Disruption in the automotive industry: A Cambrian moment

The automotive industry is experiencing a moment of innovation. With electronics gaining importance, the need to find sustainable solutions and the rampant availability of sharing platforms, the dynamics of this sector is witnessing a paradigm shift. A host of startups is colonizing every niche of what seems to be the new architecture: shared and self-driven electric vehicles. Old incumbents and emerging startups are interacting to control key technologies and the user interfaces of the future. The mechanical machine is being converted into a computer. The connected car is creating a new ecosystem for entrepreneurial opportunities. This study analyzes a set of 156 venture-backed startups: the nature of the firms, their founders’ profiles, their origins, their technological capabilities, and their investors. Our findings and conclusions are: (1) a phase of instability and vibrancy is beginning wherein multiple emerging firms compete to impose their standards, (2) the competitive battle is conducted in the digital arena, (3) disruption is led by outsiders with entrepreneurial experience and deep knowledge of digital technologies, and (4) a final winning dominant design may emerge. Entrepreneurial outsiders and outsiders coming from consumer electronics, electrical companies, and/or digital platforms have a window of opportunity to enter this new market.     

Strategic Entrepreneurs at Work: The Nature,Discovery, and Exploitation of Entrepreneurial Opportunities

What do entrepreneurial opportunities look like? How do firms discover and exploit these opportunities to create value and sustain competitive advantage? This paper reviews the strategic management and entrepreneurship literatures to identify the nature and character of entrepreneurial opportunities and the entrepreneurial strategies that firms employ to seize and commercialize these opportunities. Three emerging schools are identified. The economic school argues that entrepreneurial opportunities exist as a result of the distribution of information about material resources in society. The cultural cognitive school argues that entrepreneurial opportunities exist as a result of environmental ambiguity and the cultural resources available to interpret and define these opportunities. Finally, the sociopolitical school stresses the role of network and political structures in defining entrepreneurial opportunities. We integrate these perspectives to offer a way to improve understanding of the opportunity creation and exploitation process.     

Technological Regimes and Firm Survival: Evidence Across Sectors and Over Time

In addition to the usual variables representing firm- and industry-specific features that impact the firm’s survival, this paper uses three R&D related variables to reflect two Schumpeterian technological regimes: creative destruction (the entrepreneurial regime) and creative accumulation (the routinized regime). After controlling for age, size, entry barriers, capital intensity, the profit margin, the concentration ratio, the profit-cost ratio and entry rates, the empirical results confirm the theoretical relationship between technological regimes and the survival rate of new firms: new firms are more likely to survive under the entrepreneurial regime. Moreover, this effect is larger within the younger cohorts of firms than within the older ones.      

The rapid internationalization of high technology firms created through the commercialization of academic research

This article uses the international entrepreneurship framework developed by Jones, M. V., & Coviello, N. E. (2005). Internationalization: Conceptualizing an entrepreneurial process of behavior in time. Journal of International Business Studies, 36(3): 284–303, to explore the internationalization of high technology firms created through the commercialization of academic research. In particular, the effect of networks and entrepreneurial orientation is explored. Theoretical sampling resulted in four cases being studied. The data suggests that the “fundamental” networks of the academics involved in the firms assisted in the identification and exploitation of initial opportunities to internationalize. The research also suggests that only certain dimensions of entrepreneurial orientation impacted the internationalization of firms. Specifically, risk taking, technological innovativeness, and autonomy in certain parts of the organization assist in the entrepreneurial stages, while proactiveness and product–market innovativeness assist the success of firms internationally.     

Entrepreneurship in the Theory of the Firm

This paper develops micro-economic foundations for a theory of entrepreneurship and growth, focusing on innovation and opportunity as intermediate linkages between the two. Expanding upon points of tangency between Schumpeter and Coase, the paper argues that transactions costs are the glue that holds together entrepreneurial “new combinations.” Technological/organizational complexity of production is defined as the extent to which a technical decision by one unit within the firm affects the productive efficiency of other units. Where decreasing transactions costs tend to pull incumbent organizations apart, the possession of difficult to imitate production practices by the same organizations keeps them together. The dissolution of incumbent firms creates opportunities for entrepreneurs; the prospect of Schumpeterian rents provides the incentive to realize those opportunities.      

Small Firm Survival and Technological Activity

The paper investigates the post entry performance of small firms competing under different technological environments. Small firm survival is compared over technical and non-technical products and over stages of differing technological activity. The empirical results, in the context of the product life-cycle framework, show that small firms enjoy a higher probability of survival in stages of high technological activity, and in products that are more technical in nature. Technological activity is also seen to affect the shape of the hazard rate function, implying that the relation between technological activity, age and small firm survival may be complex.     

Industry environments and new venture formations in U.S. manufacturing: A conceptual and empirical analysis of demand determinants

Through integration of theoretical perspectives from Austrian economics, industrial organization economics, and organizational theory, this study builds and examines empirically a model of the demand determinants of new venture formations in manufacturing industries. Austrian economics and other writings on market disequilibrium imply that the dynamics of industries create market opportunities that are available to economic actors. The greater the changes occurring in an industry, the greater the opportunities created, and the further the market is moved from an equilibrium state. Entrepreneurship is viewed as the process of seizing opportunities through combinations of productive inputs. The more available market opportunities in an industry, the greater is the potential for entrepreneurial activity and, more specifically, new venture formations. Entry barriers constrain the formation of new ventures by prohibiting new ventures from taking advantage of available emerging opportunities. The inertial properties of existing firms constrain their ability to move toward these opportunities and thereby increase the potential for new ventures to exploit these market opportunities.The empirical analysis utilizes the Small Business Administration's U.S. Establishment and Enterprise Microdata file to test the model on a large sample of U.S. manufacturing industries. Results indicate that dynamic industries have greater new venture formations. More specifically, new venture formations are associated with industry growth, the dynamism of industry niches, and technological development. Moreover, entry barriers were found to strongly constrain rates of new venture formations. Industry capital requirements, concentration, and excess capacity were all related negatively to the formation of new ventures. The hypothesized positive relationship between industry-level measures of organizational inertia and new venture formations was also borne out in the empirical analysis. New venture formations were related positively to the extent of vertical integration in an industry as well as to the failure of incumbent firms to invest in new capital.Overall, the independent variables explained more than 50% of the variance in rates of new venture formations in manufacturing industries. The results support an Austrian perspective on entrepreneurship and imply that demand factors and industry structural variables are important determinants of new venture creations.The results imply that dynamic industries should spawn new ventures, and industries with high sales growth, changing consumer preferences, and rapid technological change should exhibit high rates of venture formations. For potential entrepreneurs, the model presented herein might be a useful guide to focus their venture activities. Entrepreneurs who can spot the fundamental sources of market change can exploit their knowledge for economic gain. Yet, there are a number of difficulties in suggesting that the model presented herein could be directly applied by entrepreneurs. First, it is always easier to estimate the dynamics of an industry post hoc than it is ex ante. For example, whereas it is simple to catalogue the technological change that occurred in an industry over time, it is another matter to predict the nature of future technological developments. Second, entrepreneurial opportunity can persist only if other potential economic actors do not know of the presence of the opportunity or cannot act upon it. Any model that gains acceptance as a means of predicting the presence of opportunities would, through its widespread usage, neutralize those opportunities for economic profit. Nonetheless, entrepreneurs who have that unique capability to spot industry dynamics and associated profit opportunities where others do not will gain from that ability.     

Entrepreneurial orientation,commitment to the Internet and export performance in small and medium sized exporting firms

This paper investigates links between entrepreneurial orientation, commitment to the Internet and export performance in small and medium sized firms. The central argument is that entrepreneurs are more likely to use the Internet to develop export market opportunities, and to have better export performance than less entrepreneurial firms. In testing this proposition, a measure of ‘commitment to the Internet’ was developed and used in a mail survey of UK exporters. The results show that firms with high entrepreneurial orientation are more committed to the Internet and have better export performance than firms with low entrepreneurial orientation.     

When Rivals Originate from Within

This paper examines two questions that affect entrepreneurial activity. First, under what conditions are new opportunities exploited by managers rather than their employer firms and second, under what conditions do the employer firms have sufficient incentive to pay off managers to deter entrepreneurial activity? The paper develops and analyzes an economic model to examine the condition sets. Results are consistent with recent findings in the empirical literature on managerial salaries and on technology adoption in oligopolistic industries.

     

Knowledge, values and internationalisation—introduction to the special edition

Internationalisation is increasingly being seen as an organisational learning process. However, entrepreneurial enterprises tend to be smaller, more innovative and more agile than their larger counterparts. When they internationalise, entrepreneurial firms often expand at a rapid rate. The cultures of so-called ‘born global’ firms also appear to differ from firms that internationalise in a more gradual, stepwise fashion. This raises interesting questions about how entrepreneurial firms acquire and manage knowledge about markets, networks and capabilities in turbulent and uncertain environments and how the values embedded in organisational cultures might influence strategic choices. The following articles in this special edition of the Journal of International Entrepreneurship focus specifically on how innovative firms—particularly small and medium-sized enterprises—recognise and exploit market opportunities, how they learn from international market entry and penetration experiences to improve core capabilities and how values may influence supply chain management and start-up decisions.     

International opportunity recognition as a critical component for leveraging Internet capabilities and international market performance

Recent research in the field of international entrepreneurship has emphasized the need for a better conceptualization of international opportunity recognition. Further, with advancements in information and communication technologies, such as the Internet, there has been a profound impact on the way in which international business is conducted, for example, enabling entrepreneurial firms to capitalize on the economic opportunities of an Internet environment. In this study, we propose a model, highlighting the importance of international opportunity recognition, as a critical component for leveraging Internet capabilities and international market performance. Through the lens of a resource capabilities approach, a quantitative, online survey was used to collect data from Australian, international entrepreneurial firms. Structural equation modelling results indicate that international opportunity recognition plays a central role in explaining how resources and Internet capabilities combine for the firm’s realization of international opportunities, and subsequent international performance. The findings enrich current understanding of how international entrepreneurial firms realize opportunities in Internet-based environments.     

An entrepreneurial process perspective on succession in family firms

We review and analyze previous literature on succession in family firms from an entrepreneurial process perspective. Through a three-step cluster analysis of 117 published articles on succession in family firms published between 1974 and 2010, we find several themes within which succession can be understood from an entrepreneurial process perspective where both the entry of new owners and exit of old owners are associated with the pursuit of new business opportunities. We identify gaps within each cluster and develop a set of research questions that may guide future research on succession as an entrepreneurial process. Since succession involves implications for individuals, families and firms, we suggest researchers should adopt a multilevel perspective as they seek answers to these research questions. Our review and analysis also underlines the need to focus on ownership transition rather than only management succession, and the importance of carefully defining both succession and family firm.     

Entrepreneurial orientation and international commitment

This paper contributes to the development of the field of international corporate entrepreneurship (ICE) by examining the influences that the time lapse between foundation and first international market entry may have on the development of an entrepreneurial orientation (EO). Moreover, the paper highlights the existence of a positive relationship between the development of an entrepreneurial orientation and both internationalization decision and dimensions (degree, scope) in established companies. Based on a sample of 155 Spanish firms, our findings suggest that an entrepreneurial orientation positively influences a firm’s propensity to internationalize activities. The results obtained confirm the idea that fast entry into foreign markets is positively related to the development of an entrepreneurial orientation in established firms, and that firms with a marked entrepreneurial orientation have higher relative international sales and operate in a greater number of foreign countries.     

High-growth entrepreneurial firms in Africa: a quantile regression approach

This article analyses the growth performance of a large set of entrepreneurial firms in ten manufacturing sectors of 11 Sub-Saharan African countries. The focus of the article is on identifying those entrepreneurs’ attributes and firm characteristics that tend to generate a significant number of high-growth firms in these countries. To this end, we use a quantile regression, which provides a more complete estimation of the growth distribution of firms conditional on different attributes. The results indicate that firms that engage in product innovation, have their own transport means and are connected to the internet through their own website are especially characterized by higher growth rates and also display a distribution of growth rates skewed to the right, hosting a higher number of high-growth firms. The effect of the last two variables, which relate to distance-bridging modes of infrastructure, points to the self-reinforcing growth effects they generate in creating wider input and output markets. Education raises growth opportunities by affecting the lower quantiles, but it does not appear to influence the upper quantiles. The estimated conditional growth distributions for the technology-intensive machinery and electronics sectors show more extreme tails and a lower mean in comparison to the traditional industries, indicating the more risky nature of doing business in these industries.     

Innovation and entrepreneurship as strategies for success among Cuban-based firms in the late years of the transatlantic slave trade

This article examines how Cuban-based firms and entrepreneurs circumvented ever- increasing risks in the illegal slave trade. The article sheds light to this question by analyzing new qualitative information of 65 Cuban-based firms against the Slavevoyages database. Our findings indicate that Cuban-based firms were entrepreneurial as they exploited the opportunities arising from the volatility of the slave trade by: (a) internalizing networks of agents which allowed the rapid diffusion of information, (b) diversifying trading goods and expanding the number of partnerships to reduce transaction costs and risk, and (c) adopting technological innovations that modified the design and use of vessels.     

Market imperfections,opportunity and sustainable entrepreneurship

This research develops the argument that four types of market imperfections (i.e., inefficient firms, externalities, flawed pricing mechanisms and information asymmetries) at once contribute to environmental degradation and that they also provide significant opportunities for the creation of radical technologies and innovative business models. We show that these opportunities establish the foundations for an emerging model of sustainable entrepreneurship, one which enables founders to obtain entrepreneurial rents while simultaneously improving local and global social and environmental conditions. To advance this new field, we offer suggestions for a research agenda focusing on two areas: the relationship between market imperfections and entrepreneurial opportunities, and the emerging field of sustainable entrepreneurship.     

Creation and Pursuit of Entrepreneurial Opportunities: An Evolutionary Economics Perspective

Considerable debate surrounds the concept of entrepreneurial opportunities. This paper approaches the opportunity concept from an evolutionary market process perspective. It argues that new opportunities for entrepreneurial activity frequently emerge as by-products of market competition. Agents may deliberately or unwittingly create opportunities. Organizational development and the evolution of industries are additional sources of new entrepreneurial opportunities. At the same time, they enable agents to acquire the skills required to exploit these opportunities.      

The Internationalization of Small and Medium-Sized Firms

This paper contributes to the existing research by integrating the notions of organizational learning and entrepreneurial orientation into the body of international entrepreneurship. Our primary framework combines learning theory and the new venture theory of internationalization to study the extent to which small and medium-sized companies engage in international activities. We found that the firms’ international learning effort and entrepreneurial orientation are positively associated with internationalization intent whereas domestic learning effort is negatively related with internationalization intent. Overall, our results suggest (1) that intensive knowledge renewal and exploitation regarding foreign markets and the internationalization process itself may increase internationalization by affecting the perceptions of opportunities offered by further international expansion, and (2) that firms with an entrepreneurial mindset may be more likely to develop a long-term, substantial presence in the international arena, compared to firms that are more reactive or conservative.     

Towards an asymmetry-based view of Chinese firms’ technological catch-up

By carefully reviewing our research and related literature, in this paper, we propose a two-stage model of Chinese firms’ technological catch-up, and provide asymmetrybased explanations. We argue that at the approaching stage, Chinese firms mainly focus on knowledge accumulation through frugal innovation for capturing local and global low-end markets; while at the pole vault stage, they focus on knowledge creation through radical innovation for capturing the high-end market. Moreover, we propose that lacking world-leading technologies but striving to achieve technological catch-up quickly, Chinese firms mainly rely on asymmetric resource and capabilities that are embedded within Chinese institutional, technological and market contexts. Turning these asymmetries into sustainable capabilities and then matching them to market opportunities by developing asymmetric innovation strategies, Chinese firms could achieve technological catch-up in a unique way.     

Towards an asymmetry-based view of Chinese firms’ technological catch-up

By carefully reviewing our research and related literature, in this paper, we propose a two-stage model of Chinese firms’ technological catch-up, and provide asymmetry-based explanations. We argue that at the approaching stage, Chinese firms mainly focus on knowledge accumulation through frugal innovation for capturing local and global low-end markets; while at the pole vault stage, they focus on knowledge creation through radical innovation for capturing the high-end market. Moreover, we propose that lacking world-leading technologies but striving to achieve technological catch-up quickly, Chinese firms mainly rely on asymmetric resource and capabilities that are embedded within Chinese institutional, technological and market contexts. Turning these asymmetries into sustainable capabilities and then matching them to market opportunities by developing asymmetric innovation strategies, Chinese firms could achieve technological catch-up in a unique way.