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.     

Compensating corporate venture managers

This article reports the results of a questionnaire survey addressed to CEOs of Fortune 500 companies concerning incentive practices for venture managers. Data was also collected for venture performance history in these companies.Highlights of the results are:Most companies are not providing different incentives for venture managers than for other managers.Companies that do and companies that do not provide special incentives seem to agree on the types of incentives which would promote improved venture performance, which include milestone bonuses, equity, and/or options in the new venture, variable bonuses based on venture ROI.The primary obstacle to installing such incentives is reported by firms without special incentives in place to be concern about internal equity.Firms with special incentives already in place have less concern with this problem. A moderate problem to such firms is difficulty in defining venture objectives.There is no evidence, from this study, that special incentives for venture managers affected the outcome in venture performance, when such performance was measured by the percentage of “successes” and “failures.” About 50% success rate was reported by each group.The article deals with these questions:Are performance incentives essential?Certainly not, from the data in this sample, but this was a “head count” of successes and failures—a study of overall economic performance might yield a different result. One expensive failure can wipe out the gains from many small successes.Are the incentives reported effective?Obviously not enough to show a difference between those who use them and those who don't. Analysis of the incentive elements used and the earnings limits imposed suggest that the special incentives are not particularly special, nor very much of an incentive. Further, the most common incentive reported, based on venture ROI, fails to consider the time period usually required to achieve a positive ROI, and the many changes of management which occur during that period.What criteria should be used for designing an incentive program for venture managers?Recognition of the probability of management change, incentives which promote early identification of need for change of direction or to abort, focus on event completion milestones rather than the calendar, the relationship of reward potential to risk potential including job security and actual financial risk by the venture manager, achievability, and simplicity are factors to be considered.What kind of financial incentives might be included in incentive design?Depending on the life cycle stage of the venture, fixed and variable bonuses, options for equity or shadow equity in the venture itself, actual equity in the new venture, and to a lesser extent, salary increases and equity or equity options in the parent are suggested. How can the obstacles to installation of performance incentives for venture managers be reduced?To reduce perception of internal inequity, relating potential risk to potential reward and extending performance incentives to other managers is suggested. The problem of defining venture objectives as an obstacle is instantly solved as an incentive issue by making ownership possibility a reality for venture management, especially with financial investment required by venture management.     

Does money matter?: Wealth attainment as the motive for initiating growth-oriented technology ventures

The desire to attain personal wealth has long been regarded as the foremost motive for entrepreneurship. Other goals and values, however, may also contribute to entrepreneurial motivation. Thus, the extent to which money matters relative to other motives is an empirical question. In this study we examine the role of wealth as the motive for the decision to found new ventures. Three focal questions guide our research: 1) does money matter more relative to other decision dimensions in deciding to start a new high-technology venture? 2) does money matter more to entrepreneurs compared to non-entrepreneurs? and 3) does money matter in absolute terms, that is, does a decision model that focuses solely on the motive of wealth attainment parsimoniously predict entrepreneurs' start-up decisions?We conducted in-depth interviews with 51 entrepreneurs and a control group of 28 senior managers who decided not to start ventures (non-entrepreneurs) in the high-technology industry in British Columbia to address our research questions. The motives we examined are wealth attainment and an aggregate of other dimensions identified by entrepreneurs and managers. We considered three components of values: participants' ratings of the importance of various decision dimensions, their rating of the salience of these dimensions, and their satisfaction with prior levels of attainment on those decision dimensions. We assessed beliefs as participants' perceived probability of attaining their desired level of a particular decision dimension in each of three alternatives: the position held at the time the venture decision was made, the venture itself, and the next best career alternative at that time. The data were analyzed to compare entrepreneurs' values and beliefs regarding wealth with an aggregate of other decision dimensions (our relative hypotheses), and with those of non-entrepreneurs (our comparative hypotheses).Our findings do not support the common perception that money is the only, or even the most important, motive for entrepreneurs' decisions to start new ventures. Wealth attainment was significantly less important to entrepreneurs relative to an aggregate of 10 other decision dimensions, and entrepreneurs did not rate wealth as any more important than did non-entrepreneurs. Non-entrepreneurs rated wealth as no more important than other motives. Wealth attainment was also significantly less salient to entrepreneurs' decisions to venture than were other motives. Non-entrepreneurs reported that wealth was significantly more salient to their decision against founding a venture than other dimensions. In fact, non-entrepreneurs rated wealth attainment as significantly more salient to their decision against founding than entrepreneurs rated it for their decision to proceed with starting a high-technology business. A significant number of entrepreneurs started businesses even when they believed that doing so offered them a lower probability of obtaining their most desired level of wealth than did one of their other alternatives.Satisfaction ratings and stated beliefs also dispute classical predictions. Just prior to making the decision to venture, the entrepreneurs in our study were as satisfied with wealth as they were with other decision dimensions. The non-entrepreneurs were actually more satisfied with wealth attainment than with other dimensions. A comparison of the groups revealed no difference in satisfaction with wealth attainment levels. Entrepreneurs did believe that their chances of attaining their desired level of wealth were much greater through founding a new high-technology venture than through their other alternatives. This difference in beliefs, however, was not significantly greater than their optimistic beliefs about chances of attaining desired levels of other dimensions. It was significantly higher compared to the non-entrepreneurs' belief difference measures for wealth. In fact, the entrepreneurs' stated beliefs regarding the chances of attaining their desired levels of all dimensions were higher than those of the non-entrepreneurs, suggesting that entrepreneurs were simply more optimistic at the time of their decision than non-entrepreneurs.Salience findings suggest that these optimistic beliefs about wealth did not motivate the founding decision alone.We can distinguish those people who successfully started ventures by their regard for wealth as a less salient factor, and their beliefs in higher chances of a venture producing monetary and other returns. Other motives, such as innovation, vision, independence, and challenge were more important and much more salient to this sample of entrepreneurs.Our findings have implications for practice, teaching, and research. Venture capitalists who partially base their assessment of entrepreneurs on the extent to which they are motivated to make a great deal of money may benefit from reconsideration of this criterion. We have evidence of one group of high-technology entrepreneurs who achieved success without placing much decision weight on attainment of personal wealth. Nascent entrepreneurs and those who teach entrepreneurship can use this empirical finding to argue two main points: 1) not all entrepreneurs found a business for personal wealth reasons, and 2) one need not be motivated by personal wealth attainment to be a successful entrepreneur. Similarly, theoretical models that assume money is the primary motive for entrepreneurial activity require re-examination. Future research in entrepreneurship should focus less on wealth attainment and more on other motives for the venturing decision. A multiple-attribute decision model may be able to more fully explain venturing decisions.     

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.

Venture capital in transition: A Monte-Carlo simulation of changes in investment patterns

This article examines the nature of the investment process which has historically generated high returns for venture capital funds, and the impact on fund returns of perceived changes in management practice and the structure of the industry. The article outlines some policy implications for fund managers, investors, and the general management of corporations.The authors have investigated the investment process and the changes in the nature of the process through the use of a Monte-Carlo simulation model. Information gathered from interviews with fund managers and the available published data on venture fund performance (including proprietary surveys) was used to develop and calibrate the model. The model replicates the relatively high average fund returns and distribution of returns for funds through the early 1980s. The model simulates a multistaged investment process which draws on a pool of investment opportunities which have a log normal distribution of returns and a low (zero) average return. The model readily permits the exploration of the impact of management and industry practices on fund returns.The conditions identified by the authors, which led to high rates of return on the part of venture capital funds, include:

• 1.1) multistaged investment or commitment of funds on an incremental basis with evaluation of venture performance before commitment of additional fund;
• 2.2) objective evaluation of venture performance with the clear distinguishing of winners from losers;
• 3.3) parlaying funds or having the confidence to commit further funds to ventures identified as winners;
• 4.4) persistence of returns from one round to the next, which implies that valuable information is gained from previous rounds of investment in the same venture;
• 5.5) long-term holding of investment portfolios for a period sufficient for geometric averaging of compound returns to cause the winners to “take over” or raise portfolio returns.

Taken together, these conditions have permitted venture capital funds to historically realize strong average returns with a few of them realizing extraordinary returns.The article also explores the consequences of what some believe is happening in the industry: a trend toward holding investments for shorter periods, increased competition both for investments and later in the product-market arena, and a growing lack of loyalty between investors and investees. All of these conditions and their indirect consequences were shown by the model to negatively impact the limited partners in the venture capital funds while general partners, given the structure of fees and the distribution of investment returns, generally realized a reasonable to extraordinary return. The article outlines a number of management and investment policy implications for investors and fund managers.     

Interaction Approach and Liabilities: A Case Analysis of Start-Up Firms

ABSTRACT

Purpose: Start-up firms have to face some key challenges due to liabilities related to processes that are external to the organization, such as establishing relationships with customers, suppliers and other relevant actors. The purpose of the article is to understand how liabilities, namely newness, smallness, foreignness and outsidership, are related to each other in start-ups, and what are the main liabilities perceived/experienced by start-ups and their counterparts, using an interactive perspective.

Methodology: The article uses a case study methodology and proposes 3 cases of start-ups firms and their counterparts. Cases are built using multiple data-sources, both primary and secondary.

Findings: The article highlights the role of “heritage” left by the membership in the network. This “network heritage” means that some aspects of the network are pre-existing, in terms of previous and long lasting relationships with other actors. In this sense, the network in which the firm connects pre-exists and mitigates the existence of liabilities that come into play in the processes of interdependence with other actors. This provides a perspective of liabilities, specifically the liability of newness, as an asset in the sense that newness depends on a “short story,” without constraints of a “longer story” as that of competitors in the network. The liability of newness is an asset in terms of flexibility, customized offer and innovative content.

Originality/value/contribution: The main contribution of the article lies in taking an interactive perspective on start-ups and liabilities, analyzing the interaction processes taking place between the new venture and the surrounding network of essential actors.

Practical implications: Liabilities arise and can be overcome in the processes of interaction, which therefore can have an ambivalent role: fertile ground for the manifestation of liabilities but also the context for its overcoming/conversion of liabilities into assets. Entrepreneurs and managers should consider newness and smallness as positive attributes for other actors in the processes of interaction, as a potential generator of value. Such a perception of newness as an asset depends on two factors: the presence or absence of an organization-mother that limits the perception of newness as a liability; the sector in which the new company develops, if dynamic and innovative or still tied to traditional and consolidated processes where the experience, “history” and “heritage” of the firm are sources of legitimacy.     

Critical assumption planning: A practical tool for managing business development risk

Although much has been written about the practice of new business development, the authors continue to find corporate managers and entrepreneurs repeating the same mistakes and often reaching the conclusion that venturing in the corporate environment won't work. The problem stems from a mental model about how business should be managed and managers' performance assessed. Corporate managers of existing businesses are judged against meeting plan. In growing new businesses, however, strict adherence to “the plan” can lead to business failure. To manage business development risk, venture managers must learn to deal with uncertainty. Whereas managers of mature businesses practice the ethic of predictability, venture managers must follow a learning ethic.Working with Fortune 100 corporations, the authors have evolved a practical, disciplined process for business development risk management that focuses on learning. Titled critical assumption planning (CAP), the process maximizes learning about new markets at lowest cost. Major uncertainties in the business proposition are isolated as critical planning assumptions. Critical assumptions in the plan are then tested. The test sequence is determined by the potential reduction of uncertainty per dollar of test cost. Assessment of the assumption test results marks a milestone. At each milestone the business plan is revised to reflect what has been learned, and the venture is redirected or terminated. This process avoids the wasted effort and expense of pursuing the original plan until commercial failure becomes obvious.The key steps in this learning process are identification of critical assumptions and cost-effective testing of assumptions. Because these steps are unfamiliar to most corporate managers, effective use requires a new perspective and new planning tools. The study explains this perspective and introduces new tools for employing the process. Following are some planning innovations that have been effective in changing perspective and that also are of practical use:

1. 1. Differentiation between primary and derivative assumptions with focus on extracting and understanding the primary assumptions.

2. 2. Early construction of a model of the business plan that allows calculation of the impact of primary assumptions such as price or sales productivity factors on derivative assumptions such as revenues and income.

3. 3. Assignment of uncertainty ranges to the primary assumption values, not just the most likely values.

4. 4. Identification of the critical planning assumptions by determining the impact of their uncertainty ranges on venture net present value.

5. 5. Selection of the next venture milestone based on the test program that results in maximum reduction of uncertainty at least cost in least time for the most critical assumption(s).

Using CAP, managers can control risk despite the many uncertainties surrounding a new business proposition. Above all, decisions to stop or redirect ventures can be taken earlier, saving the corporation money and venture managers their career credibility.     

Chronological cues and consumers’ preference for mere newness

Chronological cues are ubiquitous in retail settings, whether they come in the form of production, release, on-shelf, or purchase dates, etc. Yet, they remain relatively underexplored in the marketing literature. Could newness that arises from these chronological cues lead consumers to prefer options merely because they are newer, above and beyond any substantive benefits conferred or implied by that newness? We propose and find in a series of eight preregistered studies (n= 2,216) that consumers exhibit mere newness preference across many product domains—preferring chronologically newer options over older options with no substantive benefits to newness. We provide evidence that overgeneralization is one important driver of mere newness preference: Most consumers hold positive (negative) associations with chronological newness (oldness) in an implicit association test, and mere newness preference is reduced in domains in which the opposite association exists. Consequently, consumers are willing to pay a newness premium even for mere newness.     

Missing the boat or sinking the boat: a study of new venture decision making

Taking two conceptualizations of risk, Dickson and Giglierano's [J. Mark. 50 (1986) 58] nautical analogy of entrepreneurial risk (sinking vs. missing the boat) to represent the likelihood of loss element of new venture risk, and March and Shapira's [Manage. Sci. 33 (1987) 1404] risk as hazard (boat size) to represent the magnitude of loss element of new venture risk, we investigated how two contextual factors, the suitability of entrepreneurs' skills and their sources of funds, and two individual differences factors, the entrepreneurs' risk propensities and their perceptions of risk, influence their new venture decision making. Metaphorically speaking, we found that most entrepreneurs would rather risk missing than sinking the boat, and that they preferred to pilot bigger craft than smaller ones. Perhaps surprisingly, our sample of highly successful entrepreneurs made relatively risk-averse choices, with 83% choosing either of the two ventures for which the chances for loss were lowest. We also found that the source of new venture funding—the entrepreneur's own money versus that of investors—influenced our subjects' choices between ventures whose chances for loss or gain differed. A similar effect was found for the entrepreneur's risk propensity. On the other hand, we found that the risk the entrepreneurs perceived in the choice set also influenced choices, but only where the magnitude of the new venture's potential gain or loss varied. When viewed in total, our study and results suggest a risk- and reward-based typology of new venture opportunities, one that may provide a conceptual foundation for future explorations of a variety of questions relevant for entrepreneurs and theorists alike.     

The paradox of new venture legitimation within an entrepreneurial ecosystem

The current rise in research on entrepreneurial ecosystems notes that many questions are still unanswered. We, therefore, theorize about a unique paradox for entrepreneurs trying to establish legitimacy for their new ventures within and beyond an entrepreneurial ecosystem; that is, when pursuing opportunities with high levels of technological or market newness, entrepreneurs confront a significant challenge in legitimizing their venture within an entrepreneurial ecosystem, while those entrepreneurs pursuing ventures using existing technologies or pursuing existing markets have a much easier path to garnering legitimacy within that ecosystem. However, the diffusion of that legitimacy beyond the ecosystem will be wider and more far-reaching for those pursuing the newer elements compared to those using existing technologies or pursuing existing markets, thus, creating a paradox of venture legitimation. Prior research outlines approaches for new venture legitimacy but it is unclear when these approaches should be applied within and beyond an entrepreneurial ecosystem. To address this paradox, we integrate ideas from the entrepreneurship and innovation literature with insights from the legitimacy literature to describe how different types of venture newness employ different legitimation strategies which results in different levels of legitimacy diffusion beyond an ecosystem. We conclude with a discussion of our concepts and offer suggestions for future research efforts.     

Desire,need, and obligation: Examining commitment to luxury brands in emerging markets

The availability of a wide variety of luxury brands has resulted in declining commitment toward a single brand. Enhancing brand commitment has, therefore, become a significant challenge for international businesses and marketing managers. We develop a multi–dimensional brand commitment framework underpinned by marketing, organizational, and social psychology literature streams. The simultaneous examination of brand–commitment dimensions based on consumer desire, need, and obligation in our framework offers a novel perspective that advances research on brand commitment. Our findings demonstrate stability of the framework in important emerging markets for luxury brands, namely China, India, Russia, Turkey, and Thailand. The framework, incorporating affective, continuance, and normative brand commitment dimensions, offers a conceptually robust fit. We demonstrate that each brand commitment dimension is influenced by distinct antecedents, and we show the direct and interactional impact of consumers’ emotional attachment, economic motivations, and normative pressures on purchase intentions. Supported by well-established theories in organizational and social psychology, our study offers new insights on how consumers commit to brands. We provide international brand managers with a blueprint for strengthening brand commitment across countries.     

Country-specific strategy and new venture formation in Central and East Europe

In this study, we examine the influence of three country-specific strategies (market-seeking, client-following and resource-seeking) on new venture formation decisions for firms entering Central and East Europe. We found that market-seeking and resource-seeking strategies tend to influence venture choice while no such relationship was found for firms pursuing a client-following investment strategy. We conclude by discussing the implications of our findings for future research on new venture formation.     

Legitimacy and accelerated internationalisation: An Indian perspective

This paper extends the institutional theory perspective by examining the strategic behaviour of founders of smaller service firms in a key emerging economy—India. Building on accelerated internationalisation and legitimacy literature in the emerging market context, we provide a new perspective, emerging market aggressiveness, which explains why founders/managers are not always passive recipients of their environment. Their selections of locations are dependent on the vision and stretch goals of the founder and their ability to gain legitimacy quickly to move that vision to a reality. They do not appear to be limited by their potential liabilities of newness, foreignness, emergingness or outsidership. They adopt committed modes of entry from the outset to build their legitimacy and reduce their liability as an outsider. Using a qualitative multiple case study approach, we demonstrate that managers are able to use proactive, planned and unplanned strategies simultaneously, in order to quickly prepare themselves to take advantage of transient international opportunities, ahead of their competitors in advanced markets.     

The entrepreneur's mode of entry: Business takeover or new venture start?

We extend the well-known occupational choice model of entrepreneurship by analyzing the mode of entry. Individuals can become entrepreneurs by taking over established businesses or starting up new ventures from scratch. We argue that the new venture creation mode is associated with higher levels of schooling whereas managerial experience, new venture start-up capital requirements and industry level risk promote the takeover mode. A sample of data on entrepreneurs from The Netherlands provides broad support for these hypotheses, and also bears out a prediction that entrepreneurs whose parents run a family firm tend to invest the least in schooling. We go on to discuss the implications for researchers, entrepreneurs and public policy makers.     

The anatomy of a corporate venturing program: Factors influencing success

The author proposes a classification framework for factors that affect corporate venture success. Then, a database of 37 new venture investments by Exxon, including 18 venture capital investments, is analyzed for insight into the relative affect of these factors on venture technical and financial success. This article presents a statistical analysis of those factors which were quantified.As a group the venture capital investments were financially far more successful for Exxon than the internally initiated ventures. This striking difference stimulated the retrospective analysis reported here. The author was in a position to observe the program over its entire life span and had first-hand knowledge of each venture's technology, markets, and personnel. Because of the mix of venture capital and internal investments, the author was also in a position to compare the two modes of investment.Factors affecting venture success are broadly classified as extrinsic and intrinsic. Extrinsic or environmental factors are those determined by the form of investment sponsorship (e.g., corporate or venture capital) and the characteristics of the investment sponsor. Extrinsic factors are segregated into two categories: structural and procedural. These factors are defined as the degree of difference between the corporate and venture environment in each category.The four structural factors (technology, market, organization, and people) are summed up as the overall degree of structural congruence. The author postulates that the degree of congruence is directly related to venture success within the corporation. To take the corporation into new markets some incongruence is required. Too much incongruence probably pushes the risk of failure too high. The corporation's procedures for management of this incongruence will determine the degree to which it can successfully diversify its business.The four procedural factors (control, selection of venture managers, incentive compensation, and financing) are dealt with as differences between the corporate environment and an independent venture environment. Major differences in procedural factors usually exist between corporate and venture capital sponsored ventures. They probably explain to some extent the relative greater financial success of the Exxon venture capital investments as a group. However, the statistical analysis results indicate that the identified intrinsic factors are more important in explaining relative venture success.Intrinsic factors are those inherent to the venture itself, and are subdivided into two categories: product related (market and technical risk levels) and managerial (relative experience levels). Each of the 37 Exxon ventures was rated for success and for the intrinsic factors using a simple ordinal range of 3 to 6 values. The product related risk factors showed a significant inverse correlation with financial success. The level of venture managers' prior experience in the venture's target market area and their level of prior general managerial experience showed an even greater correlation with financial success. The sample correlation coefficient between the financial success rating SF and the sum of the ratings for prior marketing and managerial experience (XS + XM) was 0.809 with a standard error of only 0.105.Selection of the influential extrinsic and intrinsic factors is largely within the control of corporate management. An approach to selection of these factors similar to that used by private venture capital fund managers should greatly improve the overall success of internal corporate ventures.     

Risk bias and the link between motivation and new venture post-entry international growth

We link research in international entrepreneurship and on behavioral decision making with the international business literature on firm degree of internationalization to advance an integrative model of new venture post-entry international growth. We test this model on a sample of 286 new ventures. Results demonstrate that the extent to which entrepreneurs perceive internationalization choices more or less risky than an objective standard (i.e. internationalization risk bias) leads to variations in international growth rates, in particular international scope. Further, we show that the decision-maker's motivation leads to differences in both internationalization risk bias and international scope.     

Predicting new venture survival: An analysis of “anatomy of a start-up.” cases from Inc. Magazine

This article tests the insights and predictions of venture success as offered by reporters and experts in Inc. magazine, to the predictions generated from an analysis of data from a venture screening questionnaire. The venture screening questionnaire, consisting of 85 items covering four broad categories: (1) Individual Characteristics; (2) Entrepreneurial Behaviors; (3) Strategy; and (4) Environment, was used to evaluate 27 “Anatomy of a Start-up” articles from Inc. magazine. The creation of the questionnaire was guided by the following premises:Individual Characteristics. We hypothesized that the chances of venture survival would be improved if: (1) entrepreneurs had substantial knowledge and ability at the beginning of the start-up story; (2) entrepreneurs gained knowledge and ability during the start-up process; and (3) entrepreneurs continued to demonstrate substantial knowledge and ability at the end of the start-up story.Entrepreneurial Behaviors. We hypothesized that entrepreneurs who expended more effort in any of the following activities would be in new ventures that survived compared to entrepreneurs who expended less effort: Finding and Refining the Opportunity—comprised of 9 different activities, such as, defining the purpose of the business, planning, analyzing competitors; Acquiring Resources and Help— comprised of 15 different activities, such as, finding investors, getting advice from lawyers, getting a loan, acquiring technical expertise; Operating the Business—comprised of 5 different activities, such as, dealing with distributors, managing the day to day operations of the business; Identifying and Selling to Customers—comprised of 5 different activities, such as, identifying specific customers to sell to, selling to customers, managing sales channels; Outside of the Business Issues—comprised of 4 different activities, such as, dealing with family problems, spouse, and friends.Strategy and Environment. The strategy and environment variables were characteristics requiring comparisons of the relative performance of new firms vis-à-vis other competitors and their industry characteristics, much like the questions used in PIMS research: first to entry, degree of innovation, rate of industry growth, size of market, relative price, and relative quality. There were 28 questions in this section of the instrument. We hypothesized that niche oriented strategies and high growth environments might be strategy and environmental characteristics common to startups that survived.In total, there were 85 questions that comprised the venture screening questionnaire.New Venture Survival. The measure of new venture survival for this study was a determination of whether the new venture described in each Inc. magazine article (Longsworth 1991) was still in operation as of January 1995. This date is nearly 4 years after the last case study that we analyzed was published (September 1990), and nearly 7 years after the first case study was published (February 1988). We were able to determine that of the 27 new ventures profiled in the “Anatomy of a Startup” series published in Longsworth (1991), 17 of these ventures were still in operation.A discriminant analysis was performed that resulted in seven variables that correctly classified 85% of the cases into new venture survivors or non-survivors. New ventures that survived were more likely to have: (1) entrepreneurs who gained knowledge and ability during the founding process; who devoted greater efforts to (2) dealing with suppliers; (3) analyzing potential new entrants and who (4) devoted less time to determining the identity of the business; businesses that had (5) “fundable” resource requirements (6) focused on products or services that were designed or produced to order; and (7) were in high growth industries. The classification accuracy of the model was much better than industry experts (55% correct), competitors (55% correct), venture capitalists and financiers (40% correct), and customers (38% correct).Even though the discriminant analysis was better able to predict venture survival or non-survival compared to the experts, there are significant limitations to the reliability and validity of this one particular model, and the data set used. The primary value of this exercise involves making obvious the variables that observers use to make judgments about predicting venture success. One of the frustrations we experienced in analyzing the expert’s predictions was our inability to glean consistent and general “rules of thumb” about new venture success from their observations. We conclude by discussing the value of academic research on new venture success predictors vis-à-vis other avenues of inquiry and expertise: popular journalism and practice.     

How to inspire users in virtual travel communities: The effect of activity novelty on users’ willingness to co-create

Virtual travel community managers tend to incorporate a degree of novelty within activity design to foster interaction between users. Little is known of how users respond to these novel activities. Based on customer inspiration theory, this research investigated the mechanisms of activity novelty on users' willingness to co-create and the moderating effect of user regulatory focus and activity goal attainability. Results of three scenario-based experiments revealed that activity novelty positively influenced users’ willingness to co-create via user inspiration. Promotion-focused users were more inspired by novel activities and in turn had a higher willingness to co-create than those were prevention-focused. When activity goal attainability was high (vs. low), the positive effect of activity novelty on inspiration was attenuated. We present the theoretical and practical implications of activity design within virtual travel communities.     

Analysis of Joint Ventures Local Managers' Behaviors and Its Impact on Joint Venture Cohesiveness:

This study investigates whether there is a significant different in the level of cohesiveness perceived by two different groups of managers - local firms' local managers (Korean) and joint venture local managers (Korean) - and also examines relative importance of underlying variables that distinguish the two groups of managers in terms of cohesiveness. The findings indicated that joint venture local managers demonstrate a far lower level of cohesiveness than local firms local managers. The important variables which differentiate the two groups in terms of cohesiveness are found to be sense of inequity in rewards, negative group image, and sense of temporality.