When Rivals Originate from Within

This paper examines two questions that affect entrepreneurial activity. First, under what conditions are new opportunities exploited by managers rather than their employer firms and second, under what conditions do the employer firms have sufficient incentive to pay off managers to deter entrepreneurial activity? The paper develops and analyzes an economic model to examine the condition sets. Results are consistent with recent findings in the empirical literature on managerial salaries and on technology adoption in oligopolistic industries.

     

Linking two dimensions of entrepreneurial orientation to firm performance: The moderating role of environment and industry life cycle

The term “entrepreneurial orientation” has been used to refer to the strategy-making processes and styles of firms that engage in entrepreneurial activities. A popular model of entrepreneurial orientation (EO) suggests that there are five dimensions of EO—autonomy, innovativeness, risk taking, proactiveness, and competitive aggressiveness (Lumpkin and Dess 1996). This paper reports on two of those dimensions—proactiveness and competitive aggressiveness. Proactiveness refers to how firms relate to market opportunities by seizing initiative in the marketplace; competitive aggressiveness refers to how firms react to competitive trends and demands that already exist in the marketplace. Despite these distinctions, prior research has tended to equate these two concepts and argued that they have a similar effect on firm performance. This paper investigates how these two approaches are related to each other, how they are related to performance, and how their function differs in the environments in which firms exhibit these approaches to strategy making. These distinctions are important because proactiveness and competitive aggressiveness represent distinctly different avenues to entrepreneurial success.A field study was conducted in which 124 executives from 94 firms were surveyed. These were executives from non-affiliated, non-diversified firms who were actively involved in strategic decision making at the top level of the firm. All firms reporting had at least one respondent who was an owner. Analysis of the data was conducted in two phases. In phase 1, factor analysis was used to examine the distinctions between different dimensions of EO. Proactiveness and competitive aggressiveness emerged as two separate factors indicating that these two strategy-making modes were perceived differently by the executives in the study. In the second phase, the relationship of these two dimensions to performance was analyzed in various contexts. Initial tests found that proactiveness was positively related to performance but competitive aggressiveness tended to be poorly associated with performance.Subsequent tests of the EO-performance relationship indicated that the stage of industry life cycle tended to favor one entrepreneurial orientation over another. The performance of firms in the early stages of industry development was stronger when their strategy making was proactively oriented. In contrast, a competitively aggressive frame of mind was helpful to firms in more mature stages of industry development. These findings were supported by other tests of the business environment. In dynamic environments, characterized by rapid change and uncertainty, proactive firms had higher performance relative to competitively aggressive firms. In hostile environments, where competition is intense and resources are constrained, competitively aggressive firms had stronger performance.The findings suggest that these two different approaches to entrepreneurial decision making may have different effects on firm performance. The differences were particularly apparent in the way firms relate to their external environment. Proactiveness—a response to opportunities—is an appropriate mode for firms in dynamic environments or in growth stage industries where conditions are rapidly changing and opportunities for advancement are numerous. But such environments may not favor the kind of combative posturing typical of competitive aggressiveness. Firms in hostile environments, or in mature industries where competition for customers and resources is intense, are more likely to benefit from competitive aggressiveness—a response to threats. A further implication of this research is that the dimensions of an entrepreneurial orientation, often considered to be positively related to performance under all conditions, may not always be associated with successful outcomes. This study indicates that the dimensions of EO often vary independently rather than covary, suggesting that the extent to which an entrepreneurial approach to strategy making is useful will frequently depend on the organizational or environmental conditions under which such decisions are made.     

Governance and strategy of entrepreneurial networks: an introduction

This special issue focuses on empirical and theoretical papers that help us to better understand the strategy and governance of entrepreneurial networks, such as franchise chains, alliances, and cooperative networks. The following central themes are covered: (I) Which formal governance mechanisms do entrepreneurial networks use in order to reduce transaction cost/agency cost and to increase strategic value? (II) What is the role of relational governance mechanisms (such as information exchange and social ties) for the performance outcomes in franchise chains and cooperatives? (III) Which alliance strategies do entrepreneurial firms pursue to realize a competitive advantage, and what is the impact of resources and capabilities on performance outcomes of entrepreneurial firms. To address these issues, insights from organizational economics (transaction cost theory, agency theory, signaling theory), strategic management perspectives (resource-based, knowledge-based and organizational capabilities theory), entrepreneurship theory and the relational governance view are used.     

Contradictions of Entrepreneurial Growth: The Case of VG Instruments

What happens to entrepreneurial firms as they achieve the growth that they desire? This paper argues that growth brings with it pressures that ultimately contradict the entrepreneurial stance. In particular, the 'go getting' competitive internal structure of the firm has to adapt and change to reflect the increased importance of co-operation and teamwork as such firms mature. The author examines this question in the context of a case study of an innovative and award winning British manufacturer of scientific instruments.     

International opportunity recognition as a critical component for leveraging Internet capabilities and international market performance

Recent research in the field of international entrepreneurship has emphasized the need for a better conceptualization of international opportunity recognition. Further, with advancements in information and communication technologies, such as the Internet, there has been a profound impact on the way in which international business is conducted, for example, enabling entrepreneurial firms to capitalize on the economic opportunities of an Internet environment. In this study, we propose a model, highlighting the importance of international opportunity recognition, as a critical component for leveraging Internet capabilities and international market performance. Through the lens of a resource capabilities approach, a quantitative, online survey was used to collect data from Australian, international entrepreneurial firms. Structural equation modelling results indicate that international opportunity recognition plays a central role in explaining how resources and Internet capabilities combine for the firm’s realization of international opportunities, and subsequent international performance. The findings enrich current understanding of how international entrepreneurial firms realize opportunities in Internet-based environments.     

Entrepreneurs as intermediaries

This paper sketches the contours of a theory of entrepreneurship focusing on the nature of entrepreneurship as intermediation under information asymmetries. While entrepreneurship, strategy, and finance researchers have studied the relationship between entrepreneurs and intermediaries, they tend to treat intermediaries, such as venture capitalists, as a separate organizational form that is parallel with (start-up) entrepreneurs. In this paper, we consider entrepreneurs as intermediaries who discover, create, and exploit entrepreneurial opportunities by bearing uncertainties stemming from intermediation between potential buyers and sellers under information asymmetries. Specifically, we focus on two key questions in entrepreneurship research: (1) Why do entrepreneurs arise and exist at all? (2) Why do some entrepreneurs perform better than others in creating entrepreneurial opportunities and ultimately creating wealth? Our discussion culminates in a new research agenda with four testable propositions.     

An absorptive capacity theory of knowledge spillover entrepreneurship

The knowledge spillover theory of entrepreneurship identifies new knowledge as a source of entrepreneurial opportunities, and suggests that entrepreneurs play an important role in commercializing new knowledge developed in large incumbent firms or research institutions. This paper argues that, knowledge spillover entrepreneurship depends not only on new knowledge but more importantly on entrepreneurial absorptive capacity that allows entrepreneurs to understand new knowledge, recognize its value, and commercialize it by creating a firm. This absorptive capacity theory of knowledge spillover entrepreneurship is tested using data based on U.S. metropolitan areas.     

Creation and Pursuit of Entrepreneurial Opportunities: An Evolutionary Economics Perspective

Considerable debate surrounds the concept of entrepreneurial opportunities. This paper approaches the opportunity concept from an evolutionary market process perspective. It argues that new opportunities for entrepreneurial activity frequently emerge as by-products of market competition. Agents may deliberately or unwittingly create opportunities. Organizational development and the evolution of industries are additional sources of new entrepreneurial opportunities. At the same time, they enable agents to acquire the skills required to exploit these opportunities.      

Aspirations,market offerings,and the pursuit of entrepreneurial opportunities

In this paper we focus on two core questions: 1) Why do some people seek entrepreneurial opportunities? 2) Under what conditions is the pursuit of entrepreneurial opportunity most likely? We attempt to answer these questions by creating a theoretical framework that considers the interaction between an individual's level of aspiration and their appraised value in the labor market. We propose that when there is disequilibrium between the aspiration vector (AV) of an individual and the perceived valuation of the market offering vector (P-MOV), an individual tends to pursue entrepreneurial opportunities. In addition, when hiring officers, HR directors, or other relevant parties involved in the hiring decision are biased or when existing organizations have limitations in reflecting an individual's AV, prospective entrepreneurs begin searching for new opportunities in society. Finally and in our view most crucially, we consider the interaction between an individual's subjective consideration and his perceived assessment by the labor market, a novel approach, which we hope takes into account the complexity and richness of entrepreneurship. We offer seven specific propositions that derive from the disequilibrium predicted by our framework.     

Entrepreneurial orientation,commitment to the Internet and export performance in small and medium sized exporting firms

This paper investigates links between entrepreneurial orientation, commitment to the Internet and export performance in small and medium sized firms. The central argument is that entrepreneurs are more likely to use the Internet to develop export market opportunities, and to have better export performance than less entrepreneurial firms. In testing this proposition, a measure of ‘commitment to the Internet’ was developed and used in a mail survey of UK exporters. The results show that firms with high entrepreneurial orientation are more committed to the Internet and have better export performance than firms with low entrepreneurial orientation.     

On the internationalization of Turkish hospital chains: A dynamic capabilities perspective

How do professional service firms build the capabilities required for effective international operations? Although the internationalization of manufacturing firms is a widely studied topic, the literature on the internationalization of service firms remains scant. The problem is even more acute when it comes to studies of professional services such as healthcare organizations and hospitals. Yet, we encounter remarkable examples of international market expansion by professional service firms. In this paper, we report on a study of large privately-owned hospital operators from the emerging economy of Turkey, based on in-depth interviews with senior executives. Taking advantage of Turkey’s strategic location in the region, these firms have shown extraordinary entrepreneurial initiative expanding their operations beyond the home market over the past two decades. Even more impressive is the creative strategies these firms have been deploying in terms of market entry modes. These range from medical tourism to setting up diagnostic clinics abroad, operating full-service hospitals in key markets, management contracts, and attracting equity capital from international investment firms. We draw from the theory of dynamic capabilities in order to explain the success these firms have had in cultivating international market opportunities. We contend that it takes a variety of organizational capabilities for traditionally domestic-market focused firms to expand into international markets. We provide an integrative discussion and offer implications for advancing knowledge and managerial practice.     

Technological Regimes and Sources of Entrepreneurship

This paper concerns the technological determinants of entrepreneurial behaviour. By applying a typology of technological regimes, which describes the nature of the technological environment in which firms operate, this paper examines the sources and obstacles to entrepreneurial entry related to the process of technical change. Two major points are suggested. First, innovation in technologies of high or increasing opportunities is not always associated with entrepreneurial behaviour, but can enhance the competitive advantage of existing firms. Second, opportunities for entrepreneurship are shaped by the nature of knowledge underlying different technologies. These points are illustrated using U.S. patent statistics classified by technical field and sector of firm's principal product activity. Different combinations of sources of technological entry barriers and technological opportunity are identified in science-based technologies, chemical technologies, core technologies in complex systems, product-engineering technologies and process-engineering technologies. This paper argues that such a characterisation of the dynamics of knowledge accumulation is important for interpreting the variety of dynamics of industrial competition.     

Access (Not) Denied: The Impact of Financial, Human, and Cultural Capital on Entrepreneurial Entryin the United States

Entrepreneurship contributes to business dynamics in all economies, and the individual benefits of starting a business are clear. Nonetheless, access to business start-ups may not be available to all people because of resource constraints. Using a unique new data set for the United States, we examine the relative importance of three forms of resources in pursuing start-up ventures: financial, human, and cultural capital. Our analysis of the Panel Study of Entrepreneurial Dynamics shows that neither financial nor cultural capital resources are necessary conditions for entrepreneurial entry. By contrast, potential entrepreneurs gain significant advantages if they possess high levels of human capital. Specifically, advanced education and managerial experience are significantly positively associated with entrepreneurial entry. Our findings suggest that attempts at entering entrepreneurship, at least in the short-term, may be increasing, as opportunities to acquire human capital are becoming more widespread.     

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.     

Networks in Entrepreneurship: The Case of High-technology Firms

The value of networks as an integral part of the explanation of entrepreneurial success is widely acknowledged. However, the network perspective does not specify the role of networks in the emergence and early growth of a venture. We have distinguished three entrepreneurial processes in new venture development, i.e. discovery of opportunities, securing resources, and obtaining legitimacy, which are of importance for survival and performance. This paper examines how these processes are influenced by strong and/or weak ties and whether the degree of innovation (incremental versus radical) acts as a contingency factor in the way network ties support entrepreneurial processes. In this explorative study three cases on high technology firms in The Netherlands provide empirical material enabling us to develop a number of propositions on the network effect, in particular the mix of strong and weak ties, on the three entrepreneurial processes.     

Creativity: A key link to entrepreneurial behavior

While entrepreneurial creativity is a desired behavior in most firms, it is difficult to understand both how this complex phenomenon occurs and how to increase its rate of occurrence. Understanding and increasing managerial creativity is important not only in developed economies, but also in developing economies, where the research discussed herein was conducted. This article argues that a solid knowledge base, a well-developed social network, and a strong focus on identifying opportunities are all necessary inputs toward entrepreneurial behavior. High-technology entrepreneurs that we interviewed in Hong Kong, however, indicated that creativity also plays a critical and important role in the entrepreneurial process. Attesting to this, they credited the competence with their being able to make the associations and bisociations needed to develop new products, which led to their entrepreneurial success.     

Innovative and sustainable business models in the fashion industry: Entrepreneurial drivers,opportunities, and challenges

New and existing companies are looking for ways to thrive in a competitive environment with innovative business models while respecting society and avoiding actions that harm the planet. Trends such as circular economy, fair trade, lowsumerism, and sharing economy are some of the many emerging entrepreneurial approaches that address this issue, but there is still a gap between what theory argues and the levels of environmental and social sustainability realized when theory is put into practice. In fact, most research on the topic of sustainable business models is still exploratory and does not fully acknowledge these emerging approaches, whose definitions, boundaries, and defining characteristics are still somewhat vague. This study seeks to contribute to the understanding of the inner entrepreneurial dynamics of innovative sustainable business models. In particular, we focus on the fashion business, a resource-intensive industry in which opportunities to reduce environmental impacts and to innovate business models abound. The aim of our research is to investigate innovative business models in the fashion industry that have sustainability as their defining characteristic, especially in terms of value proposition. In order to do that, we combine a systematic review of the literature with empirical research comprised of six interviews with specialists in sustainability, business model innovation, and the fashion industry, along with eight case studies on innovative fashion startups we define as ‘born sustainable.’ As a result, we propose a synthesizing framework that discloses trends and drivers of innovative and sustainable business models in the fashion industry. We also highlight opportunities and challenges for researchers and entrepreneurs interested in this topic.     

Offshoring strategy: Motives,functions, locations,and governance modes of small,medium-sized and large firms

How does firm size impact on a firm's offshoring strategy? Are the underlying motives for offshoring, the particular functions considered, the locations to relocate, and the particular governance mode different for small, medium-sized and large firms? In this paper, cost, resource and entrepreneurial drivers are investigated for their relationship with firm size. Moreover, we hypothesize on the relationship between function, location and governance mode choices of offshoring and firm size. Using multi-country data of the Offshoring Research Network (ORN), we present empirical evidence on the three offshoring driver categories and function, location and governance mode choices of small, medium-sized and large firms. The results show offshoring might be used as cost, resource or entrepreneurial strategy. Cost drivers are most important for large and small firms, whereas resource drivers are especially important for medium-sized and large firms. Entrepreneurial drivers are most important for medium-sized firms, just like these firms have a relatively stronger preference for nearshoring. Small firms mostly offshore competence exploring activities, whereas large firms relocate competence exploiting activities.     

U.K. SMEs' decision to discontinue exporting: an exploratory investigation into practices within the clothing industry

Although the decision to internationalise has been viewed in certain studies as an entrepreneurial act, research has also indicated that some firms may be better served in concentrating on their domestic market, depending on a number of internal and external considerations associated with the profitable exploitation of identified opportunities. This investigation reports on first, reasons why a sample of executives from small firms discontinued export activities and second, perceptions towards policy assistance that may motivate them to recommence overseas activities in the future. Analysis in this study establishes that differences exist between two distinct groups of firms, namely, those indicating their discontinuation of exporting was a short-term measure compared with those that viewed the decision as longer term. Entrepreneurial learning was found to be present in firms that influenced some managers to overcome identified obstacles and engage in alternative modes of international activity to the export route, whereas others decided to pursue domestic opportunities. The study provides recommendations for policymakers in the provision of trade assistance programs.     

企业集群环境下的公司创业研究——网络资源与创业导向对集群企业绩效的影响

As the business environment becomes increasingly complex and dynamic, more firms begin to adopt corporate entrepreneurship strategy in pursuit of sustainable competitive advantage. Based on the network theory, this paper compares three types of resources acquisitions and argues that unique network resources are the underlying reason that entrepreneurship activities benefit from enterprise clusters. It also explores the relationship among network resources, entrepreneurial orientation (EO) and firm performance. Finally, drawing on the data of the enterprise clusters in Zhejiang Province, empirical results show that a firm’s performance is positively related to entrepreneurial orientation and network resources, which greatly increases the enhancement of EO to firm performance.