Early-stage Entrepreneurs Research Articles

The impact of entrepreneurs’ prior experience and communication networks on perceived knowledge access

PurposeEntrepreneurs approach the startup process with a stock of experience and a unique range of accumulated skills and abilities. Their prior experience shapes an “information funnel” through which the entrepreneurs’ attention is filtered. This study aims to investigate the impact of the relatedness of prior knowledge and knowledge acquisition activities on entrepreneurs’ perceived knowledge access.Design/methodology/approachSurvey data were collected from 100 early-stage entrepreneurs in the New York City metropolitan area to empirically test the proposed relationships with the method of conditional process modeling.FindingsFindings from this study demonstrate a negative relationship between entrepreneurs’ prior experience and their perceived ability to access knowledge. However, this negative relationship can be mitigated by seeking tacit knowledge through informal channels. In addition, the relatedness of prior experience plays a positive role in influencing media use and knowledge network engagement. While media use is a positive predictor of perceived knowledge access, engagement within knowledge networks shows no direct influence on perceived knowledge access.Originality/valueThis study sheds light on the dimensions of entrepreneurial knowledge and recognizes perceived knowledge access as an important concept in forming an entrepreneurial intention and adds to the current dialogue on the interpretation of entrepreneurs’ prior experience. For practitioners, this study offers insights into the formation of founding teams and the approaches to obtaining valuable information.

Innovative outcomes from migrant entrepreneurship: a matter of whether you think you can, or think you can’t

The entrepreneurship literature has exposed some of the most influential antecedents of innovative entrepreneurship. Prior research has also identified crucial features of migrant entrepreneurship. This article employs lessons from these two areas and draws on social cognitive theory to explore the main drivers of innovative ventures among migrants. We center the attention on entrepreneurs, differentiating them between two management strategies: imitation or innovation; and we study the role of perceived self-efficacy, prior entrepreneurial experience, and social capital into the likelihood of acting innovative. For our empirical analysis, we primarily use data from the Global Entrepreneurship Monitor for three years covering 2016–2018 and gathering 5713 observations of early-stage entrepreneurs from Chile. Our estimations show that being a migrant is in itself an insufficient condition to influence seeking substantial differentiation from what is traditionally offered in the local market; instead, we confirm that a migrant who feels capable of successfully starting a business will be likely to conduct innovative entrepreneurship. Contributions of these findings for theoretical and practical advances of the field are discussed.

RICH with well-being: An entrepreneurial mindset for thriving in early-stage entrepreneurship

Entrepreneurs enjoy high well-being, yet they report factors that typically reduce well-being. We examined well-being of early-stage entrepreneurs across two studies. Using self-determination theory (SDT), we theorize that entrepreneurs’ autonomy, job security, and resource-induced coping heuristic (RICH) have direct and interacting effects that shape their environment toward enhancing well-being. Results largely support our hypotheses. Interaction effects highlight that entrepreneurial well-being environments are conditional on the interplay of SDT-related factors. Three-way interactions showed the RICH buffered negative effects of low autonomy and job security on job satisfaction and financial well-being.

Mind the Systemic Gap(s): Service Ecosystems for Early-Stage Entrepreneurs in the East Zone of São Paulo, Brazil

Design supports entrepreneurial activity through new products, services and business designs, linking users, organizations and ecosystems. In this paper we explore services that support early-stage entrepreneurship. Fostering entrepreneurship is seen to create employment and economic wellbeing, especially in low resource environments. While service design practice has reached maturity, it is unable on its own to fully address the complexity in these services. In this paper, we suggest that complementary systemic level approaches are needed to build up coherent service ecosystems through an investigation of the perceptions of early-stage entrepreneurs regarding their service ecosystem in the resource-scarce East Zone (EZ) of São Paulo, Brazil. We found there were fundamental gaps in public policies, mentoring, access to capital and business networks, together with relatively underdeveloped skills and abilities in accessing markets. We contribute to modelling service ecosystems, identifying systemic gaps and defining a high-level agenda for service design to support early-stage entrepreneurship.

Influence of social capital offline and online on early-stage entrepreneurs

PurposeThe purpose of this article is to investigate if and how social capital offline – stemming from face-to-face interactions – and social capital online – stemming from social digital media – can influence early-stage entrepreneurs, i.e. ventures with up to 42 months of existence.Design/methodology/approachThe authors used herein a qualitative research approach. The method used was the case study. The authors investigated three early-stage entrepreneurs in order to achieve the objective of the paper. These entrepreneurs are both the unit of analysis and the unit of observation.FindingsThe outcomes of this research indicate (1) the combined importance of social capital offline and online; (2) the different performance of the two different types of social capital (they seem to operate in relatively distinct ways) and (3) the existence of recursiveness between resources stemming from the two social spheres (offline and online).Research limitations/implicationsAs research limitations, the authors point out the following: (1) the use of semistructured interviews as the only data collection instrument; (2) the limitation of the outcomes to entrepreneurs only (3) the absence of information on the performance of the business ventures; the focus of the paper was only on establishing causality between social capital offline and online and entrepreneurial performance.Originality/valueThis paper provides important research contributions. Initially, the paper presents a range of offline and online variables, which can be used in further research. At the same time, the paper emphasizes the combined impact of social capital offline and online, expanding the literature related to entrepreneurship. Moreover, this study proposes the creation of an integrative model. Finally, the authors point out the need for new theoretical and empirical studies on the subject, which still presents a gap in the literature.

International Migration Experience and Entrepreneurship: Evidence from Mexico.

This study investigates the effect of international migration experience on entrepreneurship in sending areas. To identify prosperous businesses that create jobs and encourage economic development, this study isolates businesses other than street-vending enterprises with non-family employees. Retrospective life history data from the Mexican Migration Project (N = 11,789 persons & 146,372 person-years) was used to estimate the annual probability of becoming an entrepreneur across 170 Mexican communities between 1975-2017. This study found that (1) any prior migration experience increases the probability of entrepreneurial entry relative to non-migrants; (2) accumulated months of migration experience are positively associated with the probability of entrepreneurial entry; (3) undocumented status is associated with a lower probability of entrepreneurial entry. The positive effect of accumulated migration experience on entrepreneurship suggests that international migrants can accumulate human and financial resources that are essential to early stage entrepreneurship. Thus, entrepreneurship represents an important pathway through which international migration can encourage economic development in less developed regions. At the same time, the results suggest that that immigration policies in receiving countries can undercut migrants' capacities to mobilize resources and contribute to economic development upon return. These findings suggest that target migration creates a win-win by addressing labor shortages in receiving countries, while transferring resources to sending areas that enable economic mobility and development.

Gendered institutions and female entrepreneurship: a fuzzy-set QCA approach

PurposeThis paper aims to examine the contextual embeddedness of female entrepreneurship through a focus on gendered institutions. Specifically, it draws upon Scott’s (1995) institutional categories and explores how the three dimensions of gendered institutions combine to explain both a high level of female Total Early-stage Entrepreneurship Activity (TEA) rates and female/male TEA ratios.Design/methodology/approachCollecting data from the Global Entrepreneurship Research Association, the World Economic Forum and the World Bank for 63 countries, this study uses the fuzzy-set qualitative comparative analysis (fsQCA) method to explore causal complexity between the regulative, normative and cognitive dimensions of gendered institutions (conditions) and the female TEA rates and the female/male TEA ratios (outcomes).FindingsFirst, this study confirms the complex interactions occurring among institutional components. Second, the results highlight the key role that gender equality in entrepreneurial cognitions plays in achieving high female entrepreneurship. Third, configurations for the high female TEA rates and the female/male TEA ratios share a high similarity.Practical implicationsThe study provides policymakers with a holistic viewpoint and alternate solutions with the aim of promoting female entrepreneurship in their respective countries.Originality/valueThe study highlights gendered institutions beyond general institutions, enriching the literature on the gender and institutional determinants of female entrepreneurship. Furthermore, the application of the fsQCA method in the study helps to enhance the understanding of how institutional components complexly interact to shape female entrepreneurship.

Wishful Thinking versus Reality: High-growth Aspirations of Start-ups and Established Entrepreneurs in ASEAN

Most enterprises in the Association of Southeast Asian Nations (ASEAN) are micro and small enterprises. Few have aspirations to “dream big.” From an economic perspective, high-growth firms provide many benefits. This empirical study explores both country-level contextual factors such as country competitiveness or innovativeness and individual-level factors associated with high-growth, such as an entrepreneur’s market expansion plans, new product perceptions, export orientation and use of latest technologies. In this context, we investigate whether to “dream big” is associated with specific strategic intentions and which influencing factors hinder or foster aspirations to grow the business by more than 20 employees within five years while developing it into an established business. Utilising random sampling of data in six ASEAN countries, collected in the years 2013 to 2015 and comparing male to female entrepreneurs, the regression results of this empirical study show that although high growth-oriented entrepreneurs in both start-ups and established enterprises account for only 2.7% of all enterprises in this study, high-growth aspirations can only partially be sustained by early-stage entrepreneurs into the next business phase since it depends on several factors: (1) receiving funding (for both genders); (2) being export oriented (for male entrepreneurs); and (3) perceptions of having new products or services to offer to the market (for women entrepreneurs). Both genders are less prone to pursue their initial early-stage growth goals as established entrepreneurs. We infer that established entrepreneurs gain more clarity on the deployment of growth through implementation in the organisation while running their businesses and therefore may be more realistic in their predictions or less confident in their pursuit of ambitious goals.

Evidence of Gender-Bias in Early-Stage African Entrepreneurial Finance

This paper investigates gender-related bias in equity, debt, and philanthropic contribution financing decisions for early-stage African entrepreneurial ventures. Utilizing a series of individual estimations and a two-stage Heckman Selection Model on questionnaire results from 2,812 early-stage entrepreneurs in Ghana, Kenya, Nigeria, Tanzania, Uganda, and South Africa, I find substantial evidence of a negative effect of having a female primary founder on the probability of being selected for equity funding, but that this bias does not persist in the amount of equity funding the start-up attracts. In the case of debt and lending finance, female entrepreneurs are subject to a lower probability of being selected for funding and smaller total amounts of debt financing. Philanthropic contributions present an interesting alternative, and do not have any significant gender bias in the initial funding selection or in the amount of funding provided. These results are crucial for understanding how female African entrepreneurs are able to fund their businesses and their success in obtaining funding. This paper provides policy recommendations for encouraging female entrepreneurship in Africa, which has been shown to contribute to long-term sustainable economic growth.

Early-Stage Entrepreneurship: Some Key Indicators and a Summary Index

Entrepreneurship is a process and a series of dynamic steps, rather than a binary or static outcome. To provide more granular insights into the early stages of entrepreneurship, we elaborate on four indicators and a summary index capturing different dimensions of entrepreneurial activity within the population and within new businesses. The four early-stage entrepreneurship indicators: - Rate of new entrepreneurs: the percentage of the adult, non-business owner population that starts a business each month. - Opportunity share of new entrepreneurs: the percent of the total number of new entrepreneurs who were not unemployed and not looking for a job as they started the new business. - Startup early job creation: the total employment created by new employer firms in their first year for every 1,000 people, meaning that it is a measure of average first year job creation by a startup, and it is comparable across time and by geography. - Startup early survival rate: the percentage of new employer establishments that are still active after one year of operation.

High-tech Entrepreneurship and Total Factor Productivity: the Case of Innovation-Driven Economies

This article aims to shed light on the relationship between total factor productivity (TFP) growth and high-tech entrepreneurship in a group of innovation-driven economies during the period 2007–2014. In this regard, we outline a panel data analysis method. For measuring high-tech entrepreneurship, we consider proportion of early-stage entrepreneurs and established business owners in high or medium technology sectors provided by the Global Entrepreneurship Monitor. Based on the Global Competitiveness Report 2014–2015, business sophistication and innovation are considered control variables. Our findings reveal a non-linear high-tech entrepreneurship-TFP growth relationship in an innovation-driven context after the inclusion of control variables. A disappointing finding is that business sophistication and innovation exert negative impacts on TFP growth. Policy makers should put in place a whole new policy approach accordingly. Policies facilitating innovative start-ups are an important tool to enhance knowledge diffusion and stimulate productivity growth.

The impact of regulatory quality on business venturing: A semi-parametric approach

We study the effects of regulatory quality on entrepreneurial activity in 30 OECD countries through the lens of a partially linear panel data model. We argue that there is a nonmonotonic “inverted-U shaped” curve between regulatory quality and total early-stage entrepreneurship activity lending support to the theory of pubic choice. Moreover, the empirical findings postulate that a deterioration in the effectiveness and enforcement of government regulations (i.e., government inability to formulate and implement sound policies, onerous regulation, etc.) harm setting up a business activity within the OECD countries. Our findings survive robustness checks under different dimensions of entrepreneurship (nascent, new and established entrepreneurs) and endogeneity bias. Lastly, these results have important implications for policy makers and government officials in promoting effective regulatory measures to enhance entrepreneurial activity.

Assessment of Women’s Early-stage Entrepreneurial Activity in 2018

Abstract The analysis of the regularities characterizing the existing rate of female early-stage entrepreneurial activity, as well as the identification of reserves for female entrepreneurship growth is relevant nowadays. The purpose of the work is to assess the rates of entrepreneurial activity of women, their motivational preferences, and comparative analysis of female and male early-stage entrepreneurial activities. The study is based on the economic analysis of the data on 48 countries, presented in the Global Entrepreneurship Monitor report for 2018. Normal distribution density functions are used in the modeling process. The research reveals features of female entrepreneurship and the barriers to its development. The paper defines countries with high and low values of the considered indicators. The study estimates the existing rates of opportunity and necessity motivation of female entrepreneurs, presents the analysis of the ratio of female to male participation in early-stage entrepreneurial activity, and proves the hypothesis on substantial differentiation of these indicators across countries. The obtained knowledge can be used in future scientific research, in the educational process of bachelors and masters training. The scientific novelty lies in the study of the distribution of indicators characterizing female entrepreneurs’ motivation and the existing gender gap in early-stage entrepreneurship. The study proposes new methods and tools for the analysis and presents a comparative analysis of the development of female and male early-stage entrepreneurship.

Entrepreneurial Behavior, Institutional Trust and National Innovation: A Macro-Level Empirical Study

Schumpeterian fundamentalism supports the argument that innovation is a dynamic process and novelties are initiated through economic agents namely the entrepreneurs; vis-à-vis a strong institutional environment is required to facilitate the innovation process. Therefore, the present study undertakes the macro-level empirical analysis on determining the impact of entrepreneurial behavior, property rights and state effectiveness on country’s innovation. The data is of panel nature consisting of 55 countries and a time period from 2010 to 2016. The empirical analysis is done using system GMM (Generalized Method of Moments) estimation technique. The study shows that the fear of failure rate and total early stage entrepreneurs reduces innovation in a country whereas there is a significant positive relationship between established business entrepreneurs and innovation. However, perceived opportunities have an insignificant impact. This means that it is not inevitable that opportunities necessary trigger innovation. In addition, the study shows that property rights play an integral role in developing institutional trust which boosts entrepreneurialism to undertake innovative venture. On the other hand, state effectiveness is negatively related to innovation i.e. institutional trust is brought down in fragile countries which retard country’s innovation.

Association of the Meaningful Use Electronic Health Record Incentive Program With Health Information Technology Venture Capital Funding

Although the Health Information Technology for Economic and Clinical Health (HITECH) Act has accelerated electronic health record (EHR) adoption since its passage, clinician satisfaction with EHRs remains low, and the association of HITECH with health care information technology (IT) entrepreneurship has remained largely unstudied. To determine whether the passage of the HITECH Act was associated with an increase in key measures of health care IT entrepreneurship. This economic evaluation of venture capital (VC) activity in the US from 2000 to 2019 examined funding trends in health care IT, EHR-related companies, and all VC investments before and after the passage of HITECH. A difference-in-differences analysis compared investments in health care IT companies with those of companies in 3 categories: general health care (non-IT), IT (non-health care), and all US VC transactions. Data were analyzed from September 2018 to August 2019. Venture capital funding received by US companies before and after the HITECH Act. Venture capital investment in health care IT companies and the proportion of those investments going to seed-stage companies, a proxy for very early-stage entrepreneurship and innovation. The data included 70 982 investments, of which 9425 (13.3%) were seed stage, 10 706 (15.1%) were early stage, and 50 851 (71.6%) were growth stage. After passage of the HITECH Act, investment in both health care IT companies and EHR-related companies increased at a rate much faster (13.0% and 11.4%, respectively) than VC as a whole (6.9%). In addition, the proportion of investments going to seed-stage health care IT companies increased compared with both overall VC investments and non-IT health care investments. Health care IT companies saw increased probabilities of transactions being seed-stage of 5.1% (SE, 2.2%; 95% CI, 0.8% to 9.3%; P = .02) compared with the entire sample of VC transactions and 13.6% (SE, 1.9%; 95% CI, 9.9% to 17.2%; P < .001) compared with non-IT health care VC transactions. Health care IT had essentially 0 increased probability of a transaction being seed stage compared with IT companies outside health care (-0.8% probability; SE, 2.4%; 95% CI, -5.4% to 3.9%; P = .75). Although widespread clinician dissatisfaction with EHR systems remains a challenge, the HITECH Act's incentive program may have catalyzed early-stage entrepreneurship in health care IT, suggesting an important role for incentives in promoting innovation.

Entrepreneurship gaps framework model: An early-stage business diagnostic tool

Background: In South Africa, entrepreneurship literature demonstrates that three out of four businesses collapse within 3 years of their inception. A plethora of research effort identifies factors such as the lack of finance and access to markets as the leading causes for the high attrition rates amongst emerging businesses. This study finds the narrative to be limiting and inadequate as it does not address the possible gap between entrepreneurs’ expectations and their realities of managing their businesses. Aim: To present the entrepreneurship gaps framework (EGF), an early-stage business diagnostic tool that seeks to assess entrepreneurs’ preparedness. Setting: This study focused on emerging entrepreneurs operating within the limits of developing economies. The framework can be used by emerging entrepreneurs, capacity development institutions and lenders. Methods: A descriptive research design supported by a mixed-method research approach was employed. This was coupled by a two-phase data collection procedure which took place within Limpopo province with 215 participants. Explorative data analysis based on discrete choice models was further implemented. Results: Findings on the EGF illustrated the ability of the framework to act as a more comprehensive diagnostic mechanism that improves early-stage entrepreneurship survival. Conclusion: Entrepreneurship gaps framework is a decision-making tool that can be used by lenders and capacity development institutions to evaluate the emerging entrepreneur with respect to specific areas of business. This results in the necessary support for improving entrepreneur preparedness being provided to entrepreneurs. Secondly, entrepreneurs are likely to benefit from the EGF, if used as a self-diagnostic tool to measure their business preparedness and experience.

Regional Cultural Context as a Determinant of Entrepreneurial Behaviour: The Case of Germany

This exploratory article aims to take first steps towards understanding whether a regional cultural background has, among other determinants, an influence on a person’s entrepreneurial behaviour, relying on the example of Germany. A multilevel approach is applied combining the Global Entrepreneurship Monitor individual-level data about entrepreneurship with up-to-date cultural dimensions indicators based on Hofstede’s original approach at the regional (NUTS 1) level. The results indicate that regional cultural context is an important determinant of entrepreneurial behaviour. At that, different cultural dimensions have different impacts, and the impact also differs across different stages of entrepreneurship. A lower level of uncertainty avoidance in a region could have a positive impact on early-stage entrepreneurship, whereas the established business ownership seems to be encouraged by a lower level of power distance.

The Nexus between Entrepreneurship and Economic Growth: A Comparative Analysis on Groups of Countries

Our paper examines the potential effect of different types of entrepreneurship (in particular, early-stage entrepreneurship, opportunity-driven entrepreneurship, and necessity-driven entrepreneurship) on economic growth at a national level and aims to identify whether the contribution of entrepreneurship to economic growth differs according to the stage of economic development of a country. Our empirical analysis is based on the panel data, which covers 17 years (2002–2018) and 22 European countries, classified into two groups. The results suggest that all three types of entrepreneurship have a greater impact on economic growth for the entire sample of European countries, and some types of entrepreneurship are more important than others. We find that opportunity-driven entrepreneurship and early-stage entrepreneurship would be key factors in stimulating economic growth across the sample of European countries. Our estimations also show that opportunity-driven entrepreneurship would have a greater impact in transition countries, while necessity-driven entrepreneurship would have a stronger influence in the innovation-driven countries. The results of our research could be of interest to policymakers, as it can help in identifying and implementing the most appropriate measures to eliminate the obstacles in the macroeconomic environment that entrepreneurs face, and measures to support innovative entrepreneurial activities.

Does using latest technologies impact new venture innovation? A contingency-based view of institutional environments

ABSTRACT Drawing on resource-based theory and institutional theory, we develop a multi-level model on the outcomes of early stage entrepreneurs employing latest technologies in their ventures. Essentially, we argue that the effects of using latest technologies on new venture innovation are moderated by the nature of a country’s regulative, conducive, normative, and cognitive environments. Results indicate that the entrepreneur who employs higher levels of latest technology usage in a country exhibit higher innovation as compared to others as regulatory and conducive environments of the country strengthen. These results contribute to the literature examining international comparative entrepreneurship determinants of productive entrepreneurship.

International Orientation of early-stage Entrepreneurs in the Balkan region – The age perspective

The main objective of our study is to analyse the relation between early-stage entrepreneurs' age and their international orientation in the Balkan region economies, which are facing increasing globalisation and an ageing population. Based on the existing theory, we link the international orientation with some additional influencing determinants, such as the entrepreneurs' innovativeness, their growth aspirations and the financial resources required. Our results underline the importance of institutional frameworks and the moderating effects of age and these influencing determinants, on international orientation. Accordingly, we emphasise the significance of associating explanatory variables with the early-stage entrepreneurs' age. Data from six countries in the Balkan region were obtained from the year 2015 Global Entrepreneurship Monitor Adult Population Survey. The study contributes to a better understanding of the international orientation of senior (in terms of age) early-stage entrepreneurs in the Balkan region. Given the changes that have occurred with increasing globalisation and an ageing population, the concept of this particular group of entrepreneurs is important for national and regional policy makers.