Charles H. Matthews

Founding Family Controlled Firms: Performance, Risk, and Value

An agency theory framework is used to test the effects of founding family control on firm performance, capital structure, and value. Both the finance and management literatures regarding the relationship between firm control and firm value are explored. Controlling for size, industry, and managerial ownership, the results suggest that firms controlled by the founding family have greater value, are operated more efficiently, and carry less debt than other firms.

Differences in Entrepreneurial Opportunities: The Role of Tacitness and Codification in Opportunity Identification

The role of opportunities in the entrepreneurial process remains relatively underdeveloped. To address this issue, we develop a definition of an entrepreneurial opportunity and draw upon a distinction from the domain of knowledge management to suggest a continuum of entrepreneurial opportunities ranging from codified to tacit. Though both traditional and contemporary research has examined how individual differences relate to the identification of opportunities, we focus instead on the importance of differences in the opportunities themselves. Specifically, we examine how relative differences in the degree of opportunity tacitness relate to the process of opportunity identification. We find that relatively more codified opportunities are more likely to be discovered through systematic search, whereas more tacit opportunities are more likely to be identified due to prior experience. These findings contribute to an increased understanding of the role of the opportunity in entrepreneurship research and have important implications for economic theories of entrepreneurship, entrepreneurial learning, entrepreneurial networks, and entrepreneurial education.

Importance and Implementation of Baldrige Practices for Small Businesses

An empirical survey was conducted to determine how small business perceive and implement the high-performance management practices outlined by the Malcolm Baldrige Criteria for Performance Excellence. The survey identifies the practices that small firms..

Making rational use of ‘irrationality’? Exploring the role of need for cognitive closure in nascent entrepreneurial activity

A fundamental question of interest to both researchers and practitioners alike focuses on why some individuals discover and elect to exploit opportunities to create future goods and services while others do not. Past studies have focused on the role knowledge-based resources play in the early stages of new venture creation, yet few have considered the role cognitive motivations play in impacting the processing and use of information during this process. In this study, we theorize that a cognitive need for closure (NfC), or possessing a desire for an answer on some topic as opposed to enduring confusion and ambiguity, is an important aspect of the entrepreneurial judgment formation process. We hypothesize that the need for closure will be positively related to nascent entrepreneurial activity because it provides a cognitive mechanism for dealing with the opened-ended nature of opportunity pursuit. Data drawn from the Panel Study of Entrepreneurial Dynamics (PSED) support this hypothesis. More specifically, results suggest that a high NfC is likely to foster the exploitation of discovered opportunity irrespective of their age, gender, position in the family birth order, or unique personal knowledge base. Implications for future research and practice are discussed.

Linking self‐assessment to the external environment

Self‐assessment is increasingly prevalent in many organizations. Although managers perceive self‐assessment as internally driven, the well‐known link between organizational activities and the external environment suggests that outside forces play a significant role. This investigation explores the external motivators of self‐assessment through a field study of 14 organizations. Five factors were found to link the conduct of self‐assessment to the external environment: availability of an externally developed or sponsored model, presence of a boundary spanning individual, affiliation with professional and trade associations, pressure from powerful external entities, and potential for external reward or recognition. These findings suggest that self‐assessment is driven significantly by forces external to the organization. How these external factors combine to form the context of self‐assessment may affect the outcomes of the project.

Contextual Motivation and Growth Aspirations Among Nascent Entrepreneurs

‘‘The concept of the nascent entrepreneur captures the flavor of the chaotic and disorderly founding process’’ (Acs & Audretsch, 2003, p. 3). A nascent entrepreneur is defined as someone who initiates activities that are intended to culminate in a viable new firm (Reynolds, 1994; Davidsson, 2004; 2005). Yet, what motivates people to start a new business remains poorly understood (Shane, Locke, & Collins, 2003). Existing research indicates that there are micro-level and macrolevel factors that influence the nascent entrepreneurial process. This chapter focuses on the latter, specifically exploring the macro–micro linkages in relation to context. Consequently, this assessment contributes to the understanding of entrepreneurial phenomena by specifically identifying contextual dimensions in which to differentiate types of nascent start-ups, which in turn, will lead to more precise interpretations of why individuals enter the firm creation process. The goal of the Panel Study of Entrepreneurial Dynamics I & II (PSED) is to identify how new firms come into existence through the study of nascent entrepreneurship. Two emphases have emerged from the project in order to understand the process of entrepreneurship. One centers around personal characteristics of individuals who pursue the new venture (Shaver & Scott, 1991) and the other is centered on the actual behavior initiated to establish a new firm (Gartner, 1998; Gartner, Shaver, Carter, & Reynolds). These factors focus on micro-level issues related to new firm creation. However, the firm birthing process occurs in a unique and specific environment (Reynolds, 2004). The multi-dimensional nature of entrepreneurship as a construct requires scholars to investigate not only the factors that have immediate impact on the start-up process along with those individuals who are directly involved, but also the contextual environment in which the entrepreneur operates.

ENTREPRENEURIAL CAPITAL: EXAMINING LINKAGES IN HUMAN AND SOCIAL CAPITAL OF NEW VENTURES ¤

Despite advancing extant theory, studies have tended to oversimplify the roles of human and social capital influences on nascent activity by underemphasizing the importance of motivational factors, construct dimensionality and context. This study seeks to extend previous efforts by investigating the relationship between various forms of human and social capital in the new venture creation process, both generally and across high and low technological contexts. Findings show that certain aspects of human capital are systematically related to certain aspects of social capital regardless of technological context, suggesting that nascent entrepreneurs may benefit more broadly from engaging in systematic efforts to construct certain types of social capital in support of venturing activities. Equally important, these findings support the central proposition that entrepreneurship theory and practice will benefit from more focused research efforts to generate insights into the dynamic relationships between individuals, their social worlds and entrepreneurial outcomes.

Inside the Innovation Ecosystem: Embeddedness, Venture Type and Social Tie Development in Nascent Ventures

This research presents a series of testable propositions examining the context of the innovation ecosystem and the role of start-up types and the founders’ relationships with social tie development in the venture’s early stages. Studies suggest that, in general, social capital provides a compelling focal point for new venture creation activity. We incorporate the innovation ecosystem concept to further explicate the role of contextual factors in the development and utilization of social capital in the early venture stages.

'Rules of Conduct'; Applying Deference and Demeanor to Understand Status Inconsistency and Role Conflict in Family Firms

Erving Goffmans analysis of everyday life interaction rituals as significant social ceremonies (Goffman, 1963:8; 1956:473, 499; 1971: 62-65) is the foundation for the propositions presented in the paper. Applying the concepts of deference and demeanor developed by Goffman (1956), this paper will explore how the “rules of conduct” in regards to managing social position within family businesses may lead to conflict as a result of status inconsistency and role conflict. Subsequently, a typology is provided in which dysfunctional conflict may be managed by family firms based on the degree of individual deference or demeanor.

A comparative examination of career and start-up expectations in South Korea, Ukraine, and the United States

Relatively few comparative studies have examined how perceptions across cultures might converge or diverge regarding careers in general and new venture careers in particular. Our research addresses this gap by providing a comparative study of career perceptions among undergraduate business students in three countries with different levels of experience with capitalism: Ukraine, South Korea, and the United States. Results suggest both surprising differences and interesting similarities between undergraduate students in the three countries with regard to how they perceive characteristics associated with entrepreneurial careers. Findings are discussed in the context of distinct differences and commonalities across cultures and implications for future research provided.