1. The Collective Nature of Entrepreneurship
Brayden King
Northwestern University
Law and Entrepreneurship Retreat

2. Arizona’s charter schools – An experiment in entrepreneurship

3. Arizona’s charter schools – An experiment in entrepreneurship
Arizona legislation (1994) sought to enhance autonomy of schools and encourage innovation & novelty
Freedom and encouragement to deviate from norm
“Do things differently!”

4. Proportion of charter school students in state population (2008)
Source:

5. Self-reports revealed a surprising amount of heterogeneity Examples:
NFL YET Academy – sports training and leadership skills
Flagstaff Arts and Leadership – fine arts teaching in all subjects
Center for Academic Success – culturally diverse training and emphasis on at-risk students
ACE (Alternative Computerized Education) – job training, technical skills for potential dropouts

6. What explains charter school novelty?
Most school districts exhibited mid- to high levels of homogeneity of charter school attributes
However, school districts that previously had magnet schools exhibited much higher levels of novelty
Magnet schools legitimated educational innovation and experimentation – entrepreneurs collectively learned how to build novel organizations

7. Key takeaway
Successful entrepreneurship is fundamentally a collective project.
A need to move our vision up a level analysis from the individual entrepreneur to the entrepreneurial group / community

8. Entrepreneurs - sources of economic creativity and vitality
Novelty: new ideas, new products, and new organizational forms
Wealth and job creation
Entrepreneurship – “the discovery and exploitation of profitable opportunities” by newly founded organizations

9. Two perspectives on entrepreneurship
The entrepreneurial actor – focus on individual attributes and incentives designed to encourage entrepreneurship
Who is an entrepreneur?
The collective process of entrepreneurship – focus on the interdependence of various actors in producing novel ideas
How do groups collectively generate novel ideas?

10. Collective generation of novel ideas
Collective creativity
Knowledge spillover
Collective action and legitimation of new industries
Entrepreneurial identities & mental models

11. Collective creativity
Entrepreneurial ventures are rarely the product of a single individual (Ruef 2010)
Creative process is the outcome of group interaction
Group v. individual creativity (Sawyer 2006)
Familiarity, network and demographic composition, norms, incentives tied to group collaboration,
Novel ideas are often generated in “contexts of collective creativity” (Armstrong 2002)
Cultures and norms; entrepreneurial identities

12. Knowledge spillover
Knowledge needed to innovate and create new entrepreneurial groups diffuses more freely in some contexts than others
Proliferation of venture capitalists and start-up specialists – roles as information intermediaries
Spillover amongst peers and former employees
Inter-dependence of startups
Stuart and Sorenson (2003) found that communities with high IPO rates had subsequent high rates of new firm foundings in the biotech industry
Negatively moderated by enforceability of state non-compete covenants

13. Collective action
Entrepreneurs work together, especially when their industry is new, to create legitimacy and demand
Industry associations / peer networks
Rao’s study on the certification contests and the development of the automobile industry

14. Entrepreneurial identities / mental models
Being an entrepreneur is not just an activity, it is a shared identity
Commitment to broader goals, values
Entrepreneurs form communities of fellow travelers
Mental models – how to do it
Sociability and social support
Example: Microbrewers

15. Implications for law and entrepreneurship
I don’t know, you tell me
How can law incentivize groups / communities to do more collaboration, experimentation with new organizational forms, innovation?
What tradeoffs are there between incentivizing individual entrepreneurs vs. group entrepreneurs (e.g., individual property rights vs. free information flow)?