Special issue on “The role of networks in entrepreneurial performance: new answers to old questions?”

The nature and extent of relationships between entrepreneurial networks and entrepreneurial performance are old questions. Scholars have explored the nature of entrepreneurial networks and have focused on their relationship with, and effects on, performance, which is viewed in this special issue in terms of the strategic development of established businesses and new ventures. However, while much is now known about the origins and effects of social networks there continues to a paucity of research on how social networks are used in various organizations, and when one or more networks are drawn upon for what specific purpose. Each article in this special issue addresses one or more of these questions in a range of industries and environments, namely poor village entrepreneurs who have to work in a highly challenging financial and social environment in Bangladesh, “early internationalizing small firms” in South Africa, high technology “early-stage ventures” in Hong Kong, 3-D technology ventures that operate with an “open” business model, and the “multi-rational” nature of networks in family businesses in and beyond the UK. In all, this collection of papers comprises a body of scholarship with fine-grained studies on how and when specific social networks are drawn on in various forms of organization. The subsequent discussion of these issues extends knowledge of the various ways in which entrepreneurs and entrepreneurial businesses advance their interests by leveraging familiar business and social networks.     

The path to outcome delivery: Interplay of service market strategy and open business models

Firms in a variety of manufacturing sectors as well as the software industry have increasingly embraced services alongside their product portfolios in order to improve financial performance. Yet, the key question “How do service market strategy change and the accompanying business model change interact, and how does their interplay affect value creation?” remains open. Relying on twelve case studies of firms that have shifted towards providing highly advanced services (e.g. outcome-based contracts), theoretical propositions concerning the interplay of market strategy and business model on value creation are derived. The firms studied report two interdependent changes: first, they evolve the market strategy from provision of pure products to provision of services and then outcomes, in order to achieve a better fit with customer needs and to grow their service businesses. Second, they rely increasingly on partners and suppliers to provide new activities that are outside their competence base. This 'open business model' allows them to grow their new service businesses effectively and efficiently. At the same time, however, the shift to a service market strategy requires enhanced accountability to customers and increases the threat of penalties in the case of failure, while reliance on partners and suppliers leads to loss of control over the activity system and increases the threat of failure due to third party dependency. Thus, this paper finds that the success of firms that shift to services and outcomes hinges on their ability to balance the trade-off between increased value (i.e. growth, efficiency and effectiveness) and increased uncertainty associated with service market strategy/open business model interplay.     

Disassembling the influences of perceived family relational conflict on business family offspring’s intrapreneurial intentions

Entrepreneurial business family offspring are key figures in helping family businesses achieve transgenerational entrepreneurship. However, a global survey reveals that entrepreneurial offspring avoid the family business when conducting entrepreneurial activities. Our study makes the first effort to explore what reduces business family offspring’s intrapreneurial intentions in the family business context. Applying a mixed-method approach, we conduct 18 explorative interviews, a pretest of 124 Chinese business family offspring, and a formal survey of 131 Chinese business family offspring approaching their career decision point. We realize that growing up in family businesses often exposes offspring to two types of perceived family relational conflicts that their parents’ entrepreneurial endeavors incur, which we define as “big-family” and “parent-offspring” relational conflicts. Our empirical results suggest that the relationship between perceived family (i.e., parent-offspring and big-family) relational conflict and family business intrapreneurial intentions were serially mediated by family relational outcome expectation and family relational self-efficacy. Contributions to family business research and social cognitive career theory are discussed.

     

Transfer of labour‐management partnership in multinational companies

There has been a growing interest in how multinational corporations transfer various management practices from one country to another. The positions vary from an extreme where all practices will become globally standardised; to claims that the local context will be a decisive factor. In this article, the research question is why an MNC would want to transfer the partnership practice and what the key elements to success might be. As pointed to, partnership is a part of the company's business system, the way they are used to operating. Also important is that the risk of failing in terms of technological issues was important, and thus commitment and cooperation are crucial. Success can be understood by their effort to reduce the institutional distance as much as possible, including the choice of location, hiring policy emphasis on education and training, the strategy of building strong connections to the senior shop steward.     

Entrepreneurship and diversification on English farms: Identifying business enterprise characteristics and change processes

Despite the growing importance attached to entrepreneurship as a policy concept in European Union (EU) agriculture, little assessment has been made of its practical application. This paper makes a preliminary consideration of the issues in relation to on-farm diversification. First the literatures on agricultural diversification and innovation are reviewed to establish entrepreneurial traits in (1) business change processes, and (2) business enterprise characteristics. The business enterprise characteristics are then used to identify entrepreneurial diversified businesses from a sample of 118 agricultural enterprises in England. Some 15 entrepreneurial farm businesses were identified and their managers interviewed to reflect on the underlying change processes that they had adopted during 1997–2001; the effects of diversification in terms of socio-economic benefits at business and regional levels; and the effectiveness of agricultural business advice services in supporting entrepreneurial behaviour. Respondents confirmed the importance of networking processes to managing change in their businesses. Importantly all had benefited from diversification, through increased net income, reduced dependence on agricultural subsidies and greater income stability during the survey period. Regional economic benefits were more difficult to quantify, although positive employment generating effects were evident among businesses. Importantly respondents commented on their disengagement from sectoral extension agencies in contrast to their enthusiastic use of generic business support. Consequently, consideration is made of adjustments in extension and advisory provision to enhance on-farm entrepreneurial diversification.     

New value partnerships: the lessons of Denny's/Save the Children partnership for building high‐yielding cross‐sector alliances

While business and nonprofit organisations have long used alliances within their own sectors to address specific needs, increasingly they are turning to cross‐sector partnerships that benefit both parties while they serve the common good. In the last decade, marketing alliances between businesses and social sector organisations have become increasingly common as ways for companies to achieve business objectives and for social sector organisations to raise their visibility and attract new resources. The alliance between Denny's and Save the Children provides an example of a noteworthy marketing partnership that shows how a cross‐sector alliance can assist a company with a damaged public image to build a new public identity while enabling an international nonprofit organisation to create an ambitious programme for US children. As a new value partnership, a long‐term, high yielding alliance between businesses and social sector organisations, this relationship is characterised by several elements: communication, opportunity, mutuality, multiple levels, open‐endedness, and new value, forming the acronym COMMON. Copyright © 2001 Henry Stewart Publications     

From Partners to Players: Extending the HR Playing Field

HR professionals must always be “becoming” or constantly changing and adapting. For the last decade, many have argued the business partner role as a complement to traditional HR administrative work. We argue in this paper that HR professionals should move beyond partners to become players. HR professionals as players are “in the game, on the field, making a difference” through their HR work. In this article, we suggest that to become players, HR professionals must learn to coach, architect, build, facilitate, lead, and provide a conscience to business leaders. Specific knowledge and tools for each of these roles are described. © 2001 John Wiley & Sons, Inc.     

Verifying the state of financing constraints: Evidence from U.S. business credit contracts

Many policymakers are concerned that tight financing constraints for small businesses are stalling the recovery from the Great Recession. This paper empirically assesses two agency problems that induce such financing constraints—one resulting in a “firm balance sheet channel” and one resulting in a “bank balance sheet channel”. Evaluating specific models of these two agency problems against a comprehensive data set of U.S. small business credit contracts, I find strong support for the firm balance sheet channel but only weak support for the bank balance sheet channel. A complementary regression analysis confirms this result. Hence, policies seeking to improve firms’ balance sheets may be desirable to support small business lending in the recovery from the Great Recession.     

An evaluation of business survey indices for short-term forecasting: Balance method versus Carlson–Parkin method

When questions in business surveys about the direction of change have three reply options, “up”, “down”, and “unchanged”, a common practice is to release the results as balance indices. These are linear combinations of the response shares, i.e., the percentage share of the respondents who answered “up” minus the percentage share of those who answered “down”. Forecasters traditionally use these indices for short-term business cycle forecasting. Survey response shares can also be combined non-linearly into alternative indices, using the Carlson–Parkin method. Using IFO and ISM data, this paper tests the relative performance of Carlson–Parkin type indices versus balance indices for the short-term forecasting of industrial production growth. The main finding is that the two types of indices show no difference in forecasting performance during the Great Moderation. However, the Carlson–Parkin type indices outperform the balance indices during periods with higher output volatilities, such as before and after the Great Moderation.     

Using extracurricular activity as an indicator of interpersonal skill: Prudent evaluation or recruiting malpractice?

There is widespread agreement that success in organizations requires more than high intellect. Thus, college recruiters commonly examine job candidates' extracurricular activities in search of “well‐rounded,” emotionally intelligent, and interpersonally skilled students. Intuitively, extracurricular activities seem like valuable student experiences; however, research evidence is sparse, suggesting far more questions than answers. Is participation in extracurricular activity truly linked to interpersonal skill performance? Does leadership experience make a difference? Do extracurricular experiences yield higher skill development? Six hundred eighteen business students and the relationship of their extracurricular involvement to four interpersonal skills were examined. Significant relationships were found and recruitment implications are discussed. © 2002 Wiley Periodicals, Inc.     

Social business collaboration at the bottom of the pyramid: The case of orchestration

Social business orchestrators (SBOs) help social businesses of various sizes to tackle major societal issues by filling gaps in knowledge and resources. However, research has overlooked these types of collaboration. Situated within a bottom of the pyramid context in Bangladesh, the current study sheds light on the process of value creation for SBO–social businesses partnerships by comparing different collaboration partners. Multiple case study research through the lens of the relational view were used to ask how SBOs facilitate value creation in social businesses by flexibly adapting resource inputs and governance mechanisms to the specific endowment and size of partners; this approach was informed by interviews and field note analyses. The combined deductive–inductive analysis enhances knowledge of idiosyncrasies of SBO–social business collaborations. Our study draws attention to the role of large orchestrators, whose model could be scaled and transferred to other world regions, including industrialised countries.     

The DNA of Enterprise: Jane Jacobs and Henry George on Innovation and Development Through Spin‐Offs

The main training grounds for entrepreneurial, technical, and business capacities are existing businesses. There are two ways that this training can lead to new growth—just as there are two ways that existing biological DNA can lead to the growth of bio‐mass, namely, (1) existing organisms getting bigger or (2) by spinning out offspring who in turn can spin out more offspring. Where growth has been vibrant, e.g., Silicon Valley, it has followed the second route, growth by offspring. This is also the biological principle of plenitude. Conventional ownership structures lessen the incentives for spin‐offs since managers do not want to reduce the “empire” under their control. The biological principle of plenitude is best implemented with employee‐owned or cooperative firms (e.g., as in the Mondragon cooperative group). Inspired by ideas first proposed by Henry George and Jane Jacobs, this article explores the social benefits of applying the biological principle of plenitude by encouraging the proliferation of enterprises. This poses a conundrum for societies organized around the private business model: How can the social benefits of spin‐offs be realized when managers do not have an incentive to foster new businesses? We conclude with ways to address this problem.     

Ansätze und Ergebnisse anglo-amerikanischer M&A-Forschung

Based on a review of established U.S. management journals (1995–2003), six schools of thought are identified within the Anglo-American M&;A research: “Capital Market”, “Principal/Agent”, “Industrial Organization”, “Organizational Behavior”, “Human Resources” and “Strategic Management”. The literature review shows that the definition of M&;A success, the methods applied, and insights from empirical research differ according to the respective school of thought. Empirical studies focus on the resource combinations of merger partners, the specific circumstances of merger negotiations, and on integration management as antecedents of merger performance. Unfortunately, empirical findings have not yet provided reliable explanations for M&;A success. Based on the current state of Anglo-American M&;A research, the authors discuss implications for business practice, identify research gaps, and propose areas for future research.     

For the greater good: business networks and business social responsibility to communities

Business networks (co-operative arrangements between independent business organizations) may be the signature organizational form of the contemporary global economy. Many policy-makers and local leaders advocate business network membership as an alternative development strategy for regional economic vitality. The extant literature on business networks has focused on their association with business success. However, little is known about their impact on other aspects of community life. The purpose of this paper is to elaborate the role of network membership on one non-economic dimension of the business community interface. We examined the relationship between business network membership and business social responsibility to communities, defined as the provision of leadership and support for community betterment projects. Data were gathered from telephone interviews with a random sample of 460 non-metro small business operators in the USA. Independent t-tests and ordinary least squares regression analyses controlling for theoretically important variables were conducted. Findings show that networked businesses provide more leadership and support for their communities than non-networked businesses. However, networked businesses were no more likely than non-networked businesses to use local suppliers of goods and services.     

Survival and Failure of Small Businesses Arising Through Government Privatization: Insights from Two New Zealand Firms*

Redundancies of personnel arising from the corporatization and even subsequent privatization/closure of several federal departments have contributed to the number of small businesses in New Zealand, a phenomenon that will likely be mirrored at least partially as other nations progressively liberalize their economies. Small businesses with such origins would appear to be especially prone to failure in a progressively liberalized trading environment; their precursors in the parent government departments or agencies would have been cocooned from immediate market conditions through budgetary allocations and a lack of competition. However, the scholarly literature on the behaviour of such small businesses is scant. Accordingly, we report the findings from a comparative investigation of two businesses that arose in the wake of the failure/closure of a corporatized federal service agency in New Zealand; one of the two businesses was much more successful than the other. Our major finding is that a small firm with such origins is likely to survive to the extent it avoids becoming complacent and being ‘stuck in the mud’ of the legacy of the failed federal parent. A predictor of such ability is the timing of small business formation: a small business that is formed by members who depart from the dying federal parent organization when the latter's closure is apparent, is more likely to survive than a business whose formation is precipitated by the demise of the federal parent and whose members remain in the parent organization until its formal closure.     

Business support approaches for charities and other nonprofits

This study investigated three kinds of business support for nonprofit organisations—donations, sponsorship and coalignment deals (a commercial venture between the two partners), among a sample of major Australian corporates. Most businesses were more likely to donate to a charity if their competitors were known to do so. A similar finding was observed for the sponsorship of charities, cultural and sports organisations. Businesses expected charities to be genuine in their concern about social issues, but businesslike in their dealings with their supporter organisations. Pressures for the increased commercialisation of the relationship were observed, leading to dilemmas for the nonprofits. Copyright © 2001 Henry Stewart Publications     

Information flows and adaptation in Tanzanian cottage industries

The aim of this research is to identify channels of information flows and their impact on business adaptation and survival. The analysis is set within a theoretical framework of information market failure and information flows. The paper draws on empirical data from a survey comprising approximately 400 small-scale entrepreneurs in dressmaking and woodworking industries at different levels of centrality in four regions in Tanzania. The data reveal that half of the businesses are growing and one-third have increased profitability by significant adaptations last year. Most changes occur in products and design. Customers and the media represent the most important sources of business information, followed by family members and business partners. Independent variables that significantly influence adaptability include customer relations, education, media exposure, social networks, and mobility. Associations are strongly modified by the entrepreneurs’ age and gender and by businesses’ size and location. The paper concludes that cottage industries in Tanzania have a remarkable ability to survive. Garment and woodwork markets are still predominantly local and competition from external businesses is limited. Access to business information and new ideas should be improved, however, to counteract growing competition from the modern sector.     

Interfirm Channel Relationships,Influence Strategies and Performance in China

Abstract

This paper empirically examines the relationship between inter-firm channel relationships, influence strategies and suppliers' performance. A survey of 103 foreign partners from Sino-foreign joint ventures in the food industry in China shows that channel relationships have a major positive effect on supplier's channel performance. While the influence strategy of “threats” is negatively related to supplier's channel performance and channel relationships, “suggestive litigation” has a positive influence on performance, on the contrary to findings in Western countries. Although a business relationship with an emphasis on “legal effect” is not desired on the part of distributors, it enhances channel relationships. The influence strategy of “request” as a Western phenomenon does not work well in China, and has an inverse effect on channel relationships. Implications for practitioners and researchers are discussed.     

The contrasting strategies of owner-managed and foreign-engaged joint ventures under market socialism in China

Drawing upon a contingency approach, this research based on case studies offers an understanding of the conditions for contrasting growth strategies in emerging business ventures in China. It offers an insight into the interactive effect of organisational processes that are likely to shape their strategic outcomes. Ownership as a key contingency factor influences the objectives of organisations and the formation of their growth models. The empirical evidence collected from key stakeholders in a selected number of company case studies suggests that organisations with “open” structures and processes that encourage the adoption of ideas, policies and methods from both internal and external forces are more likely to adopt more high value-added strategies than “closed” entrepreneurial firms typical of organisations in the conditions of market socialism in China. It demonstrates the critical role of foreign investment in shaping local management practices in the transitional economy. It also implies that irrespective of political ideology, the creation of a market economy imposes ‘standardizing’ global similarities in business structures and processes that cut across national cultures. This is discussed on the basis of empirical data collected from interviews with key stakeholders in a number of company case studies.     

The effectiveness of using e-collaboration tools in the supply chain: an assessment study with system dynamics

Developments in information technology, in recent years, have enabled major advances in electronic commerce, which is growing at a very fast pace. Although business-to-consumer (B2C) e-commerce seems to be slowing down due to economic conditions, business-to-business (B2B) e-commerce still represents the next generation of business automation.Taking advantage of new technologies, today provides an opportunity, but will be a must in the future. The use of Internet e-collaboration tools will increase in this new era. They play a role of “value creation enabler”, but at the same time they generate a wide range of new business and market “complexities” that companies have to face.This paper presents a classification of “managerial spaces” where multiple trading partners share critical information using e-collaboration tools and assesses the possible local and global impact on the supply chain (SC) performance. This is made by means of a SC model conceptualization and a simulation study with system dynamics.