An opportunity space odyssey:
historical exploration of demand-
driven entrepreneurial innovation
Richard A. Hunt
Division of Economics and Business,
Colorado School of Mines, Golden, Colorado, USA
Purpose –One of the crucial questions confronting strategy and entrepreneurship scholars continues to be:
Where do new industry sectors come from? Extant literature suffers from a supply-side “skew”that focuses
unduly on the role of heroic figures and celebrity CEOs, at the expense of demand-side considerations.
In response, the purpose of this paper is to examine societal demand for entrepreneurial innovations.
Employing historical data spanning nearly a century, the author assess more completely the role of latent
demand-side signaling in driving the quantity and diversity of entrepreneurial innovation.
Design/methodology/approach –Applying the methods of historical econometrics, this study employs
historical artifacts and cliometric models to analyze textual data in drawn from three distinctive sources:
Popular Science Monthly magazine, from its founding in 1872 to 1969; periodicals, newsletters, club minutes,
films and radio transcripts from the Science Society, from 1921 to 1969; and programs and news accounts
from the US National High School Science Fair, from 1950 to 1969. In total, 2,084 documents containing
33,720 articles and advertisements were coded for content related to pure science, applied science and
Findings –Three key findings are revealed: vast opportunity spaces often exist prior to being occupied by
individuals and firms; societal preferences play a vital role in determining the quantity and diversity of
entrepreneurial activity; and entrepreneurs who are responsive to latent demand-side signals are likely to
experience greater commercial success.
Research limitations/implications –This study intentionally draws data from three markedly different
textual sources. The painstaking process of triangulation reveals heretofore unobserved latencies that invite
fresh perspectives on innovation discovery and diffusion.
Originality/value –This paper constitutes the most panoramic investigation to-date of the influence
wielded by latent demand-side forces in the discovery and commercialization of innovation.
Keywords Innovation, Diffusion, Entrepreneurship, Historical analysis, Demand-side, Opportunity development
Paper type Research paper
One of the crucial questions confronting strategy and entrepreneurship scholars continues
to be: Where do new industry sectors come from? As Schoonhoven and Romanelli (2009)
noted, the great challenge inherent in this question is that scholars are trying to examine
something before it comes into existence. How, they asked, is it possible for researchers to
measure the existence of an open environmental space before new or existing firms act to
occupy it? Prior research has addressed this issue through two very different lenses: one has
focused on supply-side dynamics and the other, on demand-side dynamics (Thornton, 1999).
While the supply-side perspective emphasizes individual characteristics and the ways in which
founders access the mechanisms of innovation (Romanelli and Schoonhoven, 2001), the
demand-side perspective addresses the role of environmental context (Aldrich and
Wiedenmayer, 1993; Hunt and Kiefer, in press; Romanelli, 1989), societal signals (Hunt 2013c;
Myers and Marquis, 1969; Schmookler, 1966), and user-provocated breakthroughs (Priem et al.,
2012; Von Hippel, 1976).
Recent demand-side scholarship has sought to examine the potent effects of explicit
demand preferences developed and articulated by user-customers (e.g. Adner and
Snow, 2010; Danneels, 2003, 2008; Di Stefano et al., 2012; Priem, 2007; Priem et al., 2012;
European Journal of Innovation
© Emerald Publishing Limited
Received 6 July 2017
Revised 4 September 2017
Accepted 18 September 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
Priem and Swink, 2012; Ye et al., 2012). In particular, these demand-side approaches have
sought to illuminate the role of well-established, incumbent firms in demanding the
development of new products and services by their respective suppliers. The sum total of
these research efforts has succeeded in demonstrating the importance of existing customer
demands in instigating technological developments. What is notably missing, however,
is an identification and explication of latent demand effects as they pertain to new
sectors –before the sectors are even occupied by entrepreneurs and firms –which, I will
argue in this paper, are both pervasive and powerful in determining the quantity and
diversity of entrepreneurship supplied to the market. Latent demand refers to the condition
in which a significant number of people experience a desire or need for something that does
not exist in the form of an actual product or service (Kotler, 1973). Such demand can be,
and often is, highly diffuse, since it stems from individual preferences, many of which are
loosely constructed and largely unconscious (Earl and Potts, 2000; Hunt 2013c). The element
of latency suggests that this demand is pre-existing, as opposed to conscious, fully
expressed, well-understood decisions to act on choices that are already available (Earl, 1986;
While latent demand lies under the surface of market activity, consumer perceptions and
potential innovations, its subliminal nature does not diminish its importance to the study of
entrepreneurial innovation. On the contrary, the absence of studies on society-wide, latent
demand-side signaling for innovation suggests that extant literature may fail to account for
a recurrent market influence that is highly germane to the quantity and diversity of
entrepreneurial activity. Priem et al. (2012) identified this gap while noting that much work
remains to properly define and analyze the ways in which society-wide opportunity
signaling shapes supply-side activity. This paper responds to that call, asking: When and
how are demand-side forces instrumental in the generation of innovations, sectors and
Demand-side phenomena are notoriously difficult to isolate (Di Stefano et al., 2012;
Teece, 2008). Given the diffuse and shifting nature of demand-side effects, it is difficult to
comprehend their existence, and impossible to evaluate their impact, without employing an
historical perspective through the use “archival data”(Priem et al., 2012). Alert to the
underutilization of historical artifacts, multi-generational timeframes and historiographic
methods in management research (Booth and Rowlinson, 2006; Delahaye et al., 2009;
Ingram et al., 2012; Kipping and Üsdiken, 2014), and the comparative success of cliometrics
in reshaping central discussions in economics (Alston, 2008; Fogel, 1966, 1970; Goldin, 1997;
Greif, 1997; Hunt, 2013b), this study employs data that are amenable to the methodological
rigor and the expansive perspective of historical econometrics. The data set I use spans
nearly a century, involving the commercialization of scientific knowledge in the USA from
1872 to 1969, a time period with tectonic social shifts and epic technological changes.
Consistent with the long timeframes employed by population ecologists (e.g. Hannan and
Freeman, 1984), diffusion scholars (e.g. Benner and Tushman, 2002; Rogers, 2003; Tushman
and Murmann, 1998), and a select group of scholars in strategy and entrepreneurship
(e.g. Casson, 1982; Casson and Godley, 2005; Wadhwani and Jones, 2014), this study shares
their panoramic scale, but with the added benefit of not sacrificing fine-grained empirics
(Hunt, 2013b, c).
In venturing to underscore the utility of applying distant timeframes to key questions of
innovation research, this study makes a number of contributions to the domains of
entrepreneurship and strategy. First, my findings demonstrate that latent demand-side
effects can be explicitly identified through the analysis of socially embedded historical
artifacts that give a voice to demand-side perceptions. Latent demand, contrary to extant
literature (e.g. Dosi, 1982; Mowery and Rosenberg, 1979; Teece, 2008), is readily
distinguishable from supply-side effects, even in the context of new technologies and
emerging sectors (Hunt, 2013b; Hunt and Ortiz-Hunt, 2017). However, it is only possible to
discern these important differences with the benefit of historical distance. Second, I present
compelling evidence that demand-pull effects generate technological innovation and
entrepreneurial activity. Since the publication of highly influential work by Mowery and
Rosenberg (1979) and Dosi (1982), economists and management scholars have largely
depicted society-wide demand-side forces as selectors, not generators, of entrepreneurial
activity (Di Stefano et al., 2012; Priem et al., 2012). Writing a quarter of a century later,
Teece echoed Dosi assertion that no empirical evidence exists that provides evidence of the
generative capacity of demand-side forces (Dosi, 1982, 1988; Teece, 2008). While this may be
true of prior empirical work, the consequence of assuming away the generative capacity of
demand-side forces implicitly abandons any pretense of maintaining an explanatory model
that balances supply-push and demand-pull effects. My ability to demonstrate a generative
role stemming from latent societal demand preserves the viability of a balanced
supply-demand explanatory framework.
Finally, I offer conceptual, empirical and methodological alternatives to the study of
innovation through the use of socially embedded historical artifacts. Absent a panoramic
data set that offers pulse-like vital signs of societal preferences over the course of successive
generations, it would be impossible to apprehend and understand demand-side influences.
Successful use of historiographic tools suggests that other vexing challenges in
management scholarship could be well served by employing a more historical
approach to data.
2. Theory development and hypotheses
Which comes first: the demand for innovations and entrepreneurship or the supply?
The question is more than simply an ontological curiosity. If the supply of innovations
invariably precedes demand, then clearly supply shapes and steers demand, allowing it
selection privileges but not a generative capacity. If societal demands –regardless of
whether they are latent or explicit –invariably precede supply, then entrepreneurs are
largely “sifters and sorters,”possessing selection privileges, but not generative capabilities.
Innovation generation and selection refer to the processes through which competing
solution sets are created and commercialized (Di Stefano et al., 2012). The concepts are
important because solution sets are the generalized means through which a need or a want
is satisfied. For example, the vast array of smartphones constitutes competing solution sets
to satisfy the desire for telephony and mobile internet access. The question is: are
smartphone innovations developed to address a latent, demand-side conception of a mobile
access, or are they a solution set in search of a potential audience, wherein consumers
are drawn to an unforeseen category by novel innovations? This is the essence of the
supply-push vs demand-pull debate. Supply-side generation of innovations means that
entrepreneurs take the lead in developing products and services, after which society then
chooses, through market-based transactions, which of these innovations are attractive to
them. In one view, innovators may adopt a supply-push logic to the commercialization
of possible solution sets designed to fulfill needs and wants. Extending the language of
generators and selectors noted above, a supply-push focus suggests that solution sets are
largely the product of innovations generated by enterprising entrepreneurs and society
selects which among the various alternatives it most favors. Conversely, a generative
demand perspective involves explicit and latent signaling of desirable solution sets,
to which innovating entrepreneurs then respond in an effort to fulfill the needs and wants.
The demand-pull vs supply-push debate has occupied scholars of technological change
for more than 40 years (Dosi, 1982; Freeman, 1995; Mowery and Rosenberg, 1979; Pavitt,
1984; Rosenberg, 1982; Schmookler, 1966; Von Hippel, 1976). The supply-push approach
sees innovations emerging “independent of specific customer or market needs,”while the
demand-pull approach sees innovations emerging as a “direct attempt to satisfy specific
market needs”(Ye et al., 2012, p. 6).
Parsing supply-push and demand-pull forces is far from a discrete activity. As Mowery
and Rosenberg (1979) asserted, the highly inter-related nature of demand-pull and
supply-push forces makes it extremely difficult to identify and parse out the facets of
innovation that are patently a result of demand. On the other hand, the supply of innovations
by entrepreneurs is readily apparent in the form of patents, product designs, new launches
and new sectors. Therefore, even while the push-pull debate has been settled through an
acknowledgment of mutuality, the overwhelming tendency has been to side with Dosi (1982,
p. 150), who claimed that scholars propounding the existence of demand-pull effects had failed
“to produce sufficient evidence that needs expressed through market signaling”plays a
demonstrable role in the generation of innovations.
2.1 Novel solution sets and demand-supply sequencing
Despite the emergence and promulgation of a supply-side skew concerning the origins of
innovative solution sets (Dosi, 1982; Mowery and Rosenberg, 1979), recent work by Di Stefano
et al. (2012) suggests that the debate over supply-push primacy is far from settled. In noting the
need for more research exploring demand-side forces, they issued a call for new research to
address the question: “Does demand generate innovation in addition to selecting it?”
(Di Stefano et al., 2012, p. 1291). Implicit in this call is the lingering sense that latent demand-
side signaling has not received a proper accounting, theoretically or empirically.
The key to determining whether or not demand-side forces play a discernable role in
generating innovations involves ascertaining if and when latent demand-side signaling of
needs and wants for a solution set precede the supply of specific innovations designed to
address that solution set. This is, in essence, a question of sequencing (Hunt and Ortiz-Hunt,
2017). If latent demand for a solution set can be shown to precede supply, then demand-side
forces have the potential to generate the innovations that Dosi (1988), Teece (2008) and
DiStefano et al. (2012) have pointedly questioned. In the absence of empirical data and
applicable methodologies, the generative capacity of demand-side forces has been treated as
a theoretical issue, rather than as an empirical challenge. Since demand-first sequencing had
not been observed (Teece, 2008), theoretical frameworks describing and predicting
innovation have assumed that it cannot be observed.
Skepticism regarding the potential efficacy of demand-first logics is not unanimous.
For example, Rogers (2003) wrote about “popularized scientific conversations”exerting
influence on the diffusion of new technologies, while Golder (2000) propounded concepts
hinting at demand-side “design directives.”Similarly, opportunity spaces, as conceptualized
by Schoonhoven and Romanelli (2009), also represent the fertile ground for competing
solution sets; spaces that exist in latent fashion even before the emergence of
entrepreneurial innovations to exploit the opportunities. If an opportunity spaces are only
defined after they have been occupied, then the description of any given opportunity space
is inherently cast in terms of the initial occupants. In Schoonhoven and Romanelli’s view,
it is erroneous to only begin discussing an opportunity space once it is occupied because any
given firm or any given solution set capitalizes on only a portion of an opportunity space’s
full potential. To this point, Eisenhardt and Tabrizi (1995) noted that the initial occupants of
an opportunity space typically constitute no more than a portion of what could be exploited
as the wider potentiality the space came to be more fully appreciated.
Each of these counterpunctual perspectives drives toward an unanswered question:
Do demand-pull forces play a role in generating new innovations, firms and sectors? Given
that this question purports to address conditions that exist before the innovations, firms and
sectors themselves exist, any sequencing that places demand-side forces ahead of
supply-side entrepreneurial activity necessarily advances two important claims:
opportunity spaces exist prior to being occupied; and demand-side forces have the capacity
to generate new innovations. Extending the initial work that is suggestive of latent demand-
side forces (Golder, 2000; Rogers, 2003) and positing the existence of opportunity spaces
prior to being occupied by entrepreneurs (Schoonhoven and Romanelli, 2009),
demand-supply sequencing has potent implications regarding the generative capacity of
demand-side forces. More formally:
H1. When latent demand for entrepreneurial innovation precedes supply, then demand
serves as a generative force of innovation and supply serves as a selective force.
2.2 Demand-driven quantity and diversity of entrepreneurial activity
As the foregoing discussion reveals, disparate research streams support the premise that
opportunity spaces may exist prior to being occupied by entrepreneurial innovators
(e.g. DiStefano et al., 2012; Golder, 2000; Rogers, 2003; Schoonhoven and Romanelli, 2009);
however, a formal test is needed for the assertion that demand-side forces generate
innovative solution sets through latent societal signaling. If it can be demonstrated in at
least some material instances that demand-pull effects precede the supply of entrepreneurial
activity, then it is conceivable that demand can serve as a generative source of
entrepreneurial innovation, as opposed to simply being a selective force of promising
innovations developed by entrepreneurs. In turn, demand-side generation of opportunity
spaces and solution sets suggests that latent demand-side forces may have a role in shaping
both the quantity and diversity of entrepreneurial activity that is brought to market
(Hunt, 2013a, c; Sarasvathy, 2004). The quantity of “non-necessity”entrepreneurship –
consisting of new business venturing that excludes those pushed into self-employment due
to non-discretionary forces (Acs, 2006) –is indicative of a society’s proclivity to pursue
entrepreneurial opportunities (Baumol, 1990; North, 1990) as well as the broader influence of
tangible and intangible forces that have come to be known as entrepreneurial ecosystems”
(Gnyawali and Fogel, 1994; Isenberg, 2010). The diversity of entrepreneurship represents
the breadth of distinctive solution sets introduced to the marketplace (Brown and
While the quantity and diversity of a society’s entrepreneurship are emblematic of the
interplay between both supply-side and demand-side forces. Extant conceptions of
opportunity emergence and new business venturing have tended to focus on individual
entrepreneurs. The supply-side preoccupation involves what Schoonhoven and Romanelli
(2009) called the “lone, swashbuckling entrepreneur.”Such mythologized representations of
the “heroic entrepreneur”(McMullen, 2017) offer an incomplete and fatally over-simplified
depiction of the entrepreneur-opportunity nexus (McMullen and Shepherd, 2006; Eckhardt
and Shane, 2003) in that macro-environmental forces, including social-cultural norms, biases
and preferences, must also be taken into account. Thus, by signaling latent societal
preferences, demand-side forces exert influence over the quantity and diversity of solution
sets that might be brought to market. Sprawling, high-potential opportunity spaces,
for which society may signal strong interest, could invite more market actors and more
competition among varied solution sets than a relatively narrow niche representing a
smaller opportunity space.
For example, nearly 2,000 small firms were engaged in automobile manufacturing in the
early 1900s (Eckermann, 2001; Georgano, 1985). Virtually all of these firms were focused on
developing a “horseless carriage”powered either by steam or primitive batteries. However,
the latent demand signaling for the specific features that consumers desired in an
automobile ultimately made steam and battery-powered technologies untenable
(Clymer, 1950; Eckermann, 2001). In order to adequately address the manner in which
consumers intended to use autos, entrepreneurial inventors first had to develop and market
safe and effective internal combustion technology (Clymer, 1950; Kimes and Clark, 1975).
Therefore, the “opportunity space”for horseless, motorized land transportation would be
portrayed inaccurately if it focused primarily on sector occupants who sought to develop
steam or battery-based solutions.
Conversely, opportunity spaces suggested by latent demand for novel therapeutics to
address “orphan”diseases, with a small population of sufferers would likely generate only
rarefied interest from entrepreneurial innovators. The addressable market for a horseless
carriage was immense, while the addressable market for Aagenaes syndrome –a rare
genetic disorder occurring less than once in one million births –is extraordinarily low.
Both automobiles and Aagenaes syndrome started out as ill-defined opportunity spaces, but
dramatic differences in latent and explicit demand directly influenced the quantity and
variety of innovative solution sets that were tested in the marketplace. In each case, the
opportunity space was established by preferences, norms, biases, and even human biology,
in the case of orphan diseases. Thus, pre-existing conditions for each opportunity space
demarcated the boundaries for viable solution sets.
Both illustrations reveal the generative role of latent demand and the manner in which
entrepreneurs subsequently serve as sifters and sorters of viable solution sets in search of specific
ways in which a diffuse population of potential customers would use automotive technology or
novel therapeutics for an orphan disease. This dynamic suggests that both the quantity and
diversity of entrepreneurial activity will emerge as a consequence demand-side signaling:
H2a. Demand-pull forces are positively associated with the quantity of entrepreneurship
that is supplied to the market.
H2b. Demand-pull forces are positively associated with the diversity of entrepreneurship
that is supplied to the market.
2.3 Demand-driven outcomes
As noted earlier, existing literature has attempted to chart a middle course, asserting that supply
and demand are interlocked, symbiotic and therefore, mutually dependent (Di Stefano et al., 2012;
Mowery and Rosenberg, 1979). Recent perspectives propounding inter-subjective mechanisms
take this inter-relatedness of society and innovators to the fullest extent (Davidson, 2001;
Sarasvathy et al., 2008): “The relationships between supply and demand are circular, interactive
and contingent rather than linear, unilateral and inevitable”(Sarasvathy, 2004, p. 299).
Inter-subjective conceptualizations of how new sectors, organizations and technologies are
developedand commercialized provide additional support for Mowery and Rosenberg’s (1979)
argument for the mutuality of supply and demand forces, but the inter-subjectivity emphasis
only further obscures the explicit role of demand-side forces. Regardless of whether scholars
argue that the founder of a new venture is “causing”or “effectuating”outcomes, the reality
is that either way the focus is patently set on the supply-side founder. If instead, the focus is on
demand-side drivers of the “opportunity space”prior to being occupied, then technological
change and successful innovations are not strictly a function of successful entrepreneurs, but
rather attentive founders who develop a deft approach to society’s signals. Regardless of
ex post interpretations of “circular, interactive and contingent”processes, entrepreneurial
activity emanating from demand-side signaling should display a “validation dividend,”in the
form of improved commercialization potential, as a market-based reward bestowed upon
entrepreneurs who “answer the call”of latent societal demands. By adopting an historically
panoramic, demand-side perspective, this study tests the validity of the assertion that:
H3. Entrepreneurial innovations that follow evidence of demand-pull preferences have a
greater chance of commercial success than entrepreneurial innovation preceding
evidence of demand-pull preferences.
3. Data and methods
The study of demand-pull effects, especially those pertaining to new firms and sectors
(Forbes and Kirsch, 2011), has suffered for want of a viable methodological approach. While
measures related to the analysis of supply-side, technology-push phenomena are plentiful
and generally well documented, there are few viable mechanisms for the acquisition and
analysis of demand-side effects. Recent research has made credible progress toward
defining the ways in which existing companies service the explicit and latent demands of
existing customers (Adner, 2002; Benner and Tripsas, 2012; Danneels, 2003, 2008; Ye et al.,
2012; Priem et al., 2012; Von Krogh and Von Hippel, 2006). In this limited context, scholars
have had good success distinguishing between demand-side and supply-side innovations,
capturing the ways in which users often serve as innovators (Ye et al., 2012; Nambisan and
Baron 2010; Priem et al., 2012). However, broadly diffuse societal preferences involving
conditions that precede innovations, firms and sectors, are another matter entirely. In the
period preceding the emergence of new organizational forms that is so central to the study of
entrepreneurship, there has been virtually no empirical research whatsoever (Di Stefano
et al., 2012; Forbes and Kirsch, 2011; Priem et al., 2012).
3.1 Latent demand-side signaling through historical artifacts
Cognizant of the many methodological impediments to examining demand-side forces,
including temporal proximity biases (Forbes and Kirsch, 2011; Welter, 2011), I designed a
study based on detailed historical artifacts. In escalating fashion, strategy and
entrepreneurship scholars (e.g. Haveman et al., 2012; Popp and Holt, 2013; Wadhwani,
2010) have recently sought to expand and amplify the use of historical perspectives and
techniques by building on foundational work of economists such as Schumpeter (1947),
Fogel (1966, 1970) and Casson (1982). Consistent with the methodological intent and design-
related insights of these approaches, I employ socially embedded historical artifacts to
examine the extent to which demand-side preferences may serve as verifiable drivers of
entrepreneurship. To do this, I traced the migration from pure science to applied science to
commercialized science (CS) (Table I) for hundreds of technology paradigms (Dosi, 1982, 1988).
Precedence for the conception of technological growth along the trajectory from pure science
to commercializable science has deep roots, including Dosi, who proffered the view of
Category Summary Definition Example
Pure science A method of inductively or deductively investigating
nature through the development and establishment
of information to aid understanding –prediction and
perhaps explanation of phenomena in the natural
world. Scientists working in this type of research
don’t necessarily have any ideas in mind about
applications of their work
Discovery that serotonin levels are
associated with human depression
Applied science Applied science is the exact science of applying
knowledge from one or more natural scientific fields
to practical problems. Many applied sciences can be
considered forms of engineering. Applied science is
important for technology development. Its use in
industrial settings is usually referred to as research
and development (R&D)
Screen thousands of chemical
compounds for any that have the
ability to affect serotonin levels
Development of a product or service based on
applied science that is offered for sale to existing or
Identify and isolate agents that
selectively inhibit the reuptake of
serotonin in a fashion that is safe
and effective for human treatment
for scientific content
of historical artifacts
“‘normal science”as being the “actualization of a promise”a technological trajectory repeats
itself as the pattern of “‘normal”problem solving activity, leading to what society commonly
refers to as “progress”(Dosi, 1982, p. 152).
In order to insure that the findings are not simply a manifestation of the specific
historical source material that I employed in the analysis, I used three separate longitudinal
sources of historical artifacts: Popular Science Monthly magazine, from its founding in
1872 to 1969; periodicals, newsletters, club minutes, films and radio transcripts from the
Science Society, from 1921 to 1969; and programs and news accounts from the US National
High School Science Fair, from 1950 to 1969. The use of periodicals has strong precedence in
prior studies that have sought to panoramic perspectives and historiographic techniques
(e.g. Haveman et al., 2012). By selecting an historical span that stretches from Post-Bellum
Reconstruction to the first steps on the moon, these historical artifacts form an in-depth
accounting of many of the greatest scientific and technological advances in human history
(Mokyr, 1998). The use of periodicals and other historical artifacts has been shown to be a
valid method for evidence of demand-side effects and entrepreneurial innovation
(Golder, 2000). For instance, Petra Moser’s wonderful investigation into the relationship
between patenting and innovation used programs and other artifacts from world fairs
staged in the 1800s (Moser, 2005).
Popular Science Monthly was first published in 1872, just seven years after the end of the
US Civil War, “to disseminate scientific knowledge to the educated layman”(Popular Science
August 1872, p. 104). In its early years, the magazine was a frequent outlet for the likes of
Darwin, Spencer, Huxley, Pasteur, James, Edison, Dewey, Becquerel, Maxwell, Tesla,
and Ramsay. The magazine has been published continuously for 140 years, generating
nearly 1,700 issues, and an exhaustive chronicle of science and technology, covering
60 percent of the history of the US.
The Science Service was the brainchild of publishing magnate E.W. Scripps, who started
the organization in 1921 to present “unsensationalized, accurate and fascinating scientific
news to the American public”(Smithsonian, 2012). Although Scripps and the Science
Service’s newswire never fully realized its mission of enjoining editors nationwide in the
mass circulation of scientific knowledge, the Service did spawn publications and clubs that
left an indelible imprint on American culture (Astell, 1930). In so doing, the organization
produced tens of thousands of historical artifacts that are pertinent to an assessment of
commercializable science. The flagship publication was the Science Newsletter. Virtually a
complete collection of publications, films, meeting minutes and radio transcripts are
available through the Smithsonian Institute Archives. Artifacts from the Science Service
were also used in this study due to the fact that they were first produced at almost
the precise time that Popular Science was approaching maturity. This is important in order
to demonstrate that the migration from pure science to applied science to CS was not simply
the result of a specific news outlet.
National science fair. Through the influence and support of the Westinghouse
Corporation, the first nationwide science competition was held in 1942, with the intent of
encouraging talented high school students to pursue careers in science. In 1950, finalists for
this competition met in Philadelphia for the first national science fair. Detailed programs,
extensive news accounts and data about the background, college plans and career choices
are available for each year’s event through the Smithsonian and the New York Public
Library. In exactly the same fashion that the artifacts from the Science Service are
introduced when Popular Science approached maturity, artifacts from the National Science
Fairs are introduced as the Science Service approached maturity. I implemented this study
design element in order to demonstrate that the migration from pure science to applied
science to CS was not simply the result of more general societal trends involving the
commercialization of technology.
Coding. In total, 2,084 documents containing 33,720 articles and advertisements
were coded for content related to pure science, applied science and CS. Ten undergraduate
science and engineering students were trained to perform the categorization in accordance
with the rubric summarized in Table I. Inter-rater reliability exceeded 87 percent for
the coding of each source and for any permutation of coders and document sources.
Innovation and sector data. Various measures of the quantity and diversity of
entrepreneurial activity were captured through data from the USA Patent and Trade Office
(1872-2012), SIC/NAICS classifications (1937-2012), and Dun & Bradstreet Classifications
3.2 Dependent variables
Applying a cliometric approach, using multiple and logistic regression, I modeled and tested
the four hypotheses using three separate dependent variables: Quantity of Entrepreneurial
Activity, Diversity of Entrepreneurial Activity, and Commercialization Events.
Entrepreneurial activity –quantity (EAQ). The continuous variable, EAQ, is a blended rate
comprised of the total number of new patents and the total number of new business sectors
emanating from a scientific discovery. Scientific discoveries were coded from historical
artifacts and then traced, wherever applicable, to patenting and commercialization.
Entrepreneurial activity –diversity (EAD). The continuous variable, EAD, is a
blended rate comprised of the total number of distinct patent-holders and the numerical
distance of new business sector codes (SIC/NAICS) emanating from a scientific discovery.
Scientific discoveries were coded from historical artifacts and then traced to patenting and
Commercialization events (CE). CE is a dummy variable, with 1 representing the
commercialization of each scientific discovery identified in the coding of the historical artifacts.
Commercialization is defined as the existence of at least one revenue-generating organization
for which it can be demonstrated that technology was marketed to potential customers.
Sequence (SEQ). SEQ is a dummy variable designed to capture the demand-supply
sequence. Coding was determined by comparing the first date of latent demand-side
signaling –indicated by mentions in one or more of the science-oriented historical artifacts
during the observation window –to either initial an patent filing date or the initial
marketing date for an actual product and service related to each opportunity space. A coded
value of 1 indicates that evidence of demand-pull forces in the historical artifacts of this
study preceded evidence of the entrepreneurial supply of commercializable opportunities.
Demand-pull velocity (DPV ). DPV is a relative measure of the speed with which
demand-first scientific discoveries (indicated through the historical artifacts of this study
and patent application dates) move from an engineering conceptualization to an actively
marketed product or service, calculated by subtracting the date of initial applied science
(AS) from the date of initial CS. Values ranging between 0 and 1 are calculated through the
ratio: 1/(CS Date –AS Date).
Demand-pull mass (DPM). DPM is a relative measure of the scale with which
demand-first scientific discoveries indicated through the historical artifacts of this study.
It is a source of considerable insight regarding the relative importance of demand-side
effects in generating innovations because the mere existence of latent demand-side signaling
is not sufficient to demonstrate the influence it exerts in fueling the pursuit of numerous,
diverse solution sets. DPM solves this by counting the total number of artifacts mentioning
a particular scientific discovery as a conceptual starting point for AS or CS. Values are
included for all conditions in which AS +CS is greater than 0.
Key events. Three major historical events were modeled through dummy codes in order
to assess and control for their respective effect on demand-side phenomena: the
Great Depression, Second World War and the Space Race. The demand-side role of formal,
government institutions is likely to be evident from the massive outlays associated with
historically significant “spending shocks”instigated toward the achievement of political and
socio-economic aims (Hunt, 2015; Hunt and Fund, 2016). These three events played
a prominent role in public and private sector economics for the period, 1872-1969 (Engerman
and Gallman, 2000) and should, therefore, be modeled distinct from the diffuse sources of
latent societal demand.
Controls and instrumental variables. Consistent with cliometric models that aim to
express the materiality and directionality of causal agents related to innovation for
historical data over extended periods (e.g. Moser, 2005), control variables were employed:
population, GDP per capita and time sequence. Models such as the ones developed for this
analysis are potentially at risk of endogeneity on two fronts: omitted variables and reverse
causality. In addressing the former, my models incorporated Heckman’s two-step procedure
(Campa and Kedia, 2002; Heckman, 1979), through which I generated an inverse Mills ratio
to test for statistical significance in the context of a complete model of predictors.
To address potential confounds due to reverse causality, I took two precautions.
First, I used lagged time-series variables to confirm the directionality of focal effects (Davidson
and MacKinnon, 1995). Second, I developed instrumental variables (IV) for use in a
two-stage least squared (TSLS) analysis, which is the preferred approach in dealing with
multiple endogenous regressors and in models containing both continuous and categorical
dependent variables (Bascle, 2008). Overall, a strong IV will be wellcorrelated to the predictor
that has been included in the model, but should be uncorrelated to the model error. This means
that the IV is only related to the DV through the predictor. In this test for reverse causality,
I regressed the model predictors onto a vector containing three instruments that included:
graduate degrees in engineering, the percentage of the population engaged in agriculture, and
the percentage of the population that died from infectious diseases. Given the extended time
period across which measurements were taken, I elected to develop a vector of IVs, rather than
relying upon a single IV that might exert differential influence across the lengthy observation
window. Use of vectors is endorsed in cases involving the study of complex phenomena over
extended periods of time (Angrist and Krueger, 2001).
3.4 Model specifications
Logistic regression, OLS regression and significant mean differences were employed to
derive and explicate the focal effects and to preserve interpretability of the model
coefficients. Key assumptions underlying the decision to employ an OLS design required
four data properties: linearity in the parameters, random sampling of observations,
a conditional mean of zero, and the absence of multi-collinearity ( Judd et al., 2011). Given a
sample population of nearly 34,000 documents, drawn from diverse sources and
continuously varied time periods, it was possible to achieve robust satisfaction of these
OLS pre-conditions, confirming the suitability of the data for an OLS model.
H1, predicting that demand-pull effects often precede the supply of entrepreneurship
was evaluated by using longitudinal mean differences of coded scientific content form each
of the three sources of historical artifacts. H2a and H2b were analyzed using OLS methods
represented by the generalized model:
EAQ or EAD ¼ControlsþInstrumentsþDemand Pull Velocity þDemand
Pull MassþKey EventsþDemandSupply Sequence þe(1)
H3 predicted that when demand-pull effects precede supply-side technology-push, then
there existed a greater likelihood of successful commercialization. In order to test this,
the dependent variable for commercialization events was modeled using both a logistic
regression and a Cox Proportional Hazard (PH) regression. The logistic regression model
is represented by:
CE ¼ControlsþInstrumentsþDemand Pull Velocity þDemand
Pull MassþKey EventsþDemandSupply Sequence þe(2)
The survival analysis approach employs the Cox PH regressions, where each variable is
exponentiated to provide the hazard ratio for a one-unit increase in the predictor:
The equation states that the hazard of the focal event occurring at a future time tis the
derivative of the probability that the event will occur in time t. For the purpose of
contrasting the effects of supply and demand sequencing and then relating that sequence to
survival probabilities, I developed a matched set of 300 scientific discoveries that were
randomly selected from two pools of coded data (150 each): one pool consisting of situations
in which evidence of demand preceded supply, and one pool consisting of situations in
which supply preceded demand. Pair-wise matching insured equivalent means and variance
for each focal covariate, so that the paired innovations resembled one another in all respects
other than the coding associated with sequencing (SEQ). The purpose of employing
pair-wise analysis with data drawn from matched sets is to remove bias in the comparison
of groups by ensuring equality of distributions for the matching covariates I employed
(Casella, 2008). With pair-wise matching, the null hypothesis is that there are no significant
differences between the paired subjects, tested using z-statistics and applying McNemar’s
test (McNemar, 1947). T-test scores for each of the dimensions used to associate the two
matched set pools were not significant (ranging between 0.11 and 0.72), confirming that the
pools were statistically indistinguishable aside from the element of sequencing.
The purpose of this study was to address several vexing questions (Schoonhoven and
Romanelli, 2009) central to the process of generating and commercializing new innovations:
Do opportunity spaces exist prior to being occupied and, if so, what is the precise role of
latent demand-side forces in creating and sustaining those opportunities? As noted above,
the elusiveness of this line of inquiry necessitated the use of diverse data sources gathered
across an unusually long observation window. Analysis of the findings indicates compelling
support for all four hypotheses, with the statistical models exhibiting significant ( po0.01)
and material effects. Importantly, the findings provide substantial evidence that latent
societal demand for entrepreneurship is a key determinant of opportunity space creation
and supply-side entrepreneurial activity.
Moreover, the results strongly suggest that entrepreneurial attentiveness to demand-side
signaling is a key determinant of entrepreneurial success or failure. The correlation
coefficients reflect the directionality and materiality of the predicted relationships among
the variables (Table II), while signaling no significant concerns for multi-collinearity.
For example, the variable designed to capture demand-supply sequencing –wherein
demand for an innovation precedes marketplace supply for an innovation –is positively
correlated with commercialization, indicating that entrepreneurs seeking to service existing
demand are more likely to realize a successful commercialization of an innovation.
H1 involved the prediction that when latent demand for entrepreneurial innovation
precedes supply, it will serve as a generative force of innovation while supply serves as a
selective force. Longitudinal analysis of the three sources of historical artifacts provides
strong evidence for this premise. Figures 1-3, display similar trend lines, indicating a
consistent pattern of migration from content favoring pure science to content that largely
supplants pure science in favor of an applied focus. Given the mushrooming of novel
scientific pursuits across the observation period –involving quantum physics,
Variable Mean SD 1 2 3 4 5 6 7 8 9
1. Commercialization 0.24 0.13
2. Diversity of Entre 0.33 0.18 0.19
3. Quantity of Entre 0.28 0.13 0.13 0.05
4. Demand-Pull Velocity 0.38 0.14 0.21 0.17 0.18
5. Demand-Pull Mass 0.31 0.13 0.15 0.14 0.17 0.08
6. Great Depression 0.07 0.04 0.08 0.04 0.05 0.04 0.05
7. World War II 0.09 0.06 0.07 0.03 0.04 0.08 0.04 0.11
8. Space Race 0.13 0.06 0.09 0.11 0.10 0.14 0.12 −0.02 0.04
9. Sequence (D before S) 0.50 0.22 0.23 0.19 0.18 0.21 0.16 0.03 0.06 0.09
10. Macro-Control Vector 0.27 0.18 0.07 0.05 0.04 0.02 0.04 −0.03 −0.03 0.04 0.05
Note: Italics indicate correlation with po0.01
Pure Science Applied Science Commercialized Science
1872 1880 1890 1900 1910 1920 1930 1940 1950 1960 1969
Pure Science Applied Science Commercialized Science
1921 1925 1930 1935 1940 1945 1950 1955 1960 1965 1969
Pure Science Applied Science Commercialized Science
1950 1953 1955 1957 1959 1961 1963 1965 1967 1969
National science fair
biomechanics, medicine, computational science, materials science, aeronautics, astronomy,
and many others (Wheatley, 2011) –there is no obvious reason to explain why these popular
outlets for scientific knowledge would have taken on a more commercial orientation,
especially given the diverse audience that each services.
The most dramatic change is apparent in the Popular Science artifacts, where pure
science content slipped from nearly 100 to 10 percent over the observation period
(1872-1969). Meanwhile, content related to CS –that is, articles pertaining to products
actively marketed to existing or future customers –rose to more than 50 percent, from
0 percent in 1872. Early interest in the writings of Darwin, Curie, and Spenser, evolved to a
product orientation as readership demanded more focus on the applications stemming from
scientific breakthroughs (Table III). The inexorable drift from a pure science focus to
commercializable science focus underscores market-based motivations to seek
productization of scientific breakthroughs.
Since Popular Science is a for-profit publication, there are reasons to be concerned that
the commercialization drift is idiosyncratic to its consumer-based orientation. Therefore,
in order to stress-test the generalizability of Popular Science’strends, it was necessary to
examine whether similar trends are evident in looking at the not-for-profit Science Society
News and National Science Fair artifacts. As Figures 2 and 3 bear out, both sources of
embedded societal preferences reveal an escalation in applied science content that confirms
the findings from Popular Science.
1872 1919 1969
The Study of Sociology
The Recent Eclipse of the Sun
Science and Immortality
The Source of Labor
Quetelet on the Science of Man
Disinfection and Disinfectants
The Unity of Human Species
The Causes of Dyspepsia
Woman and Political Power
Early Superstitions of Medicine
The Nature of Disease
Hints on House Building
Production of Stupidity in Schools
Hello Mars, This is Earth!
Our Capital’s Public Waste Baskets
The Tale of Totem Pole
Insects that Sail on Raindrops
Can You Save a Drowning Man?
Why Does a Curveball Curve?
Money Making Inventions!
Improving the Intake Manifold
Squaring a Board Without a Square
The Trouble with Hooves
On the Trail of the Grizzly Bear
How Fast is Your Brain?
Keeping Paintbrush Handles Clean
A Poultry Roost that Destroys Mites
Substitute for Battery Separators
What the Apollo 8 Moon Flight
Really Did for Us?
Are We Changing Weather by
New Brakes for Your Car
The Growing Rage for Fun Cars
Canned Movies for Your TV Set
Oil Drilling City Under the Sea
It’s Easy Now to Form Your Own
What’s New in Tools
How to Build the Microdorm
New Math Discovery?
Color from Black and White Film?
Facts About Drinking and Driving
examples by era
The unmistakable trend toward applied science across the data set indicates a groundswell of
effort to identify practical applications of the burgeoning body of scientific knowledge;
however, these trend lines do not enable us to assess the relative influence of supply-side and
demand-side forces. The extent to which demand-pull forces are instrumental in fueling
entrepreneurial activity requires isolating and measuring demand-side variables, DPV and
DPM. Extending extant work on demand-side provocated innovations (Priem et al., 2012;
Ye et al., 2012), H2a and H2b predicted that increases in demand-pull effects are associated with
an increase in the quantity and diversity of entrepreneurial activity. Evenafter controllingfor a
wide array of macro-level effects, time-series factors and key events, the velocity and mass
of demand-pull effects are shown to be significant (Table IV –Models 2a and 2b) predictors of
both the quantity and diversity of entrepreneurial activity. This finding supports H2a and H2b
as well as the qualitative assessment performed in regard to H1. Taken in total, these findings
further underscore the generative role of latent demand-pull forces.
Evidence of latent demand’s generative capacity demonstrates that the customers of
entrepreneurial innovations are not merely sifters and sorters of the products and services
brought to the marketplace as CS. Rather, demand-side wants and needs are a fountainhead
of latent opportunity spaces. Left unanswered, however, is whether new innovations
succeed or fail commercially due to the effects of demand-side influence or in spite of it.
Attentive to this critical question, H3 extends the examination of demand-pull and
supply-push effects into a comparative context by predicting that when demand-pull forces
precede supply-side technology-push, then innovations have a greater probability of
resulting in a commercialized product or service. In essence, this suggests that
Model 2a (OLS) Model 2b (OLS) Model 3 (Logistic)
Entrepreneurial activity –
Entrepreneurial activity –
event (1 ¼CE)
related to increased
related to increased
Constant Incl Incl Incl Incl Incl Incl
Controls 0.97* 0.88 1.10* 1.03 1.38* 1.29*
SD (0.19) (0.22) (0.34) (0.30) (0.40) (0.38)
Demand-Pull Velocity 1.56* 1.22* 1.31 1.2 2.20** 2.13**
SD (0.48) (0.37) (0.47) (0.43) (1.32) (1.25)
Demand-Pull –Mass 0.87 0.81 0.68 0.65 1.19* 1.18*
SD (0.21) (0.20) (0.14) (0.14) (0.56) (0.56)
Great depression 3.01** 2.40** 2.12** 1.72* 1.49* 1.22*
SD (1.77) (1.32) (0.51) (0.41) (1.02) (0.95)
Second World War 2.33** 2.17** 1.80* 1.72* 1.54* 1.36*
SD (0.82) (0.61) (0.55) (0.52) (.83) (0.79)
Space race 1.68* 1.43* 2.04** 1.99* 2.16** 2.12**
SD (0.70) (0.58) (0.89) (0.82) (1.27) (1.21)
Demand-supply sequence 2.85*** 2.60** 3.43***
SD (1.59) (1.88) (2.21)
0.53 0.66 0.47 0.58 ––
F-value 117.4 131.2 98.8 102.1 ––
Predictive accuracy 77.00% 96.0%
Notes: *po0.05; **po0.01; ***po0.001
entrepreneurs who are attentive to the contexts in which societal signaling plays a
generative role, are more likely to find commercial viability for their innovations than when
supply-push innovations precede indications of latent demand. In order to test this
comparison, I used 150 randomly paired scientific discoveries, half of which involved
evidence of demand preceding supply and half evidencing supply preceding demand.
As indicated in Table IV (Model 3), H3 finds support; that is, primacy of demand is expected
to lead to more frequent success. The variable for demand-supply sequence, is highly
significant ( po0.001) in predicting the logistic model outcomes for the commercializability
of each sequence.
To more precisely determine the comparative effects of demand-supply sequencing,
I also generated probabilities using a hazard rate model, for which the relevant focal
end-point consisted of a commercialization event. In further support of H3, the findings
show that when demand precedes supply the effect on commercializability is positive, while
the effect on commercializability is significantly negative when supply precedes demand
(Table V). The significant difference is evident in the Kaplan-Meier plot (Figure 4).
With respect to endogeneity concerns, neither omitted variables nor reverse causality
proved to be a material factor. As a robustness test for omitted variables, my models
incorporated Heckman’s two-step procedure (Campa and Kedia, 2002; Heckman, 1979),
through which I generated an inverse Mills ratio that was found to be not statistically
significant. Thus, I could reasonably conclude that any omitted variables could only
influence the dependent variables through the predictors already included in the models.
I tested for the potential effects of reverse causality through the use of instrumental
Demand precedes supply (n¼150) Supply precedes demand (n¼150)
Probability of CE
(95% CI) SD p-value
Probability of CE
(95% CI) SD p-value
Controls –Macro 1.13 0.25 o0.01 1.03 0.15 o0.01
Demand-pull velocity 1.03 0.26 0.06 0.93 0.04 0.03
Demand-pull –Mass 1.01 0.30 0.14 0.98 0.11 0.18
Great depression 1.02 0.40 0.11 1.00 0.05 0.01
Second World War 1.04 0.32 0.05 1.01 0.02 0.01
Space race 1.02 0.38 0.14 1.01 0.04 0.12
Demand-supply sequence 2.07 0.32 o0.001 0.88 0.09 o0.001
p-value o0.001 o0.001
Demand Precedes Supply Supply Precedes Demand
0 1015 2530 404550
55 65 70 75 85 90 95 100806035205
based on demand-
variables (IV), aggregated into a vector, for use in a TSLS analysis (Bascle, 2008). Using Staiger
and Stock’s (1997) procedure for first-stage F-statistics, I confirmed that the correlation strength
of the IV vector was well above the target threshold. Applying both Sargan’s (1958) test and
Hansen’sJ-statistic (Hansen and Singleton, 1982) confirmed the exogeneity of the IVs. When
tested in the context of a complete model, the IV vector was found to be significant at po0.001.
Since the components of the vector are only related to the dependent variables through the
original model regressors, I concluded that the hypothesized relationships are not materially
subject to the confounding effects of endogeneity.
Considerable effort has been expended over the course of the past 30 years in seeking to
investigate what Dosi referred to as “the role of science and technology in fostering
innovation along a path leading from initial scientific advances to the final innovative
product/process”(Dosi, 1982, p. 151). As the empirical results of this study demonstrate,
the progression is not a matter of mere conjecture. In providing one of the most expansive
longitudinal investigations of society-wide, latent demand-side signaling, this study makes
evident the inexorable drift from pure science to applied science to commercializable science,
for a multitude of technological paradigms (Dosi, 1988; Teece, 2008). This is accomplished
by exposing embedded societal preferences through thousands of historical artifacts across
nearly a century of intensive innovation. By employing historical data spanning multiple
generations, this study addresses significant gaps in existing theory that have
inappropriately relegated demand-side forces to a subordinate role.
The empirical evidence presented here of primordial, unoccupied opportunity spaces
fundamentally changes the way in which the quantity and diversity of entrepreneurship is
conceptualized. Existing scholarship focusing exclusively on the supply of innovation and
entrepreneurship inherently defines emerging sectors in terms of the new sector occupants
since the opportunity space is only explicitly acknowledged at the time the opportunity is
exploited. This “supply-side skew”is inevitable when empirical studies of innovation and
entrepreneurship rely exclusively upon recent data from occupied opportunity spaces.
Equally inevitable are the significant gaps this approach has created. As a consequence of
supply-side biases, the technologies and innovators that initially populate new sectors often
define new markets; thereby presupposing that supply-side forces serve as the primary
generative mechanism of entrepreneurship, while demand-side forces serve as the primary
selective mechanism. The problems with this approach are numerous, but most
conspicuously the approach errs in failing to account for latent preferences that are
presented through societal signals of its needs and wants regarding the quantity and
diversity of entrepreneurship. As Priem et al. (2012) noted, “The process of opportunity
signaling, and the conditions under which potential customers actively drive opportunities
toward entrepreneurs who are cognizant of those signals, represents an important new
stream of research for entrepreneurship scholars”(p. 366). This is precisely the juncture at
which this study has sought to answer the call in addressing this new stream.
The cumulative weight of these findings provides compelling empirical evidence that:
opportunity spaces often exist prior to being occupied; societal preferences play a key role in
determining the quantity and diversity of entrepreneurial activity; and entrepreneurs who
are responsive to latent demand-side signaling are likely to face significantly greater
prospects of long-term survival. All three findings have implications for scholars,
practitioners and policy-makers.
5.1 Implications for scholars
For scholars, a heightened focus on demand-side research is the first step toward credibly
addressing the “supply-side skew”and, in so doing, bringing the supply-push and
demand-pull perspectives into a more reasonable balance. Future studies will find fertile soil
in demarcating more thoroughly the boundary conditions that apply to supply-side-centric
frameworks. Additional work to address the paucity of empirical research on latent
demand-side signaling can stimulate fresh progress toward better describing and predicting
demand-pull phenomena. Conceptually, a reassessment of supply-push and demand-pull
forces enables scholars in economics, strategic management, entrepreneurship and
innovation to develop more integrated frameworks.
Although Dosi (1982) joined Mowery and Rosenberg (1979) in making the strong-case
assertion that “most of the studies with a demand-pull approach fail to produce sufficient
evidence that needs expressed through market signaling are the prime movers of innovative
activity”(Dosi, 1982, p. 150), it is not obvious that the same could be said today, especially in
the context of game-changing business models, such as multi-sided platforms, freemiums
and open innovation. Novel business models that intentionally blur the lines that separate
supply and demand fundamentally alter the ways in which scholars conceptualize value
creation and value capture. By allowing for demand side’s generative capacity,
increasingly highlight user-provocated innovation (e.g. Ye et al., 2012). Absent the consideration
of latent demand-side signaling, scholars will be at a loss to explain how and why novel
business models emerge that appear to cede control over the innovation process even while
creating and capturing new sources of value (Von Hippel, 2005).
By providing a portal to the generative effects of latent demand-side forces, this study
paves the way for follow-on research wherein scholars can move beyond the traditional focus
on differential access to resources (Astley, 1985; Tushman and Anderson, 1986) and the role of
institutions (Aldrich and Fiol, 1994; Baum and Oliver, 1991; Thornton, 1999) in creating
environmental conditions that are conducive to entrepreneurial activity (Baumol, 1990;
Hunt and Kiefer, In Press; North, 1990). In this sense, the results of my investigation offer
methodological insights as well as a reorientation in the explanatory models for
Adoption of a non-historical approach, noted the Economist Avner Greif (1997), is not only
self-limiting, but can result in patently wrong empirical interpretations and conceptual
frameworks. Nowhere is this more apparent than in the study of nascent-stage industry
sectors, where the ill effects of data truncation (Cameron and Trivedi, 2005; Hunt, 2013a, 2015)
and historical proximity biases (Grosjean, 2009) are most acutely apparent; each stemming
from the exclusive use contemporary data. By sacrificing long-term intelligibility for
near-term data accessibility (Heckman, 1997; Solow, 1987) non-historical approaches run the
risk of irrelevance when examined by future generations of scholars who have the benefit of
longitudinal data and greater historical context (Welter, 2011).
Within just the past several years, leading management journals have published special
issues focusing on historical perspectives and methodologies, including Academy of
Management Journal,Strategic Management Journal and Strategic Entrepreneurship
Journal. Editorial concerns underlying these various calls underscore the growing
awareness that there are grave risks in ignoring history. The fine line separating recency
and relevance, on the one hand, and measured reflection, on the other hand, places a
premium on studies that incorporate lessons worth learning from the distant past as well as
the most current events (Hunt, 2013a).
5.2 Implications for practitioners and policy-makers
For practitioners, the implications of these findings are also illuminating. As the PH model
suggests, the commercialization of scientific breakthroughs is likely to be far more common
when business models focus on developing and executing accurate assessments of
latent demand (Hunt and Ortiz-Hunt, In Press). In an era of “mass customization,”
(Da Silveira et al., 2001) businesses increasingly find themselves catering to customers who
possess what Franke and von Hippel (2003) labeled a “very high heterogeneity of need.”
Under such circumstances, latent demand-side signaling is not only an important driver of
successful innovations, but in some sectors attentiveness to latent demand may be
indispensable to a firm’s survival (Von Hippel, 2005).
The results further suggest that entrepreneurs, incubators, investors and other parties
with a vested stake in commercializing science, will be well-served by investing time and
effort into better understanding opportunity fields as they are defined by current and future
customers, rather than isolated supply-side pre-conceptions of when, how, why, where and
by whom technologies might be acquired and used. Unquestionably, there exists a highly
interactive testing and exploration process (Di Stefano et al., 2012; Mowery and Rosenberg,
1979; Priem et al., 2012; Rogers, 2003) between suppliers and consumers of entrepreneurial
activity; but, supply-side explanatory models that have ignored the generative role of
demand-side forces handicap entrepreneurs who buy into the myths of swashbuckling
individualism (Hunt and Lerner, 2012; Schoonhoven and Romanelli, 2009).
As the illustration of the automotive industry demonstrated, entrepreneurs who selected
technological solution sets that were most closely akin to the latent opportunity space
generated by society for motorized transport faired far better than those who pushed an
unwanted set of technological solutions.
The popular media is perhaps partially to blame for the “supply-side skew.”On this
score, policy-makers would also be well advised to avoid the quick sand that often
accompanies supply-side fanfare. Deification by popular acclaim of successful individuals
ranging from Thomas Edison to Steve Jobs is deeply engrained in the culture and
myths that surround the generation and commercialization of innovations. These myths
perpetuate a sort of “great man”approach to history that fuels popular and scholarly
fascination with supply-side details. And, since supply-side details tend to be more
accessible than relatively subtle and diffuse latent demand, it is readily understandable why
a supply-side perspective dominates not just scholarly research, but also the ways in
which policy-makers look for institutional support mechanisms for entrepreneurial
ecosystems and business models (Hunt and Ortiz-Hunt, 2017) that favor the roll-out of
5.3 Limitations and opportunities
As with all studies, design-related decisions associated with this investigation exhibit both
strengths and weaknesses. Questions can reasonably be raised regarding two potential
limitations: generalizability and endogeneity. Regarding the former, the degree to which my
historical artifacts are representative of latent societal demand is a worthwhile debate.
By choosing three different sources, each of which possesses a broad and deep reach into
American society, it was obviously my hope to triangulate on material findings, rather than
investing hope in the potential effects drawn from a single source. Further study using
substantial collections of historical artifacts from other eras and nations will allow for
intriguing comparisons and fruitful boundary conditions for society-wide demand-side
drivers of the quantity and diversity of entrepreneurial activity. Regarding the latter
concern, the risks of endogeneity are endemic to analyses involving time-series data and
causal directionality. As discussed above in the methods and results sections, care was
taken to ensure that the analytical models used in this investigation were not subject to the
potentially biasing effects of omitted variables and reverse causality.
“History rarely provides the full measure of people during their lifetimes,”wrote Wren and
Bedeian (2009) in their classic tome Evolution of Management Thought (p. 211). The same can
be said about inventions and social movements, as well as the business organizations that
they spawn. For this reason, the paucity of expansive, temporally distant data sets and
historiographic methods employed in management research (Landstrom and Lohrke, 2010;
Rowlinson et al., 2014) continues to play havoc with the conceptual frameworks drawn from
limited data and non-historical methods (Forbes and Kirsch, 2011).
The increasing willingness and ability of entrepreneurship scholars to employ
historiographic methods and historically panoramic data (e.g. Casson and Godley, 2005;
Landstrom and Lohrke, 2010; Wadhwani, 2010) is the cause of justified optimism that
significant impediments to the development of robust explanatory frameworks can be
overcome, particularly those concerning phenomena that only become intelligible when
observed over the course of many generations (Popp and Holt, 2013). Nowhere is this more
apparent than in the study of innovation, entrepreneurship and emerging industrial sectors
(Forbes and Kirsch, 2011). This is, as the foregoing results demonstrate, a key facet of matching
entrepreneurship research questions to the most effective and coherent entrepreneurship
research methodologies. Supply-side vs demand-side drivers of entrepreneurial innovation are
a compelling case in point. Although extant theories of innovation posit interactive, highly
interdependent demand-pull and supply-push forces; functionally, scholarship has focused
overwhelmingly on the supply of innovation and entrepreneurship, not the demand. The result
of this supply-side skew is that the influence of demand-side opportunity signaling has been
relegated to a subordinate, virtually non-existent role. The sparse exploration of demand-pull
effects has occurred for a wide range of theoretical and empirical reasons, but one
of the primary culprits –at least in the past –is the underutilization of historical evidence
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