Murray B. Low

Entrepreneurship: Past Research and Future Challenges

The contributions and shortcomings of past entrepreneurship research can be viewed within the context of six research design specifications: purpose, theoretical perspective, focus, level of analysis, time frame and methodology. The authors suggest a unifying definition of the field of entrepreneurship. The recent trend toward theory driven research that is contextual and process oriented is encouraging. It is time for entrepreneurship researchers to pursue causality more aggressively. Exploratory studies that are not theory driven should be discouraged unless the topic is highly original. Implications for practicing entrepreneurs are discussed.

Effects of strategy and environment on corporate venture success in industrial markets

Abstract The literature identifies four important factors 1 that determine the success of a corporate venture: culture, climate, and corporate support (Schon 1966; Kanter 1983; MacMillan, Block, and Subba Narasimha 1984; Fast and Pratt 1981; Roberts 1980; Maidique and Hayes 1984); structure and venturing effort (Burgelman 1983, 1985; Souder 1981; Maidique 1980; Block 1985; MacMillan and George 1985); planning, monitoring and evaluation (Vesper andHolmdahl 1973, Quinn 1979; Fast 1981; Block and MacMillan 1985); and strategy and environment (Cooper 1979, 1983; Hobson and Morrison 1983; Biggadike 1979). This paper focuses on the last of the above issues. It seeks to explore the importance of environment and strategy for corporate venture success. At the broadest level, two theoretical perspectives have dominated the organization-environment-strategy literature in recent years: population ecology and strategic adaptation. The population ecology perspective argues that organizational survival is determined by environmental selection (Hannan and Freeman 1979,1984; Aldrich 1979; Greenfield and Strickon 1986). Technological and demographic change results in “new resource sets” that provide opportunities for the expansion of existing, or the founding of new, organizations (Brittain and Freeman 1980). A shifting network of social linkages, both within and between existing firms, connects aspiring venture managers/entrepreneurs with resources and opportunities (Aldrich and Zimmer 1986). While managers develop and implement strategies, these strategies do not directly determine success. Instead, they are one of many sources of random variation that will be selected for, or against, by the environment. In contrast, the strategic adaptation perspective implies that new venture success is a function of the managers or entrepreneurs ability to assess internal capabilities and environmental conditions for the purpose of developing and executing effective strategies (Andrews 1980; Porter 1980; Vesper 1980; Timmons 1982). The environment is viewed as a (major) constraint within which strategy is developed. Furthermore, environments are not immutable and are subject to negotiation and manipulation (Child 1972; Miles and Cameron 1982; MacMillan 1983). In recent years it has been acknowledged that both population ecology and strategic adaptation perspectives provides valuable insight. A new body of literature has emerged that attempts to reconcile these theories (Tushman and Anderson 1986; Van de Ven, Hudson and Schroeder 1984; Singh, House, and Tucker 1986; Aldrich and Auster 1986). This paper follows in this tradition and seeks to explore empirically the relative impact of strategy and environment on new corporate venture performance in industrial markets.

Movements, bandwagons, and clones: Industry evolution and the entrepreneurial process

Abstract Entrepreneurship research has paid insufficient attention to the context in which new businesses are started. Consequently, efforts to identify factors that consistently lead to entrepreneurial success have failed. This is because what works in one context will not necessarily work in another. Even worse, factors that lead to success in one context may lead to failure in another. This article addresses this problem by drawing from the concept of industry evolution to identify three broad but distinct organizing contexts—emerging, growth, and mature industries—and demonstrating how each context presents a different set of entrepreneurial challenges. An industry is defined not as a group of firms producing close substitutes, but instead, as a group of firms of the same organizational form. Industry evolution is understood therefore as the diffusion of an organizational form, with emerging, growth, and mature stages corresponding to the creation, exploitation and erosion of competitive advantage. Defining an industry in this manner makes it possible to overcome the problem of shifting industry boundaries and enables us to distinguish between entrepreneurial activities that shake up existing industries by creating new and competing organizational forms and entrepreneurial activities that replicate well-known organizational forms and drive an industry toward equilibrium. It also enables us to draw from the work of industrial organization economics, strategy, and population ecology. Entrepreneurship is defined as the creation of new organizations and is viewed as a context-dependent social process. New organizations are enacted as critical stakeholders change their behaviors in ways that allow the organization to emerge. The process is successful when the short-term existence of a new organization is no longer at risk. A typological theory of entrepreneurial success is developed by examining how the fit between context and four other critical dimensions cause successful foundings. The theory is multiplicative and probabilistic. It is multiplicative in that all dimensions need to fit for a founding to be successful. Poor fit in any one area can lead to failure. It is probabilistic in that the better the overall fit, the better the odds of success. In addition to context, the dimensions we examine are entrepreneurial networks, entrepreneurial confidence-building behaviors, the motivation of stakeholders, and organizational structures and strategies. In terms of entrepreneurial networks, we examine whether entrepreneurs have weak-tie or strongtie networks, and whether their networks are homogeneous or include subgroups that are unrelated. In terms of confidence-building behaviors, we explore the use of informal (e.g., repeated personal interaction) versus formal (e.g., contracts) mechanisms. With respect to stakeholder motivations, we ask whether stakeholders are driven by social or instrumental motivations. In terms of structure and strategy, we consider two issues. First, we explore whether the emerging organization is market or hierarchy based, and we consider the extent to which the organization is innovative versus imitative. We argue that these various dimensions come together in three logical configurations, that we label movements, bandwagons, and clones. EMERGING INDUSTRY ORGANIZING: MOVEMENTS Movements are the organizing processes through which new organizational forms are created. Pioneers of new forms of organizations have unique personal networks that enable them to see the potential of bringing the factors of production together in new combinations. They have strong ties to two or more nonoverlapping networks. To succeed, they must overcome problems associated with lack of legitimacy. Theentrepreneur is joined by highly committed stakeholders who are motivated by social factors. Belief in the ventures success is achieved through informal confidence building, such as incremental personal exchange and third-party reputation. In this manner, stakeholders develop personal familiarity with the form and make positive assessments about the entrepreneurs competence and trustworthiness. The organizing structure is market based with participant commitments being secured through flexible, cooperative agreements. The strategic emphasis is on innovation and experimentation. The belief in the importance and viability of the new organizational form serves as a loose ideology for controlling and coordinating the actions of participants. GROWTH INDUSTRY ORGANIZING: BANDWAGONS Bandwagons are organizing processes that seek to exploit the potential of a newly legitimated form. The strategic challenge at this stage is to prosper newly legitimated form. The strategic challenge at this stage is to prospeamidst rapid growth and change. The successful entrepreneur has an extensive network of high status individuals that can be tapped to quickly mobilize resources within a narrow window of opportunity. Stakeholders are motivated less by social factors, than by a desire to secure the benefits of being early movers. Formal confidence-building mechanisms dominate. In an effort to achieve efficiencies, develop sources of competitive advantage, and preempt the competition, more value-chain activities are developed in house. The strategic posture remains entrepreneurial; however, more emphasis is placed on following the example of other firms. MATURE INDUSTRY ORGANIZING: CLONES Clones are the organizing processes that replicate existing forms and incorporate all that has been learned about a given industry and type of business. Strong competition along with stable demand and technology make it difficult to find a source of competitive advantage in a mature industry. At this stage, the successful founder is someone with extensive industry knowledge and contacts who is capable of extracting operating efficiencies and/or identifying some underserved market segment. Expected returns are modest and stakeholders need to be motivated partly by social factors. However, the large amount of information now available about the form and the market itserves enables stakeholders to base their participation decisions on a rational assessment of expected future benefits. Given increased experience with the form, the relationships between the organization and its stakeholders are more predictable and as a consequence, subject to greater formalization. Models exist showing how to structure theserelationships, facilitating greater use of more specific contracts and guarantees. With tight margins and the need for efficiency, greater use is made of hierarchy in an attempt to manage costs. These same highly competitive conditions also make mistakes very expensive. The organization needs to draw upon the knowledge that others have learned about the form. Consequently, it adopts a more conservative strategic posture and is less likely to deviate from established practice. IMPLICATIONS FOR FUTURE RESEARCH If we are ever to understand what leads to entrepreneurial success, we must pay more attention to the context in which organizing occurs. Our typology suggests that fundamentally different processes may be at work at different stages of industry evolution. In addition to empirically testing our theory, an opportunity exists to reexamine the existing entrepreneurship literature through a new conceptual lens, asking how our interpretation of the research would differ if context was considered explicitly. Our theory also has the potential to inform questions about the role of organizational foundings in the diffusion of competitive advantage and to examine the impact of.founding conditions on long-term strategic adaptation.

Editor's Introduction: Low and MacMillan Ten Years On: Achievements and Future Directions for Entrepreneurship Research

In 1988, Murray Low and Ian MacMillan published a review of developments in entrepreneurship research and identified challenges for the future (Low and MacMillan, 1988). Since the appearance of their paper, there has been an explosion of entrepreneurship research. This Special Issue had its genesis a decade after the appearance of the Low and MacMillan article, when nineteen scholars from nine countries were invited to two workshops held at the Jonkoping International Business School (JIBS) in Sweden in the fall of 1998. The purpose of the workshops was, and the purpose of this Special Issue is, to take stock of the developments of the past decade and to identify directions for future research.

Developing an entrepreneurship game for teaching and research

An entrepreneurship game that is based on solid theory has significant potential to inform entrepreneurship research and enhance classroom experiences. However, developing a game that succeeds at both teaching and research is a difficult task This article describes one such attempt, which has achieved initial indications of success on both counts. The article describes the game and its theoretical underpinnings. It discusses the value of the game for teaching and provides an example of its research potential Lessons learned while developing the game are discussed.

The effects of liabilities of age and size on autonomous sub-units of established firms in the steel distribution industry

Abstract This study investigates the effects of organizational sub-unit age and size on three dimensions of customer relationships: response satisfaction, service-depth satisfaction, and perceived cooperation. The study is motivated by the frequent suggestion that one way to introduce an entrepreneurial climate into large and/or old organizations is to create small, autonomous sub-units. By establishing internal start-ups, mature organizations can achieve the flexibility and innovation associated with youth and small size. However, this argument only holds if it is found that being embedded in an established firm enables the sub-units to overcome some of the problems normally experienced by independent start-ups. Liabilities of age and size hypotheses suggest that there are advantages and disadvantages to youth and old age, and correspondingly, to small and large size. Often these advantages and disadvantages are complementary. Consistent with these insights we offer the following three sets of hypotheses on the effects of sub-unit age and size on the relationships between an organizational sub-unit and its customer population.

PERFORMANCE AND BETWEEN-GROUP GOAL CONSENSUS: AN EMPIRICAL EXPLORATION OF THE MULTIPLE CONSTITUENCY MODEL OF ORGANIZATIONS.

This research explores how financial performance affects goal consensus between groups in organizations. It is argued that in the case of financially healthy firms, an improvement in performance re...