Theories of Entrepreneurship Failure - Essay Example

This study looks into an entrepreneurship as something that many people look toward and few people accomplish. In the world of work, as the economy changes and workers lose traditional jobs, many are finding that entrepreneurship can be their next way to earn an income. The challenge with this idea is that many small businesses fail for a number of reasons and this often leaves the small business owner looking for a new job. Many people mistakenly think that “entrepreneurship” and “small business owner” are synonymous.

The challenge with this thought is that there are many small businesses, but only a few real entrepreneurs. Entrepreneurs find failure many times but there are a variety of reasons for it. Cardon, Stevens, and Potter suggest that failure is an “important phenomenon” because it leads to the entrepreneur’s ability to understand and make sense of what happened. In this way, they can make choices to do something different or begin another entrepreneurial venture. There are many theories that will be discussed in this essay to discuss scholarly views on the nature and types of theory.

There are a variety of discussions that present the nature of theories and why they are important. Harlow states that one of the challenges to the word theory is that there are so many different ways that it is used. In other words, there is no universal meaning for this word. Harlow also notes that research uses theory to mean the relevant aspects of the literature that are important in building a background of information about the specific topic. As an example, in entrepreneurship, the use of theories will provide a foundation for the study of how entrepreneurship and failure are presented.

Gelso (2006) describes theory from a more scientific point of view than Harlow (2009). Gelso posits that science and theory work together and one without the other would be very different. Gelso states that science must exist in collaboration with research in order to present solid research. In one respect, “science without controlled, empirical research would consist of only untested ideas and biases” (Gelso, 2006, para. 2), which would render research unusable. Gelso defines a theory as “a statement of the suspected relationship between and among variables” (Gelso, 2006, para. 9). With this understanding, Gelso suggests that the individual researcher can provide an integrated approach to the topic under study and make valuable assumptions about the research.

Wacker (1998) adds to this discussion by stating that the difference in the way that professionals view theory is in the “exact nature” of the theory (p. 361). Wacker states that there are several reasons why theory is important to every discipline. These reasons are: “It provides a framework for analysis It provides an efficient method for field development It provides a clear explanation for the pragmatic world” (Wacker, 1998, p. 362). In stating such, Wacker (1998) supports the ideas of Gelso (2006) and Harlow (2009) in that theory is important and that it lays the foundation for research to be built upon.

Waker also states that developing theory lessens the possibility of error because the researchers can build upon current theory; this leads to efficiency. Wacker (1998) creates a definition of theory using what academic theory understands as important. Theories are made of four factors in his definition. They must define terms or variables, they must have a domain where the theory generates from, the variables must have some type of relationship and the theory must have specific claims (Wacker, 1998, p. 363). This idea corresponds with Gelso (2006) and gives a foundation to the idea that research must be grounded in secure theories in order for them to be sound.

Henderikus (2007) also has presented information regarding theory in a similar way as Wacker (1998). Henderikus (2007) suggests that theory is a more mathematical concept and therefore