Power and Entrepreneurship

Guest Post by: Antje Fiedler

Power lets actors influence others towards desired ends. Power provides an alternative lens on entrepreneurship to institutional, networks and cognition lenses from an economic sociology perspective. Our introductory conceptualisation surfaces multifaceted dynamics of this fundamental force that most entrepreneurship literature, unlike social sciences and management, treats somewhat loosely, latently or lopsidedly. Power “comes from everywhere” (Foucault, 1978, p. 96). Not only well-resourced states and legacy firms, but entrepreneurs can shape the perception and development of entrepreneurial opportunities and potentially influence power structures.
 

In Audretsch and Fiedler (2023), we pioneer a power lens for entrepreneurship research comprising three forms, two overarching types and three main actor groups. First, building on Wrong’s (2017) work in sociology yields three forms of power. Coercive power imposes on subjects’ will via rules, dominance, force, or rewards and punishments of resources that subjects depend on in pursuing entrepreneurial opportunities. By communication and choice, persuasive power seeks “tested acceptance” of the persuader’s judgment (Easton 1958 in Wrong, 2017, p. 35) about the value of entrepreneurial opportunities. Authoritative power operates on subjects’ judgment via untested acceptance of commands or judgments in deference to the authority’s perceived personal expertise, position, resources, or even charisma, which can be a resource when enacting an entrepreneurial opportunity.
 

Second, we develop two overarching power types (Göhler, 2009): “power over” how actors consider opportunities and which opportunities can be pursued without reprimand; and “power to” pursue them. Entrepreneurship literature’s implicit focus on power over explains entrepreneurial failure better than success. While sociology shows some actors dominate via power (Weber, 1978), structurally constrained entrepreneurs (Foucault, 1978) retain choices (Campbell, 2009). Entrepreneurs often defy or evade power over them by power-to responses. This demonstrates power’s transformative potential.
 

Third, three key actor groups – state actors, legacy firms, and entrepreneurs – can use all three forms and either type, albeit certain form-type-actor combinations illustrated below are commoner. We group illustrations by power over then (responsive) power to, and within each type, by actors then forms. As “power over”, states often coercively enable or restrict who may pursue which opportunities. Enabling measures include pro-competition laws. Restrictions include privileging legacy lobbyists. Media access augments states’ persuasive power in narratives of, for example, entrepreneur-led growth. Officials who, sometimes corruptly, offer perceived control of opportunities like import licences illustrate state authority. Legacy firms coercively appropriate or close opportunities by exploiting entrepreneurs’ dependence on critical or complementary assets. Using persuasion, technology incumbents reduce would-be competitor entrepreneurs to network members by legacy licenses, or acquire them to “kill” their disruptive business models and daunt others by reputational authority for doing so.
 

Occasionally entrepreneurs can coerce opportunities: Patent sharks are predatory entrepreneurs. Persuasion, and personal network authority, win resource-strapped start-ups trust or funding. Under “power to”, state policymakers foster or channel entrepreneurship by, for instance, coercive small-firm R&D grants justified by persuasive narratives about market failure. To mould and flag opportunities, official consultancies rely on governmental authority.
 

Some business models, like digital platform provision, let legacy firms coercively control opportunities and ecosystems. The mature Alibaba persuasively lobbied China’s government to promote its Taobao Villages venture bringing rural entrepreneurs e-commerce opportunities. Google’s well-advertised corporate entrepreneurship cultivates authority.
 

Effectual entrepreneurs eke out opportunities they control, bypassing reliance on coercive power, but some entrepreneurs can coercively insist partners share risk. Entrepreneurs’ persuasive powers include storytelling. Serial successes like Richard Branson command authority.
 

As of April 2024, I, David Audretsch, and others continue exploring power’s applications to entrepreneurial opportunities alongside freedom, democracy, values and entrepreneurial ecosystems. Three foci enhance its promise as a lens linking context to opportunity development. First, power’s interactional focus differentially affects opportunity-related resources and judgments, for instance sometimes (c)overtly stifling female entrepreneurship. Interactions among actors of unequal, unfixed power illuminate how networks evolve – and how entrepreneurs unencumbered by legacy costs and shareholder expectations circumvent legislative and other structures.
 

Second, focusing on power-revealing episodes (Lawrence, 2008) extends how events impact power structures. Crises like pandemics and wars destroy, and create, opportunities. Individual-level events like investor meetings, and industry-level events like emerging competition (Fath et al, 2021), and strategic responses to both, alter structures and niches. Third, power contexts breach institutional or geographic boundaries. Moreover, differential tolerances for power inequalities will affect entrepreneurial ecosystem dynamics (Audretsch & Fiedler, 2021).
 

Finally, power impacts how freedom in a context affects entrepreneurship (Audretsch & Fiedler, 2021; Audretsch & Moog, 2022). Foucault (1982) makes freedom a condition: unfree subjects’ actions are determined, not influenced. The ways power shapes opportunities of free actors help explain when entrepreneurs fail despite superior technology; who have the right to be entrepreneurs; what strategies liberate entrepreneurs can pursue; and whether entrepreneurship is punished, tolerated or rewarded.

References

Audretsch, D. B., & Fiedler, A. (2021). The Vietnamese entrepreneurship paradox: How can
entrepreneurs thrive without political and economic freedom? The Journal of Technology Transfer. 

Audretsch, D. B., & Fiedler, A. (2022). Does the entrepreneurial state crowd out entrepreneurship? Small Business Economics. 

Audretsch, D. B., & Fiedler, A. (2023). Power and entrepreneurship. Small Business Economics, 60(4), 1573-1592.  

Audretsch, D. B., & Moog, P. (2022). Democracy and entrepreneurship. Entrepreneurship Theory and Practice, 46(2), 368–392. 

Campbell, C. (2009). Distinguishing the power of agency from agentic power: A note on Weber and the “black box” of personal agency. Sociological Theory, 27(4), 407–418.

Fath, B., Whittaker, H., & Fiedler, A. (2021). Developing venture opportunities amidst rivalry: Entrepreneurs’ backgrounds and the governing role of maintaining confidence. Entrepreneurship & Regional Development, 33(7–8), 641–667.

Foucault, M. (1978). The history of sexuality: Vol. Vintage Books.

Foucault, M. (1982). The subject and power. Critical Inquiry, 8(4), 777–795. 

Göhler, G., (2009). “Power to” and “power over.” In S. Clegg and M. Haugaard (Eds.), The Sage Handbook of Power (pp. 27–39). Sage.

Lawrence, T. B. (2008). Power, institutions and organizations. In R. Greenwood, C. Oliver, T. B.

Lawrence, & R. E. Meyer (Eds.), The Sage handbook of organizational institutionalism (pp. 170–197). SAGE Publications.

Weber, M. (1978) Economy and society: An outline of interpretive sociology (G. Roth & C. Wittich, Eds.). University of California Press.

Wrong, D. H. (2017) Power: Its forms, bases and uses (3rd ed.). Transaction Publishers (original published in 1979 by Harper and Row)