Tomas Karlsson

Institutional forces and the written business plan

In this study, we examined factors that led nascent organizations to write business plans, following 396 nascent entrepreneurs during a two-year period. We examined both the production and the outcomes of written business plans produced in nascent organizations. Our findings show that institutional variables, such as coercion and mimetic forces, are important predictors influencing the propensity of new organizations to write business plans. Our results are contrary to rationalist predictions of planning-performance, and are more in line with institutional predictions. Interestingly there was no evidence to support positive outcomes, in terms of profitability, for those nascent organizations that produced business plans during a two-year initial period. We discuss the implications for institutional theory and studies of nascent businesses, as well as for the literature on business planning.

Social Capital and the Modern Incubator: A Comparison of In-group and Out-group Social Networks

Abstract In the public policy arena, one of the most prevalent components of entrepreneurship promotion consists of the sponsorship of public and university-based incubators. Incubators are business support institutions designed to offer an array of services, such as space, infrastructure, advice, training and administrative support meant to accelerate the business start-up process. However, research within this topic is relatively young, and biased towards qualitative studies, focusing on firms within incubators. One of the findings of previous research is that entrepreneurs in incubators benefit from strong social networks; another is that they are prone to developing bureaucratic routines early on. In this study, we examine the characteristics of the firm owners’ networks and their use of business plans. We control for the bias of just studying firms within incubators by comparing incubated, and non-incubated firms. The network characteristics of incubated firm owners tended to be more business-related, with higher involvement of incubator managers and consultants. Incubated firms wrote longer business plans and made less use of family and friends.

Beyond Red Tape and Fools: Institutional Theory in Entrepreneurship Research, 1992–2014

Institutional theory has become an increasingly common lens in entrepreneurship research. Over the past years, the number of entrepreneurship studies that adopt institutional perspective (EIn research) has grown dramatically. This review systematically examines extant EIn research, analyzing 194 articles published in 11 leading journals from 1992 to 2014. In this review, we focus on three characteristics of the articles: institutional logic, level of analysis, and methodology. Further, we identify three distinct periods of EIn research: the conceptual phase, 1992–2000, the exploration phase 2001–2007, and the acceptance phase 2008–2014. This allows us to provide detailed discussion on main characteristics of the articles and identify evolutionary trends of this research area. The overall surge of articles with institutional perspective in entrepreneurship research is promising. We can see an increasing variation of methods being applied and a growing mutual interest between entrepreneurship and institutional theory researchers. Yet, we find substantial biases and omissions in the application of institutional theory. There is a focus on national level analysis with assuming state and market logics. For EIn to move forward it has to move closer to field/industry level analysis and add new insights into entrepreneurship and alternative logics. Based on our framework and additional insights gained from the review, we outline directions for future EIn research.

The Blessing of Necessity and Advantages of Newness

This chapter explores the advantages of newness and positive aspects of resource constraints, critically departing from assumptions of resource constraints and liabilities of newness. The chapter is based on a multiple case study consisting of nascent entrepreneurial processes from inexperienced entrepreneurs with severely constrained access to resources. Six theoretical concepts (legitimacy, fashion, flexibility, networks, bootstrapping, and motivation) are developed in the frame of reference. Empirical data is collected on a rich variety of sources, including longitudinal data in the form of weekly logbooks, business plans, theoretical reflections, and additional collected data during the process. Based on this data, the analysis shows that while these entrepreneurs face resource constraints and liabilities of newness, they also use strategies to leverage their constraints and novelty as an advantage in advancing their venturing efforts.

Strategies for creating new venture legitimacy

New ventures, being heavily subjected to liabilities of newness, are seen to engage in legitimacy strategies to overcome these liabilities. Building on an adapted theoretical framework of organizational legitimacy, self-reported weekly diaries of twelve entrepreneurs were analysed to identify strategies used by new ventures to create legitimacy. New ventures appear to prefer pragmatically related strategies over moral and cognitive ones, and adopt malleability with respect to moral strategies. The novelty of the venture technology increases the focus on conformity strategies, whereas more established technologies use manipulative strategies to gain legitimacy. New ventures also appear to engage strongly in moral selection strategies in terms of goal formulation.