Credit-rationing and entrepreneurial experience: Evidence from a resource deficit context

This study explores the following novel research question: Do attributes relating to the resources and signals of lead entrepreneurs, particularly prior business ownership experience quality signals, reduce the probability that entrepreneurs will be chronic credit-rationed entrepreneurs in a developing economy context with resource deficiencies? Guided by insights from signalling, resource-based view of the firm and human capital theory, profiles of credit-rationed entrepreneurs (i.e. debt finance obtained but below the amount requested) are highlighted. The length of the debt finance gap was considered with regard to temporary (over one year), major (over two years) and chronic (over three years) finance gaps. We find support for our hypotheses relating to entrepreneurs whose firms are more innovative being more likely to be chronically credit-rationed, whilst firms with partners, entrepreneurs with longer prior business ownership experience and habitual entrepreneurs are less likely to be credit-rationed. The interaction with serial or portfolio entrepreneur reduces the chronic credit-rationing problem faced by innovative firms. A case for developing linkages between inexperienced novice entrepreneurs and habitual entrepreneurs, particularly successful portfolio entrepreneurs, is made. Notably, we suggest that building upon the experienced entrepreneurs who do exist may be particularly beneficial in resource deficit contexts such as Ghana     

Sharing my way to success: A case study on developing entrepreneurial ventures using social capital in an OSS community

While Open Source Software (OSS) communities provide opportunities for knowledge creation, we have a limited understanding of how entrepreneurs leverage OSS communities for their entrepreneurial ventures. Using social capital theory in a mixed methods case study, we compare entrepreneur and non-entrepreneur behaviors to investigate how entrepreneurs build social capital within an OSS community. This study shows that entrepreneurs differentiate themselves from non-entrepreneurs by focusing on cognitive and relational capital building activities, which in return makes it possible for them to leverage their social capital to influence and shape the environment in which they are operating. Our findings suggest that entrepreneurs strategically select which activities within the community to expend their limited resources on (e.g., developing code over participating in email conversations) and build their social capital more through their actions than through their words (e.g., showing their commitment to the community through code commits, bug fixes, and documentation). Given the liabilities of newness and smallness as well as other challenges faced by entrepreneurs, applying an open innovation strategy in OSS communities could be one approach where entrepreneurs, by developing and freely revealing their intellectual property to the community, share their way to success via OSS-infused entrepreneurial business ventures.     

Network or Independent Business? Entrepreneurs' Human,Social and Financial Capital as Determinants of Mode of Entry

When establishing a new business, entrepreneurs can decide to join a network of independent business partners rather than choose the alternative of independent business ownership. In this study, we use a probit model on a large database to study the human, social, and financial capital of French entrepreneurs who join franchising and comparable forms of networks. Results confirm that initial levels of human and social capital are significant determinants of network membership. We also show that an increase in the proportion of the project financed by debt increases the probability of joining a network. Copyright © 2014 John Wiley & Sons, Ltd.     

International market selection strategies of manufacturing and services firms

This paper discusses the entrepreneurial landscape in Africa and locates a new generation of African entrepreneurs and their business networks within it. Unlike others in that landscape (i.e. micro- or small-scale informal sector vendors, and traditional or multinational large-scale formal sector firms), the ‘new generation’ entrepreneurs are business globalists who organized a system of business enterprise networks consisting of national, regional, and pan-African organizations. The study analyses interview data from 57 men and women network members from 10 countries (Botswana, Ethiopia, Ghana, Kenya, Mali, Senegal, South Africa, Uganda, Zambia, and Zimbabwe). Some defining characteristics of these entrepreneurs are interactive social and business relationships, use of modern management methods and information technology, trust among fellow members, transparent business practices, advocacy on behalf of the private sector, and commitment to increasing intra-African commerce. Their mission is to improve the climate for private sector business in Africa and to promote regional economic integration. They pursue cross-national commercial ventures, maintain official observer status at established regional economic organizations, sign memoranda of understanding with multilateral agencies, establish venture capital funds, and help to change government policies. The paper identifies characteristics of the ‘new generation’ entrepreneurs, evaluates goals and achievements of their networks, and concludes that despite limitations, these entrepreneurs and their organizations have created intra- and cross-national networks that strengthen private-sector-led economic growth in Africa.     

The influence of multiple constraints along the venture creation process and on start-up intention in nascent entrepreneurship

This study examines the influence of multiple constraints encountered by nascent entrepreneurs (NEs) in their current phase of the venture creation process – disengaged, still trying or started – and on their start-up intention after disengagement. Drawing on a sample of 1872 German NEs collated in 2014, we extend the literature in the field of nascent entrepreneurship and encountered constraints. By applying the theories of planned behaviour and appraisal as an overarching theoretical foundation, we develop our hypotheses. We find that individuals who have recently abandoned their venture have faced significantly more constraints than other NEs. A deeper analysis reveals that financing difficulties and especially certain personal characteristics impede venture creation. Furthermore, our results show that constraints beyond an NE’s own control are lethal for the continuance of the intention to create a new business. We derive important implications for NEs, entrepreneurship education and policymakers.     

Social capital effects on the discovery and exploitation of entrepreneurial opportunities

Social capital refers to social networks and the norms of reciprocity, cooperation and trust associated with them. It can be studied at different levels of analysis. As previous literature suggests, social capital has aspects at both the individual and collective levels. However, theory development and empirical research have focused on separate, sometimes diverging levels. In an attempt to address this, this research examines the simultaneous influence of individual and regional social capital on the discovery and exploitation of entrepreneurial opportunities using individual-level data from the Global Entrepreneurship Monitor linked with regional-level data on social capital. The results show that individuals from regions with higher social capital are more likely to discover and to exploit entrepreneurial opportunities. Moreover, individuals having networks with other entrepreneurs are also more likely to identify a business opportunity and to become an entrepreneur. Also, we found that social capital at individual level had a greater effect than social capital at regional level in the two stages of the entrepreneurial process.     

Determinants of agricultural entrepreneurship: a GEM data based study

The aim of this study is to explain the determinants of entrepreneurship in agriculture industry. What are the drivers of early stage entrepreneurial activity of agri-business entrepreneur and how it is influenced by various cognitive and social capital factors? To answers these questions various driving factors of entrepreneurial activity have been explored from the literature. To achieve the objective, the study uses APS (Adult Population Survey) 2013 data of 69 countries provided by GEM (Global Entrepreneurship Monitor). Total number of respondents 1470, those who are alone or with others, currently trying to start a new business, including any self-employment or selling any goods or services to others in Agriculture Industry, were selected from the data set. To measure the influence of cognitive and social capital factors on early stage entrepreneurial activity logistic regression was employed. The findings show that those who see entrepreneurial opportunities, are confident in their own skills and ability, having personal relationship or social networks with existing entrepreneurs, and have invested in others business as business angels are more likely to become an entrepreneur. Additionally, fear of failure or risk perception does not prevent people to become entrepreneur. Policy implications have been discussed. This is one the first study of its kind and contributes to the existing literature by explaining agricultural entrepreneurship through an integrated approach of entrepreneurial cognition and social networking.

     

Networks vs. market methods in high-tech venture fundraising: the impact of institutional environment

This study examines how institutional environmental factors, including cultural norm, state regulatory system and venture capital market, influence the high-tech entrepreneur's choice for using network vs. market methods when approaching prospective investors at the early stage of their new venture creation. We collected comparative data through on-site interviews and questionnaire survey with 128 high-tech entrepreneurs in Singapore (a newly industrialised economy) and 250 in Beijing, China (an emerging economy). Our findings suggest that a culture emphasising the value of social obligation, the under-development of the legal/regulatory system and the immaturity of the venture capital market increased the proclivity of entrepreneurs to use network methods. Moreover, entrepreneurs who value networks higher in social obligation than in information transfer are more likely to choose personal ties instead of business ties. This study enhances our understanding of how high-tech entrepreneurs in emerging economies choose between networks and market methods in venture fundraising, and offers suggestions on how public policy makers in these economies can improve the institutional environment of their regions to promote high-tech new venture creation.     

Passion Isn't Always a Good Thing: Examining Entrepreneurs' Network Centrality and Financial Performance with a Dualistic Model of Passion

We propose a conceptual model that links entrepreneurs' passion, network centrality, and financial performance, and test this model with small business managers in formal business networking groups. Drawing on the dualistic model of passion, we explore the relationships that harmonious and obsessive passion have with financial performance, mediated by network centrality. Results indicate that harmoniously passionate entrepreneurs had higher out‐degree centrality in their networking group (i.e., they were more inclined to seek out members to discuss work issues), which increased the income they received from peer referrals and, ultimately, business income. Obsessively passionate entrepreneurs had lower in‐degree centrality (i.e., they were less likely to be approached by peers), and in turn received less income from referrals and less business income. These findings highlight that entrepreneurial passion does not always result in positive financial outcomes – the type of passion makes a difference. Implications for research and practice are discussed.     

Entrepreneurial orientation and social capital as small firm strategies: A study of gender differences from a resource-based view

Women entrepreneurs have recently been the subject of many studies which have revealed that though women possess some of the same resources as male entrepreneurs, success levels are not the same. The current study looks at the resources utilized by small business owners within downtown business districts. Using a sample of 467 small business owners, we test differences in entrepreneurial orientation and social capital between men and women entrepreneurs. Though women actually reported higher levels of entrepreneurial orientation and social capital, there were no differences in their abilities to utilize these two resources in achieving firm performance. We offer discussion of why these findings are relevant, as well as research implications.     

New business creation and regional development: Enhancing resource acquisition in areas of social deprivation

Over 7 years, the UK-Government funded an entrepreneurship scholarship scheme in the most deprived regions of England. This study examines how, for 211 of these nascent entrepreneurs, bootstrapping compensated for their inability to obtain debt or equity funding. Results show that social capital (strong, weak and brokerage ties) is important for access to bootstrapped resources. While human capital, including previous business experience and financial skills, are linked to joint-utilisation approaches to bootstrapping, higher financial investment is linked to owner- and payment-related approaches. A key outcome for developing appropriate regional policy is that ‘brokers’ provide a link between socially disadvantaged entrepreneurs and external resources.     

Incidence of teams in the firms owned by serial,portfolio and first-time entrepreneurs

This study focused on the prevalence of teams in the firms owned by habitual and first-time entrepreneurs. Most team-oriented studies in the field of entrepreneurship have rather focused on entrepreneurial than management teams. In this study, we extend the prior research by linking management teams to the discussion and by paying attention a previous closure experience of an entrepreneur. The research revealed that management teams were more common in the firms owned by habitual than first-time entrepreneurs. Correspondingly, there were more solo entrepreneurs among the first-time entrepreneurs. The results also suggest that a closure experience decrease the probability of solo entrepreneurship.     

How did you get up and running? Taking a Bourdieuan perspective towards a framework for negotiating strategic fit

This article suggests a theoretical framework for illustrating significant iterative processes that need to be strategically managed when entering a new field or changing a social position within a field. Applying a process-relational perspective, the framework theoretically underpins what propels individuals to change their behaviour conceptualized as constructing a strategic fit between personal structure and fields. Using Bourdieu’s concepts of habitus, field and capitals as a lens the analysis reveals how capital transformations eventually can lead to a social construction of this temporary strategic fit. The article argues that the performance of habitus expresses temporary field specific social positioning as a social materialization of macrostructures (gender, age, class, etc.). This suggested framework is applied to conceptualizing how nascent entrepreneurs successfully negotiate entrepreneurial processes. It is concerned with a small aspect: how to physically start a business (its registration and the start of trading). In this context, the article unpacks how the transformation of capitals mediates nascent entrepreneurs’ social positioning. This article contributes to the growing ‘social turn’ research situating entrepreneurial processes within social relations and context and the emerging Entrepreneurship as Practice field. It offers practical implications for business support and research directions.     

企业家人力资本研究

论述企业家人力资本的特性:缺乏程式性、全面性重于专业性、边界不确定性和产权不可直接界定与不可交易性;着重研究在企业家人力资本特性下的积累及其棘轮效应,这种效应包含在企业家人力资本积累的起点、过程和退出环节,相对于其他人力资本,企业家人力资本棘轮效应使得企业家人力资本投资风险尤其明显;进而分析企业家劳动的复杂性如何使得企业家劳动定价只能通过企业价值剩余来衡量,并说明合理计算企业价值剩余需要依赖于较为完善的要素市场;最后就创业与企业家培育提出相关建议。     

Why are some graduate entrepreneurs more innovative than others? The effect of human capital,psychological factor and entrepreneurial rewards on entrepreneurial innovativeness

This study investigates the innovation behaviour of graduate start-ups at the individual level. It bridges the graduate enterprise literature and innovative entrepreneurship literature to put forward three arguments that ascertain why highly educated graduate entrepreneurs are not always innovative in starting new businesses. First, anchoring on the individual opportunity costs–entrepreneurial rewards nexus, it argues that graduate entrepreneurs will exploit opportunities innovatively if they expect the levels of entrepreneurial rewards that match their high human capital and high opportunity costs. Second, it is argued that entrepreneurial innovativeness is conditional on psychological factors such as students’ managerial self-efficacy and overconfidence. Third, it is also argued that the nonlinear relationship between entrepreneurial innovativeness and entrepreneurial rewards will drive graduate entrepreneurs to exploit even riskier opportunities in search for high rewards. This study operationalizes the theoretical framework with an empirical model and estimates it using a graduate entrepreneur sample from a questionnaire survey in China. Our results suggest that innovation behaviour of graduate start-ups is influenced by the quantity of human capital, psychological make-up and expectations of entrepreneurial rewards.     

RISK AVOIDANCE STRATEGIES IN VENTURE CAPITAL MARKETS

This research compares risk avoidance strategies employed by business angels and venture capital firm investors. It finds that differences in their approaches to evaluating risk lead them to hold predictably different views of the dangers of market and agency risk. the former tend to rely upon the entrepreneur to protect them from losses due to market risk. Consequently, they are more concerned with agency risk than market risk. the latter are more concerned with market risk because they have learned to protect themselves contractually from agency risk using boilerplate contractual terms and conditions. A likely result of their different approaches to avoiding risk is a segmentation of venture capital markets, which has important implications for both entrepreneurs and future research.     

Book review of Economic Geography of Higher Education: Knowledge Infrastructure and Learning Regions. Edited by ROEL RUTTEN,FRANS BOEKEMA and ELSA KUIJPERS (London: Routledge, 2003). [Pp. 258]

This paper focuses on the growing aspect of entrepreneurship associated with lifestyle-induced migration from wealthy countries, through investigating self-employment among expatriates from northern Europe in rural areas of southern France and Spain. Most expatriates had no prior experience of entrepreneurship and typically established their business opportunistically and some time after arrival. Based upon interviews with 41 expatriate households (operating 70 business ventures), the study explores the characteristics of the individuals involved, the nature of their businesses, factors influencing start-up, and processes and patterns of business development. Self-employment is shown to be the most effective available mechanism for supporting lifestyle objectives of expatriates who vary greatly in their skills, experience and resources. The study identifies significant differences between the respective groups from the two countries, reflecting the spatially differentiated character of migration in terms of age, education, qualifications and capital resources. These appear to have given rise to a more sophisticated profile of businesses in the French areas. Sharp differences in language skills as between the different countries are seen as influencing the ability of entrepreneurs to network with, and market to, the indigenous population, with implications for the future development of the businesses, and their local impact. The study seeks to augment standard conceptual approaches to entrepreneurship, through taking account of the primacy of the migration decision and specific related processes, and proposes a model that advances our understanding of the phenomenon.     

Entrepreneurs learning together: The importance of building trust for learning and exploiting business opportunities

This longitudinal, qualitative case study examines trust-building processes and learning outcomes among entrepreneurs who participated in formal networks designed to develop competence and knowledge. This study is built on rich data collected through observation and video recordings made during network meetings and get-togethers. Additional data was gleaned from personal interviews with participating entrepreneurs. All data sources reveal on how trust develops and how entrepreneurs can use networks to learn and improve their capacity to exploit business opportunities. Studying how trust is built over time among entrepreneurs who demonstrate a low level of trust when they join the network, this study provides insights into micro-processes and important components of building trust. Findings suggest three processes that build commitment, companionship, and competence trust. Moreover, acknowledging the notion of social learning, the findings suggest that when entrepreneurs build trust with one another they can experience cognitive, emotional, and social changes by participating in a network. This may bring potential consequences for their exploiting opportunies. Implications for academics and managers are discussed.     

An empirical study on the nexus between the emotional intelligence of top managers and their assessment of intellectual capital

This study considers intellectual capital based on the assumption that this capital, which possesses social aspects, is related to the emotional capacities (i.e., emotional intelligence) of an organization’s members. A literature review indicates that this relationship has been previously noted and studied, and researchers agree that the emotional intelligence of the members of an organization affects the organization’s intellectual capital. Based on this analysis, this relationship is examined in the Turkish business context. Data are collected from top managers, who can affect the intellectual capital oftheir businesses and who, as human beings, are emotional. Thus, in this study, the emotional intelligence of top managers and their opinions regarding the intellectual capital of their businesses are considered to be related, with interesting results. When all of the factors of emotional intelligence that are likely to affect opinions regarding intellectual capital are examined using a multivariate model, the effect of emotional intelligence is revealed. Primarily, three factors of the emotional intelligence—empathy and communication skill, self-awareness and sociability—affect the participants’ opinions regarding the intellectual capital of their businesses. Univariate models are used to evaluate the effect of each emotional intelligence factor on the participants’ opinions regarding the intellectual capitalof their businesses. Empathy and communication skills affect opinions about the quality of human capital. Self-awareness affects opinions about the organizational commitment of workers. Sociability can affect opinions about information technology and information sharing. In summary, emotional intelligence affects opinions about human capital quality, information technology and information sharing.     

Exploring creative entrepreneurs’ happiness: cognitive style,guanxi and creativity

Traditional economic theories generally assume that entrepreneurs’ satisfaction is largely affected by financial performance of their entrepreneurial business, while recent research suggests that entrepreneurs’ happiness is more important than financial success. Drawing upon the theories of entrepreneurial cognition and social networks, we develop a model to explore the factors influencing entrepreneurs’ happiness. A total of 270 creative entrepreneurs in Taiwan’s creative industries are studied. Results show that entrepreneurs’ creating cognitive style has a positive effect on both entrepreneurs’ creativity and firm creativity, but entrepreneurs’ planning cognitive style has a negative effect. Findings indicate that entrepreneurs with strong family ties and business ties have high level of individual creativity and firm creativity, which then have a positive influence on entrepreneurs’ happiness.