Critical theory may be attributed to Max Horkheimer‘s 1937 essay Traditional and Critical Theory. The Frankfurt School of sociology has developed critical theory from a combination of Marxian and Kantian ideas about critiquing traditional theories.
Alvesson and Willmot (1992: 89) state that:
“Emancipation describes the process through which individuals and groups become freed from repressive social and ideological conditions, in particular those that place socially unnecessary restrictions upon the development and articulation of human consciousness”.
The majority of the entrepreneurship literature takes a functionalist (rational or empirical) perspective, where there is an objective reality that can be measured and hypotheses that can be tested against that reality. However, there are many problems with scientific methods in the social sciences. For one, theories that work in one temporal-spacial context may not work in another.
Very few studies have adopted alternative approaches (Jennings, Perren, and Carter, 2005), but one important alternative perspective comes from critical theory. Critical theorists aim to liberate humans from the circumstances that enslave them. For instance, critical theory dissects something like Disney World as a class struggle about emotional labor and low pay.
Ogbor (2000) argues that most of the rhetoric of entrepreneurship reflects a heroic white male bias. She frames the entrepreneurial discourse as ethnocentric, pointing out that most of the literature examining entrepreneurship among minorities is aimed at helping those minorities to improve (i.e., become more like whites). This practice “reinforced the prevailing myth that non-dominant groups have psychological and racial characteristics which inhibit entrepreneurial development.” (p. 620).
The consequences of these biases include discrimination against women seeking venture capital investment and women and minorities seeking loans.
Perren and Jennings (2005) argue that government rhetoric tends to simultaneously legitimize and subjugate entrepreneurship, first by affirming the importance of small business, then by seeking to unify their voices into just one. Possibly, political rhetoric about entrepreneurship may take a back seat to the broader (macro) forces unleashed by ideologically motivated economic policies affecting the population as a whole.
This theory is highly related to the emancipation theory of entrepreneurship, however, emancipation theory has a more positive (optimistic) spin on entrepreneurship, where entrepreneurship is a means of emancipation from the ideological slavery of employment. Many critical theorists might question if entrepreneurship is really a great career choice for most, who may have to endure several difficulties and sacrifices to get a business going. Perhaps entrepreneurship is yet another ideological trap the convince people that the status quo is up to them to change with business rather than political activism.