Copyright is owned by the Author of the thesis. Permission is given for a copy to be downloaded by an individual for the purpose of research and private study only. The thesis many not be reproduced elsewhere without the permission of the Author. The Design-Resource-Opportunity Connection of Entrepreneurship A thesis presented in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Management Massey University, Albany, New Zealand Karen Eula Baeyertz 2010 i Abstract This study explored the relatively uncharted territory of entrepreneurship as a design process. It distilled the central components underlying this design process in terms of resource and opportunity connections. Adoption of an entrepreneurial capital framework was invaluable for gaining insight into the complex process of resource use and acquisition. An interpretive phenomenological approach was used to research the entrepreneur‟s actual lived experience of opportunity development and new venture creation. Findings were gleaned from fourteen entrepreneurs in the knowledge intensive technology sector in New Zealand. In-depth interviews enabled the participants to tell their stories of how they enacted opportunity. Two metaphors were explored with each of the interviewees. The first metaphor was introduced in order to comprehend how opportunity was perceived: Was it perceived as a mountain waiting to be climbed – opportunity discovery? Or was it perceived as a mountain that needed to be built - a creation view of opportunity? In order to understand resource interactions and relationships, the second metaphor explored a concept dear to the New Zealand psyche; that of No. 8 wire ingenuity in adapting to circumstance. Resource use and development was also investigated within the construct of bricolage. A key finding was that the design process of entrepreneurship involved the exercise of resources - those at hand in the inner resource domain of initial entrepreneurial capital and also augmented entrepreneurial capital accessed in the external resource domain. The centrality of human capital in the form of prior knowledge and industry experience that is embedded in the entrepreneur was highlighted. Learning by doing and knowledge development with customers, via a process of co-construction was significant. Entrepreneurs employed a number of strategies to overcome the liabilities of size and newness and importantly the generation of symbolic capital enabled establishment of legitimacy in the eyes of their stakeholders. Social and financial bricolage was practised by some entrepreneurs to „make do‟ with their existing resources. ii Acknowledgements There are a number of acknowledgements due. Without the stories that provide the backbone, there would be no thesis. As such I am indebted to fourteen entrepreneurs who gave, not only of their time, but also of themselves in order to recount individual perspectives of their venture experiences. The insights gleaned form the basis of my study and I am truly grateful for their contribution. However it is my supervisor, Professor Anne de Bruin to whom I must express my utmost appreciation. Little did she know what she was letting herself in for when I walked into her office! I have considered her my wellspring of academic knowledge and advice. Her sagacity, unfailing support, unstinting generosity with time and appropriate „kicks up the butt,‟ underpin her professional ethos and personal values. Anne: My deepest and most sincere thanks. To my family I must also express appreciation for their tolerance, encouragement and love. The support of my two wonderful sons as I have navigated some difficult terrain over the final stages of my journey has been absolute. Vi et animo. To my late father John Desmond Baeyertz, FRCOG, FNZCOG, MB, CHB (Otago), this is for you. iii Table of Contents Abstract ............................................................................................................................ i Acknowledgements .........................................................................................................ii Table of Contents .......................................................................................................... iii List of Tables................................................................................................................. vii List of Figures ............................................................................................................... vii Chapter 1 Introduction 1.1 Scope of the study ...................................................................................................... 1 1.2 Navigating to the research questions .......................................................................... 5 1.2.1 Design as an enabler ........................................................................................ 6 1.2.2 Design as a process .......................................................................................... 7 1.3 The research questions ............................................................................................... 9 1.4 The New Zealand entrepreneurial landscape ............................................................ 12 1.4.1 Historical background .................................................................................... 13 1.4.2 Incubators ...................................................................................................... 14 1.5 Definitional signposting ........................................................................................... 16 1.5.1 The Entrepreneur and Entrepreneurship ......................................................... 16 1.5.2 Design............................................................................................................ 19 1.5.3 Resources ....................................................................................................... 20 1.5.4 Opportunity .................................................................................................... 21 1.6 Research approach: Towards Verstehen ................................................................... 22 1.7 Structure of the thesis............................................................................................... 23 Chapter 2 Streams in the Literature 2.1 Introduction ............................................................................................................. 25 2.2 Design ..................................................................................................................... 25 iv 2.2.1 The global rise of design ................................................................................ 26 2.2.2 Design within New Zealand‟s economic policy .............................................. 27 2.2.3 The science of design ..................................................................................... 31 2.3 Resources ................................................................................................................ 33 2.3.1 The resource based view ................................................................................ 34 2.3.2 Bricolage ....................................................................................................... 37 2.3.3 Entrepreneurial capital ................................................................................... 42 2.3.4 Financial capital ............................................................................................. 47 2.3.5 Human capital ................................................................................................ 48 2.3.6 Social capital .................................................................................................. 51 2.4 Opportunity ............................................................................................................. 60 2.5 Chapter conclusion .................................................................................................. 71 Chapter 3 Methodological Pathway and Research Approach 3.1 Introduction ............................................................................................................. 73 3.2 Research paradigms ................................................................................................. 74 3.3 Methodology used in the study................................................................................. 77 3.3.1. Sampling method .......................................................................................... 83 3.4. Interviewing the entrepreneurs ................................................................................ 85 3.4.1 Ethics and my personal integrity .................................................................... 86 3.5 The data analysis process ......................................................................................... 88 3.6 Chapter conclusion .................................................................................................. 92 Chapter 4 The Opportunity and Resource Stories 4.1 Introduction ............................................................................................................. 93 4.2 Vignettes of the research participants ....................................................................... 95 4.3 Tim‟s Opportunity and Resource Development ........................................................ 99 4.3.1 Tim‟s Entrepreneurial Capital Development ................................................. 101 v 4.4 Bob‟s Opportunity and Resource Development ...................................................... 104 4.4.1 Bob‟s Entrepreneurial Capital Development ................................................. 105 4.5 Jon and Sue‟s Opportunity and Resource Development.......................................... 107 4.5.1 Jon and Sue‟s Entrepreneurial Capital Development .................................... 109 4.6 Ian‟s Opportunity and Resource Development ....................................................... 111 4.6.1 Ian‟s Entrepreneurial Capital Development .................................................. 113 4.7 Kit‟s Opportunity and Resource Development ....................................................... 115 4.7.1 Kit‟s Entrepreneurial Capital Development .................................................. 116 4.8 Ben‟s Opportunity and Resource Development ...................................................... 118 4.8.1 Ben‟s Entrepreneurial Capital Development ................................................. 119 4.9 Jim and Rex‟s Opportunity and Resource Development ......................................... 121 4.9.1 Jim and Rex‟s Entrepreneurial Capital Development .................................... 123 4.10 Roy‟s Opportunity and Resource Development .................................................... 125 4.10.1 Roy‟s Entrepreneurial Capital Development ............................................... 126 4.11 Guy‟s Opportunity and Resource Development .................................................... 128 4.11.1 Guy‟s Entrepreneurial Capital Development .............................................. 129 4.12 Sam‟s Opportunity and Resource Development ................................................... 131 4.12.1 Sam‟s Entrepreneurial Capital Development .............................................. 133 4.13 Ken‟s Opportunity and Resource Development .................................................... 135 4.13.1 Ken‟s Entrepreneurial Capital Development ............................................... 136 4.14 Ted‟s Opportunity and Resource Development .................................................... 138 4.14.1 Ted‟s Entrepreneurial Capital Development ............................................... 139 4.15 The essence of the metaphors ............................................................................... 141 4.16 Chapter conclusion .............................................................................................. 143 Chapter 5 Capturing the Meaning: Interpreting the Experiences 5.1 Introduction ........................................................................................................... 145 5.2 Centrality of human capital to opportunity ............................................................. 146 vi 5.2.1 Initial entrepreneurial human capital: The basis of opportunity ..................... 147 5.2.2 Learning by doing: Opportunity development .............................................. 150 5.3 Building legitimacy................................................................................................ 155 5.4 Tapping into social resources at hand: Social bricolage .......................................... 162 5.5 Resource economy: A practice and a mindset......................................................... 166 5.6 Co-construction of opportunity .............................................................................. 171 5.7 Innovative solutions ............................................................................................... 174 5.8 Retrospective sensemaking .................................................................................... 177 5.9 Making the connections: Integrating the findings ................................................... 182 5.9.1 The design-resource connection ................................................................... 183 5.9.2 The design-resource-opportunity connection ................................................ 186 5.10 Chapter conclusion .............................................................................................. 188 Chapter 6 Conclusion 6.1 Answers to my questions ....................................................................................... 190 6.2 Contributions of the study ...................................................................................... 194 6.3 Limitations ............................................................................................................ 196 6.4 Future research ...................................................................................................... 199 6.5 Concluding comments ........................................................................................... 199 References ................................................................................................................... 202 Appendix ..................................................................................................................... 226 Information Sheet Participant Consent Form Authority for the Release of Digital Transcripts Fact Sheet vii List of Tables Table 3.1 Contrasting Implications of Research Approaches ................................... 77 Table 4.1 Founder and Business Profile .................................................................. 98 Table 4.2 Mountain Discovery versus Mountain Creation Perspectives of Opportunity .................................................................. 141 Table 4.3 Dealing with Living on the „Smell of an Oily Rag‟ ............................... 143 Table 5.1 Themes from the Data Analysis Process ................................................ 145 List of Figures Figure 1.1 A Visual Interdependency ....................................................................... 3 Figure 1.2 Entrepreneurship as a Process of Design .................................................. 8 Figure 1.3 The Design-Resource-Opportunity Connection Asking the Questions ... 9 Figure 2.1 Structure and Agency in a Dynamic Relationship ................................... 69 Figure 4.1 Tim‟s Entrepreneurial Capital Development ........................................ 103 Figure 4.2 Bob‟s Entrepreneurial Capital Development ........................................ 106 Figure 4.3 Jon and Sue‟s Entrepreneurial Capital Development ............................ 110 Figure 4.4 Ian‟s Entrepreneurial Capital Development ......................................... 114 Figure 4.5 Kit‟s Entrepreneurial Capital Development .......................................... 117 Figure 4.6 Ben‟s Entrepreneurial Capital Development ........................................ 120 Figure 4.7 Jim and Rex‟s Entrepreneurial Capital Development ............................ 124 Figure 4.8 Roy‟s Entrepreneurial Capital Development ........................................ 127 Figure 4.9 Guy‟s Entrepreneurial Capital Development ........................................ 130 Figure 4.10 Sam‟s Entrepreneurial Capital Development ...................................... 134 Figure 4.11 Ken‟s Entrepreneurial Capital Development ...................................... 137 Figure 4.12 Ted‟s Entrepreneurial Capital Development ....................................... 140 Figure 5.1 The Design-Resource Connection ........................................................ 183 Figure 5.2 The Design-Resource-Opportunity Connection .................................... 187