The performance effect of network and managerial capabilities of entrepreneurial firms

Building on the organizational capabilities view, this study explores the impact of network and managerial capabilities on the performance of entrepreneurial firms in the architecture and real estate sector. We apply an extended organizational capabilities model by integrating Porter’s value chain model and Grant’s hierarchy of organizational capabilities. Starting from differences in entrepreneurial orientation between architecture and real estate development firms, we argue that under higher environmental uncertainty, network capabilities are more important for the performance of architecture firms whereas managerial capabilities are more important for the performance of real estate development firms. Employing data from Austria, Germany, and Switzerland, the research results support the hypotheses. This study integrates Porter’s value chain concept and the organizational capabilities model and delivers a contribution to the organizational capability theory. In addition, it contributes to the entrepreneurship literature by showing that network capabilities are more important for creating competitive advantage in entrepreneurial firms than in other firms.     

The development of an infrastructure for entrepreneurship

This paper takes a macroperspective of entrepreneurship, and focuses on the issues and events involved in constructing an industrial infrastructure that facilitates and constrains entrepreneurship. This infrastructure includes: (1) institutional arrangements to legitimate, regulate, and standardize a new technology, (2) public resource endowments of basic scientific knowledge, financing mechanisms, and a pool of competent labor, as well as (3) proprietary R&D, manufacturing, marketing, and distribution functions by private entrepreneurial firms to commercialize the innovation for profit. Although extensive research substantiates the importance of these infrastructure components, they have been treated as externalities to entrepreneurship. By incorporating these components within a single framework, one can systematically examine how various actors and functions interact to facilitate and constrain entrepreneurship.The paper makes three contributions to understanding entrepreneurship. First, I believe that the study of entrepreneurship is deficient if it focuses exclusively on the characteristics and behaviors of individual entrepreneurs, on the one hand, and if it treats the social, economic, and political factors influencing entrepreneurship as external demographic statistics, on the other hand. Popular folklore notwithstanding, the process of entrepreneurship is a collective achievement requiring key roles from numerous entrepreneurs in both the public and private sectors.Second, the paper examines how and why this infrastructure for entrepreneurship emerges. I argue that while this infrastructure facilitates and constrains individual entrepreneurs, it is the latter who construct and change the industrial infrastructure. This infrastructure does not emerge and change all at once by the actions of one or even a few key entrepreneurs. Instead, it emerges through the accretion of numerous institutional, resource, and proprietary events that co-produce each other over an extended period. Moreover, the very institutional arrangements and resource endowments created to facilitate industry emergence can become inertial forces that hinder subsequent technological development and adaptation by proprietary firms. This generative process has a dynamic history that is itself important to study systematically if one is to understand how novel forms of technologies, organizations, and institutions emerge.Finally, the paper emphasizes that the process of entrepreneurship is not limited to the for-profit sector; numerous entrepreneurial actors in the public and not-for-profit sectors play crucial roles. It motivates one to examine the different roles played by these actors, and how their joint contributions interact to develop and commercialize a new technology. This in turn makes it possible to understand how the risk, time, and cost to an individual entrepreneur are significantly influenced by developments in the overall Infrastructure for entrepreneurship. It also explains why the entrepreneurs who run in packs will be more successful than those that go it alone to develop their innovations.     

Entrepreneurship and dynamic capabilities: how firm age and size affect the ‘capability enhancement–SME performance’ relationship

The entrepreneurship and dynamic capabilities literature adds to our understanding of how strategic change can drive firm performance. We draw on a recent survey of US SMEs to determine whether entrepreneurial ventures have dynamic capabilities, and, if so, whether differences in the characteristics of those ventures lead to differences in how dynamic capabilities benefit firm performance. We find that most entrepreneurial ventures report having such capabilities and that their differences in age and size lead to differences in how dynamic capabilities affect firm performance. We consider how these results redefine the overlap of the dynamic capabilities view literature with the entrepreneurship literature, because the redeployment of resources to create and adapt to opportunities that defines what are dynamic capabilities lies at the core of what is entrepreneurial activity.     

Political connections and entrepreneurial investment: Evidence from China's transition economy

Recent literature in entrepreneurship suggests that market and legal institutions matter for entrepreneurial investment. Yet, prior studies have focused on the role of formal institutions. Building on new institutional theory and political connections literature, this study aims to evaluate the role of political connections in entrepreneurial reinvestment in less developed and transition economies. The purpose of this paper is threefold. First, it aims to demonstrate systematically how political connections affect entrepreneurial reinvestment. Second, it applies this relationship to a subsample group, i.e., Small and Medium Enterprises (SMEs), in order to empirically test whether political connections are more beneficial for large firms or SMEs. Third, it demonstrates that political connections substitute for, rather than complement, formal market and legal institutions. The empirical test uses a nationally representative sample of entrepreneurial firms from China's transition economy.     

Institutional quality and market selection in the transition to market economy

This paper investigates the impact of institutional quality on the productivity, profitability and survival of new entrants versus those of incumbent firms in a transitional setting, Vietnam. By integrating economic and institutional perspectives, we emphasize the importance of institutional quality in shaping the evolution of industry dynamics. We find that poor institutional quality that acts as institutional buffering for incumbents jeopardizes the Schumpeterian market selection process. In particular, despite being more productive and profitable, new entrants are still more likely to exit than incumbents on average. As a consequence, facing poor institutions, only new entrants with sufficiently high productivity and profitability are able to survive. However, improving institutional quality does not enhance new entrants' survival and entrepreneurial performance; rather, it removes the survival advantage of incumbents and thus reduces the differences in performance and exit hazard between new entrants and incumbents. We investigate this seemingly paradoxical relationship using Vietnamese census data from 2006 to 2013.     

Entrepreneurship,economic development,and institutional environment: evidence from OECD countries

The purpose of this article is to establish a typology of entrepreneurship for OECD countries over the 1999–2012 period. Our aim is to draw a distinction between managerial and entrepreneurial economies, to identify groups of countries with similar economic and entrepreneurial activity variables, and to determine the economic and institutional drivers of entrepreneurial activities in each group. We show that the level of development, sectoral specialization, and institutional variables related to entrepreneurship, functioning of the labor market, and openness of the country are decisive to understand differences in entrepreneurship activity across countries. Results show that the pre-crisis period, from 1999 to 2008, is a period of growth favorable to entrepreneurship. The financial crisis involved a break in entrepreneurial dynamism, with agricultural economies withstanding the financial crisis better. The 2010–2012 period of recovery is a period of a sharp slowdown in entrepreneurial activity, during which the countries that are less dependent on the financial sector proved to be the most resilient in terms of entrepreneurial activity. Nevertheless, it is the advanced knowledge economies with developed financial markets, fewer institutional regulatory constraints, and greater scope for qualitative entrepreneurship that show lower unemployment rates. These findings have important implications for the implementation of public policy in order to promote entrepreneurial activity and reduce unemployment.     

Exploring country-level institutional arrangements on the rate and type of entrepreneurial activity

This study introduces a novel multidimensional measure of the entrepreneurial environment that reveals how differences in institutional arrangements influence both the rate and the type of entrepreneurial activity in a country. Drawing from institutional theory, the measure examines the regulatory, normative, and cognitive dimensions of entrepreneurial activity, and introduces a novel conducive dimension that measures a country's capability to support high-impact entrepreneurship. Our findings suggest that differences in institutional arrangements are associated with variance in both the rate and type of entrepreneurial activity across countries. For the formation of innovative, high-growth new ventures, the regulative environment matters very little. For high-impact entrepreneurship an institutional environment filled with new opportunities created by knowledge spillovers and the capital necessary for high-impact entrepreneurship matter most.     

How institutions and gender differences in education shape entrepreneurial activity: a cross-national perspective

Previous studies offer evidence that human capital obtained through education is a crucial explanation for cross-national differences in entrepreneurial activity. Recently, scholar attention has focused on the importance of education in subjects such as science, technology, engineering, and math (STEM) for the promotion of entrepreneurial activity. To our knowledge, empirical evidence for this link is scarce, despite the emphasis made in the literature and by policy makers on the choice of study at the tertiary level. Given that differences in STEM education are particularly large between men and women, we utilize data from the Global Entrepreneurship Monitor for 19 European countries and the USA. We study the role of these differences in STEM education at the national level for three stages of the entrepreneurial process: entrepreneurial awareness, the choice of sector for entrepreneurial activity, and entrepreneurial growth aspirations. We also test whether the effects of gender differences in education is moderated by the nature of the institutional environment in which entrepreneurs operate. Our findings show that individual-level explanations including education account for the gender differences during all three stages of early-stage entrepreneurial activity. Moreover, countries with greater gender equality in science education are characterized by higher entrepreneurial activity in knowledge-intensive sectors and high-growth aspirations. Thus, next to individual-level education, closing the gender gap in science at the national level can benefit a country as a whole by stimulating innovative entrepreneurial activity.     

The impact of social norms on entrepreneurial action: Evidence from the environmental entrepreneurship context

Using insights from institutional theory, sociology, and entrepreneurship we develop and test a model of the relationship between centralized and decentralized institutions on entrepreneurial activity. We suggest that both decentralized institutions that are socially determined as well as centralized institutions that are designed by governmental authorities are important in promoting firm foundings in the environmental context. In a sample of the U.S. solar energy sector we find that state-sponsored incentives, environmental consumption norms, and norms of family interdependence are related to new firm entry in this sector. Our findings also suggest that the efficacy of state-level policies in the sponsoring of entrepreneurial growth is dependent upon the social norms that prevail in the entrepreneur's environment. We expand entrepreneurship theory and the study of institutions and the natural environment by demonstrating the integral role that social norms play in influencing the creation of new firms and by illustrating the potential effect social norms have on the effect of policy that seeks to encourage environmentally responsible economic activity.     

International entrepreneurial culture—Toward a comprehensive opportunity-based operationalization of international entrepreneurship

Despite the abundance of international entrepreneurship studies, there is a need to develop valid measures of the international entrepreneurship construct. Based on prior conceptual studies, we contribute to the literature by advancing a scale of the international entrepreneurial culture (IEC) that considers opportunity-based behavior; and, aims to capture the overarching context of international entrepreneurship. We followed established scale development practices and conducted a research on UK and US medium-sized firms. Our proposed six-dimensional operationalization of IEC, which sufficiently matches the initial conceptualization, consists of international entrepreneurial orientation; international market orientation; international motivation; international learning orientation; international networking orientation with competitors; and, international networking orientation with non-competitors. The main implication from this study is that international entrepreneurship scholars can use in future research these six dimensions of the encompassing IEC context rather than a confined international entrepreneurship construct.     

Strategic Capabilities and Performance in Women‐Owned Businesses in Mexico

The dire economic situation in Mexico, with its high rate of unemployment, makes it necessary for many women to find some form of economic activity to provide income for their families. Although such conditions could encourage the creation of new firms, the results of the Global Entrepreneurship Monitor 2006 Report show a gap between the number of women involved in nascent and young entrepreneurship initiatives and the number who owns established firms. This gap may indicate that the firms created need to improve their competitiveness and their ability to survive. The model proposed adopts the resource‐based view of the firm as a theoretical framework from which to study how entrepreneurial orientation, market orientation, and learning orientation, as well as the interactions between them, influence the achievement of competitive advantage and superior performance in businesses owned by women. Our investigation analyzes businesses established and managed by women in Mexico and registered with the Asociación Mexicana de Mujeres Empresarias A.C. (Mexican Association of Business Women) and the Red de Empresarias del Instituto Nacional de Mujeres (Women Entrepreneurs Network of the National Women's Institute). To gather the information needed, the study used a questionnaire as a measuring instrument. The results are based on the 90 complete answers received from the questionnaires distributed. The results show that all of relationships in our model are positive except the hypothesis that learning orientation mediates in the relationship between market orientation and performance. The results suggest that entrepreneurial orientation reinforces the effect of two capabilities, market orientation and learning orientation, on firm performance. They also reaffirm that the three capabilities assessed may lead an organization to differentiate itself from its competitors by improving its performance. In addition to contributing to the literature on female entrepreneurship, the results have important implications for management. Understanding the relationships between capabilities and the performance of women‐owned businesses in Mexico can permit the identification of areas for improvement to promote the growth and survival of this type of firm.     

Internationalization and value orientation of entrepreneurial ventures—a Latin American perspective

Entrepreneurial ventures from Latin American emerging economies are underexplored on the current international entrepreneurship literature. This paper is aimed to contribute empirical evidence on entrepreneurial ventures from Latin American emerging economies and their internationalization and value orientation. Based on the 2009 Global Entrepreneurship Monitor data, we found that institutional voids on Latin American emerging economies were a double-edge sword: on one hand, inefficient and unregulated markets make ventures from Latin American emerging economies encounter the liability of their country of origin; on the other hand, less active governments and absence of influential NGOs alternatively trigger more social entrepreneurial opportunities, with some of them across the national border. Some entrepreneurs from Latin American emerging economies have been active in exploiting those international social opportunities. International social entrepreneurship can be regarded as an alternative solution to social problems which governments, NGOs, or for-profit ventures fail to tackle on Latin American emerging economies.     

Varieties of entrepreneurship: exploring the institutional foundations of different entrepreneurship types through ‘Varieties-of-Capitalism’ arguments

While entrepreneurship researchers agree that institutions ‘matter’ for entrepreneurship, they also have a rather encompassing understanding of institutions as almost any external factor that influences entrepreneurship. Ultimately, this literature thus comes up with a long list of institutional factors that may explain entrepreneurial differences between countries. But which institutions are most influential? How do these institutions relate to different types of entrepreneurship? And to what extent are institutions complementary to each other in the way they sustain different entrepreneurship types? The literature on ‘Varieties-of-Capitalism’ (VoC) offers a parsimonious theoretical framework to address these questions. Based on the VoC literature, we theoretically derive a consistent set of institutional indicators that can explain differences in entrepreneurship types between countries. Based on principal component and cluster analyses, we illustrate how 21 Western developed economies cluster around four distinct institutional settings. Furthermore, we use simple OLS regressions to show how these institutional constellations are related to different types of entrepreneurship. We conclude that four different ‘Varieties of Entrepreneurship’ can be identified across the Western world. The main implication of our findings is that a ‘perfect’ institutional constellation, equally facilitating different types of entrepreneurship, does not exist. Policy-makers seeking to stimulate entrepreneurship are thus faced with the trade-off of targeting policy reforms to that entrepreneurship type they intend to promote—at the expense of other types of entrepreneurship and the broader societal consequences such reforms will have.     

Cross-Country Differences in Entrepreneurial Activity: The Role of Cultural Practice and National Wealth

In this paper, we argue that national culture is important in interpreting the differences of entrepreneurial activities between countries. Furthermore, national wealth plays a moderating role between national culture and entrepreneurial activities. Datasets from the Global Leadership and Organizational Behavior Effectiveness (GLOBE) project and Global Entrepreneurship Monitor (GEM) study were analyzed. We find that there are interaction effects between GDP, a proxy for national wealth, and several cultural dimensions on entrepreneurial activities. More traditional cultural variables (in-group collectivism, humane orientation, and power distance) enhance early-stage and established entrepreneurship in low- and medium-GDP countries, but hinder early-stage and established entrepreneurship in high-GDP countries. More modernistic cultural variables (performance orientation, future orientation, and uncertainty avoidance) promote high-growth and high-innovation entrepreneurship in some situations, especially in high-GDP countries. Implications and limitations are discussed.     

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.     

Institutional pressures and international market orientation in SMEs: Insights from the French wine industry

In this research, we examine how external institutional pressures influence international market orientation (IMO) in small-medium sized enterprises (SMEs). We use institutional theory and insights from the international entrepreneurship literature to predict how different formal regulative pressures (from national and international sources) as well as different informal normative pressures (from distributors and end-consumers) influence IMO in SMEs. We test our hypotheses using survey data from 107 small wineries across all of the main wine-producing regions in France. The results provide support to the central assertion that it is outside pressures on decision-making – rather than an endowment of internal resources and capabilities – that influence IMO in SMEs. External regulative sources have the strongest effects with pressures on decision-making from national laws having a negative impact on IMO and those from international laws having a positive impact on IMO. We find partial support for the effect of normative pressures from distributors and end-consumers. Implications for theory and management of internationalization in small firms are discussed.     

SME internationalization: How does the opportunity-based international entrepreneurial culture matter?

We employ the opportunity-based international entrepreneurial culture (IEC) comprehensive notion that draws upon the opportunity-based view (OBV). The OBV supports the idea that entrepreneurs mold the organizational behavior and characteristics of their firms to pursue opportunities abroad. We set out to explore possible attitudinal differences as regards exploitation of opportunities within firms in each of three internationalization dimensions that are previously identified in the literature, notably time to internationalization, country market presence and international mode. We perform eighteen case studies on high-performing internationalized small and medium-sized enterprises (SMEs) in knowledge intensive sectors. The evidence refines the OBV as it manifests how three IEC characteristics (namely risk attitude, market orientation and networking propensity) matter for firms in the three internationalization dimensions. The study further adds to the international entrepreneurship literature that has until now myopically focused on international new ventures as if they were the sole opportunity-driven group of internationalized SMEs.     

Mortgage affordability and entrepreneurship: Evidence from spatial discontinuity in Help-to-Buy equity loans

We exploit a policy change in the UK Help-to-Buy (HTB) equity loan scheme in order to identify the causal link between mortgage affordability and entrepreneurship activity at the local level. We contribute to the literature on the relationship between housing finance and entrepreneurship by demonstrating the impact of government equity loans on entrepreneurship through the release of trapped liquidity. When less equity is required to buy a house, households could use the ‘additional’ liquidity to start a business. We use a spatial discontinuity in treatment methodology to take advantage of the reform of the Help-to-Buy scheme in 2016, which increased the limit of equity loans provided in London. By using data on business population at the postcode sector level, we are able to measure the impact of the new policy by comparing similar areas on the opposite sides of the Greater London Authority boundary. Our results show that an increase in mortgage affordability fosters entrepreneurial activity in affected areas by 20%, resulting in 1 more start-up on average per postcode per year. The new businesses are mainly single-plant micro enterprises in capital intensive sectors with low income volatility.     

Transforming a traditional research organization through public entrepreneurship

Public entrepreneurship is much like its private sector counterpart; however, public entrepreneurs face additional challenges due to weaker competitive forces in the public as compared to private sector, with objectives that often are poorly defined and performance that is difficult to measure. Despite the impact on public good, how to enact changes successfully in public sector organizations to be more entrepreneurial is poorly understood. This article summarizes current research on public entrepreneurship and presents a detailed case study of a successful entrepreneurial change in a public sector organization. A five-step change process used to enhance entrepreneurial behaviors was implemented in a public sector organization and the qualitative and quantitative results demonstrated substantial performance improvements over 4 years (i.e., quantitative performance in some areas was more than 10 times greater). We explain key steps that produced successful outcomes and how to avoid common challenges in the implementation of ongoing entrepreneurial behaviors in public sector contexts.