Showing papers in "International Entrepreneurship and Management Journal in 2012"

Business model innovation in entrepreneurship

Abstract: The goal of this paper is to advance the understanding of emerging developments in business model design within the field of entrepreneurship. It is widely known that during the start-up process, entrepreneurs need to set up the boundaries of the business and define the product/service to offer. This is a very complex task, especially for new technology-based companies which usually require large investments and have a limited time span (avoiding product obsolescence) to turn the idea into a full-time venture. Although business model design within the entrepreneurship field is a recent topic, it is gaining a growing attention in the literature. The usefulness and predictable power of business models are expected to help entrepreneurs make more informed decisions, thus increasing the chances of success. This article first tackles the specific problems faced by new technology-based firms, linking their needs with the advantages of having a flexible and well-designed business model. Second, different innovative practices aimed at improving business model design are discussed. The paper ends with some recommendations, stressing the need for future empirical work.

The role of mentoring in the learning development of the novice entrepreneur

Abstract: It has been recognized that learning outcomes can be divided into three general categories: Cognitive, skill-based, and affective learning. Moreover, public organizations offer mentoring-inspired support programs to novice entrepreneurs starting a business. This study explores entrepreneurial learning through mentoring. We have coded 53 learning outcomes acquired by novice entrepreneurs through their mentoring relationship. These learning outcomes were analysed using the three general categories and linked with the mentor’s way of promoting learning. Cognitive learning accounts for 62% of total learning outcomes and affective learning makes up 35.9%, which leaves skill-based learning in a marginal position. In addition, methods used by the mentor to ensure mentee learning affect learning content. Mentees were also asked to describe the benefits of their mentoring relationship through discussion groups. From a cognitive learning standpoint, benefits reported by entrepreneurs include an increase in management knowledge and skills, improved vision for their business venture and identifying new opportunities. Benefits resulting from affective learning include a greater sense of self-efficacy, validation of one’s entrepreneurial self-image and a lowered sense of solitude, all factors that could ultimately influence entrepreneur resilience. These results reveal the scope and limitations of mentoring as means to support learning.

Business orientations and innovation in small and medium sized enterprises

Abstract: The capability of Small and Medium Enterprises (SMEs) to drive and shape markets is one path to competitive advantage. Firms that drive markets do so by leveraging radical and disruptive innovation to shape the needs of current and future customers, thereby altering market structure. In the current study, we find that firms with an entrepreneurial orientation are more likely to develop both driving markets and market driven innovations, while firms with a market orientation are more likely to develop market driven innovations.

Identity in entrepreneurship effectuation theory: a supplementary framework

Abstract: The article proposes a new framework on identity construction in entrepreneurship that in valuable ways supplements the logic of identity presented in Sarasvathy’s (2001, 2008) popular effectuation theory. Effectuation theory assumes that identity is a given and relative stable precondition of the entrepreneurial process that support the entrepreneur in ordering preferences in the process of effectuating resources, stakeholder commitment, etc.. The article shows that identity construction is an active and integral part of the effectuation process, and it importantly influences the manner in which the entrepreneur acts and makes decisions in the process. The article seeks to challenge and advance effectuation theory’s view on identity based on a narrative study of ten novice student entrepreneurs. The study gives insight into the identity processes involved in becoming a student entrepreneur, and it may serve as a guide to how entrepreneurship educators and counselors can place more emphasis on identity related struggles involved in the entrepreneurial effectuation process.

Factors affecting the success of women entrepreneurs

Abstract: The main purpose of this paper is to examine the relation that exists between the skills possessed by women entrepreneurs and their motivations, barriers and performance. Thus, on the theoretical framework we review literature some aspects that are related to the skills required of a business owner: level of education, previous occupational experience, and prior business expertise and management skills. The analysis undertaken shows that the lack of education and managerial skills of women business owners are two of the most important variables when it comes to understanding the motivations and the difficulties they have to face.

Quantifying the relationship between entrepreneurship and competitiveness development stages in Latin America

Abstract: This research aims to quantify the importance of a country’s entrepreneurship level in terms of its competitiveness rates. Our hypothesis is that those countries entrepreneurship growth rates increase their competitiveness indicators and that this entrepreneurial improvement could be a key factor in reaching the next stage of development. We establish this relationship using a longitudinal database of Latin American countries that participated in the Global Entrepreneurship Monitor (GEM) and the Global Competitiveness Reports of the World Economic Forum (WEF) from 2001 to 2006. GEM and WEF construct aggregated indexes using several variables to rate each country’s entrepreneurship activity and competitiveness development. We use a discriminant analysis to identify various countries’ competitiveness subgroups and show how each country’s entrepreneurship rates have weight in different stages of competitiveness, placing a special emphasis on Latin America. Our results suggest that Latin American countries need to gain entrepreneurial dynamics and economic (and competitiveness) development by transforming their typical self-employment or low value-added new ventures for local markets into strong, innovative networked firms competing globally. Some management and policy implications are also discussed.

Influence of institutional environment on entrepreneurial intention: a comparative study of two countries university students

Abstract: Institutional environment influences the perceptions of desirability and feasibility, society’s social and cultural environment, such as beliefs, values and attitudes, conditions behaviour and decisions made by individuals. This research evaluates the influence of institutional environment on entrepreneurial intention using a comparative analysis of different attitudes among university students in two countries: Portugal and Spain. In particular, this study aims to examine the perceptions of desirability, feasibility and intention toward the creation of one’s own business and how that variables influence the entrepreneurial intention as compared these two different institutional contexts. Results revealed difference among attitudes toward entrepreneurship in both countries. With respect to the perception of feasibility, the majority of students in Extremadura (Spain) consider that it is easier to create a business in nowadays than it was several decades ago. However, from the students of Beira Interior (Portugal) consider that it is more difficult. Furthermore, in Extremadura, the entrepreneurial intention is higher than in Beira Interior.

Evaluating competing theories of street entrepreneurship: some lessons from a study of street vendors in Bangalore, India

Abstract: Conventionally, street entrepreneurs were either seen as a residue from a pre-modern era that is gradually disappearing (modernisation theory), or an endeavour into which marginalised populations are driven out of necessity in the absence of alternative ways of securing a livelihood (structuralist theory). In recent years, however, participation in street entrepreneurship has been re-read either as a rational economic choice (neo-liberal theory) or as conducted for cultural reasons (post-modern theory). The aim of this paper is to evaluate critically these competing explanations for participation in street entrepreneurship. To do this, face-to-face interviews were conducted with 871 street entrepreneurs in the Indian city of Bangalore during 2010 concerning their reasons for participation in street entrepreneurship. The finding is that no one explanation suffices. Some 12 % explain their participation in street entrepreneurship as necessity-driven, 15 % as traditional ancestral activity, 56 % as a rational economic choice and 17 % as pursued for social or lifestyle reasons. The outcome is a call to combine these previously rival explanations in order to develop a richer and more nuanced theorisation of the multifarious motives for street entrepreneurship in emerging market economies.

Corporate entrepreneurship in Switzerland: evidence from a case study of Swiss watch manufacturers

Abstract: The purpose of this study is to examine the extent to which Swiss companies engage in corporate entrepreneurship. To that end, a case study was undertaken to better understand how corporate entrepreneurship is practiced in the watch-making industry. Using a stratified sampling method, 18 corporate-level managers of Swiss watch manufacturers were interviewed over a 5-month period to determine their perception of their firm’s entrepreneurial orientation in terms of proactiveness, risk taking, innovativeness, competitive aggressiveness, and autonomy. Findings were mixed. As anticipated, given the conservative nature of Swiss culture and tradition, the executives reflected corporate values that inhibit proactiveness, risk-taking, and competitive aggressiveness. On the positive side, these executives espoused values that support a corporate culture of innovativeness and autonomy reflecting a resurgence of innovativeness in an otherwise mature industry.

Examining the relationship between customer and entrepreneurial orientation on nascent firms’ marketing strategy

Abstract: Is entrepreneurial marketing (EM) a “one type fits all” approach? Research suggests that EM is especially suitable for small firms. However, it is obvious that—despite their size—small firms show a myriad of different characteristics. In this paper, it is argued that different firm characteristics can be seen in different business orientations, namely customer orientation (CO) and entrepreneurial orientation (EO). In turn, different amounts of EO and CO lead to different forms of EM strategy. The Panel Study of Entrepreneurial Dynamics (PSED) serves as source to investigate relationships between EO, CO, and respective marketing strategies among nascent firms. The study suggests that innovativeness is strongly related to the importance of several marketing strategies, such as developing new or advanced product or process technologies. However, other strategies, such as lower prices or convenient location, are not related to either significant levels of CO or EO. The paper offers two main implications. Firstly, small business founders have to be aware of the fact that certain strategies cannot come “out of nowhere”. This paper shows that running proactive marketing strategies that aim for ongoing innovativeness require the existence of an underlying EO. Secondly, there are different forms of “small firm EM”; a finding that requires further research in the future.

Linking intrapreneurship activities to multidimensional firm performance in Turkish manufacturing firms: an empirical study

Abstract: This study investigates the relationships among the external environment, intrapreneurship and performance of Turkish manufacturing firms. As a multidimensional construct, intrapreneurship is examined in terms of innovativeness, new business venturing, self-renewal, risk taking, and proactiveness. The environmental munificence and hostility are examined as the external determinants of intrapreneurship activities. Firm performance is considered as a multifaceted structure that covers financial and non-financial measures. Based on the data from 331 Turkish manufacturing firms, empirical results showed that environmental factors have statistically significant impact on the intrapreneurship activities of these firms. Profitability is negatively and significantly associated with self-renewal, while it is positively and significantly related with dimensions of innovation and risk taking. Growth is found to be significantly and positively correlated with only new business venturing. Finally, innovation is the only dimension that is positively and significantly associated with both customer and employee satisfaction, which are the main non-financial firm performance measures.

Marketing in SMEs: the role of entrepreneurial sensemaking

Abstract: Marketing literature has emphasized the factors hampering marketing planning and strategizing in small firms, in particular resource scarcity, lack of specialized structures and competences. Recent streams of literature in entrepreneurial marketing have nonetheless shown that small firms do engage in peculiar marketing strategies and activities that do not necessarily reflect codified processes observed in large organizations. Within this line of research, the article aims at contributing to extant theory in entrepreneurial marketing placing under scrutiny the generative moments of marketing strategies in small firms. Through the integration of literature in entrepreneurial marketing and in entrepreneurship and through the analysis of four case studies, the article proposes a conceptual framework that emphasizes the centrality of entrepreneurial sensemaking in small and medium-sized enterprises’ marketing strategies. We posit that entrepreneurs are engaged in the construction of interpretive frameworks that, when explicated and made accessible to consumers and stakeholders, legitimate novel business ideas and logics. These interpretive frameworks structure the content and processes of marketing activities. Theoretically, the article aims at contributing to the debate on marketing in small businesses shedding light on the processes underlying the formation of marketing strategies. Propositions are offered to guide future empirical research based on the proposed conceptual framework.

Global mindset and the internationalization of small firms: The importance of the characteristics of entrepreneurs

Abstract: Despite being a relatively new concept, the importance of the global mindset is already well-documented. So far research has primarily focused on multinational companies and therefore the operationalization of the concept is still a work in progress. Recognizing the importance of entrepreneurs in small companies, yet mindful of the gaps that exist, this paper addresses the factors that constitute the global mindset and their influence on the internationalization of small Portuguese companies. Using information-processing theory through a quantitative, survey-based study and Structural Equation Modeling (SEM), the results show the importance of the characteristics of both entrepreneurs and firms in explaining the global mindset, and confirm the impact they have on internationalization behavior. The entrepreneur’s level of education, their satisfaction with company performance in the domestic market and the potential for growth in the domestic market all affect the global mindset model. The conclusions are useful for entrepreneurs and national authorities aiming to successfully implement internationalization practices, given the role of the global mindset in exploring global business opportunities and in the global success of companies. Replication of the research in different contexts is essential for the wider generalization of the results.

The franchising business model: an entrepreneurial growth alternative

Abstract: The franchising business model is widely and increasingly used by entrepreneurs seeking growth through geographic expansion. Thus, continued research efforts are needed to help entrepreneurs make wise choices as to whether the franchising business model is appropriate for them. To help promote such research, we reviewed the literature on reasons for franchising and outcomes of franchising. Based on that review, we drew conclusions as to future research directions likely to be fruitful. Specifically, we recommend that researchers (a) continue adding theoretical diversity to franchising research, (b) build large-scale, longitudinal databases, (c) test or control for implicit and explicit assumptions, (d) pay more attention to micro-level considerations within franchise networks, and (e) compare franchising with alternative business models suitable for geographic expansion.

Do board composition and investor type influence innovativeness in SMEs

Abstract: Companies need to adapt and evolve if they wish to survive Future success lies in the ability to develop innovative solutions for customer’s problems and needs This study aims to explore the influence of corporate governance and ownership structure on (product) innovativeness in a sample of 49 small and medium sized firms (SMEs) in the Belgian manufacturing industries The main findings of the study are twofold Firstly, a significant positive relationship between innovativeness and the size of a firm’s board has been found Secondly, business-to-consumer markets tend to be more innovative than business-to-business markets No significant relationship was found between the investor type and a firm’s innovativeness

Entrepreneurship in the informal economy: commercial or social entrepreneurs?

Abstract: Recent research has revealed that a large proportion of entrepreneurs start-up their ventures operating on a wholly or partially off-the-books basis. Until now, it has been commonly assumed that those who operate in the informal economy are exclusively commercial entrepreneurs. They are assumed to be rational economic actors who weigh up the benefits of operating off-the-books against the costs of being caught and decide to operate in this manner. The aim of this paper is to evaluate critically this a priori assumption. Reporting evidence from a 2005/6 survey involving face-to-face interviews with 102 informal entrepreneurs in Moscow in Russia, the finding is that such entrepreneurs are not purely commercially driven. Examining their rationales, informal entrepreneurs are found to range from purely rational economic actors pursuing for-profit logics through to purely social entrepreneurs pursuing purely social logics, with the majority somewhere in-between combining both for-profit and social rationales. Neither do their logics remain static over time. What begins as a commercial entrepreneurial venture may become more socially oriented over time or vice versa. So too do their logics vary socio-spatially. Those living in deprived populations are more socially-orientated, whilst those in relatively affluent populations are comparatively more profit-driven. The outcome is a call for a more nuanced explanation of the complex and heterogeneous logics of informal entrepreneurs.

Marketing and organisational development in e-SMEs: understanding survival and sustainability in growth-oriented and comfort-zone pure-play enterprises in the fashion retail industry

Abstract: Following calls to explore organisational development in a fashion retail marketing context this paper conceptualises and explains how 14 fashion retailers operating purely online have developed their enterprises via a six-stage approach, through which they moved at various speeds, either in a linear sequence or concurrently. Effective strategies to secure sustainability for comfort-zone and growth-oriented enterprises are identified, including the development of online portfolios which acknowledges the presence of habitual entrepreneurship in fashion electronic retailing. This paper represents the first in-depth multiple case study into independent, successful pure-players marketing clothing, footwear and accessories categories online. A qualitative case approach is employed from a social constructionist perspective. Rich data is generated via in-depth interviews with owner-managers. Results are developed through thematic qualitative analysis and theoretical contributions are based on data saturation across cases and fashion categories, thus offering strong horizontal and vertical credibility. Findings stress the role of developing internet-technology competencies, strategic marketing and service capabilities in the quest for successful e-retailing in pure-play enterprises, alongside overseas market development and demonstrate an emphasis on planning for the small firm. The current findings therefore differentiate this group of enterprises from the majority of small firms accused of poor technology utilisation/competency, lack of planning and weak marketing. The paper provides strong understanding of the complexities of organisational development in pure-play retailing. That these firms have navigated the recent recession and that many have survived online for over 10 years emphasises the importance of the strategic directions explained in this paper to the marketing/entrepreneurship interface.

Social capital as a distinctive feature of Social Economy firms

Abstract: In recent years, the growing importance in developed countries of the Social Economy sector and the contribution of social capital to regional economic development are being studied in depth. Linking these two fields of research, the aim of the present work is to analyse the social capital endowments of Social Economy firms in comparison to those in traditional profit-maximizing firms. To do so, a literature review will be firstly carried out to clarify both the concept of social capital and, more specifically, its relation with entrepreneurship and social enterprises. In the empirical section, the social capital endowments both of social firms (cooperatives and owned-worker enterprises) and traditional firms are compared using data from two surveys conducted in Andalusia, a lagged Spanish region with long tradition in the Social Economy sector. Results show that social capital endowments measured through cooperation agreements and company links with local suppliers and costumers are higher in cooperatives and worker-owned companies. Therefore, Andalusian authorities must continue with its support policy to these enterprises as a mean to reinforce the regional economic development.

The emigrant entrepreneur: a theoretical framework and empirical approximation

Abstract: The present paper examines the concept of emigrant entrepreneur in relation to level of training and language skills. The study focuses on the relationship of both variables with business activity, motivation and the process followed by entrepreneur. The results show a trend in the relationship between the variable language skills and the type of activity developed. The variable “level of training” is revealed as the most influential factor affecting the business sector of activity, the level of turnover and the attitude towards entrepreneurship.

Images of entrepreneurship: towards a new categorization of entrepreneurship

Abstract: Based on a systematic literature review of contemporary entrepreneurship process research, the article provides a supplementary way of categorizing research on the entrepreneurial process which takes philosophy of science into account to a higher extent than done in previous categorizations. The motivation for doing so is to minimize problems of communication and comparison of concepts, results and theoretical contributions often experienced in entrepreneurship research. Applying Burrell and Morgan’s (1979) paradigmatic framework to analyse the selected literature, it is suggested that the essence of past and present entrepreneurship process theory can be captured in five images of entrepreneurship: 1) The Image of Machines; 2) The Image of Evolution; 3) The Image of Contingencies; 4) The Image of Mind; and 5) The Image of Social Becoming. The five images are considered to be concise and easily recalled tools, which will be valuable in the continuous development and organization of future ideas in entrepreneurship research.

Women in business: entrepreneurship, ethics and efficiency

Abstract: This article begins by reviewing some of the main theoretical approaches to entrepreneurship. We then discuss the measures proposed in the literature to benefit women, facilitating reconciliation of work and family life and examining the view of authors who consider the negative effects of these measures. Finally, we contemplate situations where the measures benefiting women are based on economic or ethical reasons. This last section qualifies the universalist approach underlying work-family life reconciliation, describing the context for interaction between women and entrepreneurial activity.

Management theories linking individual and organizational level analysis in entrepreneurship research

Abstract: This paper carries out a bibliographical review of the evolution of the individual level research, the new individual approaches and analyzes possible methods for the extension of entrepreneurship research to the organizational level. We also discuss about the suitability of the resource based view and network approaches. We review the management theories and paradigms which are capable of incorporating and linking individual and organizational level studies to the external context where entrepreneurs compete and seek opportunities. In this sense we refer to the resource based view and the network theory as they have been deemed the most adequate to incorporate micro level theories through a convergence of concepts, rather than by a combination or confrontation of ideas. The linking concepts of the individual and firm level theories are presented as an evolution of entrepreneurship research in a specific direction, showing the common ideas shared in the convergent point.

Innovation, progress, entrepreneurship and cultural aspects

Abstract: In the case of economic progress, some of the literature has considered economic growth and economic progress to be the same thing. However, there is a relevant difference between the two concepts. As Holcombe states, economic growth considers the quantity of products and economic progress the quality of products. Innovation has been considered as a key factor to promote economic progress. A culture would have a direct and an indirect effect on innovation through entrepreneurship. The goal of this paper is to analyze the relationship between culture and innovation. To carry out this study, an empirical estimation has been developed for the case of 11 countries.

The ‘recession-push’ hypothesis reconsidered

Abstract: The relationship between unemployment and self-employment has been studied extensively. Due to its complex, multifaceted nature, various scholars have found a large array of different results, so that the exact nature of the relation is still not clear. An important element of the relation is captured by the recession-push hypothesis which states that in times of high unemployment individuals are pushed into self-employment for lack of alternative sources of income such as paid employment. We make two contributions to this literature. First, we argue that official unemployment rates may not capture the ‘true’ rate of unemployment as it does not include ‘hidden’ unemployed who are out of the labour force. Therefore, we propose a new method where the ‘recession-push’ effect relates not only to the (official) unemployed but also to the inactive population. Second, we argue that the magnitude of the recession-push effect is non-linear in the business cycle, i.e. the effect is disproportionally stronger when economic circumstances are worse. We provide empirical support for our hypotheses by estimating an econometric model on Spanish data.

Product innovation and R&D policy: the case of the transformation industries in developed and developing

Abstract: This study analyzes some of the determinants of product innovation in the case of entrepreneurs from the transformation industries, using a model estimated via the Partial Least Square method, to establish whether these determinants change according to whether they are found in developed or developing countries. Such factors include human capital, technology, the degree of market competition, expectations or economic performance. The research also analyzes the effects these factors have on product innovation and some of the determining factors for innovation in the internationalization of entrepreneurial businesses from the transformation industries.

Examining the relative influence of upper echelons ties on IPO underpricing

Abstract: Integrating signaling theory with insights derived from the attention based view, this study addresses the question of which types of upper echelons ties initial public offering (IPO) markets value more. Specifically, we argue that the signals conveyed by upper echelons ties with publicly traded firms are perceived by IPO equity markets as more valuable than upper echelons ties with privately held firms. Additionally, we contend that the signals sent by external directorates with publicly traded firms are perceived more favorably by IPO equity markets than managerial ties with publicly traded firms. The theory in this study is tested on a sample of 366 firms than underwent their IPOs during 1997. The results of hypothesis tests provide partial support for our arguments.

Editorial: Strategic marketing management in small and medium-sized enterprises

Abstract: Small and medium sized enterprises (SMEs) often face diverse strategic challenges and opportunities when operating in a variety of different industrial and geographical contexts. Traditionally the marketing concept and strategic marketing management were perceived as corporate management philosophies driven by the needs and capabilities of larger organisations. Within smaller organisations the intrinsic value of a traditional approach to marketing management is acknowledged but it is also recognised that there are context specific issues that have an impact on the nature of marketing capabilities and activities of SMEs.