Showing papers in "Strategic Entrepreneurship Journal in 2014"

Toward a Greater Understanding of Entrepreneurship and Strategy in the Informal Economy

Abstract: The informal economy consists of business activities that occur outside of formal institutional boundaries but within the boundaries of informal institutions. A large gap exists between the significant importance of the informal economy to commerce around the world and the small amount of informal economy research with which entrepreneurship and strategic management scholars have been involved. As a step toward filling this gap, this special issue includes four articles with the potential to significantly advance our understanding of business activities within the informal economy. In introducing these four articles, we discuss the myriad activities that fall within the boundaries of the informal economy and distinguish between the institutional foundations of informality in developed versus developing economies. The articles included within the special issue each offer a unique understanding of how entrepreneurs are influenced by and manage their institutional contexts in various informal economy settings, providing contributions that should give rise to a series of promising future research questions. Copyright © 2014 Strategic Management Society.

Shades of Grey: How do Informal Firms Navigate Between Macro and Meso Institutional Environments?

Abstract: Our qualitative research shows that when making decisions about informality, entrepreneurs in emerging economies purposefully navigate between the enabling and constraining rules of the macro institutional environment and the norms of the meso institutional environment We show that: (1) informality is a multidimensional continuum along which path to formalization unfolds; (2) as entrepreneurs grow more successful they become simultaneously more attuned to the countervailing constraints of both the macro and meso institutional environments; and (3) informal firms and formal firms weave together an exchange system that legitimizes the persistence of informality In the context of informality, meso institutions serve as the connective tissue which cross-link levels of the environment and shape the context in which entrepreneurs make decisions Copyright © 2014 Strategic Management Society

Top Management Team Shared Leadership and Organizational Ambidexterity: a Moderated Mediation Framework

Abstract: This study proposes top management team (TMT) shared leadership as an important enabler of organizational ambidexterity. Moreover, we examine both how and when TMT shared leadership enhances organizational ambidexterity by considering two TMT processes as mediators (i.e., cooperative conflict management style and decision-making comprehensiveness) and two elements of organizational structure (i.e., connectedness and centralization of decision making) as important contingencies. We test our moderated mediation framework using time-lagged data from a cross-industry sample of 202 firms. We discuss how our findings extend strategic entrepreneurship, ambidexterity, and leadership research and provide implications for practice. Copyright © 2013 Strategic Management Society.

Social Capital and Learning Advantages: A Problem of Absorptive Capacity

Abstract: Theoretically, social capital allows entrepreneurial firms to capitalize on learning advantages of newness and gain access to knowledge as the foundation for improved performance. But this understates its complexity. We consider whether learning through social capital relationships has a direct effect on performance and whether absorptive capacity mediates and moderates this relationship. We find that network-based learning has no direct relationship with performance, but this is mediated in each instance by absorptive capacity and is moderated twice. Our findings challenge the learning advantages of newness thesis and reveal how absorptive capacity can enable business performance from a firm's network relationships.

Institutional Entrepreneurship in the Informal Economy: China's Shan-Zhai Mobile Phones

Abstract: During the last decade, Chinese shan-zhai mobile phones have steadily and deliberately evolved from an informal economy to a formal one. We draw on institutional entrepreneurship to study this evolution, focusing in particular on how informal Chinese entrepreneurs pursued change and the transition to a formal economy. We emphasize three strategies—framing, aggregating, and bridging—Chinese entrepreneurs employed to mobilize support, garner resources, and increase their amount and level of legitimacy. We also discuss implications for research on informal economies and institutional entrepreneurship. Copyright © 2014 Strategic Management Society.

Economic Opportunity and Evolution: Beyond Landscapes and Bounded Rationality

Abstract: The nature of economic opportunity has recently received significant attention in entrepreneurship, organization science and strategy. The notion of boundedly rational search on an (NK) opportunity landscape has been particularly relevant to these conversations and debates. We argue that the focus on bounded rationality and search is highly problematic for the fields of entrepreneurship and strategy and does not allow us to explain the origins of economic novelty. We contrast the NP problem with the frame problem to illustrate our point, and highlight the role of adjacent possibilities and novel affordances. We discuss the entrepreneurial and economic implications of these arguments by building on unique insights from biology, the natural and computational sciences. Copyright © 2014 Strategic Management Society.

Connecting Poverty to Purchase in Informal Markets

Abstract: Base-of-the-Pyramid (BoP) enterprises seek to serve impoverished customers in informal markets. While BoP enterprises have grown in prominence, comparatively little multidimensional theoretical work has explored why these customers ultimately elect to purchase their products. Using a sample of 555 potential customers in rural India, our results indicate that the influence of different dimensions of poverty on likelihood of purchase is largely a function of the strength of the formal institutional environment. Specifically, stronger formal institutional environments can act as both a complement to, and a substitute for, the influence of individual- and network-level norms on purchasing decisions in informal markets. Copyright © 2014 Strategic Management Society.

Source and patterns of organizational defiance of formal institutions: insights from nollywood, the nigerian movie industry

Abstract: We extend research on informal economic activity and investigate why organizations adopt informal rules when formal ones exist and how and why patterns of defiance vary across organizations. We build on data from an in-depth study of four organizations operating in the Nigerian movie industry. We identify ambiguity of formal institutions as a major source of organizational defiance. We also find that the organization’s domain of embeddedness mediates the relationship between institutional ambiguity and organizational defiance. According to our analysis, the rationale for organizing propelled by the dominant domain of embeddedness affects whether organizations consistently or selectively defy ambiguous formal rules. Our findings highlight the importance of the interplay between institutional and organizational dynamics in understanding informality within an economy. Copyright © 2014 Strategic Management Society.

Toward a Research Agenda for the Informal Economy: A Survey of the Strategic Entrepreneurship Journal's Editorial Board

Abstract: Scholarly attention to strategy and entrepreneurship within the informal economy appears to be on the rise, but a large gap remains between the importance of the informal economy and the amount of research that is devoted to it. The survey reported herein is an effort to offer insights to researchers who wish to help build the knowledge base about strategy and entrepreneurship within the informal economy. Specifically, we surveyed members of the Strategic Entrepreneurship Journal's editorial board regarding what they view as the most promising theories, research questions, and methods to leverage in order to develop greater understanding of the informal economy. Board members' views vary, but in general institutional theory and network theory are seen as the best perspectives to fuel major contributions at this time. The research questions that attracted the strongest support centered on the boundaries of and interchanges between the formal and informal economies. Finally, field interviews, case studies, and ethnography were ranked as the most promising investigative methods. Taken together, these findings offer a possible agenda for research into the informal economy. Copyright © 2014 Strategic Management Society.

Serial Entrepreneurs and Venture Survival: Evidence from U.S. Venture‐Capital‐Financed Semiconductor Firms

Abstract: How does prior firm-founding experience affect subsequent venture performance? In this study, I examine the effect of founders’ prior firm-founding experience on the survival rate and the annualized rate of return on investment in subsequent ventures. Estimates of this relationship take into account selection effect of serial entrepreneurs and two roles of venture capitalists (VCs): i) evaluating venture quality by sorting deals and ii) adding value to the portfolio company through mentoring. Analysis of U.S. VC-financed semiconductor firms that entered the market during 1995-1999 does not show evidence of selection of highly-capable serial entrepreneurs and indicates that the hazard rate of firms founded by serial entrepreneurs is substantially lower than firms founded by novice entrepreneurs. I also find that prior firm-founding experience helps entrepreneurs acquire skills that are conducive to the survival of early-stage firms, but not necessarily conducive to the financial success of a venture. In addition, I find that the mentoring role of VCs helps the portfolio company survive through the early stages of a venture, but this does not necessarily translate into a higher rate of return on investment. These findings add to our growing understanding of how founders acquire entrepreneurial skills and in what ways these skills are useful in entrepreneurial activities. These findings also shed light on the potential deadweight loss that might have been imposed on the economy if serial entrepreneurs had not been funded. Given the low success rate of entrepreneurship, this has implications for countries where failed entrepreneurs rarely get a second chance.

Dueling Institutional Logics And The Effect On Strategic Entrepreneurship In Chinese Business Groups

Abstract: Focusing on a period of institutional friction when institutions are in transition, this study examines the dueling institutional logics that simultaneously operated as business groups were implemented to foster strategic entrepreneurship activities in China. Our findings from 1,095 Chinese business group-affiliated firms show that the original institutional logic of state control and ownership remains a potent factor, while the new institutional logic in support of strategic entrepreneurship takes place through business groups' informal and formal organization controls. Further, the state logic causes rigidity and inflexibility for firms to react to the new institutional demands, thus weakening the positive effects of business group formal and informal controls on strategic entrepreneurship. This study contributes to the institution-based view by highlighting that dueling logics coexist in business groups and investigating how they can be sources of variation in advancing strategic entrepreneurship during periods of institutional friction. Copyright © 2014 Strategic Management Society.

How do Corporate Venture Capitalists do Deals? An Exploration of Corporate Investment Practices

Abstract: How do corporate venture capitalists (CVCs) do deals? Conversations with CVCs suggest that the putative view of venture capital investing is incomplete. We draw on 13 cases of CVC programs to document eight 'corporate investment practices' that are unique to CVCs. These practices reflect pressure on the CVC units for strategic fit and engagement with the corporation and also an opportunity to utilize parental resources. We then show that CVCs vary their emphasis on corporate investment practices, diverging into two distinct investment logics, 'integrated' versus 'arm's-length.' Focus of isomorphism on internal versus external stakeholders explains the emergence of the two logics.

Adaptations to Knowledge Templates in Base-of-the-Pyramid Markets: The Role of Social Interaction

Abstract: While templates may facilitate knowledge sharing within the base-of-the-pyramid, it is often necessary for entrepreneurs to adapt the template for reasons of resource scarcity. We explore the role of social interaction in determining whether these adaptations are beneficial or detrimental. Our results suggest that interactions between the entrepreneur and technical experts who understand the ‘why’ behind each practice can result in improved performance while interactions with entrepreneurial peers can produce more varied results. Thus, the type of knowledge generated through social interaction plays a significant role in the degree to which adaptations to templates are principled versus presumptive in nature. Copyright © 2014 Strategic Management Society.

International Alliances with Competitors and Non-Competitors: The Disparate Impact on Sme International Performance

Abstract: The international entrepreneurship literature maintains that small- and medium-size firms can suffer from resource constraints as they move abroad. To alleviate this problem, research suggests participating in strategic alliances. We develop and test the theoretical perspective that not all alliances are the same; cooperative agreements with non-competitors and competitors have disparate direct and moderating impacts on international performance. Based on an analysis of 162 British and U.S. private SMEs, our results indicate that alliances with non-competitors are positively associated with international performance, but that alliances with competitors are negatively related. In addition, our findings suggest that in alliances with non-competitors, entrepreneurial orientation helps SMEs increase international performance and that in alliances with competitors, entrepreneurial orientation simply reduces the negative impact. Copyright © 2013 Strategic Management Society.

Customer value propositions in declining industries: differences between industry representative and high-growth firms

Abstract: Using institutional theory and a business model perspective, we develop a framework and use content analysis of company Web sites to examine differences in customer value propositions among a sample of high-growth firms paired with two comparison samples of industry representative firms in 18 declining industries in the United States. Our results indicate that high-growth firms develop value propositions that differ substantially from industry representative firms. In addition, high-growth firms communicate their value propositions more clearly and aggressively than do industry representative firms. Copyright © 2014 Strategic Management Society.

Forecasting Errors of New Venture Survival

Abstract: This article studies entrepreneurs' forecast errors around market entry. Using data on nascent entrepreneurs in the U.S. and start-ups in Finland, we find that besides being overoptimistic on average in both countries, entrepreneurs' survival expectations can barely distinguish survival from exits. Moreover, about one fourth of the entrepreneurs do not provide an estimate for the survival of a typical venture. However, among those that do provide it, the estimates are less overoptimistic. We also compare the forecast accuracy of entrepreneurs to those of macroeconomic forecasters. Our findings provide guidance for the development of positive theories of entrepreneurial belief formation and overoptimism. Copyright © 2014 Strategic Management Society.

Mark Casson: the Entrepreneur at 30 -continued relevance?

Abstract: Mark Casson's The Entrepreneur: An Economic Theory (1982) has become one of the most influential books in the field of entrepreneurship. For the first time, this article outlines its origins and summarizes its main themes. The article goes on to show how Casson's subsequent research has closely followed the research agenda he set for himself in The Entrepreneur and illustrates the continuing challenge his work presents to entrepreneurship scholars. The article is based on an interview the authors conducted with Mark Casson on the thirtieth anniversary of the book's publication. Copyright © 2014 Strategic Management Society.

Firm‐Specific Determinants of Product Line Technology Strategies in High Technology Markets

Abstract: In high technology industries, product line technology strategies are critical to firm success. However, the determinants of these product line strategies are still unclear. We suggest that a joint consideration of firm size, firm age, and pre-entry experience better explains the choice of a specific strategy. Results obtained from the personal computer industry reveal that larger firms and older firms were more likely to pursue broad product line technology strategies, whereas the oldest firms reverted to a narrow technology strategy after a particular age. Furthermore, the contingent relationships between firm size, firm age, and pre-entry experience also yielded interesting results. Copyright © 2013 Strategic Management Society.

A Model Scholar and Preeminent Contributor to Our Understanding of Strategic Entrepreneurship: Arnold C. Cooper (1933–2012)

Abstract: This paper discusses the scholarly work of Arnold C. Cooper. He was an influential pioneer in the study of entrepreneurship, strategic management, and technology management, and his work provided an important foundation for subsequent development in those fields. Many of his contributions are a result of methodological approaches to gathering data, enabling him to draw insights from systematic empiricism of phenomena. Many of his most influential works are discussed and linked to subsequent work, including work emanating from this journal. Future research opportunities tied to his work are also elaborated. Copyright © 2014 Strategic Management Society.