Patterns of venture gestation process: Exploring the differences between tech and non-tech nascent entrepreneurs

Abstract

The process of creating new organizations has increasingly become the focus of entrepreneurship research [Gartner, W. (1990). What are we talking when we talk about entrepreneurship? Journal of Business Venturing 5(1), 15–28]. However, few entrepreneurship studies explore the venture creation process, and even fewer do it empirically, with the exceptions of Bhave [Bhave, M. (1994). A process model of entrepreneurial venture creation. Journal of Business Venturing 9, 223–242], Reynolds and Miller [Reynolds, P., & Miller, B. (1992). New firm gestation: conception, birth, and implications for research. Journal of Business Venturing 7, 405–417], Carter, Gartner and Reynolds [Carter, N., Gartner, W., & Reynolds, P. (1996). Exploring startup event sequences. Journal of Business Venturing 11, 151–166] and Delmar and Shane [Delmar, F., & Shane, S. (2002). What firm founders do: a longitudinal study of the startup process. In William D. Bygrave, Candida G. Brush, Per Davidsson, & James Fiet (Eds.), Frontier of Entrepreneurship Research. Babson Park, MA: Babson College]. Using the Panel Study of Entrepreneurial Dynamics (PSED) dataset, this study examines different venture creation process attributes across technology-based entrepreneurs (TBEs) and non-technology-based nascent entrepreneurs (N-TBEs), In particular, we address this research question: Do TBEs and N-TBEs differ in their venture creation process in terms of the number of startup activities engaged, gestation duration, association and sequencing patterns of startup activities? We find that, compared to N-TBEs, TBEs engage in more startup activities in planning, legitimacy establishment and resource acquisitions, but not in marketing. TBEs take longer to complete gestation. Surprisingly, the two types of startups share a common set of core activities, very similar in their sequencing patterns. It suggests that creating a business entails many common core processes irrespective of organizational and industry settings. What differentiates them is non-core, peripheral activities. Implications for future research are provided.