a profile of new venture success and failure in an emerging industry abstract this study examined three types of factors 1 the characteristics of the lead entrepreneur 2 startup processes undertaken during the founding of the firm and 3 firm behaviors after start up including management practices and strategic behaviors associated with new venture success and failure the research involved a field study of 26 small young firms 13 successful and 13 less successful or failed each engaged in the distribution of fresh juices in eight metropolitan centers about 30 of the total market in the united states both quantitative and qualitative data were collected through field work at each firm location a statistical analysis of data collected in a structured questionnaire was the primary method for testing the factors case studies of all of the firms were developed to provide qualitative support for the quantitative findings of the study results from these analyses indicated significant differences between successful and unsuccessful firms in all three categories lead entrepreneurs in successful firms were more likely to have been raised by entrepreneurial parents have had a broader business and more prior startup experience and believed they had less control of their success in business than unsuccessful entrepreneurs successful entrepreneurs seek to reduce risk in their businesses they work long hours have a personal investment in the firm and are good communicators successful firms were those initiated with ambitious goals lead entrepreneurs had a clear broad business idea which provided the adaptive torque required to overcome adversity confrontation and often a troubled financial condition effective startup or purchase required broad planning efforts that considered all aspects of the industry and firm successful firms spent more time planning 237 hours than unsuccessful firms 85 hours the use of outside professionals and advisors for help in solving specific problems during startup was important for success as well as the advice and information provided by other industry participants particularly customers and suppliers most ventures did not have written business plans nearly all purchased firms failed buyers of competitively troubled firms were negatively displaced generally unemployed managers who lacked broad management experience and while often well educated had no prior experience in purchasing a business successful firms were found to be more flexible participative and adaptive organizations these firms had employees who could perform the work duties of others and were likely to be managed in a way that provided these workers with the flexibility to modify their jobs to adapt to changing industry and organizational conditions lead entrepreneurs of successful firms were likely to spend more time communicating with partners customers suppliers and employees than the lead entrepreneurs of unsuccessful firms successful firms sought to become larger firms and embarked upon sales to broad sectors of the market successful firms achieved high market shares with market shares came higher financial returns less successful firms were restricted to narrow market sectors consisting of smaller customers and those more difficult to service while customer service remained an important concern the commodity nature of fresh juices failed to support differentiation and the narrowly focused firm was typified by high product costs and unprofitable operations

contours of development abstract new ventures seem to suffer more difficulties and business failures than do established firms also there is a pattern to the mortality with most newly founded businesses lasting only a few years explanations of high failure rates in new ventures have often centered on poor management or have postulated that firms chose inappropriate strategies for their markets and economic environments the present article conceives of new venture mortality as similar in nature to patterns of development that we observe for instance in human embryos or in the formation of new species that is development is an inherently hazardous process some of the specific hazards of development are 1 1 generic entry barriers it is generally not possible for a new firm or product to successfully enter an already crowded stable market where competitors are strong it is more feasible instead to enter a new or growing market or to enter with a substitute product that is clearly superior to those existing or to exploit an unnoticed market opening or to develop competitive strengths secretly without overtly challenging others in the industry 2 2 density of developmental hurdles any new entity must clear a sequence of important hurdles on its way to maturity such as establishing a well ordered office a functional sales channel etc failure at any one hurdle is potentially fatal and a mathematical analysis shows that the likelihood of passing even 10 hurdles in a row is about one in three the earliest hurdles tend to be the most difficult and to crowd more densely than later hurdles particularly troublesome are phase changes where a company first starts business or becomes one thing rather than another within a short period of time 3 3 amplification of maturational error any complex system that grows rapidly and is unable to predict the future perfectly is going to accumulate structural errors that become very difficult to remedy this is a natural and inevitable developmental process as the system grows in complexity and the flaw itself becomes a pillar of the system if an imitator or competitor arrives soon afterward and spots the error he or she will easily be able to retool and redesign a better system whereas the first firm is stuck with old habits tools dies and production methods 4 4 sequence and control in development every embryonic organism has a design template outlined in its dna that is carefully followed both the developing fetus itself and the mother have monitoring and control mechanisms that trigger an abortion if the development process goes awry new ventures lack such mechanisms they are more susceptible to developmental deviance likely to differ from the model successful corporation of their type 5 5 smallness and the asymmetry of luck small things are more subject to the whims of fate than big things amount of resources is the key because new ventures typically start off with scarce resources a bad bounce can sink the company and the probability of at least one such bad bounce is high 6 6 costs of organizing like all of the larger brained mammals a new company such as a medical supply firm must learn through experience much of what it means to be mature costs associated with learning arrive just when the firm is most vulnerable and distracted by other challenges in one sense the message of this article is good news in that managers of failed enterprises need not assume all the blame after all if most new businesses do poorly then failure is the average or typical case and it makes little sense to say that the average manager is poor the bad news is that if our perspective is correct managers of new ventures have less scope to influence the success of their enterprises than is commonly believed the managerial recommendations that emerge are that new ventures are more likely to succeed to the extent that they have sponsorship or capital have managers with a range of experience in previous ventures are given extra assistance of shelter or can ensure a high probability of passing all of the hurdles faced by a new venture

innovation and diffusion in small firms theory and evidence the article provides an inventory of the strengths and weaknesses of small firms in a dynamic context to do this it considers verbal accounts of the processes of innovation and diffusion as well as quantitative studies testing cause effect relations it consider both economic and noneconomic factors concerning issues of motivation perception and knowledge first an overall summary is given of the characteristics of small business compared with large business as a basis for an assessment of strengths and weaknesses perhaps the most important characteristic of small business is its diversity and the article gives the conditions and sources of it other core characteristics are small scale personality and independence of the small firm from these derived characteristics strengths and weaknesses and core strategies can be inferred from the perspective of the firm strengths and weaknesses are subsequently analysed for the successive stages of innovation invention development tooling production introduction to practice market strengths and weaknesses in diffusion are analysed for the successive stages in the adoption process as proposed by rogers reference is made to theory and to empirical studies from the literature and from research by the present author

performance factors of small tourism ventures the interface of tourism entrepreneurship and the environment abstract performance factors of small israeli tourism ventures were examined using an integrated model that combines four theoretical approaches each focusing on a different central facet environmental milieu institutional support entrepreneurial human capital and the venture s bundle of services the current research developed an operational instrument for assessing environmental attractiveness components of tourism ventures and their relationship to performance a factor analysis based on this instrument revealed three environmental factors tourist related infrastructure options for excursions and scenery including climate an attractive environment contributed to higher revenues in tourism ventures however it did not assure profitability the results indicate the dual nature of the impact of institutional support upon the tourism venture s performance regardless of the size and age of ventures those obtaining the advisory type of assistance from the governmental tourism incubator performed less well than those ventures that did not obtain such support by contrast those tourism ventures that were financially supported by external sources performed better than those that were not financially supported the explanation for this curious and seemingly contradictory finding may lie in the different criteria for receiving financial and advisory assistance success in persuading external sources to provide financial support would seem to be evidence of the soundness of the venture s planning and its economic viability by contrast insofar as virtually any venture in the area may apply for and obtain advisory assistance from the governmental tourism incubator with no requirement to meet financial criteria of any kind it could be that precisely the weaker ventures are being carried along by this form of assistance among the various entrepreneur s attributes examined managerial skills provided the strongest association with the performance measures the managerial skills were also found to be the most significant variable explaining performance relatively to the variables derived from the other three approaches these results have implications regarding the nature of the support to be given by a governmental tourism incubator to entrepreneurs operating in the region given that lack of managerial skills is one of the main barriers to a venture s success particularly in small businesses where the owners have to be involved in all areas of activity the incubator needs to provide entrepreneurs with tailored regional business and management training tools to promote tourism venture development and success the study also reveals that the number of services offered by a tourism venture made only a minor contribution in the revenues regression which may indicate that providing a bundle of services for the tourist customer does not necessarily guarantee profitability a noteworthy finding is the similarity in the differential association between the number of services offered and the performance measures on the one hand and attractiveness features with performance on the other in both cases these factors positively contribute to the revenues regression but neither contributes to the profitability or income regression this means that an attractive environment does contribute to higher revenues in that more tourists choose to visit the tourist attractions however this does not assure profitability similarly providing many services to the visitors may also contribute to higher revenues but does not necessarily assure profitable business outcomes the current findings indicate that small tourism venture profitability is contingent on human capital especially the skills of the entrepreneurs running the venture in accordance with our findings that managerial skills are so crucial for venture success the main objective of advisory incubators should be to promote managerial competencies

entrepreneurial success and failure confidence and fallible judgment excess entry or the high failure rate of market entry decisions is often attributed to overconfidence exhibited by entrepreneurs assuming that these decisions depend on assessments of business opportunities we model boundedly rational entrepreneurs and show analytically that whereas excess entry is an inevitable consequence of imperfect judgment it does not necessarily imply overconfidence indeed judgmental fallibility can lead to excess entry even when all potential entrepreneurs are underconfident we further demonstrate that as a group individuals who decide to start a new business exhibit more confidence than those who do not and that successful entrants are less confident than failures our results therefore question general claims that overconfidence leads to excess entry we conclude by emphasizing the need to understand the role of judgmental fallibility in producing economic outcomes and implications for both venture capitalists and the training of entrepreneurs

a comparison of japanese and u s firms completing initial public offerings abstract we set out to examine firms breaking into the top tier of for profit companies in the u s and japan to find differences across the two groups to accomplish this we conducted a questionnaire survey of companies that had recently undergone an initial public offering ipo in each country and compared them on characteristics frequently associated with new firms as we expected even when the different sizes of the two economies were taken into account there were considerably fewer listings in japan than in the u s one reason for this is that the listing requirements for young japanese firms although not stricter are much more strictly enforced hence fewer japanese firms are able to list our results show that the japanese firms were markedly different from their u s counterparts on several characteristics they tended to be older and larger which is consistent with more stringent listing requirements in japan they were also much more often led by their original founders this is a surprising result given that the japanese firms being older had longer to lose their founders when a successor to the founder was president it was much more often a relative of the founder than in the u s the japanese founders rated themselves higher on relatively emotional characteristics such as aggressiveness paternalism and charisma than did either the u s presidents or the japanese nonfounder presidents the japanese firms relied solely on the president for decision making prior to the ipo more often than the u s firms did however the japanese firms also moved in greater numbers to group decision making around the time of the ipo the post ipo investment strategies of the japanese firms were characterized by a focus on new product development an increase in r d spending and investment in the company s capital plant in contrast the u s firms reported more interest in exploiting their existing market and buying other companies usually leaving r d spending at its pre ipo level overall it is surprising that on many characteristics the japanese ipos tended to fall more to the extreme associated with new companies than did the u s firms they were dominated by founder influence the founders were apparently highly emotional their management style was initially autocratic and their strategies targeted innovation and internal development as avenues to growth this pattern is consistent with a prior hypothesis that the lack of structural support for new firms in japan results in only the most extreme personalities pursuing and succeeding in company formation for researchers a significant implication of this research is that japanese ventures may not behave according to the same rules as u s ventures research samples that fail to distinguish nationality may obscure cross regional variations for practitioners the major lesson is that a japanese venture is likely to be much different from one in the u s dealing with one is probably even more unlike dealing with an established company than working with a u s start up might be

high public debt the italian experience introduction is there a public debt problem in italy luigi spaventa the end of large public debts alberto alesina monetary and fiscal policy coordination with a high public debt guido tabellini the management of public debt and financial markets marco pagano capital controls and public finance the experience in italy alberto giovannini public debt and households demand for monetary assets in italy andrea bollino and nicola rossi

user industry spinouts downstream industry knowledge as a source of new firm entry and survival recent scholarship on entrepreneurship suggests that the pre entry know how of start ups embodied in their founders affects not only entry but also performance although prior work focuses on new entrants from the focal industry i e employee spinouts and academic organizations i e university spinoffs this study identifies and examines a hybrid category of start ups from downstream user industries which we call user industry spinouts we draw from the literature on evolutionary theory user innovation and industrial dynamics to propose that given the unique combination of knowledge inherited by these entrants their choices at entry and their ability to survive in the focal industry will differ with respect to other start ups we do this by extending existing work on new firm creation to investigate entry and performance in different product markets our findings based on a dataset of start ups in the semiconductor industry over a 10 year period 1997 2007 show that user industry spinou

impact of ownership on the international involvement of smes this paper analyses the relationship between the internationalisation strategies of smes and types of ownership different types of ownership affect firms and this in turn will influence the internationalisation strategy adopted using a sample of spanish smes our results show that internationalisation is negatively related to family ownership and positively related to corporate ownership we have also observed that the presence of a corporate blockholder in family firms encourages internationalisation these results support the idea that ownership type influences the decision to internationalise

competitive advantages in new corporate ventures the impact of resource sharing and reporting level abstract ideally new ventures born into a corporation s family of existing businesses have a wealth of established resources to successfully draw upon such new corporate ventures do not have to reinvent every wheel there are already marketing programs and plants in place as part of the existing business operations and they should be able to piggyback upon these likewise the managers from across the corporation already have established a brand name and gained important experience in dealing with customers and the new venture should get to ride on these coattails however along with these benefits come costs that may be more than offsetting corporations may try to force the new venture into the established way of doing things in the name of efficiently utilizing existing resources perhaps the new venture will be hamstrung by an effort to coordinate its development with the ongoing operations of the corporation s established businesses it is not at all clear that sharing corporate resources is always a good thing for new corporate ventures some have argued that for new ventures to be successful they often need the direct involvement of top management to see that they get the benefits of corporate resources without suffering the costs this suggests the general hypothesis underlying much of this work reporting to top management will be especially beneficial to new corporate ventures heavily involved in sharing corporate resources in considering this idea we explore the complicated relationship between resource sharing top management involvement and the ability of new corporate ventures to establish a competitive advantage we consider both the relative overall quality and relative production costs as forms of competitive advantage we find that in new corporate ventures heavily involved in resource sharing achieving either of these advantages is highly contingent upon the level of corporate management to which the new venture regularly reports in ventures heavily involved in resource sharing reporting to top ranking managers appears to be beneficial in terms of controlling cost but detrimental in terms of the new venture s overall relative quality in other words when it comes to benefiting from shared corporate resources reporting directly to top management is apparently a two edged sword offering both benefits and costs reporting level appeared to make little difference in new ventures not involved in corporate resource sharing and competitive advantage is complex and counter to some existing theories new theoretical arguments are needed to explain the empirical results we develop three such theories all appropriate for further empirical examination

variable risk preferences in new firm growth and survival we outline and test a decision making theory of new venture growth and survival building upon research in entrepreneurship and decision making under risk we hypothesize that entrepreneurs attention to survival and aspiration reference points changes based on venture age experience based learning size differences in decision complexity and performance decision domain examining a panel of 14 760 new ventures in the professional services sector our findings show how risk preferences change as a venture ages and increases in size this approach offers a more nuanced view of decision making under risk and provides a theoretical explanation for the common patterns of new ventures probability of exit and growth diminishing with age and size

corporate venturing and value creation a review and proposed framework abstract over the past decade companies worldwide have used corporate venturing cv as a means of revitalizing their operations building new capabilities and achieving strategic renewal creating value for shareholders business interest in cv has stimulated academic interest in the topic resulting in a rapidly growing but fragmented body of literature despite the growing international scholarly interest in cv researchers have devoted little effort to integrating prior findings in a cumulative fashion as a result studies do not build upon one another making it difficult to gauge the progress being made in addressing the fundamental research questions related to cv in this paper we examine the literature on cv seeking to synthesize integrate and link its key findings to do so we analyze this literature over the past decade to identify its major themes and research findings setting the stage for greater coherence in future research on cv we give special attention to the challenges and rewards of theory building in future cv research our review clearly shows that cv is an area of scholarly inquiry that has important implications for managerial practice

the effectiveness of access and benefit sharing in costa rica implications for national and international regimes the convention on biological diversity provides an international framework to ensure conservation and sustainable use of genetic resources the realization of these objectives is based on the state s sovereignty over its biological resources and the idea of a fair and equitable sharing of the benefits arising out of the utilization of genetic resources due to the enormous technical progress in biotechnology the demand for genetic resources increases especially within the pharmaceutical industry and the agribusiness whereas the biological diversity and with it the supply of diverse genetic resources decreases the concept of access and benefit sharing takes these developments into consideration and creates a market for biological resources we identify critical factors which can influence the effectiveness of this concept such as assignment of property and intellectual property rights enforcement problems and bargaining power applying these factors to evaluate the access and benefit sharing regime in costa rica we identify the specifications of these critical factors which favor economic development and sustain biodiversity at the same time we then discuss possible lessons of the costa rican experience for other biodiversity rich countries

fiscal deficits exchange rate crises and inflation this paper extends earlier work on unsustainable monetary policies by endogenizing the regime switch that ultimately restores sustainability within this framework we analyse exchange rate based stabilization programmes and show how constraints on central bank borrowing during an exchange crisis influence timing and nature of the post collapse equilibrium such constraints introduce non neutralities more restrictive pre collapse credit policies increase the post collapse inflation rate external shocks can destroy consistency between fiscal programmes and inflation targets causing reserve losses exchange rate changes and higher inflation balance of payments crises are the mechanism through which fiscal imbalances translate into higher inflation rather than an alternative explanation of it this paper deals with inflation fiscal deficits and exchange rate policy in high inflation countries the experience of the past decade has presented a series of puzzles for example countries attempting to stabilize inflation through an exchange rate freeze often saw inflation accelerate after the collapse of the experiment to levels well above those observed before the programme was implemented another puzzle concerns the relation between inflation and balance of payments crises in many countries a bop crisis forcing a change in exchange rate policy often led to a persistent increase in inflation liviatan and piterman 1984 this has led to doubts about the relevance of fiscal deficits in explaining inflationary episodes leading many to see bop crises as an independent explanation of inflation but this apparent relation is a puzzle a bop crisis cum devaluation can at most explain a jump in the price level but not a sustained increase in inflation in this paper we demonstrate that these puzzles can be explained fully by drawing on the public finance approach to inflation initiated by phelps 1973 thus the fiscal versus bop controversy is not a real one our analysis shows that bop crises and exchange rate shifts are part of the mechanisms through which fiscal imbalances translate into higher inflation rather than alternative explanations to make these points we present a simple open economy model to analyse the transition to a fixed exchange rate regime discuss sustainability and demonstrate what happens when policy measures are inconsistent and the fixed regime unsustainable we also demonstrate how the constraints under which the central bank has to operate the exchange rate regime influence the timing of the attack the post collapse inflation rate and the effects of pre collapse fiscal policy on the post collapse equilibrium the analysis builds on the work of sargent and wallace 1982 and liviatan 1984 on unsustainable monetary policies cf buiter 1988 1989 and drazen and helpman 1987 for open economy variants contrary to this literature we link the timing of the regime switch towards sustainable policies to rational speculative behaviour rather than assuming it to be exogenous the introduction of rational speculators forcing a regime switch draws on the literature on speculative attacks on central bank reserves initiated by 8i

the impact of education experience and inner circle advisors on sme performance insights from a study of public development centers in this study we investigate the effects of entrepreneurial human capital on sme performance using data on 2 713 smes within the european union performance was measured in two ways profitability as roa and productivity as revenue per employee results indicate that both profitability and productivity are positively related to industry specific knowledge possessed by the ceo owner prior to starting up the firm and the general business knowledge acquired once the firm is up and running experience as a result of having previously worked in a firm in the same industry before starting a business was related to productivity but there is no relation with profitability there is a link between performance and inclusion of other ceo owners in the founder s inner circle of advisors this relationship is positive when the advisor s venture has experienced failure and negative when the advisor s venture has been successful we discuss the significance of these findings for research and practice

assessing target zone credibility mean reversion and devaluation expectations in the erm 1979 1992 abstract the paper presents estimates of devaluation expectations for six erm currencies relative to the deutsche mark for the period march 1979 april 1992 both the simplest test and the drift adjustment method are used the simplest test adjusts interest rate differentials for the maximum and minimum expected rate of depreciation within the exchange rate band the drift adjustment method adjusts interest rate differentials by the estimated expected rate of depreciation within the band the latter method gives more precise estimates especially for short horizons and allows statistical inference and hypothesis testing expected rates of devaluation have generally fallen during the period still some devaluation expectations relative to the deutsche mark remain in 1992 except for the belgian luxembourg franc and the netherlands guilder expected rates of devaluation have fluctuated more than interest rate differentials

one or more growth processes evidence from new italian firms the paper proposes a descriptive model of firm growth which assumes that learning processes are conditional on existing competencies of the firm and its founders we suggest the idea that firms who do not grow under all realizations of potentially profitable opportunities can be considered as zero learning in order to explain why some firms are zero learning and how these are different from growing ones we put forward and discuss the hypothesis that both start up size and founders pre entry history affect the firm s ability to adjust to market using a sample of 3 905 italian firms born in 1999 and 2000 we find that individual competencies influence start up size but not directly growth we also find a significant nonlinear relationship between start up size and growth implying that firms which were born smaller than a given size grow significantly less the results support the hypothesis that multiple and heterogeneous growth processes coexist and that the growth process of microfirms below a given organizational threshold may be structurally different in the long run from that of firms starting up above that threshold

structuring small firms for rapid growth abstract small firms confront significant dilemmas as they struggle to capitalize on growth opportunities surges in demand frequently result in the hiring of additional operating and administrative personnel rapid growth in employment however creates managerial problems whose resolution requires firms to design collateral systems that both mobilize staff attention toward a shared vision and support the firm s strategic outlook hambrick and crozier 1985 kotter and sathe 1978 this article reports on a cross sectional study of 95 small u s firms that experienced a five year surge in growth findings indicate that the internal systems designed by these firms to support their rapid growth varied systematically by strategic orientation and degree of product diversity contrary to expectations the relationship between strategy and structure failed to demonstrate a significant effect on these firms levels of performance indeed the data suggest that in fashioning these systems firms managements may in fact be responding to contradictory pulls 1 bureaucratization versus decentralization increased hiring stimulates bureaucracy firms formalize procedures as staffing doubles and triples employee participation and autonomy decline and internal labor markets develop tied to growth however is also an increased diversity in product offerings that favors less formalized decision processes greater decentralization and the recognition that the firm s existing human resources lack the necessary skills to manage the broadening portfolio 2 environment versus strategy high environmental turbulence and competitive conditions favor company cultures that support risk taking autonomy and employee participation in decision making firms confront competitors however through strategies whose implementation depends on the design of formal systems that inhibit risk taking and autonomy 3 strategic emphases on quality versus cost versus innovation rapidly growing firms strive to simultaneously control costs enhance product quality and improve product offerings minimizing costs and undercutting competitors product prices however are best achieved by traditional hierarchical systems of decision making and evaluation that contrast with the kinds of autonomous processes most likely to encourage the pursuit of product quality and innovation the findings suggest that managing surges in growth involves multiple challenges resolving the stresses and strains induced by attempts to control costs while simultaneously enhancing quality and creating new products to maintain competitive parity and centralizing to retain control while simultaneously decentralizing to encourage the contributions of autonomous self managed professionals to the embryonic corporate culture rapidly growing firms are challenged to strike a balance between these multiple pulls when designing their managerial systems

time consistent fiscal policy and government cash flow abstract this short paper provides an interpretation and some extensions of lucas and stokey s results on optimal fiscal policy the discussion relies heavily on the concept of government cash flow which is related but not equal to the budget surplus time consistency of the optimal policy requires that a positive cash flow is used to buy up some debt of each maturity and contingency

a markov switching analysis of contagion in the ems abstract this paper applies the multivariate version of the forbes and rigobon 2002 contagion test as proposed by dungey et al 2005a to detect contagion effects in the exchange rate mechanism erm of the european monetary system ems crisis and non crisis observations are determined endogenously via a markov switching vector autoregression msvar we show that the msvar is suitable for this purpose as it does particularly well in identifying the 11 realignments of the erm we examine whether denmark s rejection of the maastricht treaty and italy s competitiveness problems affected other ems participants and find evidence for contagion

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

intangible assets entry strategies and venture success in industrial markets abstract this study assesses the impact of intangible assets on the venture success of firms as they enter into industrial markets that are new to them a new market is one that is geographically new for the firm or is a product market where this firm did not originally compete the analysis is based on the profit impact of market strategy database which contains information on 91 new ventures into industrial markets five hypothesis were tested in this study 1 h1 high levels of intangible assets will be positively associated with performance of firms entering new markets 2 h2 high levels of intangible assets increase the likelihood of success regardless of the timing of entry 3 h3 in explaining venture performance there will be a positive interaction effect between promptness of entry and level of intangible assets pioneer entrants will benefit substantively more from high levels of intangible assets then will later entrants 4 h4 high levels of intangible assets enhance success irrespective of aggressiveness of entry 5 h5 in explaining performance there will be a positive interaction between level of intangible assets and aggressiveness of entry firms with high levels of intangible assets will gain substantively more from aggressive pricing promotion and high quality than firms with low levels of intangible assets one specific intangible asset corporate image is empirically analyzed and the results support our hypotheses a strong corporate image enables the firm to achieve greater success when they enter into new ventures and the interaction of image with aggressive promotional pricing and quality strategies is significant in explaining this success implications for practioners are high image firms reap enormous benefits from increased promotional efforts high quality and aggressive entry low image firms are severely penalized when they aggressively enter a market and may he better off entering the market slowly and at low prices

the anatomy of a corporate venturing program factors influencing success the author proposes a classification framework for factors that affect corporate venture success then a database of 37 new venture investments by exxon including 18 venture capital investments is analyzed for insight into the relative affect of these factors on venture technical and financial success this article presents a statistical analysis of those factors which were quantified as a group the venture capital investments were financially far more successful for exxon than the internally initiated ventures this striking difference stimulated the retrospective analysis reported here the author was in a position to observe the program over its entire life span and had first hand knowledge of each venture s technology markets and personnel because of the mix of venture capital and internal investments the author was also in a position to compare the two modes of investment factors affecting venture success are broadly classified as extrinsic and intrinsic extrinsic or environmental factors are those determined by the form of investment sponsorship e g corporate or venture capital and the characteristics of the investment sponsor extrinsic factors are segregated into two categories structural and procedural these factors are defined as the degree of difference between the corporate and venture environment in each category the four structural factors technology market organization and people are summed up as the overall degree of structural congruence the author postulates that the degree of congruence is directly related to venture success within the corporation to take the corporation into new markets some incongruence is required too much incongruence probably pushes the risk of failure too high the corporation s procedures for management of this incongruence will determine the degree to which it can successfully diversify its business the four procedural factors control selection of venture managers incentive compensation and financing are dealt with as differences between the corporate environment and an independent venture environment major differences in procedural factors usually exist between corporate and venture capital sponsored ventures they probably explain to some extent the relative greater financial success of the exxon venture capital investments as a group however the statistical analysis results indicate that the identified intrinsic factors are more important in explaining relative venture success intrinsic factors are those inherent to the venture itself and are subdivided into two categories product related market and technical risk levels and managerial relative experience levels each of the 37 exxon ventures was rated for success and for the intrinsic factors using a simple ordinal range of 3 to 6 values the product related risk factors showed a significant inverse correlation with financial success the level of venture managers prior experience in the venture s target market area and their level of prior general managerial experience showed an even greater correlation with financial success the sample correlation coefficient between the financial success rating sf and the sum of the ratings for prior marketing and managerial experience xs xm was 0 809 with a standard error of only 0 105 selection of the influential extrinsic and intrinsic factors is largely within the control of corporate management an approach to selection of these factors similar to that used by private venture capital fund managers should greatly improve the overall success of internal corporate ventures

technological innovation in canada a comparison of independent entrepreneurs and corporate innovators abstract this paper compares a sample of 124 independent high technology entrepreneurs with 112 corporate entrepreneurs intrapreneurs involved in developing and introducing high tech innovations across canada the study investigates the general management and technical problems faced by these entrepreneurs and contrasts their approach to such issues as market research financing and production the approaches used by the two groups in analyzing their markets and in planning and financing of innovations are compared and contrasted in general the independent entrepreneurs were technically trained usually possessing engineering training but no general management training or experience neither themselves nor members of their management team corporate entrepreneurs were as likely to come from management backgrounds as technical or else supported their lack of general management skills by adding people to their team with skills in marketing finance and manufacturing their problems were more often defending their ideas to management within the corporation obtaining funding and other resources within the firm and finding a corporate mentor to assist them in such areas as fighting political battles providing rewards and incentives for team members and creating the proper overall environment or culture for innovation within the corporation the lack of general management training and experience by the independent entrepreneurs led them to rate various marketing problems as the most serious difficulties in rating the obstacles to launching their innovations the innovations of the independent entrepreneurs were all new products while some of the corporate innovations were new systems or processes often installed within the corporation so the markets for these innovations were also within the corporation and required less of a marketing effort corporations were also much better prepared to handle problems in the marketing planning and operational areas but they had more problems of an interpersonal nature such as the unwillingness to consider alternative approaches the most significant difference in the obstacles encountered was that independent entrepreneurs listed their five most important problems as marketing difficulties in launching their new products corporate entrepreneurs also rated imperfect market analysis as their most important problem but it was closely followed by the lack of entrepreneurial talent within the company these obstacles lead to the primary recommendation of cooperative agreements of partnerships between large and small firms to solve some of these difficulties corporate responses indicated significant difficulty in gaining support within the corporation while independent entrepreneurs did not have to justify their efforts to a corporate hierarchy

a stage contingent model of design and growth for technology based new ventures abstract stage of growth developmental models have traditionally been used to enhance our understanding of the organizational creation and growth process until recently most of this literature has been primarily conceptual and descriptive this paper presents a stage of growth model theorized to hold for technology based new ventures the model consists of four stages conception and development commercialization growth and stability and views each stage of growth as a reflection of the dominant problems faced over the course of growth by the venture the model predicts that the organization of a venture will be a function ofthe dominant problems that define a stage of growth more specifically it is argued that a technology based venture s rate of growth depends in part on the consistency or fit between its stage of growth and certain structural features of its organization including decision making centralization and formalization and functional specialization in the areas of marketing and sales manufacturing and engineering technology data were collected from 105 technology based ventures in the electronics computer and peripherals industries to test the model the results were generally consistent with the theory and showed that centralization of decision making decreased as the firms moved to higher stages while formalization of decision making increased in higher stages specialization of roles in the functional areas of manufacturing and marketing also increased by stage however specialization in the engineering and technology functions remained high across all stages the contingency hypothesis was also supported indicating that technology based ventures growth is partially attributable to the fit between a venture s stage of growth and aspects of its structure these findings indicate that different patterns of decision making and functional specialization are required at each stage if growth is to be achieved as such this research validates a long standing but untested belief in the venture management field that performance of new ventures depends upon

property rights issues involving plant genetic resources implications of ownership for economic efficiency the economic theory of property rights is applied to the issue of the conservation of plant genetic diversity an issue often discussed in terms of benefit sharing in order to demonstrate that the assignment of property rights is important for reasons of efficiency as well as for equity given the existence of transaction costs within an industry the location of a property rights assignment is a crucial factor determining the incentives for efficient levels of investment at various levels of that industry in the context of plant genetic resources this means that property rights that are located at the retail end of the pharmaceutical and plant breeding industries may not have sufficient effect to generate the incentives to supply adequate amounts of plant genetic resources to the research and development sectors at the base of these industries

small business growth through geographic expansion abstract although the small business sector as a whole is achieving phenomenal growth an important concern in the field has been identifying the problems challenges and success characteristics associated with the prudent growth of individual firms a strategy utilized by many small firms to achieve their growth objectives is one of geographic expansion this approach involves expanding a firm s business from its original location to one or more additional geographic sites and is particularly well suited for firms that cannot expand in their present location but believe that their products or services may be appealing to consumers in other markets surprisingly despite the prevalence of geographic expansion as a means of small firm growth this is a neglected area of small business research although researchers have examined the common challenges associated with small firm growth a small business that expands from one location to several locations is subject to a number of potentially unique challenges for example during the course of opening a new geographic site a small business manager will be confronted with the task of managing an existing business and a start up at the same time the challenge created by this undertaking along with the other challenges associated with geographic expansion have not been specifically identified an improved understanding of these challenges may help small firm managers maximize their changes of leading successful expansion efforts as a result of the lack of research in this area this study used a comparative case study methodology to develop a theoretical model of the antecedents of effective small business geographic expansion the model was developed in two steps first a preliminary model of the antecedents of effective small business geographic expansion was developed from the existing small business growth literature second using analytic induction the preliminary model was compared with the experiences of five small businesses that have engaged in a growth strategy of geographic expansion for the purpose of developing a more thorough and more valid theoretical model a unique attribute of the sample is that not all of the businesses have been successful in their expansion efforts two of the five small businesses included in the study have had failed expansions providing us the rare opportunity to contrast failed expansion efforts against successful ones the model that emerged from this approach supports the notion that geographic expansion involves a unique set of managerial challenges the consistent evidence across the five case studies indicated that effective small business geographic expansion involves the following six major areas of concern planning for growth managing growth reasons for growth expansion site characteristics a set of moderator variables and expansion performance among the implications of the study is that the unique nature of the geographic expansion process adds a layer of complexity to firm growth that exacerbates the need for planning along with the normal challenges involved with adding structure to accommodate growth a firm that engages in geographic expansion must do this in an unfamiliar location where the market potential and legitimacy of the firm s business concept is untested the consistent evidence that emerged from the cases is that planning helps attenuate these challenges in addition the recruitment and selection of qualified personnel to staff expansion sites is a critical activity along with networking in the expansion site locations to establish organizational legitimacy three variables were found to moderate the relationship between managing growth and expansion performance learning and flexibility were found to have a positive influence on the managing growth expansion performance relationship whereas environmental turbulence was found to have the opposite impact finally a complex set of relationships emerged from the study pertaining to expansion site characteristics for instance the evidence generated across the cases suggested that planning helps a firm develop a set of heuristics for expansion site selection which helps a firm avoid placing a site in an undesirable location

regime switching analysis for the impacts of exchange rate volatility on corporate values a taiwanese case a second moment regime switching model with not only a switching intercept and a switching slope but also a switching error variance is applied to examine the impacts of exchange rate volatility erv on corporate values cv for the 10 industries investigated in taiwan two different regimes categorized as strong impact and weak impact are identified the dominant power varies from one industry to another the wald statistics for the null of equality are ambiguous which show that if the markov switching ms model is plausible then the erv might not be one major factor but another factor that could switch the cv of taiwan s industries for the model s volatility influence the data of 8 out of 10 industries are shown to fit a two state model when the volatility is stimulated a two state first order ms model is appropriate for the goodness of fit analysis at the 10 significant level

financing new venture exporters this paper investigates the demand for and access to financing for young small and medium sized enterprises smes the work compares theoretically and empirically two sets of new firms those that export and those that do not export as to the frequency with which they seek and obtain external financing the work hypothesizes that new growth firms and new exporter firms are especially likely to seek external financing yet less likely to obtain financing empirical findings confirm these expectations demonstrating that young growth firms were more likely than non growth firms to seek all forms of capital and exporters were particularly likely to apply for equity and trade credit commercial lenders were less likely to approve loan applications from early stage growth firms and especially so for applications from young growth oriented sme exporters the implications of these results for research and public policy are discussed

an empirical test of a stage of growth progression model this paper presents a stage of growth model for technology based new ventures tbnvs tbnvs are postulated to evolve through four discrete stages of growth conception and development commercialization growth and stability based on a longitudinal sample of 71 ventures in the computer and electronics industries the hypothesis that tbnvs progress according to this model is tested using the del procedure for prediction analysis of cross classification tables the hypotheses are supported although not all firms progressed as expected these results suggest that some variation in interstage transition patterns are due to a progression imperative

a dynamic perspective of internal fit in corporate venturing abstract managers of corporate parents and their ventures have long been faced with the question of how closely to tie the parent and venture a close connection may enable a venture to capitalize on the competencies and resources of the parent however venture autonomy could prevent corporate inertia and bureaucracy from constraining venture growth the lack of consensus on this issue leads us to the first of two complementary research questions that we address in this paper what is the effect of internal strategic fit between a corporate parent and its venture on venture performance we suggest that a tight fit is positively associated with venture performance because of the venture s access to its parent s resources managers and researchers alike have often observed that growing enterprises are dynamic entities in the case of corporate ventures this implies that the relationship between parent and venture evolves over time our second research question directly addresses this issue by asking does the relationship between a corporate parent and its venture s evolve over time and if so how we identify two dimensions of the fit between corporate parents and their ventures relational and economic a relational fit reflects organizational culture and structure while an economic fit is a function of the needs of the venture and the resources of the parent we develop a series of hypotheses and test them with survey data from 97 canadian corporate ventures for the purposes of this study we define success as the ability of a firm to meet internal milestones on schedule we find that the degree of fit between a corporate parent and its venture does affect the success of a venture and that success is associated with high levels of awareness commitment and connection further the relational dimension of the parent venture interface appears to have a greater association with venture success than does the economic dimension our data support the idea that the parent venture relationship is dynamic in nature as ventures in our sample generally lessened their economic connections with their parents as they matured or vice versa we did find however that the relational bonds remained more or less intact the exceptions to these general trends were an increasing emphasis on financial targets along with decreasing ceo involvement as ventures matured both of these findings make intuitive sense greater financial independence is accompanied by greater financial accountability and as a venture gains in both independence and accountability there is less need for the ceo to provide air cover these two issues aside the basic model of enduring relational ties and diminishing economic ties was supported as well the increasing accountability is consistent with our expectation that a close connection is preferable to high venture autonomy

a quantitative content analysis of the characteristics of rapid growth firms and their founders a group of firms that is attracting attention are rapid growth firms these firms are of particular interest because rapid growth is an indication of market acceptance and firm success by studying rapidgrowth firms researchers can help all firms better understand the attributes associated with firm growth despite these positive outcomes however rapid firm growth is difficult to achieve and maintain this study adds to the literature through a quantitative content analysis of the narrative descriptions of 50 rapid growth firms and a comparison group of 50 slow growth companies the purpose of the study was to draw from the narratives a list of empirically grounded growth related attributes that are associated with rapid growth firms the findings of the study resulted in the advancement of a conceptual model of the attributes of rapid growth firms in four areas founder characteristics firm attributes business practices and human resource management hrm practices

the financing threshold effect on success and failure of biomedical and pharmaceutical start ups the theories of technological innovation are examined in the context of the formation and growth of biomedical and pharmaceutical firms analyses are based on detailed data gathered from 26 firms founded between 1968 and 1975 in massachusetts supplemented by a three member expert panel evaluation of the risk associated with use of each firm s products a positive relationship was established between the level of technological sophistication of the firm and the risk associated with use of its products consequently technological advancement of the firm has not necessarily resulted in high economic performance in part because of the high demands put upon the firm s resources and time by the u s food and drug administration approval process the study indicates that the initial financial inputs have a threshold effect on subsequent economic performance of biomedical and pharmaceutical new firms in the sample studied unless these inputs reached the 850 000 to 1 000 000 mark in 1970 1975 dollars technological innovation was negatively mediated by the risk associated with the use of firm s products and by the fda quality control procedures consequently attempts at technological innovativeness are unfortunately detrimental to the economic performance of underfinanced new firms in the biomedical and pharmaceutical industry

start up ventures towards the prediction of initial success abstract there are numerous studies on new product activities that try to measure the relative impact of different factors on success or failure the research on new ventures is less comprehensive and often only a few items are considered this article reports on the early results from a research program that is combining the research on both new products and new ventures to come up with a more comprehensive evaluation of relative success factors the literature was reviewed to determine the most significant factors found in prior work a 68 item questionnaire was developed and used with the chief executives of 24 new technical ventures all associated with the rpi incubator or technology park ten of the 17 factors investigated yielded reliable measurements which were then subjected to siepwise regression analysis to determine the relative impact of each factor on the two success measurements used initial quantified success and initial subjective success it should be recognized that initial success does not necessarily predict ultimate success an area to be investigated in continuing studies the two success measurements were not correlated and the correlations with the independent variables were therefore different initial quantified success showed a strong negative correlation with market attractiveness companies entering smaller or more slowly growing markets were doing better than those in the larger faster growing markets initial quantified success was positively correlated with the level of entrepreneurial characteristics exhibited by the leader s these were the only two variables exhibiting significant relationships with quantified success initial subjective success was negatively correlated with market dynamism rather than market attractiveness negative correlation was also measured with both r d intensity and the organic nature of the firm this latter finding is contrary to much of the new product literature which emphasizes the need for individual independence and initiative such may be the case with new products or ventures within large organizations but in small independent ventures the entrepreneur should provide strong control and guidance a positive correlation was observed with the entrepreneurial characteristics and also with the degree of match between the firm s experience and the new business requirements no significant correlation was observed with 1 product or service uniqueness 2 gross margin or 3 strategic aggressiveness the lack of correlation with these variables is surprising but it may be due to the small size of the sample the research confirmed two items that are understood by most scholars and experienced practitioners the importance of the entrepreneur and the importance of pursuing new ventures that match the technical and market experience of the team the less obvious results are those that suggest that success is favored by strong review and control by the entrepreneur rather than the development of employee initiative and independence also the initial success appears to be coming more readily to firms in more slowly growing or less dynamic markets it will take an expanded sample and a longer time horizon to determine if these initial trends continue to ultimate success

toward consilience between biology and economics the contribution of ecological economics abstract during its ten year history ecological economics has made a real difference in the way economists look at the natural world and in the way biologists look at the economy in this survey article we examine the contributions to the journal in terms of e o wilson s concept of consilience that is his argument that the methods and assumptions of any field of study should be consistent with the known and accepted facts in other disciplines in particular we examine the contributions of ecological economics to reconciling the economic theory of the consumer and producer with biophysical reality

the biodiversity bargaining problem we employ cooperative bargaining theory and nash s rational threats idea to cast light on the biodiversity bargaining problem the problem of global environmental negotiations is argued to be of the nature of a bargaining problem in which bargainers must agree on the distribution of cooperative surplus in order to move to the bargaining frontier we discuss the importance of both efficiency bargaining frontier and fairness recognition of characteristics of bargainers in the choice of the appropriate contract we show that the incremental cost contract used to resolve the biodiversity bargaining problem is of the form of an extreme point contract that fails to recognise the contributions of the south to the production of cooperative surplus a rational response to such a contract is the use of threats of biodiversity destruction contracts must evince both efficiency and fairness in order to represent lasting solutions

market attractiveness resource based capabilities venture strategies and venture performance abstract this research seeks to identify variables that should be related to venture performance it is hypothesized that both market attractiveness and resource based capabilities are directly related to new venture performance in addition specific resource based capabilities are hypothesized to be directly related to the competitive strategies chosen by a firm finally the fit between strategies and resource based capabilities is hypothesized to be related to venture performance the sample consisted of all manufacturing businesses sic codes 20 39 started or reorganized in the corporate form between 1980 and 1991 in nine counties in northwestern pennsylvania as identified by a major marketing research service of the 800 companies surveyed completed questionnaires were returned for 155 representing a 19 response rate the 155 responding companies had a median age of 5 years with a median of 15 employees the major products of companies in the sample included flour lumber household and office furniture plastic containers tools and dies ready mixed concrete pipe fittings measuring devices paint and varnish machine tools electroplate carbon and graphite composite products plastic laminated products circuit boards electronic components and parts for internal combustion engines in general the results confirm the validity of the measures of environmental and organizational characteristics as we have adapted them for new ventures as hypothesized perceived market attractiveness and the overall abundance of resource based capabilities were significantly related to venture performance also in two of three cases the evidence suggests that specific resource based capabilities are related to the firm s stated competitive strategies finally although the relationship between fit and performance is not supported in all cases the performance of the emerging manufacturing ventures included in this sample appears to be enhanced when resource based capabilities are supportive of a cost leadership strategy and when firms seeking to differentiate based on product and service quality have the resource based capabilities to support that strategy the results of this emerging research stream will make an important contribution to our understanding of the factors that impact firm performance for scholars the results provide additional information needed to develop comprehensive new venture performance models a clear understanding of the factors that have a strong influence on venture performance will enable practitioners to better identify viable business opportunities and academicians to provide potential business founders with tools to help them recognize opportunity in addition the identification of appropriate levels of abstraction will provide building blocks for future research that seeks to integrate environmental and firm level constructs

fiscal policy debt management and exchange rate credibility lessons from the recent italian experience abstract this paper explores some potential determinants of exchange rate credibility with reference to the italian experience of the 1990s the analysis relies on a nonlinear framework emphasizing shifts between credible and non credible states and assuming a significant degree of persistence in the above regimes almost all fiscal and debt management indicators display significant effects on devaluation expectations the main policy implications of the paper are that a restrictive fiscal stance a lengthening of average debt maturity and an increase in the share of foreign denominated debt are crucial to stabilize the lira exchange rate and to qualify italy in the former group of countries which will join emu

optimal fiscal and monetary policy in an economy without capital abstract this paper is concerned with the structure and time consistency of optimal fiscal and monetary policy in an economy without capital in a dynamic context optimal taxation means distributing tax distortions over time in a welfare maximizing way for a barter economy our main finding is that with debt commitments of sufficiently rich maturity structure an optimal policy if one exists is time consistent in a monetary economy the idea of optimal taxation must be broadened to include an inflation tax and we find that time consistency does not carry over an optimal inflation tax requires commitment by rules in a sense that has no counterpart in the dynamic theory of ordinary excise taxes the reason time consistency fails in a monetary economy is that nominal assets should from a welfare maximizing point of view always be taxed away via an immediate inflation in a kind of capital levy this emerges as a new possibility when money is introduced into an economy without capital

the reliance of northern economies on southern biodiversity biodiversity as information abstract this paper addresses the issue of how biodiversity is used as an input into important industrial research and development processes biodiversity should be seen as an important source of a stock of information on which these research and development processes are built this stock of information is of the nature of an economic asset that depreciates as the environment creates new problems creating the need for a continual and perpetual supply of new information results are reported from a survey of the agricultural research and development industry demonstrating how the environment engenders new problems in a systematic fashion and how the industry makes recourse to biological diversity for stocks of information to address those problems the rate at which biological diversity is input into the research and development process is indicative of the extent of the reliance of this northern based industry on southern based biodiversity this reliance is very substantial and the elimination of biodiversity could be disastrous for these important industries in the near term

facilitators of organizational innovation the role of life cycle stage abstract one of the most serious challenges facing an entrepreneurial company particularly a high technology firm is knowing how to manage innovation as the organization evolves macro level facilitators inhibitors of innovation i e organizational and environmental conditions of a firm that promote or restrain innovation such as the structure of an organization its incentive system resources provided by its environment or its ways of analyzing firm external information and their relationship to the innovativeness of the firm are considered in this study two basic arguments have been put forward previously as to why the innovativeness of an organization may change as it evolves first it has been suggested that facilitators of innovation change over time and so will firm innovativeness that is the relationship between the facilitator and innovation stays unchanged but the facilitator itself is transformed causing changes in firm innovativeness as it develops for instance it has been suggested that mature firms become less innovative because their structure becomes overly formalized to perform other functions more efficiently which then stifles innovative processes second other researchers have proposed that the relationship between a facilitator and innovation changes as firms evolve for instance a formal structure may support innovation in a younger firm because it allows the entrepreneur to focus her energy whereas it may suppress innovation later since it inhibits an innovator s interaction with other environments the results of our analysis using data from 326 u s firms in different stages of their development and involved in many kinds of high tech industries support the second theory however the results for the relationships of the individual facilitators to innovation were not always as expected we found that formally structured young firms were less innovative than informal ones and that in older organizations formalization had no negative impact on innovation this finding possibly can be explained with micro level facilitators of innovation younger firms may have more entrepreneurial personnel whose ability for innovation is more inhibited through a formal structure than the more seasoned employees in older larger firms however this finding implies that the concern for formal structures with respect to firm innovativeness does not necessarily apply as typically assumed of similar significance was our finding with respect to the relationship between financial incentives and innovation it has been suggested that younger rather than older firms use incentives such as equity to encourage an innovative environment results of this research however show that innovation is associated with stock incentives especially in older firms this may be an indication for older firms to use differentiated incentives that reflect the individual s contribution to the firm to retain innovative personnel whereas start ups might rely on the excitement of working in a new venture as an incentive for innovative behavior more in line with expectations were the results for how firms process external information environmental scanning and data analysis were positively associated with innovation and this more so in older firms presumably because they have become more remote from developments outside the organization this result confirms the notion that much innovation by a firm is initiated externally however the results also indicate that the conditions of the environment itself are of lesser importance to firm innovativeness than the firm s active pursuit of information from its environment an often discussed implication of these findings is that the boundaries of a firm must be permeable at least from the outside in and systematic information gathering from customers competition research institutions etc may be necessary to the success of a firm that depends on its product development this seems especially important for older firms as expected the centralization of power in an organization also affected innovation centralization correlated positively with innovation in new ventures and negatively in older firms this indicates the importance of the entrepreneur and strong leader in a start up it also suggests though that as the firm matures this person has to give up some of her control and may have to relinquish the job at the head of the organization to someone else finally there are some more general implications of this work to managers involved with organizational innovation first reliance on past experience may be detrimental to future performance whereas a firm evolves through different stages means that have facilitated innovation earlier may be detrimental to it now or tomorrow and vice versa second copying successful strategies for innovation from other firms may not necessarily work not because their implementation was worse but because the conditions of the other firm for instance its evolutionary stage or its micro level facilitators were different researchers who study innovation should consider including life cycle stage as a potential moderating variable factors that facilitate innovation at some point during an organization s evolution actually hinder it in another also factors that were unimportant to innovation at the inception of a firm may facilitate it in later stages this study supports the conclusion that the consideration of contingency factors such as life cycle stage may enhance the development of a theory of organizational innovation

prediction of failure of a newly founded firm abstract the rate of mortality among newly founded firms is very high failure statistics universally show that over 50 of newly founded firms will fail during their first five years the economic financial and social losses resulting from these failures are significant thus it is valuable to try to develop methods to predict and to avoid such failures however there are only very few studies dealing with failure prediction methods for newly founded firms the aim of this study was to develop such methods that would also have practical value failure was defined as cash insolvency the aim was to develop a failure prediction model based on financial statement data from newly founded firms the ratios based on these data are hard measures and easy to calculate also for a person forced to only use publicly available information a prediction model based on these ratios could then be a practical method for financial analysts and other interest groups in evaluating the failure probability of a new firm this model does not require information about management products or markets because it rather deals with the symptoms of failure than the causes the study is based on a supposition that failure process in a newly founded firm is characterized by a too high initial indebtedness and by too low revenue financing as compared with the budget this supposition was supported by the empirical results based on the comparison of the financial ratios in first four years between 20 failed and 20 nonfailed small newly founded entrepreneurial industrial firms these results may give an explanation as to why some newly founded firms will fail and some will survive this explanation is of course based on the development of financial variables in the very first years the results showed that it is possible to some degree to predict the failure of a newly founded firm already in the first year after foundation the prediction accuracy will increase when the data of failure is approached the best univariate predictors proved to be stockholders capital to total capital ratio indebtedness cash flow to net sales ratio revenue financing and cash flow to total debt ratio sufficiency of revenue financing to pay financial obligations the prediction accuracy can be increased by adjusting the critical value of the ratio stepwisely to the year of operation thus the optimal critical value will change year by year after foundation the prediction accuracy can slightly be improved by a multivariate analysis this kind of multivariate model also included the logarithmic size net sales of the firm as a variable so that the probability to fail increased when the size increased the results also showed that the same multivariate model estimated for older small firms can be used as a failure prediction model for newly founded firms however this requires that quite different critical values are selected for both types of firms to summarize the results show that the failure of a newly founded firm is to some degree predictable by univariate or multivariate analyses the failure risk is increased with high indebtedness insufficient revenue financing and large size in the first years hence the risk to fail can be reduced by using less debt as initial financing and by paying special attention to the generation of a sufficient amount of revenues in initial stages furthermore it may be less risky to start business operations with a smaller rather than larger initial size

relation of dominant problems to stages of growth in technology based new ventures two studies investigating the growth patterns of new ventures are presented in the first study a stage of growth model theorized to apply specifically to technology based new ventures was develop

emerging high tech firms how durable are their comparative start up advantages abstract successful high tech entrepreneurial firms have been shown to have several common founder characteristics and start up conditions this paper presents a study of the duration of the effect of these characteristics and conditions on a firm s early growth do they have a permanent effect or does the early comparative advantage that they confer to the firm fade away after a few years successful firms being better able to adapt to changing conditions than the others the study is based on the longitudinal analysis of the first 8 years of operations of 73 high tech firms located in various parts of canada founded between 1965 and 1980 by one or several entrepreneurs in microelectronics communications and related fields the sample includes only survivors and manufacturers all the firms being still active and doing some manufacturing at data collection time in terms of firm size start up capital and sources of financing this sample is comparable to other samples of high tech start ups described in the literature and can therefore be assumed to be representative of the industry the importance of the government sector in canada resulted in a very high government orientation of the firms at start up an average 32 of first year sales being to the public sector similar market and firm behaviors may develop in other industrial economies some having very important government sectors e g france italy or high tech markets indirectly driven by governments through major defense and space contractors in the united states the analysis confirms the positive short and medium term impact of such start up characteristics as initial size start up capital past experience in marketing finance and government contracting founder s age market structure and similarity with the market served by a previous employer however except for initial size sales initial government orientation percentage sales to the public sector year i and previous experience in government contracting which tend to be excellent predictors of medium to long term success measured in terms of sales level other start up characteristics show only short term direct effects 3 years for past experience in marketing and finance 1 to 2 years for market structure and similarity of the market served with that of a previous employer they are however indirectly related to success through their effect on initial size and government orientation past experience in government contracting is strongly linked with initial government orientation whereas initial size and initial government orientation are independent of each other initial size and initial government orientation are therefore two independent start up traits that show the longest global direct effect on sales level 8 years the time horizon of this study when regrouping firms by initial size and government orientation other long term at least 8 years effects appear for all the firms size of the previous employer and similarity of technology with that of a previous employer for smaller start ups similarity of their market with that of a previous employer for government oriented firms amount of start up capital past government employment past experience in rd and for non government oriented firms past government employment and past r d experience from a practical point of view these results illustrate the importance of start up conditions behaviors and strategies can evolve as a firm matures but some initial characteristics seem to be clearly associated with sustained comparative advantage either because they lead to larger initial size or good government contracts or because they impact on the general orientation and strategy of the firm considering these start up conditions is therefore useful to the entrepreneur when planning a start up to the venture capitalist when analyzing a start up and to the public sector planner when developing support policies

a taxonomy of new business ventures abstract in this study we develop and validate an empirically grounded taxonomy of new business ventures nbvs using qualitative and quantitative data generated from interviews of and questionnaire responses from 106 entrepreneurs the taxonomy describes eight different types gestalts of nbvs these eight types are profiled across four dimensions individual what kinds of background characteristics abilities skills and motivations do these entrepreneurs have organizational what kinds of competitive strategies and organization structures are used by nbvs environmental what kinds of competitive environments are nbvs created in process what kinds of activities are pursued and how much effort is devoted to the activities that entrepreneurs undertake to create their nbvs an nbv gestalt is an ideal type generated through cluster analysis it is a composite summary of the case descriptions of the nbvs that fell into each particular cluster although each nbv gestalt is a complex combination of many different characteristics a simplistic description of each nbv gestalt is outlined to provide an overall view of the taxonomy type 1 escaping to something new individuals who start these firms seek to escape from their previous jobs jobs that from their perspective offer few rewards in terms of salary challenging work and promotion opportunities the new venture is in a different industry and is a different type of work than the entrepreneur s previous job this firm enters an established highly competitive market and offers goods services similar to its competitors type 2 putting the deal together the concern of the entrepreneurs in this group is to assemble the different aspects of the business suppliers wholesale and retail channels customers into a deal in which each participant in the deal can be assured of winning contacts are a crucial factor type 3 roll over skills contacts before the start up the entrepreneur worked in a position using technical skills and expertise similar to those required in the new venture he or she spends little time selling marketing or advertising because customer contacts from a previous position are used this firm provides goods or services that are based on the owner s professional expertise and are usually generic services e g auditing advertising the firm competes by offering better service than competitors type 4 purchasing a firm since this is a purchase a great deal of time is spent acquiring capital for the acquisition the venture is viewed as a turn around situation from the previous owners upon acquisition a great amount of time is spent evaluating the firm s products and services the firm competes by adapting to the changing needs of customers type 5 leveraging expertise this entrepreneur is among the best in his or her technical field the firm starts with the help of partners the firm enters an established market and competes through flexibility in adapting to customer needs since the entrepreneur is keenly aware of changes in the environment a great deal of time is devoted to sales the environment is characterized by high technical change and complexity type 6 aggressive service the firm is a very aggressive service oriented firm usually a consulting firm in a very specialized area the environment requires that the entrepreneur have profes sional or technical expertise of some kind knowing the right people in this industry is very important for making sales or for gaining access to those who influence which firms have the opportunity to make sales type 7 pursuing the unique idea the firm is created because of a new idea for a product or service that is not being offered the products or services are not technically sophisticated or difficult to manufacture since this is the first firm in the marketplace to offer such products services there is some uncertainty as to whether customers can be found type 8 methodical organizing the methodical aspect of the start up is reflected in the entrepreneur s use of planning both in acquiring the skill venture the firm s products or services are similar to those of other firms but the firm has some new twist either a slightly different way to manufacture the product or provide the service or by selling to a slightly different customer the nbv taxonomy outlines a situation based framework that may be useful for helping potential entrepreneurs match their skills abilities and interests to possible new venture types

technology strategy and new venture performance a study of corporate sponsored and independent biotechnology ventures abstract new ventures companies eight years or younger play a major role in the development of an emerging high technology industry corporate sponsored new ventures those supported by an established corporation and independent ventures those founded by independent entrepreneurs frequently battle for industry leadership and financial success whereas both venture types use technology to achieve financial and market success little is known about the differences in their technology strategies technology strategy is the plan that guides a new venture s decisions on the development and use of technological capabilities this strategy covers six major areas the first is selecting the pioneering posture where a venture decides whether or not be among the industry s first companies to introduce new products technologies to the market the second is determining the number of products to be introduced to the market the third is choosing the extent of a venture s use of internal and external r d sources internal sources usually refer to in house r d activities external sources may include purchasing or licensing of technology from other companies or joining strategic alliances to acquire that technology the fourth is deciding the level of r d spending the fifth is selecting the combination portfolio of applied and basic research projects whereas basic r d advances science applied r d leads to new products and technologies the sixth and final dimension is the venture s use of patenting to protect any competitive advantages it might gain from its r d activities this article reports the results of a study that explored the differences in the technology strategies and performance of corporate and independent ventures the biotechnology industry was chosen to test the study s hypotheses using 112 ventures seven of the study s hypotheses focused on the potential variations in technology strategy between corporate and independent ventures independent ventures ivs were expected to surpass corporate ventures cvs in pioneering new products technologies using internal r d and emphasizing applied r d cvs were expected to surpass ivs in introducing new products using external r d sources spending on r d and patenting the study s remaining three hypotheses covered possible variations in new venture performance nvp and their sources the results showed that ivs focused more on pioneering pursued a more applied r d portfolio and emphasized internal r d more than cvs cvs utilized external technology sources spent more heavily on r d stressed basic r d and used patenting more intensively than ivs these results were consistent with the hypotheses however contrary to expectations there were no significant differences between cvs and ivs in the frequency of new product introductions probably because most ventures were at the invention rather than the commercialization stage the results on the nvp of cvs and ivs were counter to expectations ivs outperformed cvs probably because of the high motivation of the iv owners who reaped the rewards of growth and profitability also whereas cvs may have greater access to the resources of their sponsors political conflicts and rigid corporate controls might have reduced their ability to achieve competitive advantages the results also indicated that cvs and ivs appeared to gain competitive advantages from different technological choices pioneering a focus on applied r d and extensive use of the internal r d sources were also positively associated with the performance of ivs heavy r d spending the use of both internal and external r d sources frequent product introductions and patenting were positively associated with the performance of cvs finding that technology strategies significantly impacted nvp should encourage executives to consider pursuing a formal technology strategy likewise the finding that different dimensions of technology strategy influenced the performance of cvs and ivs in different ways has practical implications cv managers can learn from their higher performing iv rivals also because established companies frequently acquire ivs information about their technology strategies can be valuable in assimilating the acquired ventures overall the results show that technology strategy is an important factor in enhancing new venture performance

capital market myopia abstract the purpose in writing this article is to focus attention on a phenomenon we call capital market myopia a situation in which participants in the capital markets ignore the logical implications of their individual investment decisions viewed in isolation each decision seems to make sense when taken together however they are a prescription for disaster capital market myopia leads to overfunding of industries and unsustainable levels of valuation in the stock market we use the winchester disk drive industry to elucidate the phenomenon we argue that capital market participants should have seen the problem coming they should have known that valuation levels were absurd based in large part on the greater fool theory the data necessary to anticipate the problem were readily available before the industry shakeout began and stock prices collapsed there are several lessons which we believe can be learned by careful examination of the disk drive experience in the period under study these include taking the broad view of the industry is the key to profitable investment the investment mania visited on the hard disk industry contained inherent assumptions about long run industry size and profitability and about the future growth profitability and access to capital for each individual company these assumptions had they been stated explicitly would not have been acceptable to the rational investor certainly there are valuations which arise which cannot be justified under any circumstance these are the times for the manager to raise money from the public capital markets those managers who took advantage of unsustainable valuation levels now have a chance to survive the shakeout growth is not equivalent to profitability the high growth rate in the industry made it the focus of considerable managerial investor and technological attention the industry attracted so many resources that the growth had high probability of being unprofitable excesses in the capital market turned an opportunity into a disaster profits for some are not equivalent to a good business many players made high profits by investing in the hard disk drive business including the investment bankers and certain of the venture capital groups which invested early enough to catch the wave of euphoria in the stock market and still sell under rule 144 many others rode the cycle up and down without liquidity for many buyers of disk drive stocks in 1983 losses were massive short term successes of some gave the illusion of long term profitability for all investors should not be fooled by such invevitably ephemeral successes market instability can be all bad news very rapid change often creates entrepreneurial opportunity it also creates risk analysis of the hard disk drive industry reveals the dark side of rapid technological evolution and of customer instability early players are often preempted by changes in technology and in customer needs early birds are not always winners in product markets but late comers are almost always losers recognizing the chain one of the more important lessons to be learned from the tale of the disk drive industry is that all players entreprenuers venture capitalists investment bankers industry analysts and investors must recognize the chains involved in such a process first there was a technological chain a series of bets on technological advances in disk drive components disk drive designs and end user designs then there was a financial chain a series of related bets on the internal financial health of each player in the technological chain and on the nature of access to capital in the private and public markets the likelihood that any player in the disk drive industry would prosper without a serious setback due to a weak link was effectively zero indeed weaknesses in the chain were created by exactly the same people whose financial success depended on an unbroken series of favorable outcomes during this same period the public capital markets were also a large supplier of funds to the disk drive industry the total amount of money raised in public offerings of common stocks for participants in the industry was over 800 million during the middle part of 1983 the capital markets assigned a value in excess of 5 billion to 12 publicly traded venture capital backed hard disk drive manufacturers the strong market valuation of these companies paralleled the boom in other high technology stocks and rising valuation levels in the stock market in general table 2 contains data on stock prices and valuation levels for some disk drive manufacturers and table 3 provides general data on the economy and capital markets

rational expectations econometric analysis of changes in regime an investigation of the term structure of interest rates abstract this paper is of interest both for its methodological contribution of new tools for analyzing rational expectations models and for its substantive conclusions concerning the term structure of interest rates during the monetary experiment of october 1979 the paper studies systems subject to changes in regime interpreted here as occasional discrete shifts in the parameters governing the time series behavior of exogenous economic variables the specification is shown to be quite tractable both theoretically and empirically the technique is used to analyze yields on three month treasury bills and ten year treasury bonds during 1962 to 1987 a constant parameter linear model for short term rates is shown to be inconsistent both with the univariate time series properties of short rates and with the observed bivariate relation between long and short rates under the expectations hypothesis of the term structure an alternative nonlinear model that admits the possibility of changes in regime affords a much better description of the univariate process for short rates moreover the cross equation restrictions implied by the expectations hypothesis of the term structure are consistent with the nonlinear specification indeed the residuals of the restricted relation have a standard error of only 0 8 basis points this is a third less than that of a completely unrestricted linear regression of long rates on short rates and compares with an unconditional standard deviation of long rates of 142 basis points i conclude that once the recognition by bond traders of changes in regime is taken into account the expectations hypothesis of the term structure of interest rates holds up fairly well for these data

germany and the world economy a german view germany and the world economy a round table discussion led by gerhard fels and hans peter froehlich many countries most notably the us have called for a german expansion to date germany has not acceded to these requests and fels and froehlich set out the german position they argue that large budget deficits in 1980 82 and the consequent increase in the debt burden left little alternative to a strategy of fiscal consolidation any contractionary effect on demand may have been more than offset by the favourable effect on private sector expectations the result of this fiscal austerity coupled with a tight monetary policy has been a moderation of inflation and after an initial recession a period of sustained growth any german fiscal expansion would push world real interest rates even higher but would do little to improve the us current account further germany s strongly counterinflationary policies have been an important factor in the success of the ems some easing of the fiscal stance might occur were the us to come to grips with its own deficit problems a reduction of the tax burden and a removal of trade barriers remain the best policies to sustain medium term growth germany s critics remained unconvinced olivier blanchard argued that the german recovery falls well short of that required to restore full employment and that the fiscal contraction of 1982 85 was unwarranted by the existing levels of deficits and debt there was little evidence that the laws of economics had been repealed and that fiscal austerity had actually fostered expansion in germany from a european perspective marcus miller noted that german austerity had helped underpin the anti inflation policy of ems countries however the twin pressures of a tightening us fiscal policy and a falling and more competitive dollar would require a deliberate and concerted european policy expansion if yet higher unemployment was to be avoided in europe a german u turn was especially desirable at this particular juncture

entrepreneurship and the initial size of firms abstract it is clear that entrepreneurs and their firms can vary widely nevertheless most of the research to date on entrepreneurship has examined central tendencies with relatively little attention devoted to entrepreneurial diversity this study examines one of the most distinguishing characteristics of young firms initial size the focus is whether smaller start ups differ from larger ones in the backgrounds of the entrepreneurs their processes of starting or the subsequent patterns of development in this longitudinal study an initial sample of 1903 young firms was examined to determine differences in characteristics of the entrepreneurs and in their processes of starting one year later data were obtained from 742 of these firms permitting analysis of how initial firm size was related to subsequent difficulties encountered and changes made as well as to performance as expected along almost every dimension these starting larger firms had the backgrounds that would seem to be necessary for the assembly of substantial resources they tended to have more education more management experience and goals that were more managerial in nature they also were more likely to have partners women were associated more often with smaller ventures but for this sample there were no differences in the representation of minorities between the smaller and larger start ups those starting larger ventures tended to rely more upon external investors and to start ventures more closely linked to their previous jobs both groups of entrepreneurs sought information from a number of sources but those founding larger ventures utilized professional advisors more whereas those starting smaller ventures utilized informal sources in the year after the first questionnaire differences between the two groups were less marked than expected both groups of surviving firms reported low levels of serious problems with the smaller ventures somewhat surprisingly reporting serious problems less often there were not many differences in changes made except that smaller ventures were more likely to lose partners and larger ventures were more likely to add branches or locations both groups reported high rates of mean growth in sales the smaller ventures with their small initial bases showed larger percentage increases smaller ventures also showed higher percentage increases in employment and surprisingly a greater increase in the absolute number of employees somewhat more of the smaller ventures had discontinued both groups included many firms that grew substantially and others that scaled back demonstrating the fluidity and experimentation characteristic of young firms for entrepreneurs and their advisors for public policy makers and for researchers any progress in understanding entrepreneurial processes should in the long run enhance venture performance the patterns observed here indicate that firms of different initial size tend to be associated with particular entrepreneurial characteristics processes of formation and subsequent patterns of development this diversity should be recognized in the development of assistance programs and university courses as well as in the interpretation of previous research for public policy makers the growth of these firms both small and large indicates the potential of economic contributions from entrepreneur ship further the growth of the smaller start ups suggests that even those ventures that appear to have few resources and modest potential can in the aggregate contribute substantially to the economy

regulating global biodiversity what is the problem we distinguish between local problems of biodiversity loss and global ones where international cooperation is required global biodiversity regulation involves choosing the optimal stopping rule regarding global land conversions in order to ensure that some areas of unconverted natural reserves remain to support the production sector that exists on converted lands the basic difficulty with implementing a solution to this global problem lies in the asymmetry in endowments between those states that have previously converted and those that have not we demonstrate that the fundamental problem of global biodiversity regulation is similar to the bargaining problem analysed by nash rubinstein and others there are benefits from global land conversion and there must be agreement on their distribution before the conversion process can be halted since the institutions addressing global biodiversity problems are either highly ineffectual benefit sharing agreements prior informed consent clauses or very extreme incremental cost contracts the biodiversity bargaining problem remains unresolved for this reason we anticipate that suboptimal conversions will continue to occur as a way of protesting the ineffective and unfair approaches employed in addressing this problem to date

corporate versus independent new ventures resource strategy and performance differences abstract this study examines differences between independent ventures ivs which are established by individual entrepreneurs and corporate ventures cvs which are controlled by larger companies it focuses on differences between these ventures related to the resources strategies and performance of firms in the computer and communications equipment manufacturing industries thus the findings increase the understanding of the different challenges faced by each venture type and provide insight into how each venture type should be managed the study finds that managers of cvs and ivs emphasized different resources and strategies specifically cvs emphasized the following resources internal capital sources proprietary knowledge and marketing expertise ivs emphasized external capital sources technical expertise and development of brand identification they also differed in their strategies ivs pursued greater strategic breadth more customer service and focused more on specialty products the findings that cvs had less strategic breadth was surprising in that cvs emphasized resources such as internal capital sources which could make pursuing broad strategies more feasible for cvs it is possible that some cvs do not pursue broad strategies because they may be infringing upon someone else s turf within the corporation and thus may be discouraged in spite of finding significant strategy and resource differences the study found that ivs and cvs did not differ in performance and that resources were not directly related to performance based on the concept of equifinality it follows that both venture types can be equally successful even if they follow different roads to success success may be less a function of the different resources ivs and cvs have and more a function of what strategies the firms choose based upon their resources strategy variables did relate to performance a low cost strategy lowered performance regardless of venture type and the influence of an aggressive strategy i e wide strategic breadth on performance depended upon venture origin managers pursuing a low cost strategy may have had lower performance if they became penny wise and pound foolish missing opportunities in their efforts to lower costs this suggests that regardless of venture type managers of new ventures in these industries and perhaps in other volatile industries may need to be opportunistic this study indicates that pursuing broad strategies increased the performance of ivs and decreased the performance of cvs this finding was surprising in that cvs had greater resources which one might think would lead to successful implementation of aggressive strategies in securing enough resources to pursue aggressive strategies from their parents cvs may lose the freedom of action they need to cope with the dynamism of high technology industries this suggests that managers of cvs within the computer and communications equipment manufacturing industries should either not pursue broad strategies or if pursuing broad strategy they should maintain their flexibility in contrast ivs that pursued broad strategies achieved higher performance indicating that perhaps ivs unencumbered by the bureaucracy that characterizes cvs may be able to pursue aggressive strategies while simultaneously maintaining flexibility thus this study offers iv and cv managers several valuable insights first it argues that managers of each type of venture may need to pursue different strategies to increase venture performance and make optimal use of their unique resources furthermore it suggests that cv managers encounter difficulties in applying resources to strategies and not in accessing resources whereas political obstacles may occur cv managers may primarily encounter these difficulties when trying to implement strategies rather than when accumulating resources from the parent suggesting a pitfall that managers of cvs and their parents need to avoid although this study has indicated that both venture types can be equally successful it suggests that they may face different obstacles and follow different roads to success

strategies of high performing new and small firms a reexamination of the niche concept abstract entrepreneurs seeking to position new or small firms in industries populated by well established competitors are frequently advised to seek the protection of a market niche there shielded by market characteristics which render the niche uninteresting to larger rivals small firms are urged to compete at the fringe of the market this article challenges this conventional wisdom citing industry and firm characteristics which under certain conditions create opportunities for successful direct competition by some small or new firms against much larger and established competitors however the authors caution that the conditions which created the opportunity may erode in time rendering the successful challenger vulnerable either to retaliation by the larger firm or challenge from subsequent entrants examples of successful direct confrontation by relatively small competitors are drawn from mature low tech industries a rapidly growing high tech industry and the service sector

financial performance patterns of new corporate ventures an alternative to traditional measures abstract this paper describes some of the limitations involved in using traditional performance measures to evaluate new ventures and suggests an alternative we argue that the use of traditional performance measures in the new venture setting can produce misdirected decision making by managers and misleading model development by researchers the traditional performance measures evaluated are return on investment cashflow market share gain and returns to stockholders the alternative performance measured presented is based upon an evaluation of patterns of improvement in return on investment across time these patterns of performance are mapped using regression analysis return on investment is regressed against time and the parameters of the resulting models parameters are themselves used as performance measures the beta coefficient is used to measure the overall rate of change in financial performance from year to year and the coefficient of determination r 2 is used to measure the predictability of change to combine the information available in each of these parameters into a single variable we multiply by r 2 and call the result v thus v is a measure of the velocity of improvement in financial performance across time adjusted for the level of variability in the performance trend much work remains to be done that could substantially improve the usefulness of v to managers and researchers more sophisticated approaches than the one used here might include weighting either or r 2 to fit the particular goal orientation of a given management team other model parameters might be used in conjunction with or in place of or r 2 to increase or improve the information captured in v measures of financial performance other than return on investment roi could also be used as the basis of calculating v even in its current simple form however v appears to be a useful performance measure in 87 of 112 ncvs studied v provided a useful summary of the pattern of performance s development in 25 of 112 cases there were important characteristics of performance that could not be captured by v the most important managerial implication of v entails the shift to evaluating a new venture on the basis of its progress toward a desirable end rather than on the end itself this provides a logical means of evaluating the financial performance of a new venture at an earlier time than would be possible otherwise

the order and size of entry into international markets abstract when entering markets managers must decide when to enter as well as how many resources to commit to the entry the study finds that larger initial resource commitments do not result in higher market share and market survival in international markets instead to improve performance in international markets managers should strive to be first entrants further first entrants typically commit fewer resources suggesting that this strategy can be pursued by firms with limited resources

initial human and financial capital as predictors of new venture performance abstract this research seeks to predict the performance of new ventures based on factors that can be observed at the time of start up indicators of initial human and financial capital are considered to determine how they bear upon the probability of three possible performance outcomes 1 failure 2 marginal survival or 3 high growth four categories of initial human and financial capital are examined general human capital represented here by the entrepreneur s education gender and race may reflect the extent to which the entrepreneur has had the opportunity to develop relevant skills and contacts management know how embodied in the entrepreneur or available through advisors or partners reflects management specific skills and knowledge without regard to the kind of business industry specific know how reflects specific experience in similar businesses financial capital is one of the most visible resources it can create a buffer against random shocks and allow the pursuit of more capital intensive strategies which are better protected from imitation the study utilizes a longitudinal study of 1053 new ventures representative of all industry sectors and geographical regions the research departs from most previous studies in considering different measures of performance marginal survival and growth and in considering explicitly whether the factors contributing to marginal survival differ from those contributing to high growth it was found that measures of general human capital influenced both survival and growth except for gender with women owned ventures being less likely to grow but just as likely to survive management know how variables had more limited impact having parents who had owned a business contributed to marginal survival but not to growth number of partners contributed to growth but not to survival management level prior employment in non profit organizations or not having been in the labor force and the use of professional advisors did not have significant effects industry specific know how contributed to both survival and growth amount of initial financial capital also contributed to both the usefulness of the model is enhanced by the fact that the resource variables considered are relatively easy to assess and all can be considered at the time of start up although some of the human capital variables cannot easily be changed the benefits or risks associated with each can be assessed in some cases potential problems can be identified so that plans can be modified to improve prospects overall it appears that using a model based upon the initial human and financial capital of the venture it is possible to predict the performance of new ventures with some degree of confidence

product life cycle considerations and the nature of strategic activities in entrepreneurial firms abstract this article reports on the nature of strategic activities and concerns reported by the ceos of 77 entrepreneurial manufacturing firms once initial success in their marketplace had been achieved once the entrepreneurial firm achieves initial market success the rate and number of strategic decisions faced by the entrepreneurs rapidly expand a product becomes a product line product lines are added facilities and equipment are expanded personnel are added a more formal and interpersonally complex organization becomes necessary markets and distribution channels expand adding uncertainty to key market related decisions new financial risks arise often as the result of undercapitalized cash flows all of these factors combine to dramatically increase the pressure on the entrepreneur s strategic decision making a major factor underlying the complicity inherent in this scenario is the product market life cycle the entrepreneurs must now organize and make decisions regarding several product lines that span several life cycle stages with different strategic concerns rather than regarding the narrow product range and limited life cycle position that provided their initial success the research reported in this article examined the relative importance of ten strategic activities and concerns reported by the 77 ceos across products at different life cycle stages initial interviews with selected ceos and a review of the strategic management literature identified ten key factors shaping the firm s evolving decision making practices these ten factors were divided into three groups 1 1 operational concerns that necessitate strategic attention 1 changes in product design 2 changes in process design 3 risk of producing a product and 4 emphasis on creativity 2 2 dimensions influencing a firm s strategic management activities 5 demand on the strategic manager s time 6 speed of decision making 7 problems of internal politics and 8 environmental uncertainty 3 3 fundamental assumptions underlying a firm s decision making practices 9 annual profit potential and 10 value of strategic planning there are two main sets of results first four process related factors value of strategic planning demand on ceo s time speed of decision making and annual profit potential were consistently the most important factors affecting performance within eact stage regardless of the life cycle of a particular product line the manner or process by which decisions were made strategic planning ceo s time and speed of decision making and one key assumption or objective annual profit potential were seen as factors more important in affecting performance than were operating concerns that necessitated strategic attention second strategic issues associated with product lines at the development and growth stages of their life cycle are reported to be significantly more important to ceos in entrepreneurial manufacturing firms than are strategic issues associated with mature or declining products lines these results suggest that ceos in entrepreneurial manufacturing firms should re examine their strategies and practices to be sure that sufficient strategic attention is being given to decisions regarding mature product lines in addition these ceo s need to ensure in the face of constant demands for their time and decisions that operating concerns requiring strategic attention get appropriate consideration

the internationalization of new and small firms a resource based view abstract this paper seeks to enhance understanding of the internationalization of small and medium sized enterprises smes the study focuses upon the following issues can the characteristics of principal founders businesses and the external environment at one point in time be used to explain at a later date whether a firm is still an exporter or a nonexporter whether exporting firms are larger in size than nonexporting firms whether exporting firms report superior performance than nonexporting firms and whether exporting firms are more likely to survive than nonexporting firms to address these questions this study draws upon a sample of 621 manufacturing construction and services businesses located in twelve contrasting environments in great britain surveyed first in 1990 91 and then re interviewed in 1997 a resource based view is reviewed to identify the range of factors encouraging some owner managed smes to enter export markets four categories of human and financial capital are examined general human capital resources the principal founder s management know how the principal founder s specific industry know how and a principal founder s ability to obtain financial resources that can act as a buffer against random shocks variables relating to resource availability in the external environment were also collected and considered control variables previous studies have highlighted substantial industry differences in the propensity for businesses to enter export markets as well as to survive the principal industrial activity of each business in 1990 91 was therefore considered a control variable variables collected during the 1990 91 survey were selected to explain variations in the propensity to export reported by surviving independent firms in 1997 after elimination of missing values the working sample was reduced to 116 independent firms for this study 86 nonexporters and 30 exporters in 1997 in addition the 21 variables were selected to explain variations in business size in 1997 profit performance relative to competitors reported in 1997 changes in employment over the 1990 91 to 1997 period and business survival over the 1990 91 to 1997 period 213 survivors and 395 nonsurvivors multivariate statistical analysis confirmed that previous experience of selling goods or services abroad is a key influence encouraging firms to export businesses with older principal founders with more resources denser information and contact networks and considerable management know how are significantly more likely to be exporters further businesses with principal founders that had considerable industry specific knowledge are markedly more likely to be exporters businesses principally engaged in the service sectors and those located in urban areas are significantly less likely to be exporters a key finding of this study is that the explanatory variables significantly associated with the propensity to export sales abroad are not the same as those significantly associated with selected size and performance measures the resource based explanatory variables selected fail to significantly detect employment growing firms over the 1990 91 to 1997 period they also fail to significantly distinguish surviving independent firms from nonsurviving firms results from this study will provide policy makers and practitioners with additional insights into the key resource based factors associated with the decision by new and small independent firms to export sales abroad practitioners and policy makers can focus upon the characteristics of principal founders businesses and the external environment to predict the subsequent propensity of an independent firm to be an exporter policy makers and practitioners who want more new and small firms to export outside their local areas may prefer to target their resources and assistance to the relatively smaller proportion of firms that have the business and principal founder profiles that are significantly associated with a firm being an exporter

up to standard market positioning and performance of hong kong films 1975 1997 the trade off between conformity and differentiation that market entrants face has recently been enriched by a new sociological insight differentiation is rewarded only within the confines of taken for granted market categories entrepreneurs however routinely engage in combining existing market categories the present paper attempts to reconcile these seemingly different views by focusing on the role of market uncertainty in particular we predict that the propensity of entrants to blend multiple categories increases with market uncertainty upon considering the endogenous influence of uncertainty on market positioning the positive returns obtained by entrants from combining multiple categories become apparent because differentiation inspires the positioning of entrants in the face of market uncertainty the frequent adoption of the same combination by competitors dampens the performance returns derived from it our hypotheses find support from the analysis of a large sample of hong kong films during 1975 1997

filling the institutional void the social behavior and performance of family vs non family technology firms in emerging markets family businesses fbs are said to treat their employees with unusual consideration to form a cohesive internal community they are also claimed to develop deeper more extensive connections or relationships with outside stakeholders both behaviors may increase the viability of a business intended to support an owning family and its later generations such social linkages we believe may compensate for the lack of capital product and labor institutional infrastructures in dynamic emerging economies this survey study of a most challenging emerging market sector namely korean hightechnology businesses argues three major points 1 relationships of community and connection will be more common in fbs than in non fbs 2 these relationships will enhance performance in emerging market hightechnology sectors which because of their competitive complex and everchanging nature rely on significant expert knowledge and social capital within and outside the organizational community 3 the performance of fbs will benefit more from these community and connection relationships than the performance of non fbs because in these personally intimate settings employees and external partners will be especially likely to return the generosity of a visibly active owning family or to penalize its selfishness significant empirical support was found for most of these hypotheses

corporate ventures into industrial markets dynamics of aggressive entry abstract this article reports a study of the effect of aggressive entry by firms venturing into new industrial markets there are three main sets of results first there is a significant correlation between the competitive attractiveness of the target industry and the initial share objective set by the corporation venturing into that industry second the downstream share objective set at the launch of the venture is significantly correlated with several key marketing strategy and investment strategy options made by the firm at the start of operations third if most of these key strategy decisions are made under the assumption that a high share position will rapidly be achieved their resulting performance in terms of both market share and roi is superior to firms which enter with less aggressive share aspirations these results are particularly appealing to the large established firm which has the resources and thus can both afford to absorb the cost of failure and afford to make significant front end investments in aggressive initial marketing expenses and investments in initial plant capacity for such firms a feasible strategy for a new venture into an industrial market could be to if possible but not essential seek industries markets to enter which are less likely to provoke rivalrous responses set aggressive market share targets invest aggressively in initial plant capacity develop aggressive sales force sales promotion advertising service quality and or pricing programs relative to competitors as appropriate to the particular industry being entered the reason we suggest that the programs be aggressive as appropriate is that different strategic options are likely to be more effective in one industry than another for instance aggressive advertising and sales promotions could be more effective for consumables while aggressive sales calling programs and superior service delivery could be the more effective route for capital goods businesses

the evolution of new technology ventures over 20 years patterns of failure merger and survival abstract relatively few studies of entrepreneurs have examined the evolution of business ventures over a long period of time this paper summarizes the fate of 250 technology based companies founded in northern california during the 1960s the three outcomes studied are failure merger and continued operation in addition interviews with a dozen founders of firms that survived the entire 20 year period shed light on the founders own interpretations of why they succeeded by 1988 50 of the firms in the sample had failed 32 had merged or been acquired and 18 had survived as independent businesses there was a steady and occasionally sharp erosion in the number of survivors throughout the period a striking finding was that fully 78 of the surviving firms in 1988 still had one or more of the original founders in place among the factors predicting failure were product market problems such as product timing difficulties problems of product design or inappropriate distribution channels financial difficulties such as initial undercapitalization or problems with the venture capital relationship and managerial key employee problems such as imbalance in the management team or succumbing to the trappings of success the firms in the data base which were subsequently merged or acquired exhibited a number of macro and micro characteristics from a macro point of view the merger acquisition rates seem to have been lower than the national rate in the late 1960s higher in the later 1970s and similar in the 1980s from a micro point of view discernible patterns existed among acquired firms such as size and year since founding interviews with surviving founders suggested that relations between founders banking and credit problems attempted takeovers and international expansion were among the key crises that had to be overcome by the surviving firms of particular interest was the diversity of motives for founding the business reported by the survivors in addition to the desire to achieve wealth or to be independent we heard mentioned loyalty to a product or technology which would otherwise disappear and commitment to satisfying a customer group also noted were founders who indicated that their career as an entrepreneur came about primarily by accident five themes emerging from the interviews were characterized by the surviving founders as business lessons learned 1 know yourself 2 love your product 3 honor your customer 4 treat your people well and 5 keep your integrity the interviews in conjunction with the data on surviving firms are useful in expanding our understanding of the type of person that starts a business and why some start ups succeed over the long term particularly noteworthy is the number affirms who survived without ever growing larger theories of long term entrepreneurial success may need to take risk aversion into account

disparate information and the probability of currency crises empirical evidence abstract this paper tests the impact of the distribution of information on the probability of currency crises within a markov switching framework less disparate information among domestic and foreign investors proxied by premia on country funds lowers the probability of a crisis

the advantage chain antecedents to rents from internal corporate ventures abstract in this article we argue that the resource based perspective on strategy offers a useful basis for understanding the contributions to the firm of corporate ventures the heart of the resource based view of the firm lies in arguments set forth by penrose and by nelson and winter penrose 1959 argued that differential mechanisms for resource combination and utilization result in heterogeneity among firms even among firms with similar factor endowments nelson and winter 1982 argued that behavior in particular behavior with respect to the utilization of firm resources becomes routinized over time people are often unable to describe or reconstruct well honed repetitive routines with ease van de ven 1986 consequently no two firms are likely to develop identical routines and it is often difficult for one firm to copy routines originated in another the idea that resources may be combined in routinized but relatively idiosyncratic ways suggests that firms will develop enduring differences in resource profiles and consequently in strategic potentialities over time consider the benefits a corporate venture can offer entering new markets making a new product developing a new technology or reconfiguring internal processes all require changes to existing resource configurations and routines these changes can allow the firm to discover ways of combining its resources and to the extent that the new combinations incorporate difficult to imitate routines it will take some time before that combination can be matched by competitors in other words venturing is one mechanism through which a firm gains superior insight about and access to firm specific resources with future rent potential value so a substantive and desirable outcome of venturing is the generation of valuable new resource combinations specific to the firm which it alone may exploit the article presents a model of those conditions that are necessary antecedents to streams of ricardian rent from the venture five such conditions are proposed all of which must be met if the firm is to derive rents from its venturing activities the first antecedent to securing rent streams from venturing is the emergence of causal understanding of the drivers of the venture s performance new causal understanding creates insight into new opportunity areas next team proficiency is essential to translate causal understanding into coordinated delivery of the product or service to the market new competences emerge as a result of evolving causal understanding and team proficiency which allow the organization to achieve new purposes from these new competences there may then develop distinctive competences that will differentiate the firm from competing organizations these distinctive competences may then become competitive advantages if they can be deployed in delivering product or service attributes that are preferred by the market to the offerings of competitors and competitors cannot readily duplicate them rents can only ensue when these inimitable competitive advantages allow a firm to achieve either distinctive efficiency in the firm or distinctive value for the customers the final section of the article offers ways in which this framework could be used first for research purposes and secondly by venture management

using founder status age of firm and company growth rate as the basis for distinguishing entrepreneurs from managers of smaller businesses abstract this article examined the empirical implications of definitions that distinguish entrepreneurs from managers of smaller businesses based on their founder nonfounder status and their firms ages and growth rates the best distinctions were created using 1 founders 2 younger companies and 3 the combination of founders and younger companies growth indicators did not discriminate well the two founder based distinctions shared a profile of entrepreneurs as running smaller companies with higher return on assets roa than nonentrepreneurial managers having shorter tenure in their positions having previous work experience in the same industry and having higher risk taking propensity the distinction based on age of firm also showed strong ability to discriminate among respondents the field of entrepreneurship has few longer standing controversies than the one surrounding the question of what distinguishes entrepreneurs from nonentrepreneurial managers in trying to separate entrepreneurs from managers of smaller businesses in particular questions exist concerning the key defining differences definitions of entrepreneurship have utilized founder versus nonfounder status company age and company growth rates as distinguishing elements entrepreneurs have been defined by one or more of the following elements being a company founder running a young company and running or desiring to run a high growth company this article tests these elements to see if they provide a clearly differentiated profile of entrepreneurs it uses the founder nonfounder distinction for example to see if this distinction functions well in identifying a number of company financial and personal attributes that associate with founders rather than nonfounders the approach advocated here borrows from configurational theory as it has emerged in the fields of strategic management and organizational theory meyer tsui and hinings 1993 to look for a constellation of variables that group together in depicting entrepreneurs if founder status company age and growth rate are useful definitions of entrepreneurship they should point to a configuration of factors that together comprise a profile of an entrepreneur in predicting what configuration of factors will emerge this article adopts a strategic adaptation perspective low and macmillan 1988 to argue that differences between entrepreneurs and nonentrepreneurs spring from divergent thought processes and personal attributes of individuals who face the question of whether and how to enter business for themselves using the founder nonfounder distinction we view individuals who decide to start a new business rather than buy or manage an existing one as more likely to have previously founded a business have experience in the same industry be higher in risk taking show more type a behavior and be more growth oriented findings from a sample of ceos in the smaller business association of new england indicated that neither of the two tests based on high growth as a definition of entrepreneurial firms proved adept at creating a distinct entrepreneurial profile distinctions based on founder status younger firm status and founder of a younger firm status on the other hand proved effective in creating such profiles dimensions shared by the two founder based definitions of entrepreneurship included company attributes of smaller size and higher roa and ceo attributes of shorter tenure on the job previous experience in the same industry and higher risk taking propensity additional attributes showed in the younger company founder group including company attributes of lower liquidity and higher sales growth and personal attributes of having previously founded a business ranking roa as a high priority and external locus of control the distinction based on younger firm status performed well in discriminating among respondents in this study in addition to sharing several variables with the founder based distinctions it alone identified younger firms ceos as having lower education and type a tendencies and higher expectations of children succeeding them in the business as one implication of these findings knowledge of the profiles may help people who deal with these groups to have a better sense of how to interact with and respond to them the young company founder profile for example presents a picture of a relatively small company experiencing high rates of sales growth squeezing all it can from its assets in the face of high comparative liabilities because the company is young its founder has relatively short tenure but may well have had previous experience in the industry and have previously founded a company personally the founder is a risk taker who is external in locus of control and places high priority on roa if this configuration holds firm in future research those who deal frequently with entrepreneurs such as bankers venture capitalists consultants accountants and lawyers will be able to use a few identifying factors such as founder status and age of firm to draw reasonable inferences about a host of other characteristics of their clients the attempt to profile the entrepreneur in recent years thought to be futile may yet prove viable

asset specificity and behavioral uncertainty as moderators of the sales growth employment growth relationship in emerging ventures sales growth and employment growth are the two most widely used growth indicators for new ventures yet sales growth and employment growth are not interchangeable measures of new venture growth rather they are related but somewhat independent constructs that respond differently to a variety of criteria most of the literature treats this as a methodological technicality however sales growth with or without accompanying employment growth has very different implications for managers and policy makers a better understanding of what drives these different growth metrics has the potential to lead to better decision making to improve that understanding we apply transaction cost economics reasoning to predict when sales growth will be or will not be accompanied by employment growth our results indicate that our predictions are borne out consistently in resource constrained contexts but not in resource munificent contexts