcity 45 constrained environments. Key among the theories are bricolage (Baker & Nelson, 2005) and effectuation (Sarasvathy, 2001). These theories have been instrumental in advancing entrepreneurship theory by providing theoretical lenses that have afforded scholars to explore and understand entrepreneurial activities under uncertainty and constraints.
According to Fisher (2012), bricolage and effectuation theories have some commonalities even though they provide different theoretical explanations of entrepreneurial action. The common features emanate from the fact that they both take available resources as the starting point. In this regard, entrepreneurs are considered as acting on opportunities afforded by and with available means. Additionally, there is emphasis on taking action to solve a problem given the means available, as opposed to doing nothing and taking time to think about the problem before deciding. In both theories, stakeholders that the entrepreneur deals with in conducting business are regarded as partners instead of categorising them into specific groups, for example, suppliers and customers. To explain and relate the two theories further, entrepreneurs situated in dynamic, uncertain and impoverished environments establish enterprises and navigate through constraints (Baker & Nelson, 2005; Steffens et al., 2009). They do so using means available to them (Sarasvathy, 2001). Studies that have employed bricolage have identified various mechanisms through which entrepreneurs overcome resource constraints (Desa & Basu, 2013; Linna, 2013; Salunke et al., 2013). Equally, effectuation studies have identified various constructs of the effectual view of entrepreneurial action (Chandler et al., 2011). What follows is a brief but detailed description of the entrepreneurial bricolage and effectuation theories as they apply to entrepreneurial action under resource scarcity.
2.3.1 Entrepreneurial bricolage
Entrepreneurship literature recognises the role of resources in the recognition and exploitation of opportunities (George, Parida, et al., 2016; Grossman et al., 2012; Kickul et al., 2010;
Yitshaki & Kropp, 2016). Firms combine different resources to obtain services from which products and services are made (Srivastava et al., 2001). Hence, resource availability and access determine firm growth and competitive positioning. However, key resources are not always available and accessible. In this case, enterprises have to contend with inadequate or complete unavailability of standard resources. According to Baker & Nelson (2005), when faced with resource challenges, entrepreneurs have three courses of action. First, they embark on a resource-seeking exercise and continue attempts to acquire standard resources to solve a problem and explore an opportunity. They initiate a resource search process to gain access to the resources they require. Second, incumbent entrepreneurs can avoid new challenges and exploring new opportunities by either disbanding, downsizing or remaining inert. In the case of emerging entrepreneurs, they ignore the challenge and opportunity completely. Third, they employ entrepreneurial bricolage (Baker & Nelson, 2005), as a result generating ‘something’
from ‘nothing’ by replacing conventional resource mobilisation with non-conventional resource mobilisation, informal and cost-free alternatives (Fisher, 2012).
Bricolage has been extensively discussed in the literature as a strategy to overcome resource constraints when engaging in entrepreneurial action. It is a concept that challenges the ‘a priori’
resource utilisation through utilising existing resources, together with the capacity to mobilise traditional practical knowledge when innovating in resource-constrained environments (Baker
& Nelson, 2005).
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Bricolage was first introduced by Levi-Strauss (1966) in his work The Savage Mind, describing it as an option for firm innovation and growth under conditions of resource scarcity.
Subsequently, Baker & Nelson (2005) referred to it as a tendency to ‘make do’ by combining resources at hand and applying them to new challenges and opportunities. Entrepreneurial bricolage requires that entrepreneurs realise the potential that is hidden in certain non-conventional but possible resources (Clough et al., 2019). The concept of entrepreneurial bricolage is known to have key constraint-shattering mechanisms such as recombination, resources at hand and making do (Baker & Nelson, 2005; Senyard et al., 2014). Recombination implies application of combinations of resources available for new purposes, challenges and opportunities. ‘Resources at hand’ is a mechanism that particularly distinguishes an engineer who ‘religiously’ follows well-defined demands of a current project and a maintenance worker who acts as a bricoleur. A bricoleur accumulates a set of ‘short leftovers’ of certain materials in anticipation that they would be useful at some point in time (Baker & Nelson, 2005). Making do emphasises bias in actively engaging with challenges and opportunities for ‘spectacular’
outcomes as opposed to pondering. In this respect, entrepreneurs show a great deal of limitation refusal by continuously testing solutions and observing outcomes in overcoming challenges and pursuing opportunities (Baker & Nelson, 2005).
Entrepreneurial bricolage is also related to resource-constraints shattering strategies in social entrepreneurship through mechanisms such as a social mindset and subjective resource sets, social value creation, stakeholder participation and persuasion. These describe social bricolage in the context of social entrepreneurship (Di Domenico et al., 2010; Janssen et al., 2018).
Similarly, other forms of bricolage have been identified and discussed in different contexts.
Resource leveraging, for example, occurs through the entrepreneur attracting resources needed by leveraging external resources such as networks (Jones et al., 2013). Resource leveraging is similar to network bricolage discussed by Tasavori et al. (2018), making use of resources that exist within an organisation’s pre-existing personal and professional networks (Baker et al., 2003). This allows access to a much wider variety of ‘resources at hand’ by leveraging network resources. According to Dacin et al. (2010), network bricolage is particularly beneficial in the context of social enterprises operating within resource-poor communities. Intrapreneurial bricolage relates to constraint-shattering strategies adopted by employees within large organisations in pursuing their goals without the consent of the employer (Halme et al., 2012).
Other bricolage mechanisms identified in previous studies include improvisation (Cunha et al., 2014) and resilience through ritualised ingenuity from intricate entrepreneur-resource environment interactions (Honig et al., 2014).
Bricolage has therefore proven to be a theoretical concept central to fostering understanding of entrepreneurial action and strategies in overcoming resource challenges. Recently, the number of studies employing bricolage to understand resource development and utilisation in the context of social entrepreneurship in penurious environments has been on the increase (Bacq et al., 2015; Desa, 2012; Desa & Koch, 2014; Janssen et al., 2018; Sarkar, 2018). Studies employing the theoretical lens of bricolage have discussed circumstances under which bricolage is predominantly used as a strategy. These studies reveal that bricolage is a strategic response to a resource scarcity situation by entrepreneurs (Baker & Nelson, 2005). Entrepreneurial bricolage has been explored mainly in the context of high-growth technology firms (Fisher, 2012), social entrepreneurship (Bojica et al., 2018; Janssen et al., 2018), family firms (Gras &
Nason, 2015) and traditional for-profit entrepreneurship (Karnoe & Garud, 2003). Given the
2.3 Theoretical lenses for entrepreneurship under resource scarcity 47 difficulty in balancing the multiple objectives that characterise SE and the underdeveloped, resource-scarce BOP contextual setting, bricolage can be a useful lens for improving our understanding of SE in such a context.
2.3.2 Effectuation
According to Sarasvathy (2001, p. 245), ‘effectuation takes a set of means as given and focuses on selecting between possible effects that can be created with that set of means’. For an entrepreneur situated in uncertain, dynamic and highly unpredictable environments, clarity of objective is usually blurry for the entrepreneur at the beginning, to the degree that overall envisioning of entrepreneurial outcomes is almost impossible. As a result, emergence of new entrepreneurial ventures under these conditions is based on control as opposed to prediction (Sarasvathy, 2001). From an effectual point of view, entrepreneurs create rather than discover opportunities for enterprise creation (Sarasvathy, 2004). Similarly, entrepreneurs have high preference for options in the future as compared to opportunities that maximise immediate returns (Goel & Karri, 2006). According to an effectual reasoning, because the future is unpredictable, the entrepreneur assumes the role of a controller (Sarasvathy, 2001). In this case, control becomes the most viable option in the face of challenges and an unpredictable future mired with uncertainties. The entrepreneur therefore exercises control, making decisions that ameliorate future action, resulting in the emergence of opportunities (Wiltbank et al., 2006).
Effectuation theory finds its roots in cognitive psychology. Specifically, it emerged from the work on entrepreneurial framing. Entrepreneurial framing focuses on how entrepreneurs view the relevance of inputs, perceive alternative courses of action, make inferences and respond to constraints (Dew et al., 2009).
Additionally, Dew et al. (2009) described effectuation as involving shaping and enhancing initiatives, creating new opportunities and formulating goals. This is opposed to situating oneself within a certain environment that is largely beyond one’s control, resulting in taking opportunities as exogenously given. Effectuation is known to have five principles that are instrumental in understanding entrepreneurial behaviour. Firstly, similar to bricolage theory, effectuation takes the ‘resources at hand’ as the starting point. This is metaphorically referred to as the ‘bird in the hand’ principle, in which the entrepreneur and their resources are considered. According to Sarasvathy et al. (2014), the entrepreneur’s resources at hand are their identity, knowledge and networks. With these resources, the entrepreneur is envisaged to self-ask ‘given who I am and what I know, what can I do?’ (Dew et al., 2009) and thus start from that point of view. Secondly, entrepreneurs seek commitments through close interaction with new and existing stakeholders (Dew et al., 2009). They seek the support of the stakeholders willing and interested in their entrepreneurial activity, thus rendering the question of opportunity cost irrelevant (Sarasvathy, 2008).
Thirdly, through effectuation, entrepreneurs focus less on predicting the future and likely gains (Sarasvathy et al., 2014). This is a concept known as affordable loss. In affordable loss, entrepreneurs try to minimise risks by thinking in the confines of what they can afford to lose (Sarasvathy, 2008). Fourthly, entrepreneurs using causation are fixated on achieving a known outcome, while effectuation demands flexibility in adjusting based on the direction in which the entrepreneurial process would take while benefiting from environmental contingencies as they happen. This is because it is difficult to determine how things will eventuate (Sarasvathy,
2 Theoretical background 48
2008). Fifth, an effectual view supposes the non-linearity, dynamism, unpredictability and immeasurability of the environment, while taking entrepreneurial opportunities as subjective, socially constructed and created through enactment (Fisher, 2012; Sarasvathy et al., 2014).
Thus, entrepreneurship is considered an emergent social activity as opposed to a predictive economic activity (Dew & Sarasvathy, 2002). Effectuation theory is mostly applicable to dynamic, complex and high-uncertainty contexts. Such contexts make it difficult to predict the outcome of an entrepreneurial activity (Sarasvathy, 2008). Similarly, due to the uncertain and dynamic BOP context, planning and predicting entrepreneurial outcomes is difficult, making effectuation an important theoretical lens for exploring the entrepreneurial activities therein.