Entrepreneurship and paths to business ownership

Alternative paths to ownership are examined, including starting, purchasing or inheriting a firm, as well as being promoted or brought in by existing owners. It is hypothesized that these involve different ‘degrees of entrepreneurship’, which will be reflected in the profiles of owner-managers who have followed each path. Data on 1756 owner-managers are used to test hypotheses relating path to ownership to: the entrepreneurs' background characteristics; motivations and attitudes; and previous careers, incubator organizations and processes of starting.     

Consumption smoothing and portfolio rebalancing: The effects of adjustment costs

A household's response to income and return shocks depends on the costs of portfolio adjustment. In particular, the extent of portfolio rebalancing and consumption smoothing are influenced by the presence of non-convex portfolio adjustment costs. Suppose bonds can be adjusted costlessly while adjustments to stock accounts entail adjustment costs. Due to these portfolio adjustment costs, the household demands both stocks and bonds. A household can buffer some income fluctuations without incurring adjustment costs and engage in costly portfolio rebalancing less frequently. Using the estimated preference parameters and portfolio adjustment costs, the response to income and return shocks is nonlinear and reflects the interaction of portfolio rebalancing and consumption smoothing.     

Corporate Culture and Greed — The Case of the Australian Wheat Board

Between 1999 and 2002, the Australian Wheat Board (AWB) was involved in an elaborate bribery, or ‘kickback’, scheme involving the illicit payment of A$300 million to the Iraq government for supposed ‘transportation fees’ that were funnelled to the Saddam Hussein regime. This was clearly in breach of the United Nations trade sanctions and was apparently perpetrated by the AWB to secure continued sales with the lucrative Iraqi market. This paper aims to gain further insight into how a corporate culture can lead to greed, corruption and deception. Specifically, this study aims to add to the literature by analysing, using Schein's (1997, 2004) theoretical framework, a case on the development of a corrupt corporate culture. Content analysis of official investigative reports and other published documents is used to determine the extent to which the AWB's corporate culture and leadership may have influenced the behaviour of senior managers. The findings indicate that the culture within the AWB fostered an environment in which senior managers placed sales and profits above the sanctions clearly enunciated by the United Nations.     

Seizing Opportunities: The Moderating Role of Managerial Characteristics on the Relationship between Opportunity‐Seeking and Innovation Efficacy in Small Businesses

We draw from regulatory focus theory to examine the relationship between a focus on opportunities through strategic orientation and entrepreneurial culture and managerial reports of innovation efficacy in small businesses. We propose that manager goals and behaviors moderate these relationships. Hypotheses were tested on a sample of 352 small employer firms. Findings support that strategic orientation positively associates with innovation efficacy and that this relationship is stronger under low managerial direction behaviors. Entrepreneurial culture positively associates with innovation efficacy when managers focus on profit and growth goals and under high managerial direction behaviors.     

Taking Credit

Taking credit is the process through which organizational members claim responsibility for work activities. We begin by describing a publically disputed case of credit taking and then draw on psychological, situational, and personality constructs to provide a model that may explain when and why organizational members are likely to take credit. We identify testable propositions about the credit-taking process, discuss ethical aspects of credit taking and suggest areas for research on credit taking in organizations.     

Strategic experimentation: Understanding change and performance in new ventures

This research was motivated by an interest in understanding more about the extent to which entrepreneurs initiate changes along various dimensions of strategy, the nature of those changes and their implications for firm performance. Our interest in this topic began with the observation that, within the large body of strategic-change literature, the research effort has focused almost exclusively on large and established firms. Moreover, a fundamental assumption underlying much of this work is that strategic change involves movement from one dominant strategic approach to another. This premise does little to motivate or contribute to the understanding of change and strategy in new ventures, where it is less likely that a dominant approach exists. Thus, we drew upon the literature in managerial cognition to develop the idea of strategic experimentation as the conceptual foundation for studying change and strategy in new ventures. Our basic premise is that in new ventures, changes along dimensions of strategy are reflective of a process of trial and error learning, whereby the entrepreneur seeks to develop an understanding of the competitive situation and determine how to compete within that context. Further, we suggest that some aspects of the firm's strategy are more likely to be the focus of experimentation than others.Building on these premises we developed a series of research hypotheses which propose that the greater the level of perceived environmental hostility, the higher the level of strategic experimentation that will be undertaken. We also propose that experimentation will always be greater along some dimensions of strategy than others, and that the degree of environmental hostility will influence the extent to which there are performance benefits associated with strategic experimentation. Our hypotheses are tested using data from a three-year study of over 400 young businesses. Overall, we find support for our assertions.For entrepreneurs and their advisors, this study has several important implications. First, it suggests that strategic experimentation is a normal part of the process by which entrepreneurs seek to position their businesses. Although the present study does not empirically address the linkage between formal planning and experimentation, the learning and cognition literature upon which the construct of strategic experimentation is based suggests that, no matter how much attention to detail is involved in the preparation of the business plan, the actual formation and development of the business will involve considerable adjustment to and/or deviation from that plan. This is because the process of new business development involves iterative changes in the way the entrepreneur positions his/her firm as he/she develops an understanding about what does and does not work. The results of this study further suggest that some dimensions of the firm's strategy are more likely to change than others. Specifically, it appears that peripheral changes (competitive emphasis and time allocation) are more likely to be the focus of such learning and adaptation efforts than core features (product scope and partnership status). This, in part, is because the former dimensions are easier to change than the latter. Moreover, our results show that ventures in more hostile environments clearly face difficult dilemmas. Although poor performance may stimulate experimentation along various dimensions of strategy, the complexity of learning within a hostile environment suggests that entrepreneurs will have a particularly difficult time determining the type of changes that will make a difference.     

Ethical Challenges in the Two Main Segments of the Insurance Industry: Key Considerations in the Evolving Financial Services Marketplace

Based on the findings of several research studies of professionals in both the property-liability insurance industry and the life insurance industry, the paper makes and supports several important points. First, ethical challenges in the insurance industry involve not only a series of ethical dilemmas frequently faced by those working in the business, but also a variety of factors that hinder those working in the industry as they seek to resolve the ethical dilemmas encountered in the course of their work. Both of these two components of ethical challenges must be understood by those in the financial services industry who will deal with insurance operations in the future. Second, whereas the life insurance business and the property-liability insurance business have traditionally been viewed as being quite different from one another and still are in terms of operations and regulation, the research findings show that they are no longer very different in terms of the key ethical challenges faced by those working in the two segments of the industry. The paper shows how during the past decade the ethical challenges in the property-liability insurance industry have become quite similar to those in the more troubled life insurance industry.     

The Highly Troubled Ethical Environment of the Life Insurance Industry: Has it Changed Significantly from the Last Decade and if so, why?

This paper presents the findings of two surveys conducted in April 2003 of Chartered Life Underwriters (CLUs) and Chartered Financial Consultants (ChFCs) who are members of the Society of Financial Service Professionals. The first survey of 3000 CLUs and ChFCs – the life insurance industry’s most highly regarded professionals – was aimed at identifying the key ethical issues faced by professionals working in the life insurance industry today. A comparison of these findings with those of earlier studies conducted in 1990 and 1995 suggests that while the key ethical issues facing those working in the life insurance business today are essentially the same as those encountered during industry’s highly troubled ethical environment of the early 1990s, these issues are perceived as presenting somewhat less serious problems than in the past. The second survey of 3000 CLUs and ChFCs was aimed at determining the extent to which these professionals perceive the industry created Insurance Marketplace Standards Association (IMSA) as having contributed to any change in the ethical environment that has taken place. The findings suggest that IMSA has played an important role in influencing senior managers to more strongly encourage and support ethical market conduct, a critical step in improving the industry’s ethical environment.     

Customer Relationship Management: A Comparative Analysis of Family and Nonfamily Business Practices*

It has been reported that family businesses perceive excellent customer service as critical to the future of their businesses. However, little research into the customer relationship management (CRM) practices of family businesses has been performed. In this study, we examine CRM implementation among 82 family and 370 nonfamily firms. Family and nonfamily businesses report similar attitudes toward the importance of CRM, their knowledge of CRM, and their success when they do implement it. However, using a logit regression model, we find that the actual implementation strategies of family businesses are significantly different from those of nonfamily businesses. These results remain constant when controlling for size and industry sector.