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ENTREPRENEURSHIP Conference Paper Abstracts

MULTIPLE "FIT" CONSIDERATIONS IN HUMAN RESOURCE

ACQUISITION FOR ENTREPRENEURIAL FIRMS Leung, Aegean Oi Kam; National U. of Singapore; [email protected]

Zhang, Jing; City U.; [email protected] Wong, Poh-Kam; National U. of Singapore; [email protected] Foo, Maw-Der; National U. of Singapore; [email protected]

This study proposes a multi-dimension, multi-contingent “fit?perspective for examining different practices adapted by entrepreneurial firms in acquiring human resources. We posit that while environmental constraints are important considerations for adapting recruitment practices through networks, strategic needs and interpersonal dynamics are the key drivers behind the evolution of such practices. As they transit from the startup to the growth phase, entrepreneurial firms utilize different network pools in search of diversity, yet cling onto strong ties to find talents with common values and goals. Our findings carry important implications for future research in human resource management by integrating the macro and micro perspective, and at the same time enhance the understanding of network effects and their strategic bearings in the entrepreneurial process, specifically in the acquisition of human resources.

Keywords: human resources, entrepreneurship, network effect

AN EXPERIMENTAL TEST OF ENTREPRENEURIAL

EXPLOITATION Phelan, Steven E; U. of Nevada Las Vegas; [email protected]

Alder, G. Stoney; U. of Nevada, Las Vegas; [email protected]

Nexus theory (Venkataraman 1997, Shane and Venkataraman 2000, Shane 2003) predicts that entrepreneurial behavior will result from an interaction of environment, psychological characteristics and experience. In this paper, we utilized a laboratory bargaining experiment to partially test nexus theory, focusing exclusively on the resource acquisition phase of the entrepreneurial process. As predicted, we found that possession of a bundle of entrepreneurial traits we labeled ‘entrepreneurial competence’ improved profit performance on a bargaining game but only for subjects with previous task experience.

Keywords: resource acquisition, psychological characteristics, prior experience

HOW A SMALL BUSINESS CAN INCREASE ITS CHANCES TO

RECEIVE BANK LOAN Bruns, Volker; Jönköping International Business School; [email protected]

Empirical research suggests that limited access to debt capital is a major factor hampering small business growth. Information asymmetry between small business managers and the loan officers makes it difficult for loan officers to identify business with a high probability of project success and the probability to repay their loans. Loan officers have developed screening criteria examining the characteristics of the borrower in order to discriminate good customers from bad ones. A small business seeking bank loan for a project

Entrepreneurship Paper Abstracts -- 1

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that seems to carry high credit risk can affect the chance of receiving a credit by ensuring that the bank will receive its money back regardless of the success of the project which should make the bank less worried about the outcome of a risky project. This paper details how different screening criteria are likely to affect the probability of a small business receiving a bank loan and how collateral, the share of investment made by the entrepreneur, and the financial position of the firm affect these relationships. A real-time experiment with 114 Swedish loan officers emphasis on different screening criteria and selected interaction for credit requests to finance a growth project of small and medium-sized firms with different levels of the project risk. Tentative results suggest that the small business can increase the chance of receiving a bank loan although the investment project is considered to be risky. Implications for theory, banks and small business managers are discussed.

Keywords: bank loan, decision-making, finance

EPISODIC KNOWLEDGE AND ENTREPRENEURIAL

DISCOVERY Murphy, Patrick J.; DePaul U.; [email protected]

My paper elaborates theoretical foundations for opportunity-based entrepreneurial discovery research and presents an empirical study (N = 1,261) providing evidence for examining the validity of an opportunity-based research approach. My study operationalized entrepreneurial opportunities as convergences of episodic knowledge (Drucker, 1985) in a disequilibrium framework (Eckhardt & Shane, 2003). I build on past methodological research (Robinson & Hofer, 1997) by employing non-parametric statistical techniques (multiway frequency and hierarchical loglinear analysis) to derive three entrepreneurial discovery outcomes (Bhave, 1994: idea-first, business-first, simultaneous) from convergences of episodic knowledge variables (number of ideas considered, opportunity precedent, prior experience, critical relationships, expert guidance, information accessibility, and sequential learning). All variables were based on prior entrepreneurship research. Findings hold new implications for (1) the usefulness of episodic knowledge in empirical research, (2) fitting analysis techniques for the idiosyncratic nature of entrepreneurial discovery data, (3) the relevance of the opportunity construct, (4) the nature of statistical prediction, and (5) the growing promise of entrepreneurship as an area of research in the twenty-first century.

Keywords: opportunity, entrepreneurial discovery, knowledge

INNOVATION AS A CORPORATE ENTREPRENEURIAL

OUTCOME IN START-UPS: A HUMAN RESOURCE-BASED VIEW

Maes, Johan; Katholieke U. Leuven; [email protected] Sels, Luc; Katholieke U. Leuven; [email protected]

De Winne, Sophie Anna; Katholieke U. Leuven; [email protected]

The study presented here explores innovation as a corporate entrepreneurial outcome in recently established small firms. More precisely, we explore the role of upper echelon and employee human capital and human resources management as determinants of innovation. Our approach builds on a ‘human resource’-based view, stressing the importance of (1) entrepreneur/entrepreneurial team (‘upper echelon’) human resources and (2) employee human resources and their management in determining the innovation performance of start-ups. As innovation is one of the three possible outcomes of corporate entrepreneurship (innovation, venturing and renewal), we take a corporate entrepreneurship research






approach in examining innovation in start-ups. The analyses are based on a sample of 294 start-ups covering a wide range of economic activities, having 1 to 49 employees and being in their second year of life in 2003. The results indicate that both types of human capital do matter in the context of start-up innovation. First of all, employee human capital and HRM have a strong positive effect on innovation. Second, while we could not trace direct effects of entrepreneur/entrepreneurial team human capital on innovation, indirect effects (via HRM or employee human capital) of for instance education level and business advice are indisputably present. All things considered, the study teaches us that valuing human capital in start-ups can contribute to a considerable extent to preserving their innovation performance, thus stimulating their chances of building a viable business model and safeguarding future growth and further development.

Keywords: innovation, start-up, resource-based view

NEW VENTURE INTERNATIONALIZATION: A NOTE ON THE

ROLE OF MIMETIC ISOMORPHISM Fernhaber, Stephanie Ann; Indiana U., Bloomington; [email protected]

Mimetic forces leading to new venture internationalization is examined. Using a sample of 192 publicly-held, U.S.-based new ventures across 53 industries, I find strong support that new ventures imitate the level of internationalization exhibited most frequently by firms in their entered industry. In terms of more selective imitation processes, new ventures tend to pay closer attention to the level of internationalization by firms in their entered industry that are in the process of growing, rather than those firms that have achieved growth and are large as a result. The results are consistent when imitation is considered at both local and national levels.

Keywords: New Venture Internationalization, Institutional Theory, Isomorphism

WHAT HAPPENS TO NASCENT ENTREPRENEURS? AN

ECONOMETRIC ANALYSIS OF THE PSED Parker, Simon C; U. Durham; [email protected]

This article follows the progress of a large and nationally representative sample of American nascent entrepreneurs - identified in the initial interview of the Panel Study of Entrepreneurial Dynamics (PSED) - over each of the next two years of the panel. A novel theoretical and econometric model is used to reveal which personal and economic characteristics are associated with venture start-up - and which are associated with remaining a nascent entrepreneur, or giving up entirely. We discuss the implications of our results for entrepreneurs, lenders, business start-up support agencies, and policy-makers.

Keywords: Venture, Nascent, Creation




THE EFFECTS OF FOUNDING FAMILY CEOS AND FAMILINESS

ON RISK AND PERFORMANCE IN FAMILY BUSINESSES. Davis, Peter; U. of Memphis; [email protected] Mahto, Raj V; U. of Memphis; [email protected]

Robinson, Richard B; U. of South Carolina; [email protected]

Drawing upon the resource-based view of the firm, agency theory, and prospect theory; this study reports on an investigation of the impact of founding family CEOs and familiness (family social capital) on relationships among satisfaction with achieved performance, financial risk, and aspirations for future performance. A structural equation model was cross-validated using data drawn from two national samples of family businesses. The results suggest that CEOs affect risk both directly and indirectly, but the family’s effects are indirect, mediated by achieved performance. The results further indicate that achieved performance abets performance aspirations directly and indirectly, via the mediating role played by risk.

Keywords: familiness, performance, risk

THE MODERATING ROLE OF FLEXIBILITY IN FAMILY AND NON-FAMILY STRATEGIC PLANNING AND INNOVATION

Dibrell, Clay; Oregon State U.; [email protected] Craig, Justin BL; Oregon State U.; [email protected]

In this research, we explored firms’ capacity to react to emerging opportunities and threats (strategic flexibility) by assessing strategic initiatives (i.e., strategic planning and innovation) through two studies of family and non-family-owned firms. In Study 1, we conducted moderated regression analysis using validated scales on data received from 175 non-family-owned manufacturing and service firms across industries. We found that the strategic planning to innovation relationship is negatively moderated by strategic flexibility. Study 2 was a replication of Study 1 in 140 family-owned firms. We discovered that differences do exist between family and non-family-owned firms. Specifically for high innovating family-owned firms, there is positive moderation by strategic flexibility in the strategic planning to innovation relationship. This project contributes to a greater understanding of the individual and combined roles played by strategic planning, strategic flexibility, and innovation in family and non-family-owned firms.

Keywords: FAMILY BUSINESS, INNOVATION, STRATEGIC FLEXIBLITY

DEMOGRAPHIC STRUCTURE AND ENTREPRENEURIAL

ACTIVITY Levesque, Moren; Case Western Reserve U.; [email protected]

Minniti, Maria; Babson College; [email protected]

Entrepreneurial activity promotes competition and innovation and, by doing so, contributes to economic growth. Levels of entrepreneurial activity, however, vary considerably across countries. We show that, under certain conditions, the distribution of a population across age cohorts may have a significant effect on the aggregate level of entrepreneurship and that countries whose populations are excessively skewed toward old or young individuals are likely to experience low entrepreneurial activity. Furthermore, we derive sufficient conditions under which countries whose populations are aging or getting younger beyond









a critical threshold level are also likely to experience a decline in their aggregate level of entrepreneurial activity. At a time when poorer countries confront unprecedented increases in population while several developed ones see their populations aging, our study provides important insights on the relationship between population dynamics, entrepreneurship and economic growth.

Keywords: age, population dynamics, aggregate entrepreneurial activity

THE CO-EXISTENCE OF "SCHUMPETERIAN" AND

"KIRZNERIAN" VENTURE OPPORTUNITIES. Samuelsson, Mikael J; Borås U.; [email protected]

Abstract Despite the central position in the conceptual development of entrepreneurship as a scholarly domain, the venture opportunity and its empirical meaning is mostly neglected and/or absent in the literature. Drawing on Austrian economics and Neo-classical theory this research conceptually discusses and defines two types of venture opportunities; here called, innovative and reproductive venture opportunities. This classification is empirically tested and verified in a random sample of 622 venture opportunities in which reproducing venture opportunities vastly outnumber innovative venture opportunities with a ratio of nine to one. Venture opportunity variation also has implications for entrepreneurship theory and practice. Two types of underlying economic change, creative and optimizing, generates two different exploitation processes, one under risk and one under uncertainty.

Keywords: Nascent entrepreneurship, Venture opportunity, opportunity recognition

“SIGNALING THE FIRM’S VALUE”: INFORMATION DISCLOSURE, CORPORATE GOVERNANCE AND

PERFORMANCE OF IPOS Filatotchev, Igor; King's College, London U.; [email protected]

Chahine, Salim; American U. of Beirut; [email protected]

Using signaling theory, this paper examines links between information disclosure, corporate governance, and “underpricing” of IPOs in France. It argues that disclosure mitigates information asymmetry between the IPO firm and investors, and reduces underpricing. However, extensive disclosure may damage the firm’s competitive advantage, and corporate governance factors may be used as alternative (secondary) signals of the firm’s value. Empirical evidence suggests that there is a negative effect of board independence and venture capital share ownership on disclosure. Disclosure and board independence reduce underpricing. These results are consistent with the assumption that governance parameters may be used as substitutes to disclosure.

Keywords: Governance, IPO, Disclosure





ENTREPRENEURIAL ACTIVITY AND ENTREPRENEURIAL

ENVIRONMENT? A REEXAMINATION OF THE GEM’S APPROACH

De Castro, Julio O.; Instituto de Empresa; [email protected] Maydeu, Alberto; Instituto De Empresa; [email protected]

Justo, Rachida; Instituto De Empresa; [email protected]

In this paper we re-examine the measurement of entrepreneurial activity and provide a model-based approach and measure. The Global Entrepreneurship Monitor (GEM) project has been a key addition to our ability to measure and compare rates of entrepreneurial activity. But even though there is consensus about the importance of measuring entrepreneurial activity, researchers differ about the appropriate ways to measure the breadth of entrepreneurial activity. We analyze the GEM’s measure of entrepreneurial activity (TEA), address limitations in its design and development and provide an alternative measure of entrepreneurial activity, which includes entrepreneurial environment. We use a model-based approach to measure entrepreneurship activity and our results indicate that the model provides support for the combined use of entrepreneurial activity and entrepreneurial environment.

Keywords: entrepreneurship, environment, activity

PRACTICAL INTELLIGENCE IN HIGH POTENTIAL

ENTREPRENEURS Bird, Barbara Jean; American U.; [email protected]

Baum, J Robert; U. of Maryland; [email protected]

Our thesis is that practical intelligence is an entrepreneurial competency that enables entrepreneurs to make faster and better decisions. We propose a testable theory of the causes and effects of high potential entrepreneurs' practical intelligence based upon social and cognitive psychologists' theories and our understanding of entrepreneurs' uncertain and urgent situation. We propose that relevant industry and venturing experiences form (1) accumulated venture specific tacit knowledge and (2) application tacit knowledge. The two forms of tacit knowledge interact to create practical intelligence. Our fundamental proposition is that practical intelligence is a cause of successful high potential entrepreneurship because it enables fast experience-based decision-making under extreme conditions.

Keywords: cognition, decision making, tacit knowledge

ALLIANCE FORMATION MOTIVES IN SMES: A CONJOINT

ANALYSIS STUDY Van Gils, Anita; Maastricht U.; [email protected]

Zwart, Peter; Groningen U.; [email protected]

In the current SME-context, strategic alliances are important tools to improve the firms’ competitive position. This study examines the importance and interaction of firm, environmental and potential partners’ characteristics on the formation of two functional area types of SME-alliances. Besides, the influence of the sector of industry and several entrepreneurial characteristics is examined. Results indicate that alliance formation in SMEs is determined by a combination of organizational, dyadic and industry-related motives, and that these factors should not be studied in isolation. Moreover, different









determinants are at the basis of different functional area types of alliances, and also the importance of these determinants varies considerably. Specifying the functional area type of alliance investigated is mandated in order to accumulate relevant scientific knowledge on alliance formation issues. Finally, the results from this sample confirm the influence of sector of industry and an entrepreneur’s experience as a CEO on alliance formation motives.

Keywords: strategic alliance, conjoint analysis, alliance motives

REGIONAL DETERMINANTS OF THE INCIDENCE OF FAMILY FIRMS IN THE UNITED STATES: A PRELIMINARY REPORT

Chang, Erick Paulo Cesar; Mississippi State U.; [email protected] Chrisman, James J; Mississippi State U.; [email protected]

Chua, Jess H.; U. of Calgary; [email protected]

How a family firm’s resources interact with the external environment is key to its success. Thus, in contrast to previous researchers’ focus on internal resources and dynamics, this study presents preliminary findings on the external conditions that allow family firms to flourish. Using a sample of 6,100 firms, we explored the influence of economic development, culture, and industry mix on the incidence of family firms across the U.S. Our results suggest that the incidence of family firms is negatively affected by Gross State Product (GSP) per capita, the prevalence of retail business, and cultural diversity.

Keywords: Family Firms, Resources, Economic Development

AN INVESTIGATION ABOUT THE ENTREPRENEURIAL INTENTIONS OF HISPANICS IN THE UNITED STATES

Chang, Erick Paulo Cesar; Mississippi State U.; [email protected]

Research in ethnic entrepreneurship has provided the importance of community ties for entrepreneurs but it has provided little evidence about the perceptions of nascent minority entrepreneurs. This study aims to explore how the perceptions of desirability and feasibility can drive the intentions of Hispanics to start a business. Using the theory of planned behavior (Ajzen, 1991) and the Shapero (1982) model of new venture intention, a model was tested with a sample of 83 participants in a small business management course in New England. Findings of the path model analysis suggest antecedents to both perceptions and a direct effect of community norms on entrepreneurial intentions. The study also improves existing methodology by not using a dichotomous intention measure and changing the feasibility measure into a knowledge related one. Research implications are also discussed.

Keywords: hispanics, nascent entrepreneurs, ethnic entrepreneurship

ENTREPRENEURIAL VISION: IT'S NATURE AND EFFECTS

Bird, Barbara Jean; American U.; [email protected] Baron, Robert A; Rensselaer Polytechnic Institute; [email protected]

The construct of entrepreneurial vision—the mental image of the organization the entrepreneur intends to build—is introduced and defined. Entrepreneurial vision is differentiated from organizational vision, and its effects on entrepreneurs, and on new venture success, are examined. It is proposed that up to a definable point, the stronger and better articulated entrepreneurial vision is, the greater the success of








new ventures. However, beyond this point, entrepreneurial vision may produce effects that actually reduce new venture success (e.g., cognitive overload among entrepreneurs, increased susceptibility to various cognitive errors). Implications of this concept for future research are considered.

Keywords: vision, entrepreneur, cognition

THE IMPRINTING EFFECT OF INITIAL RESOURCES AND

MARKET STRATEGY ON THE EARLY GROWTH PATH OF START-UPS

Heirman, Ans; Vlerick Leuven Gent Management School; [email protected] Clarysse, Bart; Vlerick Leuven Gent Management School; [email protected]

Research-based start-ups (RBSUs) differ in their early growth. Some firms grow very rapidly, while others grow slowly or do not grow at all. In this paper we bring insights in the causes of the diversity in the early growth of RBSUs. To identify some of the key factors that affect growth, we study the initial resource base and the firm’s market strategy. We control for age, size and industry differences. Growth is a complex, multidimensional phenomenon. Therefore, we study three growth measures, namely growth in employees, revenues and total assets. Our multivariate analyses show that raising large amounts of VC is a key driver for early employment and revenue growth. Whilst most RBSUs are founded by pure technical founding teams, we find that R&D experience has no effect on growth. Founding teams with commercial experience, on the other hand, grow significantly more in employees, revenues and total assets. Next, RBSUs, which are internationally oriented from the start, grow significantly faster in terms of revenues and total assets but not in employees. Finally, multivariate analysis indicates that firms that are closer to a market ready product at founding do not grow significantly more in terms of revenues and employees, but firms that are earlier in the product development cycle grow more in total assets during the early growth path. We use in-depth qualitative information to explain and interpret the results and discuss the sustainability of different early growth trajectories. Our findings have important implications for entrepreneurs, investors and policy makers.

Keywords: growth, start-up, resources

VALIDATION OF EFFECTIVE ENTREPRENEURSHIP

BEHAVIORS Brown, Travor C.; Memorial U. of Newfoundland; [email protected]

Hanlon, Dennis; Memorial U.; [email protected]

The entrepreneur is assumed to be a key factor driving the success, or failure, of a new venture. Yet, limited research has developed or validated the behaviors necessary for effective entrepreneurship. We previously developed behavioral observation scales (BOS) that identified 47 key behaviors for entrepreneurship. These behaviors were grouped into 9 dimensions (e.g., opportunity identification, financial management skills, employee management). In this study, we validated the BOS through a national survey of 177 entrepreneurs. This survey captured two objective (i.e., employee growth and sales growth) and seven subjective (i.e., sales growth, net profit, quality, cash flow, employee satisfaction, customer satisfaction, and personal income) performance measures. Our analysis consisted of three steps. First, a confirmatory factor analysis was conducted to assess the proposed structure of the BOS. Second, we treated each of the nine BOS dimensions as scales and examined their reliability. Third, we correlated the performance measures with: (a) the nine factors resulting from the factor analysis, (b) the nine BOS dimensions, and (c) the total score on the BOS. Overall the results revealed that some refinement of the BOS was needed; a revised BOS is presented. The results further revealed that many


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of the nine dimensions, as well as the total score on the BOS, correlated significantly with most of the nine performance measures. These results suggest that the revised BOS is valid and can be used for both academic and practical applications in the entrepreneurship field.

Keywords: validation, behavior, performance

DO BUSINESS INCUBATORS WORK? PERSPECTIVES ON

INCUBATOR SUCCESS Stevens, Christopher E.; Case Western Reserve U.; [email protected]

Schulze, William S; Case Western Reserve U.; [email protected] Ford, Cameron M; U. of Central Florida; [email protected] O'Neal, Thomas; U. of Central Florida; [email protected]

Business incubators have established themselves as a recognized method of developing emerging firms, popular with policy-makers, financiers, and the business press. Proponents of incubation point to the substantially higher rates of growth and firm survival among incubated firms as evidence of the viability of the incubator model. Within the incubator literature, however, the question of why incubators succeed is rarely addressed. We draw on three theoretical perspectives to assess incubator success. Using a sample obtained from 59 incubators and bootstrap regression techniques, we find support for the proposition that incubation enhances the legitimacy of tenant firms. The pattern of results however, raises questions about their overall utility.

Keywords: incubators, success, measures

ENTREPRENEURIAL FIRMS IN SEARCH OF ESTABLISHED

PARTNERS: REVIEW AND RECOMMENDATIONS Das, T.K.; City U. of New York, Baruch College; [email protected] He, Yunxia; City U. of New York, Baruch College; [email protected]

How do entrepreneurial firms succeed in strategic alliances, especially with established firms? Although alliance partner selection criteria have received a great deal of attention in the literature, extant research has focused primarily on established firms, to the relative neglect of the unique interests of entrepreneurial firms. Based on the factors that differentiate these two types of firms, we propose that entrepreneurial firms need to use a specific set of selection criteria tailored to their particular attributes for achieving their survival and growth objectives.

Keywords: Strategic alliances, Entrepreneurial firms, Partner selection criteria

GENE POLITICS: A NEW VIEW OF FAMILY BUSINESS

Nicholson, Nigel; London Business School; [email protected]

The paper presents a new theoretical synthesis, aimed at integrating current thinking and knowledge about family firms by employing a neo-Darwinian analysis of the effects of the intersection between kinship and organization. After setting out the nature of the challenge presented by the field, the paper outlines evolutionary theory and what it says about family dynamics. This is the platform for a model of family culture and adjustment, discussing the key inputs of individual differences and family structure,









plus the wider socio-economic and cultural context. Next, the model is extended to discuss factors that mediate the infusion of family culture into business culture and leadership. The concept of leadership choice is a central element in the theory, especially its recursive significance for all other aspects of family business functioning. The bivalent effects of family involvement in business are analyzed in terms of three unique aspects of family firms, and the measures that can help secure positive outcomes. The paper concludes by considering how might the study of family business benefit firms of other kinds.

Keywords: family, Darwinism, leadership

FAMILY COUNCILS AND GOVERNANCE SYSTEMS IN FAMILY BUSINESSES: AGENCY THEORY OR PATERNALISTIC LOGIC

Gnan, Luca; Bocconi U.; [email protected] Huse, Morten; Norwegian School of Management BI; [email protected]

Montemerlo, Daniela; Bocconi U.; [email protected]

Recent descriptions of business governance heavily rely on hierarchical systems based on agency theory. These descriptions have evolved from the development of large corporations with a dispersed ownership structure. Owners are also often assumed to be both “faceless” and “heartless”. In this article we describe an alternative situation. Most businesses are small and can be considered as family businesses. We argue that a paternalistic logic should be employed when describing small businesses. In family businesses the face and heart of owners are most often very visible. Through an empirical study of governance mechanisms in small Italian family businesses, we show the substitution effects of family councils on boards of directors and other governance mechanisms. Family councils are not only governance mechanisms on the top of the business hierarchy. Family councils also replace governance roles held by the shareholder’s meeting, the board of directors and the CEOs.

Keywords: Family councils, Family business, Paternalism

THE TIME FRAMES OF ENTREPRENEURS

Bluedorn, Allen; U. of Missouri-Columbia; [email protected] Richtermeyer, Gwen; U. of Missouri-Kansas City; [email protected]

This study investigated the past and future temporal depths (the distances into the past and future people typically consider) of entrepreneurs. The results provide the first precise statistics describing these depths in a sample of entrepreneurs. A significant positive correlation was found between past and future temporal depths, and possible relationships were examined between both temporal depths and polychronicity, preference for working fast, perceived temporal flexibility of work, emphasis on schedules and deadlines, emphasis on punctuality, and general life stress. Entrepreneurs’ ages, lengths of future temporal depths, and their perceived temporal flexibility of work were all found to be negatively related to life stress in a stepwise hierarchical regression analysis.

Keywords: Time, Stress, Entrepreneurs







A SENSEMAKING-SENSEGIVING PERSPECTIVE ON THE

EVOLUTION OF GROWTH INTENTIONS IN ENTREPRENEURIAL FIRMS

Dutta, Dev K.; U. of Western Ontario; [email protected] Thornhill, Stewart; U. of Western Ontario; [email protected]

Entrepreneurial growth intentions are not static but follow an evolutionary path, varying among entrepreneurs and within individuals over time. Using an inductive, grounded theory approach we study a sample of 30 rapidly growing small and medium-sized enterprises (SMEs) over a five year timeframe to develop the 3P model of growth intentions. The model incorporates a sensemaking-sensegiving perspective and is characterized by its constituent 3Ps (Precursors, Process and Product). By capturing the essential dynamic of growth intentions, the 3P model describes how intentions emerge and span multiple levels of analysis, viz. the environment, the organization (including the pre-organization) and the entrepreneur.

Keywords: Growth intentions, sensemaking, sensegiving

THE DIFFERENTIAL EFFECTS OF SOCIAL CAPITAL TYPES ON

INTERNATIONALIZATION Prashantham, Shameen; Strathclyde U.; [email protected]

We explore theoretically the effects of social capital types on internationalization by extending the emerging integrative knowledge-based framework in the literature which has increasingly incorporated the role of networks. The central argument is that four types of social capital classified on the basis of social homogeneity (bridging/bonding) and geographic proximity (local/foreign) influence internationalization – and its knowledge determinants – but differentially. While foreign bridging social capital is vital to internationalization in many ways, we also argue for the utility of foreign bonding social capital (such as ethnic ties overseas) and local bridging social capital (such as linkages with locally based multinational subsidiaries) which appears to be under-recognized by scholars, and perhaps even practitioners.

Keywords: internationalization, knowledge, social capital

THE NATURE OF GOOD DEALS FOR ENTREPRENEURS

Fiet, James; U. of Louisville; [email protected] Patel, Pankaj C; U. of Louisville; [email protected]

We set forth the attributes of a forgiving business model that entrepreneurs may be able to utilize to minimize the potential for loss while exploiting ideas to generate new wealth. Ideas possessing these attributes would have greater potential because they would shift risk to other agents. We emphasize outside options for other actors and strategic interaction costs as key aspects of the model. We discuss impediments to using such a model, its pedagogical and ethical implications, and directions for future research.

Keywords: Opportunity recognition, Social psychological theory, Economic theory







A THEORY OF ENTREPRENEURIAL LEARNING

Patel, Pankaj C; U. of Louisville; [email protected]

By focusing on fragmented areas of the entrepreneurial process – from opportunity identification to opportunity exploitation – entrepreneurship literature provides an incomplete understanding of entrepreneurial learning. Furthermore, Austrian economic models that explain market evolution from individual conjectures to market coordination are either incomplete or logically inconsistent. This article is an attempt to provide a realistic, seamless, and holistic explanation of how entrepreneurs learn in both market and non-market contexts. The paper also explains how individual learning eventually results in market coordination. By combining radical and social constructivist theories with learning modes, this paper proposes an entrepreneurial learning framework that results in knowledge transmutations. This paper defines entrepreneurial learning as a process by which active entrepreneurs dynamically adapt to viable constructs of knowledge, through a cycle of theory-prediction-test-failure-accommodation-new theory. At the same time, they actively develop or use the zones of proximal development in market and non-market contexts throughout the entrepreneurial process. Entrepreneurs use varying combinations of diverse learning styles to develop viable constructs of knowledge. A better understanding of how entrepreneurs learn may help develop normative and pedagogical guidelines for entrepreneurial learning and may help improve our understanding of existing models of market learning and market coordination.

Keywords: Entrepreneurial Learning, Constructivism, Market Process

ACADEMIC ENTREPRENEURSHIP: ENTREPRENEURIAL

INTENT AND THE DISCLOSURE OF UNIVERSITY INVENTIONS George, Gerard; U. of Wisconsin, Madison; [email protected]

Maltarich, Mark; U. of Wisconsin, Madison; [email protected] Jain, Sanjay; U. of Wisconsin, Madison; [email protected]

Invention disclosure is the first step in the process of technology transfer from the university setting to industrial practice. We examine what motivates scientists to disclose their inventions and the role of perceived costs of patenting as an impediment to disclosures. Drawing from qualitative data and a survey of 796 scientists, we found that entrepreneurial intent to start a business was positively associated with disclosure behavior. Interestingly, entrepreneurial intent mitigates the negative effect of perceived costs on invention disclosures. The implications of these findings for science policy and theories of entrepreneurial behavior are discussed.

Keywords: social entrepreneurship, technology transfer, academic entrepreneurship

THE ROLE OF PERCEIVED RELATIONAL SUPPORT IN

ENTREPRENEUR - CUSTOMER DYADS De Clercq, Dirk; Vlerick Leuven Gent Management School;

[email protected] Rangarajan, Deva; Vlerick Leuven Gent Management School;

[email protected]

Prior research on inter-firm relationships has focused on the processes by which key relationship outcomes are fostered and developed over time. In this study, we use social exchange theory as the conceptual framework to identify a process model that explains entrepreneurs’ attitudes and behavior








towards their customers. More specifically, we posit that entrepreneurs’ commitment to and satisfaction with customers depends on the extent to which they feel that their own contribution is valued by the customer, i.e., their perceived relational support. The study’s hypotheses are tested among 217 entrepreneurs in a Western European country. We find that entrepreneurs’ perception of relational support is positively related to their commitment to and satisfaction with customers. Perceived relational support in turn is affected by customers’ reliability as a credible exchange partner [i.e., (a) customer reputation and (b) procedural justice] and the nature of the relationship between the two parties [i.e., (c) quality of communication and (d) social interaction]. We also show that these four variables affect entrepreneurs’ attitudes and behavior through their effect on perceived relational support. We are thus able to identify a key mechanism that explains relationship outcomes in entrepreneur – customer relationships. We discuss the implications and limitations of our findings and provide directions for future research.

Keywords: inter-firm relationships, social exchange, perceived relational support

CLUSTERS, KNOWLEDGE SPILLOVERS AND NEW VENTURE

PERFORMANCE: AN EMPIRICAL EXAMINATION Gilbert, Brett Anitra; Georgia State U.; [email protected]

McDougall, Patricia Phillips; Indiana U.; [email protected] Audretsch, David; Indiana U., Bloomington; [email protected]

Researchers often attribute the higher levels of performance associated with firms operating from geographic clusters to the knowledge received from the cluster environment. Yet, as this relationship has not to our knowledge been empirically examined, we are unaware of the exact nature of the relationship. This paper examines the relationships between a cluster location, knowledge spillovers and the performance of new ventures. Using institutional theory, we explain how knowledge spillovers from cluster regions affect new venture growth and innovation. We test the relationships using path analysis on a sample of 135 technology-based IPO new ventures. The results indicate that for this sample of new ventures, knowledge may be the principle factor benefiting new ventures operating from cluster regions.

Keywords: New Venture Performance, Knowledge Spillovers, Geographic Clusters

THE ROLE OF TRUST FOR ENTREPRENEURIAL EXCHANGE

IN A TRANSITIONAL ECONOMY Manolova, Tatiana S.; Suffolk U.; [email protected]

Gyoshev, Bojidar S; International Business School; [email protected] Manev, Ivan; U. of Maine; [email protected]

While trust is widely recognized as central to the establishment of an effective market economy, research on transition economies has mostly overlooked it. This paper focuses on buyer-supplier exchange relationships and validates a measure of supplier trust in the context of new and small ventures in a transitional economy. Examining the links between supplier trust, asset specificity, and uncertainty reduction, we seek to provide a better understanding of the context for economic exchange which shapes the entrepreneurial behaviors and strategic conduct of new and small ventures in transitional economies. We study the relationships between these constructs using a sample of Bulgarian small business owners (N=119). Commensurate with expectations, our findings suggest that in these conditions, supplier trust is








significantly and positively associated with asset specificity and uncertainty reduction. Implications for research and practice are discussed.

Keywords: trust, transitional economies, asset specificity, uncertainty reduction

LOCATING CLOSE TO DOMINANT FIRMS: AN ENTRY

STRATEGY IN AN EMERGING INDUSTRY Tegarden, Linda; Virginia Tech; [email protected]

Lamb, William; Ohio U.; [email protected] Hatfield, Donald; Virginia Tech; [email protected]

In recent years, emerging industries have been the focus of much research in strategy and economics. The focus of this literature has been predominantly on firm choices (such as entry timing and technology choice) and firm characteristics (such as being an established or start-up firm). However, a greater understanding of firms' location choices, as well as the competitive impact of these choices, can help advance our theories of entrepreneurship. We investigate the decision to co-locate and the benefits of co-locating with dominant firms in emerging industries; specifically, how co-location with a dominant firm impacts a firm’s product strategy. A series of hypotheses is generated and tested longitudinally in the context of the U.S. fiberoptics industry from 1976 to 1994. First, we test whether firms’ propensity to co-locate varies by stage of industry evolution. Second, we test whether entrepreneurial start-ups are more likely than intrapreneurial ventures to co-locate with dominant firms. Finally, we test a series of hypotheses regarding the impact of co-location on product offerings of both entrepreneurial start-ups and intrapreneurial ventures. We find that: (1) propensity to co-locate is greater in later stages of industry development than it is in earlier stages, (2) propensity to co-locate is very high and does not vary across firm types in early or late stages, (3) co-location with dominant firms does not appear to be related to early adoption of new product types, and (4) co-location with dominant firms is related to greater product-line breadth of firms in this emerging industry.

Keywords: Co-Location, Dominant Firm, Emerging Industry

TECHNOLOGICAL INNOVATION ACTIVITIES IN FIRMS AND

PROPENSITY OF INDIVIDUALS STARTING NEW BUSINESSES Wong, Poh-Kam; National U. of Singapore; [email protected]

Lee, Lena; National U. of Singapore; [email protected]

Prior studies have found that knowledge gained from work experience is a way to gather insights for business opportunity recognition. However, little is known about the specific types of knowledge that lead to business founding. Utilizing concepts from knowledge spillovers and from the opportunity recognition literatures, this paper argues that through an organization’s technological innovation activities, employees develop specialized knowledge that provides them with the entrepreneurial opportunities to found new businesses. Besides highlighting the positive relationship between technological innovation activities in organizations and the propensity of individuals leaving the organizations to start new businesses, this paper also provides a more fine-grained explanation of the types of technological innovation activities that can lead to business founding. We argue that knowledge acquired through product innovations is more easily appropriated by individuals for commercial uses, while knowledge acquired through process innovations must be integrated with other parts of the organization to be valuable. This study proposes that product innovation activities in an organization more so than process innovation activities in an







organization are related to new business founding. Implications for opportunity exploitation and ways to appropriate knowledge spillovers are discussed.

Keywords: Organization Founding, Technological Innovation, Knowledge Spillovers

ENTREPRENEURSHIP AND STEREOTYPES: ARE

ENTREPRENEURS FROM MARS OR FROM VENUS? Gupta, Vishal K.; U. of Missouri, Columbia; [email protected] Turban, Daniel; U. of Missouri, Columbia; [email protected]

Wasti, S. Arzu; Sabanci U.; [email protected] Sikdar, Arijit; Indian Institute of Management, Indore; [email protected]

The goal of this study was to examine gender-role stereotypes in entrepreneurship and the relationship between such stereotypes and entrepreneurial intentions. Three forms of the 92-item Schein Descriptive Index were used to measure gender role stereotypes and characteristics of entrepreneurs in general. Data were collected from respondents at the pre-entrepreneurial stage in three countries, US, Turkey and India. The results revealed that, in general, entrepreneurs are perceived to have predominantly male characteristics. Further, although both men and women perceive entrepreneurs to have characteristics similar to those of males, only women also perceived entrepreneurs and females as having some similar characteristics. We also found that respondents who perceived themselves as more similar to males had higher entrepreneurial intentions than those who see themselves as less similar to males while no such difference was found for people who saw themselves as more or less similar to females. The results were consistent across the three national cultures in our sample. The implications of our findings for both research and practice are discussed.

Keywords: entrepreneurship, gender-role stereotypes, entrepreneurial intentions

ALLIANCE STRATEGY AND THE PERFORMANCE OF HIGH-

TECHNOLOGY ENTREPRENEURIAL FIRMS Pangarkar, Nitin; National U. of Singapore; [email protected]

In this paper we examine the under-researched relationship between alliance strategy and the performance of startup firms. Specifically, we argue that startup firms forging a larger number of alliances will exhibit better performance. We also hypothesize that startups with a diverse portfolio of alliance partners will outperform others. Based on a survey of 76 Internet-related startups in Singapore, we find partial support for the hypothesized relationships.

Keywords: Alliance strategy, Partner diversity, Startup performance

IS THE TEAM AS STRONG AS ITS STRONGEST LINK?

VENTURE TEAMS’ ADVICE NETWORKS AND STRATEGIC DEBATE

Vissa, Balagopal; INSEAD; [email protected]

Explaining how new venture teams work together to build the venture that exploits an entrepreneurial opportunity is an important and less explored area in entrepreneurship. Past research on venture teams









has not considered the social context in which teams are embedded, although boundary spanning ties are important conduits for acquiring decision relevant information and advice. Using a social network perspective, I examine how new venture team members’ external network structure drives an internal team process – strategic debate. I differentiate between three analytic features of venture teams’ network structure - size, sparseness and overlap. Using a sample of 84 Indian software venture teams, I provide evidence that that so long as at least one member of the venture team has a large and sparse external advice network, strategic debate within the team is enhanced. Surprisingly, the extent to which venture team members’ networks overlap does not influence strategic debate. Overall, these novel findings bridge the complementary literatures on social networks and team dynamics.

Keywords: strategic debate, venture teams, team networks

SURVIVAL OF THE BIGGEST? THE EFFECT OF INITIAL SIZE

AND FIRM GROWTH ON NEW FIRM SURVIVAL Delmar, Frederic; Stockholm School of Economics; [email protected]

Sjöberg, Karin; Jönköping International Business School; [email protected] Wennberg, Karl; Stockholm School of Economics; [email protected]

This paper investigates the effect of initial size and firm growth on firm survival. Surprisingly, while the effect of initial size on survival is empirically well-documented, little empirical research has been conducted in this area considering the assumed role of growth on survival. Based on a population of firms (n= 5,013) founded by individuals from the science and technology labor force between 1992 and 2000, we use event history analysis to examine our hypotheses. We control for the human capital of the founders as well as for geographic and industry characteristics. We find that the survival of new firms is strongly affected by initial size as well as accumulated firm growth. However, the impact of growth is not unambiguously positive. While a certain measure of early growth has positive affect on firm survival, very rapid growth is found to have a negative effect. Thus, growth rates in general have a non-monotonic effect on new firm survival. We offer implications for research and practice.

Keywords: firm survival, growth, event history

EXPLORING DETERMINANTS OF ORGANIZATIONAL

EMERGENCE: INSTITUTIONAL PERSPECTIVE Tornikoski, Erno Tapio; Seinäjoki Polytechnic; [email protected]

Most of the organizational theories take the existence of organizations for granted. Thus, attempts to understand success and failure at the pre-organizational stage have often been conducted without an underlying theory to explain why some nascent entrepreneurs succeed in creating a new organization while others do not. This study proposes that institutional theory offers an explanatory framework to predict organizational emergence. Specifically, we argue, and find empirical evidence to suggest, that in order to successfully create new organizations a pre-organization should exhibit so called legitimating elements in order to conform to various institutional demands.

Keywords: Organizational emergence, Institutional determinants, PLS estimation






NURTURING ENTREPRENEURSHIP: DOES ONE SIZE FIT ALL?

Anokhin, Sergey; Case Western Reserve U.; [email protected]

Innovation has always been a centerpiece of entrepreneurship research. New ventures are assumed to be created to exploit novel entrepreneurial opportunities. There is, however, a second side to the new firm formation argument - the Austrian school of economics posits that arbitrage opportunities are an important determinant of entrepreneurial activity as well. We bring together both perspectives in a study of entrepreneurial activity in a national economic context and explore what insights into new venture formation process could be gained by simultaneous treatment of innovative and arbitrage opportunities within the same model. We use Data Envelopment Analysis methodology to distinguish innovative opportunities from arbitrage opportunities. Our findings indicate that to provide a satisfactory explanation for the level of entrepreneurial activity in the economy both perspectives are needed. In addition to innovation, arbitrage opportunities in concert with quality human capital, relative wealth, and economic freedom significantly affect rates of entrepreneurship. We demonstrate that the tools needed to foster entrepreneurship differ significantly between developed and less developed countries.

Keywords: International entrepreneurship, Developing countries, Economic development

HOW CORPORATE ENTREPRENEURS THINK: COGNITION,

CONTEXT, AND ENTREPRENEURIAL SCRIPTS Corbett, Andrew C.; Rensselaer Polytechnic Institute; [email protected]

Hmieleski, Keith; TCU; [email protected]

Research in the entrepreneurial cognition domain has demonstrated that, regardless of nationality and culture, entrepreneurs tend to draw from similar sets of mental scripts when considering whether to start a new venture. A parallel line of research suggests that corporate entrepreneurs, those individuals charged with creating new ventures within established corporations, think and act differently than entrepreneurs who are involved in independent startup operations. This article integrates these two perspectives by constructing a theoretical framework for explaining why differences in context lead to the development and use of different mental scripts for developing, an internal, corporate venture as compared to those needed for launching and growing an independent startup. Important implications regarding the relationship between context and entrepreneurial cognition are outlined for researchers, entrepreneurs and practicing managers; and perhaps most importantly, for educators teaching entrepreneurship within the corporate environment.

Keywords: cognition, corporate entrepreneurship, mental scripts

A SCALABLE PROBLEM-BASED LEARNING SYSTEM FOR

ENTREPRENEURSHIP EDUCATION Hanke, Ralph; Pennsylvania State U.; [email protected]

Warren, Anthony C.; Pennsylvania State U.; [email protected]

Entrepreneurship skills are vital to the future of the US economy and its ability to support continual wealth creation. Traditional educational methods do not teach such skills; indeed they may hinder them. The initiative described creates a new way to provide a valuable entrepreneurial learning experience to a large number of students at all levels. This can only be achieved by developing a “scalable” model to reduce teacher load in course creation and management, and student interaction. This paper describes a pilot









experiment at Penn State, the first of a four stage plan to make entrepreneurship education available to the majority of students in the US.

Keywords: Entrepreneurship, Problem Based Learning, Teaching Innovation

UNDERWRITERS AND THE AGENCY PROBLEM AT THE TIME

OF THE IPO Arthurs, Jonathan D.; Washington State U.; [email protected]

Busenitz, Lowell; U. of Oklahoma; [email protected] Johnson, Richard A; U. of Oklahoma; [email protected]

Hoskisson, Robert E.; Arizona State U.; [email protected]

When new ventures go through an IPO, they usually hire investment bankers to help underwrite the stock and navigate the going-public process. However, the goals of venture firms and underwriters often vary substantially. The firm issuing the stock desires to avoid underpricing and raise as much capital as possible for the growth and development of the venture. On the other hand, underwriters have an incentive to price the stock low, or “underprice,” thereby allowing them and their institutional investors that they have recruited to benefit from any stock price increase after the stock is listed on a public exchange. Using agency theory as a conceptual base, we propose situational hypotheses to explain the severity of underpricing. In particular, we find that monitoring power by the board of the new venture decreases the severity of underpricing. Furthermore, lower levels of information asymmetry (through other board memberships) also decrease the severity of underpricing. On the other hand, underwriters can increase the severity of underpricing when their prestige is higher. We discuss the implications of our findings and propose future research questions.

Keywords: IPO, Underpricing, Agency theory

THE ENTREPRENEURIAL PROCESS AS A MATCHING

PROBLEM Davidsson, Per; Queensland U. of Technology and Jonkoping U.;

[email protected]

The purpose of this paper is to integrate and expand on some key insights from recent conceptual and empirical work on the entrepreneurial process. After first defining the key term “entrepreneurship,” the paper moves on to deepen the conceptualization of the entrepreneurial process and its two sub-processes, discovery and exploitation. The then following section deals with two previously suggested categorizations of different types of processes, namely Bhave’s (1994) distinction between internally and externally triggered processes and Sarasvathy’s (2001) contrasting of causation vs. effectuation. While it seems indisputable that these different types of processes are descriptively valid, i.e., real world entrepreneurs actually use them, they are not necessarily normatively valid. The empirical co-existence of different process types makes it a plausible assumption that their applicability is contingent on the context. Consequently, the latter part of this paper uses theoretical deduction and various empirical results to arrive at conclusions about under what conditions which type of process is more commendable. A model is developed depicting how characteristics of the individual(s), the venture idea and the environment interact with the type of entrepreneurial process in determining the outcomes of the process.

Keywords: entrepreneurial process, contingency model, moderator







DETERMINANTS OF NEW VENTURE SURVIVAL: MULTI-LEVEL ANALYSES OF INTERNAL CONDITIONS AT STARTUP STAGES

Rhee, Jay Hyuk; Korea U.; [email protected]

Probably the most important research question in the field of entrepreneurship is why some new ventures survive while others fail. To advance our understanding of new venture survival, the present study examines the issue of the survival of new ventures at their startup stages (rather than their later, more established stages), with the emphasis on the internal (rather than external) environments, using the sample of new ventures (rather than small businesses). Based on several theoretical arguments, we derive the hypotheses and empirically test how the factors at the different levels of internal environments ?business plan utilization, governance mode, financial conditions, managerial conditions, strategic choices, and cohesion among startup-team members - may affect new venture survival. The empirical results, based on the data set that includes information on the formation and operation of 1176 new ventures, provide support for the argument of the present study that the factors at the different levels of internal environments co-exist as determinants of new venture survival. Overall, the results of the present study reinforce the need to perceive entrepreneurship as a multifaceted phenomenon and to conduct multi-level analyses for a better understanding of new venture survival. Suggestions and implications for future research are also discussed.

Keywords: new venture survival, internal conditions, multi-level analyses

DO ENTREPRENEURSHIP PROGRAMS RAISE

ENTREPRENEURIAL INTENTIONS OF SCIENCE AND ENGINEERING STUDENTS?

Souitaris, Vangelis; Cass Business School; [email protected] Zerbinati, Stefania; U. of Portsmouth; [email protected]

Drawing on the theory of planned behaviour, this study tests the effect of entrepreneurship programmes on the entrepreneurial attitudes and intentions of science and engineering students. This is necessary in order to confirm (or disconfirm) conventional wisdom that entrepreneurship education increases the intention to start a business. The results showed that the programmes raised some attitudes and the overall entrepreneurial intention and that inspiration was the programmes’ most influential benefit. The findings have implications for the theories of planned behaviour, education, emotions and entrepreneurship and also for the practice of teaching entrepreneurship.

Keywords: education, emotions, intentions

EXPLORE OR EXPLOIT: THE ROLE OF CORPORATE

ENTREPRENEURSHIP AND SOCIAL NETWORK IN CHINSE NEW VENTURE

Jiang, Chunyan; Chinese U. of Hong Kong; [email protected]

In this paper, we draw upon insights from two rather disparate streams of literature¡ªentrepreneurship and social network¡ªto develop an informed understanding of organizational learning in Chinese new ventures. We examine the channels of organizational learning from both internal and external sides¡ªcorporate entrepreneurship and social network. By applying March (1991)¡¯s distinction between exploratory and






exploitative learning modes, we are able to not only resolve the apparently conflicting explanations of internal/external learning channels and exploratory/exploitative learning modes but also achieve a level of pragmatic synthesis between them. In highlighting the paper¡¯s contributions to theory and practice, we suggest that just as research on entrepreneurship benefits from applying strategic management theory like organizational learning, so is strategic management theory like organizational learning informed by research arising within the filed of entrepreneurship¡ªstrategic entrepreneurship.

Keywords: corporate entrepreneurship, social network, organizational learning

AN EMPIRICAL ANALYSIS OF THE RELATIONSHIP AMONG

FOUNDING RESOURCES, STRATEGIES, AND PERFORMANCE

Newbert, Scott L.; Villanova U.; [email protected] Kirchhoff, Bruce A; New Jersey Institute of Technology; [email protected]

Walsh, Steven T.; U. of New Mexico; [email protected]

Whether a firm’s performance is more dependent on the resources or strategies it adopts at birth is widely debated in the literature. We endeavor to revolve this dispute by analyzing longitudinal data on thirty-six new independent ventures started worldwide in the semiconductor silicon crystal production industry between 1947 and 1997. We measure resources and strategies at the time of founding and relate these to multiple lagged performance measures of the firm. We find that while resources do appear to influence the strategy selected, it is the strategy and not the resources that determine the firm’s performance.

Keywords: resources, new venture strategies, performance

HOW DO ENTREPRENEURS ORGANIZE FIRMS UNDER

CONDITIONS OF UNCERTAINTY? Alvarez, Sharon; Ohio State U.; [email protected]

Entrepreneurs looking to exploit market opportunities and create economic value must concern themselves with both value creation and value appropriation. In this context entrepreneurs face an unusual challenge, they must accomplish these two tasks before the economic value of the market opportunity is known, even probabilistically. The purpose of this paper is to describe how entrepreneurs in these settings can organize a firm to solve their resource coordination and profit appropriation problems, even when the future economic value of exploiting a market opportunity is uncertain. The paper begins by distinguishing between risky and uncertain investments, and then shows how some currently popular explanations of why firms are created face significant limitations under conditions of uncertainty. Then, two different ways that firms can be organized in these settings are examined, and their implications for research on entrepreneurship are discussed.

Keywords: Economic, Resources, Entrepreneurial Firms







NEW VENTURE GROWTH: A TRANSACTION COSTS

PERSPECTIVE Chandler, Gaylen N; Utah State U.; [email protected]

McKelvie, Alexander; Jonkoping International Business School; [email protected] Davidsson, Per; Queensland U. of Technology and Jonkoping U.;

[email protected]

We analyze the moderating effects of human asset specificity and monitoring costs on the relationship between sales growth and employment growth. In resource-constrained contexts, product specific knowledge, firm specific knowledge, the importance of customer relationships, and the importance of trade secrets are positive moderators of the relationship between sales growth and employment growth, while difficulties of screening and supervising employees and measuring performance are negatively related. Hence, predictions derived from transaction cost economics apply in the domain of new venture growth.

Keywords: venture growth, transaction cost economics, employment growth

INCENTIVE DESIGN FOR CORPORATE EMPLOYEE-

ENTREPRENEURS Monsen, Erik; U. of Colorado, Boulder; [email protected]

While rewards are important in corporate entrepreneurship, few address the theoretical foundations of incentive system design for the corporate venturing context. This requires a multi-theoretic lens to explain the economic and behavioral factors that drive an employee-entrepreneur's choice to either participate in a new corporate venture or not. These factors include: risks, rewards, goals, abilities and expectations. The implications of this model extend beyond this context to broader compensation practices in strategy and human relations.

Keywords: incentives, employee, corporate entrepreneurship

INSTITUTIONAL ORIGIN AND RESOURCE ENDOWMENTS TO

SCIENCE-BASED ENTREPRENEURIAL FIRMS Moray, Nathalie; U. Gent; [email protected]

Bruneel, Johan; Vlerick Leuven Gent Management School; [email protected]

Vanaelst, Iris; Vrije U. Brussel; [email protected]

This paper addresses theoretical and empirical gaps in the relationships between the nature of institutional origin, firm resources and growth in the context of spinning off ventures from public research organisations (PROs). Institutional origin is considered a two dimensional construct consisting of the formality of technology transfer and the research specificity of a PRO. In this perspective, these variables are hypothesised to predict the resource endowments of science-based entrepreneurial firms. Additionally, given the widespread attention from academics and policy makers to IP based science-based entrepreneurial firms, the formality of technology transfer is expected to be associated with growth. Empirical tests of hypotheses derived from this view are based on data from 184 science-based entrepreneurial firms, representing 48 public research organisations. Multivariate analysis of variance









shows that institutional origin predicts firm resources, showing significance levels for start capital. An ordinal interaction effect shows that companies established with a formal transfer of technology start with higher resource levels, and even more so when started from a PRO with a specific research base. This suggests that specific PROs are more selective in the projects they consider eligible for spin off incubation and creation. Next to this, two-stage regression analysis indicates that the formality of technology transfer has a single direct effect on growth in employees and capital, independent of the start capital of the firm, pointing to the intrinsic advantage of having protected intellectual property formally transferred to the science-based entrepreneurial firm at the onset of the business activities.

Keywords: TECHNOLOGY TRANSFER, SPIN OFFS, PUBLIC RESEARCH ORGANISATION

VENTURE CAPITAL DECISIONS IN CHINA AND RUSSIA:

NETWORK TRANSITIVITY AND SOCIAL REFERRAL Batjargal, Bat; Harvard U.; [email protected]

This article examines the effects of dyadic ties and interpersonal trust on referrals and investment decisions of venture capitalists in the Chinese and Russian contexts. The study uses the postulate of transitivity of social network theory as a conceptual framework. The findings reveal that referee-venture capitalist tie, referee-entrepreneur tie, and interpersonal trust between referee and venture capitalist have positive effects on referrals and investment decisions of venture capitalists. The institutional, social and cultural differences between China and Russia have minimal effects on referrals. Interpersonal trust has positive effects on investment decisions in Russia.

Keywords: venture capital, china, russia

ENTREPRENEURSHIP EDUCATION: DO THEY PRACTICE

WHAT WE TEACH? Edelman, Linda F.; Bentley College; [email protected] Manolova, Tatiana S.; Suffolk U.; [email protected]

Brush, Candida G; Boston U.; [email protected] Greene, Patricia G; Babson College; [email protected]

Recent surveys of education in colleges and universities show that entrepreneurship courses and programs are vital components of business school curriculum. Scores of studies examine teaching pedagogy and likelihood of founding after graduation but less research considers the content of entrepreneurship courses, and in particular, start-up processes. The launch of a new organization is generally agreed to be one of the central aspects of the entrepreneurial process but, to date, steps leading to start-up success are not well researched. At the same time, the correspondence between activities leading to start-up success and classroom teaching is understudied. This raises a question of the relevance of our entrepreneurship education. Do the activities pursued by nascent entrepreneurs match our teaching prescriptions for success? In this study, we compare start-up activities of nascent entrepreneurs in the PSED dataset to data collected from a sample of entrepreneurship textbooks. Our findings indicate that while there is some overlap in start-up activities practiced by nascent entrepreneurs and those in texts, there are several differences as well. Specifically, operational activities are widely practiced by nascent entrepreneurs but are relatively deemphasized in textbooks. In addition, textbooks present start-up activities in a rational, linear fashion, the sequence of activities followed by nascent entrepreneurs at start up “messier”. Implications for teaching are discussed.

Keywords: Nascent Entrepreneur, Entrepreneurial Education, Nonparametric Analysis of Variance







LEARNING UNDER UNCERTAINTY: STRUCTURAL

HETEROGENEITY IN CORPORATE VENTURE CAPITAL RELATIONSHIPS

Wadhwa, Anu; U. of Washington, Seattle; [email protected] Basu, Sandip; U. of Washington, Seattle; [email protected]

Kotha, Suresh B; U. of Washington, Seattle; [email protected]

The search for external knowledge is characterized by considerable uncertainty. Based on whether search for new knowledge has explorative or exploitative learning objectives, different types of uncertainty become more salient to the potential acquirer. Accordingly, the actions of the acquirer to resolve a particular type of uncertainty can be explained using different theoretical perspectives. Applying this multi-theoretic approach to corporate venture capital investments, we find that corporate investors select structural attributes of investments they have control over, and adapt to other attributes that are less controllable.

Keywords: corporate venture capital, exploration/ exploitation, uncertainty resolution

PRIOR KNOWLEDGE, BISOCIATIVE MODE OF THINKING AND

ENTREPRENEURIAL OPPORTUNITY IDENTIFICATION Ko, Stephen; Hong Kong Polytechnic U.; [email protected] Butler, John E; Hong Kong Polytechnic U.; [email protected]

The purpose of this paper is to examine the relationships among prior knowledge, bisociative thinking mode and entrepreneurial opportunity identification in a sample of 197 technology-based entrepreneurs. Results indicate that bisociative thinking mode of an entrepreneur mediates the relationship between prior knowledge and opportunity identification. The relationship between prior knowledge and opportunity identification is stronger for high technology entrepreneurs. Implications for research and practice are also discussed.

Keywords: bisociation, opportunity, prior knowledge

THE PAST, PRESENT, AND FUTURE OF ENTREPRENEURSHIP

RESEARCH: DATA ANALYTIC TRENDS AND TRAINING Dean, Michelle A.; San Diego State U.; [email protected]

Shook, Christopher; Auburn U.; [email protected] Payne, G Tyge; U. of Texas Arlington; [email protected]

Data analysis is essential to entrepreneurship research and its progression as a field of study. Thus, appropriate doctoral training in data analysis is vital to the future of the entrepreneurship discipline. A three-study design is used to evaluate data analytic trends and the adequacy of doctoral training regarding entrepreneurship research. In the first study, we longitudinally examine entrepreneurship research to investigate data analytic trends. More specifically, we examine the data analytic techniques used for hypotheses testing in two key entrepreneurship journals since their inception. In the second study, we surveyed expert entrepreneurship scholars to gauge the importance of specific data analytic techniques to future entrepreneurship research, as well as their expectations regarding Ph.D. training in each technique. The third study surveyed recent entrepreneurship Ph.D. graduates to assess their










competence with various data analytic techniques. In tandem, these three studies provide a past, present, and future perspective of research uses, competencies, and expectations in entrepreneurship.

Keywords: Entrepreneurship, Statistical Methods, Research Methods

CEO TRANSFORMATIONAL LEADERSHIP AND CORPORATE

ENTREPRENEURSHIP: ROLE OF TMT PROCESS AND PERSPECTIVE

Ling, Yan; George Mason U.; [email protected] Lubatkin, Michael; U. of Connecticut; [email protected]

Simsek, Zeki; U. of Connecticut; [email protected] Veiga, John F; U. of Connecticut; [email protected]

Combining theory and evidence on transformational leadership with research on upper echelons, we build and test a model to examine how CEO transformational leadership influences a firm’s level of entrepreneurship. In addition, we examine how transformational CEOs enhance TMT processes, i.e. TMT behavioral integration, and perspectives, i.e. risk propensity, which yield greater entrepreneurial returns. Using survey data from 159 firm’s CEO and TMT members, our results confirm that CEO transformational leadership is both directly related to the extent to which the firm pursues corporate entrepreneurship, and indirectly related through its impact on TMT processes and perspectives.

Keywords: transformational leadership, Corporate entrepreneurship, top management team

PARTICIPATION AND COMMITMENT: THE MEDIATING EFFECTS OF VALUE CONGRUENCE AND PERCEIVED

INFLUENCE Davis, Peter; U. of Memphis; [email protected] Mahto, Raj V; U. of Memphis; [email protected] Allen, David G; U. of Memphis; [email protected]

In this study, we develop a model of founding family commitment to organizational continuance based on participation, influence, and value congruence. Using a national sample of family businesses, we then test this model using structural equation modeling. The results suggest that value congruence and the perceived influence of the family mediate the relationship between the extent of family members’ participation in the business and expressed commitment to continuing the business as a family enterprise.

Keywords: perceived influence, commitment, family business









BLOCKHOLDER CONFLICTS IN VC BACKED

ENTREPRENEURIAL FIRMS: DO THE COSTS OUTWEIGH THE BENEFITS?

Chandy, K Thomas; Binghamton U.; [email protected] Sivasubramaniam, Nagaraj; Duquesne U.; [email protected]

In VC backed entrepreneurial firms, the venture capitalists and entrepreneurs form distinct equity block-holders, both actively involved in managing the firm. Among the factors that are likely to distinguish the two groups are differences in time-horizons for decision-making, and differences in pressures for liquidity. Yet, entrepreneurs are willing to surrender a substantial fraction of firm ownership to VCs because, in addition to money, VCs are reputed to provide entrepreneurial firms with significant performance-enhancing managerial resources that they lack and are unlikely to obtain from other funding sources. The critical, indeed dominant, role played by VCs in entrepreneurial financing suggests that entrepreneurs, and the market, believe that the performance-enhancing benefits of VC-funding outweigh the costs of the equity stake they demand. There is, however, another less obvious cost that should also be addressed: the cost of conflict between equity block-holders. We examine 367 initial public offerings of US information technology firms between August 1995 and December 1999 and show that, when conflict between block-holders is also considered, the benefits of VC-backing are less clear.

Keywords: Venture Capital firms, startups, capabilities

ENTREPRENEURIAL PASSION: THE NATURE AND

INFLUENCE OF EMOTIONS IN ENTREPRENEURSHIP Cardon, Melissa S; Case Western Reserve U.; [email protected]

Wincent, Joakim; Lulea U. of Technology; [email protected] Singh, Jagdip; Case Western Reserve U.; [email protected] Drnovsek, Mateja; U. of Ljubljana; [email protected]

Despite the virtually unchallenged view that passion is important for new venture creation and growth, surprising little systematic theoretical or empirical work exists concerning the notion of passion and its influence on entrepreneurial activities. Through a review of the literature, we highlight the inconsistencies and gaps concerning work on entrepreneurial passion, and discuss four critical theoretical foundations that must underlie future research in this area. In a comprehensive theoretically-grounded framework of the role of emotion in entrepreneurship, we suggest that entrepreneurial passion is an emotional meta-experience that influences three key drivers of entrepreneurial effectiveness: problem-solving, persistence, and absorption, and that both subconscious and cognized emotional experiences influence these drivers. Implications for research and practice are discussed.

Keywords: entrepreneurial emotion, passion, effectiveness









RESOURCE COMBINATIONS AND THE EFFECTIVENESS OF

EXTERNAL GROWTH MECHANISMS FOR SMALL BUSINESSES

Wiklund, Johan; Jönköping International Business School; [email protected] Shepherd, Dean; Indiana U.; [email protected]

In order to grow, firms can choose to expand internally by extending existing operations, but they are also free to use external growth mechanisms (alliances and acquisitions). Resource-based theory suggests that in order for firms to reap the benefits of such mechanisms they must be able to combine existing resources with the new ones in entrepreneurial ways. Consistent with this notion, we use a resource based perspective and a sample of 319 small businesses to investigate their resource combination activities and the moderating influence that these activities have on the effectiveness of alliances and acquisitions to deliver firm growth. We find that no external growth mechanism is universally beneficial to overall firm growth but that firms’ involvement in resource integration positively moderates their effect. Implications for theory and management are discussed.

Keywords: Growth, external mechanisms, resource combination activities

AN EXAMINATION OF ENTREPRENEURIAL TEAM

DEVELOPMENT IN ACADEMIC SPIN-OUTS Vanaelst, Iris; Vrije U. Brussel; [email protected]

Wright, Mike; Nottingham U.; [email protected] Moray, Nathalie; U. Gent; [email protected]

This paper examines the dynamics of entrepreneurial teams as they evolve through the different stages of a spin-out process. Using a unique, hand collected set of data covering all team members in 10 cases, in-depth analysis is performed of the heterogeneity of team members’ experience and perception of the strategic orientation needed to attain different milestones in the spin-out process. Our findings suggest that teams evolve over time and change in composition, and therefore, they cannot be studied as immutable entities. Moreover, analysis of the teams indicates that the team’s heterogeneity changes as it evolves through the different stages of the spin-out process.

Keywords: new venture creation, team analysis, team evolution

AN ORGANIZATIONAL JUSTICE BASED VIEW OF MORAL

HAZARD PROBLEMS IN FAMILY FIRMS Lubatkin, Michael; U. of Connecticut; [email protected]

Ling, Yan; George Mason U.; [email protected] Schulze, William S; Case Western Reserve U.; [email protected]

Recent contributions to the family business literature have offered insights as to when and why family firm governance may engender either agency benefits or moral hazard threats. However, there is much about the nature of the intervening mechanism that is not well explained, in particular how controlling owners’ parental altruism and owner management can influence family and non-family employees’ perception in family firms and, in turn, encourage or mute their opportunistic behaviors. We propose to fill this “causal gap”. We reason that the theories underlying moral hazard and organization justice share a common










incentive and cause, and therefore can be integrated to obtain a more enriched view. Drawing on this view, we then explain situations where parental altruism and controlling ownership can combine to expose family and non-family employees to up to eight threats of moral hazard rooted in procedural and distributive justice violations.

Keywords: family firm, governance, justice

DYNAMISM IN CAPABILITIES AND NETWORKS:

IMPLICATIONS FOR WEALTH CREATION IN TECHNOLOGY START-UPS

Zheng, Yanfeng; U. of Wisconsin, Madison; [email protected] Liu, Jingyan; Zhongshan U; [email protected]

George, Gerard; U. of Wisconsin, Madison; [email protected]

We examine two types of resources: internally-developed organizational capabilities and externally-sourced network resources. Whereas studies focus on the impact of resources on performance, we examine changes in the relative impact of these two resource types on wealth creation over time. We investigate the dynamic relationship between capabilities, networks and wealth creation using panel data from 156 biotechnology start-ups and analyze it using a minimum distance estimation technique. We found that the network’s effect on wealth creation decreases while internal capabilities become more critical. The implication of these findings for organizational theories and entrepreneurship in high technology firms are discussed.

Keywords: dynamic resources, dynamic capabilities, alliance networks

ORGANIZATIONAL ANTECEDENTS AND ENTREPRENEURIAL ACTIONS: THE MODERATING ROLE OF MANAGERIAL LEVEL

Hornsby, Jeffrey S; Ball State U.; [email protected] Kuratko, Donald F; Indiana U.; [email protected]

Bott, Jennifer Phillips; Not Specified; [email protected]

In an effort to study Corporate Entrepreneurship (CE) as it relates to managerial levels in organizations, this paper offers an empirical study of 458 managers examining the key relationship between a corporation’s internal antecedents and corporate entrepreneurial actions with managerial level as a moderator. Of central interest in this study is the impact of management level on the relationship between the existence of a corporate entrepreneurial environment and entrepreneurial actions. The findings of this research effort support the differential roles of managers: management level was significantly correlated with three scales of the CEAI: management support, work discretion, and rewards/reinforcement.

Keywords: managerial, levels, entrepreneurship








VC DECISION-MAKING: GOOD JUDGMENT AND

ORGANIZATIONAL CHECKS ON COGNITIVE BIAS AND ERROR.

Rider, Christopher I.; U. of California, Berkeley; [email protected] Tetlock, Philip E.; U. of California, Berkeley; [email protected]

A burgeoning body of research on venture capital decision-making (e.g. Zacharakis and Meyer, 1998; Zacharakis and Shepherd, 2000; Shepherd and Zacharakis, 2002) suggests that venture capitalists exhibit significant cognitive bias and error in investment decisions. Drawing upon the social contingency model of judgment and choice (Tetlock, 2002) to frame venture capitalists as intuitive politicians who face various accountability demands, this paper advances the theoretical argument that the biases and errors observed in experimental settings may, in the real-world, be (a) mitigated by organizational correctives, (b) understood as functional adaptations to complex real-world decision environments or, even more radically, (c) viewed as normatively sound judgment when considered within the institutional context. This paper also offers an empirical strategy, likely to yield pilot study results by August of 2005, for identifying organizational checks on individual cognitive shortcomings and normative standards of good judgment in venture capital investing.

Keywords: Decision Making, Venture Capital, Heuristics and biases

ENTREPRENEURIAL RISK AND MARKET ENTRY Wu, Brian; U. of Pennsylvania; [email protected]

Knott, Anne Marie; U. of Maryland; [email protected]

This paper attempts to reconcile the risk-bearing characterization of entrepreneurs with the stylized fact that entrepreneurs exhibit conventional risk aversion profiles. We propose that the disparity arises from confounding two distinct dimensions of uncertainty: demand uncertainty and ability uncertainty. We further propose that entrepreneurs will be risk averse with respect to demand uncertainty, yet "risk-seeking" (or overconfident) with respect to ability uncertainty. To examine this view we model the entrepreneur's entry decision and then test the model empirically. We find that entrepreneurs in aggregate behave as we predict. Accordingly, risk-averse entrepreneurs are willing to bear market risk when the degree of ability uncertainty is comparable to the degree of demand uncertainty. A potential market failure exists however in instances where there is a high degree of demand uncertainty, but low ability uncertainty. In those settings there may be insufficient entry, competition and innovation.

Keywords: entrepreneur, risk, entry

BUSINESS SYSTEMS, CULTURAL VALUES AND

ENTREPRENEURIAL COGNITIONS: A PARTIAL LEAST SQUARES MODEL

Lim, Sun Kyu; U. of Western Ontario; [email protected] Morse, Eric A.; U. of Western Ontario; [email protected]

In this exploratory study, we investigate the relationships between business environments and entrepreneurial cognitions in the context of a venture creation decision. We focus on two aspects of business environments: cultural values and the type of business system (capitalism). Through a partial








least squares (PLS) analysis on a sample of 987 entrepreneurs and non-entrepreneur business managers from eleven countries, we holistically examine the structural relationships between cultural values, the type of business system and entrepreneurial cognitions. Entrepreneurial cognitions constructs investigated are arrangement, willingness, and ability scripts. Cultural values were found to mainly affect willingness scripts, while the type of business system had significant impact on arrangement and ability scripts. Among three cognitive scripts, arrangement scripts are the most significant influence on a venture creation decision.

Keywords: 1. Cognitive theory, 8. Sociological theory, 42. Structural equation modeling

SYMBOLIC EMPHASIZING: HOW ENTREPRENEURS USE

SYMBOLISM TO ACQUIRE RESOURCES Zott, Christoph; INSEAD; [email protected]

Huy, Quy Nguyen; INSEAD; [email protected]

This paper explores how entrepreneurs acquire resources for their ventures by articulating and communicating the symbolic dimension of their actions through a dynamic process we call symbolic emphasizing. Symbolic emphasizing displays to resource holders the individual competence of the founding entrepreneurs and the operating competence of their new organization. Drawing on a two-year inductive field study, we develop a model that explains how and why symbolic emphasizing of entrepreneurs affects the resource acquisition momentum of their emerging organizations. The model suggests that the sensibility, variety, and frequency of symbolic emphasizing are key to building organizations.

Keywords: Resource, Symbol, Momentum

ENTREPRENEURIAL CAPITAL AND THE SELF-

EMPLOYMENT DECISION Douglas, Evan; Queensland U. of Technology; [email protected]

In the literature on entrepreneurship it is acknowledged that differences in the human and social capital of individuals are likely to impact upon their propensity to become self-employed and also upon the probability of success of their new venture. As measures of human capital, researchers have used education, gender, age (as a proxy for work experience), and previous experience or family history of self-employment (as a proxy for knowledge about managing small businesses). These variables largely measure entrepreneurial ability and are typically used in the absence of more detailed information that is unavailable. Recent work on the utility-maximizing theory of self-employment has shown that the probability of self-employment also depends on entrepreneurial attitudes, such as those toward incomes, autonomy, risk, work effort, and perquisites. Since attitudes impact the way people apply their abilities we believe that the human capital concept applicable to entrepreneurs should be expanded to include both abilities and attitudes. We define ‘entrepreneurial capital’ to include specific abilities and attitudes, and extend the utility-maximizing model of self-employment to include neglected human capital aspects of the decision to become self-employed. These include the growth of entrepreneurial capital during the self-employment process, leveraging the human capital of employees, and retaining valuable employees by sharing income, autonomy, risk and perquisites with them such that their utility (job satisfaction) is maximized.

Keywords: entrepreneurship, human capital, self-employment






CORPORATE VENTURING AS STRATEGY ENHANCEMENT OR

AS ENGINE OF STRATEGIC RENEWAL Burgers, Henri; Erasmus U. Rotterdam; [email protected]

Van den Bosch, Frans A.J.; Erasmus U. Rotterdam; [email protected] Volberda, Henk W.; Erasmus U. Rotterdam; [email protected]

In this conceptual paper we investigate how corporate venturing is related to strategic renewal, and identify the impact of environmental conditions. Our framework suggests that the level of product and factor market dynamics will determine whether corporate venturing leads to strategic renewal. Propositions are derived highlighting that certain types of corporate ventures have no impact on the industry rules, and enhance the current strategy by maintaining fit with the competitive environment. However, a small number of innovative ventures result in changed industry rules. These rule-changing ventures lead to the adoption of a new trajectory of strategic renewal and significantly increase product or factor market dynamics.

Keywords: corporate venturing, strategic renewal, competitive dynamics

ENTREPRENEURIAL ORIENTATION: AN EMPIRICAL

ASSESSMENT OF SMES IN HYPERCOMPETITION Sciascia, Salvatore; LIUC, Cattaneo U.; [email protected]

Naldi, Lucia; Jonkoping U.; [email protected] Alberti, Fernando G.; Jonkoping U.; [email protected]

As determinants of entrepreneurial orientation (EO), literature on entrepreneurship suggested several factors ranging from the environment in which firms operate to organizational variables. Nevertheless, this line of research overlooked firms’ specific contexts and, especially, the interplay between environmental and organizational context factors. Most of the scholars studied the effect of single determinants on EO. Furthermore, the vast majority of the studies were conducted within the context of large corporations. This calls for more research on entrepreneurial processes in SME, but it also motivates investigations where SMEs are not regarded at as “homogeneous” phenomena. The acknowledgment of differences among SMEs calls for additional research, which discriminates between contextual characteristics of SMEs in relation to EO. When looking at what contextual factors might affect EO, research in the field of ‘hyper-competitive’ markets provides important insights. According to this view, market uncertainty, change and heterogeneity lead to an organic structure that enhances managerial flexibility and adaptability. Therefore we argue that market and organizational contexts can be identified as key dimensions in explaining the EO of SMEs. Specifically, we believe that the level of dynamism and heterogeneity of market contexts combined with the type of rewarding system and the level of flexibility of organizational contexts might affect the degree of EO. Bringing together entrepreneurship literature with insights drawn from organization theory, we first classified SMEs in terms of market and organizational contexts and subsequently measured the level of EO in each type of SME, finding that hypercompetitive contexts are more suitable for developing EO.

Keywords: Entrepreneurial Orientation, Hypercompetition, SMEs








THE INTERNATIONALIZATION OF US VENTURE CAPITAL

FIRMS: AN EMPIRICAL EXAMINATION Guler, Isin; Boston U.; [email protected]

Guillen, Mauro F; U. of Penn-Wharton; [email protected]

This study examines the country-level factors that affect U.S. venture capital firms’ decisions to invest in foreign ventures. Foreign venture capital investment is driven by a combination of factors different than those accounting for either foreign direct or portfolio investment: the availability of innovative opportunities, the ability to commercialize these opportunities, and the extent to which the institutional infrastructure of each country enables the appropriation of returns. We report preliminary results using a sample of 350 U.S. venture capital firms potentially investing in 140 countries during the 1990-2002 period. Countries with more opportunities, as measured by the level of scientific knowledge, those with better commercialization institutions, as measured by capital market development, and those with lower levels of economic and political uncertainty are more likely to attract U.S. venture capital investments.

Keywords: venture capital, entrereneurial finance, international

NO FAMILY IS AND ISLAND: A SOCIAL NETWORK APPROACH

TO GOVERNANCE IN FAMILY FIRMS Nordqvist, Mattias; Jönköping International Business School;

[email protected]

How do family firms develop efficient governance that aligns their unique advantages, with the provision of important tangible resources, such as strategic information and advices just available outside the family? This paper draws on social network theory to offer an alternative view on governance in family firms that differs from the traditional one proposed by agency theory. The theoretical discussion focuses on how social network theory is a complementary perspective to the dominant agency theory to understand governance in family firms. I create a model of efficient governance based on social network content, structure, dynamics and norms. The conclusions suggest that the social networks of family owners and managers in the family firm may emerge into a governance mode for the firm in its own right and with its own logics. Theoretical propositions are derived from model and suggestions for future research are outlined.

Keywords: Social networks, family firms, governance

TO JOIN, TO LEAD, OR TO CREATE? NETWORK EFFECTS

AND SMALL FIRM PRODUCT OFFERINGS Hood, Jacqueline N; U. of New Mexico; [email protected]

Smith, Anne D; U. of Tennessee, Knoxville; [email protected] Houghton, Susan; Georgia State U.; [email protected]

This study explores the effects of executive involvement in social networks on the scope of product offerings of the firm. Three types of networks – membership in national trade associations, executive positions held in state or regional trade associations, and industry based personal advice networks –









were related to the scope of product offerings in small businesses. Our results indicate that social network ties play a fundamental role in strategic decision making on extent of product offerings.

Keywords: social networks, product offerings, small business

NO EXIT: EXPLAINING THE PERSISTENCE OF "LIVING DEAD"

FIRMS Pavone, Carla Petra; U. of Minnesota; [email protected] Banerjee, Sanjay; U. of Minnesota; [email protected]

Entrepreneurial firms that perform below their founders’ and/or funders’ expectations are a widespread phenomenon. This paper attempts to explain the persistence “living dead” companies, which we define as privately held, independent, venture capital-backed companies that are underperforming relative to funders’ and/or founders’ expectations, and have uncertain potential for future growth and profitability. We develop theory and several propositions to explain the contingencies that lead to the continuation of underperforming ventures. Drawing on human capital theory and the bargaining power perspective, we suggest that poor economic performance may prompt an entrepreneur/funder to reassess the viability of a venture, but it does not determine the actual firm outcome. The decision to continue with or exit the venture depends not only on the venture’s expected economic performance, but also on the entrepreneur’s and funder’s respective threshold performance requirements and bargaining power. This paper contributes to the entrepreneurship literature in two primary ways. First, while human capital theory has already been applied to the entrepreneur’s decision whether to continue an underperforming firm, we also consider the funder’s decision. As a result, we extend current explanations of the living dead outcome by comparing it to the value of other alternatives available to both the entrepreneur and the funder. Second, we explicitly address the power dynamics that occur if funders and entrepreneurs disagree. We distinguish between the outcome preference of each party and the power of either the entrepreneur or the funder to produce that outcome.

Keywords: living dead, low performing ventures, VC

FIRM FOUNDERS, BOARDS AND MISLEADING DISCLOSURES: A NEW VISION OF GOVERNANCE OR FAMILIAR PROBLEMS?

Donoher, William J; Bradley U.; [email protected] Reed, Richard; Washington State U.; [email protected]

The role of firm founders has not been fully developed in the literature, and the extent to which the presence of founding-CEOs either imposes or minimizes agency costs thus remains largely unexplored. We examine this issue in the context of misleading financial disclosures and find that founders are positively associated with the incidence of restatements of prior years’ financial results, a finding consistent with an agency cost interpretation of founder influence. Board influence, however, emerges as a multidimensional construct, with some indicators positively associated with restatements and others negatively associated. We discuss the implications of our findings for theory and practice.

Keywords: founders, governance, boards






REORIENTING STRATEGIC ENTREPRENEURSHIP:

RESOURCE MANAGEMENT ACROSS EXPLORATION AND EXPLOITATION

Webb, Justin Wolfgang; texas a&m u; [email protected] Ireland, R. Duane; texas a&m u; [email protected]

Previous research has viewed strategy and entrepreneurship as two distinct processes within the firm. This paper reorients strategy and entrepreneurship as an integrated, concurrent, dynamic process within the firm as it manages resources across exploration and exploitation to create dynamic capabilities and sustain entrepreneurial rents. Given the different objectives, required resources, and timeframes of exploration and exploitation, the firm must manage separate resource management sub-processes for each phase of strategic entrepreneurship. The paper explores how a firm should transition radical innovations discovered through exploration into exploitative efforts. Directions for future research that may provide a more complete theoretical understanding of exploration and exploitation are discussed.

Keywords: Strategic entrepreneurship, Resource management, Innovation

ENTREPRENEURIAL ORIENTATION OF BUSINESS SCHOOLS:

STRATEGIC PERSPECTIVES Kuznik, Susan; Baldwin-Wallace College; [email protected]

Javalgi, Rajshekhar G.; Cleveland State U.; [email protected] Scherer, Robert F; Cleveland State U.; [email protected]

Business schools today are facing a number of challenges while they are trying to remain competitive. These challenges include increased competition for students, decreased government funding and escalating costs, to name a few. One way to address these issues is to employ an entrepreneurial orientation (EO), or more specifically, to take more risks, and become more innovative and proactive. What is driving this movement toward an EO are external forces, which causes many schools to search for ways to sustain growth. For some it is a matter of survival. What can result when an EO is employed is a competitive advantage and improved performance. Business schools must recognize the implications for a lack of an EO and address the strategic challenges in order to maintain a competitive advantage.

Keywords: Entrepreneurial Orientation, Business Schools, Strategic Challenges

ALLIANCE AND VENTURE CAPITAL NETWORKS: AN

ANALYSIS OF START-UP FIRMS IN THE BIOTECHNOLOGY INDUSTRY

Archambeau, Lindy; U. of Utah; [email protected] Phene, Anupama; U. of Utah; [email protected] Galvin, Tiffany L; U. of Utah; [email protected]

This study examines how biotechnology start-up companies build external relationships that allow them to overcome the liability of newness. We investigate two distinct networks that a biotechnology firm belongs to: Venture Capital networks and alliance networks. We examine the factors that drive this relationship. We hypothesize that the phase of development of the start-up, its innovatory capabilities, and the










prominence and capital investment of the venture capitalists determine the extent of alliance formation. We test these hypotheses using data from BioScan’s Alliance Database and SDC’s VentureXpert Database.

Keywords: venture capital, strategic alliance, biotechnology

ANTECEDENTS AND EXPLOITATION OUTCOMES OF

OPPORTUNITY IDENTIFICATION PROCESSES Chandler, Gaylen N; Utah State U.; [email protected] Lyon, Douglas W; Fort Lewis College; [email protected] DeTienne, Dawn; Utah State U.; [email protected]

This research focuses on opportunity identification and exploitation processes. Opportunity identification is a multistage process that includes four empirically derived sequences: (1) learn about a market need--replicate a product (Learn/Replicate), (2) learn about a market need--innovate a product (Learn/Innovate), (3) learn about an existing income stream--acquire the income stream (Learn/Acquire), and (4) innovate a product--educate customers (Innovate/Educate). Our study provides evidence that prior knowledge and human capital characteristics among entrepreneurs are significant predictors of the different opportunity identification sequences. In addition, firm level outcomes (exploitation) are significantly influenced by opportunity identification sequences.

Keywords: Opportunity, Recognition, Exploitation

THE IMPACT OF GENDER ON OPPORTUNITY RECOGNITION

OF ENTREPRENEURS Brunetto, Yvonne O; Griffith University; [email protected]

Farr-Wharton, Rodney S; U of the Sunshine Coast; [email protected]

This paper examines whether men and women engage in similar entrepreneurial behaviours in relation to acquiring business knowledge about business opportunities. The findings suggest that gender does affect some entrepreneurial behaviour. Both men and women entrepreneurs identified the importance of similar categories of places that they scanned for knowledge about potential business opportunities; however, the importance of each category varies depending on gender. In particular, women entrepreneurs make far greater use of non-social networks and family and friend mentors than male entrepreneurs. In contrast, male entrepreneurs rely on personal experiences and inspiration more than women entrepreneurs, although the category is important for all entrepreneurs. Similarly, both male and female entrepreneurs seek to acquire knowledge about potential business opportunities via short courses and workshops. Moreover, the findings suggest that non-social networks are a significant source of knowledge about business opportunities for both men and women entrepreneurs, although women made greater use of them.

Keywords: BUSINESS OPPORTUNITIES,, KNOWLEDGE ACQUISITION,, NON-SOCIAL NETWORKS








THE MANAGEMENT OF RISK THROUGH INFORMATION AND

GOVERNANCE CAPABILITIES IN IPO VENTURES Busenitz, Lowell; U. of Oklahoma; [email protected]

Arthurs, Jonathan D.; Washington State U.; [email protected]

This paper argues that the reduction in risks for outside investors, potentially associated with poor performance arising from agency problems can be mitigated by VC involvement and superior governance. The presence of VCs and superior governance can add important information regarding the venture and the pricing of securities. The control of agency risk should therefore motivate an increase in the price of the security. To test our hypotheses, we sampled ventures that had gone through an initial public offering (IPO) between 1990 and 1994. Our results generally support our hypotheses suggesting that venture capitalists, better governance arrangements, and better compensation reduce risk in IPO ventures.

Keywords: Venture capitalists, Governance, Risk

INTERPLAY OF INDIVIDUAL AND COMMUNITY SOCIAL CAPITAL. AN EMPIRICAL STUDY AMONG BUSINESS

STARTERS. Blumberg, Boris F; U. Maastricht; [email protected]

The concept of social capital has been widely acknowledged in the social sciences and beyond. However, scholars employ the concepts at rather different levels. Whereas some view it as an individual characteristic rooted in the individual's personal networks (see, e.g., Burt 1992, Coleman 1990), others perceive it at an aggregate level as a property of groups or communities (see, e.g., Putnam 1999, Dasgupta 2000). Although both approaches have been fruitful in explaining individual and group outcomes, studies investigating the interplay between social capital at the individual level and the community level are scarce. This paper attempts to shed some light on this interplay by relating the core networks of business founders to the social capital of the communities they start their business in. More specifically, we are interested whether the social structure of a community affects the usefulness of the individual's network. In particular, we test the hypothesis whether a good fit between the social capital at the community level and at the individual level is advantageous for starting a business. The empirical analysis of this paper relies on a study of about 1200 potential business starts in different local communities in the Dutch province South Limburg.

Keywords: Network Theory, Regression, Network Analysis

ON THE LONGEVITY OF PATENT-PROTECTED DISCOVERIES

Espina, Maritza; Universidad del Este; [email protected] Markman, Gideon D; U. of Georgia; [email protected]

Although discoveries are important part of innovation management and entrepreneurship theory, empirical research on this topic is relatively rare. For instance, little is known about what constitute a discovery, how to measure its distinct characteristics, or how long a discovery might last. Under the premise that more valuable discoveries last longer, the current study examines the renewal pattern of 83,743 patent-protected inventions granted to independent inventors between 1980 and 1990. Consistent with predictions based on ex ante variables, results show that patent-protected discoveries that are based







on newer inventions and that are wider in scope survive longer than their counterparts. Consistent with ex post predictors, highly cited discoveries survive longer. The study concludes with a discussion highlighting the importance of ex ante measures of discoveries to the theoretical development of innovation management and entrepreneurship.

Keywords: Longevity, Innovation Scope, Patent Accreditation

GOVERNING BY MANAGING IDENTITY BOUNDARIES: THE

CASE OF FAMILY BUSINESSES Sundaramurthy, Chamu; San Diego State U.; [email protected]

Kreiner, Glen E.; U. of Cincinnati; [email protected]

Like public corporations, family businesses are also subject to control-collaboration tensions because two not necessarily compatible identities -- the business and family -- interact. While the separation of the two identities (often prescribed by practitioners and scholars alike) may be an easy recommendation, we argue that the ultimate potential of family firms can be harnessed only through at least partial integration of the two identities. Furthermore, we suggest that boundary theory can be a useful perspective to understand governance dilemmas posed in family firms. We use this theoretical lens to describe family firms and their challenges, and then suggest processes for managing these challenges. In particular, we develop a model that illustrates how the development of various forms of trust enables the management of the dual identities in family businesses.

Keywords: family business, identity, governance

SELF-REGULATION IN DECISION-MAKING BY

ENTREPRENEURS: AN EXPLORATORY STUDY Bryant, Peter; Macquarie U., Sydney; [email protected]

Much recent entrepreneurship research has focused on the cognitive and decision-making processes associated with opportunity recognition and exploitation, and the degree to which those processes distinguish entrepreneurship as a field of inquiry. As part of that effort, some scholars have explored socio-cognitive self-regulatory factors in decision-making by entrepreneurs. However, this research is still in its infancy and there are no coherent theories about such phenomena. The purpose of this paper is to contribute to future theory development on this topic. The paper reports a study in which I surveyed a small non-population sample of 27 entrepreneurs, plus a control group of 27 managers. The survey instrument incorporated existing measures for three major self-regulatory constructs: metacognition, regulatory pride, and entrepreneurial self-efficacy. The results show evidence for a distinctive pattern of self-regulation among entrepreneurs that is absent among managers. The literature suggests that such a pattern of self-regulation is positively related to the use of intuition, heuristics, and adaptiveness in decision-making. I discuss the possible implications for decision-making by entrepreneurs and especially for their decisions about new opportunity recognition and exploitation. The implications for future research are also discussed.

Keywords: entrepreneurs, decision-making, self-regulation





GENDER, SIZE AND NEW VENTURE DEVELOPMENT IN THE

SERVICES INDUSTRIES Shelton, Lois; Chapman U.; [email protected]

Turk, Thomas; Chapman U.; [email protected]

This study examines differences in size of male and female owned entrepreneurial enterprises as an indicator of the level of gender-related disadvantage. By taking the unique approach of focusing on services, a strong sector for women entrepreneurs, we eliminate gender-based differentials due to industry choice. Unlike multiple sector studies, no significant differences in the size of male and female owned firms were found in a sample of over 12,000 service ventures in San Diego County. With smaller capital requirements, and greater social acceptance of women, the service industries appear to minimize the disadvantages women face in obtaining capital, educational credentials and relevant work experience.

Keywords: women, services, industry choice

CORPORATE ENTREPRENEURSHIP, CORPORATE NETWORK,

AND ADVERSITY: AN ORGANIZATIONAL LEARNING PERSPECTIVE

Yeung, Ping Kwong; Open U., Hong Kong; [email protected] Lui, Steven S.; City U., Hong Kong; [email protected]

Lau, Chung-Ming; Chinese U. of Hong Kong; [email protected]

This paper examines the relationship between corporate entrepreneurship and corporate network in incumbent firms based on organizational learning perspective. As corporate entrepreneurship are very much connected to organizational learning processes, and corporate network is conducive to organizational learning, they are likely to be related to each other and interwoven in the same learning process. We identify two types of corporate network, business and institutional, and hypothesize their roles in corporate entrepreneurship. We also hypothesize that adversity faced by firm enhances the positive impact of business network but reduces that of institutional network on corporate entrepreneurship, as adversity accentuates the differences in informational contents of the two networks. We use firm actions reported in newspapers to objectively measure corporate entrepreneurial actions of firms in three domains, namely new venturing, innovation, and strategic renewal. We test our hypotheses with 517 entrepreneurial actions of a sample of ten public listed firms in the hotel and banking industries for a period of 6 years. The findings of this study suggest that while business network is positively related to all three domains of corporate entrepreneurial actions, institutional network is unrelated to them. The interaction effects of adversity with corporate network were found to be more complicated than expected.

Keywords: Corporate Entrepreneurship, Corporate Network, Organizational Learning







FAMILY INVOLVEMENT, AGENCY COSTS, AND DEBT

FINANCING FOR NEW VENTURES Chua, Jess H.; U. of Calgary; [email protected]

Chrisman, James J; Mississippi State U.; [email protected] Kellermanns, Franz W.; Mississippi State U.; [email protected]

Research shows that family involvement has a positive influence on new venture formation and suggests that improving access to financing may be one way by which this contribution is made. This study examines empirically whether and how family involvement affects debt financing, an important source of capital for new ventures. The results based on 1,267 new ventures show that family involvement increases debt financing in new ventures and accomplishes this in two ways: directly through monitoring by the board and indirectly by helping to secure third party guarantees.

Keywords: family firms, agency cost, new ventures

GOAL AUTONOMY, TECHNOLOGY INTENSITY,

ENVIRONMENTAL HOSTILITY AND FIRM PERFORMANCE: DOES SIZE MATTER?

Das, Sidhartha R; SOM, George Mason University; [email protected] Joshi, Maheshkumar P; George Mason U.; [email protected]

A firm's entrepreneurial orientation (EO) has the following components: innovativeness, aggressiveness, proactiveness, autonomy, and risk-taking (Lumpkin and Dess, 1996). Research has shown EO to be related to firm performance, while several environmental and organizational factors moderate and mediate the EO-performance relationship. In their empirical study, Wiklund and Shepherd (2003) define EO as a combination of three dimensions: innovativeness, proactiveness, and risk taking, and examine its relationship with firm performance, and its moderating effect on the relationship between knowledge based resources and firm performance. The present paper examines the relationship between autonomy (another EO dimension) and firm performance in conjunction with organizational characteristics such as technology intensity, and environmental characteristics such as hostility, in the context of technology services organizations (TSOs). In addition, it proposes that the effect of these variables on firm performance is moderated by the firm's size. Hierarchical regression analysis on data from 90 TSOs shows that autonomy and technology intensity are positively related, while environmental hostility is negatively related with TSO performance. Further, firm size moderated the relationship of autonomy with TSO performance, but no evidence was found for the moderating effect of firm size on the relationship of either technology intensity or environmental hostility with TSO performance. Subsequent exploratory analysis indicates that the level of autonomy is positively related with performance in large TSOs, but not related to performance in small and medium size TSOs. Interestingly, the level of technology intensity was a mediator in the relationship between autonomy and performance in small and medium size TSOs.

Keywords: Autonomy, Technology Services, Firm Size







MANAGEMENT TEAM RESTRUCTURING IN PRE-IPO STARTUPS:THE INFLUENCE OF VC AND EXECUTIVE

CHARACTERISTICS Li, Jun; U. of New Hampshire; [email protected]

Adopting a political view of technology startups, this study develops a power model to explain management team restructuring (new executive entry and executive exit) in pre-IPO technology startups. A major thesis is that preparing for the IPO alters the power distributions among entrepreneurial executives and the investors, therefore eliciting management team restructuring as well as executive exit. Two types of factors are examined: (1) VC factors which reflect the pressures of investors to professionalize the pre-IPO management team; and (2), the executive factors reflecting the executives’ political power in the pre-IPO period. The model was tested using a sample of U.S. biotechnology startups which went IPO between 1991 and 1999. The study makes contributions to research on executive turnover, entrepreneurial teams, and IPO firms.

Keywords: IPO, Management team restructuring, Venture capital

AN UPPER-ECHELONS THEORY APPROACH TO THE

EMERGENCE OF ORGANIZATIONAL LEARNING IN NASCENT FIRMS

Hmieleski, Keith; TCU; [email protected] Ensley, Michael; RPI; [email protected]

The extant literature on organizational learning has focused primarily on modifying the existing culture within established firms as a means toward optimizing learning, while overlooking learning within nascent firms that have yet to form any measurable culture. As an attempt to fill this gap, the current article takes a step back in the organizational life cycle to consider how the regulatory behavior of founders during the initial stages of the entrepreneurial process sets in motion the emergence of an organizational learning culture. To this end, we consider important decisions that are made by entrepreneurs regarding the initial business concept during the pre-formation stage, the means through which resources are assembled at the formation stage, and leadership behavior during the post-formation stage. Through this analysis we illustrate how the first building blocks of a learning culture are laid and subsequently institutionalized within nascent firms.

Keywords: Entrepreneurship, Organizational Learning, Regulatory Focus

NEW VENTURES IN EMERGING MARKETS: COMPREHENSIVE

REVIEW AND FUTURE DIRECTIONS Miller, Toyah L.; Texas A & M U.; [email protected]

This article comprehensively reviews the development of research on new ventures in emerging markets during the period of 1990-2003. We examine the major theoretical perspectives adopted by researchers during this period. Patterns in research methods are discussed, noting trends in data collection, samples






sizes, countries studied, and industries sampled. Based on the extensive review, we offer future research directions.

Keywords: Entrepreneurship, Emerging Markets

KNOWLEDGE VALORIZATION VIA BOUNDARY EXTENSIONS: DO ENTREPRENEUIAL EXPERIMENTS CREATE MARKETS?

Surie, Gita; U. of Pennsylvania; [email protected]

We use dynamic capabilities and evolutionary approaches to study the production and conversion of knowledge over the technological life cycle in high technology industries facing uncertainty. Findings from our study of U.S. biotechnology and software firms suggest that knowledge valorization, which involves developing exchangeable assets is facilitated by: (1) creating entrepreneurial start-ups including new ventures within established firms, which provide superior incentives for converting tacit knowledge; (2) using options heuristics to create markets for knowledge; and (3) boundary extensions via alliances which, further aid the formation of markets for knowledge and innovation. We suggest that markets do not exist, a priori, but are created, and provide new insights on the dynamic boundaries between firms and markets over the technological life cycle not yielded by transactions costs and social community and identity formation theories of the firm.

Keywords: knowledge valorization, firm boundaries, innovation

THE ROLE OF RELATEDNESS: A DYNAMIC MODEL FOR

VENTURING Bradley, Steven Walter; Indiana U., Bloomington; [email protected] Green, Kimberly M; Indiana U., Bloomington; [email protected]

Though much of the business literature recommends venturing close to the parent firm's core competencies, many firms choose to pursue ventures that are relatively unrelated to the parent on any of several dimensions. This paper reviews existing venturing and relatedness research to develop a theoretical basis for why companies venture in businesses less related to the parent firm. Further, it examines the complexity of the relatedness concept and explains a typology for identifying ventures that are less related to the parent firm, or extended domain ventures. A theoretical model is developed to explain venturing in unrelated arenas and the interaction of parent firm resources, relatedness, industry munificence, and dynamic capabilities that affect venture survival. The corporate venturing outcome is defined in terms of experience to direct the focus toward explorative learning and developing new capabilities for the firm rather than what are often less certain financial gains from the new venture.

Keywords: relatedness, corporate venturing, conceptual model





STRATEGIC PROCESS EFFECTS ON THE

ENTREPRENEURIAL ORIENTATION - SALES GROWTH RATE RELATIONSHIP

Covin, Jeff; Indiana U.; [email protected] Green, Kimberly M; Indiana U., Bloomington; [email protected]

Slevin, Dennis P; U. of Pittsburgh; [email protected]

This research examined the effects of three strategic process variables - strategic decision-making participativeness, strategy formation mode, and strategic learning from failure - on the entrepreneurial orientation (EO)-firm sales growth rate relationship. Results based on a sample of 110 manufacturing firms indicate a positive effect of EO on sales growth rate. Moreover, the relationship between EO and sales growth rate is more positive among firms that employ autocratic decision making and exhibit an emergent strategy formation process. Perceptions of proficiency at learning from strategic mistakes differentially affect the growth rates of firms at different ends of the EO continuum, but in manners inconsistent with the hypothesized relationship.

Keywords: entrepreneurial orientation, strategic processes, learning from strategic mistakes

KEY CUSTOMERS AS STRATEGIC PARTNERS - A SOURCE OF

COMPETITIVE ADVANTAGE FOR SOFTWARE NEW VENTURES?

Tuertscher, Philipp; U. of St.Gallen; [email protected]

In recent years, a lot of empirical research discussed various types of strategic partnership. Scholars investigated alliances with competitors, technology partners and cooperations for R&D. Particularly contributions of the entrepreneurship literature discussed value creation in alliances between small firms with venture capitalists or partnerships with large established firms in high-tech industries. An important type of strategic partnerships is vertical alliances between customers and suppliers. While the strategic alliance literature has investigated partnerships with customers focusing on the alliance as unit of analysis, the present paper shifts focus to the individual firm as unit of analysis in order to explain differential performance of entrepreneurial firms. More precisely, this paper attempts to evaluate the impact of strategic partnerships with major customers on the competitive advantage of individual software new ventures. In particular I show how common benefits of the alliance will be appropriated among the partners and, additionally, how an individual firm can extract private benefits from the partner firm’s resources and capabilities. Moreover, I suggest that a strategic partnership influences a firm’s competitive advantage beyond the horizon of an alliance and, therefore, a firm can continue to generate benefits from its partner’s resources when the relationship has come to an end. After offering some normative prescriptions how an entrepreneurial firm can generate a sustained competitive advantage through strategic partnering with key customers, I provide some preliminary evidence from a comparative case study as an initial test of the propositions derived.

Keywords: alliance, key customer, unilateral rents







BUILDING A BUSINESS ON ETHNIC TIES: A STUDY OF THE

EFFECTS OF ETHNIC NETWORKS Karra, Neri; U. of Cambridge; [email protected]

Phillips, Nelson; U. of Cambridge; [email protected] Tracey, Paul; U. of Cambridge; [email protected]

There has been considerable interest in the role of ethnicity in new venture formation. However, little attention has been paid to the role of ethnicity in the growth and development of new ventures after founding. Furthermore, while there have been a number of empirical studies of ethnic entrepreneurship, few have examined firms that have been highly successful or that have internationalized successfully. In this article, we present the results of a case study of a highly successful international network where ethnic ties played a central role in its founding and rapid growth. Our conclusions are that ethnic ties can be an important resource in the founding of new ventures but that these same ethnic ties can become increasingly limiting as constituent firms grow and develop.

Keywords: ethnic entrepreneurship, social network theory, qualitative research analysis

INTERNATIONAL ENTREPRENEURIAL ACTION AND SME

INTERNATIONALIZATION Berg, Hanna; Stockholm School of Economics; [email protected]

Holmquist, Carin; Stockholm School of Economics; [email protected]

The aim of this paper is to study the relationship between international entrepreneurial action and internationalization in SMEs. The concept international entrepreneurial action is established in this paper and is defined following a review of theories on entrepreneurship and internationalization as well as the newly established research field of international entrepreneurship. The analysis in this paper is based on data from the INTERSTRATOS research project, a large quantitative study of the internationalization processes of European SMEs. The importance of international entrepreneurial action to the internationalization of the surveyed European SMEs is analyzed by quantitative methods such as regression analysis. The results indicate that companies that engage in international entrepreneurial action show higher export ratios than companies that do not. The presence of international entrepreneurial action in a company also seems to be related to occurrence of the direct modes of export covered by the INTERSTRATOS study. The study contributes to theories on international entrepreneurship by indicating that specific international entrepreneurial action might be more important that attitudes (orientation) for internationalization performance measures, as export.

Keywords: internationalization, entrepreneurship, SMEs







A FORAY INTO THE REALM OF ENTREPRENEURS AS

PHILANTHROPISTS: IDENTIFYING CHARACTERISTICS AND STAGES

Taylor, Marilyn L; U. of Missouri; [email protected] Taylor-Coates, Theresa; Marist College; [email protected]

Strom, Robert; Not Specified; [email protected] Renz, David O.; University of Missouri - Kansas City; [email protected]

Holman, Rhonda; University of Missouri - Kansas City; [email protected]

The 1990s led to myriad entrepreneurial success stories and incredible wealth accumulation. Some of these successful individuals have turned their significant wealth and talents to social issues through philanthropic activities. The popular press has lauded the entrepreneurial success stories and has brought attention to their philanthropic activities. However, systematic research of the phenomenon of entrepreneur as philanthropists is scarce. This research explores issues and factors which underlie entrepreneurs’ interest in philanthropic activity. The research uses a grounded theory approach to understand the factors affecting two successful entrepreneur and their philanthropic efforts. Comparing the activities and backgrounds of these two entrepreneurs provides some insights into the influences on the decisions they make regarding their philanthropic behaviors. In these two cases, the entrepreneurs see the philanthropic activities as an investment rather than just a donation. In bringing resources, energy, and talent into the philanthropic arena, the entrepreneur starts forth on a new learning curve. A major conclusion in the paper is that a number of factors are involved in the transition of an entrepreneur into a philanthropist.

Keywords: Entrepreneurship, Philanthropy, Grounded Theory

LEARNING TO LIVE WITH DEPENDENCE TRAPS: RETENTION

OF CRITICAL HIGH-SKILL EMPLOYEES IN IT START-UPS Xu, Jia (Carol); North Carolina U., Chapel Hill; [email protected]

Aldrich, Howard; U. of North Carolina; [email protected]

The paper explores the complex and conflicting issues involved when entrepreneurs try to retain ostensibly “indispensable” employees in young information technology (IT) firms. By choosing a theoretical paradigm that links resource dependence theory with human resource development in entrepreneurial firms, we develop a model that captures the dynamics of power-dependence between entrepreneurs and crucial high-skill employees. We use our model to enhance understanding of how entrepreneurs choose specific employment strategies under different contingencies. This model also theoretically links idiosyncratic jobs with organizational change and learning in entrepreneurial firms. Based on our model, we develop some promising theoretical implications for further studies.

Keywords: power-dependence, idiosyncratic job, employee retention









OPPORTUNITY FINDING BY NASCENT ENTREPRENEURS:

SATISFICING OR OPTIMIZING SEARCH? Wu, Sibin; U. of Texas Pan American; [email protected]

Priem, Richard L; U. of Wisconsin, Milwaukee; [email protected] Nystrom, Paul C; U. of Wisconsin, Milwaukee; [email protected]

Nascent entrepreneurs may undertake differing degrees of active search for opportunities, and during the search process they may tend to satisfice or may try to optimize with their opportunity choice. We argue that characteristics of prospective entrepreneurs – specifically, wealth aspirations and motivation to become an entrepreneur – jointly influence their opportunity finding processes. We describe a field study of the opportunity search behaviors of over two hundred nascent entrepreneurs, and present results of Poisson regression analyses and logistic regression analyses. We then outline the implications of our work for future research in opportunity finding.

Keywords: satisficing, aspiration, motivation

EXPLAINING THE FOREIGN DEVELOPMENT OF START-UPS:

SOCIAL NETWORKS AND KNOWLEDGE ACQUISITION Presutti, Manuela; Bologna U.; [email protected]

Boari, Cristina; Bologna U.; [email protected] Fratocchi, Luciano; L'Aquila U.; [email protected]

The foreign development of high-tech start-ups is an important issue, since international activity requires specific knowledge that new firms may find it difficult to locate and acquire. It has been found that the pattern of foreign development in high-tech start-ups differs from that of conventional companies, starting to act in foreign markets soon after their establishment. This study utilizes a social capital approach, based on embeddedness prospective, to identify the possible resources useful to realize abroad both the knowledge acquisition and the knowledge exploitation, reinforcing the internationalization propensity of start-ups. We seek to articulate, by drawing on social capital theory and its link to knowledge concept, how social network ties may influence internationalization of start-ups. Basing on research of Yli-Renko, Autio e Sapienza (2001), we argue that different dimensions of social capital embedded in relationships between high-tech start-ups and their foreign customers improve the start-ups’ knowledge acquisition from these relationships and that this acquired knowledge may then be exploited for competitive advantage abroad. The hypotheses are tested with face to face survey data from start-ups in Italy. Our findings confirm the hypothesis that the internationalization propensity of start-ups is conditioned by social relationships, which may either facilitate or bind such a propensity through a direct influence on processes both of knowledge acquisition and of knowledge exploitation abroad. Consequently, by affirming the strategic link between social capital, knowledge acquisition and knowledge exploitation, we seek to contribute to a further convergence between the domains of entrepreneurship and internationalization research.

Keywords: social capital, internationalization, start-ups








ENDOWED CHAIRS IN ENTREPRENEURSHIP: A SURVEY OF

DEANS' PREFERENCES Castrogiovanni, Gary J.; U. of Tulsa; [email protected]

Vozikis, George S; U. of Tulsa; [email protected] Mescon, Timothy; Kennesaw State U.; [email protected]

Major donations, especially for endowed chairs, put Colleges of Business and Universities in the spotlight and create a great deal of excitement, highlighting the important role that educational institutions play in benefiting the students, the community, and society in general. This kind of excitement needs to be sustained over time, signifying the link that the endowed Chair or Professorship in Entrepreneurship creates between the past, the present, and the future. Consequently, there is a need for a long-term personal connection and close relationship between the donor, the faculty holding the endowed chair, and the institution represented by the Dean that should be preserved over time. This study reports findings of a survey of the perceptions of AACSB Deans on what an Endowed Chair in Entrepreneurship is, and what it could, and should mean for their institution.

Keywords: faculty, roles, endowment

ENTREPRENEURIAL LEARNING IN ACADEMIC SPIN-OFFS: A

BUSINESS MODEL PERSPECTIVE. Sanz-Velasco, Stefan A.; Chalmers U. of Technology; [email protected]

Saemundsson, Rögnvaldur J; Reykjavik U.; [email protected]

There are two aims with this paper. The first is to investigate how academic entrepreneurs learn when creating and developing viable start-up ventures. The second is to investigate how this learning process is influenced by the nature of the environment. As academic entrepreneurs have little business experience they are unlikely to have a clear or viable conception of their business at start-up. An important element in learning how to create a viable venture is therefore to learn to develop a viable business conception. We use an innovative approach to follow this development through semi-structured interviews with founders of eight academic spin-offs in four Nordic countries, focusing on changes in business models and the associated learning. Nine learning behaviours were identified as leading to changes in business models. Six of those represented experience-based learning through business interaction while three involved learning through external relations, i.e. learning aided by actors other than customers, suppliers or business partners. Learning through external relations was only found in those countries which provide supportive environment for academic spin-offs. Interestingly, external actors such as venture capitalists and incubator services were not found to have much influence on changes in business models. The main implication of the study for academic entrepreneurs is the awareness of different learning behaviours leading to changes in business conception. For policy makers it is important to understand the specific need for learning leading to changes in business conceptions and how experience-based learning behaviours can be complemented by learning through external relations.

Keywords: organizational learning, opportunity exploitation, qualitative methods







NEW VENTURES AND INSTITUTIONAL THEORY: THE

LEGITIMATIZATION OF EMERGING ORGANIZATIONAL FORMS Lovvorn, Alton Al Stanley; U. of Memphis; [email protected]

Renn, Robert W; U. of Memphis; [email protected]

This article seeks to explore how institutional theory might provide insight into the organizational structure selected by new venture firms. Using the lens of institutional theory and, in particular, the legitimization construct to provide insight into how new ventures select one organizational form over another, an analysis of the role of legitimization and organizational fields in the selection of organizational forms of new ventures is used to extend institutional theory to new ventures, and broaden new venture theory to include institutional processes and constructs (e.g., isomorphism). It examines how institutional forces may influence the organizational structure of new ventures in both established and new fields and discusses how institutional theory may provide an explanation of the organizational forms available to new venture firms entering into established business fields. Additionally, institutional theory is evoked to better understand the process by which new ventures may establish an organizational structure where no institutionalized (legitimated) structure currently exists.

Keywords: new ventures, institutional theory, legitimization

AN INTEGRATIVE MODEL OF OPPORTUNITY RECOGNITION

Sullivan, Diane McMeekin; U. of Central Florida; [email protected]

Recent research has produced important theoretical and empirical contributions regarding opportunity recognition and entrepreneurship. As such, the research investigating related phenomenon has utilized perspectives from several different fields and entrepreneurial research domains into their papers and models. One issue that has not been adequately addressed within the nascent entrepreneurial opportunity recognition literature is the complementary nature of the research that has recently emerged. Rather, work within this research domain has seemingly progressed through sub-streams of research, seemingly ignoring synergies between each of these sub-streams. Consequently, the purpose of the current paper is to briefly review the relevant entrepreneurial opportunity recognition literature, identify the constructs most frequently emerging within this work, and build an integrative model of entrepreneurial opportunity recognition utilizing these important constructs. It is hoped that this integrative model of entrepreneurial opportunity recognition will help to move entrepreneurship research forward by recognizing and utilizing the merits of previous work examining opportunity recognition phenomenon. A secondary purpose and goal of this paper is to serve as an initial attempt at organizing the nascent work within this domain.

Keywords: Entrepreneurship, Opportunities, Opportunity Recognition

DECOMPOSING FOUNDER EFFECTS: EXECUTIVE

COMPENSATION, GOVERNANCE STRUCTURE AND FIRM PERFORMANCE

He, Lerong; U. of Pennsylvania; [email protected]

This study applies both the agency theory and the stewardship theory to investigate the impact of founder CEOs on managerial compensation, governance structure and firm performance in entrepreneurial firms. By decomposing founder effects to an ownership influence and a stewardship influence, the paper shows






that a founder CEO receives lower incentive compensation and lower total compensation than a professional CEO. This relation is induced by both ownership difference (agency effect) and intrinsic characteristic difference (stewardship effect) between founder managers and professional managers. In addition, firms with founder CEOs are associated with higher financial performance and are more likely to survive than firms with professional CEOs. Moreover, a firm’s governance structure moderates the relation between managerial characteristics and firm performance. The impact of founder management on firm performance is more positive for firms with more delegation characterized as a combined CEO and chairperson post as predicted by the stewardship theory.

Keywords: Stewardship Theory, Founder-managed Business, Executive Compensation

INFLUENCE OF LARGE STAKE FAMILY OWNERSHIP ON

PERFORMANCE: AGENCY OR LIFE-STYLE RELATIONSHIP? Oswald, Sharon; Auburn U.; [email protected] Muse, Lori A.; Western Michigan U.; [email protected]

Rutherford, Matthew W.; Gonzaga U.; [email protected]

Agency theory posits that a greater degree of ownership or financial attachment by those with decision-making authority, the greater the overall organizational performance. A life-style relationship suggests that family-controlled firms are less concerned with performance than family employment opportunities. Fama and Jensen (1983) argue that family businesses with a greater percentage of family ownership would perform better financially, even after controlling for size, than counterpart firms with a lesser degree of family ownership. We test this assertion on a nationwide sample of family businesses to determine if the relationship of percent family ownership is an agency or life-style relationship and found the latter. Specifically, for the sample firms there was a statistically significant and negative relationship between percent of family ownership and firm performance as measured by sales growth. Further, there was a strong inverse relationship between inside ownership by the top management team and all measures of financial performance. (150)

Keywords: family ownership, firm performance, agency theory

JOB CHARACTERISTICS: THEIR EFFECT ON

ENTREPRENEURIAL JOB SATISFACTION Schjoedt, Leon; Illinois State U.; [email protected]

The Job Characteristics Model (Hackman & Oldham, 1976, 1980) was used to examine the effect of work characteristics on job satisfaction for entrepreneurs and non-founding top managers. The findings of the present study show that the Job Characteristics Model applies similarly to both entrepreneurs and non-founding top managers. They also show that the job characteristics of autonomy, task variety, and feedback significantly influence entrepreneurs’ job satisfaction. An explanation is offered for why the job characteristic task identity was not found to significantly predict entrepreneurs’ job satisfaction or the job satisfaction of top managers. Additionally, an explanation is offered for why entrepreneurs are satisfied and for why entrepreneurs were not found to be more satisfied than the comparison group of non-founding top managers.

Keywords: Job Satisfaction, Job Characteristics, Regression Analysis






GENDER AND BUSINESS FINANCE: INVESTIGATING THE

RELATIONSHIP BETWEEN BANKS AND ENTREPRENEURS Carter, Sara; Strathclyde U.; [email protected]

Shaw, Eleanor; Strathclyde U.; [email protected] Wilson, Fiona; Glasgow U.; [email protected]

Lam, Wing; Glasgow U.; [email protected]

This paper describes the methodological approach and some initial results from an on-going study that explores the influence of gender in securing business finance in the UK. The study investigates both supply-side and demand side factors, collecting data from both bank lending officers and entrepreneurs. Initial analyses highlight three key issues: the continued focus on ‘character’ of loan applicant and bankers’ perceptions of business owners as an integral element of lending criteria; the importance of internal networking and the role of internal negotiations within the bank, often as a male dynamic, as an unspecified and unseen element of the lending process; and the opportunities for bank lending officers to negotiate an outcome that suits their ‘world view’. These results demonstrate that gender continues to be an important, but largely hidden variable in the acquisition of business finance. Initial results suggest that finance decisions are co-produced by both supply side and demand side factors which interact to co-produce the lending decision.

Keywords: Gender, Entrepreneurship, Finance

A REVISED CONCEPTUAL MODEL OF THE FIRM-LEVEL

ENTREPRENEURIAL PROCESS Kreiser, Patrick; Ohio U.; [email protected]

Recent research (Brown, Davidsson, & Wiklund, 2001; Lumpkin & Dess, 1996) suggests that existing conceptualizations of firm-level entrepreneurship may not be sufficient in fully explaining the construct. There has been disagreement regarding the defining characteristics of firm-level entrepreneurship (Covin & Miles, 1999; Lumpkin & Dess, 1996), as well as the breadth of existing conceptualizations (Brown, Davidsson, & Wiklund, 2001; Zahra, Jennings, & Kuratko, 1999). In particular, there is little consensus regarding the organizational processes that underlie the entrepreneurial act. Thus, the primary purpose of this study is to define the necessary components underlying the firm-level entrepreneurial process. The paper begins with a review of how key measures and conceptualizations of firm-level entrepreneurship have evolved over time, paying particular attention to the Miller (1983), Stevenson and Jarillo (1990), and Guth and Ginsberg (1990) conceptualizations. The four specific activities (Covin & Miles, 1999) most commonly associated with firm-level entrepreneurship are also considered. The study then integrates and extends these earlier conceptualizations to form a new theoretical framework for studying the firm-level entrepreneurial process. It is argued that three processes, innovation, proactiveness, and strategic renewal, are necessary preconditions for firms to be considered truly “entrepreneurial.” The impact of the firm-level entrepreneurial process outlined in this research in promoting a sustainable competitive advantage for entrepreneurial organizations is also considered. After forming this conceptualization of the firm-level entrepreneurial process, suggestions are offered regarding how a new measurement instrument could be developed to assess its salient dimensions.

Keywords: Corporate Entrepreneurship, Resource-based Theory, Entrepreneurial Intensity







ENTREPRENEURIAL VENTURES, PERFORMANCE, AND THE

GENDER EFFECT Cron, William L; TCU; [email protected]

Bruton, Garry D; TCU; [email protected] Slocum, John W.; Southern Methodist U.; [email protected]

It has been found in other domains that there is a gender effect on the earning power of women, the women earning less than males. However, there has not been a clear indication of whether gender has a mediating impact on the earnings of women entrepreneurs. This research addresses a number of important methodological limitations in prior research by sampling from professional entrepreneurs while controlling for a number of alternative explanations for gender effects. Specifically, the potential mediating effects from hours worked, motivation of the entrepreneur, and industry experience on the gender effect among entrepreneurs were examined while controlling for a wide variety of other environmental, business, and personal factors, for entrepreneurs within a single line of business. The results clearly indicate that owner income is strongly related to the gender of the owner of the entrepreneurial venture. The impact of these findings for future research and public policy are discussed.

Keywords: women, feminist theory, new venture performance

WHO ENTERS, WHERE, AND WHY? STRATEGIC LOCATION

CHOICES OF NEW ENTERPRISES Pe'er, Aviad; UBC; [email protected]

Vertinsky, Ilan; UBC; [email protected]

Using data about all new entrants into Canadian manufacturing sectors during 1984-1998, we studied location choices as a function of firms’ initial resources and capabilities. Employing nested logit estimation, we examined the impact of various locational traits such as: agglomeration, competition, deterrence, and sunk costs, on location choices. Findings reveal that stronger entrants value more locations with positive cluster externalities, but are more detracted by local competition and incumbents’ deterrence strategies. Weaker firms place a higher value on lower entry barriers and investment recoverability. The findings imply existence of both favorable and adverse entry selection processes which impact cluster dynamics.

Keywords: Resources and capabilities, Location choice, Clusters

GROWING PROFITABLE OR GROWING FROM PROFITS:

PUTTING THE HORSE IN FRONT OF THE CART? Davidsson, Per; Queensland U. of Technology and Jonkoping U.;

[email protected] Steffens, Paul Richard; Queensland U. of Technology; [email protected]

Fitzsimmons, Jason Robert; Queensland U. of Technology; [email protected]

How do firms that show above-average growth and profitability reach that desirable state? Is it because growth allows them to become profitable, or is it rather that their profitability allows them to grow based on retained earnings? While arguments in support of both scenarios can be derived from established











theories the extant empirical literature has not been able to settle the issue despite its arguably central interest to entrepreneurship theorists and practitioners. Using a large, longitudinal data set this research tests the hypothesis that SMEs that show high profitability but low growth, and those showing high growth but low profitability, are equally likely to achieve high growth and high profitability in the subsequent period. Our results turn out a rather dramatic rejection of that hypothesis. In several year-by-year analyses firms originating in the high profitability/low growth category are about three times as likely to reach simultaneous high growth and profitability, as are firms originating in the high growth/low profitability group. The latter group is instead markedly over represented among firms that regress to low growth and low profitability. Over a four-year interval the difference is smaller but still very substantial. Over all, the results presented in the paper are strong reason for entrepreneurs and policy makers as well as entrepreneurship researchers and educators not to embrace a universal and uncritical growth ideology. Our results indicate that firms that first show an ability to generate above average profits are the ones most likely to embark on a sound, profitable growth trajectory.

Keywords: growth, profitability, SME

MIT ENTREPRENEURS: AN EMPIRICAL EXAMINATION

Hsu, David; The Wharton School; [email protected] Roberts, Edward B.; Massachusetts Institute of Technology/Sloan; [email protected]

We describe findings from a survey of all living MIT alumni entrepreneurial founders regarding their venture formation and performance. Over 2000 responses were collected. This document is meant to serve as a first look at these data—and so we deviate from a paper format that derives hypotheses from the literature and then tests those empirical predictions. We report temporal trends of founder and venture formation characteristics. As a second step, we compare founder and venture characteristics by technology-intensive sectors (vs. not) and by service vs. manufacturing industry. Finally, in multivariate regressions, we examine several correlates of venture performance.

Keywords: venture formation, innovation, venture performance

WHERE DO ENTREPRENEURIAL ORIENTATIONS COME FROM? AN INVESTIGATION ON THEIR SOCIAL ORIGIN

Yang, Haibin; U. of Texas at Dallas; [email protected]

This paper explores the origin of entrepreneurial orientations (EO) from an organizational embeddedness perspective. It examines the impact of firms¡¯ structural positions in the network as well as the overall structural effects on the five dimensions of EO, namely autonomy, risk-taking, proactiveness, competitive aggressiveness and innovativeness. It argues that each dimension may vary independently with each other and has its own formation mechanism, which implies rich implications for entrepreneurial network construction.

Keywords: entrepreneurial orientations, social network, formation mechanism





RESOURCE NETWORK DEVELOPMENT: ENTREPRENEURIAL

VENTURES AND NEGATIVE CONSEQUENCES OF SOCIAL CAPITAL

Feickert, Julie; U. of Utah; [email protected]

ABSTRACT We examine the role of social capital provided to entrepreneurial ventures by social groups and the mitigating effect these groups have on the ability of the venture to form external resource networks. We discuss that although accepting the benefits of social capital may initially benefit the venture, in the long run, it may be detrimental if venture is unable to adequately form external resource networks which provide the diverse resources necessary to sustain the evolving firm.

Keywords: entrepreneurship, social capital, resource network

THE ROLE OF GENDER AND PRIOR KNOWLEDGE IN

OPPORTUNITY IDENTIFICATION DeTienne, Dawn; Utah State U.; [email protected]

Chandler, Gaylen N; Utah State U.; [email protected]

This article reports the results of two studies designed to better understand the role of prior knowledge and gender in opportunity identification. The first study of senior undergraduate students is made more generalizable by the second study of 184 entrepreneurs in two high technology industry sectors. Our findings suggest that prior knowledge affects the ability to identify opportunities; however, not equally across genders. Men and women have different types of prior knowledge and these differences affect not only the ability to identify opportunities, but also the opportunity identification sequence utilized. Even though men and women utilize different stocks of prior knowledge and approach opportunity identification through different processes, we found no significant difference in the innovativeness of the opportunities identified or the ultimate performance of the firm. This research is the first of its kind to explore gender differences and prior knowledge in opportunity identification. Our findings show that within industries men and women have different stocks of prior knowledge and utilize different processes, but ultimately neither gender is superior in innovation or firm performance.

Keywords: Prior Knowledge, Opportunity Identification, Gender

A PRAXEOLOGICAL AND THEORETICAL-FIT APPROACH TO

UNDERSTANDING THE UNIVERSITY TECH TRANSFER PROCESS

Phillips, Robert Leslie; Texas Tech U.; [email protected] Brigham, Keith; Texas Tech U.; [email protected]

In 2003, Universities received over a billion dollars in license fees. The number of disclosures, patents issued, licenses executed, and spin-outs started continue to grow at a record pace. The article uses a praxeological and literature-based approach to model the university tech transfer process; then suggests a value-chain analysis within the university’s control. In order to account for both the macro and micro effects, Hunt’s (2000) General Theory of Competition was employed to bring further understanding to the process and to derive three propositions. Finally, the detailed research suggested that the university tech transfer process is unique and does not fit the standard models of individual, team, or corporate







entrepreneurship. Instead, the authors proffer a concept of Distributive Entrepreneurship, along with a concept of Zone of Excitement.

Keywords: university entrepreneurship, distributive entrepreneurship, technology transfer

ANTECEDENTS OF FAMILY COMMITMENT AND THE

MODERATING EFFECTS OF CEO FAMILY TIES Mahto, Raj V; U. of Memphis; [email protected]

Chen, Jiun Shiu; The University of Memphis; [email protected] Busija, Edith C.; The University of Memphis; [email protected]

Drawing upon psychological ownership theory, social identity theory, kinship theory, the upper echelon perspective, and commitment literature, this study proposes a model of family members’ identification with their family’s business. We argue that social factors such as family representation in the top management team, family and shareholder meetings, and percentage networth invested in the business will determine perceived identification with the business, which, in turn, affects family members’ commitment to continue the family business. We further propose that these relationships are influenced by the CEO’s ties to the founding family. A structural equation model of these relationships is cross-validated using data drawn from two large-scale, national surveys of family businesses.

Keywords: CEO family ties, family business, commitment

VENTURE CAPITAL IN CHINA: INVESTENT PROCESS AND

DECISION-MAKING FACTORS Vega, Paul; U. of St. Gallen; [email protected]

Zhang, Wei; Tsinghua U.; [email protected] Chong, Li-Choy; U. of St. Gallen; [email protected]

White, Steven; INSEAD; [email protected]

This paper presents exploratory research into the investment processes and decision-making of VC investors in China. The findings are based on 40 qualitative research interviews conducted in 2003¨C2004, with Venture Capital (VC) investors active in China. A VC investment process, based on Western VC literature, serves as the reference process from which propositions and expected outcomes are derived with regard to how VC investors operate in China, a market characterized by uncertainty and high risk. The findings show, that despite certain perceptions that venture investment decisions in China are unstructured and disorganized, investors in China do adhere to structured decision-making processes,albeit heavily modified for the Chinese market environment. Key differences relate to investment risks inherent to VC, as well as country risks related to the Chinese market. In particular, findings reveal issues related to an under-developed legal framework, the lack of liquid financial markets, and a shortage of experienced entrepreneurs and investors. The measures taken by VC investors in China to mitigate these risks and challenges are then identified and explained, drawing on field research, case study examples, and market data. In conclusion, this paper highlights important core competencies that will likely shape the future of VC in China.

Keywords: Venture Capital, Decision-making, Investent Process









SPIN-OUT FORMATION AND PERFORMANCE FROM THE

LENS OF DYNAMIC CAPABILITIES AND SOCIAL CAPITAL THEORY

Sahaym, Arvin; U. of Washington, Seattle; [email protected]

Spin-outs have been praised as ‘paragons of innovations’ on one hand, but often criticized as ‘plunderers of parent's innovations’ on the other hand. This paper investigates the phenomenon of spin-out formation and performance from the theoretical lens of social capital theory, executive migration, and dynamic capabilities. Applying these lenses, a theoretical model is presented positing ‘immigrating executives’ capabilities’ as the antecedent for the ‘accumulation of social capital’ and ‘financial capital’, which lead to spin-out formation in the first stage. Next, this theoretical model suggests that the ‘accumulated social capital’ and ‘accumulated financial capital’ will show a positive effect on firm performance in the post-IPO stage. I expect to find support for the central thesis that the accumulated social capital and financial capital in the pre-IPO stage will have a positive effect on firm performance in the post-IPO stage. The interaction effects between (tacit) accumulated social capital and (explicit or tangible) financial capital is another point of interest as per these theories. Thus, this paper proposes testable building blocks for contributing to research in the areas of new venture creation and performance, application of knowledge based view, and application of social capital theory.

Keywords: new venture creation, social capital theory, dynamic capabilities view

REPRESENTATION AND REALIZATION: A THEORETICAL

PERSPECTIVE ON ENTREPRENEURSHIP Honig, Benson; Wilfrid Laurier U.; [email protected]

Karlsson, Tomas; Jonkoping International Business School; [email protected]

We provide a new theoretical perspective on organizational emergence, maintaining that all organizations combine certain aspects of both representation and realization as they assert themselves in the marketplace. Realization is defined as the transformation of core organizational resources, the source of concrete creation in a firm. It is “what firms do”. Representation is defined as the generation of description and presumption, of what the firm, organization, and or product/service might be. It includes how organizations present themselves, and how they are perceived in the social structure and culture. We maintain that all firms combine elements of both processes, but in different degrees, and with different outcomes. For example, due to the liability of newness, new organizations low in representation may have difficulty becoming legitimized, and may therefore perform poorly, and fail to survive. We also show that certain combinations, in particular those low in both realization and representation, are marginalized and may be unsustainable. Examples are provided for all dimensions of these processes, and propositions are developed regarding predicted outcomes for each of the dimensions. By utilizing the representation-realization framework, more heterogeneous population samples should provide researchers with considerably more information regarding how organizations fail and succeed in maximizing opportunities. We further argue that a bias exists in the research literature against studying low representation firms, representing an important research opportunity.

Keywords: Organizational Processes, emergence, entrepreneurship theory






FORCES, CONSTRAINTS, AND PROFESSIONALIZATION OF

CHINESE FAMILY BUSINESS: A THEORETICAL MODEL Zhang, Jianjun; Peking U.; [email protected]

yu, da; Peking University; [email protected]

This paper outlines a theoretical model about professionalization of Chinese family business. It identifies main forces and constraints that might affect the practice of hiring professional managers. The forces and constraints are examined at individual level, firm level, and institutional level. The possible mechanisms through which these factors work are also discussed. The theoretical model projects that the evolution of Chinese family business is largely determined by the interaction of market imperative and Chinese cultural traditions, which might differentiate Chinese capitalism from both managerial capitalism in the United States and Chinese family capitalism in South-East Asian countries. The theoretical model presented here will serve as a structural guide for our empirical study in the coming years.

Keywords: forces, constraints, professionalization of family business

INTRAPRENEURSHIP AND TRUST: AN EXPLORATORY FIELD

STUDY IN FOR-PROFIT AND NONPROFIT SETTINGS Stull, Michael Gene; California State U., San Bernardino; [email protected]

Aram, John D; Case Western Reserve U.; [email protected]

Managers and subordinates in two for-profit and two nonprofit organization settings were interviewed with semi-structured methods to provide grounded insight about the role of interpersonal trust in entrepreneurial behavior in organizations. Coding of transcripts confirmed the role of risk taking, innovativeness, and proactiveness as aspects of entrepreneurial behavior in this sample, and respondents’ comments strongly suggested that trust influences entrepreneurial outcomes. Transcription analysis identified dimensions of trust as “downward trust-in,” “upward trust-of,” and “upward trust-in.” Aspects of lateral trust, reciprocity, as well as the cascading effects of managerial trust are explored. Study results are examined within the theory of entrepreneurial behavior in organizations and directions for future research are outlined.

Keywords: intrapreneurship, trust, entrepreneurial orientation

AN ANALYSIS OF NEW VENTURE PERFORMANCE:

LINKING PRODUCT INNOVATION AND LEGITIMATION Kishida, Reiko; Case Western Reserve U.; [email protected]

Schulze, William S; Case Western Reserve U.; [email protected] Deeds, David; Case Western Reserve U.; [email protected]

This research examined how competitive and institutional factors jointly affect young firms�f performance. More specifically, the study investigated the relationships among new ventures�f different types of abilities to introduce new products, abilities to manage internal and external contexts, the characteristics of institutional environment, and firm performance. Although young firms�f abilities to carry out innovation and to secure organizational legitimacy have been recognized as important variables to explain entrepreneurial outcomes, their joint impacts have not been fully explored. Moreover, strategic and institutional perspectives have yielded conflicting arguments. While the former emphasizes the










distinctiveness to obtain competitive advantage, the latter highlights the alignment with institutional environment to gain social acceptance. By synthesizing strategic and institutional perspectives, the model was developed and tested with a sample of 300 young companies in various manufacturing industries across the U.S.

Keywords: Entrepreneurship, Innovation, Legitimation

A SOCIAL COGNITIVE MODEL OF FOUNDING TEAM

DYNAMICS Ensley, Michael; RPI; [email protected]

Carr, Jon C; U. of Southern Mississippi; [email protected] Sajasalo, Pasi; Tampere U. of Technology; [email protected]

A general social cognitive model of founding teams is developed, with a principal focus on group potency and its effects on firm performance. Using new venture top management team samples from the U.S. and Finland, hypotheses related to the antecedents of group potency and the moderating role of perceived environmental uncertainty on firm performance are tested. Support was found for all hypotheses, suggesting that the role of group potency in new venture top management teams has a significant effect on entrepreneurial success.

Keywords: Group Potency, Top Management Teams, Performance

NEW VENTURES AND AMBIDEXTROUS FIRMS FROM THE

LENS OF CAPABILITIES, ECONOMICS AND EVOLUTIONARY THEORY

Sahaym, Arvin; U. of Washington, Seattle; [email protected]

A debate has been ongoing in entrepreneurial strategy literature regarding ways to pursue disruptive technology within or outside organizational boundary—how the relationships between incumbent and spin-off or spin–out in the industry could evolve in terms of resources, governance, ownership, and incentives. Some scholars assert that incumbents should set up a separate organization for venturing into disruptive technology. However, others have questioned whether setting up a separate organization is always the best solution. Recent literature shows that technology management scholars are advocating for ambidextrous organizations. Drawing from above perspectives, this paper first distinguishes between two types of new ventures, spin-off and spin-outs. Next, it discusses how the relationship between incumbent organization and its spin-offs or –outs) can be structured, in terms of resources, governance, ownership, and incentives. Then, it discusses the motivation for their formation from the resource-based and capabilities perspective. Last, it presents a case for ambidexterity for concurrently nurturing diverse (radical, architectural and incremental) innovation streams. Thus, this paper proposes testable building blocks for contributing to research in the areas of new venture creation drawing insights from Schumpeterian economics, resource-based and capabilities view, and evolutionary theory.

Keywords: corporate intrapreneurship, new venture creation, economic theory






TOWARDS STRATEGIC AMBIDEXTERITY: THE NEXUS OF

PRO-PROFIT AND PRO-GROWTH FOR CORPORATE VENTURING

Han, Mary; Ryerson U.; [email protected]

When an organization develops a proactive strategy that manages contradictory structures, skills, and cultures to achieve a successful competitive position, it can be termed ambidextrous. This paper examines—Merrill Lynch and Comdirect Bank, the two leading firms’ management of paradoxical forces in the context of their corporate venturing process; their success supports the theory of ambidexterity. Empirical data and theory are compared iteratively to describe and illustrate the strategic decision-making and implementation processes within an ambidextrous organization. In particular, the strategic processes involved in managing the paradoxical forces of pro-profit and pro-growth are discussed, and I propose that this ability to manage paradoxical forces be termed “strategic ambidexterity,” a capability that may be especially effective in providing competitive advantage to firm's corporate venturing.

Keywords: Strategic ambidexterity, nexus of pro-profit and pro-growth, venturing strategy

STRATEGIC RESOURCES, SOCIAL CAPITAL,

ENVIRONMENTAL TURBULENCE, AND PERFORMANCE: AN EMPIRICAL STUDY

Han, I; National Taiwan U.; [email protected] Chao, Mike C. H.; Saint Louis U.; [email protected] Kim, Seung H.; Saint Louis U.; [email protected]

Chuang, Cheng-Min; National Taiwan U.; [email protected]

This paper proposes a conceptual framework to explain the major determinants of entrepreneurial firms¡¦ performance: strategic resources, which are moderated by social capital and environmental turbulence. Empirically, we investigated Taiwanese entrepreneurial firms specifically in the mature industry with 140 effective samples. The predictions of positive effects of strategic resources (i.e., barrier to imitate and uniqueness; intangible assets and managerial competences; market knowledge and access; being hard to trade, transfer, or move) on performances are all significantly supported except being hard to trade, transfer, or move. Meanwhile, the moderating effects of social capital and environmental turbulence are proved to exist but with mixed results from our original predictions. Our study makes contributions to both academia and practitioners for its advancing knowledge and implications of the empirical evidence in the context of Taiwanese entrepreneurial firms operating in the mature industry and the dynamic business environment.

Keywords: Strategic resources, Social Capital, Environmental Turbulence

GROWTH ORIENTATION AS LIABILITY: GROWTH STRATEGY

AND PERFORMANCE DURING INDUSTRY SLOWDOWN Autio, Erkko; HEC, Lausanne; [email protected]

Autere, Jussi; Helsinki U. of Technology; [email protected]

We examined whether growth volition and related strategies and organizational structures have a robust positive effect on growth during a period of dramatic slowdown in industry growth. Received literature has









not examined this question using longitudinal study designs. We found that a dominant growth orientation strategy may lead to sub-optimal performance in such conditions because of inertial forces that hamper the adjustment of strategies. Specifically, and as an interesting contribution to received literature, we found that the presence of external investors can operate as a strong traditionalizing force which hampers the firm’s ability to modify its strategies during dramatic slowdown in industry growth. We employed longitudinal study design in the context of Finnish software product firms during the period from 1998 to 2002. This period and context represents a particularly dramatic change in an industry’s fortunes, thus making it an appropriate context for our study.

Keywords: growth orientation, organizational inertia, industry downturn

CRITICAL FACTORS AFFECTING THE COMPETITIVE

SUCCESS OF E-COMMERCE ENTREPRENEURS Sukasame, Nittana; U. of Nebraska/Bangkok U.; [email protected]

Information technology and e-commerce opportunities are among the most common driving forces that can affect almost every aspect of life in the modern world, especially in the ways people live and perform business. This research presents a framework for exploring the perceptions of e-commerce entrepreneurs of the critical factors considered significant for their competitive success. The study focuses on governmental support and entrepreneurial characteristics and key behaviors in successfully establishing e-commerce ventures. Success is measured in terms of growth rate. The following factors selected from different disciplines, including factors previously linked to successful new ventures will be tested: achievement orientation, risk taking propensity, creativity, and commitment to others. In addition, specific factors linked to the behaviors of e-commerce founders will be examined: IT technical skills, IT managerial skills, e-networking, and e-service quality including reliability, responsiveness, ease of use, and self-service. Finally, external factor of governmental support will also be examined. This study will contribute to the growing body of knowledge of entrepreneurship in the 21st century.

Keywords: Entrepreneur, Critical Success Factor, E-commerce

IDENTIFYING TRENDS IN ENTREPRENEURSHIP RESEARCH:

TEXTUAL ANALYSIS REVISITED Watkins, David; Southampton Business School, U.K.; [email protected]

Reader, Diana; Bath Spa U, College; [email protected]

The field of Entrepreneurship itself as an object of study has always attracted a small number of researchers, and sometimes this has taken a quantitative turn. Recently, however, this interest has intensified (Landström and Huse 1996; Landström 2001; Reader and Watkins 2001; Verstraete 2002/03; Busenitz, Page West et al. 2003; Fried 2003; Etemad and Wright, 2003; Watkins and Reader 2003). Here we use a mix of textual analysis and visualisation techniques to identify recent research trends, employing experimental bibliometric software which translates statistically based textual analyses into domain maps of academic fields. This identifies growth points - and also unexpected gaps in research preferences. The database used comprises 1000+ articles in more than a dozen entrepreneurship ‘niche’ journals published not only in English in North America/Europe, but also in German, French, and in diverse countries such as India and Singapore. The study is thus unique in its coverage. Moreover, since relatively few of the journals abstracted (only 20%) are indexed in the Social Science Citation Index, they are not available for the more usual forms of citation-based bibliometric analysis. Textual analysis also has the advantage over citation-based accounts in establishing growth points in that the research has more currency, the publication lag in the ‘citing’ paper being eliminated. The findings are of interest not only to practicing researchers and potential doctoral candidates but also to policy makers. Keywords:





Research Challenges, Entrepreneurship as a field of Study, Literature Growth Points, Bibliometric Analysis

Keywords: Entrepreneurship as a field of Study, Literature Growth Points, Bibliometric Analysis

INTERNATIONAL ENTREPRENEURSHIP, INSTITUTIONS, AND

FIRST-MOVER ADVANTAGES Udayasankar, Krishna; Nanyang Technological U.;

[email protected] Das, Shobha S; Nanyang Technological U.; [email protected]

In this paper, we relate the institutional environment to the advantages and disadvantages faced by “first-mover” firms. We identify the institutional costs faced by firms in terms of ‘deinstitutionalization costs’ and ‘creation costs’, and relate these costs generally to the timing and order of entry of firms. Specifically we propose that firms can maximize their benefits by using various types of institutional environments, either to determine the nature of barriers to entries that can create and sustain in various environments, or by choosing to expand into environments which are best suited to creating barriers to entry, based on their specific focus and competencies.

Keywords: Institutional costs, First mover, Barriers to entry

FIRM VALUATION EFFECTS OF HIGH-TECH M&A: A

COMPARISON OF NEW VENTURES AND ESTABLISHED ACQUIRERS

Ragozzino, Roberto; University of Central Florida; [email protected]

We draw from the entrepreneurship literature to highlight the unique attributes of new ventures and examine how the M&A outcomes experienced by these firms differ from those by established organizations in the acquisitions of high-technology targets. The results show that newly incorporated acquirers experience lower average performance in general, as well as when the target is itself a young venture. Yet, we find that new firms outperform established acquirers when the target is a privately-held company, owing to search costs and fit considerations. Overall, the findings demonstrate that the challenges and opportunities of firms shift through the first years of their existence and these changes directly impact the M&A outcomes of young acquirers.

Keywords: new ventures, mergers and acquisitions, performance

GROWTH EXPECTATIONS OF BUSINESS OWNERS. HUMAN

CAPITAL, FIRM CHARACTERISTICS AND TRANSITION Aidis, Ruta; U. of London; [email protected]

Mickiewicz, Tomasz; U. of London; [email protected]

This paper presents an empirical study based on a survey of 399 owners of small and medium size companies in Lithuania. Applying bivariate and ordered probit estimators, we investigate why some business owners expect their firms to expand, while others do not. Our main findings provide evidence that SME owner’s generic and specific human capital matter. Those with higher education and ‘learning







by doing’ attributes, either through previous job experience or additional entrepreneurial experience, expect their businesses to expand. The expectations of growth are positively related to exporting and non-monotonically to enterprise size. In addition, we analyse the link between the perceptions of constraints to business activities and growth expectations and find that the factors, which are perceived as main business barriers, are not necessary those which are associated with reduced growth expectations. In particular, perceptions of both corruption and of inadequate tax systems seem to affect growth expectations the most.

Keywords: SMEs, Employment, Human Capital

THE EFFECTS OF ENTREPRENEURIAL HUMAN AND SOCIAL

CAPITAL ON THE SURVIVAL OF NEW VENTURES Yitshaki-Hagai, Ronit; Bar Ilan U.; [email protected]

Khavul, Susanna; London Business School; [email protected]

In this paper, we argue that the relationship between the human capital of entrepreneurs and the survival of new ventures is mediated by the social capital that they create. A duality in the literature explaining survival and failure of entrepreneurial firms motivates our argument. Specifically, the literature attributes the failure of entrepreneurial firms largely to their external environment (i.e. environmental hostility, lack of legitimacy, lack of social networks). However, it attributes the success of entrepreneurial firms largely to the abilities of the management team (i.e. education, experience, leadership, and decision making). We propose a theoretical model that extends the human capital theory of entrepreneurship and a set of hypotheses that relate the multi-dimensional construct of entrepreneurial human capital directly to firm survival. We also examine the role of human capital in the creation of bridging and bonding social capital that are the micro and macro connections which the firm has in the external environment. Finally, we suggest that to survive firms must transform bonding and bridging social capital into social capital internal to the organization. We argue that new venture creation and survival depend on (a) the level of entrepreneurial human capital and (b) the ability of the entrepreneurs to transform their human capital into new connections in the social structure that could lead to the recognition and exploitation of opportunities in the environment. Our paper makes a theoretical contribution to the entrepreneurship literature by explicitly linking human and social capital theories to survival and proposing a set of testable hypotheses.

Keywords: survival, human capital, social capital

EXPLORING ENTREPRENEURS’ ATTRIBUTIONS TO INTUITION

AS A BASIS FOR THE VENTURE FOUNDING DECISION Blume, Brian D.; Indiana U., Bloomington; [email protected]

Covin, Jeff; Indiana U.; [email protected]

Entrepreneurs are commonly assumed to rely heavily on intuition as a basis for their decision making. However, the extent to which intuition actually affects entrepreneurs’ decisions during the entrepreneurial process is a matter of significant uncertainty. This paper theoretically explores the issue of why “actual” entrepreneurial intuition is likely to be weakly associated with the espoused use of intuition as a basis for the venture founding decision. Of particular interest is the delineation of factors that may lead entrepreneurs to identify intuition as having played a role in the venture founding decision. Researchable propositions are offered and the paper’s theoretical and practical implications are discussed.

Keywords: Intuition, Entrepreneur, Venture Founding Decision






CORPORATE VENTURE CAPITAL AND THE POST-IPO

PERFORMANCE OF START-UP FIRMS Ginsberg, Ari; New York U.; [email protected]

Hasan, Iftekhar; Rensselaer Polytechnic Institute; [email protected] Tucci, Christopher L; Ecole Polytechnique Fédérale de Lausanne; [email protected]

Empirical research on the performance effects of corporate venture capital investment has focused either on the performance of the investing corporation, or on the market performance of the start-up when it goes public. In this paper we argue that corporate venture capital (CVC) and independent venture capital (IVC) investors provide different performance benefits to start-ups during the post-IPO growth period. We also argue that these benefits are affected by whether or not the parent of the CVC unit is a bank or operates in a related industry. We present a study that examines the effects of CVC investment on start-up firm values over the post-IPO growth period. Analysis of 1830 initial public offerings during the 1990s showed that CVC investment bestows different benefits than IVC investment, as reflected in the extent to which Tobin’s Q is higher over the five year period following the start-up’s IPO. Further analysis showed that this effect is particularly pronounced when the corporate investor is a bank, or in the same industry as the IPO. Our results show that corporate venture capital investors provide important benefits to young firms that positively influence their performance over the post-IPO five-year growth period, and that these benefits are even more pronounced when the parent company of the CVC is a bank or in a related industry.

Keywords: corporate venture capital, post-IPO performance, start-up firms

NETWORK ANALYSIS IN AN INTERNATIONAL

ENTREPRENEURIAL ENVIRONMENT Godesiabois, Joy; U. of Colorado, Boulder; [email protected]

International entrepreneurship (IE) research has progressed significantly during the past ten years. Recently, scholars have called for future IE research to include definitional rigor in order to create a common vocabulary so that comparisons of research can be made (Coviello & Jones, 2004; McDougall & Oviatt, 2000). During this same time period, network analysis methods have strengthened and their use increased in management research. We believe network analysis methods provide an opportunity to respond to this call while extending IE research, primarily in the areas of alliances and venture funding, two of the eight areas of research interest in IE (McDougall & Oviatt, 2000). In this paper, we introduce network analysis concepts and discuss specific research opportunities where these methods may extend the IE research stream. We provide an overview of network analysis measures, demonstrate their use through a small network example and discuss network data collection methods and issues. The purpose of this paper is to provide an overview of network analysis so that researchers interested in these procedures will understand the opportunities these methods impart.

Keywords: International Entrepreneurship, Network Analysis, Top Management Teams






FORMS OF ENTREPRENEURS’ CAPITAL, VENTURE

STRATEGY AND PERFORMANCE Ndofor, Hermann Achidi; U. of North Carolina, Charlotte; [email protected]

Priem, Richard L; U. of Wisconsin, Milwaukee; [email protected]

In this study, we examine the origins of minority venture strategies and performance. We propose that the entrepreneur is central to venture strategy and performance. Specifically, the forms of capital possessed by the entrepreneur (which provide resources to the venture) determine the strategy (conceptualized in terms of product market scope and growth orientation) pursued by a venture. This relationship is moderated by the entrepreneur’s social identity with the relevant ethnic community. Venture strategy is hypothesized to influence performance based on how well aligned the strategy is to the aspirations and capital possessed by the minority entrepreneur. Empirical analyses conducted on a sample of 206 minority ventures in a Midwest state provide support for these arguments.

Keywords: minority ventures, new venture strategy, new venture performance

ENVIRONMENTAL DETERMINANTS AND PROXIMITY EFFECTS

ON ENTREPRENEURSHIP IN THE FRENCH ICT SECTOR Lasch, Frank; CEROM Montpellier Business School; [email protected]

Le Roy, Frederic; ERFI/CEROM U. of Montpellier 1 / Montpellier Business School; [email protected]

Yami, Saïd; ERFI-ISEM U. of Montpellier 1; [email protected]

Even if numerous researches produced empirical evidence to outline the key determinants of new firm formation (NFF), relatively little research has been undertaken into regional variations in the formation rate in particular sectors. This is especially true for the ICT sector. Despite the large literature on innovative firms in general, only some few publications focused on this type of firms. In the same way, previous researches neglected to analyze the impact of the local socio-economic context on NFF in this strategically and rapidly changing sector. Mostly SMEs, young ICT firms are extremely fragile and are sensitive to the local context. But does the regional environment significantly affect entrepreneurship and what type of local contexts give opportunities for entrepreneurs in this sector? An empirical lead forward was made by including data of all new firms created between 1993 and 2001 in the 348 French labor market areas (84.535 firms). The results clearly show that the environment affects entrepreneurship in innovation and technology in a more than significant manner. So, results from prior researches about NFF differ significantly, when one particular sector is examined. NFF constitutes a regionally differentiated process in the ICT sector. The major determinants are a well developed R&D infrastructure, localization economies, locally embedded large firms and population growth. Contrary to most researches the influence of agglomeration effects is not clearly measured. Essentially, proximity effects (interaction and networking opportunities) and positive knowledge externalities prime. The present study concludes with a number of points where future research is necessary.

Keywords: Entrepreneurship, New firm formation, French ICT sector








VENTURE CAPITAL SYNDICATION IN EUROPE:DOES FIRM

SIZE MATTER? Bruining, Hans; Erasmus U.; [email protected]

The present study examines firm size effects on transaction costs of Venture Capital Syndication. The authors submit that from the three critical dimensions of transactions uncertainty and frequency entail positive size effects while negative size effects result from the small firm’s greater ability to respond to asset-specific and idiosyncratic demands. Survey data from 317 venture capital firms (VCs) in 6 European countries are used to test the theory. The results show that in general larger VC firms are more likely to syndicate their investments although very largest VC firms have a lower incentive to syndicate. Furthermore, in line with theory the evidence shows that more specific and idiosyncratic early stage investments are more likely to be syndicated by smaller VCs. Implications and suggestions are discussed.

Keywords: venture capital, syndication, transaction costs theory

DETERMINANTS OF STRATEGY AND PERFORMANCE IN SMALL TECHNOLOGY-BASED PRIVATE FIRMS IN JAPAN

Yamada, Kozo; Sophia University; [email protected] Eshima, Yoshihiro; U. of Shimane; [email protected]

This paper examines factors affecting strategies and performance of 1,348 small privately-owned firms in Japan. Our analyses showed: (1) family-oriented governance had no impact on strategies, but had a negative effect on sales growth; (2) the higher competitive advantage firms had, the more prospective strategies they were likely to employ; (3) top management�fs visionary leadership moderated the relationship between internal resources and strategies; (4) firms with prospective strategies tended to choose more hostile environments; and (5) the more prospective strategies firms employed, the more likely they were to achieve a high level of profitability and innovation.

Keywords: Family Business, Governance, Knowledge-based view

DISTINCTIVE PATTERNS OF ORGANIZING WITHIN

ENTREPRENEURIAL FAMILY FIRMS Steier, Lloyd P; U. of Alberta; [email protected]

Given that the vast preponderance of the world's firms have a family dimension, understanding the processes that govern their organization stands as an issue of great practical and theoretical significance. This study focused on entrepreneurial management, ownership and control that is precipitated by the succession phase.

Keywords: family business, governance, succession






STRATEGIC ALLIANCE PORTFOLIO PERFORMANCE IN SMES:

A MULTI-COUNTRY STUDY Tokman, Mert; U of Alabama; [email protected] Marino, Louis; U. of Alabama; [email protected]

Richey, R. Glenn; U. of Alabama; [email protected] Dickson, Pat H; Georgia Institute of Technology; [email protected]

Weaver, Mark; Rowan U.; [email protected]

In many industries business performance is increasingly being driven by competition between networks of firms rather than by competition between individual firms. This trend makes it critical for firms of all sizes to build effective alliance networks. However, evidence suggests that many Small-to-Medium-Sized Enterprises (SMEs) find it difficult to maximize their performance in these initiatives and are often dissatisfied with the benefits they achieve from these agreements. The objective of this manuscript is to investigate factors that influence SME dissatisfaction with alliance portfolio performance. In addressing this objective, the authors integrate multiple theoretical lenses to develop a model that contributes to the explanation of alliance usage. Subsequently, a framework including environmental, relational, cultural, and resource related factors is presented to explain SMEs dissatisfaction with alliance portfolios. Results indicate that opportunism and flexibility of portfolios are the main drivers of dissatisfaction. Interestingly, our findings also suggest that SMEs are satisfied with flexible portfolios when they are self-sufficient, however when the SMEs are in dire need of an alliance and the valuable resources that the alliance provides, flexibility leads to dissatisfaction. The implications of this research are not only meant to provide the managers of SMEs with a direction to assess what causes dissatisfaction with alliance portfolio performance, but also to stimulate a new research stream towards an integrated theory of alliance portfolio management

Keywords: Alliance Portfolios, Performance, Transaction Cost Economics

HOW INTERNATIONAL IS ENTREPRENEURSHIP?

Gamboa, Ernesto Carlos; U. Texas El Paso; [email protected] Brouthers, Lance; U. of Texas, El Paso; [email protected]

This study investigates two primary questions. First, have academic journals in entrepreneurship become more international? Secondly, how much international entrepreneurship (IE) research is published in major international business and management journals? As “the intersection of international business and entrepreneurship is of increasing importance for all those interested in either topic,” (McDougall and Oviatt, 2000, p. 902), we sought to answer these questions. Specifically, the purpose of our study is to determine the pervasiveness of international research in the highest quality entrepreneurship journals in a systematic fashion. In addition, four top management and international business journals were also examined for international entrepreneurship content. In all, 1991 articles appearing in the seven journals were included in the sample. The first step in determining the pervasiveness of international research in top entrepreneurship journals was to define international entrepreneurship (IE) research. Next, the top journals in entrepreneurship were identified. The entrepreneurship journals were then examined over two time frames for all IE research content. The content of IE research was then analyzed to determine the ratio of international to non-international research. The same process was followed for the four international business and management journals. Finally, all the articles identified as international entrepreneurship were categorized as replications or non-replications of research conducted on larger companies.

Keywords: entrepreneurship, international, empirical









CONFIGURATIONS OF SMALL AND MICRO BUSINESSES AND

SUCCESS: STRATEGIES, FIRM, AND ENVIRONMENT Unger, Jens M.; U. of Giessen; [email protected] Frese, Michael; Giessen U.; [email protected]

Diversity in the small business sector and the large number of factors impacting business success has led researchers to question the value of investigating universal success relations. We propose a configurational individual level approach to the understanding of success in small businesses. In cluster analyses of 102 Zimbabwean business owners we found four distinct groups of business owners who demonstrated different levels of success depending on patterns of strategy use, characteristics of the firm and the environment. Findings demonstrate the usefulness of a configurational approach to the understanding of business success.

Keywords: Configurations, Success, Small Business

CORPORATE VENTURE CAPITAL AND FIRM GROWTH VALUE

Li, Yong; U. of Illinois at Urbana, Champaign; [email protected] Zou, David; U. of Illinois at Urbana-Champaign; [email protected]

We view corporate venture capital investments as creating growth options for the investing firms and propose that the contribution of corporate venture capital investments to firm value creation depends on the factors that determine the growth option value of corporate venture capital investments. Using a sample of 4319 observations from 1986 to 2003, we find that both growth opportunities and uncertainty of venture industry increase the investing firms¡¯ market value.

Keywords: corporate venture capital, uncertainty, real options

FAMILY BUSINESS RESEARCH: A BIBLIOMETRIC

ASSESSMENT OF INTELLECTUAL ROOTS AND STRUCTURE Mattsson, Juha T.; Helsinki U. of Technology; [email protected]

Schildt, Henri; Helsinki U. of Technology; [email protected]

This article complements the existing reviews of family business research by applying bibliometric methodology. We systematically analyze 108 family business articles published in leading management, finance, and economics journals between 1986 and 2003 to provide a balanced view on the subject area. Utilizing a specific algorithm, dense sub-network grouping, we systematically identify the ten most popular core streams underlying the past family business research. The analysis shows that agency theory still dominates as the most prevalent theoretical platform, but its applications have changed in the past few years. We also analyze and describe the different streams, primary publication outlets, research activity across various countries, and their interrelations. We conclude by presenting predictions and suggestions regarding the future development of the field.

Keywords: Family business research, bibliometrics, meta-analysis








IRIDIUM’S HOUSE OF CARDS: THE NATURE OF

ENTREPRENEURIAL STAGES AND STAGE TRANSITIONS Dooley, Kevin; Arizona State U.; [email protected]

Daneke, Gregory A; Arizona State U.; [email protected] Pathak, Seemantini Madhukar; Arizona State U.; [email protected]

Life-cycle or entrepreneurial stage models have become widely accepted in the study of technological innovations. Yet, such models often lack empirical validation, and fail to address when and why an entrepreneurial ventures shift from one stage to another. Moreover, they often fail to explicate how the timing of the shift might affect venture success. This study addresses these deficiencies using a newly devised narrative method and statistical analysis tool. We develop a case study of Iridium LLC, an international joint venture that developed and launched the first low-earth-orbit satellite-based telecommunications system. Media reports and computer-based text analysis are used to identify the different themes within Iridium’s public narrative. Statistical analyses of thematic dynamics suggest an epochal model, and the content of each epoch and event history data are examined in order to propose a stage model of entrepreneurial growth. We conclude with normative comments concerning risks involved in stage transitions.

Keywords: stage model, life cycle, entrepreneurial venture

INNOVATION, NEW PRODUCT DEVELOPMENT, AND

INTERNATIONALIZATION: SME PERFORMANCE IMPLICATIONS

Wolff, James A; Witchita State U.; [email protected] Pett, Timothy; Wichita State U.; [email protected]

We develop the theoretical underpinnings for hypothesized relationships between SME capabilities (innovation, new product development and internationalization) on two distinct forms of SME performance (sales growth and profitability). Multiple regression analyses is used to test the proposed relationships using questionnaire data from 181 mid-western based SMEs. Significant relationships were found among the innovation, new product development and internationalization capabilities for both forms of performance. A discussion of the implications for these findings with respect to managerial practice and future research is provided.

Keywords: Innovation, Product Development, Performance

DECIDING ON AN ENTREPRENEURIAL CAREER: A TEST

OF THE PUSH AND PULL HYPOTHESES USING THE PSED DATA

Schjoedt, Leon; Illinois State U.; [email protected] Shaver, Kelly G; College of William and Mary; [email protected]

We examine the long standing question in entrepreneurship: why do some, but not others, become entrepreneurs? More specifically, we test if job dissatisfaction “pushes” or the potential for increased life satisfaction “pulls” individuals to pursue an entrepreneurial career. We use the PSED data set to analyze if nascent entrepreneurs were “pulled “or “pushed” towards creating new ventures. For life satisfaction,










we found no significant mean differences between two groups of nascent entrepreneurs and the comparison group. We found the job satisfaction mean to be significantly lower for the comparison group than for the nascent entrepreneurs. As these results show little about the possible importance of nascent entrepreneurs being “pulled” into an entrepreneurial career by the potential for a better life, they have to be taken as strong evidence against the importance of nascent entrepreneurs being “pushed” towards an entrepreneurial career. We offer an explanation for this unexpected finding.

Keywords: Nascent Entrepreneurs, Pull-Push Hypothesis, Job Creation

MODELING SME PERFORMANCE: IMPACT OF STRATEGIC

ACTION & FIRM CONTEXT ON PRODUCT & PROCESS IMPROVEMENT

Pett, Timothy; Wichita State U.; [email protected] Wolff, James A; Witchita State U.; [email protected]

Small- and medium-sized (SME) firm performance is a multi-faceted construct that researchers (e.g., Dvir, Segev and Shenhar, 1993) argue should be examined in light of this construct complexity. This study develops a conceptual research model that proposes SME performance as two dimensions—growth and profitability. Further, we examine the effects of contextual factors (environmental uncertainty and firm size) and SME strategic action factors (internationalization and innovation) on the strategic orientation (product improvement or process improvement) in SMEs. In turn SME strategic orientation is postulated to be associated with the performance dimensions. The findings of the study suggest that internationalization and innovation have a positive impact on new product and process improvements, while environmental uncertainty, internationalization, and product improvement have positive influences on growth as a performance dimension.

Keywords: SME Performance, product and process improvements, internationalization and innovation

CREATIVE DESTRUCTION-CREATIVE ACCUMULATION?

CONDITIONS FAVORING GROWTH OF NEW AND ESTABLISHED FIRMS

Eckhardt, Jonathan Thomas; University of Wisconsin-Madison; [email protected] Shane, Scott; Case Western Reserve U.; [email protected]

In this article we compare the industry characteristics associated with high growth new private companies with those associated with high growth established public companies. Drawing on the innovation management literature, we argue that industries in which the production function is becoming more focused on technological innovation are more favorable to new small private companies; whereas industries in which the production function is becoming more focused on production and marketing/distribution are more favorable to established large public companies. Using a unique database of 205 industries over a 15 year period, we examine how changes in technology, production and marketing/distribution employment are associated with industry counts of the fastest growing new private and fastest growing large public companies. We find that increases in technology employment is positively associated with the industry counts of fast growing new private firms and negatively associated with industry counts of fast growing large public companies and that production and sales employment are negatively associated with industry counts of fast growing new private companies and positively associated with industry counts of fast growing large public companies. This study make several






important theoretical and practical implications to our understanding of entrepreneurship, strategy, and technological innovation.

Keywords: technological innovation, startup growth, entrepreneurship

CORPORATE DEALS OF NEWLY IPOED FIRMS: BUILDING CORP. CAPABILITIES FOR CONDUCTING ALLIANCES &

M&AS? Arikan, Asli Musaoglu; Georgia State U.; [email protected]

McGahan, Anita; Boston U.; [email protected]

Corporate deals have been studied extensively for large and established firms. This study assesses the amount of time required for stock prices of recently IPOed firms to reflect the expectation that firms have corporate capabilities for conducting alliances and acquisitions. Corporate capabilities – rather than business-unit capabilities -- have been difficult to study directly. The research reported here relies on a dataset on the 3,595 U.S. firms that went through an initial public offering (IPO) between 1988 and 1999 to show from the earliest years of firm formation how quickly corporate capabilities developed – and investors reacted. The principal method is a series of event studies that show how stock prices reacted to the announcements of alliances and acquisitions as the firms accumulated experience in conducting deals of each type. Examining the stock-market reaction to deals by newly public firms allows us to track changes as firms do their first deals and then accumulate deal experience. The results suggest that stock prices quickly adjust because firms build capabilities to conduct particular types of deals, or because investors expect firms to pursue deals of particular types, or both. The results also suggest that research on alliance and acquisition capabilities using event studies may come to spurious conclusions unless the analysis controls for prior adjustments in stock prices in anticipation of deals.

Keywords: IPO, Alliance, Acquisition

RESOURCE DEVELOPMENT PHASES IN NEW VENTURES

West, Page; Wake Forest U.; [email protected] Bamford, Charles E.; U. of Richmond; [email protected]

A considerable amount of research in the field of entrepreneurship has begun to draw upon resource-based theory to better understand antecedents of and factors that contribute to new venture performance. Yet there are two significant drawbacks to new venture research that draws upon resource-based theory. First, most studies examine firms at discrete stages of their development at which time a set of resources already exists. Only a handful of published studies focus on the development paths of resources in new ventures, but these studies are all based on a few number of specific cases. Second, no study has dealt with the financial and return implications of making resource investments. This is surprising since new ventures lack financial depth, and since the accumulation of financial resources is itself such a critical component of new venture success. This paper seeks to articulate a broader, more generalized view of the resource development process in new ventures. We propose five phases of resources development, and propose that there is a priority of types of resources to be focused upon within each phase. We also propose that there are upper and lower constraints for resource investment, outside of which new ventures cannot succeed.

Keywords: resources, entrepreneurship, growth






SOCIAL TIES AND HUMAN CAPITAL: RESOURCE

CONTRIBUTION BY TEAM MEMBERS TO THE NASCENT VENTURE.

Kotha, Reddi; London Business School; [email protected]

Organizational research on the influence of social relationships on economic outcomes has either taken the view of a one-to-one mapping of resource to economic outcome or has ignored the flow of multiple resources through a relationship. The normative implication of these lines of research is that based on the need for a resource an actor should search or create a particular type of relationship. There are two boundary conditions to this implication; first, when there is ex ante uncertainty on what type of resource is needed it is not possible to specify which social ties are useful. Second, organizational action needs multiple resources at the same time. For example, in nascent entrepreneurial ventures the entrepreneur does not know what resources are need, in what combinations, and when. I ask whether it is the strong or weak ties within the entrepreneurial venture that lead to the contribution of resources by a team member. The contribution of the paper is; first, shifts the level of analysis from one-to-one mapping of resources to level of multiple resources. Second, the structure intra-team ties on resource generation by team members has not been studied. Third, the paper uses a simultaneous multiple Probit model to account for the endogeneity between the residuals of the choice to contribute resources and team membership. Finally, the results show that team members who share kinship relationship with other team members contribute lower resources. Interestingly economic incentives seem to have a negative influence on the resource contribution by a team member.

Keywords: Social Relationships, Teams, Resources

INTERPRENEURSHIP: EXAMINING THE EFFECTS OF SOCIAL STRUCTURE ON THE EO—PERFORMANCE RELATIONSHIP

Moore, Curt; Texas Tech U.; [email protected] Macy, Barry A; Texas Tech U.; [email protected]

The study attempts to answer two research questions. The first question is: “In markets where product innovation has limited feasibility, does entrepreneurship still relate to firm performance?”. The second question is “If so, what effect does social structure have on the relationship between entrepreneurship and organizational performance?”. In order to answer these questions, the term “interpreneurship” is developed to refer to macro-level, relationally focused entrepreneurship and is compared to “intrapreneurship” and “alliance entrepreneurship”. Interpreneurship is conceptualized as the combining of two distinct types of resources in innovative ways. The two resources are entrepreneurial resources and relational resources. Interpreneurship seems most important for organizations who are constrained in their ability for product innovation, such as manufacturing retail, personal, and household goods (the supplier in this study). Instead such organizations have to innovate on their business processes, systems, and structures that include innovation in managing inter-organizational relationships, such as those between suppliers and their preferred customers. Following the testing of the hypothesized interaction only model, two alternative models were tested (i.e., mediating and direct effects models) using Partial Least Squares (PLS) analysis. The direct effects model lacked explanatory power based on the Q2 statistics, R2 statistics, and percentage of paths that are significant. The mediating model’s Q2 and R2 statistics indicate strong relationships between the relational social capital construct and organizational performance measures. However, the relationship between entrepreneurial orientation and relational social capital lacks predictive power. The results, therefore, appear to be strongest for the interaction only model.

Keywords: Resource Based Theory, Strategic Alliances, Corporate intrapreneurship





INVESTIGATION OF FACTORS ASSOCIATED WITH WOMEN’S SELF-EMPLOYMENT PREFERENCE IN NORDIC COUNTRIES

Arenius, Pia Maria; U. of Lausanne; [email protected] Kovalainen, Anne; Turku School of Economics and Business Administration;

[email protected]

Even though the trend in women’s self-employment and business ownership in many countries did appear to be upward in the 1980s and 1990s, women are still less likely than men to start new businesses. However, the economic growth potential in most industrialized countries is gendered, and with the lack of paid employment opportunities, more high hopes are targeted towards entrepreneurial activities, especially by women. Although there is good and substantial reason to expect that individual differences have a major impact on participation in and implementation of business start-ups, a large body of previous research has provided few systematic, reliable results in terms of these and more structural factors influential in the start-up process. This paper seeks to fill this void. We will explore women’s self-employment preferences across the Scandinavian countries, the influence and importance of specific societal and individual factors affecting self-employment preferences and the similarities and differences across the Scandinavian countries . The importance of factors influencing the participation of women in the new firm formation process is analysed utilising data drawn from samples of 1000 women in each of the Scandinavian countries, that is Sweden, Norway, Denmark and Finland. Perception of self-employment skills arises across the four countries as the most salient factor predicting self-employment preference. However, the multivariate models differ across the four countries, thus challenging the existence of the universal Scandinavian model that could explain the entrepreneurial activities of women in the Scandinavian countries.

Keywords: women, self-employment, Nordic countries

ALL IN THE FAMILY: ADVISORY NETWORKS OF NEW

VENTURES Kim, Phillip H.; U. of North Carolina, Chapel Hill; [email protected]

In this study, I examine relationship characteristics of advisors who support nascent entrepreneurs. I rely on the strength of weak ties argument for acquiring information and resources and the principle of homophily to propose that density of strong ties within a founding team will impact the structure of relationships among its advisors. Specifically, increases in increases in start-up team size, presence of spousal pairs, and ethnic diversity all decrease the expected number of advisors for the start-up team, while the number of non-spousal kin ties has a positive relationship with the expected number of advisors. Additionally, diversity among start-up team members is associated with the strength of relationships with the advisory network. With advisory relationships unlikely to change dramatically over time, an initial advisory network structure becomes an imprinted feature of new ventures. Studies of organizational emergence and survival should account for these advisory network characteristics.

Keywords: social networks, team diversity, new ventures





THE ENTREPRENEURIAL FIRM’S KNOWLEDGE ACQUISITION

FROM A UNIVERSITY LINKED BUSINESS INCUBATOR Studdard, Nareatha L.; Arkansas State U.; [email protected]

High technology entrepreneurial firms will often join university linked business incubators to assist the firm’s formation and development. Universities have recently begun to become involved with business incubators for two reasons. One, universities seek to convert scientific pursuits into commercial products. Secondly, too increase the economic development of the surrounding community. Previous business incubator research has focused primarily on the success of the business incubator manager and/or success of the business incubator organization. There has been little research examining the success entrepreneurial firms’ gain from their association with a business incubator. A critical component of a high technology entrepreneurial firm’s success in the marketplace is acquiring knowledge. Firms require the acquisition of two types of knowledge which are technological knowledge and business knowledge. The social structure of a university based business incubator includes the incubator support staff, the university environment and the community at large. The examination university linked business incubators provides a unique perspective to demonstrate the interaction between social capital and the knowledge acquisition of the high technology firm.

Keywords: sociological learning, organizational learning, incubators

SELLING ENTREPRENEURIAL FIRMS THROUGH IPOS AND

M&AS Arikan, Ilgaz T; Georgia State U.; [email protected]

Entrepreneurial firms are sold in M&A and IPO markets but the factors that determine this discrete choice is not well established. Using auctions and negotiations theories in Economics and Finance literatures and resource-based view theory in management, I decompose the decision of the entrepreneur to sell his firm. I test five factors: firm’s value, bargaining power of the parties, search costs in the industry, the number of buyers and sellers in the market and risk propensity of the entrepreneurs. Using a large panel dataset of all US manufacturing firms with consummated deals in 1980-2000, I examined each discrete and noncontinuous choice. I find that all else being equal, entrepreneurial firms with high bargaining power are more likely to choose M&As, firms that represent high private values (e.g. in high-tech industries) are more likely to be sold through IPOs, as the market thickness increases, the likelihood of entrepreneurial firms being sold through M&A decreases. However, this finding is reversed for firms with higher private values. For firms with high debt ratios, the likelihood of M&A increases compared to IPOs. I find that as venture capital activity in the focal industry increases, the likelihood of M&As increases.

Keywords: IPO, Resource Based View, Entrepreneurial Exit Decisions

REAL OPTIONS REASONING AND THE FORMATION OF

ENTREPRENEURIAL CONCEIT Janney, Jay J; U. of Dayton; [email protected]

Recent work suggests that while managers and entrepreneurs do not differ in the levels of risk they assume, they do differ in their perceptions of what constitutes a risky decision (Busenitz & Barney, 1997). Not understanding what formulates these differences in risk perceptions can lead to errant perceptions of risk-taking. These errancies can both over and under-estimate risk preferences. Given that managerial perceptions of risk can be clouded by “managerial conceit” (March and Shapira, 1987), I suggest that not





only are entrepreneurs prone to exhibiting “managerial conceit”, they are also likely to be influenced by biases regarding the availability and value of future opportunities, which I identify as “entrepreneurial conceit”. Entrepreneurial conceit can be characterized by an entrepreneur’s perceptions of: 1) the number and quality of future opportunities available to the entrepreneur, 2) an entrepreneur’s ability to learn from existing ventures and to apply it to future opportunities, and 3) an entrepreneur’s ability to attract the requisite resources for future opportunities. These biases, if not understood, can lead a entrepreneur to accept greater risk than they realize they are accepting. In this paper I define entrepreneurial conceit, the biases which lead to its emergence, as well as discuss the role the real options perspective plays in encouraging entrepreneurial conceit. I argue that while entrepreneurs are more likely to embrace real options reasoning (McGrath, 1999), misapplying it can lead to even greater risks for the entrepreneur to assume.

Keywords: Real Options, New Ventures, Risk

WHO THE ENTREPRENEURS IS VS. WHAT THE

ENTREPRENEUR DOES: COMPARING TWO DOMINANT APPROACHES

Rauch, Andreas; Giessen U.; [email protected] Lumpkin, G T; U. of Illinois at Chicago; [email protected]

Wiklund, Johan; Jönköping International Business School; [email protected] Frese, Michael; Giessen U.; [email protected]

This meta-analysis compares two different approaches to entrepreneurship: individual-level entrepreneurship and firm-level entrepreneurship. The personality approach is one of the classical approaches to entrepreneurship and assumes that successful entrepreneurs can be characterized by the personality traits of the individual entrepreneur, such as need for achievement, risk propensity, innovativeness, and locus of control. The personality approach was heavily criticized in the eighties because e.g., there is no average personality profile of successful entrepreneurs. One scholar avoids some problems of the personality approach by focusing on entrepreneurial activities of the firm: Entrepreneurial orientation (EO) refers to firm-level strategy making processes and includes e.g. innovativeness, risk-taking, and innovativeness. Our research compares the two approaches by using meta-analytical methods. Analyses of 34 independent studies on EO and 39 studies on personality traits revealed that both approaches report correlations with business success of similar size (corrected r=. 258 and .245, respectively). Moreover, we found that EO and personality traits relate differently to different types of outcome variables: While EO produced higher correlations with firm-level success (e.g., sales growth) than with individual-level success, personality traits produced higher correlations with individual-level success (e.g., goal attainment) as compared with firm-level success. These results let us conclude that EO and the personality approach are conceptually distinct approaches to entrepreneurship and that entrepreneurship theory and research should address the different interactions of the two approaches with entrepreneurial behavior more carefully.

Keywords: Entrepreneurial Orientation, Entrepreneurial Traits, Meta-analysis






ENTREPRENEUR SOCIAL COMPETENCE AND CAPITAL:

THE SOCIAL NETWORKS OF POLITICALLY SKILLED ENTREPRENEURS

Lux, Sean; Florida State U.; [email protected]

Social competence and social capital research in the field of entrepreneurship has demonstrated a positive relationship between these two concepts and entrepreneurial performance. A causal relationship between these two concepts and performance lacks theoretical development and empirical investigation. A causal model linking entrepreneur social competence to social capital and subsequent performance is developed. The model proposes that individuals high in political skill form social networks that provide access to information for opportunity identification and resources for opportunity exploitation through weak and strong ties, which create social capital. The role of social capital in obtaining entrepreneurial performance is contextual. The interaction of social capital and the operating environment determines entrepreneurs’ social capital value. Implications and future research directions are presented.

Keywords: Social Capital, Social Networks, Political Skill

KNOWLEDGE ACQUISITION AND LEAKAGE IN INTERFIRM RELATIONSHIPS INVOLVING NEW TECHNOLOGY BASED

FIRMS. Parker, Hamieda; U. of Cape Town; [email protected]

This study contributes to the understanding of the role of relational governance and formal contractual governance within new product development focused alliances and proposes relevant managerial implications. This work draws on the relational exchange perspective, transaction cost theory and the resource-based view in order to develop a conceptual framework of the role of relational and formal contractual governance on the outcomes of new product development focused alliances. Survey data collected from British new technology-based firms, operating in three industry sectors, was used to examine the propositions emerging from the framework. Regression analysis was used to test the hypotheses. Relational governance was found to have a positive relationship with the acquisition of knowledge-based resources by the new technology-based firms engaged in collaborative new product development. Increased comprehensiveness in the formal contractual governance structure was found to be associated with lower levels of harmful knowledge loss. These findings support the view that relational governance enhances a firm’s ability to acquire valuable resources through interfirm collaboration. The findings however challenge the views that formal contractual governance is redundant when relational governance structures have been developed.

Keywords: alliances, knowledge, technology





COGNITIVE ADAPTABILITY IN ENTREPRENEURIAL

ENVIRONMENTS: MOTIVATION, CONTEXT, AND METACOGNITION

Haynie, James; U. of Colorado, Boulder; [email protected] Mosakowski, Elaine; U. of Colorado, Boulder; [email protected]

Earley, Chris; London Business School; [email protected]

Entrepreneurship scholars suggest that cognition can serve as a process lens through which to “reexamine the people side of entrepreneurship” (Mitchell et al., 2002: 93) by investigating the memory, learning, problem identification, and decision-making of entrepreneurs (Baron, 1998; Busenitz & Barney, 1997). This paper adopts a cognitive interest in entrepreneurship by focusing on how individuals develop and inform “higher-order” cognitive strategies responsible for regulating cognitive functioning and promoting the cognitive adaptability underlying an ‘entrepreneurial mindset’ (McGrath and MacMillan, 2000). These cognitive strategies serve to promote the process of “thinking about thinking,” or more precisely metacognition. In this paper we present a model of situated metacognition that emphasizes higher-level cognitive strategies, situates cognition within a context, and incorporates the effect of motivations. We discuss the applicability of this model for entrepreneurship and consider its relationship to extant cognitively oriented perspectives on entrepreneurship.

Keywords: cognition, metacognition, entrepreneurship

CLAIRVOYANCE OR SOMETHING LESS SINISTER: A

MODEL OF MARKET INSIGHTS AND OPPORTUNITY RECOGNITION

Townsend, David Matthew; U. of Oklahoma; [email protected] Harkins, Jason A.; U. of Oklahoma; [email protected]

Within the broad framework of the entrepreneurial opportunity recognition literature, the debate has continued as to whether opportunities are discovered or created. While under the paradigm of neoclassical economics, entrepreneurial opportunities are held to be the temporary result of disequilibrium in external markets, a behavioral perspective on entrepreneurship emphasis the influence of creative agency by individuals on external markets. By examining the theoretical nexus of schema theory and the Neoclassical Economics’ perspective regarding market disequilibrium, this paper describes the formation of market insights as the first discovery stage in the opportunity recognition process. In addition, market insights are distinguished from entrepreneurial opportunities and are shown to be the result of a entrepreneurial cognitive processing while entrepreneurial opportunity recognition is shown to be the result of a unique entrepreneurial decision process. Overall, the goal of this paper is bridge the theoretical gap between the behavioral and economic perspectives regarding entrepreneurial opportunities and to construct a viable framework for considering the process by which entrepreneurs translate external stimuli into specific plans for action.

Keywords: Opportunity Recognition, Cognitive, Economics








PROCESS MATTERS – EMPIRICAL EVIDENCE ON THE

VALUE OF MARKETING PLANNING IN VC-BACKED STARTUPS

Gruber, Marc B.; U. of Munich; [email protected]

This study offers new insights on the much debated question, if business planning is a worthwhile activity for entrepreneurs. Based on a unique data set of VC-backed startups, we use ordered probit analyses to examine how the process of marketing planning prior to market entry affects the success of new ventures. Our results improve existing entrepreneurship theory by capturing in more detail the multi-faceted planning process in emerging firms. The findings lend concrete support to aspiring entrepreneurs, show how to improve the normative literature on business planning, and indicate ways to resolve the ongoing debate on the value of business planning.

Keywords: business planning, entrepreneurial marketing, opportunity exploitation

AN EMPIRICAL STUDY OF ENVIRONMENTAL UNCERTAINTY,

INTERNAL VARIETY, AND FIRM PERFORMANCE IN SMES Tang, Zhi; U. of Alabama, Tuscaloosa; [email protected]

Extant organizational theory predicts that the impact of environmental uncertainty on firm performance can be reduced or absorbed by adjustments of an organization’s internal structure. This paper investigates the structural relationships between the environmental uncertainty, the variety of internal arrangements within the organization and firm performance. The survey in small- to medium-size firms finds that the impacts of the environmental complexity have been reduced by a less hierarchical organizational structure. The impacts of environmental munificence are absorbed by a variety of organizational goals and less complicated organizational relations. The impacts of environmental dynamism are not influenced by any of the present organizational arrangements.

Keywords: uncertainty, internal, variety

EXAMINING THE SOCIAL ENTREPRENEURSHIP

PHENOMENON: A PROCESS MODEL OF SOCIAL VENTURE CHOICE

Sharfman, Mark P; U. of Oklahoma, Norman; [email protected] Busenitz, Lowell; U. of Oklahoma; [email protected]

Townsend, David Matthew; U. of Oklahoma; [email protected] Harkins, Jason A.; U. of Oklahoma; [email protected]

In this paper we address the rapidly growing phenomena of for-profit social entrepreneurship. While much has been written about social entrepreneurship in the non-profit context, little theoretical or empirical work has been done in the for profit arena. We propose that the phenomenon of for-profit social entrepreneurship begins with a cognitive process – one in which the social entrepreneur comes to the decision to start such a venture. It is important to note that this cognitive process does not spontaneously germinate; rather the cognitive process is stimulated by elements in the institutional or business context. We develop a model based on entrepreneurial cognition that combines passion, institutional and









cognition theories into a process model of the choice to commence a social entrepreneurial venture. We conclude the paper with a discussion of the model and present an agenda for future research.

Keywords: Cognitive theory (1), Entrepreneurial intentions (13), Social Entrepreneurship

DETERMINANTS OF ENTREPRENEURIAL ACTION: AN

EMPIRICAL TEST OF A COMPOSITE INTENTIONS-BASED MODEL

Meeks, Michael D; San Francisco State University; [email protected] Meyer, G. Dale; University of Colorado, Boulder; [email protected]

This study investigates the determinants of entrepreneurial action – those activities intended specifically to start a new independent business venture. A recently proposed model of entrepreneurial action is empirically tested using comprehensive profiles of 221 randomly selected nascent entrepreneurs and 90 control group respondents from a four-year U.S. entrepreneurship panel study. The model explains 46% of the variance in entrepreneurial action.

Keywords: entrepreneurial action, entrepreneurial intentions, motivation

BOARDS ATTENDING TO OPPORTUNITY IN ESTABLISHED

ENTERPRISES:AN ATTENTION-BASED MODEL Tuggle, Chris; Texas A&M U.; [email protected]

Hellriegel, Don; Texas A&M U.; [email protected]

Through an attention-based model, this paper advances research on boards of directors by examining how different contexts shape board composition, board attention and ultimately firm actions. This study theorizes that firms operating in industrial environments characterized by high-degrees of uncertainty reflect this through boards of directors composed from a broader array of contextual backgrounds. It is further proposed that directors are strategically positioned at an integral boundary of the firm to identify opportunities, gain greater allocation of board attention toward an initial evaluation of opportunities and garner firm resources to further explore opportunities.

Keywords: opportunity, attention based model, boards

LATENT CLASS ANALYSIS OF ENTREPRENEURIAL

VENTURES BASED ON ECONOMIC GROWTH THEORY Waterson, Charles K.; U. of Nebraska - Lincoln; [email protected]

Sebora, Terrence C.; U. of Nebraska, Lincoln; [email protected]

A goal of economic policy is growth. Research, education and resources are directed by various agencies in pursuit of that goal at the national, regional and community level. In these efforts, entrepreneurship is frequently cited as a significant contributing factor to economic growth and development. But not all new ventures contribute to economic growth. In this paper, we synthesize economic growth theory with the intent of identifying characteristics of a new venture that would be most likely to influence its relative impact on economic growth. Specifically, we propose that high-impact firms differ from low-impact firms with respect to: (a) growth intent, (b) “distance” of goods and services from consumption, (c) financing,








and (d) technological innovation. These hypotheses are empirically tested using data from the Panel Study on Entrepreneurial Dynamics. Due to limitations related to power, we find limited support for the conceptual model, but provide additional insight into the study of new venture growth trajectories. Our results lead us to believe that new firms that are innovative not imitative, with higher-order not consumption products, whose founders are growth-intended and willing to use external financing do, in fact, grow faster than firms that do not have these characteristics. Empirical studies to confirm and perhaps augment our proposed list of characteristics of the high-impact entrepreneurial venture are called for. In addition, further investigation into how economic conditions, institutions, culture and policies either inhibit or stimulate these characteristics would seem warranted.

Keywords: growth, start-ups, entrepreneurship

DO BOARDS OF DIRECTORS VALUE ENTREPRENEURIAL

PERFORMANCE? AN EMPIRICAL STUDY Lekse, William John; Babson College; [email protected]

Zhao, Mengxin; Bentley College; [email protected]

This study examines the influence that CEO’s stock of skills and knowledge have on the board of director’s negotiation process to determine management control. Based on a sample of 298 firms involved in mergers of equals, the study examines the board of director’s choice of CEO from their performance and strategic metrics to gain merger control power. In particular, the study examines the power difference between that of CEOs who are either internal operation or entrepreneurial focused from the two merged firms. The results indicate statistical significance in all internally operating performance measurements in the negotiation process, the board of director chose the management with better prior to merger internal operating performance. Entrepreneurial posture had a statistically significant influence in just two out of 10 measurements. The evidence documented in this paper strengthens the view that mergers take place as a mechanism which transfers the assets from less efficient management to the more efficient management. The value of skills and knowledge with which corporate entrepreneurs are identified is valued less in a merger of equals than are the skills and knowledge of managers whose focus is on internal operating performance measurements.

Keywords: Entrepreneurial, CEO, Control

ENTREPRENEURIAL CONFIGURATIONS: WHAT’S DRIVING

THE OUTSOURCING - PERFORMANCE LINKAGE? Salimath, Manjula S.; Washington State U.; [email protected]

Cullen, John B; Washington State University; [email protected] Umesh, Uchila; Washington State University; [email protected]

Addressing the fundamental issue of heterogeneous firm performance, we hypothesize that the outsourcing-performance linkage is driven by patterned relationships existing within entrepreneurial firms. Adopting a multifaceted view of the entrepreneurial firm, we take a gestalt of variables that is informed by life cycle theory and prior research identifying unique features of entrepreneurial firms to arrive at representative clusters of entrepreneurial configurations. The resulting taxonomy of this inductive endeavor is then refined by subsequent stages where we look at the functional activity of outsourcing in these derived configurations. Finally we explore this two-stage gestalt’s probability of predicting entrepreneurial performance at the firm level in a sample of high growth innovative firms. Results significantly prove that these entrepreneurial configurations drive the outsourcing-performance linkage (p<0.001). Four of the five models are highly significant with R values ranging from .287 to.634 and







adjusted R values ranging from .133 to .554. Implications for efficient asset utilization and strategic decisions include approaching outsourcing tactic repertoires as a flexible, contextual, and cyclically oscillating option for the entrepreneurial firm.

Keywords: Configurations, Outsourcing, Life-cycle

THE ROLE OF INNOVATIVE SEARCH IN INITIAL PUBLIC

OFFERINGS OF U.S. SEMICONDUCTOR VENTURES Wu, Geraldine; Columbia U.; [email protected]

This paper investigates the role of firms’ innovative capabilities in determining their ability to go public by examining both the structure of innovative capabilities (stocks of knowledge assets) and processes (search activities) that produced these structures. Firms build stocks of knowledge assets by following consistent sets of innovation search practices (exploitative or explorative). I propose that the rate at which firms undertake IPOs is associated with: 1) strength of technological knowledge base, 2) breadth of innovative activity, 3) building on internally developed knowledge, 4) building on technologically distant knowledge, and 5) building on recently developed knowledge. The first two constructs represent stocks or structures, while the remaining three denote innovative search processes. Both sets of factors – structure and process – contribute to a firm’s growth potential and hence to its ability to undertake an IPO. I test my hypotheses using quantitative longitudinal data on firms, IPOs, and patents in the U.S. semiconductor industry, with event-history methods. With the exception of building on internally developed (rather than externally developed) knowledge, the hypotheses are generally supported by the analysis. Results are especially supportive with respect to the technological distance and temporal dimensions of innovative search.

Keywords: going public, knowledge, technological innovation

MATCHING NEW VENTURE STRATEGY TO INDUSTRY

CHARACTERISTICS Franklin, Victor; Texas A & M; [email protected]

Dynamism and growth are separate constructs that can vary independently from one another. The level of dynamism and growth shape the behavioral expectations that customers and suppliers have for the firms in the industry. New ventures that vary from the behavioral norms and expectations will face a higher level of legitimacy barriers as compared with their conformist counterparts. Some industries, as defined by the dynamism and growth, are more munificent to a new venture following a strategy of innovation than others. Therefore, the penalty for non-conformity is higher in some industries than others. Higher legitimacy barriers will increase the required level of human, social, and financial resources the new venture needs to survive.

Keywords: industry, dynamism, growth




CULTURAL IMPACT ON RISK-TAKING BEHAVIOR OF

ENTREPRENEURS Grichnik, Dietmar; Heinrich Heine U.; [email protected]

The paper presents a model of entrepreneurial risk-taking behavior in different cultural settings. Young entrepreneurs and entrepreneurship students in Germany and the United States were tested by means of an experimental design to evaluate the model and to identify cultural differences in the decision to start a company. The central research question states: How does the cultural context influence the decision-making and risk-taking behavior of entrepreneurs? The overall result of the international sample, which consists of entrepreneurial settings on two different continents, indicates that the significant differences between entrepreneurs and non-entrepreneurs in risk-taking behavior are culturally driven. Thus, this study confirms earlier U.S. studies to distinguish between risk propensity and risk perception in respect of entrepreneurs' risk behavior with an international, intercultural sample. The cultural context is identified as a key factor for the differences in entrepreneurial risk behavior. Furthermore, it is possible for “would-be entrepreneurs” to use the conducted experiment as an individual diagnostic instrument, making it possible to, on the one hand, identify individual anomalies in risk and decision-making behaviors and, consequently, contribute to a better understanding of suitable entrepreneurial behavior as well as to reveal discrepancies between self-assessment and actual behavior. On the other hand, this experiment offers a set of instruments, techniques and a framework for an improved understanding of potentially attractive, but risky, start-up opportunities. In ideal circumstances, a perfect fit between the personal start-up dispositions and the characteristic of the market opportunity as an entrepreneurial action field would be aspired to.

Keywords: International Entrepreneurship, Decision making, Heuristics and biases

DAVID VS GOLIATH ROUND 2: ENTRY AND THE PERSISTENCE OF INCUMBENT PROFITABILITY

Dean, Thomas J; U. of Colorado, Boulder; [email protected] Plummer, Larry; U. of Colorado, Boulder; [email protected]

A prevailing assumption within the economics and management literatures is that entry disciplines markets and thereby erodes the profitability of incumbent firms. Furthermore, much of the research on entry implies that, relative to new firm entrants, diversifying firm entrants present a stronger competitive challenge to incumbent firm performance. Yet this contention has never been directly tested across a broad sample of industries. It is also contrary to Schumpeterian and other theoretical perspectives which suggest that new firms might actually have the stronger competitive disciplining effect on markets. Using a large sample of manufacturing industries over a 20 year period, we test the hypotheses that 1) total entry erodes the performance of incumbent firms and 2) that new firm entry more powerfully diminishes the profitability of incumbents. While we find no support for the impact of total entry on the persistence of profitability, we find significant relationships between the two types of entry and persistence. Whereas new firm entry is significantly negatively related to the persistence of returns, diversifying entry appears to be positively related thereto. Our results challenge the notion that the strongest competitive disciplining effect of entry would come from firms diversifying from other industries, and cause us to reaffirm our commitment to understanding the role of new, entrepreneurial firms in both presenting us with competitive challenges and enhancing the efficiency of markets through the competitive disciplining of incumbents.

Keywords: entry, persistence, entrepreneurship





EXPLORING AN ENTREPRENEURIAL TYPOLOGY: ATTRIBUTIONAL STYLES AND ENTREPRENEURIAL

ALERTNESS Tang, Jintong; The University of Alabama; [email protected]

Tang, Zhi; U. of Alabama, Tuscaloosa; [email protected] Lohrke, Franz T; U. of Alabama; [email protected]

This study develops an entrepreneurial typology employing two dimensions: internal versus external attributional styles and high versus low entrepreneurial alertness. As a result, four types of entrepreneurs emerge: the true believer, the practical, the clueless, and the reluctant. Using a representative sample of 315 nascent entrepreneurs, we found that four types of entrepreneurs differ in their degrees of need for achievement, risk-taking propensity, and commitment, in the new venture creation process. We conclude by discussing the importance of these findings and suggesting avenues for future research.

Keywords: attributions, alertness, opportunity

BEYOND THE DEVELOPMENTAL MODEL FOR FAMILY

BUSINESS: AN EMPIRICAL EXAMINATION Rutherford, Matthew W.; Gonzaga U.; [email protected]

Muse, Lori A.; Western Michigan U.; [email protected] Oswald, Sharon; Auburn U.; [email protected]

This research extends the work of Gersick, Davis, Hampton, and Lansberg (1997) by empirically testing the Developmental Model for Family Business (DMFB). Specifically we examine ownership, business and family development variables as defined by the DMFB to determine if, as asserted, specific characteristics are associated with the developmental stages of the DMFB. Utilizing a sample of over 900 firms, our findings indicate that that the model is only moderately useful, as little variance in business development was explained by the ownership and family development variables. Our analyses led us to construct a post hoc analysis which included owner, firm, and family characteristics. By combining the DMFB with the new variables, a much larger percentage of the variance is explained.

Keywords: family business, model devlopment, regression

THE GOVERNANCE OF CORPORATE ENTREPRENEURS: THE

APPLICABILITY OF AGENCY THEORY Kelley, Donna; Babson College; [email protected] Neck, Heidi M.; Babson College; [email protected]

Peters, Lois S.; Lally School of Management, Rensselaer Polytechnic Institute; [email protected]

O'Connor, Gina; Lally School of Management, Rensselaer Polytechnic Institute; [email protected]

Our research considers the applicability of agency theory to the governance of corporate entrepreneurship through radical innovation. We additionally explore relaxing agency theory’s assumptions and the relevance of stewardship theory to this context. A multicase analysis of radical innovation governance systems in twelve industry-leading corporations reveals particular considerations












in selecting, incentivizing, and monitoring agents. While these elements are consistent with the basic foundations of agency theory, we find differences in the underlying assumptions. We conclude that integrating alternate perspectives can increase agency theory’s applicability to complex contexts such as radical innovation. However, our analysis reveals the importance of recognizing and maintaining the agent’s personal motivation for engaging in this activity in order to enable them to act in accordance with the organization’s goals.

Keywords: agency, innovation, corporate entrepreneurship

WHEN TWO WORDS COLLIDE: THE ROLE OF CORPORATE

ENVY IN CORPORATE VENTURING ACTIVITIES Biniari, Marina; Strathclyde U.; [email protected]

This paper draws attention to corporate envy as an internal obstacle in promoting entrepreneurial behaviour, such as corporate venturing within a large corporation. Equity theory and organisational justice literature are employed to investigate the importance of emotions such as envy in regard to internal organisational changes. Preliminary qualitative data from three large corporations are presented and propositions are developed. Differentiations in the remuneration system and the financial autonomy that a corporation employs in favour to the Corporate venturing unit triggers emotions of envy towards the managers of the Corporate Venturing unit. The enviers become irritated and sceptical towards the role and responsibilities of the Corporate Venturing unit and this in turn castes doubt on their willingness to cooperate with it. That leads to the creation of tension and conflict of interest between the Corporate Venturing unit and the other units, as well as among their managers, which generates costs for the corporation and a further scepticism regarding venturing and entrepreneurial behaviour.

Keywords: Corporate Envy, Coprorate Venturing, Qualitative Methods

THE IMPACT OF AGENCY COSTS, REPUTATION AND

EXPERIENCE ON THE DECISION TO SYNDICATE. Meuleman, Miguel LCJ; Ghent U.; [email protected]

Manigart, Sophie; Ghent U.; [email protected] Lockett, Andy; U. of Nottingham; [email protected]

This study addresses the question as to what extent private equity syndicate arrangements may impose agency costs by identifying conditions where syndication is less likely to occur and how agency costs of syndication can be offset by the reputation and experience of the lead investor. Our hypotheses are tested on a sample of 805 buyout investments by 64 private equity companies in the UK between 1993 and 2001. The results of this paper show that syndication is less likely to occur when ex-post monitoring is more important. The reputation and experience of the lead investor help to alleviate the costs associated with syndication. The results further highlight potential problems of adverse selection in the market for syndication. The findings of this study also add to the existing literature on motives for syndication.

Keywords: Venture Capital, Syndication, Agency Theory






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