R. Michael Holmes

Architecture of Entrepreneurial Learning: Exploring the Link Among Heuristics, Knowledge, and Action

We extend existing theories of entrepreneurial learning and highlight the effects of heuristics under two different learning contexts: experiential learning and vicarious learning. Specifically, we argue that heuristics are consequential in explaining variations in learning. In some cases, heuristics can be highly adaptive and beneficial to the accumulation of knowledge. In others, they can distort judgments and bias learning. By considering linkages among heuristics, knowledge, and action, we seek to provide a more complete model of entrepreneurial learning that allows for examination of the influence of judgments on learning and to expose conditions that can benefit or limit effective action in an entrepreneurial setting.

The Interrelationships Among Informal Institutions, Formal Institutions, and Inward Foreign Direct Investment

This research contributes to institutional theory by examining the influence of informal institutions on formal institutions and the effects of formal institutions on inward foreign direct investment. In particular, the authors integrate prior research from multiple disciplines to identify and to examine the roles of a country’s formal regulatory, political, and economic institutions. The results suggest that the country’s informal institutions, in the form of the cultural dimensions of collectivism and future orientation, shape the country’s formal institutions. In turn, each of the three formal institutions affects the country’s level of inward foreign direct investment differently. To facilitate future research, the authors also provide a set of measures for formal institutions in 50 countries.

IPO Research in Management and Entrepreneurship: Moving the Agenda Forward

Building on research from multiple fields, management and entrepreneurship scholars have shown increasing interest in the causes and consequences of initial public offerings (IPOs). The authors summarize this emerging literature and categorize research on IPOs into four broad themes: corporate governance, upper echelons, social influence, and innovation. They also review the various measures used by scholars to assess IPO performance. Based on this review, the authors develop an agenda for future research. This agenda provides both topics and research questions for future research and recommendations regarding IPO performance measurement.

Management Theory Applications of Prospect Theory: Accomplishments, Challenges, and Opportunities

The authors review management research drawing on prospect theory, focusing primarily on studies in strategic management and organizational behavior/human resource management. These studies have made valuable contributions to several prominent research streams. However, they commonly underutilize or misconstrue central arguments from prospect theory. Furthermore, they illustrate that applying prospect theory in organizational settings poses several theoretical and methodological challenges. Thus, the authors review these studies, critically analyze them, and make suggestions to enrich future work.

Diversification to Achieve Scale and Scope: The Strategic Implications of Resource Management for Value Creation

Research on diversification has produced insights into possible linkages between organizational scale and scope and firm performance. However, the paucity of research on strategy implementation has hindered our understanding of the broader performance implications of diversification. We extend the resource-based view and diversification research by examining how firms can exploit diversifying investments designed to achieve scale and scope economies. Successful firms more effectively structure their resource portfolio, bundle resources into capabilities, and leverage these capabilities when implementing a diversification strategy. We develop a model linking strategies by which firms expand product and geographic market scope to the actions they take to manage resources. We examine three actions – internal development, acquisitions, and strategic alliances – and discuss the implications of these actions using the resource management framework.

It's Who You Know and What You Do: How SMEs from Emerging Economies Capitalize on Founder Ties to Create Bargaining Power with Foreign Multinational Alliance Partners

We examine the relative bargaining power in alliances between small- and medium-sized enterprises (SMEs) from emerging economies and multinationals from developed markets. Our work highlights the importance of founders’ personal ties, network positions, and the processes their firms use to manage resources. Specifically, we evaluate how SME founders’ ties with local government officials and business managers may serve as the conduit for value creation and SMEs’ bargaining power over foreign multinational partners. Further, this work explores the importance of resource management processes (bundling and synchronization) to enhance the value of personal ties. In doing so, we offer theory to demonstrate that SMEs’ bargaining power in strategic alliances is a function of the social relationships and resource management processes that underlie and shape the firms’ competitiveness and capabilities in emerging economies.

Top Executive Goal Orientations’ Effects on Environmental Scanning and Performance: Differences Between Founders and Nonfounders:

Firms differ in the extent to which they scan their environments, which ultimately affects their performance. Although upper echelons theory suggests that top executives’ individual-level attributes affect firm strategy and performance, our understanding of how these attributes affect firms’ environmental scanning remains weak. Advancing knowledge in this area is important because such scanning is a key first step in strategic decision making. We theorize that top executives’ goal orientations (i.e., inherent motivations that shape what individuals generally seek to accomplish when engaging in challenging tasks) affect their firms’ environmental scanning. Specifically, firms whose top executives exhibit higher learning goal orientations (i.e., they seek knowledge in an effort to improve) or higher performance prove goal orientations (i.e., they seek to demonstrate their competence to others) might engage in more environmental scanning than firms whose top executives have higher performance avoid goal orientations (i.e., they seek to avoid demonstrating incompetence). We also theorize that these relationships differ between founders (who have more status and influence in their firms) and nonfounders (who are under more pressure from owners). As firm environmental scanning is found to relate positively to firm performance, understanding how top executives shape this activity has important theoretical and practical implications. This study contributes to the growing stream of upper echelons research that examines top executives’ personality and cognitive, as opposed to demographic, characteristics. It also enriches understanding of the situational nature of goal orientations’ effects, which differ according to top executives’ status as founder or nonfounder.