Entrepreneurs' Personal Values,Compensation, and High Growth Firm Performance

We tested whether high growth firms' performance is related to the number of benefits offered and/or the values of the entrepreneur. Using data from the 2007 top 500 fastest growing entrepreneurial firms in America, we discovered that entrepreneurs' values do not relate to the total number of benefits offered, meaning the mediation model does not exist and lending strength to the argument that entrepreneurs' values greatly influence the success of a new venture. However, the total benefits offered are positively related to firm performance. We determine that the entrepreneurs' values and the total benefits offered are instrumental to firm performance.     

Product life-cycle considerations and the nature of strategic activities in entrepreneurial firms

This article reports on the nature of strategic activities and concerns reported by the CEOs of 77 entrepreneurial manufacturing firms once initial success in their marketplace had been achieved. Once the entrepreneurial firm achieves initial market success, the rate and number of strategic decisions faced by the entrepreneurs rapidly expand. A product becomes a product line. Product lines are added. Facilities and equipment are expanded. Personnel are added. A more formal and interpersonally complex organization becomes necessary. Markets and distribution channels expand, adding uncertainty to key market-related decisions. New financial risks arise, often as the result of undercapitalized cash flows. All of these factors combine to dramatically increase the pressure on the entrepreneur's strategic decision making.A major factor underlying the complicity inherent in this scenario is the product/market life cycle: the entrepreneurs must now organize and make decisions regarding several product lines that span several life-cycle stages with different strategic concerns, rather than regarding the narrow product range and limited life-cycle position that provided their initial success. The research reported in this article examined the relative importance of ten strategic activities and concerns reported by the 77 CEOs across products at different life-cycle stages.Initial interviews with selected CEOs and a review of the strategic-management literature identified ten key factors shaping the firm's evolving decision-making practices. These ten factors were divided into three groups:

• 1.1. Operational concerns that necessitate strategic attention: 1) changes in product design; 2) changes in process design; 3) risk of producing a product; and 4) emphasis on creativity.
• 2.2. Dimensions influencing a firm's strategic-management activities: 5) demand on the strategic manager's time: 6) speed of decision making; 7) problems of internal politics; and 8) environmental uncertainty.
• 3.3. Fundamental assumptions underlying a firm's decision-making practices: 9) annual-profit potential; and 10) value of strategic planning.

There are two main sets of results: First, four process-related factors (value of strategic planning, demand on CEO's time, speed of decision making and annual-profit potential) were consistently the most important factors affecting performance within eact stage. Regardless of the life cycle of a particular product line, the manner or process by which decisions were made (strategic planning, CEO's time, and speed of decision making) and one key assumption or objective-annual-profit potential-were seen as factors more important in affecting performance than were operating concerns that necessitated strategic attention. Second, strategic issues associated with product lines at the development and growth stages of their life cycle are reported to be significantly more important to CEOs in entrepreneurial manufacturing firms than are strategic issues associated with mature or declining products lines.These results suggest that CEOs in entrepreneurial manufacturing firms should re-examine their strategies and practices to be sure that sufficient “strategic attention” is being given to decisions regarding mature product lines. In addition, these CEO's need to ensure, in the face of constant demands for their time and decisions, that operating concerns requiring strategic attention get appropriate consideration.     

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.     

Express yourself: Facial expression of happiness,anger, fear,and sadness in funding pitches

We build upon theory from evolutionary psychology and emotional expression, including basic emotion theory and the dual threshold model of anger in organizations, to extend knowledge about the influence of facial expressions of emotion in entrepreneurial fundraising. First, we conduct a qualitative analysis to understand the objects of entrepreneurs' facial expressions of four basic emotions in their pitches: happiness, anger, fear, and sadness. This provides a base for our theorizing that the frequency of entrepreneurs' facial expression of each of these emotions exhibits an inverted U-shaped relationship with funding. We also argue that the frequency of changes in entrepreneurs' facial expressions is positively related to funding. We test our predictions with a sample of 489 funding pitches using computer-aided facial expression analysis. Results support inverted U-shaped relationships of the frequency of facial expression of happiness, anger, and fear with funding, but show a negative relationship of sadness with funding. Results further support that the frequency of change in entrepreneurs' facial expressions promotes funding.     

Prior Knowledge and New Product and Service Introductions by Entrepreneurial Firms: The Mediating Role of Technological Innovation

Most research on new product and service development by entrepreneurial firms takes an individual‐level, prelaunch perspective or firm‐level postlaunch perspective. Our study examines two components of the new product and service introduction process: how entrepreneurs' prior knowledge underpins (1) firm technological innovation prior to the introduction of new products and services (prelaunch) and (2) postlaunch viability of those new products and services. Our findings, based on a series of analyses of data from 158 entrepreneurial firms, show that formal technological innovation fully mediates the relation between prior knowledge and the introduction of viable new products and services.     

Entrepreneurial inception: The role of imprinting in entrepreneurial action

Recent research highlights that founders' early decisions and the environmental conditions at founding each imprint upon a new venture in ways that affect growth and survival. However, we know much less about how the entrepreneur is imprinted and how the outcome of this imprinting process influences the entrepreneur and the venture. Through semi-structured interviews and content analysis, our study examines entrepreneurs' formative experiences during sensitive periods of transition, which we refer to as sources of imprint. We illustrate how these sources of imprint impact entrepreneurial decision making and explain how they guide entrepreneurs' decisions as they progress through their entrepreneurial careers. In doing so, we improve our understanding of how entrepreneurs navigate the entrepreneurial process.     

Sleep and entrepreneurs' abilities to imagine and form initial beliefs about new venture ideas

In spite of enthusiastic encouragements, theories of entrepreneurship still poorly explain the influence of physiological resources and dynamics on entrepreneurs' abilities to perform cognitive tasks known to enable entrepreneurial action. To advance research in this area, we develop and test new theoretical notions about sleep's effects on entrepreneurs' abilities to imagine promising new venture ideas, and to form initial beliefs about the attractiveness of such ideas. Results from three studies, including a self-comparison study over time and a randomized sleep deprivation experiment, show that a good night of sleep positively influences entrepreneurs' abilities to perform cognitive tasks at the very basis of entrepreneurial pursuits, whereas shortchanging sleep can yield suboptimal performance.     

Perceived risks and choices in entrepreneurs' new venture decisions

Though risk plays a central role in most entrepreneurial decision making, little empirical research has explicitly examined how the elements of risk, risk perceptions, and entrepreneurs' propensities to take risks influence choices among potentially risky entrepreneurial ventures. This experimental study asked a sample of entrepreneurs leading America's fastest growing firms to make choices among a series of hypothetical new ventures. The results indicate that such choices are influenced by the risks inherent in the new ventures, as evidenced by the pattern of outcomes anticipated in each venture, the entrepreneurs' differing perceptions of those risks, and differences in their personal propensities to take risks.The subjects in our sample of entrepreneurs tended not to choose ventures having a high degree of variability in their pattern of anticipated outcomes. This avoidance of outcome variability suggests that the sensitivity analyses commonly prescribed for examining new venture attractiveness may inhibit risk taking, and may deter potential investors from investing in their firms. New approaches to assessing and presenting new venture risk, other than the traditional best case/expected case/worst case approach, may be advisable, as well as sufficiently through market research to provide evidence of the degree to which market acceptance is likely for the venture's products or services.We also found an effect of differences in risk propensities among entrepreneurs on their new venture choices. This effect suggests not only that entrepreneurs should be wary of any biases they bring to their new venture decisions, but that prospective investors should consider the degree to which entrepreneurs in whom they choose to invest are well-matched to the investors' own risk-taking propensities.Finally, while our sample of entrepreneurs tended to shun high levels of variability in their new venture choices, they appeared willing to accept a considerable degree of hazard, or possible downside, in their new venture choices, presumably in pursuit of potentially significant gains. Entrepreneurs are advised to seek a clear understanding of the downside entailed in their proposed ventures, and develop strategies to mitigate the likelihood of adverse outcomes. Thus they will not jeopardize chances for near term success and attracting support of investors and others in later stages of the venture or in subsequent ventures.Our research did not attempt to examine how our subjects' choices would have played out in terms of performance, but the apparent biases which entrepreneurs' risk propensities bring to their assessment of proposed new ventures is a potentially important issue that merits further scrutiny. On one hand, such biases may lead to patterns of suboptimal decisions. On the other hand, our results suggest that investors should entrust their new venture investments to entrepreneurs whose risk propensities (and perhaps other personal characteristics) best match the needs of both the opportunity at hand and the investor's objectives. As many venture capitalists attest, the management of a proposed new venture should lie at the heart of their investment decision.     

Surviving the emotional rollercoaster called entrepreneurship: The role of emotion regulation

The entrepreneurial journey is often experienced as an emotional rollercoaster, but we know very little about how entrepreneurs can ride it most effectively to increase their ventures' chances of survival. We investigate how entrepreneurs' habitual use of cognitive reappraisal and expressive suppression – two well-established types of emotion regulation – impact on the likelihood of their venture surviving. Drawing on a sample of 183 technology ventures, we find that both regulation types are generally associated with a lower survival likelihood, but that these effects depend on the venture's performance. Our study contributes to the literatures on emotions and new venture survival in entrepreneurship and to the emotion regulation literature.     

Are entrepreneurs influenced by risk attitude,regulatory focus or both? An experiment on entrepreneurs' time allocation

“Hybrid entrepreneurs” — those who maintain a wage job while starting a new enterprise — outnumber pure entrepreneurs in many countries. Yet, how hybrid entrepreneurs allocate their working hours between these two activities is not well understood. To better understand the relationship between hybrid entrepreneurs' division of time between their wage jobs and new enterprises we develop a model that captures hybrid entrepreneurs' decisions on the tradeoffs between financial risk and return as it relates to time allocation. We test two hypotheses based on utility theory, and challenge them with two hypotheses based on regulatory focus theory in a controlled experiment with 25 early stage entrepreneurs and 29 undergraduate students. In the computer-based experiment, entrepreneurs' and students' time allocation decisions (tied to monetary incentives) are used to test what would motivate them to work more or less hours in their entrepreneurial startups. We find that the actual time allocation decisions of the student group are somewhat in tune with utility theory, but that the entrepreneurs' time allocation decisions are better explained by regulatory focus theory.     

A personal adversity model of justifying the costs of entrepreneurial action: The case of oil thieves in the Niger DELTA

While entrepreneurship can generate economic and social benefits, it can also be a source of negative outcomes. We need to gain a deeper understanding of how individual entrepreneurs interpret their context and engage in entrepreneurial action that can generate substantial negative outcomes. In this paper we shed light on the entrepreneurial process at the micro-level by exploring how bunkerers—oil thieves—engage in, justify, and persist with entrepreneurial action that, while generating some benefits for the entrepreneurs and the local community, causes substantial destruction to the local environment, community, and the entrepreneurs' health. By inductively generating a personal adversity model of justifying entrepreneurial action that generates substantial negative outcomes (for the local community and environment), we provide new insights into (1) the link between aspects of entrepreneurship under adversity and substantial costs (and some benefits) experienced by local communities already facing adverse conditions, (2) how entrepreneurs' claim varying levels of agency in the same justification of the same action and its negative consequences, and (3) how entrepreneurs entangle the self and others to justify their actions and its costs.     

The contingent value of social resources: Entrepreneurs' use of debt-financing sources in Western China

This study shows that entrepreneurs' use of debt-financing sources is conditioned by the resources embedded in their social networks. More business or political contacts increase entrepreneurs' probability of using formal financial sources, and more urban ties increases their probability of using informal sources. However, the effects of business and bureaucratic ties are contingent on community-level institutional trust and on firms' age. Business ties have greater positive impact on the probability of using formal financial sources for older firms and for those in regions with a higher level of institutional trust, while the impact of bureaucratic ties on these firms is weaker.     

Can prosocial motivation harm entrepreneurs' subjective well-being?

Entrepreneurship research on prosocial motivation has outlined its positive impact on well-being, but still little is known about its power, which may have deleterious personal consequences under certain conditions. In this study, we ask whether prosocial motivation can harm entrepreneurs' subjective well-being when they run a commercial venture. Embedded within a contingency perspective informed by self-determination theory, we build on longitudinal survey data to explain the effect of prosocial motivation on entrepreneurs' overall life satisfaction. Our analysis demonstrates that prosocial motivation has a negative effect on entrepreneurs' life satisfaction due to increased levels of stress. However, our findings show that the negative effect of prosocial motivation dissipates when perceived autonomy at work is high compared to when it is low. Overall, our research raises questions on the role of prosocial motivation for entrepreneurs' subjective well-being and, in particular, discusses its potential “dark side” in the context of commercial entrepreneurship.Executive summaryCan there be a “dark side” in helping others? If so, how can we better understand under what conditions it emerges? Entrepreneurship research conventionally presents prosocial motivation as a positive driver for social venture creation and entrepreneurs' well-being. However, we have little knowledge about the consequences of prosocial motivation when we move outside the social entrepreneurship context. When prosocially motivated entrepreneurs lead a commercial venture, they face the difficult task of balancing the desire to help others with the financial requirements of the business. The challenge of simultaneously accomplishing commercial and prosocial goals can result in a stressful experience that is detrimental to the entrepreneur's well-being. In this study, we ask whether and under what circumstances prosocial motivation can harm entrepreneurs' well-being.Embedded in a contingency perspective informed by self-determination theory, this article expands our knowledge on the effects of prosocial motivation in the context of commercial entrepreneurship. We draw from original longitudinal survey data on 186 entrepreneurs in the United Kingdom to demonstrate that prosocial motivation causes entrepreneurs stress and through that stress has a negative effect on their life satisfaction. We also show that the negative effect of prosocial motivation diminishes when the degree of autonomy entrepreneurs perceive in the pursuit of daily work tasks is high. To explore the uniqueness of the entrepreneurial context, we run a comparative analysis with a sample of 544 employees. This analysis confirms that stress fully mediates the negative relationship between prosocial motivation and subjective well-being, but for employees, this negative effect disappears when their level of intrinsic motivation—the desire to expend effort based on enjoyment of the work itself—is high.Building on our findings, we generate several important contributions. First, we help develop an understanding of the “dark side” of prosocial motivation by demonstrating that under certain circumstances, the desire to help others can be detrimental to entrepreneurs' subjective well-being. Second, we expand knowledge about the link between prosocial motivation and well-being by considering the boundary conditions (perceived autonomy and intrinsic motivation) that influence the dynamics of their relationship. Third, we set the stage for further investigations that aim to clarify the relationship between motivation and perceived autonomy and its effect on personal outcomes across different work domains.The key insight of the study is that prosocial motivation creates a dilemma for entrepreneurs when operating a commercial business such that the desire to help others outside the context of immediate work tasks can harm their personal well-being. We also find that the perception of autonomy is key for commercial entrepreneurs to be able to realize their prosocial motivation without creating stressful situations. Extending our understanding of the conditions that shape the relationship between prosocial motivation and well-being among entrepreneurs would help in developing a more holistic notion of prosocial business venturing, one that includes the role of both commercial and social enterprising activities in contributing to personal and societal well-being.     

Entrepreneurial orientation and international scope: The differential roles of innovativeness,proactiveness, and risk-taking

This research integrates the international business and entrepreneurship literatures by examining the independent influences of innovativeness, proactiveness, and risk-taking on the ability of a firm to broaden its scope across international markets. For each dimension of entrepreneurial orientation, a cost–benefit framework is applied to highlight the trade-offs associated with different levels in the internationalization context. Based on a unique dataset of 500 SMEs spanning 10 industries, the results reflect the consequences of being “stuck in the middle” with respect to their strategic posture on innovativeness and proactiveness, but reveal a nuanced role for risk-taking behavior. The non-uniform and non-linear relationships from the findings contribute to a better understanding of when the individual dimensions of entrepreneurial orientation help or hinder entrepreneurial firms in the internationalization process.     

Start‐up Motivations and Growth Intentions of Minority Nascent Entrepreneurs

Firm growth is widely considered to be a measure of success for entrepreneurial businesses. Data indicate that there are systematic differences between minority and nonminority‐owned firms with respect to growth. Black entrepreneurs are 50 percent more likely to engage in start‐up activities than white entrepreneurs, however, black‐owned firms are smaller and less profitable than their white‐owned counterparts. Following the effort–performance–outcome–logic of expectancy theory and using data from the Panel Study of Entrepreneurial Dynamics (PSED), our paper investigates the differences between black and white entrepreneurs' motivations to start and intentions to grow a new venture. Findings indicate that there are significant differences in motivations between black and white entrepreneurs both in starting and in their intentions to grow the new venture. Implications for future research are discussed.     

The Impact of Environmental,Firm, and Relational Factors on Entrepreneurs' Ethically Suspect Behaviors

Entrepreneurs' engagement in ethically suspect behaviors (ESBs) can have seriously negative business and social consequences. Yet what defines entrepreneurs' ESBs remains unclear. Further, little is known about what factors contribute to such behaviors. This study provides conceptual clarification of entrepreneurs' ESBs and examines environmental, firm, and individual factors in relation to them. Results, based on data from 158 Chinese entrepreneurs, indicate that dynamism, firm performance, and relational social capital are all negatively related to ESBs. Firm performance partially mediates the relationship between dynamism and ESBs, and albeit with marginal support, the relationship between entrepreneurs' relational social capital and their ESBs.     

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 legacy: Toward a theory of how some family firms nurture transgenerational entrepreneurship

Research shows that family firms are less entrepreneurial, on average, especially after the founder departs. There are notable exceptions, however, and so we build a new theory to explain how these exceptional firms accomplish transgenerational entrepreneurship. Specifically, we conducted in-depth interviews with owners and (potential) successors in 21 German wineries that are, on average, in their 11th generation. We introduce entrepreneurial legacy, which we define as the family's rhetorical reconstruction of past entrepreneurial achievements or resilience, and theorize that it motivates incumbent and next-generation owners to engage in strategic activities that foster transgenerational entrepreneurship. Entrepreneurial legacy thus helps explain transgenerational entrepreneurship and has implications for family-firm, imprinting, and succession research.     

The artisans' dilemma: Artisan entrepreneurship and the challenge of firm growth

An increasing number of entrepreneurial ventures are growing at exponential rates despite their founders' professed intentions not to grow their firms. We refer to these individuals as artisan entrepreneurs. Through an inductive, phenomenon-based research approach, we explore how artisan entrepreneurs subscribe to a counter-institutional identity yet engage in a divergent set of behaviors. We discover that artisans' counter-institutional identity contains two sides—promoting the exclusion of ‘who we are not’ (oppositional identity) or providing support for ‘who we are’ (relational identity). We theorize that artisan entrepreneurs' differing views regarding their independence led to very different approaches to growth. When artisans either do not see forms of external control as impinging on their independence or sense that serving stakeholders is a means to perform relational identity work, they embrace growth. Thus, artisans may find that growth serves stakeholders, but funding growth brings about financial pressures, which may force the artisan down a path of growth.     

Gender,Social Networks,and Entrepreneurial Outcomes in Tanzania

This article presents results of a study that investigates egocentric network differences between female and male entrepreneurs and their entrepreneurial outcomes in Tanzania. Based on a random sample of 272 micro-, small, and medium-size enterprises, the study reveals that female and male entrepreneurs have diverse networks. However, when compared to their male counterparts, female entrepreneurs' strong ties included more kin members. No significant gender difference in the composition of weaker ties was observed, suggesting gender differences in the choice of individuals with whom to have strong ties but not with whom to have weak ties. A significant gender difference in entrepreneurial outcomes at both start up and at the time of research was found, suggesting an antecedent networking behavior influence on performance.