Journal of Business Venturing

The organized venture capital industry is now more than 40 years old. In the last decade, the pool of venture capital has increased almost tenfold to a current total of about $30 billion. Despite its comparative maturity, there has been no systematic tracking of the financial performance of the industry. An extensive search of the scholarly literature found that published information on rates of return was skimpy and not very reliable.In response to the need for valid and reliable industrywide rates of return. Venture Economics launched a data base in 1985 that records the rates of return of venture capital funds quarterly. For the period 1970–1984, there are 131 different funds in the data base. For the period 1970–1978, the data base covers 15% of all new capital committed to private funds; for the period 1981–1982, it covers 50%. Venture Economics adds funds to the data base on an ongoing basis.Preliminary analysis of the compound annual rates of return for the period 1978–1985 shows that funds started in 1978–1979 performed magnificently, with returns well in excess of the oft-quoted industry expectation of 25–30%. Funds started in the later part of the period did not perform nearly as well.However, it is much too early to make any predictions about the final rates of return of the funds because the oldest fund for which the rates are presented in this paper was 7 years old and the youngest was 15 months. Because they will have a life of at least 10 years, these funds have a long way to go before their portfolios are fully harvested and their final rates of return are known.The implications of the work reported in this paper will be derived from the following fact: The rates of return of venture capital are being recorded in a systematic way for the first time in the history of the organized industry. It is now possible to study the performance of venture capital with valid and reliable data. We expect that those studies will cover a range of applications from pragmatic analyses such as the performance of investment portfolios to theoretical questions such as the efficiency of the market in allocating venture capital.

A common characteristic of entrepreneurial farms is fast growth. A common problem for their managers is obtaining enough resources to accommodate that growth. A typical entrepreneur (either individual or corporate) often desires to pursue a detected opportunity but lacks the necessary resources to make it happen. Again, gaining access to those resources becomes the “first” entrepreneurial problem.One of the most efficient weapons used by entrepreneurial firms to gain market share from larger, more powerful corporations is their flexibility. But the progressive accumulation of resources that growth often entails brings almost necessarily a loss of that very flexibility that made the firm successful in the first place. This can be termed the “second” entrepreneurial dilemma.“Networking” practices are a way to overcome these problems. Essentially, networking is a system by which entrepreneurs can tap resources that are “external” to them, i.e., that they don't control. In its simplest form, networking consists of the use of all personal relationships to obtain advice, financing, “insider” sales, etc. (Birley 1986). In its most sophisticated form, entrepreneurs set up an elaborate web of relationships between companies, most of them of similar entrepreneurial characteristics, that are extremely efficient and flexible at delivering a product or service.In all cases, we find that the ability to exploit resources that are outside the entrepreneur's control is a constant of entrepreneurial, high-growth management. This is why entrepreneurs have been defined as being primarily motivated by the pursuit of opportunities, as opposed to those managers exclusively concerned with the proper management of the resources already controlled by their firm (Stevenson 1983; Stevenson and Gumpert 1985).This paper proposes a view whereby the essence of entrepreneurship is seen precisely in the ability and willingness to use external resources. A statistical validation of the main hypothesis, i.e., that entrepreneurial, fast- growing firms do use more external resources than their competitors, is then attempted.The results strongly support the hypothesis. It is found that the fastest-growing firms in a very large sample of public companies are much less integrated (make more use of external resources) than their competitors; in addition, those firms that are at the forefront of using external resources grow, on average, much faster (more than 10% every year) than their competitors over a long period of time (ten years).This study's implication for managers seems clear. It constitutes yet another piece of evidence in favor of the efficiency of networking arrangements. Being flexible enough to use external resources allows the entrepreneurial firm to break through the limits to sustainable growth and, at the same time, lowers its risk, for it taps into someone else's experience and know-how. Entrepreneurs and entrepreneurial managers must not be deterred by the lack of resources in the pursuit of opportunities.

The study presented here explores innovation as a corporate entrepreneurial outcome in recently established small firms. More precisely, we explore the role of upper echelon and employee human capital and human resources management as determinants of innovation. Our approach builds on a 'human resource'-based view, stressing the importance of (1) entrepreneur/entrepreneurial team ('upper echelon') human resources and (2) employee human resources and their management in determining the innovation performance of start-ups. As innovation is one of the three possible outcomes of corporate entrepreneurship (innovation, venturing and renewal), we take a corporate entrepreneurship research approach in examining innovation in start-ups. The analyses are based on a sample of 294 start-ups covering a wide range of economic activities, having 1 to 49 employees and being in their second year of life in 2003. The results indicate that both types of human capital do matter in the context of start-up innovation. First of all, employee human capital and HRM have a strong positive effect on innovation. Second, while we could not trace direct effects of entrepreneur/entrepreneurial team human capital on innovation, indirect effects (via HRM or employee human capital) of for instance education level and business advice are indisputably present. All things considered, the study teaches us that valuing human capital in start-ups can contribute to a considerable extent to preserving their innovation performance, thus stimulating their chances of building a viable business model and safeguarding future growth and further development.

This paper provides insight for practitioners by exploring the collective process of entrepreneurship in the context of the formation of new industries. In contrast to the popular notions of entrepreneurship, with their emphasis on individual traits, we argue that successful entrepreneurship is often not solely the result of solitary individuals acting in isolation. In many respects, entrepreneurs exist as part of larger collectives. First and foremost, there is the population of organizations engaging in activities similar to those of the entrepreneurial firm, which constitute a social system that can affect entrepreneurial success. In addition, there is also a community of populations of organizations characterized by interdependence of outcomes. Individual entrepreneurs may be more successful in the venturing process if they recognize some of the ways in which their success may depend on the actions of entrepreneurs throughout this community. Thus, we urge practitioners and theorists alike to include a community perspective in their approach to entrepreneurship. We also suggest that one way of conceptualizing the community of relevance might be in terms of populations of organizations that constitute the value chain. For example, in the early film industry a simple value chain with three functions—production, distribution, and exhibition—is a convenient heuristic for considering what populations of organizations might be relevant. As we show in our case study of that industry, a community model offers insights into the collective nature of entrepreneurship and the emergence of new industries.Our basic thesis is that the role of entrepreneurship in the creation of new industries can be conceptualized in terms of the dynamics of a community of organizational populations. At least three implications of this view may be important for practitioners. First, the kind of widespread and fundamental economic and social change that has often been linked with entrepreneurship requires a variety of behaviors. While most definitions of entrepreneurship have recognized that entrepreneurship requires the introduction of innovation, they have tended to ignore the importance of behaviors that subsequently support that innovation. To encompass these important behaviors, we believe that a broad definition of entrepreneurial behaviors is justified. To capture this, the framework of entrepreneurial behaviors that we develop includes the variety of behaviors that are important to the success of a collective process of entrepreneurship. We believe that recognition of a variety of different behaviors that are important to the success of the entrepreneurial process can help practicing entrepreneurs to understand more fully the complex dynamics of new industry creation. In terms of our framework, the range of behaviors of potential importance to entrepreneurship includes all of the following: creating a firm that innovates, creating a new business that imitates the practices of others, innovating within an existing business, and imitating by creating change in an existing business. In addition, we recognize that the kinds of innovative change that support entrepreneurship in the context of new industry creation are not narrowly technological; other kinds of product and service changes as well as administrative innovations may also be relevant.Second, entrepreneurship in one part of the community often creates the opportunity for entrepreneurial activity elsewhere in the community. For example, the founding of movie palaces did not begin until feature length films appeared. The challenge for entrepreneurs is to recognize these opportunities and act on them. Third, and related, the long-term success of entrepreneurial behaviors in one population of the community frequently requires that supportive entrepreneurial behaviors occur in other populations in the community. For example, the success of feature length films was hastened by the development of distribution organizations to replace traveling shows and localized markets. Their success was also hastened by the movement away from nickelodeons towards larger, more comfortable exhibition outlets, such as theaters and show palaces. When the interdependence among populations in the community is stated this way, another challenge to entrepreneurs becomes clear: the facilitation and encouragement of supportive behaviors in other populations.We are not the first to propose that the community is important, but we contribute to this idea by showing in a specific context how various types of behaviors interact and ultimately promote entrepreneurship throughout the community. Our contribution for practitioners is twofold. We would urge practitioners to consider the variety of behaviors necessary to create, reinforce, and maintain fundamental and widespread change. Further, we would suggest that practitioners consider how activities in a broad community of organizations can set the stage for entrepreneurship and have a high impact on its ultimate success or failure. Thus, we would suggest that practitioners who seek to innovate should search broadly for opportunities and understand the importance of relations with businesses elsewhere in the community. The success of their entrepreneurial efforts may depend on the occurrence of supportive entrepreneurial changes in those businesses as well. Their ability to do this will be enhanced by a broad understanding of entrepreneurial behaviors and sensitivity to the opportunities that their entrepreneurial behaviors may create for others.

The case study of the Zobele family and Zobele Chemical Industries, their past history, and present status was published in J. Bus. Venturingdoi:10.1016/S0883-9026(03)00062-4. This teaching note centers on the challenges they face in ensuring global leadership in their served market niches, while maintaining the continuity of family ownership and control. This case presents the practical implications for family enterprises in their attempts to meet the challenges of a globalized marketplace.The Zobele, located in Trento, Northern Italy, was founded in 1919 by Enrico Zobele Sr., who became famous when he invented his first “killer product” in 1930—flypaper. After the Second World War, the bombed-out factory was rebuilt by his sons, Luigi and Fulvio, who introduced new products for home hygiene and home care. The company globalized under the joint leaderships of Chief Executive Enrico Jr., son of Luigi, and Franco and Giovanni, sons of Fulvio. In 2001, Zobele Chemical Industries reported sales of US$75 million with profits of US$5.1 million. The company had 700 employees, factories in Italy, Spain, Brazil, Paraguay, India, Hong Kong, Mexico, and Malaysia with continuing expansions in Italy and China.

We follow the evolution of superconductivity from empirical discovery to theory development, to proof of the theory by General Electric (GE) laboratory experiments by Nobel laureate Ivar Giaever, to the development, design and manufacture of superconducting materials and magnets, to the creation of new venture (Intermagnetics General, IGC), to application to magnetic resonance imaging (MRI), which resulted in GE's world leadership. We highlight the role of R&D management in encouraging creativity, transferring technology to operations and achieving leadership through technology. We also discuss implications for R&D managers and entrepreneurs in established companies who wish to start an internal venture, and for technological entrepreneurs who are planning a spin-off.

Steria, a leading French information systems and services company, was created with the vision that it would be owned by employees of all ranks. Founded in 1969 with US$80,000 initial capital and eight employees, Steria achieved its initial public offering (IPO) in 1999, and in May 2000 had sales of US$400 million, 3000 employees, and a market value of US$800 million, with a price/earnings ratio of 55. Steria's strategy was driven by the entrepreneurial control imperative. While the founder entrepreneur gradually relinquished control in favor of new employees, Steria was wary, almost paranoid, in ensuring its independence from takeovers by other companies. We discuss the four stages of growth of Steria, separated by three internal crises. Two of these crises were caused by the revolt of dissatisfied employees, the “barons,” and were resolved through the statesmanship of the founder entrepreneur. We analyze the key factors that contributed to the success of Steria, and we discuss whether the strategy of maintaining entrepreneurial control was beneficial to Steria and whether this strategy is still valid for the post-IPO “New Steria.”

In this article, the sectorial and environmental forces that facilitate or inhibit the creation of venture capital companies are studied in the three European countries where the industry is most developed: the United Kingdom, France, and the Netherlands. The focus is on the start-up phase of the industry, the period from 1970–1990. The founding of firms can be studied on four different levels: entrepreneurial, organizational, population, and macroeconomic. In this study, a population approach is taken; this implies that we do not attempt to explain any single founding, but rather the aggregate number of foundings that occur in an industry in a certain period in a certain country.

A popular misconception holds that most new businesses experience similar growth stages of start-up, rapid growth, maturity, and decline. Yet, business statistics show that only a small number of firms grow into large organizations. A few experience some growth, but the majority have such small growth that they provide only a marginal income to the founder.While market conditions impact on the growth of the firm, they do not explain growth differences when they occur under similar market conditions. In this paper, the authors have compared psychological type preferences of founders/CEOs of fast-growth firms with those of slow-growth firms under the assumption that differences in psychological preferences, as they relate to gathering, assimilating, and processing information, would have an impact on the strategic or growth orientation of the firm.The results are based on the administration of the Myers-Briggs Type Indicator to the founders/cofounders of 143 firms included in the 1987 Inc. 500 list of the fastest-growing private companies in the United States and the comparison of these results with those of an earlier study of 150 founders/CEOs of successful, yet slower growing firms.The primary personality traits under consideration were an individual's preferred method of gathering information from the environment, making decisions, and drawing conclusions from the information.The results indicate that founders of rapid-growth firms have psychological preferences that are significantly different from those of their slower-growth counterparts. Growth oriented founders prefer an intuitive approach or consideration of future possibilities when gathering information, and a thinking or planned and organized approach to drawing conclusions. These preferences represent those facets most frequently used in strategic or growth planning.Investors in new firms that place importance on the capabilities and orientations of the management team as an evaluation criteria are currently limited to consideration of past experiences. An awareness of the management team's experiences can provide an indication of management ability, but unless their experience involves management of growth, the information related to growth propensities or orientations is limited. A measure of a person's preferences in gathering, assimilating, and processing information can indicate their desires for strategic and/or growth planning. Hence, investors may have another tool that can be used in the investment decision making process. In addition, government policy makers may have the opportunity for increased effectiveness in assistance programs by recognizing that the needs and preferences of founders of rapid-growth companies are significantly different from those of their slower-growing counterparts, and that these differences should be considered in the development of assistance programs.

The study presented here explores innovation as a corporate entrepreneurial outcome in recently established small firms. More precisely, we explore the role of upper echelon and employee human capital and human resources management as determinants of innovation. Our approach builds on a 'human resource'-based view, stressing the importance of (1) entrepreneur/entrepreneurial team ('upper echelon') human resources and (2) employee human resources and their management in determining the innovation performance of start-ups. As innovation is one of the three possible outcomes of corporate entrepreneurship (innovation, venturing and renewal), we take a corporate entrepreneurship research approach in examining innovation in start-ups. The analyses are based on a sample of 294 start-ups covering a wide range of economic activities, having 1 to 49 employees and being in their second year of life in 2003. The results indicate that both types of human capital do matter in the context of start-up innovation. First of all, employee human capital and HRM have a strong positive effect on innovation. Second, while we could not trace direct effects of entrepreneur/entrepreneurial team human capital on innovation, indirect effects (via HRM or employee human capital) of for instance education level and business advice are indisputably present. All things considered, the study teaches us that valuing human capital in start-ups can contribute to a considerable extent to preserving their innovation performance, thus stimulating their chances of building a viable business model and safeguarding future growth and further development.

This study takes a network theoretical perspective in its examination of innovation-based corporate entrepreneurship (ICE), focusing on how project-specific ties can form for non-routine phenomena. A comparative case analysis of 246 interviews in twelve industry-leading global corporations identifies constructs associated with individual network capacity at the individual level, organizational network capacity at the organization level, and program network capacity at the ICE program level. In addition, we recognize the managerial facilitating roles of cultivator and broker. We develop propositions aimed at providing insights about the relationships among these constructs, and identify implications for managerial and ICE program responsibilities.

We analyse the determinants of high growth expectations entrepreneurial entry (HGE) using individual data drawn on working age population, based on the Global Entrepreneurship Monitor (GEM) surveys for the 1998-2004 period. Individual level explanatory variables are combined with country-level factors. Our results suggest that availability of venture capital and intellectual proper rights protection are strong predictors of HGE. In addition, we also find that innovative start-ups are associated with highest growth expectations in countries with extensive supply of venture capital and strongest intellectual property rights. Once we introduce venture capital, we detect no significant effects of other elements of financial systems on high-powered entry.

A steady supply of entrepreneurs who will build the growth firms of the future has always been seen as fundamental to the economic health of a country. However, as companies have grown to the point where many have balance sheets larger than many countries, the role of the Top Management Team in managing these corporate giants has also received more prominence. Unfortunately, research into the two groups of current entreprenurs and large corporation managers has been both sparse, and has followed different, though parallel, paths. This research examines their backgrounds and asks the question whether the basic assumption that they are, in fact, different is correct—who are the high flying entrepreneurs, and are they any different from successful corporate leaders?

Although many studies have focused on the issue of relatedness in corporate venturing, it is still unclear whether high or low levels of relatedness between a new venture and the parent firm leads to success as measured by venture performance. In this study, we raise the question of whether or not relatedness plays a determinant role in affecting success at the venture level. The study analyzes data on 88 new industrial product corporate ventures from STR4, the corporate start-up database of the PIMS project.

As companies move from one stage of their cycle to the next, they often have to revamp their skills and build innovative capabilities to survive, achieve profitability, and stimulate growth. Corporate entrepreneurship (CE) activities give these firms a foundation for building and exploiting these capabilities. In turn, stimulating and sustaining CE requires the infusion of resources and new knowledge into the firm's operations, using multiple external sources. In this paper, we highlight the importance of boards of directors and absorptive capacity for gaining access to varied and current knowledge that enriches CE. We suggest that boards and absorptive capacity complement each other in fueling CE activities. Further, boards can sometimes substitute for poor absorptive capacity and vice versa, influencing the intensity of CE activities. Managing these complementarities (or substitutions) is crucial for sustaining CE initiatives and creating value from them.

Academic entrepreneurship, the creation of new business ventures by university professors, technicians, or students, is increasingly being promoted by university-based innovation centers and university business offices. It is seen as an efficient university-industry technology transfer mechanism, and, in some cases may contribute to university revenue. Whereas most entrepreneurs leave the university at time of start-up, others keep their academic postings as full-time or part-time professors. “Part time” entrepreneurship may be interesting from a university point of view, because (i) it keeps in the laboratory a creative individual, (ii) it may provide through part-time academic positions for a more efficient use of university resources, and (iii) it encourages more contacts between faculty, students, and the business world. However, manufacturing firms led by part-time entrepreneurs do not seem to be as aggressive and growth-oriented as “independent” firms. The university professor interested in the successful transposition of an idea, an invention, to the commercial sector, may therefore have to do it through licensing, or resign from the university to devote all his time and energy to the development, manufacturing, and commercialization process. And the university interested in investing in a new “academic firm” created to exploit commercially an invention made in its own laboratories should beware of keeping the academic entrepreneur on staff, or, if he stays on staff, of involving him with the management of the new company.

The paper adopts a network perspective in an attempt to understand the underlying mechanisms generating the different university spinout structures. In this respect, we propose a trichotomous categorisation of university spinouts into orthodox, hybrid and technology spinouts and argue that the academic's embeddedness in a network of exoinstitutional and endoinstitutional ties influences the type of spinout initiated. We draw from some of the recent network research that has adopted a contingency approach in explaining the value of social networks.

Although academic entrepreneurship is a topic receiving some attention in the literature, higher education's appetite for expanding technology transfer activities suggests that more research is needed to inform practice. This study investigates the effects of particular resource sets on two university commercialization activities: the number of start-up companies formed and the number of initial public offering (IPO) firms to which a university had previously licensed a technology. Utilizing multisource data on 120 universities and a resource-based view of the firm framework, a set of university financial, human capital, and organizational resources were found to be significant predictors of one or both outcomes.

The many achievements of entrepreneurship research have given it some of the characteristics of a legitimate academic field. But there is a gap between what is being done, and what could be done better. Potential research topics include analysis of startups by various dimensions, longitudinal studies of success and failure, comparative geographic studies, examination of various roles in startups, and experimental (as opposed to simple observational) studies. Strategies for making research more rigorous could be adopted from the methods of other academic fields, especially for reconsidering indicators of valid entrepreneurship research, measuring its advances, and making progress. Researchers could do more experimental projects, report and study mysteries, paradoxes, and puzzles about the subject, and not exaggerate the priority of research methodology, especially inappropriately adopting statistical significance between means as sufficient indicator; what may be more important is the exceptional. Causes of differences between industries should also be addressed. Nonetheless, it is unlikely entrepreneur research can become anything near a general science. Entrepreneurship research can, though, reconsider old paradigms and established conventions. Entrepreneurship research and business school teaching could, for example, credit coursework where students participate in startups; let entrepreneurs participate in classes; use business creation projects as tests of accomplishment; provide freedom, encouragement, and positive feedback instead of grades; and abandon the school calendar. Moreover, research could be more experimental, involving design of interventions aimed at facilitating startups through education and assistance. Research could also be run and tracked by different parties. Overall, experimenting with different ideas and approaches could advance the field of entrepreneurial academics. (TNM)

Growth of women business enterprises (WBEs) has been rapid in fields like manufacturing, where their presence has traditionally been low. This movement partly reflects a growing emphasis on serving corporate and government customers. Women business owners complain that they have less access to clients than male-owned firms, when they seek to operate in markets beyond their traditional household clientele. This study empirically tests the hypothesis that WBEs are discriminated against, when they seek to sell their products to government agencies and other businesses. When WBE traits such as firm size, age, and industry of operation are controlled for statistically, WBEs are shown to have less access to business clients than male-owned firms.

Women-owned businesses are the fastest growing sector of new venture ownership in the United States. Although women's access to, and use of, debt and venture capital financing have been explored, comparatively little is known about women's access to capital from private equity investors. In this paper, we examine the equality of women's access to angel capital. The research suggests that women seek angel financing at rates substantially lower than that of men, but have an equal probability of receiving investment. We also document that women are more likely to seek, and to a lesser extent receive, financing from women angels.

Drawing on Bem's psychological theory of self-perception, this paper presents and tests a model that examines the impact of business accomplishments and gender on entrepreneurial self-image and explores the definition of entrepreneurship according to Vesper's entrepreneurial typology. Regression techniques are used to identify those business accomplishments that university alumni associate with self-perceptions of entrepreneurship. Experience as a small business person (founding, running, and/or owning a small business) most clearly predicts entrepreneurial self-image. Results also support predictions of both direct and indirect effects of gender as well as direct effects of education and business degree. Results of a separate expert panel study are used to rank business accomplishments according to degree of entrepreneurship. Results of both studies reveal stark contrasts in the implied definition of entrepreneurship between entrepreneurship experts (academic and practitioner alike) and the general business community (as represented by the alumni). This raises questions about the meaning of the term “entrepreneurship”, what the word “entrepreneur”, in particular, conveys to the general public, and the implications for practice and future research.

Joint venturing is recommended to avoid some of the obstacles to successful business venturing, such as capability limitations and organizational resistance. However, the high dissolution rates for joint ventures suggest a need to learn how to utilize this cooperative strategy more effectively. Two frequently reported problem areas in joint venturing are unrealistic corporate expectations and inadequate planning. Thus, this study sought to examine the impact of strategic intent on joint venture success as measured by partner goal achievement and satisfaction.

An increasing number of firms are making initial public offerings in foreign markets to circumvent constraints in the availability of capital and to provide an exit for their investors. However, previous research on foreign initial public offerings and their determinants is very limited. In this paper, we contribute to this literature by demonstrating that international experience of the management team and pre-IPO ownership by foreign investors are positively related to foreign initial public offerings. We test our hypotheses using data on initial public offerings of European companies from 1991–2001. The results support our hypotheses. The findings have important implications for entrepreneurs, investors, and public policy.

Owners and financial planners in new ventures prefer using internal sources of capital as much as possible because they are uncertain about how to obtain external financing and how the involvement of others will impact their ventures. Because undercapitalization and financial problems are at the center of nearly all business failures, it would appear useful for owners and financial planners to reduce the uncertainty surrounding external financing. Obtaining information about one source of this uncertainty, a lack of understanding of the decision processes followed by venture capitalists, is the focus of research in this paper and a growing body of literature.

Most of the existing studies on investment functions ignore the role of technology acquisition in influencing investment decisions. This study argues that technology acquisition will decisively influence investment behavior, modernization, and expansion plans of firms. However, capability of the firms to acquire technology differs considerably. Following the Schumpeterian paradigm, we maintain that the entrepreneur's decision to invest and expand would depend on the technological opportunities available. The main role of the entrepreneur in the Schumpeterian framework is to exploit an invention or new technology in introducing new processes and products. The policy regime in India prior to 1985 did not permit the firms to take advantage of technological opportunities created abroad in introducing new technologies and expanding their capital base. The reforms introduced since 1985, for the first time, permitted the Indian firms to expand their product range, introduce new technologies, and increase their capacities without obtaining prior official sanction.

An important issue technology managers face today, and a vital component of any coherent technology strategy, concerns the decision to chose between developing technical capabilities internally or acquiring them through external means. While there is a clear indication in the literature of a greater reliance on external sources of technology, the factors driving this phenomenon and the potential benefit to firm performance have received limited empirical attention. This study addresses these issues by testing the relationships between several potential determinants of external technology sourcing, and the differential impacts of external vs. internal sourcing on firm performance.

I modify the uniform-price auction rules in allowing the seller to ration bidders. This allows me to provide a strategic foundation for underpricing when the seller has an interest in ownership dispersion. Moreover, many of the so-called "collusive-seeming" equilibria disappear.

A sample of 318 entrepreneurs who sought equity capital in amounts of $100,000 or more were studied. Success in acquiring funding is related to characteristics of the entrepreneurs, enterprises, requests, and sources of advice. Entrepreneurs in the early stages of development in high-technology industries seeking large amounts of financial support are most successful in acquiring funding. Less experienced entrepreneurs who are aggressive in seeking financing and are willing to surrender higher percentages of their businesses receive funding more often than older entrepreneurs. Those who take their business proposals directly to private non-venture investors are most successful in acquiring equity capital.

This study proposes a multi-dimension, multi-contingent “fit” perspective for examining different practices adapted by entrepreneurial firms in acquiring human resources. We posit that while environmental constraints are important considerations for adapting recruitment practices through networks, strategic needs and interpersonal dynamics are the key drivers behind the evolution of such practices. As they transit from the startup to the growth phase, entrepreneurial firms utilize different network pools in search of diversity, yet cling to strong ties to find talents with common values and goals. Our findings carry important implications for future research in human resource management by integrating the macro- and micro-perspective, and at the same time, enhance the understanding of network effects and their strategic bearings in the entrepreneurial process, specifically in the acquisition of human resources.

The premise of Austrian economics on entrepreneurial discovery suggests that mutual knowledge about market participants defines who will acquire potential information about opportunities to bring future products into existence. Building upon this argument, this research investigates the role of networking alliances in information acquisition and its lagged effect on the new product performance of the firm. By using a longitudinal analysis, the study shows that a firm improves its new product performance as it increases the number of repeated partners and its centrality position relative to others in the technology collaboration network.

External technology acquisition has been viewed as an important method used by firms to achieve higher economic returns. However, only a few studies have evaluated the contribution of external technology acquisition to firm performance. This lack of research is surprising because the benefits of external technology acquisition to innovation output have been emphasized extensively in the literature. This study therefore investigates the extent to which external technology acquisition effects a firm's performance, and how this effect is moderated by internal R&D efforts. This analysis concentrates on the electronics-manufacturing industry, taking advantage of the relative abundance of data on longitudinal investigation variables. A longitudinal sample allows this examination to control extraneous effects and to provide more convincing evidence for the relationship between external technology acquisition and firm performance. The analytical sample comprises a total of 341 Taiwanese electronics-manufacturing firms over the period from 1998 to 2002. The least square dummy variable analysis method reveals that external technology acquisition does not provide a significant contribution to firm performance per se; however, the positive impact of external technology acquisition on firm performance increases with the level of internal R&D efforts. Verifications for robustness and the split-sample analyses both validate the results in the setting of larger firms.

We develop a theory of commercialization mode (entry or sale) of entrepreneurial inventions into oligopoly, and show that an invention of higher quality is more likely to be sold (or licensed) to an incumbent due to strategic product market effects on the sales price. Moreover, preemptive acquisitions by incumbents are shown to stimulate the process of creative destruction by increasing the entrepreneurial effort allocated to high-quality invention projects. Using detailed data on patents granted to small firms and individuals, we find evidence that high-quality inventions are often sold, and that they are sold under bidding competition.

Alliances with Japanese corporations are generally regarded as difficult and demanding and the literature suggests that there are four reasons for this—general cultural differences; perception and understanding of the legal contract and differences in attitudes to the ways in which this form of arrangement can contribute to organizational learning; the placing of the locus of activities on the value chain; and the effects of global versus multidomestic differences.The article suggests that for small independent firms, the creation of alliances across national boundaries is a social event that relies upon the building and nurturing of a series of entrepreneurial networks. In countries as culturally diverse as Japan and the U.S.A., this may be realized through the use of gatekeepers who facilitate the creation of a “network-of-networks.” The authors analyze the creation of a successful international strategic alliance between the technology-based companies of Kinkel in Japan and three companies in Silicon Valley, U.S.A. None of the four companies are major corporations.From analysis of the case study, the following conclusions are made: 1.1. International strategic alliances between small firms can be more symmetric than those between large and small firms.2.2. Even if national cultures are starkly different, there are common features that characterize technology-based businesses regardless of their country of origin.3.3. Accepting a fit of organizational culture, patience is a key factor of success.4.4. The key to success is a “networker of networks,” a key person or company whose role is to create a global network of local networks.5.5. Social events, such as international symposia, exchange programs, or conventions are important mechanisms for identifying potential partners.6.6. The most important implication of this case study is that the nature of the project will usually require a network of small businesses with different resources.

Highly educated individuals possessing a net worth exceeding $100,000 are the most likely to enter self-employment. Recent studies have linked personal wealth holdings positively to self-employment entry, but educational attainment has been a weak and erratic determinant of self-employment status. Although barriers such as financial capital constraints clearly shape self-employment entry decisions, the nature of these barriers varies substantially across small business industry groups. The strong role often played by education and work experience in identifying self-employment entrants is often obscured by inappropriate aggregation across industries.

Investigates the extent to which the reasons for and the environmental influences on business formation are conditional on an entrepreneur's gender and nationality. Data were collected from venture initiators in Great Britain, Norway, and New Zealand and consist of responses to 23 questions in four categories - recognition, independence, learning, and roles - about the entrepreneurs' reasons for startup. Findings indicate significant national differences regarding all of the factors except roles. Independence is a lesser reason for new firm creation in Norway than in New Zealand and Great Britain. Also, desire for status and recognition is stronger in New Zealand and Great Britain than in Norway. However, entrepreneurs in Norway are more likely than entrepreneurs in Great Britain or New Zealand to establish firms as a way to develop an idea for a product and to continue learning. No significant differences are found among the countries on the extent to which desire to be innovative and at the forefront of technology are reasons for firm creation. In addition, no significant differences are shown on the extent to which roles - i.e., having influence in the community, continuing and family tradition, and following the example of an admired person - are reasons to start a business. It is also shown that, between men and women, there are not significant differences on independence as a reason for starting a business. However, achieving a higher position in society and increasing the status and prestige of one's family are greater reasons for firm creation in men than women. Achieving something and getting recognition for it is a greater reason for women to start a business. Female entrepreneurs are more likely to start businesses in order to develop product ideas, but are less likely to do so to be on the forefront of technological development. There are no significant differences between genders on desire for community influence or for following the example of an admired person as reasons to create a firm. However, men are more likely than women to start a business to continue a family tradition. Finally, none of the factors appears to be a reason consistently across all countries for firm creation for one gender and not the other. Also, no reasons determined solely by nationality are found. (SFL)

In this study we draw on the literature of emotions and entrepreneurial motivation to analyze how and why emotional displays of managers influence the willingness of employees to act entrepreneurially. Using an experimental design and 2912 assessments nested within 91 employees from 31 small entrepreneurially oriented firms, we find that managers' displays of confidence and satisfaction about entrepreneurial projects enhance employees' willingness to act entrepreneurially, whereas displays of frustration, worry, and bewilderment diminish employees' willingness. Moreover, we find that displays of satisfaction, frustration, worry, and bewilderment moderate the effect of managers' displayed confidence on employees' willingness to act entrepreneurially. Our findings have implications for the emotions and entrepreneurial motivation literature.

Uncertainty is central to entrepreneurship; however robust and generalizable findings that explain the conditions in which uncertainty may impede [or promote] entrepreneurial action remain elusive. We operationalize uncertainty as a multi-dimensional construct composed of state, effect, and response types of uncertainty (Milliken, 1987) to investigate the relationship between uncertainty and entrepreneurial action. We decompose more than 2800 exploitation decision policies nested within a sample of new product decision-makers working in entrepreneurial software firms. We focus on the primary decision-maker's willingness to exploit a given opportunity in the face of varying combinations and manifestations of uncertainty and find that the type of uncertainty experienced influences the willingness to engage in entrepreneurial action differently. Further, we find that differences in how each type of uncertainty is manifested in the environment, the scale of exploitation (i.e. large vs. small), and the entrepreneur's expertise serve to moderate the relationship between uncertainty and action in counter-intuitive ways. We discuss the implications for both theory and practice.

Using insights from institutional theory, sociology, and entrepreneurship we develop and test a model of the relationship between centralized and decentralized institutions on entrepreneurial activity. We suggest that both decentralized institutions that are socially determined as well as centralized institutions that are designed by governmental authorities are important in promoting firm foundings in the environmental context. In a sample of the U.S. solar energy sector we find that state-sponsored incentives, environmental consumption norms, and norms of family interdependence are related to new firm entry in this sector. Our findings also suggest that the efficacy of state-level policies in the sponsoring of entrepreneurial growth is dependent upon the social norms that prevail in the entrepreneur's environment. We expand entrepreneurship theory and the study of institutions and the natural environment by demonstrating the integral role that social norms play in influencing the creation of new firms and by illustrating the potential effect social norms have on the effect of policy that seeks to encourage environmentally responsible economic activity.

Like a photographer trying to take a perfect picture, an entrepreneur trying to increase the odds of survival must learn very quickly that focus is everything. And what demands an entrepreneur’s immediate focus is the development of new products. Entrepreneurial ventures depend on the rapid creation of new products to gain access to early cash flows, create legitimacy, grab early market share, and increase their odds of survival (Schoonhoven, Eisenhardt, and Lymman 1990). However, the increasing costs and complexity of new product development are making it difficult for entrepreneurial ventures to contain the assets needed for successful R&D within their boundaries, forcing them to reach beyond their borders to access resources. Barley et al. (1992) document the use of more than 900 contractual research agreements within the biotechnology industry alone. Recent research has also found a positive relationship between the use of alliances in the R&D process and the rate of new product development Deeds and Hill 1996 and Shan, Walker, and Kogut 1994.

While research in entrepreneurship continues to increase general understanding of the opportunity-recognition process, questions about its nature nonetheless persist. In this study, we seek to complement recent research that relates "the self" to the opportunity-recognition process by deepening understanding of the self vis-à-vis this process. We do this by drawing on the self-representation literature and the decision-making literature to introduce two distinct types of images of self: images of vulnerability and images of capability. In a study of 1936 decisions about hypothetical entrepreneurial opportunities made by 121 executives of technology firms, we then investigate how both types of images of self affect the images of opportunities that underlie opportunity recognition. Our results indicate that both images of self - vulnerability and capability - impact one's images of opportunity.

This article explains how entrepreneurship can help resolve the environmental problems of global socio-economic systems. Environmental economics concludes that environmental degradation results from the failure of markets, whereas the entrepreneurship literature argues that opportunities are inherent in market failure. A synthesis of these literatures suggests that environmentally relevant market failures represent opportunities for achieving profitability while simultaneously reducing environmentally degrading economic behaviors. It also implies conceptualizations of sustainable and environmental entrepreneurship which detail how entrepreneurs seize the opportunities that are inherent in environmentally relevant market failures. Finally, the article examines the ability of the proposed theoretical framework to transcend its environmental context and provide insight into expanding the domain of the study of entrepreneurship.

Are organizational factors that support entrepreneurial action supportive for all? We use the literatures on corporate entrepreneurship and managerial levels to propose that managers differ in structural ability to make the most of their organizational environment. Using a sample 458 managers and moderated Poisson regression analysis we found that the relationship between managers' perceptions of the organizational environment and the number of entrepreneurial ideas implemented varied across managers of different structural levels. Specifically, (1) the positive relationship between managerial support and entrepreneurial action is more positive for senior and middle level managers than it is for lower- (first) level managers, and (2) the positive relationship between work discretion and entrepreneurial action is more positive for senior and middle level managers than it is for first-level managers. These findings suggest that managerial level provides a structural ability to "make more of" organizational factors that support entrepreneurial action.