Elaine Romanelli’s research while affiliated with Georgetown University and other places

Using data on the human biotherapeutics industry in the United States from the period 1976 through 2002, the authors explore the organizational origins of entrepreneurs to understand the location and size of industry clusters. Specifically, they examine the effect that different types of organizational legacy—defined as the organization in which the entrepreneurs were previously employed—have on the entry of new firms. The study reveals that regional resources influence the location of industry clusters but that concentrations of entrepreneurs who hail from the same population exert an important, differentiating influence and define a local culture that affects the propensity for information-sharing and collaboration. This research shows that the largest impact on local entry stems from a concentration of founders with prior experience in organizations that are more networked than hierarchical.

The evolution of new organizational forms has attracted growing theoretical and empirical attention, but little research has considered the microsocial processes that promote the emergence of groups of quasi-similar organizations that sometimes evolve into new organizational forms. Drawing from social psychological and sociological theories of identity formation, we explain processes of individual identification and collective identity development that precede and promote the formation of similar clusters, which audiences can then recognize and distinguish from established organizational populations and other emerging similarity clusters.

The evolution of new organizational forms has attracted growing theoretical and empirical attention, but little research has considered the micro-social processes that promote the emergence of quasi-similar organizations that may evolve over time into organizational forms with distinctive identities that are both claimed and granted. Drawing on social psychological theories of identity formation within and among organizational groups, we develop a model of identification and identity development for organizational forms that underpins arguments from ecological and institutional theory.

To extend understanding of the spatial arrangements of industries, we examined the influence of regional industrial identity, defined as the shared understandings of audiences about legitimate places for particular types of organizations, on the entry rates of firms and investment rates of venture capitalists into U.S. regional biotherapeutics industries, 1976 through 2004. Controlling for important resources, regional industrial identity increases the entry rates of non-local de novo firms into regions and the rates of investment by venture capitalists with limited experience in either biotherapeutics overall or in a regional biotherapeutics industry. Our study shows that regional industrial identity affects the cross-regional movements of entrepreneurs, firms, and investors and, thus, the location and persistence of industry clusters.

This chapter examines the spatial and temporal dimension of a variety of forms of entrepreneurship across cities in the United States in the human biotherapeutics. The first finding is that clusters grow predominantly through the investments of local entrepreneurs, local firms, and local venture capitalists. Second, for three of the regions with the largest clusters - San Diego, Boston, and San Francisco - the critical spur to growth appears to be a tendency of entrepreneurs to leave local, established firms to found additional firms. Moreover, only those regions, however, that exhibited this secondary, or second-generation growth grew to substantial sizes relative to other clusters. The attraction of entrepreneurs and firms to a region is a tertiary influence on growth, occurring late in the history of the industry and the clusters.

Seminar. We thank Martin Doyle and Alex Gilev for help with data collection.

We explore the concept of regional industrial identity as an important missing component in our understanding of the development of metropolitan regions and the spatial arrangements of industries. While economists and sociologists have explained the location of industry clusters on the basis of unevenly distributed resources, and historians have provided rich descriptive insight into the developmental dynamics of particular metropolitan regions, little systematic theory has been advanced to explain cross-regional inflows and outflows of resources, especially with respect to patterns in cluster development. This paper examines the concept of regional industrial identity as a social code that (1) arises from the shared understandings of residents and external audiences about the suitability of a region for particular kinds of business activity and (2) influences decisions about where to locate investments. We argue that such understandings are principally informed by configurations of industry clusters that have already formed in a region. Clusters, which are the results of historical investments, are also important signals about the types of business that can thrive in the future. We develop theoretical propositions linking characteristics of regional industry cluster configurations, in particular cluster dominance and cluster interrelatedness, to the strength and focus of regional identity and, as a result, to the types and amounts of resources that will develop within and flow into and out of regions.

Rather quietly over the last decade, a large body of literature has emerged to consider how new forms of organization arise and become established in the organizational community. The literature represents a very wide array of theoretical perspectives, and no emerging consensus or dominant theme can plausibly be identified. No long stream of research has been produced to validate the arguments of any perspective. What we find instead is a disparate group of mostly nascent theories from organizational ecology, economics, institutional sociology, strategic management, and others, all seeking to explicate the nature of contexts and processes that may generate new organizational forms. This review organizes this literature according to assumptions about how variations are generated in the organizational community. Three perspectives appear to capture most of the arguments: an organizational genetics view, which emphasizes random variation; an environmental conditioning view, which considers variation to be co...

New organizations do not emerge full blown from the idiosyncratic minds of individual entrepreneurs. Their ideas for new organizations, their ability to acquire capital and other essential resources, and their likelihood of survival as entrepreneurs derive from the contexts in which they live and work. The Entrepreneurship Dynamic explores the conditions that prompt the founding of large numbers of new organizations or entirely new industries, and the effects on existing industries, economies, and societies. ---------- Claudia Bird Schoonhoven is Professor of Organization and Strategy in the Graduate School of Management at the University of California, Irvine. She is co-author of The Innovation Marathon: Lessons from High Technology Firms. Elaine Romanelli is Associate Professor of Management at the Georgetown University School of Business. ---------- Scholars and popular writers have written a great deal about entrepreneurs and the formation of new companies, but they have not succeeded in predicting when and where large numbers of new organizations will emerge. This volume attempts, from the viewpoint of the interdisciplinary field of organization studies, to answer two major questions about entrepreneurship: First, what are the conditions that prompt the founding of large numbers of new organizations or entirely new industries? Second, what are the real and significant effects of such entrepreneurial activities on existing industries, economies, and societies? The authors emphasize that new organizations do not emerge full blown from the idiosyncratic minds of individual entrepreneurs. Their ideas for new organizations, their ability to acquire capital and other essential resources, and their likelihood of survival as entrepreneurs derive from the contexts in which they live and work. At the same time, new organizations fundamentally and immediately transform their contexts. The first part of the book explores the mental models that founders of new companies bring with them from previous experiences, the ways in which their ideas come not only from the companies in which they work but from the surrounding organizational communities, and the importance of local and regional dynamics in nurturing innovative communities. Other papers in this section shift perspective from geographic communities to other contexts—the university, the knowledge industry, and the technology cycle. The second part of the book explores the role of entrepreneurial activity in the transformation of contexts and the evolution of industries, focusing on the processes and tools that entrepreneurs use to legitimate new organizational populations, and the collateral industries and communities that build up around new organizational populations, aiding in the development of new companies. ---------- “This outstanding work will be required reading for all entrepreneurship scholars.�—Andrew H. Van de Ven, University of Minnesota “A detailed and fresh look at the conceptual end of the business of making money in developed societies.�—Enterprise and Society “Claudia Schoonhoven and Elaine Romanelli have delivered a compelling edited volume to enrich our understanding of entrepreneuship as a contextual process . . . .[The Entrepreneurship Dynamic] is an impressive exploration of the conditions, processes, and outcomes of the entrepreneurial process . . . .[It] is an excelllent volume that deserves a prominent position on the bookshelves of serious students of entrepreneuship and organizations . . .Our bottom line: buy it, read it.�—Academy of Management Review “Those who are looking for new approaches and resarch directions will find The Entrepreneurship Dynamic a rich and variegated source of ideas.�—Philip Anderson, INSEAD ---------- Table of Contents for The Economic Approach to Law Chapter 1: Introductory Concepts What is Law and Economics? Positive and Normative Analysis Is Efficiency a Valid Norm for Evaluating Law? Efficiency Concepts Pareto Efficiency Potential Pareto Efficiency, or Kaldor-Hicks Efficiency Consensual Versus Nonconsensual Exchange The Coase Theorem The Law in “Law and Economics� The Nature of the Common Law The Court System in the United States Conclusion Discussion Questions Problems Appendix to Chapter 1: Review of Microeconomics The Theory of the Consumer and Market Demand The Theory of the Firm and Market Supply Market Equilibrium Perfect Competition Monopoly Oligopoly and Game Theory Welfare Economics Welfare Theorems Market Failure Uncertainty and Imperfect Information Choice Under Uncertainty and Insurance Moral Hazard Adverse Selection Chapter 2: An Economic Model of Tort Law What Is a Tort? The Social Function of Tort Law Elements of a Tort Claim Cause-in-Fact Proximate Cause Liability Rules An Economic Model of Accidents: The Model of Precaution The Unilateral Care Model Social Optimum Actual Care Choice by the Injurer Comparison of Strict Liability and Negligence Bilateral Care Model No Liability and Strict Liability Negligence The Hand Rule The Reasonable-Person Standard Contributory Negligence Negligence with Contributory Negligence Strict Liability with Contributory Negligence Further Topics Sequential Care Accidents The Injurer Moves First The Victim Moves First Last Clear Chance Comparative Negligence Causation and Liability Cause-in-Fact Proximate Cause Res Ipsa Loquitur Uncertainty over Causation Activity Levels Punitive Damages The Judgement-Proof Problem The Impact of Liability Insurance Litigation Costs Legal Error The Statute of Limitations for Tort Suits Intentional Torts Valuing Human Life and Safety Conclusion Discussion Questions Problems Chapter 3: Applying the Economic Model of Tort Law Products Liability A Brief History of Products Liability Law An Economic Model of Products Liability Equilibrium Price and Output for a Dangerous Product Care Choices by Manufacturers and Consumers Consumer Perceptions of Risk A Note on Custom as a Defense Recent Trends Evidence on the Impact of Products Liability Laws Concluding Remarks Workplace Accidents Respondeat Superior Accidents in which the Victim is an Employee Workers’ Compensation Laws Liability for Environmental Damages Characteristics of Environmental Damages Multiple Victims Causal Uncertainty Superfund Case Study: Asbestos Medical Malpractice Customary Practice and Informed Consent Do Physicians Practice Defensive Medicine? Conclusion Discussion Questions Problems Chapter 4: The Economics of Contact Law I: The Elements of a Valid Contract Contracts and Efficient Exchange The Elements of a Valid Contract Reasons for Invalidating Contracts Mental Incapacity or Incompetence Coercion or Duress Mistake and the Duty to Disclose Private Information Purely Distributive Information Socially Valuable Information Casual Versus Deliberate Acquisition of Information Disclosure of Unfavorable Information Unconscionability Conclusion Discussion Questions Problems Chapter 5: The Economics of Contract Law II: Remedies for Breach The Efficient Breach Model Money Damages and Efficient Breach Incentives for Efficient Reliance Mitigation of Damages Impossibility and Related Excuses Efficient Risk Sharing Commercial Impracticability Specific Performance Transaction Costs Subjective Value and Efficient Breach The Value of Consent Self-Enforcement of Contracts Liquidated Damage Clauses Product Warranties Express Warranties Implied Warranties Long-Term Contracts Conclusion Discussion Questions Problems Chapter 6: The Economics of Property Law: Fundamentals The Nature and Function of Property Rights The Definition of Property Rights Property Rights in Incentives The Emergence of Property Rights Enforcement of Property Rights Fundamentals of the Economics of Property Law The Coase Theorem The Assignment of Rights and the Distribution of Wealth Examples of the Coase Theorem The Role of Transaction Costs Enforcement of Property Rights Property Rules and Liability Rules The Choice Between Property Rules and Liability Rules Trespass and Nuisance The General Transaction Structure Consensual Transfers of Property The Legal Protection of Ownership Should the Law Protect the Possessor or the Claimant? An Analysis of Land Title Systems Land Title Systems: Recording Versus Registration Land Title Systems in the United States Title Protection and Economic Development Limited and Divided Ownership Leasing The Lease: A Contract or Conveyance? Mitigation in Leases The Law of Waste Sharecropping Private Versus Group Ownership The Optimal Scale of Ownership Public Goods The Anticommons Problems and the Right to Partition Time-Limited Property Rights: Intellectual Property Patents Copyrights Conclusion Discussion Questions Problems Chapter 7: Involuntary Transfers and Regulation of Property Involuntary Transfers and Restrictions on Transfers Between Private Parties Adverse Possession The Mistaken Improver Problem Inheritance Rules Primogeniture The Rule Against Perpetuities Government Acquisition of Property Under Eminent Domain The Eminent Domain Clause Public Use and the Scope of the Takings Power The Meaning of Just Compensation Case Study on the Determination of Just Compensation: “The Assassin’s Bequest� Eminent Domain and Land Use Incentives The No-Compensation Result Arguments Against the No-Compensation Result Government Regulation of Property The Compensation Question Tests for Compensation An Economic Model of Regulatory Takings Implications of the Efficient Compensation Rule Investment-Backed Expectations: Does the Market Eliminate the Need for Compensation? Regulation Versus the Common Law Conclusion Discussion Questions Problems Chapter 8: The Economics of Dispute Resolution The Litigation Process Why Do Trials Occur? The Differing Perceptions, or Optimism Model The Asymmetric Information Model The Social Versus Private Incentive to Sue Procedural Rules and Litigation Costs Discover The English Versus American Rule The English Rule and Settlement The English Rule and the Incentive to File Suit Evidence on the Impact of the English Rule Rule 68 Contingent Fees The Benefits of Contingent Fees Contingent Fees and Settlement Do Contingent Fees Promote Frivolous Suits? Frivolous Suits Court Delay Alternative Dispute Resolution Evolution of the Law Selection of Disputes for Trial Is the Common Law Efficient? Empirical Evidence on Legal Change Judicial Decision Making and Legal Change Decision by Precedent An Economic Model of Precedent Precedents as a Stock of Knowledge Procedural Responses to Legal Errors The Standard of Proof Appeals as a Means of Error Correction What Do Judges Maximize? Judicial Self-Interest and the Law Pragmatism and the Economic Approach to Law Conclusion Discussion Questions Problems Chapter 9: The Economics of Crime Distinguishing Crimes and Torts Crimes Are Intentional Other Reasons for Public Enforcement Examples of Private Enforcement Property Rules, Liability Rules, and Criminal Sanctions The Economic Model of Crime The Offender’s Decision to Commit a Crime and the Supply of Offenses Optimal Punishment The Optimal Fine Gain Versus Harm-Based Fines Fines and Imprisonment Prison, Probation, and Parole The Probability of Apprehension is Variable Why Are Fines Not Equal to Offenders’ Wealth? Repeat Offenders Empirical Evidence on the Economic Model of Crime The Death Penalty Economics of the Death Penalty Constitutional Issues The Bail System Private Protection Plea Bargaining Economic Models of Plea Bargaining Plea Bargaining and Deterrence A Comparative Perspective Topics Crime and the Business Cycle Gun Laws and Crime Primitive Law Enforcement Some Constitutional Issues Free Speech The Rule Against Self-Incrimination The Right of Privacy Conclusion Discussion Questions Problems Answers to In-Chapter Exercises Notes Works Cited Index