Established Firms Research Articles

Does gendered wording in job advertisements deter women from joining start‐ups? A replication and extension of Gaucher, Friesen, and Kay (2011)

AbstractResearch SummaryGaucher, Friesen, and Kay (2011: “GFK” hereafter) found that women perceive jobs to be less appealing when job adverts use masculine wording—a result they attributed to women's lower evaluations of “belongingness.” As masculine wording is used more often in male‐dominated jobs, GFK concluded that gendered wording in job adverts may deter women from entering such jobs. In light of growing general interest in joining new ventures (“start‐ups”), we replicate and extend GFK's study to compare start‐ups and established firms. Interestingly, we find that GFK's original findings are replicated in the context of start‐ups, but not in established firms. We propose and adduce evidence that the unique context of start‐ups may prime women to respond especially sensitively to gendered wording, via positive expectancy violation.Managerial SummaryThis article builds on a previous study that found masculine wording in job adverts deters women from entering male‐dominated jobs. Our purpose is to try to replicate these findings using a more recent sample of data and distinguishing new ventures (“start‐ups”) from established firms. Interestingly, we show that the prior finding is only replicated in the context of start‐ups and not established firms. Hence, women's responsiveness to gendered wording in job adverts appears to depend on the context. Implications are that incorporating feminine wording in job adverts is likely to be more effective in contexts where women anticipate greater challenges in becoming integrated into the workplace culture. Entrepreneurs' recruitment strategies designed to assemble a diverse workforce should therefore differ from those of established firms.

Impact of Social Media Marketing on Consumer Buying Behaviour (With Reference to Online Entertainment Platforms)

An alteration in the economy has occurred both at the micro and macro levels as a result of the coronavirus disease occurring at such an alarming pace and pushing the economy to a new normal. Since then, customers' buying behaviour, attitudes, tastes, and decision-making processes have altered. The devastating effects of the Corona Virus epidemic were also felt by online entertainment platforms. Social media marketing activities also influence the behaviour of consumers towards online entertainment platforms. As Traditional media channels have been challenged by the emergence of OTT platforms, which puts pressure on cable and satellite television networks' dominance. Consumers are cutting the cord and switching from traditional TV subscriptions to streaming services as a result of this transition. Traditional broadcasters and pay-tv providers have thus had to modify their methods in order to remain competitive, either by starting their own OTT platforms or collaborating with already-existing ones. By giving customers more convenience, choice, and control over their media consumption, OTT platforms have revolutionised the entertainment sector. Their disruptive impact on conventional media platforms is clear, changing consumer behaviour and forcing established firms to react. Further investigation is required as the OTT environment develops in order to examine new patterns, regulatory outcomes, monetization techniques, and the long-term effects on the entertainment industry. This research aims to analyse the impact of social media marketing on consumer preferences towards online entertainment platforms in India. It also seeks to identify the factors influencing customer behaviour towards these platforms and study the perception of Jaipur's consumers towards subscription-based services for entertainment. Additionally, the research investigates how social media affects consumer decision-making processes when selecting and engaging with online entertainment platforms. The research methodology for this study primarily focuses on data collection and analysis. A mixed-methods approach has been employed, collecting both quantitative and qualitative data to gain a thorough understanding of how social media influences consumer behaviour towards online entertainment platforms. With the aid of a self-structured questionnaire, primary data has been collected for the study. The survey has included Likert scale-based questions to assess respondents' opinions on social media, online entertainment platforms, and their content preferences. The questionnaire also inquires about the frequency and impact of social media usage on purchasing decisions. To ensure reliable and generalizable results, appropriate statistical methods have been employed to determine the sample size of Jaipur city. For qualitative sampling, random convenience sampling has been utilised. Qualitative data analysis involved content and frequency analysis techniques, along with graphical representations of the data. The study's findings have been drawn based on these analyses.

Determinants of firms’ default on unsecured loans in the P2P crowdfunding market

We investigate the payback performance of small businesses’ funded loans, and its determinants, in the Peer-to-Peer (P2P) lending crowdfunding market. We do so by analysing a dataset of 1000 small businesses’ unsecured funded loans, via the American online P2P lending funding website Prosper.com. As these loans are unsecured, interest rates are relatively high (18.5% on average in our data base). As a result, payback is by no means straightforward. Indeed, we find 27% of all funded loans in our sample to default. Hence, it is particularly important in this market to know which factors determine payback performance. A novelty of our paper is that we are able to distinguish empirically between new and established firms in this market. Our results highlight that also in P2P lending, borrower reputation — stipulated by credit grade and repayment history — continues to be the single most dominant determinant of payback over loan default, especially for established firms. However, in contrast to conventional financing theory, we found that borrowers’ credit grade is only weakly relevant in determining risks of default of new businesses and that new firms are not more likely to default when compared to established firms. Selection effects may play a role here, in that only high-risk established firms look for unsecured online P2P finance as they are more likely than lower risk established firms to have been unable to get finance in the more traditional markets. This suggests that the liability of newness does not hold in this market. Nevertheless, among new firms, and in contrast to established firms, inclusion of a picture in the loan application was found to be an additional quality signal, positively associated with payback performance. This suggests the importance of visual information as a means of reducing uncertainty and signalling lower risk to financiers.

Implementing Strategic Resilience Through Cooperation Projects with Start-ups: a Multiple Case Study

Strategic resilience is the capacity of organizations to proactively transform and renew through innovation to minimize the effects of unknown future crises. In this context, we know that cooperation plays an essential role as an external innovation strategy, and cooperation projects with start-ups related to innovation are one specific way to implement strategic change. However, research does not provide deeper insights into the process, outcomes, and success conditions of such projects. To help fill this research gap, we use the cases of two established firms using cooperation projects with start-ups related to innovation to enhance their strategic resilience. Based on an in-depth empirical investigation, we developed a framework that describes the specifics of those cooperation projects along their course (i.e., before cooperation, entry-phase into cooperation, during cooperation, and after cooperation) and resulting direct and indirect resilience benefits for the established firms. Thereby, the relationship quality (i.e., balance between formal and informal procedures, improvisation mindset, and appreciation and prioritization) turned out to be a central condition for resilience to emerge from those projects. Our framework illustrates how strategic resilience can arise from cooperation projects with start-ups related to innovation and which factors are particularly important in this context. It thus can be used as a guideline for the successful implementation of strategic resilience in practice as well as a basis for future research on the role of cooperation in strategic resilience.

Reflecting on the creation of the Market Opportunity Navigator (4th tool in the Lean Startup)

Formally recognized as the 4th tool in the Lean startup toolset, the Market Opportunity Navigator supports the identification and exploitation of market opportunities for value creation and growth in new and established firms (“Where to Play?”). To date, this business tool has been used by tens of thousands of firms as well as educators, mentors, and consultants. In this article, we reflect on the process of creating the tool, show how it is grounded in theory and empirical evidence, provide insights on the development of supporting materials, and discuss our efforts in bringing the tool to its target markets. Our reflections seek to advance understanding of how design science allows researchers to move beyond their accustomed roles as analysts of existing artifacts by engaging in the creation of new artifacts. In effect, by designing, launching, and marketing a new business tool, researchers can embark on their very own entrepreneurial journey.

Corporate sustainability entrepreneurship: The role of green entrepreneurial orientation and organizational resilience capacity for green innovation

Our study researches the antecedents and outcomes of sustainability entrepreneurship in established firms. Specifically, we investigate the antecedents of green innovation and the specific role that a green entrepreneurial orientation plays in a firm’s green innovation. Using multi-level and multi-source data from 197 manufacturing firms in Pakistan, our findings reveal that technical orientation and environmental collaboration drive green entrepreneurial orientation and organizational resilience capacity which in turn support green innovation. Our study extends the entrepreneurial orientation concept to the sustainability context and contributes to a new line of research in corporate entrepreneurship. Further, we investigate these corporate entrepreneurial phenomena within an under-researched, emerging country context in which we provide nuanced insights on mechanisms for developing sustainable and resilient initiatives to achieve green innovation in resource-constrained environments.

Schumpeterian creative destruction and temporal changes in business models of US banks

Schumpeter theorizes that capitalism is characterized by a constant process of creative destruction. Newcomers introduce disruptive innovations and technologies that replace older, less efficient business practices. Thus, established firms must either continually adapt or perish. Christensen (1997) argues that large, established firms cannot innovate as fast as newcomers and thus are likely to perish over time. We test these predictions in the setting of the United States banking sector. We examine banks' credit and liquidity risks as proxies for their business models, as well as their reliance on brokered deposits, commercial real estate loans, off-balance sheet items, and noninterest income as proxies for operational strategies. We find that banks' credit and liquidity risks increased significantly over the last 40 years or so, indicating a steady change in banks' business models. This trend stems primarily from progressively aggressive business models introduced by incoming cohorts. Older cohorts respond to changing market conditions by increasing the aggressiveness of their own business models, but not as much as the newcomers. Surprisingly, surviving large banks among older cohorts change their business models faster than smaller banks from the same cohorts. Thus, while we find support for Schumpeterian creative destruction and Christensen's (1997) arguments, we also find that large and established banks are better able to adapt to new market conditions, perhaps because they have superior access to resources and talent necessary to implement transformation. Our findings at least partly explain why the dominant players in the US banking sector have remained the same decade after decade.

Diversification Strategies and the Emergence of a New Industrial Value-chain: Challenges and Opportunities for companies

Marine renewable energy technologies (MRET) can contribute to the decarbonization of energy, as well as to the revitalisation of other sectors, but are still an emerging and uncertain area. The development of these technologies entails the construction of a new industrial value chain, requiring the involvement of established firms from a variety of industries. Thus, it is important to understand how established firms can be mobilised to support MRET development, by pursuing diversification strategies. This paper addresses this question by looking at the case of Portuguese firms that expressed willingness to engage with MRET and investigating how they perceive the opportunities for diversification into the new business area, the changes they may need to introduce in their resources and capabilities to exploit those opportunities, and the obstacles they expect to face.

How Incumbent Firms Respond to Emerging Technologies: Comparing Supply-Side and Demand-Side Effects

A perennial challenge for executives in established firms is deciding how and when to respond to emerging technologies. This article demonstrates that the way emerging technologies play out in established industries differs according to how the business system is affected. Some have primarily a supply-side effect (on how a firm in the industry creates its product), while others have a primarily demand-side effect (on how users consume the product). Supply-side effects play out over relatively long periods of time in a predictable way, with incumbent firms executing similar strategies though at different speeds. Demand-side effects are faster-acting and more volatile, with incumbents often experimenting with a range of different business models as they seek a viable way forward in a changing market. By understanding these important differences between supply-side and demand-side effects and being able to anticipate the typical patterns of responses from incumbents, executives can make better choices in how and when to invest in emerging technologies.

Declining science‐based startups: Strategic human capital and the value of working in startups versus established firms

AbstractResearch SummaryWe document that since 1997, the rate of startup formation has precipitously declined for firms operated by US PhD recipients in science and engineering. We explore how increasing knowledge complexity can be associated with fewer science‐based startups. The decline in startup formation is accompanied by an earnings decline, increasing work complexity in R&D, and more administrative work for science‐based founders. Founding a startup appears to have become increasingly harder over the past 20 years, while established firms are becoming more attractive workplaces for PhDs.Managerial SummaryThe increase in knowledge complexity has changed the balance of incentives between starting own business versus working for an incumbent firm in favor of the latter for PhDs. If maintaining a steady flow of new businesses in the high‐tech sector is important to keep the flow of commercialization of new ideas coming, managerial practitioners and policy makers may need to find ways to make the job of the founder more attractive. The findings in this article point to the importance of secularly increasing value of complementary assets in work practices, especially for founders and employees that are high value generators. Alternatively, the increasing dominance of a few very large tech firms that the increasing burden of knowledge is fueling could be just fine, and startups need not play an important role in economic development.

Creativity and commerce: a shifting balance for specialty foods and beverages

PurposeProducers of specialty products that apply nonindustrial production techniques to deliver high quality and authenticity to niche markets define themselves in opposition to industrial production. This forces them to strike a delicate balance between, on the one hand, emphasizing the symbolic value related to quality, creativity and distance from traditional industrial production, and on the other hand, ensuring profitability through commercial orientation. This paper aims to explore how new and established firms benefit from a different balance between a strategic orientation toward creativity and the symbolic value of specialty products and commercialization.Design/methodology/approachBased on survey data from 99 specialty coffee roasters, this study uses statistical regression models to analyze how new versus established firms benefit from a strategic orientation toward creativity versus commercialization.FindingsThe authors find that firms benefit from shifting the balance from a strategic orientation on creativity in new firms to a strategic orientation on commercialization in more established firms. This shift increases the likelihood that firms’ passion and creativity lead to commercial success.Originality/valueThe findings demonstrate the importance of strategic orientation and emphasize that business owners need to revisit and adjust their strategic orientation as their businesses develop.

Can Technology Startups Hire Talented Early Employees? Ability, Preferences, and Employee First Job Choice

Early stage technology startups rely critically on talented scientists and engineers to commercialize new technologies. And yet these startups compete with established technology firms to hire the best workers. Theories of ability sorting predict that high-ability workers will choose jobs in established firms that offer greater complementary assets and higher pay, leaving low-ability workers to take lower paying and riskier jobs in startups. We propose an alternative view in which heterogeneity in both worker ability and preferences enable startups to hire talented workers who have a taste for a startup work environment even at lower pay. Using a longitudinal survey that follows 2,394 science and engineering PhDs from graduate school into their first industrial employment, we overcome common empirical challenges by observing ability and stated preferences prior to entry into the labor market. We find that both ability and career preferences strongly predict startup employment with high-ability workers who prefer startup employment being the most likely to work in a startup. We show that this partly reflects dual selection effects whereby worker preferences result in a large pool of startup job applicants and startups make job offers to the most talented workers. Additional analyses confirm that startup employees earn approximately 17% lower pay. This gap is greatest for high-ability workers and persists over workers’ early careers, suggesting that they accept a negative compensating differential in exchange for the nonpecuniary benefits of startup employment. Data on job attributes and stated reasons for job choice further support this interpretation. This paper was accepted by Toby Stuart, entrepreneurship and innovation. Funding: This work was supported by the National Science Foundation SciSIP Award [Grant 1262270] and the Ewing Marion Kauffman Foundation (Junior Faculty Fellowship). Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4868 .

A survey on incumbent digital transformation: a paradoxical perspective and research agenda

PurposeDigital transformation (DT) is a major challenge for incumbent organisations, as research on this phenomenon has revealed a high failure rate. Given this consideration, this paper reviews the literature on DT in incumbent organisations to identify the main themes and research directions to be undertaken.Design/methodology/approachThe authors adopt a systematic literature review (SLR) and computational literature review (CLR) employing a machine learning algorithm for topic modelling (LDA) to surface the themes discussed in 103 peer-reviewed studies published between 2010 and 2022 in a multidisciplinary article sample.Findings The authors identify and discuss the five main themes emerging from the studies, offering the state-of-the-art of DT in established firms' literature. The authors find that the most discussed topics revolve around the DT of healthcare, the process of renewal and change, the project management, the changes in value performances and capabilities and the consequences on the products of DT. Accordingly, the authors identify the topics overlooked by literature that future studies could tackle, which concern sustainability and contextualisation of the DT phenomenon.Practical implications The authors further propose managerial insights which equip managers with a revolutionary mindset that is not constraining but, rather, integration-seeking. DT is not only about technology (Tabrizi B et al., 2019). Successful DT initiatives require managerial capabilities that foster a sustainable departure from the current organising logic (Markus, 2004). This study pinpoints and prioritises the role that paradox-informed thinking can have to sustain an effective digital mindset (Eden et al., 2018) that allows for the building of momentum in DT initiatives and facilitates the renewal process. Indeed, managers lagging behind DT could shift from an “either-or” solutions mindset where one pole is preferred over the other (e.g. digital or physical) to embracing a “both-and-with” thinking balancing between poles (e.g. digital and physical) to successfully fuse the digital and the legacy (Lewis and Smith, 2022b; Smith, Lewis and Edmondson, 2022), enact the renewal, and build and maintain momentum for DTs. The outcomes of adopting a paradox mindset in managerial practice are enabling learning and creativity, fostering flexibility and resilience and, finally, unleashing human potential (Lewis and Smith, 2014).Social implicationsThe authors propose insight that will equip managers with a mindset that will allow DT to fail less often than current reported rates, which failure may imply potential organisational collapse, financial bankrupt and social crisis.Originality/value The authors offer a multidisciplinary review of the DT complementing existing reviews due to the focus on the organisational context of established organisations. Moreover, the authors advance paradoxical thinking as a novel lens through which to study DT in incumbent organisations by proposing an array of potential research questions and new avenues for research. Finally, the authors offer insights for managers to help them thrive in DT by adopting a paradoxical mindset.

Examination of the Person-Job Fit of Entrepreneurs, Joiners, and Employees of Established Firms

Examination of the Person-Job Fit of Entrepreneurs, Joiners, and Employees of Established Firms

The Impact of Restricting Labor Mobility on Corporate Investment and Entrepreneurship

Abstract This paper examines how labor mobility restrictions like noncompete agreements affect firms’ investment decisions. Using matched employee-employer data from LinkedIn, I show that increases in the enforceability of noncompete agreements lead to widespread declines in employee departures, specifically in knowledge-intensive occupations. Established firms that rely more on these knowledge-intensive occupations increase their investment rate in physical capital. However, new firm entry in corresponding sectors declines. I provide evidence for different mechanisms to explain these patterns. Together, the findings show that labor frictions play an important role in investment decisions. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Capital Structure and Profitability in Emerging Market New Ventures: Insights from Trinidad and Tobago

New ventures, which are essential in driving economic development, face a universal challenge of accessing finance and deciding on a suitable capital structure. In developing countries such as Trinidad and Tobago, studying the impact of capital structure on profitability levels of new ventures is especially critical, given that current literature has primarily focused on established firms. To fill this gap, this study examined the existing capital structure of 43 new ventures in Trinidad and Tobago, testing the effects of different financing sources on net profit margins. The findings revealed that owners’ savings and retained earnings had a positive impact on net profit margins, while short-term loans, long-term loans, and informal investor finance had no significant effect. Moreover, this study expanded upon existing theories, particularly the pecking order theory, by testing it in the context of new ventures, rather than mature firms. The implications of this study are significant to financial managers in charge of decision-making for new ventures. It suggests the importance of owners’ savings and retained earnings in financing new ventures. Moreover, the findings suggest that new ventures in Trinidad and Tobago may benefit from pursuing funding options that align with the pecking order theory. Overall, this research emphasizes the need to consider the unique financial challenges facing new ventures when making decisions regarding their capital structure.

Influence of Innovation Climate on Attraction and Retention of Human Capital Among Small and Medium Enterprises in Kenya

Small and Medium Enterprises (SMEs) globally are currently operating in dynamic and uncertain business environments, making it necessary to attract and retain valuable human capital that can give them a competitive edge over peers. Most of these enterprises lack resource advantages and suffer from liabilities of size and newness, resulting in a big challenge in their attempts to compete favorably with large established firms. The ability of an enterprise to create and sustain a healthy and supportive innovation climate is consequential to its ability in attracting and retaining valuable human capital. This research aimed to ascertain the influence of innovation climate on attracting and retaining human capital among SMEs in Kenya. The top 100 SMEs for the year 2019 formed the study sample. A response rate of 59% was achieved. The study utilized structured questionnaires to collect data from founders of enterprises, and in their absence, the top management team was engaged. The data analysis methods used included SPSS and partial least squares structural equation modeling (PLS-SEM). This yielded results which established that various dimensions of innovation climate, including organizational support for innovation, organization structure, teamwork, leadership behaviour, and manager's approval, have a significant and positive influence on the attraction and retention of human capital among SMEs in Kenya. From these findings, it is recommended that founders and top management teams of SMEs should put in place a supportive and healthy innovation climate where human capital holders feel comfortable working and growing their careers in the long run. Such measures are instrumental in the attraction and retention of valuable human capital.

Do dividend policies of privately held firms follow a life cycle?

We investigate whether the dividend policies of privately held firms follow a predictable pattern that parallels their life cycles. Our analyses are based on a large sample of 113,599 Belgian privately held firms with 666,135 firm-year observations that cover the period from 2005 to 2018. We find that as the retained earnings of privately held firms increase, they are more likely to pay dividends and to pay higher amounts. We find a significant effect of retained earnings on dividend policy in a subsample of established firms, but not in a subsample of young firms. Firms are also more likely to initiate (omit) a dividend as their retained earnings increase (decrease) over time. Overall, our results support the life cycle theory in the context of privately held firms.

Are young CEOs a better match for young firms? Evidence from age, firm performance and CEO compensation

PurposeThe current paper extends previous studies on the match between CEO and firm and explores whether certain characteristics of young CEOs make them more desirable to young firms. Results in this paper will provide useful information to startup companies when they need to find managers leading the firms.Design/methodology/approachThis study use a large sample of panel regression to study the match between CEOs and firm via a difference-in-differences approach.FindingsThe author finds that young firms hire a disproportionately higher percentage of young CEOs than established firms. Young firms led by young CEOs exhibit higher growth rates in sales and assets and invest more in capital expenditure and R&D activities than similar firms led by older CEOs. Young CEOs in young firms also receive higher compensation than both older CEOs working in young firms and young CEOs working in established firms.Originality/valueThere are many studies examining how CEO age affect their decision-making process. There are also many studies examining the differences between young firms and established firms. However, there is no study so far examining the intersection of the two questions above. Specifically, whether the differences between young vs established firms make certain characteristics of young CEOs beneficial to young firms.

The Mediating Effect of IT-Enabled Dynamic Capabilities and Organizational Readiness on the Relationship Between Transformational Leadership and Digital Business Model Innovation: Evidence From Indonesia Incumbent Firms

The outbreak of the coronavirus disease 2019 (COVID-19) has triggered the massive adoption of digital products and services in Indonesia, forcing established organizations to accelerate digital transformation and adaptation of their digital enabled business model to stay relevant. This article investigates how established firms achieve digital business model innovation (DBMI) and the role of transformational leadership (TL) as a key antecedent. Based on the cross-sectional survey data from 124 public listed firms in Indonesia, this study reveals that established firms in the uncertainty’s situation require Transformational Leadership, and TL indirectly influence DBMI through organizational readiness and ITeDC. We also found that despite the direct impact of organizational readiness on DBMI, partial mediation through IteDC can be a plausible mechanism. We contribute to the business model literature by offering a more integrated view of the antecedents concerning established firms’ DBMI.