Entrepreneurial Firms Research Articles

The International Network Activity of Entrepreneurial Firms in Multi-Layered Networks

The International Network Activity of Entrepreneurial Firms in Multi-Layered Networks

Why do entrepreneurial firms switch lead venture capital? A double-sided matching perspective

This paper investigates the dynamics of a switch in the lead venture capital (VC) caused by a low degree of match between the entrepreneur and VC in the previous round of investing through theoretical and empirical analysis using a large sample from the Chinese venture capital market. The results show that the lower the degree of match is, the higher the likelihood that entrepreneurial firms will switch the lead VC. The rematching of firms and VCs is also a dynamic process of switching lead VCs in the venture capital market. Especially, in multiple rounds, for both subsamples of rising startup quality and rising VC quality, we find that the lower the matching degree in the previous round, the more likely a lead VC switch occurs. However, there is no significant difference in the effect of the matching degree in the previous round on the lead VC switch in the following round in both subsamples. We also show that a lead VC switch is more likely when startups are in the growth stage, mature stage, and high-tech industries. In addition, we confirm that a lead VC switch improves the success of startups. Specifically, whether the quality of a startup rises or falls, only lead VC switches at the early stage are conducive to the VC exits and the startup’s success. In the early stage, the lead VC switch is a great shot in the arm for the company’s success, whereas, in the later stage, the lead VC switch is only the icing on the cake.

Entrepreneurship and innovation in worker cooperatives and conventional firms: the role of external cooperation

AbstractThrough the comparison of conventional firms (CFs) with worker cooperatives (WCs), which are a type of collective enterprise with significant experience in cooperation, this research aims to analyse the influence of external cooperation on the two most prominent factors for the success of enterprises: entrepreneurship and innovation. To this end, a research model is proposed based on contributions from the stakeholders’ perspective of the resource-based view of the firm and tested with data from a survey conducted on WCs and CFs located in two Spanish regions with a long tradition in the cooperative movement. The results highlight that the influence of external cooperation on innovation performance is more relevant for WCs and demonstrate that these collective firms are not disadvantaged in innovation compared to CFs. Furthermore, the results suggest that WCs have a more remarkable ability to compete and cooperate simultaneously, that is, to coopete, due to their participative nature.

Moderating Effect of Perceived Organizational Support on the Relationship Between Employee Performance and Its Determinants: A Case of Entrepreneurial Firms in UAE

Considering the organizational success, employees performance has been accepted as among the fundamental role players. However, several organizational factors like abusive supervision, job stress, turnover intention, and agile leadership have been accepted as among the most critical determinants of such performance outcomes. The objective of this study is to assess the moderating effect of perceived organizational support on the relationships among abusive supervision, job stress, turnover intention, and agile leadership on employee performance in public firms in the UAE. A valid sample of 211 respondents from the public sector firms in UAE has been collected. The present study applies the measurement model and structural model assessment using the Smart PLS version 4. The findings confirm the presence of the internal consistency reliability, convergent validity, and discriminant validity of the latent constructs when examined through their relative items. Moreover, the structural equation modelling reveals that there is a significant impact of agile leadership, abusive supervision, and job stress on the employee performance among the public firms of UAE. Additionally, the findings state that there is a significant moderating effect of perceived organizational support on the relationship between agile leadership and employee performance, between abusive supervision and employee performance, and between job stress and employee performance, respectively. Based upon the given findings, several policy implications have also been suggested for the policymakers specifically at the public firms in UAE.

Digital marketing capabilities, entrepreneurial orientation and franchise systems' performance

PurposeWe adopt the conceptual lens of the Dynamic Capabilities Approach to evaluate the relationship between Entrepreneurial Orientation (EO), Digital Marketing Capabilities (DMC), and Performance in Brazilian franchises.Design/methodology/approachWe applied a survey with franchisors at the Brazilian Franchising Association Expo 2022. Data were collected for 145 franchise systems. We used Partial Least Squares Structural Equation Modeling and tested two distinct models. Model 1 presents the direct effects of EO and DMC on Performance. In Model 2 we include the mediation effect of DMC on the relationship between EO and Performance.FindingsAligned with prior literature, in our first model we found a direct association between EO and Performance and between DMC and Performance. In our second model, when analyzing the combination of EO and DMC, we observed a full mediation effect of DMC in the relationship between EO and performance, and an indirect effect of EO on performance.Originality/valueWe advance in the debate of the relationship between EO and Performance in the franchise context, adding to our model the DMC perspective. Findings shed light on the importance of digital marketing capabilities for franchise systems. These elements open important avenues for dedicated research to further understand how digitalization process can be redefining the drivers of performance in entrepreneurial firms.

Collaborative entrepreneurship and social innovation performance: Effects of institutional support and social legitimacy

AbstractTo date, our understanding of how collaborative entrepreneurship influences social innovation performance is limited. In this article, we developed and tested a model that examines the effect of collaborative entrepreneurship on social innovation performance and introduced two boundary conditions of this relationship. Time‐lag data collected from 261 entrepreneurial firms in Vietnam yielded the following results. First, collaborative entrepreneurship positively influences social innovation. Second, institutional support boosts the effect of collaborative entrepreneurship on social innovation performance. Finally, the effect of collaborative entrepreneurship on social innovation performance is contingent on social legitimacy such that at high levels of social legitimacy, the effect of collaborative entrepreneurship on social innovation performance is amplified. These findings contribute to the collaborative entrepreneurship and social innovation literature and offer implications for practice.

Exploring the financing gap for entrepreneurial firms in a developing economy: a case of mismatched expectations?

PurposeThis paper investigates the financing preferences and practices of Senegalese entrepreneurial firms, with a particular focus on understanding the gaps between the two and how they may contribute to financing constraints in developing economies. By juxtaposing the preferences of different financing options against their degree of usage, this study attempts to reveal the mismatch in demand and supply of entrepreneurial firms financing in Senegal.Design/methodology/approachA structured questionnaire was used to survey 524 entrepreneurial firms, and data was analyzed using various statistical methods.FindingsThe results indicate that the most preferred sources of financing for Senegalese entrepreneurial firms are self-financing and short-term bank loans. Short-term funding horizons are also much more preferred than their long-term counterparts. However, there is a mismatch between financing preferences and practices, particularly with regards to equity sources, which were found to be more preferred than used. The study argues that a combination of preferences, firm, and owner characteristics can explain the choice and frequency of usage of financing sources.Originality/valueThis study contributes to the literature by contrasting preferences and practices, revealing gaps between theory and practice, and providing better insight into the real financing needs of entrepreneurial firms in developing economies. To the authors’ knowledge, this is the first study to examine the financing preferences of Senegalese entrepreneurial firms, making it an important contribution to the literature on entrepreneurial firms financing in developing economies.

Shareholder Patience: Implications for Executive Compensation and Firm Performance

Purpose: This paper explores how shareholder patience can influence firm performance and the efficacy of executive compensation and corporate governance in organizations. The shareholders’ patience, as reflected in their tendency to hold stock for extended periods, enables firm management to make long-term decisions and sustain ongoing project stability, which reflects positively on firm value. Shareholder patience amplifies the positive effects of un-exercisable options on a firm’s long-term performance and restrains overconfident CEOs by improving governance rather than by relying on market reactions, which positively influences performance.Study design/methodology/approach: The quantitative analysis conducted in this paper utilizes a fixed-effects regression model.Sample and data: This paper utilizes a multi-industry sample of 1,397 publicly traded U.S. firms that operated between 1999 and 2016. The data were retrieved from various archival sources.Results: Shareholders’ patience was positively associated with a firm’s performance, both in the short term and the long term. Further, the shareholders’ patience accentuated the positive effects of TMT un-exercisable stock options on the firm’s long-term performance but did not influence the negative effects of TMT exercisable stock options on the firm’s performance. Shareholder patience weakened the negative effects of CEO overconfidence on firm performance.Originality/value: This paper provides evidence of the effects of shareholders’ patience on the efficacy of executive compensation, which reflects positively on a firm’s performance.Research limitations/implications: The findings presented in this paper have limitations in terms of generalizability to non-U.S. firms and private and entrepreneurial firms.

Green entrepreneurial leadership, and performance of entrepreneurial firms: does green product innovation mediates?

Green entrepreneurial leadership, and performance of entrepreneurial firms: does green product innovation mediates?

Context-dependence of dynamic capabilities in small, entrepreneurial firm internationalization

Our study replicates a US study and an Australian study in the Italian context to address whether the home- country context influences the nature of dynamic capabilities (DCs) that are developed and deployed in small, entrepreneurial firms for these firms to internationalize. We measure a suite of dynamic capabilities and relate these to innovation in the firm which is put to internationalization. The Italian findings portray two logics, a dominant entrepreneur’s logic and a lesser significant entrepreneurial logic. The entrepreneur’s logic is centered on the entrepreneur and their vision and is dominant in the Italian model. The entrepreneurial logic, based on the bundling of DCs to learn from internal and external environments, is represented in all three countries. Our three-country comparison illustrates that dynamic capability development and deployment is indeed context-dependent. Notwithstanding contextual differences across Italian and Anglo-Saxon countries, which present spatial boundary conditions, the theoretical configuration of DCs, innovation and internationalization we replicated is retained, suggesting that it has potential to be developed further into an actionable theory of DCs for the small, entrepreneurial firm that internationalizes.

Entrepreneurial Culture and Continuous Improvement to Handle Environmental Turbulence

Abstract The purpose of this study is to understand how organizations behave when faced with turbulent external environments characterized by rapid change, uncertainty, and unpredictability. We look at different dimensions of environmental turbulence, for example, regulatory forces, economic changes, and political changes that directly shape organizational strategies. Literature suggests that while dealing with market dynamics companies must go beyond traditional paradigms to embrace a proactive approach toward change thus making decisions that shape new potential opportunities and being always ready to act and react swiftly according to market changes. Entrepreneurial firms can indeed lead to innovative interventions, driving market developments. The research utilizes a single case study approach that is somewhat revealing to explore the strategic responses of a firm in a resource-based industry facing globalization pressures. There are two broad streams identified: Continuous Improvement and Entrepreneurial Culture. Corporate strategy regarding market dynamics impact and internationalization efforts falls under the category of continuous improvement approaches which emphasize coping with external contingencies. The second macroaggregate on Entrepreneurial Culture deals with stakeholder orientation, organizational agility, and the influence of entrepreneurial ideas and values in corporate responses to disruption. The firm is actively involved in shaping its own future by taking a change-focused approach that involves both forwardthinking management decisions but also an entrepreneurial mindset. This study will contribute to the literature on firm’s organizational learning, focusing on how to strategize in turbulent environments. Furthermore, the study will provide a holistic view of different resources and components of a change that are extensively analysed independently in the literature. Thus, looking at how they are combined for company success.

Shadow capital in venture financing: Selection, valuation, and exit dynamic

Non-venture capital private equity funds (PEs) have become increasingly interested in investing in entrepreneurial firms. We investigate how PEs invest and perform in comparison to VCs, and the implication of PEs’ participation on ventures. We show that PEs are more likely to invest in ventures after typical investment period and when there was substantial capital overhang. PEs prefer the expansion and late-stage ventures. Investment size and valuation are larger/higher with PEs’ participation. We further find that IPOs and secondary buyout are more prevalent among ventures with PE investments. PEs’ participation also allows ventures more time to get ready for exit.

The Moderating Role of Entrepreneurial Networking between Entrepreneurial Alertness and the Success of Entrepreneurial Firms

Entrepreneurial firms’ success is significantly influenced by their capacity to seize market opportunities. At the same time, little is known about when and how entrepreneurs’ alertness to the potential for business opportunities and how it influences their success. To fill this vacuum in the literature on entrepreneurship, the current study focused on identifying the impact that fluctuations in the degree of entrepreneurial networking cause on the relationship between three pertinent dimensions of entrepreneurial attentiveness and the success of entrepreneurial firms. Based on primary data collected from 384 entrepreneurial firms that are operating in Pakistan, using an adapted questionnaire, this study discovered that improvements in dimensions of entrepreneurial alertness have a beneficial impact on the success of entrepreneurial firms. Moreover, the moderating role of entrepreneurial networking has proved significant in the relationships. The effect size of the moderator is also significant and large. This study is also important for the sustainability of entrepreneurial firms because the more they are successful in their mission, the more they will be sustainable. Moreover, the moderating role of entrepreneurial networking that helps them in times of crisis also improves their sustainability. This study also revealed how entrepreneurial alertness works as a driver of entrepreneurial business success and how success is magnified in the presence of a higher degree of entrepreneurial networking. The theoretical, managerial, and policy ramifications of the study are explained at the end, along with limitations and recommendations for future researchers.

Role of Emergent Technologies in Entrepreneurial Firms

New technologies are one of the most obvious parts of the emotional change of culture in developing or developed countries. These emergent technologies offer enormous opportunities for the entrepreneurial firms interested in searching for a competing lead in business as well as pose challenges to the firms. The emergent technologies can go a long way in helping the organisations to tap the newly emerging markets with high potential. The present study aims at identifying the role of emergent technologies in influencing the survival and expansion of the business. The study has compiled the reviews of various scholars on the usage of the latest technologies by the firms to achieve a competitive edge. This is a descriptive study and makes use of the secondary data. The findings of the study suggest that technologies, such as AI, robotics and drones, 3D Printing, serverless computing, block chain and so forth have been most important technologies for the firms, as they have completely changed their traditional way of organisation functioning. These technologies enable effective and efficient decision-making and promote the growth and development of the firms. The study makes a value addition to the existing literature on the role of emergent and futuristic technologies in enabling the entrepreneurial firms to pave their way towards sustainable growth in the competitive business environment through ingenious business solutions.

High-performance work practices and entrepreneurial firm performance: the moderating role of firm size and industry type

PurposeThis paper examines the moderating role of firm size (FS) and industry type in the relationship between high-performance work practices (HPWPs) and entrepreneurial firm performance.Design/methodology/approachA descriptive research design involving a five-year dataset from firms in the retail and services industries of Nigeria was used in the analyses.FindingsThe use of HPWPs is widespread among entrepreneurial firms, with ability- and motivation-enhancing practices being dominant. Country context influences the types of HPWPs implemented by entrepreneurial firms. FS and industry type do not have significant moderating effects on the relationship between HPWPs and the performance of entrepreneurial firms. The positive effect of HPWPs on performance is consistent with findings made in prior studies.Research limitations/implicationsFS plays a neutral role in the relationship between HPWPs and entrepreneurial firm performance. Within the broader retail and services industries, this relationship is weaker in capital-intensive firms compared to less capital-intensive ones. The restricted focus on only retail and service industries may limit the universal applicability of the findings.Practical implicationsFindings indicate that the efficacy of HPWPs is neither influenced by FS nor industry type. Entrepreneurial firms with higher capital intensity benefit relatively more from the use of HPWPs.Originality/valueUnlike other research efforts focusing on a single moderating influence, this study combines two important contextual factors, FS and industry type, to provide a better understanding of HPWPs. The study spotlights the effects of country context in the implementation of HPWPs in a way that prior studies have not done.

Unobserved heterogeneity in firm performance: The alignment of entrepreneurial orientation and organizational error management culture

Most prior research has focused on the positive relationship between a firm’s entrepreneurial orientation (EO) and its performance. However, errors in entrepreneurial strategies are inevitable. We argue that entrepreneurial firms benefit from an organizational error management culture. Drawing on data from 208 German family businesses, we combined partial least squares structural modeling with finite mixture partial least squares (FIMIX-PLS) segmentation to capture unobserved heterogeneity in firm performance. Our results show that firms align organizational error management culture with the behavioral or attitudinal dimensions of EO. The two identified segments indicate that firms align one at the cost of the other. Error communication emerged as a central link in both segments, mediating EO and firm performance. Overall, the results highlight the importance of aligning cultural practices, particularly the dialogue about errors within firms, with entrepreneurial behaviors and attitudes across managerial and firm levels.

Operationalizing leverage points in business model design for sustainable systems change

AbstractSystems change can help to address sustainability challenges and interventions at deep leverage points of a system can be applied to do so. By studying 9 sustainable entrepreneurial businesses, this paper looked at how entrepreneurial firms used their business to intervene at deep leverage points to facilitate systems change. We then proposed how deep leverage points can be operationalized by developing an approach for sustainable business model innovation and how entrepreneurs can consciously target leverage points when designing their business models to influence sustainable systems change.

Assessment of Organisational Knowledge Management and Innovativeness in Medium-Scale Manufacturing Firms

While the drive towards profit is a distinctive and the most dominating objective of every business, environmental issues are currently putting growing pressure on organisational models. This paper examined the implication of knowledge management- acquisition, distribution, and utilization- on innovativeness in selected manufacturing firms in north-central Nigeria. Data was gathered through the use of structured questionnaire. Multiple regression technique was employed to test the research hypothesis. The study established knowledge management to have a significant effect on organizational innovativeness and recommended that the management of entrepreneurial firms should look at adopting team-focused approaches especially for task implementation to facilitate idea sharing and performance.

A Brief Analysis of the Influence of Venture Capital on Pioneering Enterprises

This paper mainly discusses the impact of venture capital on entrepreneurial firms. At the moment, venture capital is a very favorable source of capital for many start-ups. At the same time, the joining of venture capital is an opportunity as well as a challenge to the start-up enterprises. This article from the venture capital to the venture enterprise development influence, the venture capital follow-up management to the venture enterprise influence and the venture capital withdrawal to the venture enterprise and so on three aspects analysis, aims to provide some references for the entrepreneur, thus promotes the venture enterprise better, faster development.

Geographical distance, investment strategies and performance of venture capital: evidence from Chinese enterprises

ABSTRACT A growing body of evidence suggests that geographical distance plays an important role for venture capital (VC) investment. This study explores whether and how the geographical distance between the lead VC firms (VCFs) and the invested entrepreneurial firms (IEFs) influences the investment strategies of VCFs and their performance. The results show: (1) The geographical distance has a significant positive effect on the performance of VC investments. (2) As distance increases, lead VCFs will tend to be conservative on investments by improving project screening criteria and adopting syndication strategies and multiple-rounds of staged financing, which can dramatically improve the successful exit from the invested projects. This study has useful theory and policy implications for VCFs, entrepreneurial firms and local governments.