National culture,effectuation, and new venture performance: global evidence from student entrepreneurs

Studies examining the relationship between national culture and entrepreneurial activity have largely ignored the influence of culture on individual decision-making. Recent years have witnessed considerable interest in cognitive logics employed by entrepreneurs. A growing body of literature examines factors contributing to the relative reliance on causal and effectual reasoning as entrepreneurs attempt to launch and grow new ventures, with evidence suggesting expert entrepreneurs engage more heavily in effectual reasoning than do novice entrepreneurs. The present study examines the mediating role of cognitive logic in explaining venture performance in differing cultural contexts. A series of hypotheses are tested using a sample of 3411 new ventures started by student entrepreneurs from 24 countries based on the Global University Entrepreneurial Spirit Students’ Survey. The findings indicate that both venture cognitive logics have positive effects on new venture performance and serve as mediators in the culture-performance relationship. Based on these findings, we conclude entrepreneurial reasoning is shaped not only by personal characteristics of entrepreneurs but also by aspects of the cultural context.     

A meta-analytic review of effectuation and venture performance

Though much research in entrepreneurship makes the fundamental assumption that opportunities are found, new work is emerging which questions this core tenet. Effectuation, for example, positions the entrepreneur as co-creator of opportunities, together with committed stakeholders. In this study, we conduct a meta-analysis of the articles published in the Journal of Business Venturing, summarizing data on 9897 new ventures to connect three of the principles of effectuation positively with new venture performance. In so doing, we offer both specific insight into precisely measuring effectuation and a general method for extracting variables from prior work to measure new constructs.     

Buddhist entrepreneurs and new venture performance: the mediating role of entrepreneurial risk-taking

Small Business Economics - This study examines how Buddhism as an Eastern religion influences new venture performance. We propose that Buddhist values and associations can bring unique benefits to...     

The advantage of experienced start-up founders in venture capital acquisition: evidence from serial entrepreneurs

Entrepreneurs with prior firm-founding experience are expected to have more skills and social connections than novice entrepreneurs. Such skills and social connections could give experienced founders some advantage in the process of raising venture capital. This paper uses a large database of venture-backed companies and their founders to examine the advantage associated with prior founding experience. Compared with novice entrepreneurs, entrepreneurs with venture-backed founding experience tend to raise more venture capital at an early round of financing and tend to complete the early round much more quickly. In contrast, experienced founders whose earlier firms were not venture-backed do not show a similar advantage over novice entrepreneurs, suggesting the importance of connections with venture capitalists in the early stage of venture capital financing. However, when the analysis also takes into account later rounds of financing, all entrepreneurs with prior founding experience appear to raise more venture capital. This implies that skills acquired from any previous founding experience can make an entrepreneur perform better and in turn attract more venture capital.     

Technology commercialization, incubator and venture capital, and new venture performance

This study examines the effects of technology commercialization, incubator and venture capital supports on new venture performance from the resource-based view. This study uses regression analysis to test the hypotheses in a sample of 122 new ventures. The findings highlight the role of technology commercialization as a mediator between organizational resources, innovative capabilities, and new venture performance. Also, the empirical evidence indicates that incubator and venture capital supports moderate the effects of technology commercialization on the performance of new ventures. Finally, this study discusses managerial implications and highlights future research directions.     

Antecedents and consequences of effectuation and causation in the international new venture creation process

The selection of the entry mode in an international market is of key importance for the venture. A process-based perspective on entry mode selection can add to the International Business and International Entrepreneurship literature. Framing the international market entry as an entrepreneurial process, this paper analyzes the antecedents and consequences of causation and effectuation in the entry mode selection. For the analysis, regression-based techniques were used on a sample of 65 gazelles. The results indicate that experienced entrepreneurs tend to apply effectuation rather than causation, while uncertainty does not have a systematic influence. Entrepreneurs using causation-based international new venture creation processes tend to engage in export-type entry modes, while effectuation-based international new venture creation processes do not predetermine the entry mode.     

Understanding the dynamics of new venture top management teams: cohesion,conflict, and new venture performance

Research conducted under the upper echelon perspective has produced consistent evidence of a relationship between top management team (TMT) interaction and firm performance. We draw upon and extend this research in an effort to explain new venture performance as a function of cohesion and conflict within the top management team. Based upon data collected from a sample of 70 new ventures, we find that TMT cohesion is negatively related to affective conflict and positively related to cognitive conflict. As expected then, we also find that TMT cohesion is positively related to new venture growth.     

International new venture performance: Role of international entrepreneurial culture,ambidextrous innovation,and dynamic marketing capabilities

International new ventures (INVs) contend with environmental dynamism in global markets, compelling firms to enhance their innovation and marketing capabilities. While the INV literature is growing, it is not informative as to how INVs develop and utilize dynamic capabilities to overcome resource-constraints to enhance performance. We utilize the concept of international entrepreneurship culture (IEC) to better understand how INVs advance innovation and dynamic marketing capabilities to succeed in their internationalization activities. Building on the dynamic capabilities view (DCV), we empirically examine the relationships among IEC, ambidextrous innovation, dynamic marketing capabilities, and INV performance under varying levels environmental dynamism. The findings highlight that IEC influences both ambidextrous innovation and dynamic marketing capabilities; and, together, these link to INV performance gains. Furthermore, this research finds support for the mediating effects of ambidextrous innovation and dynamic marketing capabilities in the IEC – INV performance relationship. Additionally, the results indicate an international entrepreneurial culture is of greater significance in developing ambidextrous innovation when environmental dynamism is present. The study context is a sample of 286 high-technology INVs from India, a large and dynamic emerging market.     

National distances,international experience,and venture capital investment performance

This study examines how the performance of cross-border venture capital investments is affected by national institutional and cultural distances between the environments of venture capitalists (VCs) and investee ventures. We propose that institutional and cultural distances will decrease VCs' effectiveness in conducting venture capital activities and negatively affect investment performance in terms of exit success, and obtain supportive evidence while controlling for geographic distance. We further analyze how VCs can use their international experience to mitigate the negative consequences of national distances. We find that while broad international experience in diverse countries attenuates the deleterious effects of institutional distance in a significant way, it does not have a similar impact in attenuating the negative effects of cultural distance.     

Beyond hubris: How highly confident entrepreneurs rebound to venture again

This article outlines why highly confident entrepreneurs of focal ventures are better positioned to start and succeed with another venture; and therefore why overconfidence in one's capabilities functionally persists and pervades amongst entrepreneurs. By combining cognitive perspectives on confidence in decision making with Fredrickson's [Fredrickson, B.L. 1998. What good are positive emotions?. Review of General Psychology, 2, 300–319.; Fredrickson, B.L. 2001. The role of positive emotions in positive psychology: the broaden-and-build theory of positive emotions. American Psychologist, 56, 218–226.; Fredrickson, B.L. 2003. The value of positive emotions. American Scientist, 91: 330–335] ‘broaden-and-build’ theory of positive emotions, this paper elaborates the manner in which such entrepreneurs can develop emotional, cognitive, social and financial resilience that can be marshaled and mobilized for a subsequent venture.     

Clusters,knowledge spillovers and new venture performance: An empirical examination

Firms in geographic regions with industry clustering have been hypothesized to possess performance advantages due to superior access to knowledge spillovers. Yet, no prior studies have directly examined the relationship between a firm's location within a cluster, knowledge spillovers and firm performance. In this study, we examine whether technological spillovers explain the performance of new ventures in cluster regions. We find that ventures located within geographic clusters absorb more knowledge from the local environment and have higher growth and innovation performance, but contrary to conventional wisdom, technological spillovers are not the contributing cause of higher performance observed for these firms.     

Health insurance and the supply of entrepreneurs: new evidence from the affordable care act

Is the difficulty of purchasing health insurance as an individual or small business a major barrier to entrepreneurship in the USA? I answer this question by taking advantage of the natural experiment provided by the Affordable Care Act’s dependent coverage mandate, which allowed many 19–25 year olds to acquire health insurance independently of their employment. Using a difference-in-difference strategy, I find that the dependent coverage mandate did not increase self-employment among young adults overall, but increased self-employment among disabled young adults by 19–23%.     

The critical relationship between venture capitalists and entrepreneurs: Planning,decision-making,and control

On the basis of preliminary interview and survey data, evidence suggests that venture capitalists (VCs) are less involved with their affiliated new venture organizations than may be necessary for long term survival. The dual core model of innovation that emphasizes the need of a technical and administrative core for continued innovation is used as the foundation of this perspective. In the post investment relationship between the venture capitalist and the new venture, it is expected that the new venture has a well developed technical core. However, the administrative needs are often ignored by the new venture entrepreneurs. Therefore, it is recommended that VCs become more involved in the administrative component of the new venture organization (NVO) through either direct involvement or through the recruiting of key personnel. As the NVO moves through its life cycle the addition of an administrative component to its technical core provides for continued innovation necessary for long term survival and growth.     

Newness and novelty: Relating top management team composition to new venture performance

We distinguish novelty from newness and argue that the tasks of new venture top management teams vary with new venture novelty. We argue that as novelty increases, the information processing requirements on the TMT change as well. Because a team's demographic characteristics influence its information processing abilities, venture performance should reflect, at least partially, the fit between the characteristics of the TMT and the level of venture novelty. Evidence from a large sample of ventures supports this view.     

Financial crises and venture capital development: evidence from Indonesia

This exploratory study examines how financial crises impede or support venture capital (VC) development in the context of Indonesia and the 1997–1998 Asian financial crisis (AFC). Using a mixed-methods research methodology, the study finds that financial crises have divergent effects on VC development. Financial crises support VC development through accelerated VC practise diffusion, but impede that development by slowing VC enabling conditions. The effects of the substantial macro institutional changes often associated with financial crises are insufficient to overcome these impediments, resulting in a smaller VC industry.     

Market attractiveness,resource-based capabilities,venture strategies,and venture performance

This research seeks to identify variables that should be related to venture performance. It is hypothesized that both market attractiveness and resource-based capabilities are directly related to new venture performance. In addition, specific resource-based capabilities are hypothesized to be directly related to the competitive strategies chosen by a firm. Finally, the “fit” between strategies and resource-based capabilities is hypothesized to be related to venture performance.The sample consisted of all manufacturing businesses (SIC codes 20–39) started or reorganized in the corporate form between 1980 and 1991 in nine counties in northwestern Pennsylvania, as identified by a major marketing research service. Of the 800 companies surveyed, completed questionnaires were returned for 155, representing a 19% response rate. The 155 responding companies had a median age of 5 years with a median of 15 employees. The major products of companies in the sample included flour, lumber, household and office furniture, plastic containers, tools and dies, ready mixed concrete, pipe fittings, measuring devices, paint and varnish, machine tools, electroplate, carbon and graphite composite products, plastic laminated products, circuit boards, electronic components, and parts for internal combustion engines.In general, the results confirm the validity of the measures of environmental and organizational characteristics as we have adapted them for new ventures. As hypothesized, perceived market attractiveness and the overall abundance of resource-based capabilities were significantly related to venture performance. Also, in two of three cases, the evidence suggests that specific resource-based capabilities are related to the firm's stated competitive strategies. Finally, although the relationship between “fit” and performance is not supported in all cases, the performance of the emerging manufacturing ventures included in this sample appears to be enhanced when resource-based capabilities are supportive of a cost leadership strategy and when firms seeking to differentiate based on product and service quality have the resource-based capabilities to support that strategy. The results of this emerging research stream will make an important contribution to our understanding of the factors that impact firm performance. For scholars the results provide additional information needed to develop comprehensive new venture performance models. A clear understanding of the factors that have a strong influence on venture performance will enable practitioners to better identify viable business opportunities and academicians to provide potential business founders with tools to help them recognize opportunity. In addition, the identification of appropriate levels of abstraction will provide building blocks for future research that seeks to integrate environmental and firm-level constructs.     

Efficiency of venture capital firms: evidence from Spain

In recent years the venture capital (VC) sector has played an increasingly important role in financial systems. In general, this type of specialised financial activity is conducted by two types of operators, VC firms and VC management companies, each with its specific characteristics. The main objective of this paper is to evaluate the operating efficiency of these financial intermediaries in Spain, using data envelopment analysis, and to carry out an exploratory study of the variables that affect their level of efficiency, using a truncated regression model, and taking into consideration the nature of the operator (an approach not previously undertaken). Our analysis reveals, first, differences in the levels of efficiency achieved by VC firms and VC management companies and, second, that the most efficient organisations are those with more diversified ownership structures and which have a portfolio of companies active in the most innovative sectors.     

Financial intermediaries,ownership structure and the provision of venture capital to SMEs: evidence from Japan

This paper examines how the provision of venture capital to small- and medium-sized businesses (SMEs) is influenced by the ownership structure of the venture capital provider. We introduce a new and unique dataset from the Japanese venture capital market, comprising data on investment and venture capital activities of 127 Japanese venture capital funds. The data allow us to provide a direct comparison of the behaviour of individual owner-manager venture capitalists versus financial intermediation (e.g., bank’s venture capital divisions). The data indicate owner-manager venture capitalists (financial disintermediation) give rise to much smaller portfolios of SMEs and more advice to entrepreneurs. Across the scope of different financial intermediation structures, including banks, life insurance companies, securities firms, corporations and government bodies, there are further differences in the provision of governance and value-added advice provided to SMEs. Also, the data indicate US-affiliated funds in Japan are more likely to have smaller portfolios and tend to provide more advice to SMEs.

Untangling the relationship between new venture internationalization and performance

To help untangle the inconsistency in prior performance studies for new venture internationalization, the dynamic capabilities perspective is revisited to consider whether the relationship is more complex than previously assumed. While internationalization requires the reconfiguration of routines and resources, survivability is argued to peak at moderate levels of internationalization where the associated resources and risk is balanced between local and foreign markets. In contrast, sales growth is suggested to peak at either low or high levels of internationalization where a singular market focus and set of capabilities is being exploited. The results confirm that the level of new venture internationalization exhibits an inverted U-shaped relationship with survival, while the opposite U-shaped relationship exists with sales growth.