Entrepreneurship education in the nineties

Bringing entrepreneurship education into the community support infrastructure poses one of the more important economic development issue for the 1990s. Aspart of the new strategy for job creation, entrepreneurship education holds promise as an integral component in a community's venture support system along with incubators, innovation centers, technology transfer offices, science parks, and venture capital operations. Since new venture success is foremost a function of entrepreneurial knowledge and know-how, entrepreneurship education may be the most promising of these economic development mechanisms. Unfortunately, it may be the most difficult to implement.Generally the extent and nature of education required by modern aspiring entrepreneurs is not well understood. Many would see entrepreneurship education as strictly an add-on to current education in management or engineering. Such is the option of minimal use. The real promise or entrepreneurship education will be realized when it is strategically organized for economic development and job creation. This article traces the recent history of entrepreneurship education before proceeding to deal with a number of questions facing those who would use entrepreneurship education as part of a modern economic development strategy:

1. 1.1. Why is entrepreneurship education important?
2. 2.2. How should it be distinguished from related programs?
3. 3.3. How will success be measured?
4. 4.4. Who will be the students?
5. 5.5. How will the subject be taught?
6. 6.6. What will be the curriculum?
7. 7.7. Who will be the teachers?

     

Environment,corporate entrepreneurship,and financial performance: A taxonomic approach

This study examined the association between a firm's external environment, corporate entrepreneurship, and financial performance. The study emphasized three propositions: (1) perceived—rather than objective-characteristics of the environment significantly influenced entrepreneurship activities; (2) a multidimensional definition of a firm's environment was essential to unravel the interplay between the environment, orporate entrepreneurship activities, and financial performance; and (3) a taxonomic approach had the advantage of accounting for the interrelationships among the dimensions of the environment in classifying firms.Using data from 102 companies in six4-digit industrial classification codes (SIC),cluster analysis was used to distinguish four environmental settings: “dynamic growth,” “hostile and rivalrous but technologically rich,” “hospitable, product-driven growth,” and “static and impoverished” environments. These four environments varied in their characteristics.The four empirically derived environment clusters were then used to examine variations in corporate entrepreneurship—operationalized as corporate innovation and venturing, and corporate renewal activities. The first dimension—corporate innovation and venturing—had four components: new business creation, new product introduction, percent of revenue from new products, and technological entrepreneurship. The renewal dimension had three components: mission reformulation, reorganization, and system-wide change. The data were used to test six hypotheses:

• 1.H1: In dynamic or growth environments, companies will emphasize new business creation and innovation.
• 2.H2: Environmental hostility is positively associated with the redefinition of business through venturing activities.
• 3.H3: Hospitable business environments are positively associated with business venturing and renewal activities.
• 4.H4: Static environments are inversely associated with corporate venturing and renewal activities.
• 5.H5: Corporate entrepreneurship activities are positively associated with company financial performance.
• 6.H6: Corporate entrepreneurship activities emphasised in HI through H4 will be significantly and positively associated with company financial performance in their respective environmental clusters.

The results provided general support for the six hypotheses. They showed that: (1) each environmental cluster had a distinct combination of activities relating to corporate innovation and venturing, and renewal; (2) corporate entrepreneurship activities varied in their associations with measures of company growth and profitability; and (3) the associations between corporate entrepreneurship and company financial performance varied among the four environment clusters. The results from this study can help executives in selecting specific entrepreneurial activities that match the demands of success in their business environment to improve their company's performance.     

Learning needs of growth-oriented entrepreneurs

As firms increase in size and complexities, the entrepreneurs managing them face a number of unique problems. Often the entrepreneurs lack the experience to address these challenges. Further, finding the best method to acquire the needed information has proven elusive for both entrepreneurs and educators.The existing entrepreneurship education literature related to teaching and/or learning skills to grow a business does not significantly address the problems brought on by growth. Most studies have examined students in an academic environment, away from realworld problems, in a relatively structured setting of a specific duration and with similar levels of competency and knowledge. Practicing entrepreneurs do not fit this educational mold.The results of this study show that entrepreneurs prefer learning experiences that are short, to the point, content oriented, and taught by practicing professionals. This study also identifies the priority learning needs and preferred delivery methods of fast growth entrepreneurs. These findings could be used to develop a series of courses or modules that could enhance the management efficiency and effectiveness of fast growth entrepreneurs.This study contributes to the general knowledge of entrepreneurship education in the following areas:

• 1.1. It identifies the learning needs and preferred instructional methods of practicing, fast growth entrepreneurs.
• 2.2. It provides market information on course offerings for executive education programs.
• 3.3. It provides a model of curriculum content for universities that wish to bring their courses more in line with the needs of practicing entrepreneurs.
• 4.4. It provides a teaching approach that can help bridge the gap between academe and the business world by focusing on learning needs common to both students and entrepreneurs.

     

The Swedish product safety legislation

During the 1970's and 80's the interest in product safety has grown in Sweden. This in turn has led to an examination of the product safety legislation. On July 1, 1989, a new general Product Safety Act will come into force. Its aim is to prevent hazardous goods and services from causing personal injury or damage to property. Under the Act an entrepreneur can:

--be enjoined to provide safety information

--be prohibited from further provision of the hazardous goods and services

--be enjoined to provide cautionary information

--be ordered to recall hazardous goods and services.

A Governmental Committee has recently investigated whether or not rules concerning prohibition of export goods entailing a direct danger to life, health, or safety should be introduced and, in that event, how they should be devised. The Committee proposed certain rules in December 1988. This proposal will be circulated for comment whereupon it will be decided within the Government Offices how to proceed with the work on the proposal.     

After the cash arrives: A comparative study of venture capital and private investor involvement in entrepreneurial firms

Equity investments in entrepreneurial firms continue to grow in number and dollar amount from both venture capital and private investment sources. Increasingly, these two sources of capital play an important role in the development of new and existing entrepreneurial ventures. Due to the sometimes hurried attempt to turn their dream into reality, entrepreneurs may fail to consider similarities and differences in the value-added benefits supplied by venture capital firms (VCs) and private investors (PIs).Accordingly, the purpose of this study was to determine how initial relationships are established and maintained between entrepreneurs and their primary investors. Specifically, we asked entrepreneurs to assess characteristics of the relationship with their primary investor. We then contrasted the results between entrepreneurial firms that had received venture capital funding versus private investor funding. Differences were examined along the following lines:

• 1.• Levels of investor involvement in entrepreneurial firms
• 2.• Reporting and operational controls placed on the firm
• 3.• Types of expertise sought by the entrepreneur

     

General managers control new and existing products differently

This article presents some initial findings from an ongoing research project on the way that divisional general managers of targe organizational units control new product innovations. (Control, in this instance, refers to the set of procedures, systems, and actions that general managers use to monitor, evaluate, influence, or define what subordinates are doing.) The research presented here focuses on three broad questions:

• 1.1. Do divisional general managers of large organizational units control their new product activities differently from their more established operations?
• 2.2. Is a new product's innovation strategy related to the nature and degree of divisional general manager control—and, if so, in what way?
• 3.3. Is a divisional general manager's choice of control methods related to his/her unit's new product output?

The results were based on in-depth interviews with the general managers of 26 large Canadian-based divisions in 12 firms. All the firms were significant competitors in the North American market and all were actively engaged in new product activities. Firm size ranged from $210 million to $5 billion in sales. The following is a summary of the study's principal findings and conclusions:

• 1.1. Control varies among dimensions. The study measured the degree of control exercised by divisional general managers over new and established products on 14 control variables. It was found that none of the new products (relative to established brands) was controlled in the same fashion by the managers. Instead, new products were always managed through a variety of “loose” and “tight” controls. In so doing, it appeared that the divisional general managers were trying to balance the control and freedom required by subordinates with new products.
• 2.2. Control varies with strategy. Both theory and empirical research generally support the notion of linkage between a unit's strategy and its organizational (eg, design, reward, placement, information, etc.) practices. The results of this study strengthen this line of thinking. The data show that both the nature and degree of divisional general manager control vary with three dimensions of product strategy (i.e., familiarity, uniqueness, and advancement).
• 3.3. Control varies with output. The analysis highlighted the pivotal relationship between divisional general manager control and new product output. Both the nature and degree of control were found to be associated with new product output in each strategic category. Although there does not appear to be one best way to control all types of new products, some divisional general management approaches to control were more preferred than others.
• 4.4. Loose formal/tight informal. The general managers' control patterns showed that formal control dimensions were usually managed more loosely than informal ones; that tighter informal controls were used to off-set (or “balance” ) the more relaxed formal dimensions; and that the observed reduction in formal control should not be interpreted to mean either the absence of bureaucracy or the absence of formal control. Indeed, some formal bureaucratic control was always found in the “high output” strategic categories. Thus, rather than being considered or labeled as typically “bad”, bureaucracy may in fact be “beautiful”—provided, of course, that it is appropriately used.

The article concludes by arguing that a divisional general manager's approach to controlling new products seems to make a difference in terms of performance. As such, the control approach chosen should not be made haphazardly or with abandon.     

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.     

Three facets of satisfaction and their influence on the performance of innovation teams

This study investigates and demonstrates the mediating effect of job satisfaction between team deftness and team comprehension and the performance of 168 project teams involved in major innovation projects for their companies.The study demonstrates that there are at least three independent facets of job satisfaction: instrumental satisfaction with the way the task is progressing, social satisfaction with the way the team members interact with one another and the organization, and egocentric satisfaction with the individuals' perceived benefits to themselves.Previous studies have shown that innovation team performance is directly correlated with the two antecedents of performance: team deftness, which reflects how effectively the team works to achieve the innovation's purpose and team comprehension, which reflects how the team understands the linkages among key variables driving the innovation outcome. The study argues that these different facets of satisfaction differentially affect the ways in which team performance is affected by deftness and comprehension.There are three major results:

• 1.1. Social satisfaction mediates the relation between team deftness and performance—as social dissatisfaction of the team increases, it appears to impede the ability of the team to deploy its deftness in accomplishing the project's purpose.
• 2.2. Instrumental satisfaction mediates the relation between team comprehension and project performance—as instrumental dissatisfaction increases, it appears to impede the ability of the team to deploy its comprehension to accomplish the project's purpose.
• 3.3. Egocentric satisfaction does not appear to mediate the relation between team deftness and project performance.

Some managerial implications of these results are discussed.     

The impact of regulatory legislation on contractual costs risk and the form of contracts used in the UK and Republic of Ireland

The problem of contractual cost and quality risk within the public sector has been infrequently addressed within the EU regulated procurement environment. The view of Member States has been that concentration of buying power, standard conditions of contract and competitive bidding are the protective mechanism and cornerstones of regulated sector buyers. Aspects of the size of the ‘bidding pool’ and the influence of EU purchasing requirements are addressed and seen as largely unsatisfactorily addressed. This article provides an empirical analysis on two significant points:

• •that the UK and Republic of Ireland (ROI) public sector bodies have not significantly changed the type of contract (or contractual form) as a result of regulatory requirements.
• •that the form of contract adopted does not effectively address the cost and quality risks management may face once such contracts have been let.

     

Contours of development

New ventures seem to suffer more difficulties and business failures than do established firms. Also, there is a pattern to the mortality, with most newly founded businesses lasting only a few years.Explanations of high failure rates in new ventures have often centered on “poor management,” or have postulated that firms chose inappropriate strategies for their markets and economic environments.The present article conceives of new venture mortality as similar in nature to patterns of development that we observe, for instance, in human embryos or in the formation of new species. That is, development is an inherently hazardous process.Some of the specific hazards of development are:

• 1.1. Generic Entry Barriers. It is generally not possible for a new firm or product to successfully enter an already crowded, stable market where competitors are strong. It is more feasible instead to enter a new or growing market; or to enter with a “substitute” product that is clearly superior to those existing; or to exploit an unnoticed market opening; or to develop competitive strengths “secretly,” without overtly challenging others in the industry.
• 2.2. Density of Developmental Hurdles. Any new entity must clear a sequence of important hurdles on its way to maturity, such as establishing a well-ordered office, a functional sales channel, etc. Failure at any one hurdle is potentially fatal, and a mathematical analysis shows that the likelihood of passing even 10 hurdles in a row is about one in three. The earliest hurdles tend to be the most difficult and to crowd more densely than later hurdles. Particularly troublesome are “phase changes” where a company first starts business or becomes one thing rather than another within a short period of time.
• 3.3. Amplification of Maturational Error. Any complex system that grows rapidly and is unable to predict the future perfectly is going to accumulate structural errors that become very difficult to remedy. This is a natural and inevitable developmental process, as the system grows in complexity and the flaw itself becomes a pillar of the system. If an imitator or competitor arrives soon afterward and spots the error, he or she will easily be able to retool and redesign a better system, whereas the first firm is stuck with old habits, tools, dies, and production methods.
• 4.4. Sequence and Control in Development. Every embryonic organism has a design template outlined in its DNA that is carefully followed. Both the developing fetus itself and the mother have monitoring and control mechanisms that trigger an abortion if the development process goes awry. New ventures lack such mechanisms. They are more susceptible to “developmental deviance,” likely to differ from the model successful corporation of their type.
• 5.5. Smallness and the Asymmetry of Luck. Small things are more subject to the whims of fate than big things. Amount of resources is the key. Because new ventures typically start off with scarce resources, a bad bounce can sink the company, and the probability of at least one such bad bounce is high.
• 6.6. Costs of Organizing. Like all of the larger-brained mammals, a new company, such as a medical supply firm, must learn through experience much of what it means to be mature. Costs associated with learning arrive just when the firm is most vulnerable and distracted by other challenges.

In one sense, the message of this article is good news, in that managers of failed enterprises need not assume all the blame. After all, if most new businesses do poorly, then failure is the average or typical case, and it makes little sense to say that the average manager is “poor.” The bad news is that, if our perspective is correct, managers of new ventures have less scope to influence the success of their enterprises than is commonly believed. The managerial recommendations that emerge are that new ventures are more likely to succeed to the extent that they: have sponsorship or capital, have managers with a range of experience in previous ventures, are given extra assistance of “shelter,” or can ensure a high probability of passing all of the hurdles faced by a new venture.     

The case method: A perspective

The task of preparing a case is similar to writing a legal brief or an essay insofar as all three should contain a thesis or main point and argumentation or logically arranged facts and inferences. However, different from a brief or an essay, case studies should not contain a conclusion. A case should lead the reader through the facts, but it should not offer a firm or fixed resolution or moral judgment. Ideally it should leave the reader with the opportunity to create and insert their own conclusion. A good case study should be amenable to the following kinds of questions or analysis procedures:

1. What is the problem? or What is at stake?
2. What are the non-normative or factual issues involved?
3. What are the normative or ethical issues involved?
4. What are the alternatives available?
5. What decision would you make?

     

Corporate social responsibility and public accountability

The development of legislation determining corporate behaviour is a fascinating topic, offering insight into the societal problems of corporate enterprise as they are related to their accounting, their administration, and their external reporting. In this paper the following specific implications for accounting are examined:

-Should accountants get involved in social auditing and are they the ‘core’ persons in corporate social accounting systems?

-Should corporate social performance measurement and reporting become obligatory and to what extent?

-A general framework for the implementation of corporate social accounting systems is suggested and quidelines for its auditing are proposed.

-A tentative set of social auditing standard is outlined together with its methodological accompaniments.

     

Commentary on “an empirical study of moral reasoning among managers”

Managerial reasoning is characteristic of a care-relationship ethics:

1. If a corporation provides certain community values to corporate members not reducible to their self-interested economic or professional objectives;
2. If such values are generated by a division of labor based on interdependence, reciprocity and concern for another's self-realization;
3. If it's based on promoting an ethical corporate self independent of its economic value.

Such an ethic is appropriate, given employees' tremendous personal contributions, the unique position of private industry to provide distinctive resources without committing extensive social resources, and due to its potential for reducing managerial moral fragmentation and hypocrisy.     

Offensive and defensive marketing: Closed-loop duopoly strategies

Offensive and Defensive Marketing: Closed-Loop Duopoly Strategies A modified Lanchester game is used to develop closed-loop strategies for offensive and defensive marketing expenditures of duopolistic competitors in a market share rivalry. Analysis of the model reveals that

1. well-defined closed-loop strategies can be developed that show directly the influence of market share on offensive and defensive marketing;
2. steady state is marked by balance between offensive and defensive marketing expenditures;
3. defensive marketing is more critical than offensive marketing due to greater risk of loss under deviation from closed-loop strategies.

The last result would appear to have particularly important implications for both practice and research.     

In search of the meaning of entrepreneurship

This paper is an attempt to build a bridge between the popular and the academic usage of the terms entrepreneur and entrepreneurship, and to identify the raw materials needed to construct an interpretive framework capable of illuminating the nature of entrepreneurship and its role in economic theory. We review briefly the contributions made to this topic by Cantillon, Schumpeter, Schultz and Kirzner. We advance a synthetic definition of the entrepreneur as someone who specializes in taking responsibility for and making judgemental decisions that affect the location, the form, and the use of goods, resources, or institutions. We then conclude with some observations on the basic choice confronting economics regarding the place of entrepreneurship in economic analysis.     

Age and entrepreneurship: nuances from entrepreneur types and generation effects

The literature on the relationship between age and entrepreneurship has been inconclusive. This study for the first time examines this relationship by extending the occupational choice literature to eight entrepreneur types and four generational modification effects in the USA. Multilevel mixed-effect logistic regression models are estimated to examine the age effects in entrepreneur type propensities. Generational modification effects are compared for the same ages across neighboring generations by hierarchical age-period-cohort (HAPC) models. We find that entrepreneurial propensity rises with age until around 80. The propensity of novice (versus non-novice) and unincorporated (versus incorporated) entrepreneurs has a U-shaped age trend dipping around age 60, while the propensity of full-time (versus part-time) declines since age 30s. The propensity of incorporated (versus unincorporated) entrepreneurs declines from ages 44 to 51 for Gen-Xers, but not for Boomers; this propensity also declines faster for Boomers than for Traditionalists from ages 63 to 70.     

Employee attitudes toward whistleblowing: Management and public policy implications

Managers of organizations should be aware of the attitudes of employees concerning whistleblowing. Employee views should affect how employers choose to respond to whistleblowers through the evolving law of wrongful discharge. This article reports on a survey of employee attitudes toward the legal protection of whistleblowers and presents an analysis of the results of that survey. Among the most significant findings of the survey are:

1. Recognition by employees of a hierarchy of proper whistleblowing outlets: internal first, law enforcement agencies second, and news media last.
2. Less employee support for legal protection for whistleblowers who report unethical activities than for those who report illegal conduct.
3. Very strong overall employee support for legal protection of whistleblowers, even among managerial and supervisory employees.
4. A belief among employees that a fear of being fired deters whistleblowing.

These findings have important implications for both management and public policy. Organizations that want to encourage whistleblowing clearly must protect whistleblowers from retaliation, while organizations that do not encourage whistleblowing may want to reconsider that policy. The survey results also have implications in the handling of individual whistleblowers. From a public policy perspective, the survey results provide support for increasing the legal protection of whistleblowers. On the other hand, any such increase in whistleblower protection should considerr the importance of employee loyalty and managerial discretion.