Networks and Local Environmental Characteristics in the Survival of New Firms

This study seeks firstly to clarify which networks at start-up situation and early in life influence the survival of new firms. Secondly the study examines regional differences in the success of new firms. The subjects were firms which had closed down during their fourth to sixth year of operations, and they were compared with firms continuing in business. The results indicate, firstly, that it is networks internal to firm that create competitive advantage, innovation and efficiency. Secondly, management based on working in groups was emphasized in the firms that continued in business. In a typical family enterprise, ownership, management and family are united in a single entity. In other types of firms networks are seen as participating in the strategic management of the firm. Thirdly, close-downs were often caused by uncontrolled risks. A firm which fails after a successful start-up often tends to grow rapidly in the beginning, leaning on its product idea, but this rate of growth is too high from the viewpoint of the financing and the management of the firm. In firms which closed the growth objectives were too ambitions compared with the resources of the entrepreneur.     

Do young firms owned by recent immigrants outperform other young firms?

This study compares the performance of new businesses owned by recent immigrants with that of other new firms. It addresses an on-going unresolved discussion in the academic and professional literatures by drawing on a large sample of Canadian business owners whose firms began trading between 2000 and 2004 and using taxation data to track 2004 to 2008 performance. The results provide empirical evidence that young immigrant-owned exporter firms outperformed young domestically-founded firms whether or not they exported; however, immigrant-owned young enterprises that did not export underperformed other young firms. Owner-level factors such as gender, growth intentions and experience also influenced growth performance among young SMEs. The results provide evidence that suggests that immigrants have resources such as access to international networks that provide competitive advantage over non-immigrant owners that export or aspire to export. Not all immigrant business owners, however, are able to lever such advantages. The implications of the findings for research and policy are discussed.     

The ambitious entrepreneur: High growth strategies of women-owned enterprises

During the last two decades, researchers have sought to develop categories of entrepreneurs and their businesses along a variety of dimensions to better comprehend and analyze the entrepreneurial growth process. Some of this research has focused on differences related to industrial sectors, firm size, the geographical region in which a business is located, the use of high-technology or low-technology, and the life-cycle stage of the firm (i.e., start-up vs. more mature, formalized companies). Researchers have also considered ways in which entrepreneurs can be differentiated from small business managers. One of these classifications is based on the entrepreneur's desire to grow the business rapidly. This is the focus of our study.To date, the media have paid considerable attention to rapidly growing new ventures. However, still lacking are large-scale research studies guided by theory through which we can expand our knowledge of the underlying factors supporting ambitious expansion plans. Some research has identified factors that enhance or reduce the willingness of the entrepreneur to grow the business. Factors include the strategic origin of the business (i.e., the methods and paths through which the firm was founded); previous experience of the founder/owner; and the ability of the entrepreneur to set realistic, measurable goals and to manage conflict effectively.Our study attempted to identify the strategic paths chosen by entrepreneurs and the relation of those paths to the growth orientation of the firm. The entrepreneurs sampled in this study are women entrepreneurs across a wide range of industrial sectors. Recent reviews of entrepreneurship research have suggested the need for more studies comparing high-growth firms with slower-growth firms to better delineate their differences in strategic choices and behaviors.Our study sought to answer the following questions: What characterizes a “high growth-oriented entrepreneur?” Is this distinction associated with specific strategic intentions, prior experience, equity held in previous firms, the type of company structure in place, or success factors the entrepreneur perceives are important to the business? Do “high growth” entrepreneurs show greater entrepreneurial “intensity” (i.e., commitment to the firm's success)? Are they willing to “pay the price” for their own and their firm's success? (i.e., the “opportunity costs” associated with business success and growth). Other relationships under investigation included different patterns of financing the business' start-up and early growth. Do “high-growth” entrepreneurs use unique sources of funding compared with “lower-growth” entrepreneurs?Eight hundred thirty-two entrepreneurs responded to a survey in which they were asked to describe their growth intentions along nineteen strategic dimensions, as well as respond to the foregoing questions. Some of the strategic activity measures included adding a new product or service, expanding operations, selling to a new market, and applying for a loan to expand operations. Actual growth rates based on sales revenues were calculated, and average annualized growth rates of the industrial sectors represented in the sample were obtained. This study showed that high-growth-oriented entrepreneurs were clearly different from low-growth-oriented entrepreneurs along several dimensions. The former were much more likely to select strategies for their firms that permitted greater focus on market expansion and new technologies, to exhibit greater intensity towards business ownership (“my business is the most important activity in my life”), and to be willing to incur greater opportunity costs for the success of their firms (“I would rather own my own business than earn a higher salary while employed by someone else”).The high-growth–oriented entrepreneurs tended to have a more structured approach to organizing their businesses, which suggests a more disciplined perception of managing the firm. In summary, results showed the group of high-growth–oriented entrepreneurs, labeled “ambitious,” as having the following distinctions: strategic intentions that emphasize market growth and technological change, stronger commitment to the success of the business, greater willingness to sacrifice on behalf of the business, earlier planning for the growth of the business, utilization of a team-based form of organization design, concern for reputation and quality, adequate capitalization, strong leadership, and utilization of a wider range of financing sources for the expansion of the venture. The purpose in uncovering these differences is to enable entrepreneurs and researchers to identify more clearly the attributes of rapid-growth ventures and their founders and to move closer to a field-based model of the entrepreneurial growth process which will help delineate the alternative paths to venture growth and organizational change.     

Employment Growth Determinants in New Firms in Eastern Germany

The unification of both Germanies and the introduction of the market economy in eastern Germany came as a shock to existing firms and led to an enormous boom in the establishment of new firms. The first section of this paper shows that during the period under observation (January 1991--June 1995) the number of firms nearly doubled and in 1995, nearly 50% of all jobs were to be found in firms established after 1991. Shortly after unification, a kind of "start- window" existed during which the conditions for establishment, growth and survival of firms were extraordinarily good. The next section deals with the determinates of the growth of these newly founded firms. Most determinants have been selected on the basis of the most recent studies by Brüderl, Preisendörfer and Ziegler (1996), and Storey (1994). The analysis included not only establishment characteristics but also strategic factors such as the technological status of the establishment, the proportion of sales in interregional markets, and a corporate competitive strategy indicator. A comparison of these results with other studies shows that the determinants that affect employment growth in new firms in eastern German are apparently the same as in western Germany and Britain, albeit to different extents.     

Personal networks and firm competitive strategy—A strategic or coincidental match?

This article is based upon the premise that the personal network of the owner-manager is the most important resource upon which he or she can draw in the early days of the firm's development. This is particularly the case as the concept of personal networks is sufficiently general to include dimensions that include, for example, attention to customers, understanding of the business, market orientation, or stress on quality. As such, it is intuitively obvious that the nature and use of these networks must impinge upon the resultant strategy adopted in the firm, albeit often implicit rather than explicit. However, as yet there is no empirical evidence to support this conclusion. Therefore, this article probes one question: how do the characteristics of the owner-manager's network relate to the competitive strategy of new ventures? Clearly, within this, we expected to find relationships that were logically consistent.The research was conducted in two counties in England that possessed similar industrial structures and equal rates of new firm formation. A list of firms was obtained from local business directories, and all 629 firms that fit the criteria were contacted by telephone. Validation of the firms at this point resulted in a significant reduction in those that fit the sampling criteria.Four hundred twenty-three firms were mailed an 11-page questionnaire resulting in a 52% response rate.Preliminary analysis of the strategy variables identified six components that were consistent with previous literature. These were labeled as marketing differentiation, product innovation, market segmentation, distribution, growth through outside capital, and differentiation through quality. Correlation of these components with the networking characteristics of propensity to network, network activity, network density, network intensity, and content of network exchanges supports our proposition that entrepreneurs differ in their networking activities according to the competitive strategy pursued by the firm.Further classification of the owner-managers into strategic clusters demonstrates that most firms appear to follow multiple patterns of strategic behavior. Moreover, the comparison with the networking characteristics shows that owner-managers appear to differ in a logical manner in the use of their networks. Bailey, Montera, and Cardow (1992) argue that a firm's resource base consists of financial, physical, and human resources, and that the manner in which those resources interact is determined by the firm's strategy. Previous research on entrepreneurial networks has shown the amount of time and energy the owner-manager devotes to the development and maintenance of contacts. The underlying assumption of social-network theory is that through a personal network, the owner-manager of a new venture gathers access to critical resources, which for a variety of reasons the new firm does not possess internally. Consequently, this research has argued that this resource base cannot be ignored when attempting to understand the concept of “strategy” among new and small firms. In fact, this resource base may play a dominant role in formulating as well as implementing “strategy.”     

The Creation and Growth of Small Business Service Firms in Post-Industrial Britain

Since 1980, the United Kingdom has experienced a dramatic growth in firms and employment in information-intensive business services, such as management consultancy and market research. This article reports the results of the first substantial nation-wide investigation into the nature and causes of small professional business service firm growth in Britain, undertaken in 1991. It reveals marked differences in the characteristics, markets and competitive requirements of such firms, compared with small manufacturing firms. The demand for their services comes predominantly from large companies, and is more focussed on financial and other services and government. But small firms are also making increasing use of business services. Specialised expertise, reputation and educational and professional qualifications are essential prerequisites for the establishment of new business service firms. Their success is also being enhanced by increasing use of informal networking, collaborative partnerships, and subcontracting.     

Strategic and Functional Orientation of Small and Medium Sized Enterprises in Professional Services: An Analysis of Public Accountancy

This study examines how SMEs in public accountancy remain competitive, promote and deliver their services. The association among strategic planning, functional diversification (services and markets), methods of promotion and delivery is also examined. These SMEs face considerable difficulty in overcoming both in-house and external barriers in accessing clients requiring non-traditional services (e.g. management consulting), and clients involved in international business (broadly defined). The results show that the proactive, functionally diversified, and/or internationally oriented firms outperform the reactive, functionally concentrated, and local market oriented firms. The competitive advantage for the former categories is based on flexible specialisation such as customisation of services for specific groups of clients, speed of delivery collaboration with other producer service firms, and specialised skills. These firms utilise informal networks to promote their services with minimal investments in sponsorships or media selling. Face-to-face interaction with clients continues to be the preferred mode of service delivery despite the increased adaptation of local area networks and other modes of internationally technology by the proactive, functionally diversified or internationally oriented firms.     

Strategic and Business Planning Practices of Fast Growth Family Firms

Fast-growth family firms were surveyed about their business and strategic planning practices. Of the 65 fast-growth family firms surveyed, the majority prepare written formal plans. The business plans are in sufficient detail to enable the business to tie planning to actual performance and to adjust management compensation accordingly. The majority of the firms regularly share information with employees regarding comparisons between actual company performance results and goals or planned performance. Further, the majority of the firms describe their business strategy as a high quality producer strategy rather than as a low-cost or time-based strategy. Further, when bringing new products to market, these fast-growth family firms adopt a first mover or early follower strategy. Implications of these findings for growth-oriented family firms are presented.     

Competitive dynamics and business models in service business: a promising research subject

Successful firms create substantial value by doing things in ways that differentiate them from the competition. Business models reflect choices and their operating implications. They facilitate the analysis, testing, and validation of the cause-and-effect relationships that flow from the strategic choices. Due to business models are one of the main forces driving strategic renewal efforts of businesses around the world, we focus on service industry companies and their unique characteristics, with regard to new business and competition models that service companies use for strategic management and on how such models mesh with the traditional processes of competitive and corporative strategies.     

Chinese FDI in New Zealand: What Are Chinese Investors Looking For?

In recent years, there has been unparalleled growth in outward foreign direct investment from China. Traditional Western‐dominated international business theory proposes that asset exploitation is necessary for firms undertaking foreign investment. However, more recently, studies suggest asset augmentation is more important for multinational enterprises from emerging countries. This article examines the acquisition by two Chinese firms—Agria and Haier—of two iconic New Zealand firms, each with a significant international presence—PGG Wrightson and Fisher & Paykel. The article determines that Agria and Haier invested to acquire strategic assets in order to strengthen their position in the Chinese market as well as build and sustain a global position. Strategic intent was an important factor in deciding where to invest, and strategic assets complementary to their own competitive advantages were sought by the Chinese firms. © 2016 Wiley Periodicals, Inc.     

Changing Paradigms of International Entrepreneurship Strategy

This article identifies sweeping transformations taking place in the contemporary international business environment, and discusses their impact on international entrepreneurship. We focus on two overarching trends: (1) the demise of the nation-state as the relevant unit around which international business activity is organised and conducted; and (2) the demise of the stand-alone firm, with a hierarchic distribution of power and control, as the principal unit of business competition. We then discuss an alternate approach to internationalisation: one that involves a multi-polar distribution of power and control. Traditional approaches to internationalisation focus on the hierarchic centralised firm, with a uni-polar distribution of power and control. We suggest that the world is moving towards multi-polar networks of firms, involved in what we term symbiotic management: each entity benefits from working together within a multi-polar network. This includes large corporations as well as small and medium-sized enterprises (SMEs). As corporations out-source to specialised firms–increasingly SMEs–power and control are dispersed among independently owned firms that are cooperating voluntarily for increased efficiency and profit. The new paradigm moves from a focus on the firm, towards a focus on relationships within multi-polar networks. We conclude by illustrating how this emerging competitive paradigm may impact on the strategic management of small firms, with examples from a real-world company.     

What drives firms’ intent to seek strategic assets by foreign direct investment? A study of emerging economy firms

What drives firms, particularly those from emerging economies, to engage in competitive catch-up with world leaders? We study the first step leading to catch-up, namely the managerial intent to acquire strategic assets that help closing the gap. Theoretically grounded in the awareness–motivation–capability (AMC) framework of competitive dynamics, we identify key factors contributing to firms’ strategic intent to catch-up by acquiring strategic assets abroad. Using a sample of 154 Chinese firms, we find that firms’ strategic assets seeking intent of foreign direct investment is influenced by their exposure to foreign competition, their governance structure, and relevant financial and managerial capabilities.     

Learning Networks as an Aid to Developing Strategic Capability among Small and Medium-Sized Enterprises: A Case Study from the Irish Polymer Industry

Strategic decision making within small to medium-sized enterprises (SMEs) is a necessary element for business growth. SMEs must adapt and become more efficient and dynamic within current business paths and in finding new paths. Traditional philosophies are not focused on delivering new capabilities or developing new business paths. Learning networks are cooperative associations of partner firms that share knowledge, physical resources, and expertise to improve current performance and to advance new business paths. Ireland has emerged as a significant net contributor of plastics to the global medical device, telecommunications, and ophthalmic sectors. The role of the first polymer network as a catalyst for both new business development and increased technological enhancement is advanced in this study of Mould-Tech, an Irish polymer manufacturing firm. Adaptation of dynamic learning networks as expounded in this study present participant firms with new opportunities both to learn and earn—that is, to enhance and acquire new capabilities and to grow their businesses.     

Born global or local? Factors influencing the internationalization of university spin-offs—the case of Halmstad University

A wealth of research in the past decades has examined born globals or international new ventures, which are firms that from inception view the whole world as a market and as a source to access resources. Many of these firms build their competitive advantage on high-tech knowledge. However, although many studies have shown how born globals can achieve success if they access resources through their relationships from actors in their networks, few studies have explored the relationship between born globals and universities. Universities are important actors in creating new technology knowledge, and many studies have shown how new firms, or so-called university spin-offs (USOs), are formed around universities. The current study explores why some USOs are successful in their international growth strategy and discusses the factors that influence and facilitate the internationalization process. The study investigates 10 USOs around the newly established Halmstad University in Sweden and finds that universities have a positive effect on firm creation and initial international growth. The regional competence base increases from the establishment of a local university, primarily by strengthening the regional human capital and by increasing university research. This study shows that researcher entrepreneurs’ ventures start as born globals, but that these firms do not continue to grow. Born global business models, per se, do not lead to competitive advantage and successful internationalization. Instead, a strategy built on customer focus and an ability to adapt to different customer demands lead to growth, and the location of growth is dependent on the size of the home market. This study also shows that student entrepreneurship can be a successful growth strategy for USOs focusing on both international and local markets.     

Strategic Formulation and Communication of Corporate Environmental Policy Statements: UK Firms’ Perspective

This paper suggests that most of the FTSE-listed firms in the United Kingdom use corporate environmental policy statements (CEPS) to communicate their strategic intent of what environmental and social targets to attain, and broad guidelines of how they will progressively achieve all the required changes and new developments. In this paper, we link the contents of CEPS of a sample of FTSE-listed firms (from the chemical, pharmaceutical and food industry that are committed to develop business excellence) to the voluntary participation in the environmental benchmarking exercise and the various levels of environmental performance therein. The findings suggest that in contrast to their non-participating counterparts, the strategic focus of the participating firms transcends from simply mitigating any potential damages that their operations might have on the environment to business process reengineering and building new implementation capabilities. However, not all of the participating firms achieved excellence in their environmental performance, the high performing firms outweighed their counterparts on their emphasis on technological competence and competitiveness, and interestingly, the average-performing firms would use the strategic emphasis on social responsibility to compensate for their mediocre technological competence.     

商业模式设计与战略导向匹配性对业务绩效的影响

作为竞争优势的来源之一,商业模式设计对经营绩效而言变得越来越重要。文章通过区分驱动市场型和市场驱动型商业模式设计,探讨了商业模式设计与战略导向的匹配性对业务单位绩效的影响。结果表明,驱动市场型商业模式设计与创业导向之间的匹配对业务单位绩效产生积极影响;市场驱动型商业模式设计与顾客导向及竞争者导向之间的匹配对业务单位绩效产生积极影响。研究结论对企业的商业模式设计和创新活动提供了管理建议。     

Crossing the borderline in strategic corporate philanthropy: Dangote and the construction of cement roads in Nigeria

Using the case of Nigeria's Dangote Group and an exploratory research technique, we critique CSR practices in a developing country context based on a three‐pillar model—traditional CSR, strategic CSR and strategic business engagements. Our paper makes a unique contribution by revealing how a company can transform its strategic CSR into strategic business engagements that permit it to circumvent public procurement laws and secure public contracts at non‐competitive terms. We show how, in weak institutional and regulatory contexts, strategic CSR could be turned to a tool for rent extraction and profit maximization. We advocate for regulatory measures that impose ex ante and ex post limits on the extent to which firms can go in integrating CSR into their normal business operations. Based on the outcomes from this important African case study, we illustrate and propose the strategic business engagement model as a new framework for analysing the social benefits of strategic CSR practices in developing countries.     

Managing future uncertainty: Reevaluating the role of scenario planning

The business environment for many firms is changing rapidly and is becoming increasingly uncertain due to the disruption caused by new digital technologies, deregulation, new business models, and the threat of new competitive entrants. This dynamic competitive environment increases the level of uncertainty for senior executives and strategic planning teams who bear responsibility for the strategic development of the firm, particularly in terms of the future direction, scope, and the strategy required to deliver on corporate objectives. This in turn, places increased scrutiny on the strategic planning tools that are used to undertake a rational and comprehensive analysis of the competitive dynamics that inform strategy formulation. This article presents empirical findings and reflections on a scenario-planning project that sought to develop a long-term corporate level strategy. While scenario planning is an established constituent of the strategist’s toolbox, the increasing level of dynamism and uncertainty in many markets has meant that it has seen a resurgence. This article presents empirical findings on how the scenario-planning tool was selected and applied before reflecting on the individual and organizational outcomes of using scenario planning to develop an organizational strategy in uncertain market conditions.