The influence of multiple constraints along the venture creation process and on start-up intention in nascent entrepreneurship

This study examines the influence of multiple constraints encountered by nascent entrepreneurs (NEs) in their current phase of the venture creation process – disengaged, still trying or started – and on their start-up intention after disengagement. Drawing on a sample of 1872 German NEs collated in 2014, we extend the literature in the field of nascent entrepreneurship and encountered constraints. By applying the theories of planned behaviour and appraisal as an overarching theoretical foundation, we develop our hypotheses. We find that individuals who have recently abandoned their venture have faced significantly more constraints than other NEs. A deeper analysis reveals that financing difficulties and especially certain personal characteristics impede venture creation. Furthermore, our results show that constraints beyond an NE’s own control are lethal for the continuance of the intention to create a new business. We derive important implications for NEs, entrepreneurship education and policymakers.     

Jumping in at the deep end! The role of motivational forces in starting a new venture

Entrepreneurial motivation is a decisive factor for new venture creation, yet sometimes high motivation does not translate into corresponding behaviour. Comparing the intention-action gap of nascent entrepreneurs, we find that variances in motivation do not sufficiently explain the decision to not pursue a start-up idea. We propose and show that through applying an enhanced version of expectancy theory (ET), it is possible to identify additional personality factors of nascent entrepreneurs which add explanatory power to answer the question, why, out of a seemingly similarly motivated group, some will found a company and others will not. Through framing our study as an attempt to add to the intention-action gap literature by demonstrating the general applicability of ET, yet the need for further contextualisation of the theory, we contribute to previous studies and advance our knowledge in this important field. Our study provides a conceptual model, tests it using data from the Panel Study of Entrepreneurial Dynamics (PSED II) and, finally, offers suggestions regarding future research as well as practical implications.

     

VENTURE CAPITALIST RELATIONSHIPS IN THE DEAL STRUCTURING AND POST-INVESTMENT STAGES OF NEW FIRM CREATION

Entrepreneurs often turn to outsiders for financial assistance. Venture capitalists represent an outside source of finance that generally takes an active interest in managing the firm. Two common practices within the venture capital industry are co-investing and staged financing. Responding to the call for more process research which examines the deal structuring and post-investment stages of venture capital involvement, this research utilized a case study approach to explore salient features and themes that emerged in a relationship involving entrepreneurs and multiple co-investors in a new firm start-up. Central findings of the study included: penetrating the venture capital network is a significant first step in securing financial resources and, intriguingly, relationships supersede business plans in securing these resources; paradoxically, venture capitalists establish milestones and tight time-lines yet inadvertently contribute to many of the delays experienced by a start-up firm; the operating logic of venture capital networks, constrained by the hierarchical structures of their constituents, may be incompatible with the needs of a start-up firm; activities within the deal structuring and post-investment stages are more dynamic and iterative than current models suggest; and, staged financing, when combined with multiple venture partners, requires a clear understanding of each party's collaborative role in the enterprise.     

Switch or persevere? The effects of experience and metacognition on persistence decisions

This paper extends the scholarly understanding of entrepreneurial persistence decisions by identifying individual-level constructs that moderate which decision criteria have the most influence on entrepreneurs’ persistence decisions. Prior research demonstrates that contextual factors, such as feedback through adversity and the attractiveness of opportunities in an entrepreneur’s environment, determine whether or not an entrepreneur will persist with their current venture. We contribute to this literature by theoretically proposing and empirically testing how individual differences in entrepreneurial experience, metacognitive experience, and metacognitive knowledge moderate which aspects of environmental information entrepreneurs pay the most attention to when deciding whether or not to persist. We test our proposed model using a conjoint experiment that allows for monitoring actual persistence decisions of 124 entrepreneurs. Results suggest that metacognitive knowledge influences persistence decisions primarily through altering the impact that probability of expected outcomes associated with potential alternatives has on entrepreneurs’ persistence decisions. Furthermore, the results provide evidence that more experienced entrepreneurs weigh financial returns and switching costs more heavily when making persistence decisions.     

Startup team contributions and new firm creation: the role of founding team experience

The likelihood of nascent entrepreneurs making the transition from a new venture idea to a profitable business is argued to be contingent on the breadth of the resources available within the startup team. Team industry and startup experience are deemed to influence the entrepreneurs’ ability to profitably establish the venture in the market via the mobilization of team resources. Using a sample of nascent entrepreneurs in the USA, we show that team resource heterogeneity has a positive impact on profitable firm creation. Moreover, this positive effect is greater as the team has more experience in the industry in which the new business will compete.     

Entrepreneurial Hustle: Navigating Uncertainty and Enrolling Venture Stakeholders through Urgent and Unorthodox Action

Entrepreneurs need to act under conditions of uncertainty and resource constraints to bring new, often-unrecognizable products to market and convince an unknown set of stakeholders to support their endeavours. The type of action entrepreneurs take to navigate uncertain entrepreneurial contexts is underspecified. We analysed 48 interviews with entrepreneurs to inductively identify an action-oriented construct we labelled as entrepreneurial hustle – an entrepreneur’s urgent, unorthodox actions that are intended to be useful in addressing immediate challenges and opportunities under conditions of uncertainty. In a follow-up study, we use an experimental vignette approach to assess the impact of an entrepreneur’s hustle on venture stakeholders. Findings suggest that entrepreneurial hustle positively influences stakeholder perceptions of the entrepreneur’s leadership effectiveness and a venture’s legitimacy, mediated by perceptions of the entrepreneur’s ability-based trustworthiness. We conclude that entrepreneurial hustle is a fundamental behaviour that enables entrepreneurs to enrol new venture stakeholders and lead their entrepreneurial efforts.     

Nascent Entrepreneurs and Venture Emergence: Opportunity Confidence,Human Capital,and Early Planning

Nascent entrepreneurs continuously evaluate the merits of the opportunities they pursue and so can abandon those that lack promise and persist with those that remain attractive. This paper articulates this evolving judgment about the opportunity as the nascent entrepreneur's opportunity confidence. It situates this construct in the context of the nascent entrepreneur's human capital and early planning actions in respect to the pursued opportunity, and in respect to the emergence of the nascent venture. Analyses of PSED data show that opportunity confidence positively affects venture emergence and that, through it, entrepreneurial experience and early planning have only indirect effects on venture emergence. In contrast, industry experience has a direct, positive effect on venture emergence. These results provide some novel insights into the nascent entrepreneurial process as well as into the role of human capital and early planning in that process.     

Entrepreneurial financing in new business ventures: a help-seeking behavior perspective

How and from whom prospective entrepreneurs seek their start-up capital for new venture formation represent fundamental questions in entrepreneurial financing. Drawing on research of help-seeking behavior, we propose that apart from economic rationale entrepreneurs’ decisions to seek financing may be influenced by socio-psychological factors. Using a scenario experiment (venture risk x relational proximity) to investigate how prospective entrepreneurs considered funding from family and outsiders, it was found that they tended to seek family financing when the family was close and the risk was high, and inclined to seek outsider funding when the venture risk was high and the family was not close. The findings might seem paradoxical but they actually underscore the influence of socio-psychological factors in entrepreneurial financing decisions and offer novel contributions to the entrepreneurship, informal investment, and education literatures.     

Entrepreneur political skill and new venture performance: Extending the social competence perspective

Research on the social competence perspective holds that since operating high performing new ventures is dependent on entrepreneurs’ ability to influence stakeholder actions, entrepreneur social competence is likely critically important to new venture performance. Using a sample of 163 entrepreneurs throughout the USA, we extend such research by examining the entrepreneur political skill new venture performance relationship. Our results suggest that political skill, which is the component of social competence which specifically assesses an individual's ability to influence other's actions within the business environment, is positively associated with new venture performance. Study results provide additional support for the social competence perspective.     

The influence of entrepreneurs’ social referents on start-up size

This paper uses social comparison theory to explore the effect that the average size of established businesses at the regional (provincial) level may have on start-up size. It is argued that established entrepreneurs at the regional level become referents of new entrepreneurs, influencing not only the decision to become entrepreneurs but also the characteristics of the new venture, such as its initial size. Specifically, the greater the average size of established businesses at the provincial level, the bigger the start-up size of new ventures. This paper further considers how this effect is moderated by two key individual level variables: knowing an entrepreneur personally (i.e., close social referent), and being the owner and manager of an existing business (i.e., past entrepreneurial and managerial experience). Predictions are tested using data that combine individual- and provincial-level information in Spain over the period 2008–2014. The results show the positive relationship of the average size of established businesses on new venture start-up size, and that this effect decreases when the entrepreneurs have previous entrepreneurial experience.     

Effective entrepreneurial narrative design in reward crowdfunding campaigns for social ventures

One of the most important challenges for social venture entrepreneurs is acquiring resources. Reward crowdfunding is considered a suitable tool for meeting the financing needs of social ventures, whose backers are particularly interested in firm ideas and core values rather than in collaterals or business plans. A strategic factor that is able to influence the outcome of crowdfunding campaigns is the entrepreneurial narrative. Very few scholars have examined the key factors that support a crowdfunding campaign, particularly those on reward-based crowdfunding platforms, and the effects of entrepreneurial narratives on investors’ decisions. Aiming to fill this research gap, this paper investigates how entrepreneurs in the technology industry describe their social ventures and projects on Eppela, an Italian reward-based crowdfunding platform. Thematic analysis was applied to detect the five following key factors of effective entrepreneurial narratives in reward-based crowdfunding campaigns for social ventures: 1) problem/need; 2) project; 3) product; 4) team; and 5) venture. Each key factor includes specific subfactors. Lexical data analysis was then performed to identify the following expected effects of the examined entrepreneurial narratives on potential investors, leading these investors to understand, trust, and approve the project proposal, and thus, finance the social venture’s project: 1) reassurance, 2) reliability, and 3) credibility. Based on these results, this study proposes an explanatory model about how to design effective entrepreneurial narratives to be presented to contribute as much as possible to the success of projects in crowdfunding platforms.

     

Aspiring,nascent and fledgling entrepreneurs: an investigation of the business start-up process

This study focuses on three different milestones in the business gestation process, i.e. becoming an aspiring entrepreneur, a nascent entrepreneur, and a founder of a fledgling new business. Moreover, this study uses a combination of both individual and regional (or environmental) factors in predicting individuals’ success or failure to reach each of these three milestones. Hypotheses are developed to test the effect that human and environmental resources have on the odds of reaching the different milestones in the business start-up process. The study is based on interviews of a representative sample of 9533 Norwegians aged 18 years or older. From this group, 197 respondents qualified as nascent entrepreneurs. These were subsequently interviewed in follow-up interviews conducted in 1996, 1997 and 1999. In addition, regional data at the municipality level is included to measure the available pool of environmental resources. The results indicate that entrepreneurial experience is the single most important factor for predicting the outcome of the business start-up process. Even though environmental resources play a role, human resources are generally found to be better predictors of the outcome of the business start-up process. Several important implications for policy-makers are presented.     

Understanding relational qualities of entrepreneurial learning: Towards a multi-layered approach

The aim of this paper is to present a multi-layered relational framework of entrepreneurial learning by embedding the conceptual tools of a continental thinker, Pierre Bourdieu, in a social constructionist paradigmatic approach. Through a longitudinal study based on participant observation and in-depth qualitative interviews, entrepreneurial learning processes of five nascent entrepreneurs who have formed a venture team have been examined as a case study. Relational qualities of entrepreneurial learning can be illuminated by exploring dispositions and different forms of capital that nascent entrepreneurs hold at the micro-individual level, which are inextricably linked to the meso-relational level of developing an entrepreneurial habitus as they navigate through the process of business venturing. Such a multi-layered conceptualisation of entrepreneurial learning transcends individual-, team-, firm- and network-level analyses of the subject by generating insights from both micro- and meso-layers.     

Alacrity: a new model for venture acceleration

As research on venture accelerators develops, different models have emerged in the literature. These focus on the goals of the accelerator, which range from creating profit for managers and building support for business platforms to promoting regional economic development, as well as on its organizational form based on its for-profit or non-profit status. This article examines a novel model, the networked venture builder model, which offers an alternative perspective on the acceleration process. Using the example of the Alacrity Global Ecosystem (AGE), this article explores how the venture builder model includes characteristics of multiple accelerator types, which has helped it both rapidly grow new ventures and achieve substantial economic development goals. Synergies between the different aspects of the AGE’s organizational design help it support multiple missions. Drawing on interviews with key stakeholders and entrepreneurs within the AGE, this article describes the history of the AGE and its present form, providing new insights into a novel, but increasingly common, accelerator design and laying the basis for further research on its emerging organizational form.

     

工作嵌入对知识型员工离职创业过程的影响研究

知识型员工离职创业已成为高新技术产业发展的新特点,其工作经历在离职创业过程中发挥重要作用。工作嵌入描述个体与工作或工作外的环境产生各种联系,并影响个体的行为和决策过程。以工作嵌入为研究视角,深入揭示工作经历、社会资本的"嵌入性"对知识型员工离职创业过程的影响机理。创业者通过工作经历"嵌入"能够积聚知识和资源,同时要注意工作嵌入给创业过程带来的局限。     

Networks vs. market methods in high-tech venture fundraising: the impact of institutional environment

This study examines how institutional environmental factors, including cultural norm, state regulatory system and venture capital market, influence the high-tech entrepreneur's choice for using network vs. market methods when approaching prospective investors at the early stage of their new venture creation. We collected comparative data through on-site interviews and questionnaire survey with 128 high-tech entrepreneurs in Singapore (a newly industrialised economy) and 250 in Beijing, China (an emerging economy). Our findings suggest that a culture emphasising the value of social obligation, the under-development of the legal/regulatory system and the immaturity of the venture capital market increased the proclivity of entrepreneurs to use network methods. Moreover, entrepreneurs who value networks higher in social obligation than in information transfer are more likely to choose personal ties instead of business ties. This study enhances our understanding of how high-tech entrepreneurs in emerging economies choose between networks and market methods in venture fundraising, and offers suggestions on how public policy makers in these economies can improve the institutional environment of their regions to promote high-tech new venture creation.     

Sense and sensibility: The role of business incubator client advisors in assisting high-technology entrepreneurs to make sense of investment readiness status

For high-technology entrepreneurs, attaining an appropriate level of investment to support new ventures is challenging as substantial investment is usually required prior to revenue generation. Consequently, entrepreneurs must present their firms as investment ready in the context of an uncertain market response and an absence of any trading history. Gaining tenancy within a business incubator can be advantageous to this process given that placement enhances entrepreneurial contact with potential investors whilst professional client advisors (CAs) use their expertise to assist in the development of a credible business plan. However, for the investment proposal to be successful, it must make sense to fund managers despite their lack of technological expertise and product knowledge. Thus, this article explores how incubator CAs and entrepreneurs act in concert to mould innovative ideas into plausible business plans that make sense to venture fund investors. To illustrate this process, we draw upon empirical evidence which suggests that CAs act as sense makers between venture fund managers (VFMs) and high-technology entrepreneurs, yet their role and influence appears undervalued. These findings have implications for entrepreneurial access to much needed funding and also for the identification of investment opportunities for VFMs.     

Intermediated mode of internationalization: new software ventures in Ireland and India

This paper longitudinally examines the relationship between the career reasons of nascent entrepreneurs, their growth preferences and subsequent growth achieved. The longitudinal design allows for examination and control of both survivorship and recall bias upon career reason and growth linkages. Substantial recall bias was observed in the career reasons of entrepreneurs, with the reported importance of self-realization and financial success, as explanations for entering venturing activity, being significantly lower when responses were obtained once the venture was operational. Consistent with economic motives, the importance that the entrepreneur places on financial success was a key determinant to explain cross-sectional differences in growth preferences of the entrepreneur, the intended size of the venture, and achieved growth. Further, the importance of financial success was robust to the use of both prospective and retrospective career reasons. While independence was the most important factor to explain the career choices of nascent entrepreneurs, independence was also found to be negatively associated with intended and achieved employment growth. Overall, the findings demonstrate that nascent entrepreneur career reasons for self-employment are not homogeneous, vary by growth intentions and preferences, and are associated with subsequent venture growth achieved.     

Developing dynamic capabilities through resource accretion: expanding the entrepreneurial solution space

We report our findings from the analysis of crisis episodes that resulted in the development of new capabilities in eight small firms. When dealing with resource constraints in periods of crisis, entrepreneurs engaged in a number of actions to develop their firms' capabilities. By accreting resources such as knowledge, skills and other assets, entrepreneurs were able to expand their repertoire of potential solutions and change the firm's learning trajectory. Our contribution is to describe the process of resource accretion (the gradual accumulation and integration of resources) through grafting and bonding of capabilities into the firm's ambit, which is dependent on the proximities, salience and relationships of resources. We observe three patterns within the accretion pathways of the eight firms in the study, namely the combination of coping mechanisms, the extension of networks, and the reprisal of previously successful solutions. These activities support resource accretion and the subsequent expanded solution space where entrepreneurs begin the process of embedding new capabilities. Such coping routines are necessary antecedents for the development of nascent dynamic capabilities in small firms.