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Growth Configuration of Invention-based Entrepreneurial Start-up
Abstract
This research studies an important question of configurational change of entrepreneurial growth. More precisely, it explores the question of post-start-up configurations in invention-based ventures and aims to improve our understanding of how and why aspects of start-ups transition from one stage to another. A case study method enables us to see what happens when a start-up tries to move from product invention to its commercialization stage, why specific actions occur, and how they impact the venture. Our findings show the importance of enabling the organizational emergence process through two complementary mechanisms, changes in entrepreneurs’ sense- and decision-making logic and using temporal or similar pressure as a motivational tool.
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An open innovation approach can contribute to management opportunities. This article analyses how Science and Technology-Based Start-ups (STBSUs) achieve entrepreneurial opportunities involving stakeholders. The basis of the analysis comes from a qualitative and exploratory study of 24 STBSUs from two entrepreneurial ecosystems in France and Spain. The empirical data shows the active listening and generation of a co-creation environment where stakeholders emerge as key tools for innovativeness, competitiveness and survival in STBSUs. The findings suggest the recognition of uncertainty is a driving force for implementing open innovation. The findings contribute empirical insights into how STBSUs take advantage of stakeholder contribution in product development and suggest practical implications and future directions in the field of entrepreneurship and open innovation.
Start-ups are important part of the world economy. Despite the astonishing rate of the start-up creation, their viability and success remain to be relatively low. Reasons behind the failure are diverse and complex. The leadership has been recognized as an important factor influencing the performance of start-ups. The paper argues that entrepreneurial leadership theory can effectively capture the complex processes in start-ups. Τhe paper explores a broader understanding of the entrepreneurial leadership by examining the context around which the entrepreneurial leadership occurs. Additionally, it includes leader and follower perspective in constructing the phenomenon. Lastly, the research reveals that it is important to view the Entrepreneurial leadership as a process developing along the stages of the start-up life cycle. The findings suggest that leadership is changing across the lifespan of the start-ups and distinct conditions and features are characteristic for the entrepreneurial leadership within each respective stage.
Scholars have long studied small and medium-sized enterprises (SMEs) and recognize the need for SMEs to postulate strategies to compete and succeed in the global market. In the current ultra-competitive business environment, SMEs face several internal and external challenges. In this introduction to the Special Issue (SI), we review the theoretical models and frameworks in this stream of research and outline some research questions that could be potentially used in future research in this era of globalization. The six papers selected for inclusion in this SI analyze this field from different angles, offering interesting overviews on the present situation of research in the field, as well as relevant new findings and perspectives for future research.
Many new ventures have to pivot – radically transform what they are
about – because their original approach has failed. However, pivoting
risks disrupting relationships with key stakeholders, such as user
communities, who identify with ventures. Stakeholders may respond by withdrawing support and starving ventures of the resources needed to thrive. This can pose an existential threat to ventures, yet it is unclear how they can manage this problem. To explore this important
phenomenon, we conduct a qualitative process study of The Impossible Project, a photography venture which encountered significant resistance from its user community as it pivoted from an analog focus to an analog-digital positioning. We develop a process model of stakeholder identification management that reveals how ventures can use identification reset work to defuse tensions with stakeholders whose identification with the venture is threatened. A core finding is that ventures can remove the affective hostility of stakeholders and rebuild connections with many of them by exposing their struggles, thus creating a bond focused around these shared experiences. We offer contributions to scholarship on identification management, user community identification, and pivoting.
This study examines family firms’ propensity to protect their intellectual property through patents. Building on the mixed gamble logic of the behavioral agency model, we theorize that family ownership has a U-shaped relationship with firm propensity to patent. Specifically, we argue that family firms’ desire to prevent losses of current socioemotional wealth inhibits their propensity to patent until a threshold level of family ownership, beyond which the family’s socioemotional wealth is secured and a greater focus on prospective financial gains attainable through patents is possible. We also suggest that environmental munificence moderates this nonlinear relationship such that a low-munificent environment accentuates the potentially detrimental (beneficial) effects of low-to-medium (medium-to-high) levels of family ownership on patents. We test our hypotheses on a sample of 4,198 small- and medium-sized family firms.
According to recent studies applying Resource-Based Theory [RBT] to entrepreneurial firms (e.g. Chandler & Hanks, 1994; Brush & Greene, 1996), In the early stages of new venture development It is the identification and acquisition of resources-rather than deployment or allocation activities-that Is crucial for the firm's long-term success (Stevenson & Gumpert, 1985). This study explores that relationship longitudinally, tracking salient resources in three rapidly growing new ventures, and analyzing how these resources change over time. Our findings Identify the most common types of salient resources, the primary types of changes In resource and resource bundles, and a pattern linking the type of change with short-term performance results In each firm.
Since its inception, research in international entrepreneurship has focused mainly on how and why international new ventures internationalize early on. To date, there has been hardly any research regarding the issue of continuing corporate growth in such ventures beyond their start-up phase or initial internationalization. Theoretically, we ground our study within the dynamic capabilities view of the firm and through an inductive theory building research explore how and whether international new ventures made-it beyond the start-up phase, aiming to generate early theoretical constructs to guide international entrepreneurship research in this substantive area. Grounded in data, we develop the following constructs related to made-it points: strategic experimentation, tensions in organizational gestalt, and legitimacy lies. To get to a made-it point, entrepreneurs experiment with their venture at several levels: organizational, business model, and operational. These experimentation efforts are fueled by tensions that exist in the organizational gestalt, such as ownership structure, business proposition to the market, and product development process. To legitimate themselves and their venture in the stakeholders’ eyes, entrepreneurs may tell legitimacy lies. We maintain that international new ventures do not reach a made-it point if they only manage to develop substantive capabilities to produce desired outputs at various levels within the venture but fail to create dynamic capabilities to change and reconfigure existing substantive capabilities.
While Churchill [1983] & Eggers [1994] put together a model for entrepreneurial growth, which included aspects of a decision tree at each stage of growth, this model has not been fully tested. Most studies based on the Churchill-Eggers research have utilized "large n" survey research and have looked at growth vs. failure. This study uses case studies of entrepreneurial firms over time and at different stages of entrepreneurial growth to test the model looking at multiple paths that entrepreneurial organizations follow. These case studies present "small n," longitudinal analysis of several entrepreneurial ventures at all stages of their existence.
The 1993 Special Research Forum on Configurations is dedicated to the proposition that configurational theory and research can significantly advance understanding of people, groups, and organizations. In this introductory essay, we define configurational approaches to organizational analysis, trace the history of configurational thinking, distinguish the contingency approach from the configurational approach, and highlight key contributions of the five empirical articles that make up the special research forum. Most of these articles report research conducted at the organizational level of analysis, but we argue that the configurational perspective has unrealized potential at other levels as well and suggest some configurational approaches to revitalizing theory and research at the individual and group levels.
Thematic analysis is a poorly demarcated, rarely acknowledged, yet widely used qualitative analytic method within psychology. In this paper, we argue that it offers an accessible and theoretically flexible approach to analysing qualitative data. We outline what thematic analysis is, locating it in relation to other qualitative analytic methods that search for themes or patterns, and in relation to different epistemological and ontological positions. We then provide clear guidelines to those wanting to start thematic analysis, or conduct it in a more deliberate and rigorous way, and consider potential pitfalls in conducting thematic analysis. Finally, we outline the disadvantages and advantages of thematic analysis. We conclude by advocating thematic analysis as a useful and flexible method for qualitative research in and beyond psychology.
Develops a model relevant to small and growing businesses that delineates five stages of firm development. These stages are: (1) existence--concerned with garnering customers and delivering the product or service contracted for; (2) survival--firms have demonstrated that they are workable business entities, but the key question becomes whether there is enough money for the firm to break even and stay in business; (3) success--here the decision facing owners is whether to exploit the company's accomplishments and expand or keep the company stable and profitable, providing a base for alternative owner activities; (4) take-off--concerned with how to make the firm grow rapidly and how to finance this growth; and (5) resource maturity--companies have the advantages of size, financial resources, and managerial talent and will be a formidable force in the market if they retain their entrepreneurial spirit. Each stage is characterized by an index of size, diversity, and complexity and described by five management factors: managerial style, organizational structure, extent of formal systems, major strategic goals, and the owner's involvement in the business. In addition, this research identifies eight factors prominent in determining firm success or failure. They include: financial, personnel, systems and business resources and the owner's goals for him/herself, operational abilities in doing important jobs, managerial ability and willingness to delegate, and strategic ability for looking to the future. Knowing which development stage the firm is in will help managers, consultants, and investors make more informed choices and prepare the company for later challenges. (SFL)
Modeling the dynamics of nascent entrepreneurship provides insight into how organizations are created. In order to study this complex phenomenon we develop a longitudinal case study and analyze it with respect to three modes of organizing: vision, strategic organizing, and tactical organizing. Multiple sources of data are used to identify changes within and across these three modes. Using longitudinal content analysis and other complexity science methods, we found a nearly simultaneous shift in all three modes, indicating a punctuation event. We define this punctuation as an “emergence event,” and provide a process model of organizational emergence showing that a shift in tactical organizing generated a shift in strategic organizing, which resulted in a shift in the vision (identity) of the firm. We conclude with some theoretical implications of our analysis.
Research summary
This article examines previously neglected tensions between causation and effectuation in the process of new venture creation. We studied 41 episodes of new venture creation by entrepreneurs in Finland and Denmark, who we followed applying the diary method. We reveal tense relations between the respective causation and effectuation principles at multiple levels, and identify the corresponding mechanisms for their resolution, which, in turn, lead to the synergy. This study enriches the effectuation research by offering a dynamic perspective on causation-effectuation interplay and categorizing three modes of their interaction, that is, separation, hybrid synergy, and tensions.
Managerial summary
Venture creation is a complex process that involves different decision-making logics. While combining the goal-driven logic of causation and non-goal driven logic of effectuation is essential for the success of a start-up, the road to their synergy can be paved with different tensions. Our study of 41 episodes of new venture creation by entrepreneurs in Finland and Denmark shows that these tensions can occur at the individual, organizational and inter-organizational levels. We also show four different mechanisms of how entrepreneurs can overcome these tensions within their ventures and in relations with other stakeholders.
This editorial offers ways to develop qualitative studies in entrepreneurship research. We indicate why and how qualitative methods clearly and distinctively contribute to the understanding of current entrepreneurship challenges using examples from the articles in this Special Issue and from other recent qualitative research. We provide a synthesis of the five articles that comprise the special issue on qualitative research in entrepreneurship and conclude by offering practical advice for those seeking to publish insightful and creative qualitative research in entrepreneurship journals. We hope this Special Issue encourages entrepreneurship scholars to pursue opportunities that might enhance qualitative entrepreneurship research.
It is well known that 90 percent of all new ventures fail partly because they often lack vital resources, must compete against established companies but have little or no business acumen with which to compete and drive spectacular growth and profitability. Thus, just one-out-of-ten start-ups grow into successful, sustained enterprises. Although the academic literature attributes such sustained growth to innovative approaches for inducing transformative change, very few studies have attempted to address the five main components of strategic innovation management (strategic planning, business model innovation, marketing management, product innovation, and financial planning) within a single research framework. Building on insights from a systematic review of strategy and innovation management literature, this paper seeks to fill this important gap in the literature by introducing a decision-analytic framework for road mapping a go-to-market innovation strategy, comprising of well tightly integrated elements of strategy, business model innovation, marketing management, product innovation, and financial planning that mutually support each other as a system. The framework and its corresponding road mapping process create powerful alignment mechanisms to systematically map and analyse the underlying processes driving business performance and develop game-changing business plans to reshape industries, transform value chains, and drive spectacular growth and profitability.
Ethical drugs can take hundreds of millions of dollars and over 10 years to bring to market. Start-up biotechnology companies are recognized for their unique exploration and then exploitation in the development of future drugs. However, these potential new drugs are highly unpredictable and require a broad scope of inquiry. Significant and complex knowledge along with openness to learning is required because of the unusually high risk and uncertainty of biotechnology. After initial start-up, biotechnology companies often form a strategic partnership with an established pharmaceutical company to get additional funding and incorporate needed later stage development knowledge. To conclude an alliance, a company needs to develop learning processes that transition the organization to the next stage of growth. These processes advance the technology sufficiently to conclude a strategic deal. Effective learning enhances exploitation of knowledge needed to generate unique insights and understandings related to the development of a new drug. This paper examines seven biotechnology companies and identifies key processes that should optimize “effective learning” to enhance the probability of creating the necessary new knowledge needed for a start-up to achieve an alliance stage of growth. Despite a majority of the companies successfully reaching the scaling-up stage of growth, some ultimately fail due to a lack of one or more the explored factors.
A survey of new manufacturing firms yielded significant support for hypothesized relationships between psychological differences, background characteristics, and scanning behavior of the owner/founder and firm performance. In addition, a proposed contingency model of new manufacturing firm performance was tested using moderated regression analysis. This model suggests that a linear combination of psychological, background, and scanning characteristics of the owner/founder acting on firm performance may be moderated by industry dynamics.
We posit that family firms often face a dilemma in their strategic decision making: whether to maintain current socioemotional wealth or pursue prospective financial wealth. Applying such a mixed gamble perspective to acquisitions, family owners assess potential acquisitions with regard to their impact on both wealth dimensions. In line with this reasoning, our results show that family control implies a general reluctance to acquire and, when an acquisition happens, a preference for related targets. Because financial and socioemotional viewpoints lead to largely incompatible predictions about the occurrence and relatedness of acquisitions, family firm owners use their firm’s vulnerability as a signal. Increased vulnerability leads to a heightened propensity to prioritize financial over socioemotional wealth problem framing, which is reflected in the acquisition of unrelated targets. Empirical results are supportive of these predictions.
The formation of organizations that are international from inception-international new ventures-is an increasingly important phenomenon that is incongruent with traditionally expected characteristics of multinational enterprises. A framework is presented that explains the phenomenon by integrating international business, entrepreneurship, and strategic management theory. That framework describes four necessary and sufficient elements for the existence of international new ventures: (1) organizational formation through internalization of some transactions, (2) strong reliance on alternative governance structures to access resources, (3) establishment of foreign location advantages, and (4) control over unique resources.
The major paradigms of organizational theory suggest four imperatives or powerful influences-environment, structure, leadership, and strategy-that help shape organizational configurations. The configurations in turn reveal the range of applicability of the paradigms, signifying their middle range, as opposed to universal nature. Conjectures are drawn about the theoretical roots, causal patterns, common elements, facilitating conditions, and modes of change of each imperative.
The strategy-making process exists in three basic modes: the entrepreneurial mode, where bold decisions are taken by a powerful decision-maker; the adaptive mode, where a coalition of decision-makers reacts to environmental pressures with small, disjointed steps; and the planning mode, where analysts integrate strategic decisions into systematic plans.
In this article we argue that (1) legitimacy is an important resource for gaining other resources, (2) such resources are crucial for new venture growth, and (3) legitimacy can be enhanced by the strategic actions of new ventures. We review the impact of legitimacy on new ventures as well as sources of legitimacy for new ventures, present strategies for new ventures to acquire legitimacy, explore the process of building legitimacy in the new venture, and examine the concept of the legitimacy threshold.
This article argues that new venture formation is a speciai case of strategic management theory. Thus, Sandberg & Hofer's (1987) model of new venture performance, which states that new venture performance is a function of industry structure, venture strategy, and the founding entrepreneur, must be extended to Inciude the resources and the organizational structure, processes, and systems developed by the venture to implement its strategy and achieve its objectives. The key assumptions underlying this model are presented, and spe- cific propositions concerning how resources and organizational structure, processes, and systems affect new venture performance are developed.
For the past decade and a half, the primary conceptual model of family business has been the three-circle model, which views family enterprise as a complex system made up of three overlapping sub-systems (ownership, business, and family). The three-circle model is an excellent tool for understanding the dynamics at work in any family company at a particular point in time. In our more recent work, we have found it even more useful to transform this three-circle concept into a developmental model, in which each of the three sub-systems moves through a sequence of stages
A diversity of factors encompass entrepreneurship phenomena. An overview of theory and research in the field shows that entrepreneurship covers (1) number of start-up firms, (2) growth of the firm, (3) growth of the industrial economy, (4) individual mobility, and (5) social transformation. This paper tries to advance, through a partially developed formal model, an integration of some of the important aspects of entrepreneurship. Based on nearly 50 case studies carried out in the course of field work over North India, it examines the interplay of resources, opportunities and capabilities in new venture growth. The findings suggest that resource access may itself limit the range of opportunity choice and growth potential. Within these limits, managerial capability, as related to human resources in particular, could be more significant than hitherto recognized. A preliminary effort is made to develop a typology of firms based on the varying proportion of factors influencing growth of a venture. Further, a model of entrepreneurial firm stabilization and human resources is outlined. A path-based typology of new venture growth and human resource management is described. These include the use of family labor or supervisory resources, an empathetic leadership style and the presence of entrepreneurial teams.
This article examines the determinants of new venture performance. Specifically, it rejects the traditional academic model of new venture performance, which argues that success is based solely on the characteristics of the entrepreneur, i.e., NVP = f(E); and supports instead the broader model of venture capitalists, which claims that success depends not only on the characteristics of the entrepreneur, but also on the structure of the industry entered and the strategy of the venture involved, i.e., NVP = f(E,IS,S).
Aldrich [J. Manag. Inq. 10 (2001) 115] importantly points out that not all forms of process research are equal or the same. He emphasizes the need to distinguish between outcome-driven and event-driven research. We build upon Aldrich's distinctions, arguing that event-driven and outcome-driven explanations represent different kinds of process and variance theories that are based on fundamentally different ontological assumptions. We examine and compare these variance and process theory assumptions in order to sharpen our understanding of process theory as distinct and not derivable from variance theory. We conclude by arguing that variance and process theories must be evaluated on their own items.
New venture growth differs from that of established firms and is an important topic for scholarly inquiry. Current literature on new venture growth has focused primarily on why new ventures grow to the exclusion of how and where that growth is occurring. This article reviews the literature on new venture growth and addresses key limitations within this stream of research. It unites the literature on why new ventures grow with that of how (through internal or external means) and where (in domestic or international markets) new ventures grow to advance an important research agenda for future new venture growth studies.
Libro de metodología cualitativo para investigación en las ciencias sociales. La utilización de la computadora, el uso de datos y la recolección de los mismos. Se describen detalladamente numerosos métodos de datos y análisis.
This paper studies the initial resources on which new organizations are based and how these resources interact with the institutional origin and market characteristics. Using a unique hand-collected data set of research-based start-ups (RBSUs), we empirically test how technological, financial and human resources relate to each other to form distinct starting resource configurations. We find four different start- ing configurations: "venture capital-backed start-ups," "prospectors," "product start-ups" and "transitional start-ups". The results show that VC-backed start-ups are a minority while half of the firms start as prospectors. Market complexity and growth prospects influence the probability of starting with venture capital. The unclearness of the product market at founding characterizes prospectors, while product start-ups mostly have an almost market-ready product targeted at an international niche market. Transitional starters initially commercialize technical know-how through consulting and become product oriented later on. This discussion contributes to the debate concerning the interplay of environment and firm resources.
Stages of Small Business Growth Revisited: Insights into Growth Path and Leadership/Management Skills In Low-and High-Growth Companies
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The image identity as a competitive characteristic of managers
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