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Power law distributions in entrepreneurship: Implications for theory and research

Author

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  • Crawford, G. Christopher
  • Aguinis, Herman
  • Lichtenstein, Benyamin
  • Davidsson, Per
  • McKelvey, Bill

Abstract

A long-held assumption in entrepreneurship research is that normal (i.e., Gaussian) distributions characterize variables of interest for both theory and practice. We challenge this assumption by examining more than 12,000 nascent, young, and hyper-growth firms. Results reveal that variables which play central roles in resource-, cognition-, action-, and environment-based entrepreneurship theories exhibit highly skewed power law distributions, where a few outliers account for a disproportionate amount of the distribution's total output. Our results call for the development of new theory to explain and predict the mechanisms that generate these distributions and the outliers therein. We offer a research agenda, including a description of non-traditional methodological approaches, to answer this call.

Suggested Citation

  • Crawford, G. Christopher & Aguinis, Herman & Lichtenstein, Benyamin & Davidsson, Per & McKelvey, Bill, 2015. "Power law distributions in entrepreneurship: Implications for theory and research," Journal of Business Venturing, Elsevier, vol. 30(5), pages 696-713.
  • Handle: RePEc:eee:jbvent:v:30:y:2015:i:5:p:696-713
    DOI: 10.1016/j.jbusvent.2015.01.001
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    References listed on IDEAS

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    2. Ireland Vernon & Gorod Alex, 2016. "Contribution of Complex Systems to Entrepreneurship," Entrepreneurship Research Journal, De Gruyter, vol. 6(1), pages 1-41, January.
    3. repec:kap:sbusec:v:50:y:2018:i:3:d:10.1007_s11187-017-9905-3 is not listed on IDEAS
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    5. Bartz, Wiebke & Winkler, Adalbert, 2016. "Flexible or fragile? The growth performance of small and young businesses during the global financial crisis — Evidence from Germany," Journal of Business Venturing, Elsevier, vol. 31(2), pages 196-215.
    6. Richard A. Hunt & Daniel A. Lerner, 2017. "Tales Left Tails Tell: Addressing Left-Side Truncation in Strategy Research," Working Papers 2017-04, Colorado School of Mines, Division of Economics and Business.
    7. Lichtenstein Benyamin, 2016. "Emergence and Emergents in Entrepreneurship: Complexity Science Insights into New Venture Creation," Entrepreneurship Research Journal, De Gruyter, vol. 6(1), pages 43-52, January.
    8. McKelvey Bill, 2016. "Complexity Ingredients Required For Entrepreneurial Success," Entrepreneurship Research Journal, De Gruyter, vol. 6(1), pages 53-73, January.
    9. Mario BENASSI & Matteo LANDONI & Francesco RENTOCCHINI, 2017. "University Management Practices and Academic Spin-offs," Departmental Working Papers 2017-11, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    10. repec:eee:jobuve:v:6:y:2016:i:c:p:21-27 is not listed on IDEAS
    11. Mary Han & Bill McKelvey, 2016. "How to Grow Successful Social Entrepreneurship Firms? Key Ideas from Complexity Theory," Journal of Enterprising Culture (JEC), World Scientific Publishing Co. Pte. Ltd., vol. 24(03), pages 243-280, September.
    12. repec:eee:jobuve:v:9:y:2018:i:c:p:53-59 is not listed on IDEAS
    13. James Caton, 2017. "Entrepreneurship, search costs, and ecological rationality in an agent-based economy," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 30(1), pages 107-130, March.

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