Tim R. Holcomb

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.

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.

A Multi-Level Analysis of the Upper-Echelons Model

The upper-echelons model of Hambrick and Mason ((1984). Academy of Management Review, 9, 193–206) launched a new area of research and provided the first overall theoretical framework for use in understanding how the experiences, backgrounds, and values of senior executives in organizations can influence the decisions that they make. The model is typically assumed to be what Rousseau ((1985). In: B. M. Staw, & L. L. Cumming (Eds), Research in organizational behavior (Vol. 7, pp. 1–37). Greenwich, CT: JAI Press) calls “multi-level,” as it describes how both individuals and top management teams (TMTs) make decisions in line with their preferences, biases, and values; the same model is applicable to both individuals and groups. However, the levels issues in the model have never been subjected to rigorous analysis. This chapter juxtaposes levels concepts and theories on the upper-echelons model, in an effort to highlight its strengths as well as its weaknesses. While the majority of researchers use the model to describe team-level decision making, the analysis presented here reveals that the model is inherently individual-level in focus, and several important limitations must be overcome before the model will provide a full explanation of team-level decision making.

Modeling Levels and Time in Entrepreneurship Research: An Illustration with Growth Strategies and Post-IPO Performance

New ventures lack resources, are buffeted by environmental factors, and often experience rapid growth and organizational transformations that can have profound effects on performance and survival. This indicates that factors at multiple levels and across time affect new venture outcomes. Research examining these outcomes often address relationships that cross levels or time, but rarely both. Because scholars potentially can make rich theoretical contributions by simultaneously investigating temporal relationships that cross levels, the authors illustrate multiyear, multilevel model building with random coefficient modeling (RCM) using language that is accessible to entrepreneurship scholars. Specifically, they model the effects of strategic growth actions on new venture performance using a longitudinal data set of young, IPO-stage firms. Their illustration demonstrates the statistical advantages of modeling levels and time simultaneously and offers a roadmap for entrepreneurship scholars interested in examining these effects, including a step-by-step guide with SAS code for working with these data. They also describe some specific research questions to help advance theory development using RCM.

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.

A Multi-Level Analysis of the Upper-Echelons Model: Planting Seeds for Future Research

We thank Carpenter and Dalton and Dalton for their insights on our earlier chapter, and on the promise (and perils) of upper-echelons research in general. We set out to closely examine the levels issues in Hambrick and Masons ((1984). Academy of Management Review, 9, 193–206.) original upper-echelons model, and the research initiatives that have applied this theoretical framework. We are encouraged by the initial reception that we have received from these authors. We continue to believe that top management teams (TMTs) are an important level of analysis for strategic leadership research, though the original upper-echelons model proposed by Hambrick and Mason cannot be directly applied at the team level. Our reply highlights several joint and individual concerns raised by the articles. We close by reiterating our call for continued analysis of the upper-echelons model.

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.

Differentiators of Managerial Preferences for Outsourcing: Experimental Evidence of the Moderating Role of Value Appropriation

This study adds to our understanding of outsourcing decision-making by examining the differential effect of potential cost and non-cost innovation benefits on outsourcing choices made by top managers. In addition, we show that value appropriation - which we define in this context as a firm’s ability to capture(appropriate) value created by effectively combining and leveraging the capabilities it sources through outsourcing partners - plays a moderating role on the decision to outsource, particularly when the expected benefits involve value realized from complementary internal and external capabilities. Our results reveal that although cost efficiency incentives remain an important motivation behind outsourcing, managers recognize and strongly value non-cost innovation benefits and the role of contractual efficiency when making outsourcing decisions.