Business Systems Perspective on Entrepreneurship

Part of the institutionalist and organization theory literatures, business systems theory (BST) presents a comprehensive framework to understand how institutions shape the strategies of firms and individuals, including entrepreneurs. Entrepreneurial activities do not take place in a barren environment; rather both entrepreneurs and entrepreneurial processes are embedded in a societal or institutional context; thus, the nature of business systems and institutions influence entrepreneurs’ cognition, orientation, capabilities and venture creation. Much work has drawn on BST to analyse multinationals’ strategies, structures and decision making. We focus, instead, on a relatively neglected area: how BST can help to explain entrepreneurship. In particular, how can this framework help us to understand 1)why a particular business model is developed, 2) why entrepreneurs tend to make a particular type of decision, in a particular way, for a particular context, 3) why firms or new ventures structures, strategies and growth trajectory follow a particular path dependency in a particular institutional context, while 4) complementarity and/or lack of complementarity presents different types of opportunities, challenges, and growth patterns for new ventures or new industries in a society? We provide an overview of the BST framework and then illustrate how it can help to explain entrepreneurial decision-making, motivation, venture/industry creation, rationales behind new business model/ venture development, social entrepreneurship, diaspora entrepreneurship and above all institutional entrepreneurship in national and comparative institutional contexts. Our aim is to stimulate future studies within the entrepreneurship domain to use the BST perspective for understanding complexity in entrepreneurship research in comparative and cross-border institutional contexts.