New Venture Performance in Transition Economies from Different Institutional Perspectives

Building on institutional theory, this study examines the effects of dysfunctional competition and government ties on new venture performance in transition economies. And, it goes deeper to investigate how these effects are contingent on a new venture's entrepreneurial orientation (EO). It finds that EO weakens the negative relationship between dysfunctional competition and new venture performance but exacerbates the negative linkage of government ties to new venture performance. The findings not only illustrate how government impacts new venture performance in transition economies, but also indicate that new ventures can leverage entrepreneurship to cope with the effects of government‐related factors.     

Explaining the formation of international new ventures: The limits of theories from international business research

International new ventures (INVs) represent a growing and important type of start-up. An INV is defined as a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries (Oviatt and McDougall 1994). Their increasing prevalence and important role in international competition indicates a need for greater understanding of these new ventures (Oviatt and McDougall 1994).Logitech, as described in a case study by Alahuhta (1990), is a vivid example of an INV. Its founders were from two different countries and had a global vision for the company from its inception. The venture, which produces peripheral devices for personal computers, established headquarters in both Switzerland and the U.S. Manufacturing and R&D were split between the U.S. and Switzerland, and then quickly spread to Taiwan and Ireland. The venture's first commercial contract was with a Japanese company.Using 24 case studies of INVs, we found that their formation process is not explained by existing theories from the field of international business. Specifically, neither monopolistic advantage theory, product cycle theory, stage theory of internationalization, oligopolistic reaction theory, nor internalization theory can explain the formation process of INVs. These theories fail because they assume that firms become international long after they have been formed, and they therefore highlight large, mature firms. They also focus too much on the firm level and largely ignore the individual and small group level of analysis (i.e., the entrepreneur and his or her network of business alliances).We propose that an explanation for the formation process of INVs must answer three questions: (1) who are the founders of INVs? (2) why do these entrepreneurs choose to compete internationally rather than just in their home countries? and (3) what form do their international business activities take?Who are the founders of INVs? We argue that founders of INVs are individuals who see opportunities from establishing ventures that operate across national borders. They are “alert” to the possibilities of combining resources from different national markets because of the competencies (networks, knowledge, and background) that they have developed from their earlier activities. Following the logic of the resource-based view of the firm, we argue that the possession of these competencies is not matched by other entrepreneurs. Only the entrepreneur possessing these competencies is able to combine a particular set of resources across national borders and form a given INV.Why do these entrepreneurs choose to compete internationally rather than just in their home countries? The founders of INVs recognize they must create international business competencies from the time of venture formation. Otherwise, the venture may become path-dependent on the development of domestic competencies and the entrepreneur will find it difficult to change strategic direction when international expansion eventually becomes necessary. As the founder of one INV explained, “The advantage of starting internationally is that you establish an international spirit from the very beginning” (Mamis 1989:38).What form do their international business activities take? Founders of INVs prefer to use hybrid structures (i.e., strategic alliances and networks) for their international activities as a way to overcome the usual poverty of resources at the time of start-up.This study has important implications for the practice of management. In financing decisions relating to INVs, venture capitalists and other venture financiers should look for entrepreneurs who have a global vision, international business competence, and an established international network. When entrepreneurs start INVs they should create hybrid structures to preserve scarce resources. Finally, given the path-dependence of competence development, founders of new ventures should consider whether establishing a domestic new venture with plans to later internationalize will be as successful a strategy as establishing a new venture that is international from inception.     

Competitive advantages in new corporate ventures: The impact of resource sharing and reporting level

Ideally, new ventures “born” into a corporation's “family” of existing businesses have a wealth of established resources to successfully draw upon. Such new corporate ventures do not have to reinvent every wheel. There are already marketing programs and plants in place as part of the existing business' operations, and they should be able to piggyback upon these. Likewise, the managers from across the corporation already have established a brand name and gained important experience in dealing with customers, and the new venture should get to ride on these coattails. However, along with these benefits come costs that may be more than offsetting. Corporations may try to force the new venture into the established way of doing things in the name of efficiently utilizing existing resources. Perhaps the new venture will be hamstrung by an effort to coordinate its development with the ongoing operations of the corporation's established businesses.It is not at all clear that sharing corporate resources is always a good thing for new corporate ventures. Some have argued that for new ventures to be successful, they often need the direct involvement of top management to see that they get the benefits of corporate resources without suffering the costs. This suggests the general hypothesis underlying much of this work: reporting to top management will be especially beneficial to new corporate ventures heavily involved in sharing corporate resources.In considering this idea, we explore the complicated relationship between resource sharing, top-management involvement, and the ability of new corporate ventures to establish a competitive advantage. We consider both the relative overall quality and relative production costs as forms of competitive advantage. We find that in new corporate ventures heavily involved in resource sharing, achieving either of these advantages is highly contingent upon the level of corporate management to which the new venture regularly reports.In ventures heavily involved in resource sharing, reporting to top-ranking managers appears to be beneficial in terms of controlling cost, but detrimental in terms of the new venture's overall relative quality. In other words, when it comes to benefiting from shared corporate resources, reporting directly to top management is apparently a “two-edged” sword, offering both benefits and costs. (Reporting level appeared to make little difference in new ventures not involved in corporate resource sharing, and competitive advantage is complex and counter to some existing theories.) New theoretical arguments are needed to explain the empirical results. We develop three such theories, all appropriate for further empirical examination.     

Tweeting like Elon? Provocative language,new-venture status,and audience engagement on social media

This article theorizes and empirically investigates how status and provocative language influence audience engagement with new-venture posts on social media platforms. Using venture capital funding as a status proxy, we analyzed 369,142 Twitter posts by 268 new ventures. We found that status (1) increases engagement with ventures' tweets, and that it (2) moderates the effect of provocative language on audience engagement so that provocative language has a negative effect for low-status ventures but a positive effect for high-status ventures. Post-hoc analyses provide a basis for pragmatic theorizing and explore the effects of status tiers and subdimensions of provocative language.     

The Impact of Knowledge Resources on New Venture Performance

A new venture's strategy—and thus its performance—is based upon the knowledge the firm has about its market, its opportunity in that market, and its appropriate conduct to take advantage of that opportunity. Resource-based theory underscores knowledge as a type of resource that confers competitive advantage and the potential for sustainability, two factors that are critical for start-ups. Three types of procedural knowledge are considered to be important at start-up: (1) about the industry in which the venture competes; (2) about the type of business approach the venture is pursuing; and (3) about creating, building, and harvesting new ventures. Knowledge useful to the new venture is developed either through relevant personal experiences or by accessing relevant knowledge possessed by others. Hypotheses are developed regarding the impact on the performance of new ventures as a result of these sources of knowledge, and these relationships are explored in a study of new technology-based firms.     

Dynamic capabilities and venture performance: The effects of venture capitalists

After going through the initial public offering (IPO), new ventures face increased competition, greater public examination, and increased government scrutiny. Resource base weaknesses and external forces pose severe threats to the survival and success of new ventures. Building from resource-based theory, we first examine and delineate dynamic capabilities from entrepreneurial capabilities in entrepreneurship. We then develop theory to explain how venture capitalists (VCs) endue their ventures with greater dynamic capabilities in order to address these weaknesses and threats. We test our hypotheses on a match-pair sample of VC-backed and non-VC-backed new ventures and find that VC-backed ventures demonstrate greater dynamic capabilities as they relate to product and management development but do not display any greater dynamic capabilities as they relate to legal and government regulation threats. Further analysis also revealed that VC experience and VC reputation were positively related to 1-year stock price returns.     

International versus domestic entrepreneurship: New venture strategic behavior and industry structure

International entrepreneurship is defined in this study as the development of international new ventures or start-ups that, from their inception, engage in international business, thus viewing their operating domain as international from the initial stages of the firm's operation.One hundred and eighty-eight new venture firms in the computer and communications equipment manufacturing industries are classified according to the percentage of their sales in the international market. Ventures with no sales derived from international activities are considered “domestic” new ventures, and ventures with sales from international activities comprising greater than 5% of total sales are considered “international” new ventures.The strategy and industry structure profiles of international new ventures are significantly different from domestic new ventures. The internationals pursue much broader market-based strategies, seeking a strategy of broad market coverage through developing and controlling numerous distribution channels, serving numerous customers in diverse market segments, and developing high market or product visibility. The internationals also emphasize a more aggressive entry strategy, building on outside financial and production resources to enter numerous geographical markets on a large scale. Securing patent technology is also an important component of their strategy. This suggests that the internationals compete by entering the industry on a large scale, seeking to penetrate multiple markets, with the recognition that external resources are necessary to support such an entry.Whereas both the domestics and the internationals characterize domestic competition as being relatively intense, the international new ventures compete in industries with higher levels of international competition. It is not clear from this research whether the new venture selects an industry with a high degree of international competition and therefore responds with an international orientation or, because the new venture has an international orientation, it perceives or recognizes a higher degree of international competition. Another industry structure difference is the internationals' perceived higher degree of restrictiveness due to government regulation. It is unclear whether this restrictiveness motivates new ventures to seek less-regulated international environments or if it indicates that when competing internationally, the new venture is confronted with increased regulatory requirements.Domestic new ventures are distinguished by their emphasis on a production expansion strategy and customer specialization strategy. The production specialization strategy consists of focusing on limited geographical markets, maintaining excess capacity, and pursuing forward integration. The customer specialization strategy incorporates the production of a specialty product that is purchased infrequently. Thus, for both of the domestic strategies, a consistent “closeness” between the producer and consumer is implied. This may be an important basis underlining the new venture's decision to compete in an exclusive domestic context.This study offers initial support for the notion of international entrepreneurship by its findings that there are significant differences between new venture firms competing domestically and new ventures choosing to also enter international markets.     

The Corridor Principle

This article discusses how many entrepreneurs create multiple ventures, and thereby apparently lengthen the duration of their entrepreneurial careers. A new concept, called the Corridor Principle, is proposed as a possible explanation of the multiple venture phenomenon. The Corridor Principle states that the mere act of starting a venture enables entrepreneurs to see other venture opportunities they could neither see nor take advantage of until they had started their initial venture.The Corridor Principle presents an alternative model to the linear single venture career model, embodied by such celebrity entrepreneurs as Ray Kroc of MacDonald' s and Kenneth Olsen of Digital Equipment Corp. Six hypotheses test expectations about the timing and duration of entrepreneurial careers, as well as the relationship between entrepreneurial career length and the creation of multiple ventures.The findings strongly support: • the position that entrepreneurship is a dynamic, multi-venture process for a great many entrepreneurs the rule, rather than the exception. • the existence of a positive correlation between finding at least a second venture and realizing a longer entrepreneurial career. Though there are a variety of explanations for this, and the patterns include both sequential and overlapping ventures, the net effect of creating multiple ventures appears to produce a longer entrepreneurial career. • the position that significant numbers of entrepreneurs create their second venture very early in their entrepreneurial careers especially when contrasted to the group of ex-entrepreneurs, who create multiple ventures (if at all) at a slower rate and later in their careers.Overall, these observations reinforce the notion of the Corridor Principle. Though who can and cannot take advantage of the Corridor Principle is not entirely revealed by the data, some indication exists that an entrepreneurs ability to use Corridor Principle strategy to prolong his or her career is related both to age at startup, and to conscious anticipation and preparation for an entrepreneurial career.The main implications for entrepreneurship practitioners, advisors, researchers, teachers and students are these: Whether studying the entrepreneurial process or planning to start an entrepreneurial career, a long-term view should be taken, one that includes the likely possibility of multiple ventures. The minimum economic returns of earlier ventures can be lower than previously thought if these ventures provide entry to subsequent ventures that possess higher (more acceptable) returns to the entrepreneur. The evidence thus far available indicates that the creation of subsequent ventures occurs relatively quickly when corridors of opportunity become visible and attainable after earlier ventures are established. The likelihood of career failure, as opposed to venture failure, may be lowered if one selects earlier ventures based on their potential to reveal follow-on-venture opportunities that the entrepreneur can investigate and possibly pursue.     

Strategic and Operational Determinants of Relationship Outcomes With New Venture Suppliers

While the vast majority of the supplier selection and development literature has focused on relationships between mature, established firms, significantly less attention has been paid to relationships between established firms and new, entrepreneurial ventures. This study addresses this important topic and, using an interdisciplinary lens, investigates the question of how established buying firms can work with new ventures to achieve desired relationship outcomes. Drawing on the literature from the disciplines of entrepreneurship and supply chain management, we propose a theoretical model that links buying firms' strategic orientation in supplier selection (innovation and cost in strategic supplier selection) and operational approach in supplier development (direct and indirect development of new venture suppliers) with new venture‐specific relationship outcomes (purchasing volume and realized innovations). The model's predictions are tested on cross‐sectional survey data from 136 buying firms. Our results contribute to the emerging research stream at the supply chain management–entrepreneurship interface and enhance the understanding of relationships between established firms and new ventures.     

Informal risk capital investors: Investment patterns on the East Coast of the U.S.A.

In this study we profile a group of informal investors, their investment criteria and the nature of their referral network. The study supports the findings of several earlier studies. It indicates the existence of an extensive informal investment community on the East Coast of the U.S.A., which can provide substantial financial resources to startup and young firms. A full 58% of the sample investments were in startups; a huge proportion compared with formal venture capital sources. The study further supports earlier findings that this group is difficult to locate, for entrepreneurs and researchers alike. This opaque market consists primarily of friends and business colleagues who individually provide modest sums of money ($20,000–$50,000), but are often able to use their network to assemble a group of investors who will sponsor the entire funding requirement. 130 informal investors report that in three years they and their networks raised 38 million dollars to support 286 new venture proposals.There are also encouraging indications that these angels are both enthusiastic and persistent. Many of them claim that they have achieved higher returns via angel activity than any other investment options that they have tried. Of the angels who did better with alternative investment options, more than 80% are still prepared to make further investments. Even those who reported failed investments in the informal risk capital market remain supportive: over 65% indicate a willingness to invest again.The criteria by which the angels screen the proposals differ markedly from those of the venture capital community. In particular, the angels do not appear to be interested in a thorough business plan, a sine qua non for venture capitalists. Unlike the capital firms, angels are not interested in competitive insulation. They do not limit their investments to industries that are appealing, or with which they are familiar, nor do they care very much about the degree to which the entrepreneur has identified competition. However, they are in close agreement with the venture capital community in their concern with the management ability of the venture team and a requirement that there be a clear, demonstrated need for the product or service, preferably in a market with large potential.The study has shed some light on the structure of the referral networks of angels. Though we do not know from this study how the respondents themselves first heard of the ventures that were described in this survey, we do know that their referral network is composed primarily of friends and business colleagues; to whom they refer as much as 60% of the proposals that they receive and in which they themselves eventually invest. Thus they pass on serious opportunities to their network. Their referees are inclined to be very supportive; in our sample almost 75% of them also invested in the venture. The current strategy for informal investors is to approach mainly close contacts. These are inclined to be supportive (85% also invested in the venture) and to follow a trusting investment behavior pattern, relying mainly on the recommendation of the angel. This strategem ensures that the total capital requirements are met via the network. However, given the results of this study; the angels might be well-advised not to stop here, they might also approach at least one professional. Only a small proportion of professionals were approached by our sample of angels (less than 30%). As the study shows, professionals are more effective at selecting successful ventures. Thus a mixed strategy may be called for; use mainly trusting referees to ensure full capitalization and a limited number of professional referees to screen the proposals. This will help ensure that those proposals that do get supported by the more trusting members of the network have been competently screened, thus increasing to the probability of venture success.A discriminant analysis revealed some useful pointers in helping the informal investor select successful ventures. First it is critical to select only ventures in which the entrepeneur can be relied on to evaluate the risks of the ventures and manage these risks well; Angels do not need entrepreneurs that will gamble with their money. Equally important is to avoid placing too much credence on highly articulate sales pitches by the venture team, or too much reliance on ventures in which the main emphasis is on product and proprietary protection. Rather insist on being shown clear evidence that the product or service has channel and/or market acceptance. It is also important for Angels to stick to investments where they know the industry well, and to back venture teams with a solid reputation and a propensity to get involved in the details rather than gloss them over. As in the case of studies of venture capital investments, competitive insulation in the early stages of the venture is also important.     

The Impact of Environment Uncertainty and Effectual Flexibility on Entrepreneurial Resource Combination: The Moderating Effect of Entrepreneurial Self-efficacy

Entrepreneurial resource combination is widely recognized as a key enabling factor to a new venture’s survival and growth, but how and why resources are integrated remain elusive. Borrowing from the theory of resource combination proposed by Sirmon, Hitt and Ireland (2007), this study empirically examines how environmental uncertainty impacts entrepreneurial resource combination. We also examine the mediating effect of effectual flexibility on the relationship between environmental uncertainty and entrepreneurial resource combination to see how new ventures utilize flexibility to neutralize the threat of environmental uncertainty. The moderating effect of entrepreneurial self-efficacy is also examined to see how entrepreneurs’ self-cognition affects these relationships. Examining data from 287 new ventures, we find that both environmental dynamism and environmental hostility have significantly positive influence on entrepreneurial resource combination (including entrepreneurial resource cohesion and entrepreneurial resource coupling). We also find that flexibility mediates the relationship between environmental uncertainty (including environmental dynamism and environmental hostility) and entrepreneurial resource combination. Empirical studies also show that entrepreneurial self-efficacy positively moderates the relationship between environmental dynamism and flexibility but negatively moderates the relationship between environmental hostility and flexibility. Theoretical and practical implications are discussed.     

Linking prefunding factors and high-technology venture success: An exploratory study

This study reports on the exploratory phase of a research project on prefunding factors influencing the success of high-technology start-up companies. The study was done in collaboration with two major West Coast venture capital firms that allowed the authors full access to the due diligence files, investment proposals, and closing documents associated with eight ventures. Half of the eight ventures studied are currently public companies with sales that range from $65 million to $500 million and with an after-tax profit of about 10% of sales. The other half have either been dissolved or did not reach $3 million in sales within the five years following their funding.Information was obtained on those prefunding factors that were available for investor review prior to funding, such as the founders track records, the characteristics of the founding team, the nature of the target market, the technological strategy of the firm, the proposed composition of the board, and the deal structure.In spite of the small sample size, findings of this research revealed discernible differences between successful and unsuccessful firms. The founders of the successful ventures had more prior experience working together; tended to form larger, more complete teams; and had more extensive experience in the function they performed in the new venture. Successful founders also had experience in rapid growth firms that competed in the same industry as the start-up.The successful ventures targeted product-market segments with high buyer concentration in which, through technological advantage, their products could attain and sustain a competitive edge. Often this advantage was achieved by careful management of the product-development process, which resulted in early market entry and its corollary, reduced competition.On the other hand, some factors that the authors had predicted would allow them to distinguish between success and failure were not found to do so. Both successful and unsuccessful ventures targeted high growth markets, anticipated high gross margins, had founders with over five years of relevant experience, had experienced venture capitalists on their boards, and were characterized by a wide range of founder equity shares.     

Venture capitalists' decision criteria in new venture evaluation

What criteria do venture capitalists use to make venture investment decisions? The criteria venture capitalists use to make their venture investment decisions are of interest for several reasons. First, venture capitalists are conspicuously successful in their investment decisions. The success rate of venture capital-backed ventures is significantly higher than the success rate of new ventures generally (Dorsey 1979: Davis and Stetson 1984). A better understanding of the criteria used could lead to a better understanding of the reasons for this success.Second, a better understanding of the criteria for successful new ventures could lead to an improvement in the success rate of new ventures. Although there is no clear agreement on the precise rate, the failure rate among new ventures is generally viewed as significantly higher than the average failure rate (Dun and Bradstreet 1984; Van de Ven 1980; Shapero 1981).Finally, venture capitalists' investment criteria are of enormous import to entrepreneurs seeking venture funding. Such entrepreneurs require a significant infusion of capital in order to grow their businesses, and knowledge of the criteria sought by venture capitalists can aid entrepreneurs in gaining the necessary financing.This study attempts to uncover the criteria used by venture capitalists through semistructured interviews and verbal protocol analysis of venture capitalists' evaluations of actual venture proposals. Sixteen verbal protocols—in which the participants “think aloud” as they review business proposals— were made of venture capitalists' venture evaluation decisions.The findings of this study suggest that venture capitalists screen and assess business proposals very rapidly: the subjects in this study reached a GO/NO-GO decision in an average of less than six minutes on initial screening and less than 21 minutes on proposal assessment. In venture capitalists' initial proposal screening, key criteria identified include fit with the venture firm's lending guidelines and the long-term growth and profitability of the industry in which the proposed business will operate. In the second stage of proposal assessment, the source of the business proposal also played a major role in the venture capitalists' interest in the plan, with proposals previously reviewed by persons known and trusted by the venture capitalist receiving a high level of interest.In addition to the specific criteria identified and how they were used in reaching GO/NO-GO decisions, the findings of this study also were surprising for the lack of importance venture capitalists attached to the entrepreneur/entrepreneurial team and the strategy of the proposed venture during these early stages of the venture evaluation process.     

In good company: The role of personal and inter-firm networks for new-venture internationalization in a transition economy

Although personal and inter-firm networks are critical for the survival and growth of entrepreneurial ventures in transition economies, their role in new-venture internationalization has been understudied. Exploring the internationalization of entrepreneurial ventures (n = 623) in Bulgaria, we find that domestic personal networks have a positive effect on internationalization. Firm age negatively moderates the effect of inter-firm networks: the earlier the new venture engages in inter-firm collaboration, the higher the degree of its internationalization. Internationalization is positively associated with new venture size and varies by industry. Implications for managerial practice and public policy are discussed.     

Home country institutions,social value orientation,and the internationalization of ventures

We examined how home country formal institutions and the venture’s value orientation influenced the venture’s likelihood of internationalization based on a data set that was adapted from the Global Entrepreneurship Monitor (GEM) data in the year 2009, covering 7668 individual ventures in 25 countries. Better-developed home country formal institutions are found to have a supportive impact on the venture’s likelihood of internationalization. The supportive impact is also found to be weaker for socially oriented ventures than for profit-oriented ventures. The venture’s social value orientation negatively moderates the home country formal institutions–likelihood of internationalization relationship. The negative moderating effects can be explained as follows: Socially oriented ventures in the better-developed home country institutional environment are less likely to develop coping skills against uncertain and risky institutional environments, which are common in their host countries. Besides the theoretical contributions, this paper also highlights the implications for both business researchers and policy makers.     

Organizational sponsorship and the economics of place: How regional urbanization and localization shape incubator outcomes

Organizational sponsorship impacts new venture emergence and survival prospects by shaping the relationship between new ventures and their surrounding environment. While extant literature offers an explanation as to why heterogeneity in the effectiveness of sponsorship emerges based on the sponsor's characteristics, current theorizing largely overlooks how sponsorship interacts with local economic conditions. This study introduces insights from urban economics to extend organizational sponsorship theory by showing how different types of agglomeration economies affect the effectiveness of organizational sponsorship. We test our hypotheses with a comprehensive database that includes over 46,000 sponsored and non-sponsored firms in the years 1997–2007. Our results reveal organizational sponsorship delays new venture exit when urbanization levels are low, localization is low, and both urbanization and localization are high.Executive Summary.Organizational sponsorship (OS) is an institutional arrangement whereby private or public entities provide assistance to new firm ventures. Since young firms face low survival chances at birth, it is assumed that any assistance such firms receive is to their advantage. However, very little research supports this assumption (Clayton et al., 2018; Dutt et al., 2016). It is in this context that we examine the impact of OS in different regional environments. Specifically, we look at the interplay between business incubation, a ubiquitous form of OS, urbanization, the city-scale of the region in which the firm is founded, and localization, the presence of same-industry firms in the region, in determining new venture survival. By exploring this interaction, we identify how the efficacy of OS varies in differing environmental circumstances. Additionally, it provides a better understanding of the specific OS mechanisms that are most likely to promote new venture survival depending on regional characteristics.For the purposes of our study, we combine insights from OS and agglomeration literatures. Specifically, we look at the interplay between the bridging, buffering and curating functions of OS with the externalities that arise from urbanization and localization. We consider the regional characteristics that provide new ventures with positive agglomeration externalities of input sharing, quick and quality matching with resource providers, and knowledge spillovers. Similarly, we also consider regional characteristics that give rise to negative externalities of rising costs and congestion. Thus, we identify urbanization and localization scenarios in which new ventures are most in need of buffering from competition, in the form of financial aid and subsidies, and scenarios where new ventures need to be bridged or curated with non-monetary resources such as accountants, lawyers, or industry-specific suppliers and investors. That is, we identify founding environments in which OS functions are most valuable.We test our hypothesis on a population of US business incubators operating between 1997 and 2007. To study the impact of OS at different levels of urbanization and localization, we compare the probability of exit by incubated new ventures with that of a control group of non-incubated new ventures in the same county. We find that incubators are most effective in improving the survival of new ventures when both localization and urbanization in the founding environment are low or when both are high.By linking OS literature with agglomeration literature our study identifies the conditions under which OS is most effective and finds that it is most effective when mitigating the lows of resource-deprived environments or the highs of a hyper-competitive landscape. We also extend the theoretical link between these two streams of literature by identifying the critical role of the OS function of curating in a highly localized and urbanized environment.Our study sheds new light on why OS is often met with varying levels of success in promoting new venture survival. We see that specific regional characteristics determine the type of OS mechanisms that are most beneficial. Thus, for instance, simply mimicking successful incubators in one region may not lead to success for incubators in other regions. Furthermore, we see that OS is counterproductive in regions with low urbanization and high localization. Together, these findings suggest that policy-makers need to consider the specific constraints faced by entrepreneurs in different regions before they seek to promote entrepreneurship through OS. It also stresses the need for entrepreneurs to do due diligence prior to joining an incubator.     

When do spinouts benefit from market overlap with parent firms?

We examine how market overlap with parent organizations impacts the performance of startups founded by the former employees of these incumbent firms. Building on knowledge inheritance and competitive dynamics theories, we propose that the degree to which the operating markets of spinouts overlap with their parent organizations has a curvilinear relationship with their likelihood of survival. Market overlap is beneficial to spinouts because it reduces uncertainty during the early stages of new venture development. However, substantial market overlap may spark hostile actions by the parent organizations, thereby creating disruptive competition that may lower the likelihood of spinouts' survival. Furthermore, we hypothesize that the previous hierarchical position of founders in parent organizations moderates the overlap–performance relationship. Using a sample of European biotech spinouts and their parent firms, we find support for our hypotheses.     

Born global or local? Factors influencing the internationalization of university spin-offs—the case of Halmstad University

A wealth of research in the past decades has examined born globals or international new ventures, which are firms that from inception view the whole world as a market and as a source to access resources. Many of these firms build their competitive advantage on high-tech knowledge. However, although many studies have shown how born globals can achieve success if they access resources through their relationships from actors in their networks, few studies have explored the relationship between born globals and universities. Universities are important actors in creating new technology knowledge, and many studies have shown how new firms, or so-called university spin-offs (USOs), are formed around universities. The current study explores why some USOs are successful in their international growth strategy and discusses the factors that influence and facilitate the internationalization process. The study investigates 10 USOs around the newly established Halmstad University in Sweden and finds that universities have a positive effect on firm creation and initial international growth. The regional competence base increases from the establishment of a local university, primarily by strengthening the regional human capital and by increasing university research. This study shows that researcher entrepreneurs’ ventures start as born globals, but that these firms do not continue to grow. Born global business models, per se, do not lead to competitive advantage and successful internationalization. Instead, a strategy built on customer focus and an ability to adapt to different customer demands lead to growth, and the location of growth is dependent on the size of the home market. This study also shows that student entrepreneurship can be a successful growth strategy for USOs focusing on both international and local markets.     

The exemplar enigma: New venture image formation in an emergent organizational category

We examine the process of organizational image formation for new ventures entering an emerging organizational category. An emerging organizational category is usually initiated by a pioneering venture that adopts a new organizational form. If that venture garners early recognition, it serves as an exemplar, attracting other ventures to enter the emerging category. Those ventures then have to formulate an image that both accounts for and competes with that of the category exemplar. This article describes how ventures form their images in the face of this tension. We examine this tension using qualitative data from eight new U.S. venture accelerators entering the emergent venture accelerator category, which revealed that image formation in an emerging organizational category involves three basic considerations: (1) emulation, (2) experimentation, and (3) divergence. Through emulation, organizations observe and rely on the exemplar in order to capture legitimacy. Through experimentation, organizations consider who they are beyond the exemplar and how they might change. Through divergence, organizations definitively claim and establish a unique image. From this, a conceptual framework is proposed in which organizational and contextual factors influence image formation actions and decisions.