Friends,family, or fools: Entrepreneur experience and its implications for equity distribution and resource mobilization

Who helps entrepreneurs raise the resources they need and how much equity does an entrepreneur distribute in return? We use a sample of 611 entrepreneurs in the U.S. to examine why some entrepreneurs are more likely than others to distribute ownership selectively to helpers. We find that entrepreneurs with specific industry experience and start-up experience are able to provide ownership more selectively and raise more resources from their helpers. We refine the categorization of social ties further to make a distinction between professional and familial ties to show that the ownership distribution and types of resource contributions vary by the mix of ties in the entrepreneur's helper network. Our findings have implications for theories of resource assembly, social structure and entrepreneurship, and organization design.     

The Who,Where, What,How and When of Market Entry

This introductory, along with the eight articles contained within this Special Issue, highlights and brings greater clarity to entrant‐incumbent interactions and to firm movement – when entrants traverse market territories for the creation and/or delivery of offerings, where ‘markets’ include service or product categories, technology or resource spaces, industries, sectors and/or geographies. Collectively, this Special Issues explains that firm movement across market boundaries is highly consequential, influencing resource‐capability mixes inside firms, interfirm relations, market logic and industry value chains, and of course, people, communities and even nations. Specifically, we develop a field‐wide perspective of market entry by expanding on the framework of market entry that Zachary and his colleagues developed (Zachary et al., 2015) – i.e., the who (players such as incumbents, entrants, suppliers, etc.), when (the timing and sequence of entry), how (the strategy, resources, capabilities, etc.), where (the space of entry) and what (product, service, business model, etc.) – to include two additional categories: complements (networks, platforms, ecosystems) and non‐market elements (government, political, social and cultural arrangements). We also summarize the eight highly diverse and insightful articles that make this Special Issue, and conclude with a discussion to highlight foundational questions that point to new directions in future research in this field. In sum, we hope to inspire scholars to go beyond counting outcomes (e.g., entry/exit rates, or profiling successful versus unsuccessful entrants), to consider contexts, processes and contingencies (e.g., cost, time, collaboration, competition, interfirm relations, etc.) and to discover boundary conditions that inform a theory of market entry.     

Strategy and environment as determinants of performance: Evidence from the Japanese machine tool industry

This study examines the roles played by the environment and realized strategies on firm-level performance in the Japanese machine tool industry. We examine the effect of environment and strategy on performance using longitudinal data on a sample of 25 Japanese machine tool firms over the period 1979-92. Our results indicate that both firm strategies and the environment play significant roles in influencing profitability and growth. More specifically, whereas both strategy and environmental variables are significantly related to firm profitability, only environmental variables are associated with firm growth. Additionally, in contrast to U.S. based studies, we find that capital expenditures and technological change are not negatively associated with profitability. Rather technological change has a positive impact on firm growth. We discuss the implications of these results for strategic management and provide suggestions for future research.     

Does group membership matter? Evidence from the Japanese steel industry

In this study we address criticism that performance differences among strategic groups found in past research may be spurious and attributable to firm effects. The Japanese steel industry provides the setting for the study. Our analysis is based on data from the carbon steel sector of the Japanese steel industry for the periods 1980–87 and 1988–93. A one-way ANOVA indicated that the average performance of firms in the two technology-based groups in this industry—the integrated mills and the minimills—were significantly different during the two periods. Subsequently, we performed a regression analysis to examine the residual group effect after controlling for both environment and firm-specific effects. We found that even after controlling for both environment and firm-specific effects group membership was significantly associated with firm performance. Copyright © 2001 John Wiley & Sons, Ltd.     

Stock Liquidity and Firm Value: Evidence from a Policy Experiment in India

The Indian securities market regulator intervened in June 2010 with a regulatory amendment in the listing requirement that mandated all the listed firms other than PSUs (government‐owned companies) to have a minimum public shareholding of 25%. The affected firms were given a 3‐year window to comply with the regulation. This study examines the impact of the new regulation on the affected firms’ value. We explore the relationship between improvement in firms’ value and stock liquidity. This regulatory intervention offers a natural experiment to examine direct causality between stock liquidity and firms’ value. The findings of the empirical analysis confirm the existence of a direct causal relationship between stock liquidity and firm value, stemming from an improved operating performance.     

Generic manufacturing strategies: A conceptual synthesis

This paper provides a conceptual framework that links manufacturing to business unit strategy and focuses on developing the notion of ‘generic manufacturing strategies’ at the strategic business unit (SBU) level. Specifically, an explicit conceptual link is drawn between ‘generic’ business unit strategies and ‘generic’ functional structures in manufacturing. It is proposed that the alternate manufacturing structures implicitly represent ‘generic manufacturing strategies’. Drawing on ideas and concepts from the business strategy literature and manufacturing literature the paper links Porter's generic strategy framework to a complementary manufacturing structure framework that uses three dimensions: process structure complexity, product line complexity, and organizational scope. Viewed from different perspectives, the ‘manufacturing contingency theory’ concepts presented implicitly in the paper can be viewed as an extension of classic research on the interdependence between strategy and structure. The frameworks developed here provide a partial synthesis of knowledge in the broader disciplines of engineering and management without sacrificing academic rigor and practitioner relevance.     

Assessing generic strategies: An empirical investigation of two competing typologies in discrete manufacturing industries

In spite of the extensive empirical evidence supporting Porter's (1980) typology of generic strategies, many researchers have criticized it for its conceptual limitations. To address these criticisms, Mintzberg (1988) proposed an alternative typology of generic strategies. Our findings, based on a survey of executives in manufacturing firms, provide support for Mintzberg's typology and fail to support Porter's typology. Given the findings, we call for further empirical validation of competing typologies to revitalize research on generic strategies.     

Social structure,reasonable gain,and entrepreneurship in Africa

In the context of desperate poverty, characterized by households at subsistence level that experience economic loss and social fracture, explanations for why individuals undertake entry into entrepreneurship are limited. We find that individuals rely on their social relationships to enable entrepreneurial activities that have the potential to create a reasonable income gain. In a sample of 1,049 households in rural Kenya, we test whether the disintegration of social structure attenuates entrepreneurial behavior. When coupled with factors such as income loss, gender of the household head, and access to communal resources, social structure plays a pivotal role in entrepreneurial action. We propose that the search for reasonable income gain is a key driver of entrepreneurial action at subsistence levels, thereby adding to behavioral explanations of entrepreneurship. Copyright © 2015 John Wiley & Sons, Ltd.     

HomeGrocer.com: Anatomy of a failure

This case study examines the initiation, financing, development, and failed merger of an ambitious online grocery retail venture: HomeGrocer.com. It highlights the risks and challenges associated with developing a revolutionary venture. Even though the HomeGrocer.com team did many things right developmentally, some key errors and unfortunate timing resulted in them expanding too quickly and running low on cash. It also forced them to make a tough strategic decision about whether to scale back operations and renege on their IPO commitments or merge with a well-funded competitor, Webvan. The case discusses lessons that can be learned from business failure.     

Entry into new niches: the effects of firm age and the expansion of technological capabilities on innovative output and impact

We provide evidence that young firms systematically differ from older firms in their innovative output when they enter ‘new to the firm’ technological niches. We analyze data from 128 biotechnology firms since their inception and track these firms over time. Our analyses reveal that the organizational age at which the firm branches into new technological niches significantly influences its innovative activity. We refine the focus of the extant literature by separately examining the effects of branching on the quantity of innovative output and the impact that this output has on the technology domain. Subsequent to branching into new niches, we find that older firms have a higher quantity of output than their younger counterparts, whereas young firms tend to outpace their older rivals with higher impact. We discuss the implications of these findings for the literature on dynamic capabilities and entrepreneurship. Copyright © 2011 John Wiley & Sons, Ltd.