Paul R. Steffens

Performance Configurations over Time: Implications for Growth- and Profit-Oriented Strategies

Strategic entrepreneurship can be described as simultaneous opportunity seeking and advantage seeking. Younger firms are generally more flexible and therefore enjoy “discovery advantages,” whereas established firms tend to be resource rich and more experienced and consequently enjoy “exploitation advantages.” The resulting evolution of the two important performance dimensions, “growth” and “profitability,” by firm age is not well understood. In this article we integrate several theoretical arguments concerning profit–growth relationships to develop a dynamic model of firm development, which suggests different development pathways for young firms. This leads to several unidirectional, competing hypotheses that we examine by studying the profitability–growth configurations of approximately 3,500 small firms and how these configurations evolve over time. We find that for both young and old firms a focus on achieving above–average profitability and then striving for growth is a more likely path toward achieving sustained above–average performance than is first pursuing strong growth in the hope of building profitability later. In line with our hypothesis we find that younger firms are over represented as “Stars” (high on both growth and profitability) and underrepresented as “Poor” (low on both growth and profitability). However, young firms in the “Star” category are also less likely than their older counterparts to maintain that position. Furthermore, our results indicate that young firms are overrepresented not only among “Stars,” but also among growth–orientated firms, regardless of the level of profitability. The findings strongly caution against the blind pursuit of growth for young firms, in favor of a thoughtful analysis of how both growth and profitability might be developed by firms. The results also question whether simultaneous high performance in terms of growth and profitability among young firms usually reflects a successful entrepreneurial strategy. The results can also be interpreted as luck on the part of a subgroup of young firms who indiscriminately pursue growth opportunities with varying profit prospects, and in many cases, the high growth–profit performance will be short lived.

A model of multiple-unit ownership as a diffusion process

This paper develops and tests a new model for multiple-unit adoptions of durable goods based on the diffusion modeling tradition. Multiple-unit adoptions are a major component of sales for many consumer durable product categories. For instance, sales of multiple-unit adoptions for televisions have been high than both first adoptions and replacement purchases since 1977, while for automobiles they have represented more than 20% of sales since 1966 in Australia. The structural drivers of multiple-unit adoptions are quite different from either first or replacement purchases. Hence, identifying and modeling the multiple-unit component of sales is important for aggregate sales forecasts. Moreover, consumer requirements for additional units of a product are likely to be considerably different to than for the other components of sales (first purchases and replacement purchases). As such, the ratio of the first, multiple and replacement sales components will strongly influence the product mix requirements of the market. While forecasting and influencing multiple-unit sales is an important managerial issue, very little attention has been given to multiple-unit ownership in the diffusion modeling literature. The only model available was developed for the purpose of modeling relatively short-term behavior of multiple-unit adoptions, rather than the longer-term pattern of sales. We propose a model of multiple-unit adoptions as a diffusion process. We apply the model to both color television and automobiles. Analysis of the models long-term fit and forecasts in these applications provide support for the structure of the new model.

Prediction of air core diameters for hydrocyclones

The flow split between the products of a hydrocyclone is one of the least understood aspects of hydrocyclone operation. This split is greatly influenced by the air core diameter, so an understanding of the air core behaviour would greatly assist in predicting flow splits. A program of combined theoretical and experimental investigation of the factors that control the air core in a hydrocyclone is being undertaken. Rietema type simplifications of the Navier Stokes equations have been extended to include the prediction of air core diameter. The equations which are indirect in their original form have been converted to give a direct solution for the dimensionless pressure and air core diameter ratio. An experimental program using simplified test units has been undertaken. This has obtained pressure drop, air core diameter and velocity profile data over a considerable range of operating conditions. This data is being used to identify and correct deficiencies in the theoretical analysis, and to investigate the range of validity of the resulting relations. The aim is to produce simple relations that can be used to improve the accuracy of typical simulations of hydrocyclone performance, and also to provide some guidance in the design of hydrocyclones.

An Aggregate Sales Model for Consumer Durables Incorporating a Time Varying Mean Replacement Age

Forecasting category or industry sales is a vital component of a companys planning and control activities. Sales for most mature durable product categories are dominated by replacement purchases. Previous sales models which explicitly incorporate a component of sales due to replacement assume there is an age distribution for replacements of existing units which remains constant over time. However, there is evidence that changes in factors such as product reliability/durability, price, repair costs, scrapping values, styling and economic conditions will result in changes in the mean replacement age of units. This paper develops a model for such time- varying replacement behaviour and empirically tests it in the Australian automotive industry. Both longitudinal census data and the empirical analysis of the replacement sales model con®rm that there has been a substantial increase in the average aggregate replacement age for motor vehicles over the past 20 years. Further, much of this variation could be explained by real price increases and a linear temporal trend. Consequently, the time-varying model signi®cantly outperformed previous models both in terms of ®tting and forecasting the sales data. Copyright # 2001 John Wiley & Sons, Ltd.

Growth and Profitability in Small and Medium Sized Australian Firms

This study investigated the longitudinal behaviour of growth rates and profitability for a large sample of Australian firms. Similar to previous studies, growth rates were found to be much more volatile than profitability measures. Using a regression equation with lagged profit and growth variables, we found no evidence of a consistent relationship between growth and profitability. The longitudinal behaviour of the growth profitability relationship was also investigated. Consistent with previous research, we found that higher growth firms were on average younger. Similarly, high and low profit firms were found to be younger on average. Our results found that a higher proportion of firms pursuing the profitability pathway were much more likely to achieve high growth and profitability in following years. A much lower proportion of firms pursuing the growth pathway were likely to achieve above average performance in profitability in future years.

Comprehensive Australian study of entrepreneurial emergence (CAUSEE) : design, data collection and descriptive results

The Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE) is a research programme that aims to uncover the factors that initiate, hinder and facilitate the process of emergence of new economic activities and organizations. It is widely acknowledged that entrepreneurship is one of the most important forces shaping changes in a country’s economic landscape (Baumol 1968; Birch 1987; Acs 1999). An understanding of the process by which new economic activity and business entities emerge is vital (Gartner 1993; Sarasvathy 2001). An important development in the study of ‘nascent entrepreneurs’ and ‘firms in gestation’ was the Panel Study of Entrepreneurial Dynamics (PSED) (Gartner et al. 2004) and its extensions in Argentina, Canada, Greece, the Netherlands, Norway and Sweden. Yet while PSED I is an important first step towards systematically studying new venture emergence, it represents just the beginning of a stream of nascent venture studies – most notably PSED II is currently being undertaken in the US (2005– 10) (Reynolds and Curtin 2008).

Shouting From the Ivory Tower: A Marketing Approach to Improve Communication of Academic Research to Entrepreneurs

Evidence–based practice in entrepreneurship requires effective communication of research findings. We focus on how research synopses can “promote” research to entrepreneurs. Drawing on marketing communications literature, we examine how message characteristics of research synopses affect their appeal. We demonstrate the utility of conjoint analysis in this context and find message length, media richness, and source credibility to have positive influences. We find mixed support for a hypothesized negative influence of jargon, and for our predictions that participants’ involvement with academic research moderates these effects. Exploratory analyses reveal latent classes of entrepreneurs with differing preferences, particularly for message length and jargon.

Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE): Project Presentation and Early Results

It is widely acknowledged that entrepreneurship is one of the most important forces shaping changes in the economic landscape (van Praag and Versloot 2007). An understanding of the process by which new economic activity and business entities emerge is therefore vital. The Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE) is a research project that aims to uncover the factors that initiate, hinder, or facilitate the process of emergence, survival, and success of new independent businesses.

The Chinese steel industry in transition: Industry perspective on innovation policy

There is little empirical research on how the Chinese Government should function in innovation management, particularly during its critical period of economic transition. This study explores and investigates the Chinese Governments innovation management structure, procedures and functions by interviewing government R&D management officials and industrial innovation managers and users. Questionnaires were distributed to industrial innovation practitioners and users of new steel products to solicit their perspectives on innovation policy issues. Findings indicate that current government innovation management procedures have received a tepid welcome from industry. While there was general agreement that the government should maintain some involvement in industrial innovation, opinions regarding just how the government should intervene differed significantly between producers and users. Producers generally favoured more indirect government involvement. Policy implications are discussed.

Applying Diffusion Models with Regional Heterogeneity

Recent studies of innovation diffusion have investigated cross-country heterogeneity, but implicitly assumed within-country homogeneity. As such, these studies potentially overlook within-country variations in diffusion patterns, which may be even more important to marketing managers and researchers alike. The current paper is concerned with such intra-country variations using one of many possible a priori segmentation schemes, namely geographic segmentation. It empirically demonstrates that when substantial regional variations in diffusion patterns occur, taking account of these regional differences improves both short- and long-term forecasting under certain conditions. Regional differences in diffusion patterns also provide some important normative implications.