Reconceptualizing Entrepreneurial Performance: The Creation and Destruction of Value from a Stakeholder Capabilities Perspective

Abstract

Although scholars have long known that entrepreneurship involves the interaction of countless individuals beyond the entrepreneur, traditional performance metrics are limited to capturing the economic value that is created for shareholders. Multiple scholars have suggested that it should be possible to develop a more complete assessment that is able to simultaneously capture both the economic and non-economic consequences of entrepreneurship that exist for the broader network of firm stakeholders. The purpose of this paper is to provide a more nuanced understanding of entrepreneurial performance by operationalizing the concept of stakeholder capabilities. Building on concepts from stakeholder theory and the human development and capability approach in welfare economics, we argue that the pursuit of entrepreneurial opportunities can either create or destroy value for multiple stakeholders, and that this value is best conceived in terms of increases and decreases in individual capabilities (social, psychological, economic, physiological and intellectual). Approaching entrepreneurial performance from a stakeholder capabilities lens has implications for how we view entrepreneurs’ impact on society, what we mean by the creation and destruction of “value,” and how we define failure and success in entrepreneurship.

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Fig. 1

Notes

  1. 1.

    Scholarly research on stakeholder value is incredibly broad, and encompasses a number of different sub-domains. For clarity of argument we have limited our review to prior research on “what value is.” Those who would like a more comprehensive review should see Tapaninaho and Kujala (2019).

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Acknowledgements

We would like to thank Saras Sarasvathy, Sankaran Venkatarman, Ed Freeman, Alex Naar, Jessica Jones and multiple anonymous reviewers for their valuable comments on previous versions of this manuscript.

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This article was not funded by any specific grants from any specific institution.

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Correspondence to Ishrat Ali.

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Ishrat Ali declares that he has no conflict of interest. Griffin W. Cottle declares that he has no conflict of interest.

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Ali, I., Cottle, G.W. Reconceptualizing Entrepreneurial Performance: The Creation and Destruction of Value from a Stakeholder Capabilities Perspective. J Bus Ethics (2019). https://doi.org/10.1007/s10551-019-04327-0

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Keywords

  • Entrepreneurship
  • Performance
  • Value creation
  • Stakeholder capabilities