Abstract
In this article, I argue that if we challenge some tacit assumptions of narrow rationality that endure in much of entrepreneurial studies, we can elevate entrepreneurial ethics beyond mere external constraints on rational action, and move toward fuller integration of ethics as an intrinsic part of the process of value creation itself. To this end, I propose the concept of practical wisdom as a framework for exploring entrepreneurial decision making and action that can broaden the scope of our research to recognize entrepreneurship as an inherently normative enterprise. Specifically, I suggest that a framework built upon a concept of practical wisdom enables us to adopt a richer and more complex view of entrepreneurial decision making that is well suited to the dynamic and uncertain context of entrepreneurship. Further, this framework enriches our view of entrepreneurial ethics to include consideration of the personal character, values, and purpose of the entrepreneur. By examining entrepreneurship through a lens of practical wisdom, we can open up new avenues of fruitful inquiry for scholars of entrepreneurship.
Similar content being viewed by others
References
Anderson, E.: 2005, ‘Dewey’s Moral Philosophy’, The Stanford Encyclopedia of Philosophy (Spring 2005 Edition), Edward N. Zalta (ed.), http://plato.stanford.edu/archives/spr2005/entries/dewey-moral/
Aristotle: 1984, Nicomachean Ethics, Trans. David Ross (Oxford University Press, New York)
Augier, M.: 2001, ‘Sublime Simon: The consistent vision of economic psychology’s Nobel laureate’, Journal of Economic Psychology, 22: 307-334.
Austin, J. E., Stevenson, H. & Wei-Skillern, J.: 2006, ‘Social and Commercial Entrepreneurship: Same, Different, or Both?’, Entrepreneurship Theory and Practice 30: 1-22.
Baltes, P. B., & Smith, J.: 1990, ‘The psychology of wisdom and its ontogenesis,’ in R. J. Sternberg (ed.), Wisdom: Its nature, origins, and development (Cambridge University Press, New York), pp. 87-120.
Blau, P.: 1964, Exchange and Power in Social Life. (New York: John Wiley).
Brush, C.: 1992, ‘Marketplace information scanning activities of new manufacturing ventures,’ Journal of Small Business Management, Vol, 30, pp. 41-54.
Burt, R. S.: 1992, Structural holes: The social structure of competition. (Cambridge, MA: Harvard University Press).
Busenitz, L. W., and Barney, J. B.: 1997, ‘Biases and heuristics in strategic decision-making: Differences between entrepreneurs and managers in large organizations’, Journal of Business Venturing 12: 9-30.
Carter, R.B. and Van Auken, H.: 2005, ‘Bootstrap Financing and the Characteristics of Small Business Owners and Their Business Environment’, Entrepreneurship and Regional Development 17: 129-144.
Cornwall, J. and Naughton, M.: 2008, Bringing your business to life: The four virtues that will help you build a better business and a better life (Ventura, CA: Regal).
Csikszentmihalyi, M., & Rathunde, K.: 1990, ‘The psychology of wisdom: An evolutionary interpretation’, in R.J. Sternberg (ed.), Wisdom: Its nature, origins, and development (pp. 25–51). (Cambridge, UK: Cambridge University Press).
De Koning, A.: 1999, Conceptualizing Opportunity Formation as a Socio-Cognitive Process, Dissertation manuscript, INSEAD
Dees, J.G. & Anderson, B.B.: 2003, ‘For-profit social ventures’, International Journal of Entrepreneurship Education (special issue on social entrepreneurship), 2: 1–26.
Dees, J. and Starr, J.: 1992, ‘Entrepreneurship through an Ethical Lens: Dilemmas and Issues for Research and Practice’, In: D. Sexton and J. Kasarda (eds) The State of the Art of Entrepreneurship (Boston: PWS-Kent).
Donaldson, T. 2003. ‘Taking Ethics Seriously –A Mission Now More Possible’, Academy of Management Review, 28: 363-366.
Dunham, L., J. McVea and R. E. Freeman: 2008, ‘Entrepreneurial Wisdom: Incorporating the Ethical and Strategic Dimensions of Entrepreneurial Decision-Making’, International Journal of Entrepreneurship and Small Business 6, 8–19
Duska, Ronald F.:1993, ‘Aristotle: A pre-modern post-modern? Implications for business ethics’, Business Ethics Quarterly, 3: 227-249.
Etzioni, A.: 1988, The Moral Dimension: Toward a New Economics (New York: The Free Press).
Forbes, D. P.: 1999, ‘Cognitive approaches to new venture creation’, International Journal of Management Reviews 1: 415–439.
Freeman, R. E.: 1994, ‘The Politics of Stakeholder Theory: Some Future Directions’, Business Ethics Quarterly 4: 409-21.
Freeman, R. E., Wicks, A., Parmar, B.: 2004, Stakeholder theory and “the corporate objective revisited. Organization Science. 15: 364-69.
Granovetter, M.: 1973, ‘The strength of weak ties’, American Journal of Sociology, 6: 1360-1380.
Green, D.P. and Shapiro, I.: 1994, Pathologies of Rational Choice Theory. A Critique of Applications in Political Science (New Haven, CT: Yale University Press).
Hannafey, F. T.: 2003, ‘Entrepreneurship and Ethics: A Literature Review’, Journal of Business Ethics 46, 99–110
Harris, J. D. and Freeman, R. E. (2008) The Impossibility. Business Ethics Quarterly 18:541-548.
Hartman, E. M.: 1996, Organizational Ethics and the Good Life. (New York: Oxford University Press).
Hayek, F.A.: 1948, Individualism and Economic Order, (Chicago: The University of Chicago Press).
Homans, G.: 1958, ‘Social behavior as exchange’, American Journal of Sociology, 62: 606-627.
Johannisson, B.: 1996, ‘The dynamics of entrepreneurial networks’, In: Reynolds, P., et al. (Eds.), Frontiers of Entrepreneurship Research, Babson College Press, Babson Park, MA, pp. 253–267.
Kaish, S., Gilad, B.: 1991, ‘Characteristics of opportunities search of entrepreneurs versus executives: sources, interest, and general alertness,’ Journal of Business Venturing, Vol. 6, pp. 45–61.
Kirzner, I.: 1979, Perception, opportunity and profit (Chicago: University of Chicago Press).
Kirzner, I.: 1985, Discovery and the capitalist process (Chicago: University of Chicago Press).
Kirzner, I.: 1997, ‘Entrepreneurial discovery and the competitive market process: An Austrian approach’, Journal of Economic Literature, 35: 60 – 85.
Larson, A.: 1997, ‘Ethics and entrepreneurship’, In Werhane, P. and Freeman, R.E. (eds.) Blackwell Encyclopedic Dictionary of Business Ethics. (Malden, MA: Blackwell Publishers Inc.).
Lindenberg, S.: 1983, ‘Utility and Morality’, Kyklos, 36: 450-68.
Low, M.B. and MacMillan, I.C.: 1988, ‘Entrepreneurship: Past research and future challenges’, Journal of Management, 14: 139-161.
Mackey, J.: 2005, ‘Rethinking the Social Responsibility of Business’, Reason Online, http://www.reason.com/0510/fe.mf.rethinking.shtml. Retrieved 4 Nov 2005
Margolis, H.: 1982, Selfishness, Altruism and Rationality: A Theory of Social Choice (Cambridge: Cambridge University Press).
McCune, J. C.: 1999, ‘Bootstrapping: Cutting Corners and Pinching Pennies to Finance Your Business’, Bankrate.com, http://www.bankrate.com/brm/news/biz/Cashflow_banking/19991101.asp. Retrieved 10 Jan 2007
McVea, J.: 2007, ‘Constructing Good Decisions in Ethically Charged Situations: The Role of Dramatic Rehearsal, ‘Journal of Business Ethics, 4: 375-390.
McVea, J. F. and Freeman, R. E.: 2005, ‘A Names-and-Faces Approach to Stakeholder Management: How Focusing on Stakeholders as Individuals Can Bring Ethics and Entrepreneurial Strategy Together’, Journal of Management Inquiry, 14: 57-69.
Mises, L. V.: 1949 [1966], Human Action: A Treatise on Economics (Henry Regnery, Chicago)
Mitchell, R. K., Busenitz, L., Lant, T., McDougall, P. P., Morse, E. A., & Smith, B.: 2004, ‘The distinctive and inclusive domain of entrepreneurial cognition research’, Entrepreneurship Theory and Practice, 28: 505–518.
Moberg, D.J.: 2008, ‘Mentoring and practical wisdom: Are mentors wiser or just more politically skilled?’, Journal of Business Ethics, 83: 835-843.
Nussbaum, Martha C.: 1990, Love’s Knowledge: Essays on Philosophy and Literature (Oxford: Oxford University Press).
Opp, K.D.: 1999, ‘Contending conceptions of the theory of rational action’, Journal of Theoretical Politics, 11 : 171-202.
Palich, L.E., & Bagby, D.R.: 1995, ‘Using cognitive theory to explain entrepreneurial risk taking: Challenging conventional wisdom’, Journal of Business Venturing, 10: 425-438.
Robinson, D. N.: 1990, ‘Wisdom through the ages’, in R. J. Sternberg (ed.), Wisdom: Its nature, origins, and development. (Cambridge: Cambridge University Press).
Roca, E.: 2007, ‘Introducing practical wisdom in business schools’, Journal of Business Ethics, 82: 607-620.
Roddick, A.: 1991, Body and Soul (New York: Crown).
Sarasvathy, S. D.: 2002, ‘Entrepreneurship as economics with imagination’,Business Ethics Quarterly. The Ruffin Series 3: 95-112.
Schumpeter, J.: 1934, Capitalism, socialism and democracy (New York: Harper and Row).
Shane, S., Locke, E. A., and Collins, C. J.: 2003, ‘Entrepreneurial motivation’, Human Resource Management Review, 13: 257–279.
Simon, H.A.: 1976, ‘From substantive to procedural rationality’, in S.J. Latsis (ed.), Method and Appraisal in Economics. (Cambridge: Cambridge University Press).
Simon, M., Houghton, S.M. and Aquino, K.: 1999, ‘Cognitive biases, risk perception and venture formation: how individuals decide to start companies,’ Journal of Business Venturing, 15: 113-134.
Singh, R.P., Hills, G.E., Hybels, R.C. and Lumpkin, G.T.: 1999, ‘Opportunity recognition through social network characteristics of entrepreneurs’, In Reynolds P., et al. (eds) Frontiers of Entrepreneurship Research (Wellesley, MA: Babson College).
Solomon, R.C.:1992, Ethics and Excellence. (Oxford: Oxford University Press).
Starr, J.E. and MacMillan, I.C.: 1990, ‘Resource cooptation via social contracting: resource acquisition strategies for new ventures’, Strategic Management Journal, 11: 79–92.
Sternberg, R.J.: 1998, ‘A balance theory of wisdom’, Review of General Psychology, 2: 347–365.
Stevenson, H.H., Roberts, M.J. and Grousbeck, H.I.: 1985, New Business Ventures and the Entrepreneur (Homewood, IL: Irwin).
Venkataraman, S.: 1997, ‘The Distinctive Domain of Entrepreneurship Research’, in J. Katz and R. Brockhouse (eds.), Advances in entrepreneurship, firm emergence and growth, 3 (Greenwich, CT: JAI Press), pp. 119-138.
Wicks, A. C.: 1996, ‘Overcoming the Separation: The Need for a Reconsideration of Business and Society Research’, Business & Society 35: 89-118.
Wicks, A. and Freeman, R.E. 1998. Organization Studies and the New Pragmatism: Positivism, Anti-Positivism, and the Search for Ethics. Organization Science, 9, 123-140.
Acknowledgments
The author would like to thank the editor and anonymous reviewers, as well as John McVea, for their helpful comments on this article.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Dunham, L.C. From Rational to Wise Action: Recasting Our Theories of Entrepreneurship. J Bus Ethics 92, 513–530 (2010). https://doi.org/10.1007/s10551-009-0170-5
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-009-0170-5