Andrea Larson

Network Dyads in Entrepreneurial Settings: A Study of the Governance of Exchange Relationships

Investigates network dyads and the manner in which control is exercised in these structures. Four entrepreneurial, high growth firms, each from a different industry, were selected to participate in this ethnographic analysis. The represented industries are telephone equipment, clothing, computer hardware, and environmental support systems. Seven network dyads were identified for the four firms considered. The partnerships were typically other members of the value chain - e.g., suppliers, distributors and final customers. The analysis identified three phases for the network dyad development: preconditions for exchange, conditions to build, and integration and control. The first phase, preconditions, utilized prior relations in addition to personal and firm reputations to reduce uncertainty and establish expectations and obligation. The second phase, the building process, has significant reliance on the trust and the development of reciprocity norms. The third phase is marked by three forms of integration: operational, strategic, and social control. Examination of the four firms and their seven dyadic relationships support the model. These firms were found to be engaged in stable, sustained relationships with a high degree of cooperation and collaboration. The mode of exchange found in these dyadic relationships is characterized as a network form of governance, which appears to be beneficial to high growth firms. Further research using this model could be done for R&D partnerships, cooperative marketing agreements, and other forms of strategic alliances and joint ventures. (SRD)

A Network Model of Organization Formation

This paper presents a network model of organization formation and builds upon theories of social and socioeconomic exchange. The model explains the transformation of exchange relationships from a set of relatively simple, often single-dimensional dyadic exchanges into a dense set—a network—of stable, multidimensional and multilayered interorganizatlonal exchange relationships. The model details three stages of entrepreneurial networking activity which are used to secure the critical economic and non-economic resources needed to start a business: (1) Focusing on the essential dyads; (2) Converting dyadic ties to socioeconomic exchanges; and (3) Layering the exchanges with multiple exchange processes. In all three stages, there is an iterative process which involves the exploration, screening and selective use of network dyads to match the business definition of the emerging firm. Organization formation results from the crystallization of stable, committed, revenue-generating, inter-organizational exchange relationships which extend beyond the earlier idiosyncratic and personalized relationships of the entrepreneur. A network model of organization formation appreciates the social embeddedness of economic relationships and the multidimensional nature and content of business relationships.

Partner networks: Leveraging external ties to improve entrepreneurial performance

Abstract This paper examines the conditions under which successful partnership networks were formed by four entrepreneurial companies. Seven alliance partnerships were studied. Both sides benefited through product advances, administrative process improvements, and rapid response times due to the greater levels of information exchange and coordination through computers. Key to understanding the partnerships was the development of trust between organizations. The value of these partnerships in terms of benefits to smaller companies has not received adequate attention in the literature. Yet forging such collaborative alliances seems crucial in explaining the ability of smaller firms to grow and to innovate. These networks should be seen as a competitive alternative to vertical integration. Smaller-scale entrepreneurial firms lack the financial resources to vertically integrate steps in the value added chain. This research suggests that a network organizational form can be cultivated by smaller companies to realize the benefits of vertically integrated functions while avoiding the bureaucratic inefficiencies of that organizational form. The network strategy of building close collaborative alliances with a limited set of suppliers and customers enables a firm to stabilize itself while remaining flexible and responsive to a changing market. An important aspect of strategic planning for the entrepreneurial firm is to identify prospective partners and consciously initiate and build partnerships with responsive firms. The data gathered indicate that these alliances do not form by chance but can be studied as patterned, predictable exchange structures that can be replicated and used to improve a firms competitive position against larger players. The paper argues for an expansion of our concept of entrepreneurship to include the effective management of partnership networks. We should also expand our ideas about organizational forms to recognize the network structure as an effective governance arrangement for entrepreneurial companies. The findings strongly suggest that entrepreneurial firms ability to identify, cultivate, and manage these network partnerships is critical to survival and success.

Sustainable innovation through an entrepreneurship lens

Sustainable innovation is an emerging and fundamental force for change in business and society. Its potential to transform technology, products and markets distinguishes it as an area of entrepreneurial opportunity and a force of ‘creative destruction’ as defined by economist Joseph Schumpeter (1934). Walden Paddlers is a case example of Schumpeterian creative destruction in the area of sustainable innovation. By examining the process by which product and process innovations were achieved by this startup virtual corporation we gain a broader comprehension of how environmental and sustainability considerations can be successfully integrated into business strategy. The company is studied from idea generation through successful launching and management. Key to understanding the outcome was the environmentally related opportunity and the process through which the entrepreneur created innovation through the cultivation and leadership of a network of players. Two premises underlie the analysis: (i) by focusing on opportunity and innovation, the entrepreneurial field offers insights into the relationship between business and the natural environment; (ii) studies of startup entrepreneurial firms implementing environmental and sustainable strategies provide important data that add to our rapidly evolving body of knowledge about the relationship between corporate behavior and the environment. Copyright

Sustainable Business: Opportunity and Value Creation

Sustainable Business: Opportunity and Value Creation Andrea L. Larson Assistant Professor of Business Administration Darden Graduate School of Business Administration University of Virginia P.O. Box 6550 Charlottesville, Virginia 22906-6550 (804) 924-3221 (804) 243-7677 fax LarsonA@darden.gbus.virginia.edu Elizabeth Olmsted Teisberg Associate Professor of Business Administration Darden Graduate School of Business Administration University of Virginia P.O. Box 6550 Charlottesville, Virginia 22906-6550 (804) 243-7689 (804) 243-7676 TeisbergE@darden.gbus.virginia.edu Richard R. Johnson Research Assistant Darden Graduate School of Business Administration University of Virginia P.O. Box 6550 Charlottesville, Virginia 22906-6550 (804) 924-3920 (804) 243-7677 FAX JohnsonRi@darden.gbus.virginia.edu Sustainable Business Special Issue Interfaces Revised: May 11, 1999 We would like to thank Mike Rothkopf for his helpful comments and to thank the following organizations for funding this project: The Darden School Foundation, the Genzyme Corporation, the Batten Center for Entrepreneurial Leadership, and the Tennessee Valley Authority.

Entrepreneurship, Innovation, and Sustainability Strategies at Walden Paddlers, Inc.

Walden Paddlers, a market leader in popularly priced recreational kayaks, used a simple, inexpensive guide to evaluate decisions against a parameter of environmental responsibility. This guide was applied across Waldens virtual corporation structure to yield quick innovations and economic, strategic, and environmental advantages. The guide enabled Walden and its network of partners to produce light, strong, inexpensive kayaks with superior performance characteristics made from 100-percent-recycled plastic, the only such kayaks on the market. Walden also employed the guide to create a nearly waste-free product-packaging-and-shipping system. Waldens decision guide succeeded within a network of collaborative alliances because it was applied comprehensively, it helped to clarify common goals, it created benefits for all participants, and it was implemented by a skilled entrepreneur-leader who coordinated decision making in the network.

The Thread of Inchoate Demand in Social Entrepreneurship

There is an emerging belief amongst non-profit, environmental and business leaders that social entrepreneurship may present an alternative solution to many of the issues we face. Whether the problem is homelessness (Hibbert et al., 2002), funding for non-profit art organizations (Hughes and Luksetich, 2004), or environmental degradation (Cohen and Winn, 2007), one can find active new ventures led by those labelling themselves as ‘social entrepreneurs’. As with the broader field of entrepreneurship, there has been a struggle to define social entrepreneurship and its contribution as a field of study (Venkataraman, 1997). Some scholars have focused on outlining key differences with and similarities to ‘traditional’ entrepreneurship (Austin et al., 2006; Dees, 1998) and others have focused on the prioritization of a social mission in these organizations (Dees, 1998; Mair and Marti, 2006). Attempts to create a taxonomy delineating non-profit, for profit, and complementary profit models have been advanced (Fowler, 2000). While some have chosen to squarely place social entrepreneurship within the realm of non-profit organizations utilizing traditional business techniques (Zietlow, 2001), others describe social entrepreneurship as crossing nonprofit, business and government boundaries (Austin et al., 2006). On the whole, it appears as though the focus of attention is on the ‘social’ in social entrepreneurship rather than the ‘entrepreneurship’ that goes into addressing social issues of interest.

Green Chemistry and EVA: A Framework for Incorporating Environmental Action into Financial Analysis

The past few decades have seen increased interest and concern around businesses’ relationship with their natural environments and, in particular, ways in which businesses can either help or hinder the transformation to a sustainable society (Hart 2005; Hawken, Lovins, and Lovins 2000; Hoffman 2000; Reinhardt 2000). Many frameworks and decision-making tools, most of which originated in engineering or product design communities, have been developed to address these issues. While these tools have recently come to the attention of corporate strategists and financial managers, widespread adoption does not seem imminent and is pending exposition of a compelling “business case.”

REI: Sustainability Strategy and Innovation in the Outdoor Gear and Apparel Industry

Many companies view financial variables independently from ecological and social variables. Is it possible to hold ones organization equally accountable for financial performance and social responsibility? This field-based case is suitable for MBA and undergraduate courses or modules in sustainability and innovation, ethics, and corporate social responsibility. For REI, an outdoor gear and apparel manufacturer, the challenge lies in how to expand sustainability awareness through consensus building across the organization and with outside collaborators. As it designs a new strategic framework for the operations footprint, the company seeks to adopt a corporate strategy on product stewardship and adapt its philanthropy strategy around sustainability objectives.