the influence of motivations and environment on business start ups some hints for public policies abstract this paper examines entrepreneurial motivations to start a business in different perceived environmental settings motivations to start a business for a sample of 163 entrepreneurs from growing and declining regions in the north center and south of italy were factor analysed in order to identify the main groupings of variables that lead people to start their own business the results proved to be highly consistent with friberg s 1975 1976 findings on incentives to start a business the motivation factor scores were then clustered and three verv different classes of entrepreneurs were identified each driven by very different sets of motivations self actualizers who started their business driven by a thirst for achievement and a sense of independence and autonomy discontented entrepreneurs unhappy with present working conditions and followers of family tradition role models the relationship between individuals motivations and their perceptions of the environment was then investigated resources and incentives to start a business were factor and cluster analyzed to yield three very different types of perceived environments munificent environments characterized by efficient infrastructures established capital markets and the availability of incentives to start a business supportive environments in which the creation of an infrastructure specifically aimed at encouraging new companies could lead to a significant increase in entrepreneurship sparse environments lacking both infrastructure and capital availability the proportions of entrepreneurial types differ significantly in each environment government intervention in stimulating the diffusion of entrepreneurship is legitimized by the role new companies play in job and wealth creation and the diffusion of innovation within a territory these results suggest some implications for public policies instead of blanket incentive policies applied on a wide geographical basis policies tailored on a local basis may be more effective in stimulating new venture creation

house prices bank instability and economic growth evidence from the threshold model abstract this paper examines the effects of house prices on bank instability when gauged at various levels of income growth bank stability may respond differently to house price changes or deviations from fundamental values in an economic boom environment than in a bust circumstance a threshold estimation technique developed by hansen 1999 is applied to a panel of 286 u s metropolitan statistical areas msas over the period 1990q1 2010q4 we consider two house price indicators the house price changes and the house price deviations from long run equilibrium the results suggest the existence of income growth threshold effects in the relationship between house prices and bank instability specifically there are two income growth thresholds when using the house price changes and one income growth threshold when the house price deviations are applied robustness results using the non msas sample from 1995q1 to 2010q4 provide further evidence of income growth threshold effects

personal networks and firm competitive strategy a strategic or coincidental match abstract this article is based upon the premise that the personal network of the owner manager is the most important resource upon which he or she can draw in the early days of the firm s development this is particularly the case as the concept of personal networks is sufficiently general to include dimensions that include for example attention to customers understanding of the business market orientation or stress on quality as such it is intuitively obvious that the nature and use of these networks must impinge upon the resultant strategy adopted in the firm albeit often implicit rather than explicit however as yet there is no empirical evidence to support this conclusion therefore this article probes one question how do the characteristics of the owner manager s network relate to the competitive strategy of new ventures clearly within this we expected to find relationships that were logically consistent the research was conducted in two counties in england that possessed similar industrial structures and equal rates of new firm formation a list of firms was obtained from local business directories and all 629 firms that fit the criteria were contacted by telephone validation of the firms at this point resulted in a significant reduction in those that fit the sampling criteria four hundred twenty three firms were mailed an 11 page questionnaire resulting in a 52 response rate preliminary analysis of the strategy variables identified six components that were consistent with previous literature these were labeled as marketing differentiation product innovation market segmentation distribution growth through outside capital and differentiation through quality correlation of these components with the networking characteristics of propensity to network network activity network density network intensity and content of network exchanges supports our proposition that entrepreneurs differ in their networking activities according to the competitive strategy pursued by the firm further classification of the owner managers into strategic clusters demonstrates that most firms appear to follow multiple patterns of strategic behavior moreover the comparison with the networking characteristics shows that owner managers appear to differ in a logical manner in the use of their networks bailey montera and cardow 1992 argue that a firm s resource base consists of financial physical and human resources and that the manner in which those resources interact is determined by the firm s strategy previous research on entrepreneurial networks has shown the amount of time and energy the owner manager devotes to the development and maintenance of contacts the underlying assumption of social network theory is that through a personal network the owner manager of a new venture gathers access to critical resources which for a variety of reasons the new firm does not possess internally consequently this research has argued that this resource base cannot be ignored when attempting to understand the concept of strategy among new and small firms in fact this resource base may play a dominant role in formulating as well as implementing strategy

booms and busts in the uk housing market the often volatile behaviour of uk house prices between 1957 and 1994 is analysed in an annual econometric model theory suggests that financial liberalisation of mortgage markets in the 1980s should have led to notable shifts in house price behaviour the evidence supports the predictions of theory suggesting shifts took place in wealth effects as in the consumption function and that real interest rates and income expectations became more important the presence of transactions costs suggests important nonlinearities in house price dynamics the paper also contains an explicit econometric treatment of expectations demography supply spillovers from the rented sector and of composition biases in the official house price index

fiscal policy and financial market movements abstract this paper estimates fiscal policy reaction function in order to investigate the links between financial market movements and fiscal policy outcomes an increase in asset prices affects in a positive and significant manner primary balances with the response reflecting both an increase in government revenues and a fall in government spending the most important impact on fiscal balances is due to changes in residential property prices changes in equity and commercial property prices are also important determinants of fiscal balances our findings suggest that the steepening of the slope of the yield curve contributes to expenditure based fiscal discipline

nominal and true cost of loan collateral abstract this paper explores costs and proceeds from loan collateral in the credit market with ex ante asymmetric information when collateral value and the probability of project success fluctuate a borrower is willing to pledge collateral if i its future value is correlated with the probability of project success or ii its value fluctuates strongly or iii it is funded with loan capital when one of the conditions is satisfied in contrast to bester 1985 a high risk borrower may be more willing to pledge collateral than a low risk borrower the paper is related to topical subprime crises and real estate collateral

an examination of the influence of industry structure on eight alternative measures of new venture performance for high potential independent new ventures abstract this study examined the influence of the structure of new ventures entered industries on eight alternative measures of new venture performance for 199 high potential independent new ventures each of the 199 entrepreneurial ventures had undertaken an initial public offering ipo within the first 6 years of the venture s founding date and were free of corporate sponsorship or prior corporate parentage specifically this research examined the influence of 1 stage of the life cycle 2 industry concentration 3 entry barriers and 4 product differentiation on eight alternative measures of new venture performance the eight measures of new venture performance examined in this research consisted of 1 change in sales 2 sales level 3 net profit 4 earnings before interest and taxes 5 return on sales 6 return on assets 7 return on invested capital and 8 return on equity most prior research examining the influence of industry structure on new venture performance has 1 utilized only one or two measures of new venture performance as indicators of the venture s overall effectiveness and efficiency 2 often failed to provide theoretical justification for the measure s of new venture performance or industry structure examined and 3 utilized data derived from questionnaires and or the pims data base of corporate sponsored new ventures in addition prior industry structure studies examining independent new ventures have often utilized relatively small sample sizes this study sought to advance the progress in the field of entrepreneurship with regard to understanding the influence of the structure of new ventures entered industries on new venture performance by 1 examining eight alternative measures of new venture performance 2 providing theoretical justification for the measures of new venture performance and industry structure examined and 3 utilizing the largest nonquestionnaire data base of independent new ventures developed to date this research found that the stage of the life cycle of the venture s entered industry was the most important determinant of new venture performance among the four industry structural elements examined stage of the life cycle had a statistically significant relationship at a 0 05 level with the majority of the new venture performance measures examined in this research in addition ventures entering industries in the introductory stage of the life cycle achieved the highest levels of venture performance particularly when compared with those ventures that entered industries in the mature stage of the life cycle however this study did not find a statistically significant relationship between stage of the life cycle and change in sales this suggests that there is a trade off between profitability and sales growth and that new ventures that undertake an ipo have a stronger focus on achieving profitable operations rather than sales growth during the initial years after their ipo this may be due to pressures placed on the new ventures to achieve profitability by the external credit market conversely this research found that 1 industry concentration 2 entry barriers and 3 product differentiation did not have statistically significant relationships at a 0 10 level with any of the eight alternative measures of new venture performance examined in this research however this research did find that over 90 of the new ventures entered industries characterized by 1 a low degree of industry concentration and 2 a high degree of product differentiation the relative absence of new venture entry into industries characterized by 1 high degrees of concentration and 2 low degrees of product differentiation provides support for prior theory which suggests that successful entry into such industry environments may be substantially more difficult in sum the results of this research suggest that high potential independent new ventures that undertake an ipo should enter industries in the introductory stage of the life cycle in addition the results of this research suggest that industries characterized by 1 relatively low degrees of industry concentration and 2 highly heterogenous products may be necessary but not sufficient conditions for successful entry by high potential independent new ventures seeking to raise equity capital through an ipo

bank lending and property prices in hong kong abstract this paper studies the relationship between residential property prices and bank lending in hong kong this is an interesting topic for three reasons first swings in property prices have been extremely large and frequent in hong kong second under the currency board regime monetary policy cannot be used to guard against asset price swings third despite the collapse in property prices since 1998 the banking sector remains sound while the contemporaneous correlation between lending and property prices is large our results suggest that the direction of influence goes from property prices to bank credit rather than conversely

tax subsidies to owner occupied housing an asset market approach inflation reduces the effective cost of homeownership and raises the tax subsidy to owner occupation this paper presents an asset market model of the housing market and estimates how changes in the expected inflation rate affect the real price of houses and the equilibrium size of the housing capital stock simulation results suggest that the accelerating inflation of the 1970s which substantially reduced homeowners user costs could have accounted for as much as a 30 percent increase in real house prices persistent high inflation rates could lead ultimately to a sizable increase in the stock of owner occupied housing

fundamentals panics and bank distress during the depression we assemble bank level and other data for fed member banks to model determinants of bank failure fundamentals explain bank failure risk well the first two friedman schwartz crises are not associated with positive unexplained residual failure risk or increased importance of bank illiquidity for forecasting failure the third friedman schwartz crisis is more ambiguous but increased residual failure risk is small in the aggregate the final crisis early 1933 saw a large unexplained increase in bank failure risk local contagion and illiquidity may have played a role in pre 1933 bank failures even though those effects were not large in their aggregate impact

interaction between housing prices and household borrowing the finnish case abstract employing time series econometrics this study shows that there has been a significant two way interaction between housing prices and housing loan stock in finland since the financial liberalization in the late 1980s before the financial deregulation the interaction was substantially weaker furthermore housing appreciation has a notable positive impact on the outstanding consumption loan stock it appears that there is no similar relationship between stock prices and credit understanding the two way interaction between housing prices and credit is of importance since the interdependence is likely to augment boom bust cycles in the economy and increase the fragility of the financial sector

networking and growth of young technology intensive ventures in china abstract more often than not new ventures lack established products known technologies longstanding customer relations experienced managerial teams sufficient capital and strong reputations almost by definition small new firms lack the resources of many larger established firms the task of an infant firm and a measure of its success is to make a transition from being resource weak to being resource strong how can resources that are critical for profitable growth be acquired for the resource weak new venture researchers have found that entrepreneurs can gain access to valuable resources and they can seek to achieve competitive advantage through networking activities forming and utilizing available relationships with external organizations can allow entrepreneurs to build credibility gain advice financing and customer access build a positive image and obtain resources at below market prices and obtain channel access information and innovations business relationships with other organizations allow an entrepreneur to achieve desired business results through asset parsimony a favorable view toward networking for new ventures leaves a number of unanswered questions however relevant research questions might include who should the entrepreneur seek as a business partner are all inter organizational relationships equal or are some types more valuable to new ventures than other relationships do firms relying on high levels of networking activities actually outperform firms that less actively seek resources through external organizational relationships the present study provides a specific understanding of the concept of networking for entrepreneurs we propose that networking can be understood in terms of range the number of external relationships to obtain resources and of intensity the frequency of contact of and amount of resource obtained from these relationships this research project evaluates the range and intensity of networking among high growth and low growth entrepreneurial ventures extensive interviewing with managers of six young technology oriented firms in the people s republic of china prc affirmed the importance of entrepreneurial networking managers in the three high growth firms reported greater range and intensity of business networking than did managers of three low growth firms matched by industry and age moreover the relationship between networking activities and growth transcended the stage of firm development where networking range and intensity are deemed important in the growth process new venture success may call for entrepreneurs to reach out deliberately to external organizations to capture needed resources to a certain extent such networking activities run counter to important entrepreneurial motivations of independence and autonomy the concept of networking and the results of this study imply that entrepreneurs need to combine the spirit of independence with the reality of resource dependence and they need to balance personal autonomy with strategic business relationships this study also contributes to the understanding of entrepreneurship in our increasingly global economy particularly in the prc business relationships between the united states and the prc have been expanding rapidly in the last decade many foreign businesses seek license agreements joint venture partners equity participation or channel relationships with young ventures in that country do the same rules of networking apply in the prc as the literature suggests apply in the united states new ventures in this study were found to engage in processes of networking activities consistent with those in the west although networking activities may have different cultural roots firm success appeared influenced by the same principles of networking

constellations of firms and new ventures abstract firm growth is typically described as from the inside out an integrated process of resource capture supplementing the traditional view of growth from within this article focuses on how small firms come into being and grow resorting to cooperative relationships with external organizations through such a process new firms come into being without notable direct investments and grow without significant employment increases the emerging organizational design stresses the importance of constellations constellational structures suggest that organizations do not survive as isolated and self sufficient entities rather they are strongly tied to supportive quasi infrastructural collectives firms grow through various and changing interorganizational relationships we suggest that a growth path of firm disintegration is positively associated with flexibility cost reductions and more favorable competitive position that the success of this path in different industries and countries makes a venturing without investing process more than a small is beautiful fad we find regularities in growth patterns at the beginning an unplanned constellation of firms each geared to solving short term contingent problems planned interfirm linkages and partnerships geared to greater effectiveness arise in more advanced stages in this manner the competitive position of the constellation is improved this article suggests underlying conditions facilitating the growth of organizations that use synergies and the constellations resources effectively

content and performance of growth seeking strategies a comparison of small firms in high and low technology industries abstract the question of how to grow and gain market share is repeatedly asked by small firm managers yet little help exists in the academic literature in terms of identification of specific business practices and competitive tactics associated with the pursuit of market share growth rather most discussion of appropriate strategies for small firm growth centers around the prescription of broad strategy types e g the often recommended niche strat egy furthermore the environment s potential effects on the viability of growth strategies seldom receive adequate treatment in the small firm strategy literature despite the long acknowledged influence of environmental conditions on strategy content this paper describes a study of the business strategies used by small growth seeking firms in high and low technology industries the construct of strategy was examined from both a micro level focusing on individual strategy dimensions and a macro level focusing on the firms overall strategic postures and patterns of strategy related variables data were collected from the senior executives of 57 small manufacturing firms whose mission strategies were to aggressively increase sales and market share the data indicate that growth seeking firms in high technology industries relative to those in low technology industries 1 rely more heavily on advertising 2 place more emphasis on product related issues e g new product development superior product warranties as a basis for building market share 3 rely more heavily on formal planning activities 4 place more emphasis on customer service support 5 rely more heavily on external financing 6 rely more heavily on premium pricing strategies and 7 have more entrepreneurial strategic postures the data also indicate that an entrepreneurial strategic posture is more positively associated with firm performance among growth seeking firms in low tech industries than among those in high tech industries although there are exceptions to this finding cluster analysis was used to identify the content and performance of various strategies operationally defined as patterns of strategic variables associated with growth seeking firms in high and low technology industries four strategies were identified through this technique two of which are most common among firms in low tech industries one of which is most common among firms in high tech industries and one of which is equally prevalent in both industry types these results corroborate several of the aforementioned findings regarding the effects of industry technological sophistication on dimensions of firm strategy for example they demonstrate the general aversion among growth seeking firms in low tech industries to premium pricing furthermore they suggest that overall growth seeking firms in low tech industries may be somewhat more disposed to pursuing cost leadership strategies and less disposed to pursuing differentiation strategies than growth seeking firms in high tech industries there were no overall performance differences across the four strategy types identified through the cluster analysis however the data suggest that an entrepreneurial strategic posture is most strongly associated with high performance among firms that have a cohesive and focused strategic mix or pattern of strategic decisions this finding holds for growth seeking firms in both industry types

the impact of income economic openness and interest rates on housing prices in china evidence from dynamic panel quantile regression the rapid growth of housing prices has attracted the attention of the whole of society in china this article adopts the dynamic panel quantile regression to investigate the impact of income econo

real estate prices and bank stability abstract real estate prices can deviate from their fundamental value due to rigid supply heterogeneity in quality and various market imperfections which have two contrasting effects on bank stability higher prices increase the value of collateral and net wealth of borrowers and thus reduce the likelihood of credit defaults in contrast persistent deviations from fundamentals may foster the adverse selection of increasingly risky creditors by banks seeking to expand their loan portfolios which increases bank distress probabilities we test these hypotheses using unique data on real estate markets and banks in germany house price deviations contribute to bank instability but nominal house price developments do not this finding corroborates the importance of deviations from the fundamental value of real estate rather than just price levels or changes alone when assessing bank stability

network location and learning the influence of network resources and firm capabilities on alliance formation this paper presents a dynamic firm level study of the role of network resources in determining alliance formation such resources inhere not so much within the firm but reside in the interfirm networks in which firms are placed data from extensive fieldwork show that by influencing the extent to which firms have access to information about potential partners such resources are an important catalyst for new alliances especially because alliances entail considerable hazards this study also assesses the importance of firms capabilities with alliance formation and material resources as determinants of their alliance decisions i test this dynamic framework and its hypotheses about the role of time varying network resources and firm capabilities with comprehensive longitudinal multi industry data on the formation of strategic alliances by a panel of firms between 1970 and 1989 the results confirm field observations that accumulated network resources arising from firm participation in the network of accumulated prior alliances are influential in firms decisions to enter into new alliances this study highlights the importance of network resources that firms derive from their embeddedness in networks for explaining their strategic behavior copyright 1999 john wiley sons ltd

does collateral fuel moral hazard in banking this paper presents two models in which the fluctuating value of loan collateral real estate generates the problem of moral hazard between a bank and a deposit insurance agent the bank finances risky projects against collateral and relies on the rising collateral value if the collateral value later appreciates the bank enjoys handsome profits otherwise the bank fails the findings are rather consistent with the characteristics of the topical subprime mortgage crisis

when and why did fslic resolve insolvent thrifts abstract this paper develops an optimal resolution triage strategy for a deposit insurance regulator the regulator seeks to maximize the market value of the deposit insurance enterprise subject to budget personal bureaucratic political informational and legal restraints testable hypotheses are derived concerning the timing of insolvency resolutions the paper tests these hypotheses using a two step hazards model and a data set of thrift resolutions during 1985 1989 the tests focus on the relative roles of value maximization and constraint pressures in decisions to grant capital forbearance the results suggest that regulators seldom conformed to the benchmark resolution timing strategy that an unconflicted agent would follow under only a budget constraint instead the evidence shows that the resolution timing decision was distorted by personal political informational and legal constraints

long run trends in workers beliefs about their own job security evidence from the general social survey in recent years federal reserve chairman alan greenspan former u s secretary of labor robert reich and many journalists have argued that workers are more anxious about losing their jobs than they were in the past i use the 1977 96 general social survey to document trends in workers beliefs about their own job security during the 1990s workers have been more pessimistic about losing their jobs in the next 12 months than workers were during the 1980s workers have also been more concerned about suffering future job loss that would have resulted in a decline in earnings or a spell of unemployment

what motivates a subprime borrower to default this paper uses a real options approach to analyse the exercise of the default option embedded in mortgages in particular it examines a subprime household who borrows at a premium but hopes to refinance at prime rates if their house appreciates we show how these optimal default decisions can be used to calculate probabilities of default an important input for risk management and pricing purposes numerical examples are provided calibrated to us data in a low interest rate environment the credit upgrade potential may discourage subprime borrowers from defaulting however default probabilities are highly sensitive to changes in interest rates and house prices this provides a rational explanation for the prevalence of adjustable rate mortgages among subprime borrowers and the subsequent large numbers of defaults when interest rates rose and house prices declined

the productivity effects of bank mergers evidence from the uk building societies abstract this paper presents an empirical investigation of the impact of acquisition activity on financial intermediary productivity specifically it uses an augmented production function approach to investigate the impact of acquisition after controls for input changes the model is estimated on an unbalanced panel of 93 uk building societies over the period 1981 1993 using data on their core financial intermediation activities which it is suggested are particularly appropriate for our purposes in contrast to much of the existing merger literature which for the most part uses financial performance data our results do indicate significant and substantial productivity gains following acquisition these are consistent with an acquisitions process in which less efficient firms are acquired and reorganized the post merger gains appear to increase substantially in the post deregulation period when pressures to minimize cost are widely considered to have increased

firm networks and firm development the role of the relational mix abstract this study examines the role of different networks called the relational mix on the development of the entrepreneurial firm our regression analysis of survey data from 60 venture capital financed firms questions the importance of network size on firm development rather our results suggest that different types of networks are more important for firm development in particular we found a significant positive relationship for reputational networks and a weak significant negative relationship for cooperative technology networks at founding with time to break even social networks at founding have no direct effect on time to break even and a significant negative relationship with sales in the years after foundation furthermore our findings show the important role of marketing information and co opetition networks relationships with direct competitors on firm development in the years after foundation these results suggest that the relational mix is a more appropriate construct for explaining network development than network size alone

can pure play internet banking survive the credit crisis this paper positions the pure play internet banking model ppi as a hybrid business model that combines features of both relationship and transaction banking although in terms of customer orientation ppi banks may partly resemble relationship banks they lack their comparative advantage in generating borrower specific information instead the characteristic features of ppi banks are low costs and easy scalability while the latter may enable ppi banks to quickly capture market share it may also generate overexposure in risky markets we present a case study on ing direct one of the leading global ppi banks and address the sustainability of the ppi business model by comparing the ing direct foreign operations the findings for ing direct are validated using data for e trade bank we conclude that managing growth appears to be the prime challenge to ppi banks

banking market structure and financial stability evidence from the texas real estate crisis in the 1980s abstract this paper examines the relationship between banking market structure and financial stability using data on thrifts a type of banking institution specializing in residential mortgage lending i test two related hypotheses first competition reduces franchise value second reduced franchise value induces risk taking testing the second hypothesis exploits predictions that when hit by an exogenous shock the slope of risk with respect to franchise value becomes more negative because thrifts adopt bang bang strategies and choose minimal or maximal risk using the texas real estate collapse in the 1980s as a natural experiment i find evidence supporting both hypotheses

financial infrastructure and house prices we argue that banks operating in a local market possess better information about the local housing market than do nonlocal banks possessing this information may influence their willingness to grant loans to house buyers and the specifics of the loan terms which in turn may affect house prices because credit facilitation makes the housing market more efficient using a panel data set covering a period from 1993 to 2007 and involving 274 municipalities in sweden we establish a positive causal influence of local bank presence on local house prices there are significant spatial and spillover effects that is banks in a municipality affect the housing markets in neighbouring municipalities although to a lesser extent than in their own municipality similar results are obtained through a gravity model the results are robust over time and municipality size

lending behavior and real estate prices abstract the willingness of banks to provide funding for real estate purchases depends on the creditworthiness of borrowers besides other factors this creditworthiness depends on the development of real estate prices real estate prices in turn depend on the demand for homes which is influenced by the supply of mortgages i develop a theoretical model which explains this circular relationship i show how different kinds of expectation formations can lead to fluctuations in real estate prices furthermore i show that banks make above average profits in the upswing phase of the real estate cycle but suffer high losses when the market turns

valuation and systemic risk consequences of bank opacity abstract we examine the effects of opacity on bank valuation and synchronicity in bank equity returns over the years 2000 2006 prior to the 2007 financial crisis as expected investments in opaque assets are more profitable than investments in transparent assets and taking profitability into account have larger valuation discounts relative to transparent assets the valuation discounts on opaque asset investments decline over the 2000 2006 period only to be followed by a sharp reversal in 2007 the decline is coincident with a rise in bank equity share prices decrease in transparent asset holdings by banks and greater return synchronicity evidence consistent with a feedback effect

which ties matter when the contingent effects of interorganizational partnerships on ipo success this paper investigates the contingent value of interorganizational relationships at the time of a young firm s initial public offering ipo we compare the signaling value to young firms of having ties with two types of interorganizational partnerships endorsement relationships such as those with venture capital firms and investment banks and strategic alliance partnerships we propose that under different equity market conditions potential investors in an issuing firm attend to different types of uncertainty attention to these different types of uncertainty affects investors perceptions of the relative value of a young firm s different kinds of endorsements and partnerships and hence ipo success results from a sample of young biotechnology firms show that ties to prominent venture capital firms are particularly beneficial to ipo success during cold markets while ties to prominent investment banks are particularly beneficial to ipo success during hot markets a firm s strategic alliances with major pharmaceutical health care firms did not have such contingent effects implications for understanding the contingent value of interorganizational ties are discussed copyright 2003 john wiley sons ltd

hostile environmental jolts transaction set and new business abstract in this exploratory study we examine empirically the effects of environmental jolts on the evolution of the set of relationships that entrepreneurs have with their customers and suppliers which we call the transaction set we believe that understanding how turbulence in the environment affects the ability of entrepreneurs to hold on to their existing relationships or to add new relationships is fundamental to understanding the evolution and growth of an organization from a start up to a stable wealth creating enterprise in the long run using longitudinal data spanning 7 to 10 years from five start up firms we investigate three questions on the connection between environmental jolts and changes in the transaction set of the firm first do environmental jolts during the early life of the firm induce significant reductions in the set of relationships of a new small firm second are entrepreneurs able to add new relationships in greater numbers than the exit of old relationships following a jolt and third do start ups enjoy a honeymoon period when environmental jolts do not induce significant reductions in the set of relationships after a jolt our study yielded several findings that may be of interest to entrepreneurs academics and incubator managers first environmental jolts have a significant impact on the exits of relationships from the transaction set of a new small firm but not necessarily on the entry of new relationships into the set thus although liabilities of newness and small size seem to affect the ability of entrepreneurs to hold on to their existing relationships during environmental jolts these jolts do not seem to affect the entrepreneur s ability to add ties at least in the very early life of the firm second the level of reduction after environmental jolts seems to be less severe during the early life and greatest during the adolescent period further entries of new relationships decrease with each succeeding jolt one implication of our findings is that environmental selection pressures are more severe after an incubation period called the honeymoon period a second implication of our findings is the way in which liability of adolescence manifests itself the honeymoon does not provide incubation against exits of relationships rather the incubation manifests itself in the form of the willingness of new customers and suppliers to join the entrepreneur s transaction set even during a jolt however this goodwill shown by new customers and suppliers decreases with each succeeding jolt thus making the firm very vulnerable to failure during its adolescent phase of life we believe our study emphasizes the role that chance plays in the early survival and growth of firms firms lucky to avoid hostile jolts after their honeymoon period will be in a better position to grow rapidly other things being equal despite sound management and superior exercise of enterprise jolts appear in the life of firms in a stochastic often unpredictable fashion although it is not clear that firms who have superior enterprise ability or slack are more likely to succeed than those who don t what is clear is that the ability to survive and grow is seriously affected with each succeeding jolt whatever the ability if our findings and our inference from the findings are general they have an important public policy implication for new small companies conventional wisdom holds that given liabilities of newness and small size incubator environments are best provided to start up firms we would recommend a different strategy incubator environments are best provided not at the start up stage to new business but at the adolescent stage incubators should be provided to companies that show during the honeymoon phase that their ideas and products have merit and that they can attract customers and investors to their venture it is during the adolescent stage that firms are most vulnerable to environmental disturbances and where ability may not be a sufficiently good discriminator between survival and failure

the duality of collaboration inducements and opportunities in the formation of interfirm linkages i argue that the linkage formation propensity of firms is explained by simultaneously examining both inducement and opportunity factors drawing upon resource based and social network theory literatures i identify three forms of accumulated capital technical commercial and social that can affect a firm s inducements and opportunities to form linkages firms possessing these capital stocks enjoy advantages in linkages formation however firms lacking these accumulated resources can still form linkages if they generate a radical technological breakthrough thus i identify paths to linkage formation for leading as well as peripheral firms i test these arguments with longitudinal data on technical collaborative linkages in the global chemicals industry copyright 2000 john wiley sons ltd

the identification of technology regimes in banking implications for the market power fragility nexus neglecting the existence of different technologies in banking can contaminate efficiency market power and other performance measures by simultaneously estimating i technology regimes conditional on exogenous factors ii efficiency conditional on risk management and iii lerner indices of german banks we identify three distinct technology regimes public retail small specialized and universal relationship system estimation at the regional level reveals that greater bank market power increases bank profitability but also fosters corporate defaults corporate defaults in turn lead to higher probabilities of bank distress which supports the market power fragility hypothesis c 2009 elsevier b v all rights reserved

partners forever an empirical study of relational ties in two small firm clusters many researchers take as axiomatic the proposition that economic action in clusters is embedded in dense durable and trust based social networks it is suggested here that the bias towards high trust enduring relations obscures the competitive dynamics of networks even where co operation can be identified drawing attention to the competitive motives underlying the construction of social networks an investigation is made into the duration and brokering of dyadic relations in business owners advice networks the analysis of 668 dyadic ties in a population of 113 small business owners in two textile and clothing clusters in germany reveals considerable variation in the duration of social relations and the likelihood that they were formed through third party brokers many of whom were direct competitors creating more ephemeral links the findings suggest that marketless conceptions of social networks in clusters need to be balanced with a stronger concern for the role of competition in the social embe

macroprudential policies and housing prices a new database and empirical evidence for central eastern and southeastern europe several countries in central eastern and southeastern europe used a rich set of prudential instruments during the recent credit and housing boom and bust cycles we construct a comprehensive database of these policy measures covering 16 countries at a quarterly frequency we use this database to investigate whether the policy measures had an impact on housing price inflation the measures that appeared to be effective were capital measures minimum capital adequacy ratio maximum ratio of lending to households to share capital and nonstandard liquidity measures marginal reserve requirements mrrs on foreign funding mrrs linked to credit growth

uncovering the value of planning in new venture creation a process and contingency perspective researchers are engaged in a major debate on the value of business planning in new venture creation this study suggests a potential resolution by applying a process and contingency perspective the results indicate that planning is beneficial yet planning processes need to be governed by different planning regimes depending on the type of founding environment in highly dynamic environments entrepreneurs will get most value from planning when they focus on select planning activities and speed up the planning task in less dynamic environments they are better of pursuing a munificent approach to planning the analysis thus reveals a major component of theorization on business planning that has been neglected in previous discussions as for entrepreneurship teaching and practice the findings suggest the importance of an adaptive toolkit approach to business planning hypotheses were developed based on information processing and decision making theory and were tested with an ordered probit analysis on a sample of 100 start ups backed by venture capital

entrepreneurship and growth the strategic use of external resources abstract a common characteristic of entrepreneurial farms is fast growth a common problem for their managers is obtaining enough resources to accommodate that growth a typical entrepreneur either individual or corporate often desires to pursue a detected opportunity but lacks the necessary resources to make it happen again gaining access to those resources becomes the first entrepreneurial problem one of the most efficient weapons used by entrepreneurial firms to gain market share from larger more powerful corporations is their flexibility but the progressive accumulation of resources that growth often entails brings almost necessarily a loss of that very flexibility that made the firm successful in the first place this can be termed the second entrepreneurial dilemma networking practices are a way to overcome these problems essentially networking is a system by which entrepreneurs can tap resources that are external to them i e that they don t control in its simplest form networking consists of the use of all personal relationships to obtain advice financing insider sales etc birley 1986 in its most sophisticated form entrepreneurs set up an elaborate web of relationships between companies most of them of similar entrepreneurial characteristics that are extremely efficient and flexible at delivering a product or service in all cases we find that the ability to exploit resources that are outside the entrepreneur s control is a constant of entrepreneurial high growth management this is why entrepreneurs have been defined as being primarily motivated by the pursuit of opportunities as opposed to those managers exclusively concerned with the proper management of the resources already controlled by their firm stevenson 1983 stevenson and gumpert 1985 this paper proposes a view whereby the essence of entrepreneurship is seen precisely in the ability and willingness to use external resources a statistical validation of the main hypothesis i e that entrepreneurial fast growing firms do use more external resources than their competitors is then attempted the results strongly support the hypothesis it is found that the fastest growing firms in a very large sample of public companies are much less integrated make more use of external resources than their competitors in addition those firms that are at the forefront of using external resources grow on average much faster more than 10 every year than their competitors over a long period of time ten years this study s implication for managers seems clear it constitutes yet another piece of evidence in favor of the efficiency of networking arrangements being flexible enough to use external resources allows the entrepreneurial firm to break through the limits to sustainable growth and at the same time lowers its risk for it taps into someone else s experience and know how entrepreneurs and entrepreneurial managers must not be deterred by the lack of resources in the pursuit of opportunities

strategic alliances and the rate of new product development an empirical study of entrepreneurial biotechnology firms abstract a key to success in industries populated by entrepreneurial high technology firms is the rate at which the firm develops new products rapid product development creates significant advantages for entrepreneurial firms including access to early cash flows external visibility legitimacy and early market share the higher a firm s rate of new product development the more likely the firm is to achieve and maintain these first mover advantages this is particularly true in industries such as pharmaceuticals where the effectiveness of patent protections leads to patent races in which a winner take all scenario exists but even in industries where patent protection is weak the advantages of being first in terms of market preemption reputation effects experience curve effects etc can still be of major importance we argue that one way an entrepreneurial firm can increase its rate of new product development is by entering into strategic alliances with firms that possess complementary assets the basic proposition advanced is that a firm s rate of new product development is a positive function of the number of strategic alliances that it has entered however the relationship between strategic alliances and the rate of new product development may be nonlinear specifically although strategic alliances may initially have positive effects on the rate of new product development this relationship may exhibit diminishing returns moreover past some point it is possible that negative returns may set in thus the relationship between the number of alliances and the rate of new product development may be an inverted u shape two reasons can be given to support such a relationship first not all alliances will make an equal contribution to increasing the rate of new product development the economic law of diminishing returns suggests that the more alliances a firm engages in the more likely it is to enter some alliances whose marginal contribution is relatively minor such a phenomenon on its own is enough to suggest diminishing returns second gaining access to complementary assets through strategic alliances is not without risks malperformance may occur when the firm discovers that the complementary assets provided by the partner are a poor match fail to live up to the promises made by the partner or a partner may opportunistically exploit an alliance expropriating the firm s know how while providing little in return these problems arise because the effectiveness with which the firm can select and manage alliance partners is likely to be negatively related to the number of alliances the firm is managing due to information processing requirements the quality of partner search and the ability to monitor the partners actions will decline as the firm increases the number of alliances in which it is involved this reasoning leads to a prediction that past some point alliances will be increasingly vulnerable to malperformance this raises not only the possibility of diminishing returns to the number of alliances but also negative returns as the number of alliances increases past some critical point this proposed relationship between alliances and new product development was tested on a sample of 132 biotechnology firms the results provide strong evidence to support the inverted u shaped relationship between the number of strategic alliances and the rate of new product development therefore at low levels strategic alliances are positively related to new product development but as the number of alliances increases the benefits begin to decrease and at high levels the costs of an additional alliance actually outweigh the benefits

new methodology for constructing real estate price indices applied to the singapore residential market this paper develops a new methodology for constructing a real estate price index that utilizes all transaction price information encompassing both single sales and repeat sales the method is less susceptible to specification error than standard hedonic methods and is not subject to the sample selection bias involved in indexes that rely only on repeat sales the methodology employs a model design that uses a sale pairing process based on the individual building level rather than the individual house level as is used in the repeat sales method the approach extends ideas from repeat sales methodology in a way that accommodates much wider datasets in an empirical analysis of the methodology we fit the model to the private residential property market in singapore between q1 1995 and q2 2014 covering several periods of major price fluctuation and changes in government macroprudential policy the index is found to perform much better in out of sample prediction exercises than either the s p case shiller index or the index based on standard hedonic methods in a further empirical application the recursive dating method of phillips et al 2015a b is used to detect explosive behavior in the singapore real estate market explosive behavior in the new index is found to arise two quarters earlier than in the other indices