Scott L. Newbert

New Firm Formation: A Dynamic Capability Perspective

This paper applies the dynamic capability framework to the new firm formation process. Specifically, this paper argues that new firm formation is a specific process that has been the subject of substantial empirical research. This paper also provides empirical evidence that shows that a common set of gestation activities exists for successful nascent entrepreneurs, that market dynamism affects the complexity and characteristics of the new firm formation process, and that learning negatively impacts new firm formation success for nascent entrepreneurs operating in highly dynamic markets. By positioning the new firm formation process as a dynamic capability, the rationale behind the execution of specific gestation activities to acquire and/or to reconfigure those resources most critical to emerging organizations can be understood better.

Differentiating market strategies for disruptive technologies

The literature is full of anecdotes that show new small firms attacking existing markets with innovations based upon disruptive technologies and achieving phenomenal success. Because of this, some theorists argue that disruptive technologies are best commercialized by new small firms. If this is true, can a logical rationale be developed that explains this unique capacity of new firms? If so, can empirical research of new and established firms in an industry fraught with a disruptive technology identify the advantages that new firms have over established firms in the commercialization process? The purpose of this paper is to examine the different roles of established and new firms in disruptive technology commercialization. The authors begin by developing a model of the innovation process beginning with technology creation and ending with user adoption and application. From this model they develop propositions for testing. The authors use survey data collected from 72 micro-electro-mechanical-systems (MEMS) manufacturing firms. Their results from the MEMS industry show that established firms rarely commercialize disruptive technologies and then prefer to use market-pull strategies to accomplish this. New firms select primarily disruptive technologies and choose either market-pull or technology-push strategies for commercialization. Perhaps more important, time to market for new firms is one-fourth that for established firms. These results suggest that new firms have two advantages in commercialization of disruptive technologies-flexibility in marketing strategy and much shorter times to market.

The Influence of University R&D Expenditures on New Business Formations and Employment Growth

Since new firms generally lack the resources necessary to compete with their larger, older counterparts in the knowledge development process, we argue that they often rely on spillovers to fuel their own innovative efforts. Thus, we hypothesize that new firms will tend to form in areas characterized by high levels of university research and development (R & D) expenditures and that these births will in turn stimulate the local economy by generating increases in employment level and growth. We test our hypotheses at the U.S. labor market area level using secondary data from various government sources for the years 1990 through 1999. Our results demonstrate that university R & D expenditures are positively related to new firm formations, and that these new firm formations are positively related to employment level and change. These findings suggest that university R & D expenditures are an important indirect contributor to overall economic growth by encouraging primary and secondary firm births.

Defining the Relationship Among Founding Resources, Strategies, and Performance in Technology-Intensive New Ventures: Evidence from the Semiconductor Silicon Industry

The degree to which a firms performance is dependent on its resources and strategies is widely debated in the literature. We examine this issue by analyzing historical data on the entire population of new independent firms started worldwide in the semiconductor silicon industry for the first 50 years of its existence. We measure resources (managerial capabilities and technological competencies) and strategies (emphasis on demand pull or technology push) at the time of founding and test their relationship with each other as well as with multiple measures of performance (lifespan and best years sales). We find that firms founded on managerial capabilities emphasize demand‐pull strategies at founding, whereas firms founded upon technological competencies emphasize technology‐push strategies at founding. We also find that firms emphasizing technology‐push strategies perform better than firms emphasizing demand‐pull strategies. Lastly, we find that though managerial capabilities are related to a firms best years sales, this relationship is mediated by the firms founding strategy.

Resource Acquisition in the Emergence Phase: Considering the Effects of Embeddedness and Resource Dependence

Despite evidence that embedded ties are important to entrepreneurs seeking low–cost resources, no research to date has explored how this relationship unfolds in the context of emerging organizations, how the inevitable dependence on ties might drive up resource acquisition costs, or how the manner in which ties are embedded might affect the specificity of these resources. We develop a conceptual model that examines these relationships and, analyzing data from the Panel Study of Entrepreneurial Dynamics I, find support for the majority of our hypotheses. We then discuss the implications of our findings for scholars and practitioners.

Realizing the Spirit and Impact of Adam Smith's Capitalism through Entrepreneurship

Adam Smith argued in The Wealth of Nations and The Theory of Moral Sentiments that in order to create an effective and productive capitalist system, individuals must pursue interests of both the self and society. Despite this assertion, modern economic theory has become tightly focused on the pursuit of economic self-interests at the expense of other, higher order motives. This paper will argue that the tendency to employ such an egocentric strategy often generates externalities and inequalities that serve to detract from the greater welfare of society. However, by tempering these economic self-interests with non-economically motivated considerations, this paper will suggest that individuals may create tremendous benefits to society, precisely as Smith outlined more than two centuries ago. In defense of this assertion, this paper will review an array of theoretical arguments and empirical findings that suggest that todays entrepreneurs are not only seeking to satisfy both selfish and ethical motivations, but in so doing they are also contributing substantially to the overall welfare of society through job creation, wealth redistribution, and a lack of discrimination. As such, it appears that spirit and impact of the capitalist system that Smith envisioned is being realized through entrepreneurship.

Rarely pure and never simple: Assessing cumulative evidence in strategic management

As empirical evidence in strategy has accumulated, scholars have shown increasing interest in assessing the empirical record of leading theories. Two methods of assessment have figured prominently: vote counting and meta-analysis. Recently, critics have denounced the former in favor of the latter. While meta-analysis is certainly a powerful assessment tool, we argue that both vote counting and meta-analysis are characterized by certain strengths and weaknesses and that these methods should be seen as complementary means of understanding bodies of empirical evidence. We provide guidance regarding when to employ each method and how to improve the process of cumulative assessment.

Social Impact Measurement: Current Approaches and Future Directions for Social Entrepreneurship Research:

Despite the importance of social impact to social entrepreneurship research, standards for measuring an organization’s social impact are underdeveloped on both theoretical and empirical grounds. We identify a sample of 71 relevant papers from leading (FT50) business journals that examine, conceptually or empirically, the measurement of social impact. We first describe the breadth of definitions, data sources, and operationalizations of social impact. Based on this analysis, we generate a typology of four approaches to conceptualizing social impact, which we use to organize insights and recommendations regarding improved measurement of the social impact of entrepreneurial ventures.

What's Holding Back Social Entrepreneurship? Removing the Impediments to Theoretical Advancement

Abstract This article summarizes four contributions that were presented in a professional development workshop at the 2013 Academy of Management conference. The goal of the workshop was to discuss impediments to the theoretical advancement of social entrepreneurship. This papers first two contributors discuss assumptions and boundaries of social entrepreneurship, exhibiting contrasting views of whether theory should be aggregated or disaggregated. The other two scholars focus on specific topics that advance social entrepreneurship research, specifically, studying the implicit normative underpinning of social entrepreneurship and social innovation processes. This is part three of a three-part series dealing with the future of social entrepreneurship research and theory.

Building Theory in Social Entrepreneurship

Since the term ‘social entrepreneur’ was first formally used in the academic literature (Waddock and Post 1991, 393), scholarship in the area has increased apace. However, its rapid growth has resu...