Failing firms and successful entrepreneurs: serial entrepreneurship as a temporal portfolio

Entrepreneurial performance is almost always confounded with firm performance. In this paper we argue for an instrumental view of the firm by formally showing that entrepreneurs can amplify their expected success rates by designing their careers as temporal portfolios that exploit contagion processes embedded in serial entrepreneurship. The advantages to holding concurrent portfolios that exploit heterogeneity are well known. The same advantages may be achieved in the serial context through contagion. Our model exploits an observation due to William Feller on the near equivalence of the two, statistically speaking. It also leads to empirically plausible implications about the size distribution of firms in the economy and illustrates the relevance of considering firms and entrepreneurs as distinct loci of analysis.     

Dynamics of retail-bank branching in Antwerp (Belgium) 1991–2006: Evidence from micro-geographic data

We exploit a comprehensive new panel dataset on retailbank branch locations in 233 neighborhoods (local markets) in the metropolitan area of Antwerp to describe (i) how between 1991 and 2006 the patterns of bank presence, entry, exit and choice deeply evolve and (ii) whether and how changes in these “on the ground” patterns systematically diverge across Antwerp’s different, highly segregated neighborhoods. We show that over the 15-year period under study entry and exit dynamics substantially intensify, the level change in branch desert grows significantly, and bank choice markedly declines; and that between 1996 and 2001, these changes are robustly associated with the neighborhood average income. In doing so, we advance a new technique for generating spatial measures that both minimize the discretization bias and can be reliably linked to neighborhoods. We demonstrate that the resulting measures are indeed more precise than traditional count measures.     

Consequences of misspecified mental models: Contrasting effects and the role of cognitive fit

Research summary: Mental models, reflecting interdependencies among managerial choice variables, are not always correctly specified. Mental models can be underspecified, missing interdependencies, or overspecified, containing nonexistent interdependencies. Using a simulation model, we find that under‐ and overspecification have opposite effects on exploration, and thereby, performance. The effects are also opposite, depending on whether a manager controls all choice variables. The mechanism underlying our results is a feedback loop: misspecified mental models influence managerial learning about the effectiveness of choices; this learning guides how the environment is explored, which in turn, affects which information will be generated for future learning. We explore implications of these results for strategic management and introduce the notion of “cognitive fit” between the mental model of the decision‐maker and the strategic environment. Managerial summary: Managers often rely on mental models to guide their decision‐making. These mental models, however, are often misspecified, that is, more or less complex than the situation managers are facing. Using a simulation model, we study the consequences of such misspecified mental models. We find that the performance implications of misspecified mental models crucially depend on whether the manager controls all choice variables. We identify situations in which simpler mental models are better than overly complex ones, and vice versa. Copyright © 2015 John Wiley & Sons, Ltd.     

Assessing advertising content in a hospital advertising campaign: An application of Puto and Wells (1984) measure of informational and transformational advertising content

The following is a report of a study designed to measure advertising content based on the cognitive and affective elements of informational (i.e., information processing) and transformational (i.e., experiential) content using the measure of advertising informational and transformational content developed by Puto and Wells (1984). A university hospital advertising campaign designed to be high in transformational content did not appear to affect perceived quality of local university hospitals relative to private hospitals or increase the likelihood of choosing a university hospital in the future. Further, experiences with university hospitals that seemed to be in direct contrast to the content of the advertisements based on subject perceptions affected how university hospital advertisements were perceived in terms of content. Conclusions and implications for hospital advertising campaigns are discussed.