Pankaj C. Patel

Systematic Search and Its Relationship to Firm Founding

This research uses a representative sample of U.S. nascent entrepreneurs to find that there is a positive relationship between their use of systematic search and their success in founding new firms. We control for mediating variables and find that searching systematically leverages firm founding by using an adaptive decision–making style and social capital. Systematic search also appears to reduce environmental uncertainty, which has additional important implications for aspiring entrepreneurs. Finally, this research suggests possible lines of future inquiry.

Forgiving Business Models for New Ventures

We set forth the attributes of forgiving business models that entrepreneurs can use to minimize losses while exploiting ideas to launch new ventures. Venture ideas possessing these attributes have greater potential because they can shift risk to resource providers. Thus, the success of a venture partially depends on the market conditions for others, which affects how an opportunity can be exploited. We emphasize combinations of outside options for resource providers together with their market interaction costs. Finally, we discuss the contributions of this research for entrepreneurs, its theoretical implications, and future research possibilities.

ENTREPRENEURIAL DISCOVERY BY THE WORKING POOR

We test the proposition that it is possible to train the economically vulnerable, working poor of inner cities to make entrepreneurial discoveries. We demonstrate the effective use of a model of constrained, systematic search. We employ an experimental design with a control group using the alertness approach recommended by received theory and a treatment group using systematic search. Our results indicate the systematic search approach works 25 times better among a sample of the working poor. In addition, we operationalize systematic search training protocols and implementation. We conclude by discussing special challenges inherent in training the economically disadvantaged and suggest that the lack of trust of those from outside the local community necessitates the building of bridges to targeted residents. Bridge-building, as an integral part of public policy utilizing large-scale training, might be accomplished through reliance on established community relationships.

Evaluating the Wealth-Creating Potentialof Business Plans

This research tests a novel, theoretically-based approach for evaluating and predicting business plan performance. Using hidden, but known historical cases, it successfully classified 31 out of 31 venture capital funded ventures into 3 levels of performance. These levels of performance were less than 20% ROI, between 20% and 35% ROI and greater than 35% ROI. Moreover, the results accounted for 74% of the variance above the expected ROI to investors based on the original business plan estimates. This research is important to entrepreneurs, public policy analysts and investors because it may increase the success rate of estimating commercialization efforts.