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Making it happen: Entrepreneurs’ perspectives on co-creation partnerships with Corporates
... The importance of stakeholders is empirically emphasized in activities from securing crowdsourced funding (Cucari and Nuhu, 2017) to building partnerships with larger corporations (Allmendinger and Berger, 2018), to expanding the venture internationally (Rastrollo-Horrillo and Martín-Armario, 2019). Our review also identified collaborations spanning employees (Ulhøi, 2009) business partners (Pollack and Bosse, 2014), and customers (Chandra and Coviello, 2010;Elias et al., 2018), often with those roles blurred. ...
Interest in applying the idea of co-creation to entrepreneurship is emerging through research on opportunity creation and entrepreneur heuristics. We place co-creation in the conceptual center of the entrepreneurship research discussion. Doing so requires relaxing the view of a central entrepreneur and adopting a view of stakeholders as peers in the venture, providing resources and deriving benefit. We formalize this insight into a central proposition and derive implications of it for major themes of entrepreneurship research, entrepreneurial outcomes, and three challenges unique to entrepreneurship. The sum of our work suggests moving the discussion in entrepreneurship research from the unit of analysis of the individual entrepreneur, venture, or opportunity to entrepreneurship as a collaborative process undertaken by a constellation of stakeholders that come together to co-create novelty in the environment.
... The importance of stakeholders is empirically emphasized in activities from securing crowdsourced funding (Cucari and Nuhu, 2017) to building partnerships with larger corporations (Allmendinger and Berger, 2018), to expanding the venture internationally (Rastrollo-Horrillo and Martín-Armario, 2019). Our review also identified collaborations spanning employees (Ulhøi, 2009) business partners (Pollack and Bosse, 2014), and customers (Chandra and Coviello, 2010;Elias et al., 2018), often with those roles blurred. ...
Interest in applying the idea of co-creation to entrepreneurship is emerging through research on opportunity creation and entrepreneur heuristics. We place co-creation in the conceptual center of the entrepreneurship research discussion. Doing so requires relaxing the view of a central entrepreneur and adopting a view of stakeholders as peers in the venture, providing resources and deriving benefit. We formalize this insight into a central proposition and derive implications of it for major themes of entrepreneurship research, entrepreneurial outcomes, and three challenges unique to entrepreneurship. The sum of our work suggests moving the discussion in entrepreneurship research from the unit of analysis of the individual entrepreneur, venture, or opportunity to entrepreneurship as a collaborative process undertaken by a constellation of stakeholders that come together to co-create novelty in the environment.
Coopetition (collaboration between competitors) among young firms (i.e. start-ups) and larger, more established firms (i.e. corporates) may be beneficial for both partners as each party typically has something to offer that is missing in the other. Start-ups often develop innovative ideas, are flexible and agile, willing to take risks, and aspire to achieve high growth, but they tend to lack the required resources, capabilities, and knowledge due to their newness and smallness. Corporates have resources, routines, and experience that enable them to work efficiently but lack a certain innovation capability. Research has suggested that coopetition represents an opportunity for start-ups facing restrictions in resources, while corporates benefit from start-ups’ innovative ideas. However, it is yet unknown whether start-ups and corporates engage in coopetition with each other and, if so, how and why they do this. This study seeks to fill this void by exploring the motives of coopeting start-ups and corporates, how they manage their coopetitive relationship, and what implications occur including potential benefits and risks. We present a multiple case study based on qualitative data collected through 70 interviews with Austrian-based start-ups and corporates representing 35 coopetitive partnerships. Discussing the findings based on our data, we propose relationships concerning coopetition and its role to enlarge resource- and technology-bases as well as its role in the development of dynamic capabilities.
Presents an integrative theoretical framework to explain and to predict psychological changes achieved by different modes of treatment. This theory states that psychological procedures, whatever their form, alter the level and strength of self-efficacy. It is hypothesized that expectations of personal efficacy determine whether coping behavior will be initiated, how much effort will be expended, and how long it will be sustained in the face of obstacles and aversive experiences. Persistence in activities that are subjectively threatening but in fact relatively safe produces, through experiences of mastery, further enhancement of self-efficacy and corresponding reductions in defensive behavior. In the proposed model, expectations of personal efficacy are derived from 4 principal sources of information: performance accomplishments, vicarious experience, verbal persuasion, and physiological states. Factors influencing the cognitive processing of efficacy information arise from enactive, vicarious, exhortative, and emotive sources. The differential power of diverse therapeutic procedures is analyzed in terms of the postulated cognitive mechanism of operation. Findings are reported from microanalyses of enactive, vicarious, and emotive modes of treatment that support the hypothesized relationship between perceived self-efficacy and behavioral changes. (21/2 p ref)
While high technological distance to project partners outside of the established value chain can positively influence innovation performance, project goals can only be achieved if the social integration of project members is improved in terms of coordination and communication. This paper draws on embeddedness and absorptive capacity literature to explore how social integration mechanisms translate into different learning outcomes in distant collaborations within and across organizational boundaries. Drawing upon expert interviews with project members as our primary source of data, we conducted an in-depth multiple case study analysis of a number of inter-organizational projects. Our findings indicate that the effect of different types of social integration mechanisms on learning outcomes also affect the ability to bridge distances in process and product technology. Moreover, they suggest that it is not just the extent, but also the interplay of social integration mechanisms surrounding internal and external absorptive capacity routines that enable project members to engage in the exploration, transformation and exploitation of distant knowledge. In examining how social integration mechanisms foster learning outcome in distant collaborations, our study contributes to the literature on absorptive capacity.
The current research investigates the effectiveness of impression management strategies available to entrepreneurs to foster social legitimacy with stakeholders following venture failure. We use a conjoint experiment to examine how different attributions of causes of failure influence the general public's legitimacy judgments. The most effective strategy proves to be the entrepreneurs distancing themselves from the failure, in that they attribute the failure to external factors that are not under the entrepreneurs' volitional control, and brought about by circumstances that are unlikely to reoccur. Our analysis also considers how the audience members' dispositional agreeableness and general self-efficacy influence judgment formation.
Purpose
Open innovation in start-ups is a relatively unexplored field and studies focusing on collaborative innovation between start-ups with large companies seen from the former’s point of view are virtually inexistent. The authors address this gap in an exploratory study built on in-depth case studies. The purpose of this paper is to illustrate how start-ups successfully organize and manage open innovation with large companies. The paper highlights common challenges and barriers faced by start-ups in adopting open innovation practices along with its benefits for them.
Design/methodology/approach
This is an exploratory study based on two case studies. The cases are diligently selected to examine two key forms of open innovation – inbound and outbound open innovation – in start-ups.
Findings
The paper provides an insight on how start-ups organize and manage open innovation activities with large companies and how it benefits them in overcoming liability of newness and smallness. The practices significantly differ from those followed in large companies. The paper highlights the advantages and challenges of inbound and outbound open innovation for start-ups. This paper also ascertains the crucial role of start-up manager for successful implementation of open innovation and shows how start-up’s managers with prior experience of working in/with a large company can proficiently deal with the larger counterpart in the innovation network.
Research limitations/implications
This research is based on exploratory case studies so the conclusions drawn from these two cases may be hard to generalize. The findings of the study could be used for further development of the theoretical framework. Future research, including quantitative studies, will be helpful in examining the conclusions and providing more in-depth understanding of open innovation in start-ups.
Practical implications
The paper includes several practical implications for the managers including the role start-up managers play in organizing and managing open innovation activities. Furthermore, this paper suggests how start-ups could orchestrate open innovation ecosystem.
Originality/value
The paper is a step forward in filling the literature gap about open innovation and start-ups with some definite implications for start-up managers. A lot is written about the collaboration between large firms and start-ups from a former’s point of view but the start-up’s perspective has been left unexplored.
Purpose
Startup companies represent a powerful engine of open innovation (OI) processes. The purpose of this paper is to represent a first step in building a map of the state-of-the-art knowledge of the “startups in an OI context” phenomenon. Through the selection and analysis of relevant literature, this study aims at deepening our understanding of the theme and at providing directions for future research.
Design/methodology/approach
By using an explicit method for the review (Pittaway et al. , 2004) the authors selected a set of papers, which cover the knowledge domain object of this study. In total, 41 articles about “startups and OI” have been selected and the full papers have been analysed.
Findings
The analysed literature has been synthesized in seven sub-topics, which have been evaluated as the most relevant in explaining the phenomenon of startups in relation to OI. Implications for research, for managers and for policy makers conclude the paper.
Practical implications
The review produced valuable knowledge for both managers and policy decision-makers. The paper allows a better understanding of the role of startups in OI processes. This improved understanding can help managers of large firms as well as policy makers involved in OI in making their decisions. Besides, implications of OI strategies for startup managers have been singled-out.
Originality/value
Startup companies are intrinsically open organizations, necessarily engaged in innovation processes. Research at the intersection between the themes of OI and startups is gaining momentum. This review of the literature represents the first attempt to organize the scientific knowledge related to the intersection between the startups and OI phenomena systematically.
A company’s ability to recognise early-stage opportunities and to understand the dynamics of emerging markets determines the success or failure of new products. Particularly the emergence of new information technology and social media networks provide ample opportunities to leverage a massive amount of data for managerial purposes. However, managers still meet using social media with skepticism and it is not fully understood how to make use of this information for new product development. We introduce a new method on how to use large-scale internet data as a complement to traditional approaches (patent or publication analysis and surveys) to overcome their shortcomings in terms of speed, dynamic and expense to conduct. More specifically, we propose that social media communication of startups can give valuable indications about future product trends especially in rapidly developing fields. Our approach measures the awareness of startups — and their products — as the increase of the communication about the startup on Twitter. Startup communication is a particularly well-suited indicator because startups develop new-to-the-world products or are in the development process. We illustrate our approach by analysing the communication of 545 startups. On a holistic level we determine industry trends. Fintech is among the topics that increase significantly in relevance. We determine more specific categories within the industries by applying cosine-similarity metrics and hierarchical cluster analysis. Subsequently we determine NPD relevant trends by the increase of retweets within these categories. The growing customer awareness of these clusters shows newly evolving customer needs. Incumbents may use this information to adjust to their current portfolio or to find collaboration partners to best meet upcoming challenges and opportunities. We think that the approach can be transferred to a multitude of fields, helping with the analysis of emerging fields and with early stage opportunity recognition.
This paper examines the performance implications of efforts in absorptive capacity development for new ventures, companies in their eight first years of existence. We distinguish between corporate ventures (CVs) and ventures created by independent entrepreneurs (IVs) and explore the extent to which they vary in: (1) the emphasis on building different absorptive capacity dimensions and (2) their performance gains from absorptive capacity dimensions. Using data from 140 new ventures, our results show that CVs emphasize potential absorptive capacity (combining external knowledge acquisition and assimilation) more than IVs. Conversely, IVs focus more on exploiting external knowledge. We also find that efforts in activating realized absorptive capacity (combining external knowledge transformation and exploitation) have a negative effect on the performance of new ventures that is stronger for CVs than IVs. Yet, this negative effect of realized absorptive capacity on new venture performance is mitigated when combined with efforts in potential absorptive capacity in the case of CVs. The implications of our study for research into the multidimensional nature of absorptive capacity and the dynamic capabilities approach are discussed.
Since the introduction of open innovation (OI), both firms and academics have widely acknowledged the potential of unlocking large firms’ innovation potential through interactions with external parties, such as young ventures. These asymmetric partnerships are prone to several problems related to communication, roles and responsibilities, cultural differences, and operational issues, for which solutions and best practices have been proposed. However, all these solutions focus on the partnership itself; hence, on the “Get & Manage (GM)” stages. Unfortunately, the processes leading to a partnership; i.e., the “Want & Find (WF)” stages before the partnership, have largely been overlooked. The central thesis of this manuscript is that solutions that are implemented in the early “WF” stages have a positive impact on the outcomes of an asymmetric large firm — young venture partnership. We will show that attention to set-up and communication efforts in these early stages is needed, and discuss how our detailed explanations of such fruitful solutions contribute to the extant literature on asymmetric OI collaborations.
By opening a company’s innovation process, and allowing purposeful collaboration with external partners, Open Innovation (OI) offers several advantages, such as the use of external expertise, shorter time-to-market and reduced failure rates. However, the success of OI projects is directly linked to the selection of suitable partners, who operationally or strategically contribute to reach the goal of the OI project. Despite this relevance of OI-partner selection, methodical support has hitherto been limited — it is either too abstract to be helpful in practice, or too focused on single aspects. This paper presents a methodical approach to close this gap by combining identification and selection approaches from different fields, such as stakeholder analysis, lead-user identification and systems engineering. The methodology was evaluated in an industrial OI-project with an SME from plant manufacturing.
Mutual growth in the relation between large firms and small-medium enterprises (SMEs) has been an important issue that can be overcome with the concept of open innovation, which is the most continuous research topic in technology innovation. However, most previous studies on open innovation barely analyse both firm types, focusing only on one party. The aim of this study is to develop open innovation models for complementary cooperation between both types of firms in manufacturing industry. Based on a basic understanding of open innovation in each firm type, this study suggests open innovation typology with two main concepts of open innovation: knowledge interaction and technology innovation. Finally, open innovation models are developed, considering the cooperative participants, their relationships in open innovation processes, and open innovation activities illustrated through case studies. The results contribute to manage strategic open innovation between large firms and SMEs through various approaches of cooperation.
Complex systems seem to be all around us and the world, economies and businesses apparently become more complex every day. This is especially true for phenomena in entrepreneurship, innovation and technology research. This introductory chapter elaborates our understanding of complexity and explores the interdependencies in entrepreneurship, innovation and technology research with regard to complexity. When studying complexity it is essential to apply research methods that consider the non-linearity, dynamics and interrelatedness inherent in complexity. However, appropriate methods are frequently neglected or not yet established among the plethora of available research methods. This volume adds to the visibility of the application of emergent and neglected methods in the context of complexity in entrepreneurship, innovation and technology research. Finally, the chapter provides an overview of the contributions in this book.
Much of the prior research on interorganizational learning has focused on the role of absorptive capacity, a firm's ability to value, assimilate, and utilize new external knowledge. However, this definition of the construct suggests that a firm has an equal capacity to learn from all other organizations. We reconceptualize the Jinn-level construct absorptive capacity as a learning dyad-level construct, relative absorptive capacity. One firm's ability to learn from another firm is argued to depend on the similarity of both firms' (1) knowledge bases, (2) organizational structures and compensation policies, and (3) dominant logics. We then test the model using a sample of pharmaceutical-biotechnology RED alliances. As predicted, the similarity of the partners' basic knowledge, lower management formalization, research centralization, compensation practices, and research communities were positively related to interorganizational learning. The relative absorptive capacity measures are also shown to have greater explanatory power than the established measure of absorptive capacity, R&D spending. (C) 1998 John Wiley & Sons, Ltd.
Little is known about the conditions strengthening or weakening the impact of a firm’s collaboration with research organizations on innovation performance. Thus, this study uses a sample of 542 manufacturing firms in Korea to examine how innovation orientation and firm size and age as internal characteristics influence the relationship between collaboration with research organizations and innovation performance. The results show that collaboration with research organizations has a positive impact on innovation performance. More importantly, this effect is stronger (weaker) for firms with a strong orientation toward exploration (exploitation). In addition, older or larger firms obtain greater benefits from collaboration with research organizations. This study contributes toward clarifying a firm’s collaboration with research organizations.
Entrepreneurial self-efficacy (ESE) is an important construct in entrepreneurship research. It captures entrepreneurs’ specific self-efficacy in accomplishing entrepreneurial tasks. Because various empirical results exist in past studies of the ESE-firm performance relationship, we employed meta-analysis to review and synthesize the current literature concerning this relationship and to address moderators that influence it. We meta-analyzed 27 samples from 26 studies with a total sample size of 5,065 firms and found that the corrected ESE-firm performance correlation is 0.309. We found that the firm performance measurement is a significant moderator and we suggest scholars to further identify moderators.
Minimisation of time-to-market strategies can provide companies with a competitive advantage in dynamic and competitive environments. Using parallel innovation processes has been emphasised as one strategy to speed up innovation processes and consequently minimise the time-to-market of innovations. Much innovation today takes place in open structures in which networks play an important role. However, little is known about how innovation networks can facilitate parallel innovation processes. This paper discusses how innovation network structures develop and support exploration and exploitation in parallel innovation processes and in this way sustain speedy innovation processes. A case study of an innovation network is carried out by analysing communication structures and the information contents of emails related to a particular innovation process. The analysis shows how certain characteristics of the network facilitate the parallel innovation process but also how such processes place new requirements on such networks and their management.
Research summary : Strategic alliances have been recognized as a means for firms to learn their partners' proprietary knowledge; such alliances are also valuable opportunities for partner firms to learn tacit organizational routines from their counterparts. We consider how relatively novice technology firms can learn intraorganizational collaborative routines from more experienced alliance partners and then deploy them independently for their own innovative pursuits. We examine the alliance relationships between Eli Lilly & Co. (Lilly), a recognized expert in collaborative innovation, and 55 small biotech partner firms. Using three levels of analysis (firm, patent, and inventor dyad), we find that greater social interaction between the partner firm and Lilly subsequently increases internal collaboration among the partner firm's inventors .
Managerial summary : Can collaborating externally advance internal collaboration? Yes. Our research found that collaboration among scientists at small, early‐stage biotechnology firms significantly increased after these firms formed highly interactive R&D alliances with a large pharmaceutical company known for its expertise in such collaboration. It is well known that alliances help new firms learn specific new technologies and commercialize innovations. Our study broadens the scope of potential benefits of alliances. New firms can also learn collaboration techniques, deploying them internally to enhance their own abilities in collaborative innovation. Managers should take this additional benefit into consideration in developing their alliance strategies. Pursuing alliance partners with expertise in collaboration and keeping a high level of mutual interactions with partner firm personnel should be important considerations to extract this value . Copyright © 2015 John Wiley & Sons, Ltd.
Previous research on entrepreneurship as well as goal, social-cognitive, and leadership theories has guided hypotheses regarding the relationship between entrepreneurial traits and skill (passion, tenacity, and new resource skill) and situationally specific motivation (communicated vision, self-efficacy, and goals) to subsequent venture growth. Data from 229 entrepreneur-chief executive officers and 106 associates in a single industry were obtained in a 6-year longitudinal study. Structural equation modeling revealed a web of relationships that impact venture growth. Goals, self-efficacy, and communicated vision had direct effects on venture growth, and these factors mediated the effects of passion, tenacity, and new resource skill on subsequent growth. Furthermore, communicated vision and self-efficacy were related to goals, and tenacity was related to new resource skill.
Arguably, the most critical time frame for organizational participants to develop trust is at the beginning of their relationship. Using primarily a cognitive approach, we address factors and processes that enable two organizational parties to form relatively high trust initially. We propose a model of specific relationships among several trust-related constructs and two cognitive processes. The model helps explain the paradoxical finding of high initial trust levels in new organizational relationships.
This tutorial aims to introduce Hierarchical Linear Modeling (HLM). A simple explanation of HLM is provided that describes when to use this statistical technique and identifies key factors to consider before condu
cting this analysis. The first section of the tutorial defines HLM, clarifies its purpose, and states its advantages. The second section explains the mathematical theory, equations, and conditions underlying HLM. HLM hypothesis testing is performed in the third section. Finally, the fourth section provides a practical example of running HLM, with which readers can follow along. Throughout this tutorial, emphasis is placed on providing a straightforward overview of the basic principles of HLM.
We draw from cognitive science literature on rule-based thinking to develop and empirically test a theoretical framework of entrepreneurial opportunity evaluation. We argue that entrepreneurs make use of socially constructed rules to discern the attractiveness of an opportunity, for them, specifically. Using conjoint analysis data of 498 decisions made by 62 entrepreneurs, we find that entrepreneurs' use of rules regarding opportunity novelty, resource efficiency, and worst-case scenario significantly influences entrepreneurs' evaluations of opportunities and that individual differences in opportunity market and technology knowledge augment the effect of the rules on opportunity attractiveness. Additionally, we document that the worst-case scenario diminishes the positive effect of other rule criteria (e.g. novelty, resource efficiency) on opportunity evaluation and that market and technology knowledge further influence the negative effects of the worst-case scenario.
What makes some entrepreneurs persist in their venture efforts while others quit? Self-efficacy has robustly been found to drive persistence, yet recent work suggests that affect, in particular entrepreneurial passion, may also enhance persistence. We empirically examine the possibility that the long-standing relationship between self-efficacy and persistence might be mediated by entrepreneurial passion. Using data from 129 entrepreneurs, we find that the self-efficacy to persistence relationship is mediated by passion for inventing and for founding but not by passion for developing firms. The passion of entrepreneurs appears to help explain the relationship between entrepreneurial self-efficacy and sustained entrepreneurial action.
Commitment is an essential part of successful long-term relationships. Whereas commitments by both parties in an exchange can provide the foundation for development of relational social norms, disproportionate commitments can lead to opportunism by the less committed partner. The authors study the effect of the credibility and proportionality of commitment inputs in an exchange upon the development of relational social norms, opportunism, and long-term commitment intentions. They also investigate longitudinal effects of the credibility of long-term commitment intentions, relational social norms, and opportunism in one time period on commitment inputs and long-term commitment intentions in later periods. Data gathered from a behavioral simulation suggest that (1) the credibility of commitment inputs in exchange is positively related to the development of relational social norms, (2) and is positively related to long-term commitment intentions in the same time period, (3) relational social norms may be undermined by opportunistic conduct, and (4) the presence of relational social norms in one time period is positively related to commitment inputs and long-term commitment intentions in later periods.
Recruiting high potentials is the foundation for creating knowledge, innovation and competitive advantages. Unfortunately, many companies face the problem of having a hard time recruiting high potentials in a tightening labor market. To secure future innovation, growth and competitiveness companies must be attractive for potential employees. Within this respect, past research suggests that innovative companies might be at an advantage as they appear more attractive to employees in general and to those with an innovative personality in specific. Hence, HR communication might use an organization’s innovativeness within employer branding to attract high potentials. However, current literature falls short to provide empirical evidence on whether and how the communication of organizational innovativeness affects employer attractiveness and especially attracts innovative employees. The results of our scenario-based experiment (n=322) show that organizations with an innovative product portfolio and a strong innovation culture appear more attractive to potential employees. These effects turned out to be even stronger for employees which are highly innovative as they care a great deal about the organizational innovativeness of the company they work for. Thus, our findings suggest that communicating organizational innovativeness within employer branding is an effective measure not only to improve employer perceptions in general, but also to attract innovative employees.
Alliances between entrepreneurial and large firms can create economic value. In many circumstances, however, much of that value is appropriated by the larger partner. In these situations, the performance and even long-term survival of entrepreneurial firms can be put at risk. This article describes the conditions under which the value created by alliances will be appropriated by the large firms, and describes actions that entrepreneurial firms can take to appropriate more of the value created by these alliances.
Alliances present a paradox for firms. On the one hand, firms engage in a large number of alliances to secure and extend their competitive advantage and growth; on the other hand, their alliances exhibit surprisingly low success rates. In this paper, we discuss how firms can address these failures by identifying some of the primary drivers of alliance success. First, we discuss how firms can achieve success with any individual alliance by considering critical factors at each phase of the alliance life cycle. Second, we show how firms can increase their overall alliance success by developing and institutionalizing firm-level capabilities to manage alliances. Third, we highlight emerging issues in the alliance context, including the need to recognize a new class of alliances between firms and not-for-profit organizations or individuals, the benefits of taking a "portfolio approach" to alliance strategy and management, and the opportunity to transfer one's alliance capabilities to the effective management of other interfirm relationships, including acquisitions.
Some managers and entrepreneurs decide to act in ways that result in harm to the natural environment, despite the fact that such actions violate their own values. Building on moral self-regulation theory (Bandura, 1991), we propose that entrepreneurs' assessments of the attractiveness of opportunities that harm the natural environment depend on the simultaneous impact of values and personal agency. By cognitively disengaging their pro-environmental values, decision makers (i.e., entrepreneurs) can (under certain circumstances) perceive opportunities that harm the environment as highly attractive and thus suitable for exploitation. The results of a judgment task that generated 1,264 opportunity assessments nested within 83 business founders offered support for this general prediction and indicated that the extent of founders' disengagement of their pro-environmental values was stronger when they had high, rather than low, entrepreneurial self-efficacy, and stronger when industry munificence was perceived as low rather than high. We discuss our new measure of moral disengagement in a decision-making context and the implications of the study's findings for extant literatures on moral disengagement and sustainable entrepreneurship.
Judgment and decision-making research has a long tradition in management and represents a substantial stream of research in entrepreneurship. Despite numerous reviews of this topic in the organizational behavior, psychology, and marketing fields, this is the first review in the field of entrepreneurship. This absence of a review of entrepreneurial decision making is surprising given the extreme decision-making context faced by many entrepreneurssuch as high uncertainty, time pressure, emotionally charged, and consequential extremesand the large number of studies in the literature (e.g., 602 articles in our initial screen and 156 articles in a refined search). In this review, we (1) inductively categorize the articles into decision-making topics arranged along the primary activities associated with entrepreneurshipopportunity assessment decisions, entrepreneurial entry decisions, decisions about exploiting opportunities, entrepreneurial exit decisions, heuristics and biases in the decision-making context, characteristics of the entrepreneurial decision maker, and environment as decision context; (2) analyze each context using a general decision-making framework; (3) review and integrate studies within and across decision-making activities; and (4) offer a comprehensive agenda for future research. We believe (hope) that this proposed review, integration, and research agenda will make a valuable contribution to management scholars interested in decision making and/or entrepreneurship.
Much organizational theory and research is characterized by an uncritical acceptance of the efficacy of open communication. In this critique, the lack of support for this view of openness is discussed. A contingency perspective that more accurately reflects the political nature of organizational life is proposed.
When it comes to agility, startups have an edge over large corporations – whereas large corporations sit on resources which startups can only dream of. The combination of entrepreneurial activity with corporate ability seems like a perfect match, but can be elusive to achieve. This article examines how large corporations from the tech industry have begun to tap into entrepreneurial innovation from startups. Prominent examples are used to inductively derive a set of four models commonly used to engage with startups and to describe their characteristics, challenges, and rationales. While corporate equity is the key mechanism behind more established models, newer approaches replace equity with shared technology to connect both worlds with fewer organizational costs and greater speed and agility. We construct a typology of corporate mechanisms to engage with startups that balance speed and agility against control and strategic direction, to map the ways companies can bridge the gap between themselves and the startup world.
Coopetition describes an interorganizational relationship that combines “cooperation” and “competition”. During recent years, coopetition has become an important domain for industrial practice which has led to an increasing rate of publications in academic journals. Despite the growing interest, coopetition research is still fragmented, reflected by divergent uses of the coopetition concept, a lack of generalizability, and a limited contextual focus. This article presents a systematic literature review and a synthesis of high-quality contributions in this field with a focus on a general overview of research on coopetition, coopetition as a strategy, and the management of coopetition. By critically evaluating the current body of literature and definitions and connecting it to other promising domains, we develop a new definition of coopetition and highlight several promising areas for future research, such as the elaboration of theoretical and empirical approaches, the consideration of contextual contingencies, and implications for innovation that involves interorganizational knowledge flow.
I explore the role of trust in acquisitions of entrepreneurial firms, taking a dyadic view that gives equal attention to buyers and sellers. The two parties have asymmetric views regarding whether their counterparts are trustworthy. I outline how these asymmetries emerge, persist, and influence behavior, including tendencies to behave deceptively and to guard against deception. I also find that buyers' and sellers' beliefs concerning whether their counterparts are trustworthy and trusting are often erroneous. I explore the implications of these findings for developing a theory of trust asymmetries and argue that selecting buyers on the basis of trust increases rather than diminishes entrepreneurs' vulnerability.
This paper describes how asymmetric trust develops and changes in time in cooperative relationships between large enterprises and SMEs in China. A model is developed on the basis of in-depth case studies of cooperation between six SMEs and five large firms in China. The data sources reveal how Chinese SMEs use trusting behavior to overcome trust asymmetry in negotiations in order to exploit business opportunities. This study provides insights into the micro-processes of building trust at three consecutive stages of the cooperation process. For each stage, the paper describes the perception of trust asymmetry of cooperating large firms and SMEs, the trust building behavior of SMEs, and the response to that behavior from large firms. The paper analyzes how large firms and SMEs deal with asymmetric trust to develop long-lasting cooperative relationships.
We investigate how an entrepreneur's behaviors during an initial interaction with a business angel can build, damage, or violate trust, and how the investor's level of trust (prompted by the entrepreneur's behavior) can affect his/her decision to make an investment offer. Our empirical analysis shows that entrepreneurs who receive offers from business angels exhibit a larger number of trust-building behaviors during the initial interaction and a smaller number of unintentional trust-damaging behaviors than those who do not receive an offer, and display few deliberate trust-violating behaviors. We further observe that the investor's deployment of a control mechanism is a prerequisite for receiving an investment offer for all entrepreneurs who damage or violate trust.
This article acknowledges the importance of achieving confidence in partner co-operation within the venture capitalist (VC)-entrepreneur relationship. The entrepreneur and the VC need to balance the level of control and trust building mechanisms so that the optimal level of confidence in partner co-operation can be achieved. The study proposes that the entrepreneur can build trust with the VC (and vice versa) by signaling commitment and consistency, being fair and just, obtaining a good fit with one's partner, and with frequent and open communication. Open and frequent communication acts as a catalyst for the other trust building mechanisms. This theoretical framework acts as a counter weight to most previous studies on the VC-entrepreneur relationship that have emphasized control mechanisms in order to build partner co-operation without sufficient consideration of how this might effect trust and how trust and control jointly effect confidence in partner cooperation.
In exploring the downsides of partnering with large firms, extant literature has typically focused on the external perspective and the alliance characteristics of small firms. We argue that jointly considering the internal dimension of firm capability together with the external perspective promises to yield a fuller understanding of the nature and consequences of a small firm's relationships with large partners. We analyze a longitudinal dataset on the alliance activities and growth of small, independent studios in the U.S. motion picture industry during 1990–2010. Our findings indicate that small firms that engage in higher levels of alliance activity with large partners, i.e., the major studios, realize lower growth benefits from their internal capability. Copyright © 2013 John Wiley & Sons, Ltd.
Drawing on the multi-principal–agent perspective, this research models the influence of venture capitalists' reputation for ethical behavior on entrepreneurs' willingness to partner decisions. We test our model using a two-study design. Study one, a conjoint experiment, revealed that explicit knowledge of past unethical behavior negatively affects entrepreneurs' willingness to partner. Interaction effects revealed that factors previously shown to influence the entrepreneurs' evaluations—investor value-add and investment track record—become largely contingent upon and often subjugated by investors' ethical reputation. Study two, a traditional between-subjects scenario experiment, revealed that when entrepreneurs develop their own perceptions about the ethicality of an investor's prior behaviors, the ethical dimension remains highly influential. Further, we find that as the consequences of rejecting funding become more severe (e.g., possible bankruptcy), entrepreneurs become increasingly willing to partner with unethical investors. We also find that high fear of failure entrepreneurs are less willing to partner with unethical investors than their low fear of failure counterparts.
Jeffrey L. Cummings, Associate Professor, Sellinger School of Business, Loyola University Maryland, Baltimore, MD, USA. His research and consulting focuses on strategic alliances, strategy formulation approaches and knowledge-transfer mechanisms. His work has been applied at IBM, the World Bank and the U.S. Navy, among other organizations, and has appeared in Long Range Planning, California Management Review, Journal of Engineering and Technology Management and other outlets. E-mail: jcummings@loyola.edu.
This paper focuses on the tension that firms face between the need for resources from partners and the potentially damaging misappropriation of their own resources by corporate “sharks.” Taking an entrepreneurial lens, we study this tension at tie formation in corporate investment relationships in five U.S. technology-based industries over a 25-year period. Central to our study is the “sharks” dilemma: when do entrepreneurs choose partners with high potential for misappropriation over less risky partners? Our findings show that entrepreneurs take the risk when they need resources that established firms uniquely provide (i.e., financial and manufacturing) and when they have effective defense mechanisms to protect their own resources (i.e., secrecy and timing). Overall, the findings show that tie formation is a negotiation that depends on resource needs, defense mechanisms, and alternative partners. These findings contribute to the recent renaissance of resource dependence theory and to the discussion on the surprising power of entrepreneurial firms in resource mobilization.
A critical challenge facing today's organizational leaders is gaining their followers' trust and having them view leaders as effective in addressing turmoil and change. Using a downsizing scenario as the context, this field experiment examined how a leader's positivity and transparency impacted followers' perceived trust, defined in terms of willingness to be vulnerable, and effectiveness of their leader. To test the hypotheses, 304 participants were randomly assigned to one of the four conditions of high (low) leader positivity×high (low) leader transparency. Results of our mixed methods study indicated both the leader's level of positivity and transparency impacted followers' perceived trust and evaluations of leader effectiveness. Besides limitations and suggestions for future research, we conclude with the practical implications that positive, transparent leaders may have on building trust and perceived effectiveness among their followers.
The resource-based view of the firm has not been systematically applied to strategic alliances. By examining the role of firm resources in strategic alliances, we attempt, in this paper, to put forward a general resource-based theory of strategic alliances, synthesizing the various findings in the literature on alliances from a resource-based view. The proposed theory covers four major aspects of strategic alliances: rationale, formation, structural preferences, and performance. The resource-based view suggests that the rationale for alliances is the value-creation potential of firm resources that are pooled together. We note that certain resource characteristics, such as imperfect mobility, imitability, and substitutability, promise accentuated value-creation, and thus facilitate alliance formation. We discuss how the resource profiles of partner firms would determine their structural preferences in terms of four major categories of alliances: equity joint ventures, minority equity alliances, bilateral contract-based alliances, and unilateral contract-based alliances. As part of the theory, we propose a typology of inter-partner resource alignment based on the two dimensions of resource similarity and resource utilization, yielding four types of alignment: supplementary, surplus, complementary, and wasteful. We also discuss how partner resource alignment directly affects collective strengths and inter-firm conflicts in alliances, which in turn contribute to alliance performance. Finally, we develop a number of propositions to facilitate empirical testing of the theoretical framework, suggest ways to carry out this testing, indicate future research directions, and list some of the more significant managerial implications of the framework.
Optimistic overconfidence (OO), that is, being certain of success only to end up disappointed, represents a potentially catastrophic error. However, few studies have identified which entrepreneurial actions are associated with it. To explore this issue, we examined 55 small companies and found that OO of product success was positively related to introducing products that required more resources and were more pioneering. Furthermore, satisfaction with company performance had a curvilinear (U-shaped) relationship with overconfidence. Both high and low levels of satisfaction were associated with greater OO in product introductions. In addition, the bias was positively correlated with entering hostile environments; that is, environments that are characterized by intense competition that threatens a firm and its introductions. Contrary to expectations, however, OO was negatively associated with environmental dynamism; defined as environments that embody frequent and large changes. The research also compared general knowledge overconfidence to OO, concluding that each represents a distinct bias with distinct effects.
Policy-capturing has been employed extensively in the past to examine how organizational decision makers use the information available to them when making evaluative judgments. The purpose of this article is to provide researchers with guidelines for enhancing the reliability and validity of their studies. More specifically, the authors identify issues researchers may want to consider when designing such studies and offer suggestions for effectively addressing them. They draw on a review of 37 articles from 5 major journals to identify “best practice” and discuss the advantages and disadvantages of alternative approaches to resolving the various issues. The key issues are (a) the realism of the approach and its effect on both internal and external validity, (b) the limits of the full factorial design, (c) the need for orthogonal cues, (d) sample size and statistical power, and (e) the assessment of reliability. The analysis also includes comparisons with conjoint analysis, a similar methodology used in the marketing research literature.