Entrepreneurial Climate Research Articles

Confronting the challenges of corporate entrepreneurship: Guidelines for venture managers

Abstract This article addresses two important questions: First, what has been the overall track record of internal corporate venturing? Second, why do some organizations do much better at internal corporate venturing than others? After discussing the paradoxical nature of corporate entrepreneurship and the difficult managerial challenge that it presents, Ari Ginsberg and Michael Hay examine the historical track record of corporate venturing activities. Although they acknowledge the important role of senior managers in creating an entrepreneurial climate, they argue that corporate entrepreneurship is both a ‘top down’ and a ‘bottom up’ process reliant on the initiatives emanating from below as much as on the creation of a receptive climate from above. In taking this position, they maintain that venture managers can do much more than may be commonly acknow- ledged in contributing to the success of corporate entrepreneurship. To this end, the authors recommend specific steps that venture managers can take to protect the autonomy and flexibility of the venture, so as to increase the likelihood of its success.

Modeling new venture performance: An analysis of new venture strategy, industry structure, and venture origin

This study examined the relative role of strategy, industry structure, and origin (independent vs. corporate or parental venture) on the profitability and growth of 247 new ventures in two segments of the information processing industry: computer-related and communications-related equipment manufacturing. Each of the 247 ventures was eight years old or less. Most previous research examining the role of these three factors in new venture performance has examined them singularly or in limited combinations with very few firms in their sample. The theoretical agenda in this study was to advance this research stream by simultaneously examining origin, strategy, and industry structure as well as the interaction between strategy and industry structure using a large sample of new ventures. The applications agenda in the study was to uncover patterns in the interactive role of strategy, structure, and origin that might provide meaningful insights to aid strategic decisions in new ventures. From the theoretical perspective, the study found that variability in new venture performance was better “accounted for” when all three factors were included in a statistical model. Overall, these results suggested that new venture strategy and industry structure and their interaction are essential for understanding new venture performance while origin is secondary (more important in explaining market share growth than higher profitability). Several study findings may be of interest to the practicing new venture strategist. The study uncovered eight basic strategy patterns across the 247 firms. A detailed description of these eight distinct patterns is provided in Appendix A of this article. Overall performance results suggest that no one strategy is always the best new venture strategy. But when we examined the fit of different strategies with different industry structures, we were able to distinguish high from low performing new ventures dramatically. In other words, specific new venture strategies were very effective in some industry settings and ineffective in others. For example, new venture entrepreneurs were able to successfully enter and compete in high barrier industries by employing strategies emphasizing superior product quality and higher customer service. Alternatively, when entry barriers were low, strong marketing skills offered the best advantage. The key to the success of these marketing-oriented ventures was the establishment of a distribution system in which products were pulled through by their strong brand identification and name recognition. These venture managers supported brand identification and name recognition with a high level of advertising and promotion experience and gave constant attention to adding new channels of distribution. Although earlier studies suggested that parented new ventures are more effective in achieving profitability, origin was not a significant explainer of profitability for the new ventures in this study. Much has been written recently that argues for creating an entrepreneurial climate in a corporation. Many corporations have wholeheartedly embraced efforts to foster an independent spirit among parented ventures, so much so that many corporations have attempted to replicate an independent climate in their corporate-sponsored start-ups. Rather than an origin difference between new ventures, perhaps it is the difference in the climate or spirit of the venture, or more specifically the manner in which the corporation manages the start-up, that accounts for profitability differences.

New firm formation in the USA: corporate structure, venture capital, and local environment*

New firm formation in the USA has been geographically uneven, but little analysis has been undertaken to examine this unevenness. The entrepreneurial environment or climate of places is the set of conditions which help-or hinder-new firm formation. These conditions include aspects of the business community, the cultural and social milieu, actions of government, and the availability of venture capital, which has enormous variations from place to place. A set of statistical analyses of firm formation in the USA from 1978 to 1983 suggests that branch plants inhibit the formation of new manufacturing firms, but spark new service firms. Venture capital and the technological base are part of a supporting climate for firms in high technology sectors. The bottom line is that places vary greatly in their ability to stimulate and nurture new firms.

Entrepreneurship: Fact Not Fad

AbstractThe flurry of attention being given to entrepreneurship is both merited and misguided. Entrepreneurship is not a fad and its utility could be damaged if treated as a fad. Entrepreneurial ventures are a vibrant and permanent part of the economy, and there are a number of current trends which are strengthening the entrepreneurial climate.

Technology Policy at the Crossroads of Economic Policy and Physical Planning

Technology policy must be considered as a tailor-made endeavour towards the creation of specific innovative activities in specific sectors and at specific locations. It therefore cannot be implemented only from the national level but must be aimed at mobilizing also the self-organizing potential at regional and local levels. Technological change and regional structures turn out to be closely interrelated. For this theme issue contributions have been invited on general aspects of technology policy (Zegveld), on its regional implications (Malecki and Nijkamp), and on the relevance of sectoral policies and entrepreneurial strategies on the spatial diffusion of innovations (Dyckman and Swyngedouw). In further papers, three spatial types of technology policy are represented: A spatially deconcentrated major technology project in the form of the French technology city Sophia-Antipolis (Perrin), a decentralized three-tier national technology policy in Japan (Kawashima and Stöhr), and a federal setting of technology policy in the case of the USA (Premus). In drawing conclusions from the papers in this theme issue, its editors discuss the question of how technology policy and regional policy can join to help create a broad entrepreneurial and innovative climate at the local scale.

Venture capital and high technology entrepreneurship

Venture capital clearly plays an important role in high technology entrepreneurship. The purpose of this article is to explain the differences among various venture capital complexes focusing on where venture capital is important to innovation and entrepreneurship and conversely where it is not. We do so through an empirical and historical examination of the seven most important venture capital complexes: California (San Francisco/ Silicon Valley), Massachusetts (Boston), New York, Illinois (Chicago), Texas, Connecticut, and Minnesota (Minneapolis). We establish a three-part tripartite typology for explaining the differences between these venture capital complexes: 1) technology-oriented complexes are located close to concentrations of high technology intensive businesses, invest most of their funds locally, and are net attractors of capital; 2) finance-oriented complexes are located around financial institutions and export their capital; and 3) hybrid complexes mix characteristics of both technology and finance-oriented venturing. Our findings have a series of important practical implications. Although venture capital is not absolutely necessary to facilitate high technology entepreneurship, well-developed venture capital networks provide tremendous incentives for entrepreneurship by lowering the difficulties of entering an industry. Venture capitalists use both their experience and their contacts to reduce many of the information and opportunity costs associated with new business formation. The importance of contact networks and information to both deal flow and investment monitoring goes a low way toward explaining why venture capitalists cluster tightly together. The availability of venture capital also attracts entrepreneurs and high quality personnel to a region creating a virtuous circle of new enterprise formation, innovation, and economic development. Private, nonprofit, and subsidized public efforts aimed at providing venture capital and stimulating high technology entrepreneurship must confront the fact that venture capital alone will not magically generate entrepreneurship and economic development. It is important that such efforts recognize the nonfinancial side of venture investing and attract experienced personnel who can tap into established entrepreneurial networks and secure coinvestors. More significantly, establishing public venture funding in an area lacking the requisite entrepreneurial climate or technology infrastructure may create a “catch 22” situation where locally oriented funds invest in bad deals or where venture capital is simply exported to established high technology regions.

Federal Technology Policy: Small Is Now Beautiful

Next week in Teaneck, N.J., a group of small, innovative chemical companies will gather in what could be deemed a high-tech beauty contest. They will strut their products, processes, and know-how before an audience made up of people from big companies and venture capital firms. The aim will be to attract capital so these companies can prosper and get bigger. The originator of expositions like the one in Teaneck is chemist Samuel Z. Cardon, president of General Technical Services Corp., a small research and development consulting firm near Philadelphia. Cardon was one of the first to promote the idea that small companies are an overlooked resource and key to the future economic health of the country. Indeed, the idea that small is beautiful is emerging as the cornerstone of a national technology policy. A report just issued by Congress' Joint Economic Committee, 'The U.S. Climate for Entrepreneurship and Innovation/7 caps in a few pages the ...

What birth has done for doctors: a historical view.

Historians have usually described contributions of medicine to birth as if all the benefits accrued to patients. This article explores the contributions that birth and birthing women have made to the professionalization of American medicine and to the social and economic status of doctors during the past 200 years. Birth provided doctors with some of their first valid techniques, giving them a claim to superiority over irregular practitioners and midwives; it also enabled them to become moral authorities and personal confidantes to women. Later it helped to accustom families to the use of hospitals. Finally, maternal and neonatal mortality rates provided an international standard for judging the overall quality of a nation's health care. In the United States, high maternal mortality rates led to the first self-critical investigations by the profession, the first hospital mortality review boards, and the first major specialty board, obstetrics. In the process of gaining these professional advantages in an entrepreneurial climate, American doctors transformed birth from a natural event into an occasion requiring the use of medical art.