Dynamic capabilities in entrepreneurial firms: A case study approach

Three entrepreneurial case studies in Canada show that changes in the environment??such as changes in customers?? needs and changes in competitive products??are the major sources of opportunities. To recognize and exploit these opportunities, the firm needs entrepreneurial capabilities. At the same time, to gain long-run competitive advantage, the firm needs dynamic capabilities. The case findings show that entrepreneurial capabilities have circular and iterative relationship with dynamic capabilities??each reinforces the other. The more often the iteration takes place, the stronger entrepreneurial capabilities and dynamic capabilities are. Further, the study builds on the extant literature and develops a new method to capture dynamic capabilities through capturing changes in ordinary capabilities.     

High-growth firms and innovation: an empirical analysis for Spanish firms

This paper analyses the effect of R&D investment on firm growth. We use an extensive sample of Spanish manufacturing and service firms. The database comprises diverse waves of Spanish Community Innovation Survey and covers the period 2004–2008. First, a probit model corrected for sample selection analyses the role of innovation on the probability of being a high-growth firm (HGF). Second, a quantile regression technique is applied to explore the determinants of firm growth. Our database shows that a small number of firms experience fast growth rates in terms of sales or employees. Our results reveal that R&D investments positively affect the probability of becoming a HGF. However, differences appear between manufacturing and service firms. Finally, when we study the impact of R&D investment on firm growth, quantile estimations show that internal R&D presents a significant positive impact for the upper quantiles, while external R&D shows a significant positive impact up to the median.     

Resource mobilization in entrepreneurial firms

We test the relative influence of power and social embeddedness in mobilizing resources between newly-formed businesses and other organizations by re-examining longitudinal data from the Van de Ven and Walker (1984) study of interorganizational relations. We find that resource flows to entrepreneurial ventures are predicted by the total dependence between parties engaged in the creation of value; they are not predicted by dependence advantage (or disadvantage) between the parties. We discuss the implications and propose that a theory of joint resource mobilization may be more useful than a theory of unilateral resource acquisition for understanding how new ventures access external resources.     

Searching for the existence of entrepreneurial ecosystems: a regional cross-section growth regression approach

In this paper, we propose a method by which the entrepreneurial ecosystem, if present, reveals itself in the data. We first follow the literature and define the entrepreneurial ecosystem as a multidimensional set of interacting factors that moderate the effect of entrepreneurial activity on economic growth. The quality of such an ecosystem, by its multidimensionality, is impossible to measure directly. But so defined, we argue that variation in entrepreneurial ecosystem quality should result in variation in the estimated marginal effect of entrepreneurial activity on economic growth. Testing for such variation is possible using a combination of a multilevel growth regression and latent class analysis. We motivate and validate our approach in simulated data before illustrating its applicability in a data set covering 107 European NUTS1-2 regions across 16 EU member states. For this dataset, we cannot reject the hypothesis of a homogeneous contribution of entrepreneurship to regional growth. That is, in this dataset, we find no evidence of statistically significant heterogeneity in the estimated slope coefficients for entrepreneurial activity across regions. There are several possible explanations for this negative result. The two we deem most likely are first that the NUTS1-2 level may not be disaggregated enough to coincide with the relevant boundaries of the entrepreneurial ecosystem. We suspect our method would reveal significant differences across smaller geographical units, but the data unfortunately do not yet allow us to empirically test this hypothesis in a multi-country regional analysis. The second possible explanation is that the growth rates from 2006 to 2014 coincided with the global financial and the European crisis, and during this time, the effect of entrepreneurship on (long-run average) growth overall has been obscured. Our simulations also suggested a third reason. If measurement error is large (in the order of 33 or 0.015% point annual GDP-growth), the effects may also have been obscured.     

Corporate environmental sustainability reporting in the context of national cultures: A quantile regression approach

This work, based on previous evidence within international business management research, aims to test the influence of communities’ culture features on corporate environmental sustainability reporting (CESR) practices. To overcome some limitations of conventional statistical approaches applied by previous research, a quantile regression (QR) model is implemented which allows setting a framework to test the working hypotheses in different scenarios that cover divergent firms’ commitment levels to stakeholder engagement and CESR practices development. Our central results addresses that different national culture dimensions present a non-monotonic influence on CESR practices. This result, which is analyzed through the Stakeholder Theory proposals, can be explained because corporate sustainability behaviors are highly sensitive to stakeholders’ pressures and demands which are ultimately conditioned by the cultural environment. Some interesting recommendations for companies’ strategic management and governmental policy-making processes are reported.     

An entrepreneurial process perspective on succession in family firms

We review and analyze previous literature on succession in family firms from an entrepreneurial process perspective. Through a three-step cluster analysis of 117 published articles on succession in family firms published between 1974 and 2010, we find several themes within which succession can be understood from an entrepreneurial process perspective where both the entry of new owners and exit of old owners are associated with the pursuit of new business opportunities. We identify gaps within each cluster and develop a set of research questions that may guide future research on succession as an entrepreneurial process. Since succession involves implications for individuals, families and firms, we suggest researchers should adopt a multilevel perspective as they seek answers to these research questions. Our review and analysis also underlines the need to focus on ownership transition rather than only management succession, and the importance of carefully defining both succession and family firm.     

Managing internationalization and innovation tradeoffs in entrepreneurial firms: Evidence from transition economies

For entrepreneurial firms (EFs), internationalization and innovation present two major avenues for growth. Prior research, based primarily on EFs from advanced economies, demonstrates mixed insights for the relationship between these strategies. A deeper understanding of the tradeoffs involved in the internationalization-innovation relationship may help better comprehend the issue. In this study, we draw on the organizational learning and capabilities-based literatures to examine the relationship in the context of EFs in transition economies (EFTEs). Our findings suggest that in EFTEs, internationalization is negatively associated with the likelihood of innovation. We also find that three knowledge-based capabilities of EFTEs (absorptive capacity, appropriation capability, and managerial capability) positively moderate the aforementioned negative relationship. We do not find any evidence of reverse causality (EFTE innovation impacting internationalization). Our research provides novel insights to the IE literature by shedding light on the internationalization–innovation tradeoffs that EFTEs experience.     

A comparative analysis of the entrepreneurial orientation/growth relationship in service firms and manufacturing firms

This article builds on the recently increasingly mentioned notion that entrepreneurship in the service sector is a worthwhile, but clearly underresearched topic. Using a sample of 1,612 small- and medium-size enterprises from the four German-speaking countries Germany, Austria, Switzerland, and Liechtenstein, and using structural equation modeling, this article finds that service firms have a significantly higher entrepreneurial orientation (EO) than manufacturing firms – both on the overall level as well as for each of the three sub-categories proactiveness, innovativeness, and risk-taking. With regards to the positive relationship between a firm's EO and its growth aspirations, nevertheless, no significant differences could be identified. Accordingly, this study shows that EO is a strategic orientation of highest value for service firms as well, under the premise of growth-orientation.     

Family firms and internationalization: An exploratory study on high-tech entrepreneurial ventures

This paper empirically explores a highly relevant, although poorly investigated topic: internationalization of family firms that operate in high-tech industries. Specifically, we compare internationalization of family and nonfamily entrepreneurial ventures in these industries. Relying on prior studies on internationalization of family firms, we speculate on how the specificities of high-tech industries shape the advantages and disadvantages of family entrepreneurial ventures in pursuing internationalization as compared with their nonfamily peers. In the empirical part of the paper, through a rigorous quantitative analysis of unique data from 264 Italian high-tech entrepreneurial ventures, we explore whether in high-tech industries family entrepreneurial ventures are more (or less) likely to pursue internationalization than their nonfamily counterparts. Surprisingly enough, our econometric estimates indicate that, in high-tech industries, family entrepreneurial ventures exhibit a higher internationalization propensity than their nonfamily peers.     

A new entrepreneurial drive in large and small manufacturing firms in Japan

Japan's per capita GDP growth has been decelerating for at least three decades, despite groping towards better ways of accommodating individualistic Smithian market forces. Japan has made great progress in opening markets and fostering profit seeking, yet it has not reaped the benefits anticipated so far. Facing the most severe economic downturn of the post-war period, it is now rethinking the fundaments of its economic and management system. The necessity of developing competitive advantages in new industries has been identified but a crucial question is how they will affect the way industry has organized itself to maximize quality, efficiency and flexibility. It is said that an entrepreneurial culture was not needed during the post-war period in Japan because a group-based industrial organization could generate about the same dynamism and outcome. Nevertheless, this time, a venture-type business culture may be a key factor in the renewal of the Japanese economy to put it back on a sustainable growth path. The objective of the article is to make a critical assessment of the trends in entrepreneurship in Japan, using secondary data. They are complemented by partial results of two surveys made by the author, the first one in 1997 in ten electronic companies on intrapreneurship schemes, and the second one in 1998 in 40 small companies in the Hiroshima prefecture, centred on human resource management. To these are added information obtained through interviews in the small business agency, MITI, and a number of universities on business-university research collaboration schemes.     

International entrepreneurial capability: The measurement and a comparison between born global firms and traditional exporters in China

This study presents the development and application of a new measure of international entrepreneurial capability. The data were collected from manufacturing firms in China, both traditional exporters and born global firms. Five key dimensions of international entrepreneurial capability were identified from the capability and entrepreneurship literature. After scale purification and validation, this new measure was used to examine the relationship between international entrepreneurial capability and global market performance. Born global firms are statistically different from traditional firms along three dimensions: international learning capability, international networking capability, and international experience. Implications and future research directions are then provided.     

Entrepreneurial orientation,market orientation,network ties,and performance: Study of entrepreneurial firms in a developing economy

Entrepreneurial orientation (EO), market orientation (MO) and network ties are typically modeled as separate antecedents of performance. However, the boundary conditions for such models are under-explored, as is their applicability to developing economy settings. Accordingly, drawing on institutional and social capital theories, the current paper argues that the performance benefits of EO and MO are complementary, and vary across different levels of social and business network ties. Using primary data gathered from entrepreneurial firms operating in Ghana, the study findings indicate that aligning high levels of EO and MO improves business performance, and particularly so when social and business network ties are well developed, since under these latter conditions, the performance benefits of aligning EO and MO are greatest.     

Fast growing small entrepreneurial firms and their venture capital backers: An applied principal-agent analysis

First the empirical background of the U.K. venture capital industry is developed using a panel of major U.K. venture capital funds over the period 1988–92. Then a framework for applied principal agent analysis is developed, focusing on risk management and information. Under risk management it explores attitude to risk, risk sharing and bearing, and the effects of risk bearing on effort. Under information handling, it explores information systems, information asymmetries between investor (venture capitalist) and investee (entrepreneur), and ways of attenuating them, and information variance and costs. Finally, the contract between investor and investee is seen as a device for trading risk and information. The implications of this trading for risk bearing, effort and efficiency are explored. The whole analysis is supported by a detailed case study which reflects current practice in the U.K. venture capital industry. The evidence provides striking confirmation of the applicability of the principal-agent model to the venture capital financing of hightech ventures.     

Speed of internationalization and entrepreneurial cognition: Insights and a comparison between international new ventures,exporters and domestic firms

This paper examines four aspects of managerial cognition among firms, as differentiated by speed of market entry. Aspects are: risk perception, proactivity, tolerance for ambiguity and international orientation. Internationalization speed is indicated by rapidity of first market entry resulting in three groups of firms: international new ventures, traditional exporters and domestic firms. For all groups, proactivity is the basic premise for risk perception, which in turn is the key variable in relation to internationalization speed. Risk perception is the element that may prevent a firm from internationalizing at all, in a timely manner, or fast enough to capture available opportunities.     

The performance implications of entrepreneurial proclivity: A dynamic capabilties approach

Retail performance is driven in part by a retailer's ability to not only develop knowledge resources, but also convert these resources into the dynamic capability of market responsiveness. The results of this study add to the growing literature on dynamic capabilities by showing that the management orientation of entrepreneurial proclivity not only aids in the accumulation of knowledge resources, but can aid (as well as hinder) the conversion of these resources into dynamic capabilities. Specifically, we show that the management orientation of entrepreneurial proclivity increases the accumulation of knowledge resources, in addition to enhancing the conversion of one knowledge resource (knowledge of suppliers) in the capability of market responsiveness. However, this same management orientation also diminishes the conversion of another knowledge resource (knowledge of regulatory agencies). The results are based on a survey of 269 small retailers.     

Subnational institutions,political capital,and the internationalization of entrepreneurial firms in emerging economies

This study advances the institution-based view of strategy by integrating it with firm-specific capability considerations. In particular, we investigate the integrative influence of subnational-level home country institutional environments and firm-level political capital, as an important way to seek resources, on emerging economy entrepreneurial firms’ internationalization. With data from Chinese entrepreneurial firms, we find that the development of subnational institutional environments in the home country is related to firms’ degree of internationalization. Furthermore, while political capital with low-level governments enhances the effect of subnational institutions on internationalization, political capital with high levels of government has no such moderation effect. Theoretical and empirical contributions and implications are discussed.     

The internationalization of entrepreneurial firms from emerging economies: The roles of institutional transitions and market opportunities

This paper examines the influence of institutional transitions and market opportunities in emerging economies on the internationalization of entrepreneurial firms from these economies. We conceptualize and examine a three-stage model of institutional transition in emerging economies, and their effects on the internationalization strategies of new venture firms. Propositions are developed in examining how the different stages of the institutional transition can influence the strategic choices for the internationalization of new venture firms. In responding to the calls for more research on institutions and international entrepreneurship, this paper is an attempt extending the linkages between the two to the context of emerging economies. The paper also has managerial implications for entrepreneurs and the associated policy implications in international entrepreneurship.     

The value relevance of brand equity in the financial services industry: an empirical analysis using quantile regression

The purpose of this article is twofold. First, it attempts to explore the factors contributing to the brand values of Taiwan??s financial service companies. Second, it aims to examine the value relevance of their brand equity. Our empirical findings from OLS regression show that advertising expenditure in banking firms have positive significant effects on brand evaluation and that the brand equity of banking firms is positively related to their market value. The general findings remain valid when we apply conditional quantile regressions to re-examine these relationships. Moreover, the quantile estimates indicate that the factor of brand loyalty could bring benefits to the banks with lower levels of brand equity. However, brands do not offer insights into the banks that have extremely low market capitalization.     

Knowledge and entrepreneurial employees: a country-level analysis

According to the knowledge spillover theory of entrepreneurship, knowledge created endogenously results in knowledge spillovers, which allow independent entrepreneurs to identify and exploit opportunities (Acs et al. in Small Bus Econ 32(1):15–30, 2009). The knowledge spillover theory of entrepreneurship ignores entrepreneurial activities of employees within established organizations. This ignorance is largely empirical, because there has been no large-scale study on the prevalence and nature of entrepreneurial employee activities. This article presents the outcomes of the first large-scale international study of entrepreneurial employee activities. In multiple advanced capitalist economies, entrepreneurial employee activity is more prevalent than independent entrepreneurial activity. Innovation indicators are positively correlated with the prevalence of entrepreneurial employee activities, but are not or even negatively correlated with the prevalence of independent entrepreneurial activities.     

Financing the entrepreneurial decision: an empirical approach using experimental data on risk attitudes

This paper empirically examines the role of personal capital in the entry decision for US high-technology entrepreneurs. Our innovative approach utilizes both survey data and data from economics-based field experiments, which enables us to elicit and control for the risk attitudes of individual entrepreneurs in the study. Empirical findings suggest that (1) Small Business Innovation Research (SBIR) grants, (2) credit cards, and (3) earnings from a salaried job are among the most important sources of funds for entrepreneurs in their decision to start up a firm. Our findings support Evans and Jovanovic (Journal of Political Economy 97(4):808–827, 1989) in that wealth appears to have a positive impact on the probability of starting up a firm, even when controlling for risk attitudes; however, risk attitudes do not appear to have a strong role to play in the entry decision overall. Policy implications suggest that firm start-ups are dependent on access to capital in both initial and early stages of development, and that government funding, including SBIR grants, is an important source of capital for potential and nascent high-technology entrepreneurs.