Entrepreneurial alertness in the pursuit of new opportunities

The recognition and development of new opportunities are at the heart of entrepreneurship. Building from Kirzner's (1973, 1999) work, cognition theory, and McMullen and Shepherd's (2006) recent development, we offer a model involving three distinct elements of alertness: scanning and search, association and connection, and evaluation and judgment. We then conduct multiple studies to develop and validate a 13-item alertness scale that captures these three dimensions. Results demonstrate appropriate dimensionality, strong reliability, and content, convergent, discriminant, and nomological validity. The resultant instrument provides researchers with a valuable tool for probing the entrepreneurial opportunity development process including antecedents and outcomes.     

Entrepreneurial information search

Information is a key resource for the new venture. Despite the importance of information search practices, little research has examined whether entrepreneurs show a tendency to search for more or less information under particular conditions.This article considers whether information search might be explained by concepts of bounded rationality. Such theories lead to the counterintuitive expectation that entrepreneurs with less experience or those entering unfamiliar fields would search less because of their more limited understanding of what is needed. In addition, entrepreneurs with higher levels of initial confidence would search less because their “entrepreneurial euphoria” may limit their ability to assess their own needs for additional information.This study examined the information search practices of 1176 entrepreneurs. It considered six sources of information that were widely used: accountants, friends or relatives, other business owners, bankers, lawyers, and generally available books and manuals. Three measures of search intensity were developed, with the first reflecting the relative importance of all six sources and the remaining two focusing upon the subcategories of professional and personal sources.It was found that those who had no entrepreneurial experience, on the average, sought more, not less, information. However, as expected, those who ventured into fields which were different and those who had higher levels of initial confidence sought less information. An interaction effect provides insight into these findings and reveals that inexperienced entrepreneurs varied their search depending upon whether they were in familiar or unfamiliar domains. In particular, novice entrepreneurs searched less extensively in unfamiliar domains, a behavior consistent with bounded rationality. By contrast, experienced entrepreneurs did not vary their search pattern. It was also found that entrepreneurs having high levels of confidence sought less information, as expected.The behavioral tendencies observed here appear to have clear implications for entrepreneurs and their advisors. We might expect that those venturing into fields they do not know would have more to learn and thus would search more aggressively. However, neither inexperienced nor experienced entrepreneurs acted in this way. In fact, inexperienced entrepreneurs lessened their search as they entered fields they did not know, consistent with the bounded-rationality model. Many prior studies have found that entrepreneurs entering unfamiliar fields are, on the average, less successful (Cooper and Gimeno-Gascon 1992). This certainly raises questions about whether entrepreneurs, both experienced and inexperienced, might benefit from greater emphasis upon gathering and utilizing external information as they enter fields that are new to them. Outside advisors (if the entrepreneur will utilize them) may be helpful in urging and assisting entrepreneurs who enter unfamiliar fields to engage in more extensive information search, even though they may have less developed networks of contacts and less of a feeling for what is needed in such fields. With respect to initial confidence, entrepreneurs and their advisors should recognize that high levels of confidence may lead to lower levels of information search. Recognizing this tendency, they should use care to ensure that entrepreneurial euphoria does not lead to blinders in the search for information.     

Roles of a preselling strategy under asymmetric information

Marketing Letters - In many product markets, one firm may provide an option to buy ahead of time. In this circumstance, customers inevitably make a purchase decision under uncertainty on the future...     

Dynamic tariffs with asymmetric information

Recent developments in dynamic game theory are applied to determine when two countries can sustain freer trade given that they determine trade policies non-cooperatively. Countries know their own level of protection, but not the other country's level of protection. Using import trigger strategies, cooperation (in the form of low tariffs) can be supported, although there are periodic reversionary (high tariff) episodes. However, if terms of trade trigger strategies are used, cooperation does not occur.     

Tariff and quota equivalence in the presence of asymmetric information

This paper investigates the equivalence of optimal import tariffs and quotas in a Cournot duopoly model when firms have more information about demand than the domestic government. I consider a screening model in which the government offers the domestic firm different contracts from which to choose. I show that the availability and cost of obtaining correct information from the firm depends upon the choice of trade policy instrument. Asymmetric information thus destroys the equivalence of tariffs and quotas, which prevails under complete information, and has a profound impact on how government, firms, and consumers rank different trade policy instruments.     

Towards a schematic theory of entrepreneurial alertness

This article is an investigation into Kirzner's concept of entrepreneurial alertness — its mechanism and its antecedents. By drawing from decision theory and schema theory, a model is developed to show how changes in the environment are mediated by entrepreneurial alertness and brought to the situated attention of entrepreneurs for evaluation. Entrepreneurial alertness is seen to be the application of unique schemata that allow the entrepreneur to impute meaning to environmental change that would not be imputed by other managers. It is argued that the alertness that allows entrepreneurs to see opportunity where others do not arises from differences in schematic richness, schematic association, and schematic priming. These three antecedents may therefore form a basis on which enhanced entrepreneurial alertness can be developed.     

Entrepreneurial orientation and performance in private family firms: A configurational model

The relationship between entrepreneurial orientation (EO) and performance has received considerable attention from the family business literature. However, little is known about how EO, organizational parameters, and environmental characteristics act in combination to influence family firm performance. Drawing on the socioemotional wealth perspective, this study proposes a configurational model that considers the performance implications of EO, family management, and environmental dynamism. The empirical analysis indicates that the combination of family management, low EO, and low environmental dynamism engenders the best performance. The paper contributes to the family entrepreneurship literature by identifying the conditions under which EO leads to improved performance in family firms, and answers a recent call for more context‐based investigations of the performance effects of family managers. © 2018 ASAC. Published by John Wiley & Sons, Ltd.     

Social responsibility in the marketplace: asymmetric information in food labelling

This paper takes as its focus the adoption by the Co-operative Wholesale Society of what appears to be a socially responsible stance on food labelling practice and policy through the publication of a public report and a proposed code of practice. The central issue in the debate surrounding labelling is the question of ‘asymmetric information’ (when one party knows more about a product than the other). In order to function, markets need perfect information. The existence of asymmetric information gives rise to ‘market failure’ which prevents the ‘free market’ from functioning according to the laissez faire model. It can be argued that regulation will overcome this problem. However, this paper counters this argument on several grounds. In the first part of the paper labelling is examined as a textual construction, and ethical dimensions are revealed through an awareness of discourse and signification, which gives rise to a view of packaging as a version of reality partially built through connotation and association. The second part of the paper examines political and regulatory concerns. Marketing and economic theories are discussed in terms of their impact upon ethical issues in food labelling. Sense is made of various arguments about the policy and practice of food regulation – particularly in the wake of the James Report calling for the establishment of a Food Standards Agency. Tactics for resisting regulation are also examined. The paper analyses the role and motivation of the CWS in taking these steps. Consideration is given to the issue of where responsibility for information giving and public health education might lie, and what phenomena act as barriers to increased public awareness and action on dietary matters. Finally the debate over food labelling is used as an example of why it is problematic (and possibly unethical) to promote the free market model as the only sensible alternative to other modes of economic organisation.     

Crisis management—dealing with asymmetric information problems

A key component of crisis management involves the management of asymmetric information problems. Drawing on the experience of the recent severe acute respiratory syndrome (SARS) epidemic, this article examines the nature of the asymmetric information problems that typically prevail during a crisis, the costs associated with it, and the various mechanisms to address the problems. We find that the asymmetric information problems in the event of a crisis can be severe and potentially costly if the problems are not adequately resolved. © 2009 Wiley Periodicals, Inc.     

Entrepreneurial narrative and a science of the imagination

This article is an introduction to a special issue on entrepreneurial narrative that provides theoretical and empirical links between scholarship in narrative and entrepreneurship as well as demonstrates how theories and methods in narrative may be applied to the study of entrepreneurship as a phenomenon. A conjecture that narrative perspectives might lead to a “science of the imagination” is offered.     

Entrepreneurial marketing: a comparative study

This paper uses a comparative study to explore entrepreneurial marketing orientation in small software technology firms, in relation to firm growth. Entrepreneurial Marketing (EM) acknowledges the interface between entrepreneurship, marketing and innovation and, pursuance of customer value. Researchers acknowledge that firms adopting other strategic orientations combined with a market orientation are more likely to outperform their competitors. Currently, there are few comparative studies of knowledge-intensive technology firms and no comparative cross-country studies, which consider firm growth and orientation from the EM perspective. This paper addresses these issues by using an entrepreneurial marketing orientation qualitative framework that consists of 15 dimensions, which allow investigation of entrepreneur and employee activities, attitudes and behaviors in such firms. Using a UK and US sample of firms, this research enables assessment of how and why entrepreneurial marketing orientation may lead to sustainable growth for firms in challenging markets and provides a comparison in two different country contexts.     

Entrepreneurial spawning and knowledge-based perspective: a meta-analysis

Entrepreneurial spawning is the transitory process by which employees of an existing firm leave their employment to initiate a new business venture. There is a lack of consensus regarding the predictors of entrepreneurial spawning. We used meta-analysis to analyze 28 studies (with 128 effect sizes) to examine the predictors of entrepreneurial spawning. Based on knowledge-based perspective, we hypothesize that employee characteristics (age, education, and job position) and parent firm characteristics (firm age, firm performance, and firm diversity) are significantly related to entrepreneurial spawning. We identified two inverted U-shaped relationships (age and tenure with entrepreneurial spawning) based on our meta-analytic hierarchical multiple regression analyses. Based on labor market rigidity perspectives, we also examined how country region (North America versus Europe) moderates the relationships between employee characteristics and entrepreneurial spawning and between parent firm characteristics and entrepreneurial spawning. Our paper provides theoretical and practical implications.     

Advancing Entrepreneurial Leadership as a Practice in MSME Management and Development

Consistent with recent studies, we emphasize that entrepreneurial leadership benefits from mutual cross‐fertilization between entrepreneurship and leadership, making it an effective mechanism for studying micro small and medium enterprise (MSME) management and development. Since it is an emerging concept and existing knowledge on MSME management and development so scattered, our comprehensive entrepreneurship and leadership literature review provided us in‐depth insights and new perspectives. From our analysis, a framework emerged mapping a new path for MSMEs. The model presents a nuanced leadership paradigm for small businesses. Thus, by presenting a mechanism that offers new methods aimed at managing and developing MSMEs, we extend existing leadership theories.     

Entrepreneurial orientation in family firms: a generational perspective

We adopt a generational perspective to investigate entrepreneurial orientation (EO) in family firms. We test a model that determines how the influence on EO of external factors and internal factors differs in first-, second- and third-and-beyond-generation family firms. We argue that while the founder is vital in the first generation, EO is more subject to interpretations of the competitive environment in the second generation and that in the third generation and beyond, access to non-family resources drives EO to a greater extent. Our findings show that perceptions of the competitive environment and EO correlate differently in family firms, depending on the generation in charge, and it is generally stronger in second-generation family firms. Further, we find that non-family managers on the top management team makes a positive difference for EO only in the third-generation and beyond family firms. The significance of non-family investors’ on EO is particularly strong in third-generation-and-beyond firms.     

Entrepreneurship as a twenty-first century skill: entrepreneurial alertness and intention in the transition to adulthood

Given the importance of entrepreneurial thinking and acting as a meta-skill in the future world of work, we focus on the emerging entrepreneurial mind-set in the transition to adulthood. We study the role of personality characteristics and age-appropriate entrepreneurial competencies (leadership, self-esteem, creativity, and proactivity motivation) in the prediction of entrepreneurial alertness and career intention. Using two-wave longitudinal data from high schools in Helsinki, Finland (N = 523), we tested a mediation model with competencies as mediators between personality and entrepreneurial alertness and intention. The findings suggest that entrepreneurial alertness and career intention (a) are rather independent career development constructs of the emerging entrepreneurial mind-set, (b) are both an expression of an entrepreneurial personality structure, and (c) are predicted by different underlying competencies: leadership and self-esteem mediated the personality—entrepreneurial intention link, and leadership, creativity, and proactivity motivation the personality—entrepreneurial alertness link. Consistent with the balanced skill approach to entrepreneurship, the intraindividual variety of these competencies was also a valid mediator; it did not show incremental predictive power though. Implications for research and practice are discussed.     

Entrepreneurial Orientation and Corruption

Organizational corruption is a wide-spread negative aspect of economic activity, and a seemingly never-ending series of corruption scandals has been made public around the globe. Although research is performed in a broad variety of disciplines, ranging from psychology to management to law, a fully satisfactory explanation for the causes of organizational corruption has not been found. By looking at organizational factors as potential triggers for corruptive behavior, this study draws upon the concept of entrepreneurial orientation (EO). Diverse studies have shown that EO, as an antecedent to company performance, has a positive effect. Recent EO literature, however, indicates that EO has not only positive but also negative consequences. In this line of reasoning, this study builds upon principal agent theory and makes a first step in exploring the impact of EO on a negative aspect of business behavior, namely organizational corruption. We gathered survey data and publicly available data from 411 firms, inquiring for both acts of corruption from within the top management team over the last 3 years and the level of entrepreneurial orientation within the organization. Results show diverging effects along the individual dimensions of EO; they point to risk orientation as the dark side of EO, as it significantly increases the likelihood of corrupt behavior in companies. In contrast, innovation orientation, to a certain extent, counterbalances by reducing the likelihood of corrupt behavior.     

Entrepreneurial intention and regional internationalization in China

Small Business Economics - This study uses a novel approach to examine the link between regional internationalization and entrepreneurial intention in China. Robust findings suggest that higher...     

Entrepreneurial orientation and small business performance: a configurational approach

The strategy and entrepreneurship literatures suggest that an entrepreneurial orientation (EO) improves firm performance, but the empirical results are mixed. In this article, we investigate the EO of small businesses and find that a main-effects-only analysis provides an incomplete picture of performance. Access to capital and the dynamism of the environment are important to small businesses, and we find that when combined with EO (a three-way interaction model) the configurational approach explains variance in performance over and above a contingency model (two-way interactions) and a main-effects-only model.     

Shaping the Entrepreneurial Mindset: Entrepreneurial Intentions of Business Students in Croatia

Business students from a public university in Croatia participated in an international study on entrepreneurial self‐efficacy, identity, and education. The results of this preliminary empirical research indicate that the main predictors of the entrepreneurial intentions in Croatia are strength of entrepreneurial identity aspiration and entrepreneurial self‐efficacy. These two main constructs mediate the number of personal, situational, or contextual factors, including education. Empirical analysis supports the majority of Social Cognitive Career Theory hypothesized interaction between control variables and main constructs such as self‐efficacy, positive outcome expectations, and entrepreneurial identity. These findings thus fill the gap in the empirical evidence of the theoretical framework validity derived from different contexts.