Failed,not finished: A narrative approach to understanding venture failure stigmatization

This paper implements a qualitative, narrative approach to investigate entrepreneurs' personal experience of stigma associated with venture failure. Findings draw on the lived experience of 12 entrepreneurs and tell a collective story of how stigma affects entrepreneurs, shapes their actions, and engenders outcomes for them and their ventures. The story covers three episodes of entrepreneurs anticipating, meeting, and then transforming venture failure. Overall the paper shifts the focus of stigma research from the socio-cultural perspective pervading research to date, to micro-level processes underlying socio-cultural trends. Findings offer unexpected insights into failure stigmatization. First, findings suggest stigmatization is best viewed as a process that unfolds over time rather than a label. Second, this process begins before, not after, failure and contributes to venture demise. Third, there is a positive ending to the collective story in that stigmatization ultimately triggers epiphanies or deep personal insights which transform entrepreneurs' view of failure from a very negative to a positive life experience. This transformation results in entrepreneurs distributing learning from failure to the founding of future ventures, even when ventures are not their own.     

Work hard or play hard: the effect of leisure crafting on opportunity recognition and venture performance

Given the challenges inherent in starting companies, investigation of how entrepreneurs use their time at work to develop ventures has received prominent attention by scholars. We argue that how entrepreneurs use their leisure time has not received commensurate scrutiny. Leisure crafting, the proactive pursuit of particular leisure activities for specific goals, could play an important role in the entrepreneurial process. Herein, we develop and test a theoretical model describing how leisure crafting among entrepreneurs affects opportunity recognition and venture performance. Using three studies we provide strong evidence that leisure crafting positively relates to opportunity recognition and venture performance, which is mediated by thriving at work and moderated by work task focus. These findings provide generative insights into the nature of leisure and the micro-processes that drive entrepreneurship.     

Venture capitalists and serial entrepreneurs

Habitual entrepreneurship is receiving growing attention, much of which has focused on entrepreneurs who have started more than one venture. This paper examines the importance of habitual entrepreneurs to the venture capital industry, with particular emphasis on those who have exited from an initial investment in the venture capitalist's portfolio, termed serial entrepreneurs. As venture capital markets mature, increasing numbers of entrepreneurs are likely to exit from their initial enterprises, creating a pool of entrepreneurs with the potential for embarking on subsequent ventures. Venture capitalists making investments may invest both in entrepreneurs starting new ventures and those who purchase a venture through a management buy-out or buy-in. On this wider basis, the paper develops a classification of types of serial venture. A number of issues are raised for venture capitalists, notably the relative attractiveness of reinvesting in exited entrepreneurs and the policy they adopt in tracking and assessing such individuals.The paper addresses venture capitalists' perspectives on investing in serial entrepreneurs based on a representative sample of 55 UK venture capitalists (a response rate of 48.7%, and a follow-up survey of those who had more extensive experience of serial entrepreneurs (23 respondents). The results of the survey show that despite a strong preference for using an entrepreneur who had played a major role in a previous venture, the extent to which exiting entrepreneurs are funded from their own portfolio again is limited, though there is more extensive use of such individuals in a consultancy capacity. In screening entrepreneurs exiting from previous ventures for subsequent investments, venture capitalists scored attributes relating to commercial awareness, experience in a particular sector, and personal ambition of the entrepreneur most highly.Venture capitalists do make extensive use of serial entrepreneurs who have exited from other venture capitalists' portfolios, primarily to lead management buy-ins. Indications from the survey are that venture capitalists rarely assess entrepreneurs formally at the time of exit and that it is unusual to maintain formal links with entrepreneurs after they have exited. These apparent shortcomings suggest that perhaps investment opportunities are being missed. Those venture capitalists preferring serial entrepreneurs generally had a larger volume of funds under investment and were rather older than those venture capitalists who do not prefer to use serial entrepreneurs, reflecting the possibility that longer established venture capitalists have had more opportunity and experience in relation to second-time entrepreneurs.Investment appraisal factors were subject to a principal components analysis to identify underlying dimensions/relationships between them. With respect to the general investment appraisal factors, five factors were identified. Two factors were related to track record; one of these reflected ownership experience, while the other represented management experience. The third factor was related to personal attributes such as age, knowledge, and family background. The fourth factor represented links to the funding institution, and the final factor (a single variable factor) concerned financial commitment. The principal components analysis for screening factors on management buy-ins produced a single factor comprising all variables. These factors were then subject to a multivariate analysis of variance (MANOVA), with preference for use of a serial entrepreneur as the independent variable. The results suggest that there are significant differences between venture capitalists who prefer serial entrepreneurs and those who do not in respect to their business ownership experience, the length of their entrepreneurial careers, and the number of their previous ventures.The results of the study have implications for practitioners. First, the findings emphasize the importance of not considering previous venture experience in isolation but in the context of other key investment criteria. Second, the lack of strongly greater performance from serial, versus novice, entrepreneurs further emphasizes the care to be taken in assessing experienced entrepreneurs. Third, the relatively low degree of formal and rigorous post-exit assessment and monitoring by venture capitalists suggests that important opportunities to invest in experienced entrepreneurs may be missed.     

How On‐the‐Job Embeddedness Influences New Venture Creation and Growth

This study aims to answer why some employees choose to start their own ventures, whereas others choose to seek jobs in other organizations after leaving their current employment. Drawing insights from knowledge‐based view and social capital theory, we examine the impact of on‐the‐job embeddedness on the decision of employee entrepreneurship, industry choice, and new venture growth. We argue that on‐the‐job embeddedness provides key resources for employees to start new ventures and grow them. We test our hypotheses with Panel Study of Entrepreneurial Dynamics (PSED) data. Our results show that on‐the‐job embeddedness increases the probability of employees becoming entrepreneurs. Once they decide to become entrepreneurs, those employees with high on‐the‐job embeddedness are more likely to start new ventures in the industry in which they worked before. Moreover, employees' on‐the‐job embeddedness has a positive impact on new venture growth.     

Perceived risks and choices in entrepreneurs' new venture decisions

Though risk plays a central role in most entrepreneurial decision making, little empirical research has explicitly examined how the elements of risk, risk perceptions, and entrepreneurs' propensities to take risks influence choices among potentially risky entrepreneurial ventures. This experimental study asked a sample of entrepreneurs leading America's fastest growing firms to make choices among a series of hypothetical new ventures. The results indicate that such choices are influenced by the risks inherent in the new ventures, as evidenced by the pattern of outcomes anticipated in each venture, the entrepreneurs' differing perceptions of those risks, and differences in their personal propensities to take risks.The subjects in our sample of entrepreneurs tended not to choose ventures having a high degree of variability in their pattern of anticipated outcomes. This avoidance of outcome variability suggests that the sensitivity analyses commonly prescribed for examining new venture attractiveness may inhibit risk taking, and may deter potential investors from investing in their firms. New approaches to assessing and presenting new venture risk, other than the traditional best case/expected case/worst case approach, may be advisable, as well as sufficiently through market research to provide evidence of the degree to which market acceptance is likely for the venture's products or services.We also found an effect of differences in risk propensities among entrepreneurs on their new venture choices. This effect suggests not only that entrepreneurs should be wary of any biases they bring to their new venture decisions, but that prospective investors should consider the degree to which entrepreneurs in whom they choose to invest are well-matched to the investors' own risk-taking propensities.Finally, while our sample of entrepreneurs tended to shun high levels of variability in their new venture choices, they appeared willing to accept a considerable degree of hazard, or possible downside, in their new venture choices, presumably in pursuit of potentially significant gains. Entrepreneurs are advised to seek a clear understanding of the downside entailed in their proposed ventures, and develop strategies to mitigate the likelihood of adverse outcomes. Thus they will not jeopardize chances for near term success and attracting support of investors and others in later stages of the venture or in subsequent ventures.Our research did not attempt to examine how our subjects' choices would have played out in terms of performance, but the apparent biases which entrepreneurs' risk propensities bring to their assessment of proposed new ventures is a potentially important issue that merits further scrutiny. On one hand, such biases may lead to patterns of suboptimal decisions. On the other hand, our results suggest that investors should entrust their new venture investments to entrepreneurs whose risk propensities (and perhaps other personal characteristics) best match the needs of both the opportunity at hand and the investor's objectives. As many venture capitalists attest, the management of a proposed new venture should lie at the heart of their investment decision.     

Venture distress and problemistic search among entrepreneurs in Brazilian favelas

When do entrepreneurs in emerging markets seek out help from organizational sponsors? Problemistic search theory suggests that entrepreneurs will seek out sponsors in moments of venture distress. However, this theory was developed in the context of large organizations; it is not clear how it might apply to entrepreneurs in resource-constrained contexts. We use three inductive studies conducted in favelas in Brazil to examine when entrepreneurs seek help. Consistent with problemistic search theory, we find evidence that entrepreneurs seek out help from organizational sponsors in moments of venture distress. We also explore what types of entrepreneurs are most likely to seek help in a situation of venture distress and find that entrepreneurs who are more socially embedded and have more social obligations are more likely to take up sponsorship services, leading to important heterogeneity in our results on take-up. We find that women, more mature ventures, and middle-aged entrepreneurs are all more likely to engage in problemistic search. We contribute to a more contextualized theory of problemistic search for small entrepreneurs in emerging markets. We also provide important theoretical and practical insights about the demand-side of organizational sponsorship.     

Navigating compromise: How founder authenticity affects venture identification amidst organizational hybridity

Founders of hybrid ventures encounter organizational tensions that can compel compromise in both their organizations' and their own personal values. Such compromises may, in turn, undermine founders' identification with their ventures. In a multi-case study analysis we examine why social entrepreneurs differ in their responses to organizational tensions, both at the firm- and individual-level, and how such differences relate to their venture identification. Specifically, our findings reveal that strategic decisions made in the context of values-based complexity are often accompanied by concerns regarding founder authenticity—that is, judgments about the alignment between founders' actions and the commitments or responsibilities associated with their identities as entrepreneurs. Yet, because founders differ in the basis from which they seek to maintain such alignment, these differences shape both hybridity management and subsequent venture identification. By unpacking such differences, our findings contribute new theory, bridging recent scholarship on founder authenticity with longstanding research on organizational identification and hybrid organizing.     

Creating sustainable international social ventures

International social ventures are now an increasingly common feature of the international business and social landscape in many countries worldwide. However, despite the increase in the number of social ventures and widespread interest that has resulted, theoretical development that deals specifically with international social ventures, or social ventures that operate across borders, has lagged behind, and there is little to guide potential social entrepreneurs thinking of setting up an international social venture. The aim of this article is to show how combining concepts from social exchange theory with international new venture theory can provide a useful conceptual framework that helps answer the central questions: What are the conditions for sustainable international social ventures? What difficulties are likely to arise in establishing such ventures? © 2012 Wiley Periodicals, Inc.     

The Corridor Principle

This article discusses how many entrepreneurs create multiple ventures, and thereby apparently lengthen the duration of their entrepreneurial careers. A new concept, called the Corridor Principle, is proposed as a possible explanation of the multiple venture phenomenon. The Corridor Principle states that the mere act of starting a venture enables entrepreneurs to see other venture opportunities they could neither see nor take advantage of until they had started their initial venture.The Corridor Principle presents an alternative model to the linear single venture career model, embodied by such celebrity entrepreneurs as Ray Kroc of MacDonald' s and Kenneth Olsen of Digital Equipment Corp. Six hypotheses test expectations about the timing and duration of entrepreneurial careers, as well as the relationship between entrepreneurial career length and the creation of multiple ventures.The findings strongly support: • the position that entrepreneurship is a dynamic, multi-venture process for a great many entrepreneurs the rule, rather than the exception. • the existence of a positive correlation between finding at least a second venture and realizing a longer entrepreneurial career. Though there are a variety of explanations for this, and the patterns include both sequential and overlapping ventures, the net effect of creating multiple ventures appears to produce a longer entrepreneurial career. • the position that significant numbers of entrepreneurs create their second venture very early in their entrepreneurial careers especially when contrasted to the group of ex-entrepreneurs, who create multiple ventures (if at all) at a slower rate and later in their careers.Overall, these observations reinforce the notion of the Corridor Principle. Though who can and cannot take advantage of the Corridor Principle is not entirely revealed by the data, some indication exists that an entrepreneurs ability to use Corridor Principle strategy to prolong his or her career is related both to age at startup, and to conscious anticipation and preparation for an entrepreneurial career.The main implications for entrepreneurship practitioners, advisors, researchers, teachers and students are these: Whether studying the entrepreneurial process or planning to start an entrepreneurial career, a long-term view should be taken, one that includes the likely possibility of multiple ventures. The minimum economic returns of earlier ventures can be lower than previously thought if these ventures provide entry to subsequent ventures that possess higher (more acceptable) returns to the entrepreneur. The evidence thus far available indicates that the creation of subsequent ventures occurs relatively quickly when corridors of opportunity become visible and attainable after earlier ventures are established. The likelihood of career failure, as opposed to venture failure, may be lowered if one selects earlier ventures based on their potential to reveal follow-on-venture opportunities that the entrepreneur can investigate and possibly pursue.     

Cognitive biases,risk perception,and venture formation: How individuals decide to start companies

Despite the high risk involved, thousands of individuals decide to start ventures. Past research, however, has found that entrepreneurs do not have a high-risk propensity, that is, a great willingness to knowingly take risks. This study, therefore, explores how individuals cope with the risks inherent in their decisions, and suggests that entrepreneurs may not perceive the riskiness of starting ventures.The study's findings suggest that risk perceptions may differ because certain types of cognitive biases lead individuals to perceive less risk. Cognitive biases are common types of mental shortcuts used to make judgments. This study examines three cognitive biases that previous research has suggested may lower risk perception. The first, overconfidence, refers to the failure to know the limits of one's knowledge. The second bias tested, the illusion of control, occurs when individuals overemphasize the extent to which their skill can increase performance in situations where chance plays a large part and skill is not necessarily the deciding factor. Because the individuals believe that they can control largely uncontrollable events, they also think they can accurately predict the outcome of the events. Finally, the third bias, the belief in the law of small numbers occurs when an individual uses a limited number of informational inputs (a small sample of information) to draw firm conclusions.This study's sample consisted of 191 students pursuing a Masters of Business Administration. The students' responses to a survey based on a case study regarding a decision to start a venture were examined. The survey included questions about the students' willingness to start the venture, their perception of the venture's riskiness, and the extent to which they exhibited cognitive biases in their decision processes.The study's findings tentatively suggest that individuals start ventures because they do not perceive the risks involved, and not because they knowingly accept high levels of risks. The belief in the law of small numbers lowered an individual's perceptions of a venture's riskiness, suggesting that some individuals draw firm conclusions from small samples. An illusion of control also decreased risk perception, suggesting that individuals starting ventures might not acknowledge that certain tasks, important to the venture's success, are beyond their control.Some argue that biases might be associated with venture failure. If this is the case, the very processes that increase the likelihood of starting a venture may actually decrease performance. Entrepreneurs may choose to minimize their biases by soliciting and paying heed to the advice of outsiders, or by using group decision-making techniques, such as devil's advocacy or dialectical inquiry.Others, however, suggest that early in the decision process, biases may be beneficial because they lower risk perception, which allows entrepreneurs to generate the commitment needed for success. Even if this is true, entrepreneurs should still institute processes to increase learning so the venture can adjust to unfolding realities and avoid any damage caused by initial misperceptions. Similarly, entrepreneurs need adequate safety nets in case their biases lead them to encounter unforeseen difficulties. The potential positive and negative effects of biases and perceiving low levels of risk suggest the importance of exploring this area further.     

Venture capitalists' decision criteria in new venture evaluation

What criteria do venture capitalists use to make venture investment decisions? The criteria venture capitalists use to make their venture investment decisions are of interest for several reasons. First, venture capitalists are conspicuously successful in their investment decisions. The success rate of venture capital-backed ventures is significantly higher than the success rate of new ventures generally (Dorsey 1979: Davis and Stetson 1984). A better understanding of the criteria used could lead to a better understanding of the reasons for this success.Second, a better understanding of the criteria for successful new ventures could lead to an improvement in the success rate of new ventures. Although there is no clear agreement on the precise rate, the failure rate among new ventures is generally viewed as significantly higher than the average failure rate (Dun and Bradstreet 1984; Van de Ven 1980; Shapero 1981).Finally, venture capitalists' investment criteria are of enormous import to entrepreneurs seeking venture funding. Such entrepreneurs require a significant infusion of capital in order to grow their businesses, and knowledge of the criteria sought by venture capitalists can aid entrepreneurs in gaining the necessary financing.This study attempts to uncover the criteria used by venture capitalists through semistructured interviews and verbal protocol analysis of venture capitalists' evaluations of actual venture proposals. Sixteen verbal protocols—in which the participants “think aloud” as they review business proposals— were made of venture capitalists' venture evaluation decisions.The findings of this study suggest that venture capitalists screen and assess business proposals very rapidly: the subjects in this study reached a GO/NO-GO decision in an average of less than six minutes on initial screening and less than 21 minutes on proposal assessment. In venture capitalists' initial proposal screening, key criteria identified include fit with the venture firm's lending guidelines and the long-term growth and profitability of the industry in which the proposed business will operate. In the second stage of proposal assessment, the source of the business proposal also played a major role in the venture capitalists' interest in the plan, with proposals previously reviewed by persons known and trusted by the venture capitalist receiving a high level of interest.In addition to the specific criteria identified and how they were used in reaching GO/NO-GO decisions, the findings of this study also were surprising for the lack of importance venture capitalists attached to the entrepreneur/entrepreneurial team and the strategy of the proposed venture during these early stages of the venture evaluation process.     

Performance factors of small tourism ventures: The interface of tourism,entrepreneurship and the environment

Performance factors of small Israeli tourism ventures were examined using an integrated model that combines four theoretical approaches, each focusing on a different central facet: environmental milieu, institutional support, entrepreneurial human capital, and the venture's bundle of services. The current research developed an operational instrument for assessing environmental attractiveness components of tourism ventures and their relationship to performance. A factor analysis, based on this instrument, revealed three environmental factors: tourist-related infrastructure, options for excursions and scenery, including climate. An attractive environment contributed to higher revenues in tourism ventures; however, it did not assure profitability. The results indicate the dual nature of the impact of institutional support upon the tourism venture's performance. Regardless of the size and age of ventures, those obtaining the advisory type of assistance from the governmental tourism incubator performed less well than those ventures that did not obtain such support. By contrast, those tourism ventures that were financially supported by external sources performed better than those that were not financially supported. The explanation for this curious and seemingly contradictory finding may lie in the different criteria for receiving financial and advisory assistance. Success in persuading external sources to provide financial support would seem to be evidence of the soundness of the venture's planning and its economic viability. By contrast, insofar as virtually any venture in the area may apply for and obtain advisory assistance from the governmental tourism incubator, with no requirement to meet financial criteria of any kind, it could be that precisely the weaker ventures are being carried along by this form of assistance.Among the various entrepreneur's attributes examined, managerial skills provided the strongest association with the performance measures. The managerial skills were also found to be the most significant variable explaining performance relatively to the variables derived from the other three approaches. These results have implications regarding the nature of the support to be given by a governmental tourism incubator to entrepreneurs operating in the region. Given that lack of managerial skills is one of the main barriers to a venture's success, particularly in small businesses where the owners have to be involved in all areas of activity, the incubator needs to provide entrepreneurs with tailored regional business and management training tools to promote tourism venture development and success.The study also reveals that the number of services offered by a tourism venture made only a minor contribution in the revenues regression, which may indicate that providing a bundle of services for the tourist customer does not necessarily guarantee profitability. A noteworthy finding is the similarity in the differential association between the number of services offered and the performance measures, on the one hand, and attractiveness features with performance on the other. In both cases, these factors positively contribute to the revenues regression, but neither contributes to the profitability or income regression. This means that an attractive environment does contribute to higher revenues, in that more tourists choose to visit the tourist attractions; however, this does not assure profitability. Similarly, providing many services to the visitors may also contribute to higher revenues, but does not necessarily assure profitable business outcomes. The current findings indicate that small tourism venture profitability is contingent on human capital, especially the skills of the entrepreneurs running the venture. In accordance with our findings that managerial skills are so crucial for venture success, the main objective of advisory incubators should be to promote managerial competencies.     

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.     

Industry environments and new venture formations in U.S. manufacturing: A conceptual and empirical analysis of demand determinants

Through integration of theoretical perspectives from Austrian economics, industrial organization economics, and organizational theory, this study builds and examines empirically a model of the demand determinants of new venture formations in manufacturing industries. Austrian economics and other writings on market disequilibrium imply that the dynamics of industries create market opportunities that are available to economic actors. The greater the changes occurring in an industry, the greater the opportunities created, and the further the market is moved from an equilibrium state. Entrepreneurship is viewed as the process of seizing opportunities through combinations of productive inputs. The more available market opportunities in an industry, the greater is the potential for entrepreneurial activity and, more specifically, new venture formations. Entry barriers constrain the formation of new ventures by prohibiting new ventures from taking advantage of available emerging opportunities. The inertial properties of existing firms constrain their ability to move toward these opportunities and thereby increase the potential for new ventures to exploit these market opportunities.The empirical analysis utilizes the Small Business Administration's U.S. Establishment and Enterprise Microdata file to test the model on a large sample of U.S. manufacturing industries. Results indicate that dynamic industries have greater new venture formations. More specifically, new venture formations are associated with industry growth, the dynamism of industry niches, and technological development. Moreover, entry barriers were found to strongly constrain rates of new venture formations. Industry capital requirements, concentration, and excess capacity were all related negatively to the formation of new ventures. The hypothesized positive relationship between industry-level measures of organizational inertia and new venture formations was also borne out in the empirical analysis. New venture formations were related positively to the extent of vertical integration in an industry as well as to the failure of incumbent firms to invest in new capital.Overall, the independent variables explained more than 50% of the variance in rates of new venture formations in manufacturing industries. The results support an Austrian perspective on entrepreneurship and imply that demand factors and industry structural variables are important determinants of new venture creations.The results imply that dynamic industries should spawn new ventures, and industries with high sales growth, changing consumer preferences, and rapid technological change should exhibit high rates of venture formations. For potential entrepreneurs, the model presented herein might be a useful guide to focus their venture activities. Entrepreneurs who can spot the fundamental sources of market change can exploit their knowledge for economic gain. Yet, there are a number of difficulties in suggesting that the model presented herein could be directly applied by entrepreneurs. First, it is always easier to estimate the dynamics of an industry post hoc than it is ex ante. For example, whereas it is simple to catalogue the technological change that occurred in an industry over time, it is another matter to predict the nature of future technological developments. Second, entrepreneurial opportunity can persist only if other potential economic actors do not know of the presence of the opportunity or cannot act upon it. Any model that gains acceptance as a means of predicting the presence of opportunities would, through its widespread usage, neutralize those opportunities for economic profit. Nonetheless, entrepreneurs who have that unique capability to spot industry dynamics and associated profit opportunities where others do not will gain from that ability.     

Networking and growth of young technology-intensive ventures in China

More often than not, new ventures lack established products, known technologies, longstanding customer relations, experienced managerial teams, sufficient capital, and strong reputations. Almost by definition, small, new firms lack the resources of many larger, established firms. The task of an infant firm, and a measure of its success, is to make a transition from being resource weak to being resource strong.How can resources that are critical for profitable growth be acquired for the resource weak new venture? Researchers have found that entrepreneurs can gain access to valuable resources and they can seek to achieve competitive advantage through “networking activities.” Forming and utilizing available relationships with external organizations can allow entrepreneurs to build credibility, gain advice, financing, and customer access, build a positive image and obtain resources at below-market prices, and obtain channel access, information, and innovations. Business relationships with other organizations allow an entrepreneur to achieve desired business results through “asset parsimony.”A favorable view toward networking for new ventures leaves a number of unanswered questions, however. Relevant research questions might include, who should the entrepreneur seek as a business partner? Are all inter-organizational relationships equal, or are some types more valuable to new ventures than other relationships? Do firms relying on high levels of networking activities actually outperform firms that less actively seek resources through external organizational relationships?The present study provides a specific understanding of the concept of networking for entrepreneurs. We propose that networking can be understood in terms of “range,” the number of external relationships to obtain resources, and of “intensity,” the frequency of contact of and amount of resource obtained from these relationships. This research project evaluates the range and intensity of networking among high-growth and low-growth entrepreneurial ventures.Extensive interviewing with managers of six young technology-oriented firms in the People's Republic of China (PRC) affirmed the importance of entrepreneurial networking. Managers in the three high-growth firms reported greater range and intensity of business networking than did managers of three low-growth firms, matched by industry and age. Moreover, the relationship between networking activities and growth transcended the stage of firm development.Where networking range and intensity are deemed important in the growth process, new venture success may call for entrepreneurs to reach out deliberately to external organizations to capture needed resources. To a certain extent, such networking activities run counter to important entrepreneurial motivations of independence and autonomy. The concept of networking, and the results of this study, imply that entrepreneurs need to combine the spirit of independence with the reality of resource dependence, and they need to balance personal autonomy with strategic business relationships.This study also contributes to the understanding of entrepreneurship in our increasingly global economy, particularly in the PRC. Business relationships between the United States and the PRC have been expanding rapidly in the last decade. Many foreign businesses seek license agreements, joint venture partners, equity participation, or channel relationships with young ventures in that country. Do the same rules of networking apply in the PRC as the literature suggests apply in the United States? New ventures in this study were found to engage in processes of networking activities consistent with those in the West. Although networking activities may have different cultural roots, firm success appeared influenced by the same principles of networking.     

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.     

Emerging life sciences ventures: The quest for legitimacy

As an emerging life sciences venture, gaining legitimacy (credibility) with external stakeholders (e.g., investors) is a critical challenge in today's environment. This quest for legitimacy relates to issues that focus on the individual, the environment, and the process. Integrating insights gained from interviews with three CEOs of life sciences companies along with the academic literature, we provide guidance for entrepreneurs regarding the unique challenges facing life sciences ventures. We propose that these ventures are driven by a “quest for legitimacy” and that life sciences entrepreneurs therefore must be aware of the strategic issues which impact legitimacy in the eyes of external stakeholders (e.g., investors).     

Surviving the emotional rollercoaster called entrepreneurship: The role of emotion regulation

The entrepreneurial journey is often experienced as an emotional rollercoaster, but we know very little about how entrepreneurs can ride it most effectively to increase their ventures' chances of survival. We investigate how entrepreneurs' habitual use of cognitive reappraisal and expressive suppression – two well-established types of emotion regulation – impact on the likelihood of their venture surviving. Drawing on a sample of 183 technology ventures, we find that both regulation types are generally associated with a lower survival likelihood, but that these effects depend on the venture's performance. Our study contributes to the literatures on emotions and new venture survival in entrepreneurship and to the emotion regulation literature.     

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.     

Explaining the formation of international new ventures: The limits of theories from international business research

International new ventures (INVs) represent a growing and important type of start-up. An INV is defined as a business organization that, from inception, seeks to derive significant competitive advantage from the use of resources and the sale of outputs in multiple countries (Oviatt and McDougall 1994). Their increasing prevalence and important role in international competition indicates a need for greater understanding of these new ventures (Oviatt and McDougall 1994).Logitech, as described in a case study by Alahuhta (1990), is a vivid example of an INV. Its founders were from two different countries and had a global vision for the company from its inception. The venture, which produces peripheral devices for personal computers, established headquarters in both Switzerland and the U.S. Manufacturing and R&D were split between the U.S. and Switzerland, and then quickly spread to Taiwan and Ireland. The venture's first commercial contract was with a Japanese company.Using 24 case studies of INVs, we found that their formation process is not explained by existing theories from the field of international business. Specifically, neither monopolistic advantage theory, product cycle theory, stage theory of internationalization, oligopolistic reaction theory, nor internalization theory can explain the formation process of INVs. These theories fail because they assume that firms become international long after they have been formed, and they therefore highlight large, mature firms. They also focus too much on the firm level and largely ignore the individual and small group level of analysis (i.e., the entrepreneur and his or her network of business alliances).We propose that an explanation for the formation process of INVs must answer three questions: (1) who are the founders of INVs? (2) why do these entrepreneurs choose to compete internationally rather than just in their home countries? and (3) what form do their international business activities take?Who are the founders of INVs? We argue that founders of INVs are individuals who see opportunities from establishing ventures that operate across national borders. They are “alert” to the possibilities of combining resources from different national markets because of the competencies (networks, knowledge, and background) that they have developed from their earlier activities. Following the logic of the resource-based view of the firm, we argue that the possession of these competencies is not matched by other entrepreneurs. Only the entrepreneur possessing these competencies is able to combine a particular set of resources across national borders and form a given INV.Why do these entrepreneurs choose to compete internationally rather than just in their home countries? The founders of INVs recognize they must create international business competencies from the time of venture formation. Otherwise, the venture may become path-dependent on the development of domestic competencies and the entrepreneur will find it difficult to change strategic direction when international expansion eventually becomes necessary. As the founder of one INV explained, “The advantage of starting internationally is that you establish an international spirit from the very beginning” (Mamis 1989:38).What form do their international business activities take? Founders of INVs prefer to use hybrid structures (i.e., strategic alliances and networks) for their international activities as a way to overcome the usual poverty of resources at the time of start-up.This study has important implications for the practice of management. In financing decisions relating to INVs, venture capitalists and other venture financiers should look for entrepreneurs who have a global vision, international business competence, and an established international network. When entrepreneurs start INVs they should create hybrid structures to preserve scarce resources. Finally, given the path-dependence of competence development, founders of new ventures should consider whether establishing a domestic new venture with plans to later internationalize will be as successful a strategy as establishing a new venture that is international from inception.