Entrepreneurial Firms Research Articles

A South African view of youth entrepreneurship in the epoch of digital transformation. A review of the book “Practical tools for youth entrepreneurs” (Palgrave Macmillan, 2024)

The importance of youth entrepreneurship in the context of digital transformation makes it relevant to study its development. The article is a review of a new book on the promotion and support of young and aspiring entrepreneurs in the South African Republic. The book is characterized by novelty of views and considerable informative content. It is organized into three main parts comprising 9 chapters. Issues related to the conceptual vision of youth entrepreneurship and a large-scale initiative that was specifically designed and then piloted in the South African Republic to stimulate related activities have been addressed. The author of the peer-reviewed book emphasizes the importance of the university environment and the mechanisms formed in it, on the one hand, and entrepreneurs’ personal development, on the other. Recommendations on finding sources of funding and working with potential consumers of innovative products and services have been given. The book is written in lucid language, which is characteristic rather for educational literature, and is well illustrated. It is found to contain various references to digital transformation, and governance is considered in relation to both entrepreneurial firms created by entrepreneurs and youth entrepreneurship incentive schemes in general. The book contains interesting (including pedagogical) information that will also be useful to consider when establishing cooperation among the BRICS countries.

Developing employee proactivity in entrepreneurial ventures through training: an organisational identity approach

Purpose This study aims to explore how training influences employee proactive behaviours in entrepreneurial ventures. Specifically, the study develops and tests a model in which organisational identification (OID) mediates the relationship between perceptions of training and two employee proactive behaviours: taking charge and creative behaviour. Design/methodology/approach Data was collected from 136 employee-supervisor dyads from 24 entrepreneurial ventures in Malaysia’s high technology industry. Smart–partial least square structural equations modelling was used to test our proposed hypothesis. Findings The findings suggest that entrepreneurial ventures can use training to strengthen employees’ identification with the ventures, which in turn encourages proactive behaviours. Originality/value This study shows how HRD practices found in larger firms can work in different ways to influence desirable behaviours among employees of entrepreneurial firms. Specifically, by demonstrating how the relationship between training and employee proactive behaviours occurs through OID in the context of entrepreneurial ventures, the authors provide a complementary explanation of how HRD practices in entrepreneurial ventures can influence employee positive behaviours.

Entrepreneurial firm creation and economic uncertainty: an explainable artificial intelligence approach

ABSTRACT Through this paper, we examined the relationship between macroeconomic factors and new entrepreneurial firms in France during the 2000–2020 period; this relationship included several uncertainties and shocks (the 9/11, the 2008 global financial crisis, the Brexit, COVID-19 Pandemic, and so forth). To this aim, we applied various advanced machine learning (ML) techniques, including the eXtreme Gradient Boosting (XGBoost) algorithm, Light Gradient-Boosting Machine (LightGBM) algorithm, Neural Network (NN), Random Forest (RF), and Linear Regression (LR). We also investigated SHapley Additive exPlanation (SHAP) framework for interpretation and analysis purposes. Furthermore, we compared the performance and forecasting accuracy of the five models. The study revealed three major results. First, the XGBoost algorithm provides the most accurate prediction of a firm’s creation. Second, a heterogeneous relationship exists between new business creation and the business cycle. Third, higher GDP and unemployment levels are associated with greater procyclicality and countercyclicality in entrepreneurship, respectively. Finally, the results of the study suggest the importance of developing effective financial assistance during economic downturns to encourage faster recovery in the formation of new businesses.

Why do Entrepreneurial Firms Engage in Planning?

Why do Entrepreneurial Firms Engage in Planning?

Harnessing the innovative potential of start‐ups for corporate entrepreneurship in incumbent firms: a study of asymmetric buyer–supplier relationships

Corporate entrepreneurship is critical for incumbent firms to ensure continuous organizational renewal. Asymmetric buyer–supplier relationships with start‐ups, known as “venture clienting,” serve as an entrepreneurial process wherein incumbent firms integrate innovative technologies acquired from start‐ups into their processes and products to drive organizational renewal. Prior research, however, lacks insights into how incumbent firms manage these asymmetric buyer–supplier relationships and overcome the challenges that differences in culture, governance structure, and negotiating power pose. We address this gap by drawing on data from 52 semi‐structured interviews with key decision makers in a multi‐case study of six incumbent firms engaging in venture clienting. Based on the results of our cross‐case analysis, we inductively distill three maturity stages of venture clienting within incumbent firms (i.e., initiation, complexification, and pruning) and the triggers for each stage. We also shed light on the dynamic capabilities that firms develop in each maturity stage and outline the enablers that foster their development. Furthermore, we reveal how these dynamic capabilities affect corporate entrepreneurship in the incumbent firm, in terms of opportunity recognition and technology integration success.

Empirical assessment of external enablers on new venture creation: the effect of technologies and non-technological change in Iran digital entrepreneurship

Purpose The purpose of this study is to investigate the influence of external enablers (EEs) – factors that are exogenous and independent of the actors – on the rate of new venture creation (NVC) in digital entrepreneurship. Design/methodology/approach The authors established a unique data panel comprising all formal digital entrepreneurial firms and startups licensed to operate in the digital space from Iran E-Commerce Development Center, from 2012 to 2022, totaling 124,751 businesses classified in 16 sectors. The authors used Poisson regression with robust standard errors to analyze the relationship between external factors and NVC. Additionally, the authors segmented the data set along demographic, spatial and sectoral subsets to compare them using the average treatment effect model. Findings This analysis confirms that technology readiness and technology intensity, as EEs, significantly boost digital entrepreneurship in a developing country. The authors also explored the impact of the COVID-19 pandemic as a natural environmental enabler and explored its facilitating effects and the enduring impacts post-pandemic. Moreover, the authors assessed the heterogeneous impact of the EEs across different groups and derived implications for each. Research limitations/implications While this study is comprehensive, it focuses exclusively on formal digital entrepreneurship within a single developing country, namely, Iran. Although the authors explored various EEs, they did not address all possible types, highlighting the potential for further research in other entrepreneurial sectors for a comparative analysis of EEs. Practical implications The initial findings affirm that most NVC in Iran stems from external factors. These findings have been widely used by policymakers to define the goals and objectives of EEs concerning their nature and impact. This research reveals that EEs have heterogeneous effects on NVC, varying across different characteristics such as gender, geography and industry sectors. The results of this study suggest that governments should reassess the role of “macro” policies to support vulnerable groups. EEs disproportionately benefit male founders, which exacerbates existing gender gaps and necessitates ongoing attention and intervention. Additionally, EEs have diverse impacts across industries, potentially favoring some while disadvantaging others because of varying social, cultural and economic factors. Originality/value NVC, central to entrepreneurship in developing nations, encounters numerous challenges, yet the role of EEs remains underexplored in this context. EEs are opportunities that are not limited to a subset of entrepreneurial actors; they act as levers influencing a wide range of entrepreneurial activities. This research distinctively investigates the empirical impact of EEs in a Middle Eastern developing country context, contributing to the growing literature on the external enablers framework.

Intellectual capital as a driver of value creation in Serbian entrepreneurial firms

PurposeThis paper analyses the role of intellectual capital (IC) as a factor of the financial performance of entrepreneurial firms, which are recognized as the main drivers of economic growth and employment.Design/methodology/approachThe sample consists of 188 business owners from Serbia. The primary data are collected using the questionnaire, while the secondary data come from the annual financial statements of their companies. The elements of IC as independent variables are grouped into three components: human, structural and relational capital; sales revenue and operating profit CAGR (5y) are used as dependent variables, while company size and industry type are used as control variables. Statistical analysis involves factor and regression analyses.FindingsThe results reveal that IC components contribute to the long-term financial performance of entrepreneurial firms. Specifically, the following elements have positive effects on financial performance: knowledge of the entrepreneur, process improvement and organisational culture. On the other hand, entrepreneurs’ social skills and tenacity were found to have a negative impact on revenue and operating profit growth, while support from informal networks had a negative effect on the growth of sales revenue.Originality/valueThis study aims to fill a gap in the literature on the impact of IC on the financial performance of entrepreneurial firms.

Extending behavioral theory of the firm to new ventures: Dispositional optimism as a moderating influence on new product introductions in high-tech ventures

Extant literature has typically drawn from the behavioral theory of the firm (BTOF) to examine new product introductions in the context of well-established companies. This paper extends the behavioral theory of the firm to entrepreneurial firms and argues that jointly considering founders' dispositional optimism together with the performance feedback promises to yield a better understanding of new product introductions in new ventures. We analyze a longitudinal dataset on the activities of 344 newly founded high technology ventures in the United States. The key insight of our study is that when BTOF is applied to the context of nascent, entrepreneurial ventures, the personality and dispositional characteristics of the entrepreneur must be considered. Specifically, we find that performance attainment discrepancy leads to new product introductions, but only when the entrepreneur's dispositional optimism level is high.

A cognitive bias awareness matrix for enhancing ERP Decision-Making in entrepreneurial firms

Purpose The purpose of this study is to address a critical gap in enterprise resource planning (ERP) implementation process for small and medium-sized enterprises (SMEs) by acknowledging and countering cognitive biases through a cognitive bias awareness matrix model. Cognitive biases such as temporal discounting and optimism bias often skew decision-making, leading SMEs to prioritize short-term benefits over long-term sustainability or underestimate the challenges involved in ERP implementation. These biases can result in costly missteps, underutilizing ERP systems and project failure. This study enhances decision-making processes in ERP adoption by introducing a matrix that allows SMEs to self-assess their level of awareness and proactivity when addressing cognitive biases in decision-making. Design/methodology/approach The design and methodology of this research involves a structured approach using the problem-intervention-comparison-outcome-context (PICOC) framework to systematically explore the influence of cognitive biases on ERP decision-making in SMEs. The study integrates a comprehensive literature review, empirical data analysis and case studies to develop the Cognitive Bias Awareness Matrix. This matrix enables SMEs to self-assess their susceptibility to biases like temporal discounting and optimism bias, promoting proactive strategies for more informed ERP decision-making. The approach is designed to enhance SMEs’ awareness and management of cognitive biases, aiming to improve ERP implementation success rates and operational efficiency. Findings The findings underscore the profound impact of cognitive biases and information asymmetry on ERP system selection and implementation in SMEs. Temporal discounting often leads decision-makers to favor immediate cost-saving solutions, potentially resulting in higher long-term expenses due to the lack of scalability. Optimism bias tends to cause underestimating risks and overestimating benefits, leading to insufficient planning and resource allocation. Furthermore, information asymmetry between ERP vendors and SME decision-makers exacerbates these biases, steering choices toward options that may not fully align with the SME’s long-term interests. Research limitations/implications The study’s primary limitation is its concentrated focus on temporal discounting and optimism bias, potentially overlooking other cognitive biases that could impact ERP decision-making in SMEs. The PICOC framework, while structuring the research effectively, may restrict the exploration of broader organizational and technological factors influencing ERP success. Future research should expand the range of cognitive biases and explore additional variables within the ERP implementation process. Incorporating a broader array of behavioral economic principles and conducting longitudinal studies could provide a more comprehensive understanding of the challenges and dynamics in ERP adoption and utilization in SMEs. Practical implications The practical implications of this study are significant for SMEs implementing ERP systems. By adopting the Cognitive Bias Awareness Matrix, SMEs can identify and mitigate cognitive biases like temporal discounting and optimism bias, leading to more rational and effective decision-making. This tool enables SMEs to shift focus from short-term gains to long-term strategic benefits, improving ERP system selection, implementation and utilization. Regular use of the matrix can help prevent costly implementation errors and enhance operational efficiency. Additionally, training programs designed around the matrix can equip SME personnel with the skills to recognize and address biases, fostering a culture of informed decision-making. Social implications The study underscores significant social implications by enhancing decision-making within SMEs through cognitive bias awareness. By mitigating biases like temporal discounting and optimism bias, SMEs can make more socially responsible decisions, aligning their business practices with long-term sustainability and ethical standards. This shift improves operational outcomes and promotes a culture of accountability and transparency. The widespread adoption of the Cognitive Bias Awareness Matrix can lead to a more ethical business environment, where decisions are made with a deeper understanding of their long-term impacts on employees, customers and the broader community, fostering trust and sustainability in the business ecosystem. Originality/value This research introduces the original concept of the Cognitive Bias Awareness Matrix, a novel tool designed specifically for SMEs to evaluate and mitigate cognitive biases in ERP decision-making. This matrix fills a critical gap in the existing literature by providing a structured, actionable framework that effectively empowers SMEs to recognize and address biases such as temporal discounting and optimism bias. Its practical application promises to enhance decision-making processes and increase the success rates of ERP implementations. This contribution is valuable to behavioral economics and information systems, offering a unique approach to integrating cognitive insights into business technology strategies.

Strategic Accounting for Innovation: Empowering Entrepreneurship in the Modern Era

This study explores how modern accounting practices drive entrepreneurial success. Through a comprehensive literature review, case study analysis of successful entrepreneurial firms, and interviews with companies that have implemented innovative accounting practices, this research uncovers the pivotal role of adaptive accounting in financial planning, risk management, and strategic decision-making. The findings highlight that companies utilizing advanced accounting tools are better equipped to handle the complexities of modern business, achieve greater financial transparency, and drive continuous innovation. The study also emphasizes the importance of accounting education and professional development in leveraging technology for these purposes. Additionally, the implications for policymakers and stakeholders underscore the necessity of a regulatory framework that supports advanced accounting practices. This study provides valuable insights for practitioners aiming to utilize modern accounting as a catalyst for business innovation and entrepreneurial success.

Two entrepreneurial firms, a digital disruption, and different responses: the role of organizational mission and experiential computing digital options

Two leading digital entrepreneurial firms responded to a digital disruption differently. One adapted, whereas the other stagnated and eventually went bankrupt. In this inductive multi-case study, we strive to understand how they came to do so. Through constant comparison analysis between data, emerging theory, and existing literature, we develop a nuanced theoretical model suggesting that for entrepreneurial firms, having an abstract mission and pursuing diverse digital options actually constrain firms’ ability to respond to a digital disruption. But a specific mission and selective options enable adaptive agility. Overall, our emergent process theory highlights critically overlooked entrepreneurial firms, which are increasingly facing disruptions from powerful, established firms. Our emergent theory also prompts us to reconsider the conventional wisdom that digital options inherently enable agility.

Entrepreneurial archetypes: Spiritual well-being as a catalyst for humane entrepreneurship and performance

ABSTRACT Entrepreneurial firms significantly impact economies; nevertheless, they face high failure rates. While factors like market assessment and management skills are known to influence entrepreneurial success, intrinsic factors such as spirituality have been less explored. This study examines whether spirituality, through the lens of spiritual well-being (SWB), can enhance entrepreneurial performance (EP) by analyzing different archetypes of entrepreneurs. Three archetypes have been identified that show the relevance of SWB in EP: task-oriented, heropreneurs, and holistic entrepreneurs, each showing varying degrees of success in economic and noneconomic aspects. Findings suggest SWB is critical in enhancing EP by promoting a balanced life, effective stress management, and stronger interpersonal connections. Furthermore, humane entrepreneurial orientation has been identified as a comprehensive entrepreneurial behavioral theory that intertwines SWB and EP. Integrating spiritual values into entrepreneurial ecosystems can significantly aid in overcoming challenges and ensuring long-term success.

Government as a Source of Equity Capital for Entrepreneurs: Evidence From Entrepreneurial Exits

ABSTRACTResearch Question/IssueWe examine the effect of government equity investment on the dollar value of entrepreneurial exits spanning 50 countries over the years 1990–2015.Research Findings/InsightsData on 8532 entrepreneurial exits indicate that, relative to exits in which the investor base is purely nongovernment, private firm exits with government equity investment have higher dollar exit values. Subsample analysis suggests that the exits via initial public offerings (IPOs) drive these results with an average associated increase in IPO proceeds of $192.49 million. The positive impact of government is more pronounced when access to entrepreneurial capital is limited and for limited partnership venture capital structures.Theoretical/Academic ImplicationsResearch on government equity investment has suggested inefficiencies that lead to the deterioration of corporate value. Conversely, government equity investment can provide a valuable source of capital to some firms when investors, for example, venture capitalists, are unable or unwilling to invest. Our paper sheds light on whether government equity investment can provide value to small private firms, a subset of firms that is typically financially constrained, and how they might enhance exit value.Practitioner/Policy ImplicationsOur results suggest that governments enhance value when they provide capital in times/places where capital is scarce and government investors do not actively manage entrepreneurial firms.

In search of superior performance: knowledge management and learning capability of entrepreneurial firms

In search of superior performance: knowledge management and learning capability of entrepreneurial firms

Unlocking data’s potential: navigating the challenges of data-driven innovation for start-ups

Purpose Data-driven innovation is a key pillar for economic development in the 21st century, accordingly the role and value of data in developing new products, services and business models has gained attention. The study aims to identify three important factors explaining the challenges faced by young entrepreneurial firms when seeking to use public data in their business development. Design/methodology/approach This study presents the user journeys of five data-driven start-ups in the capital region of Norway aiming to use public data in their business development process. Multiple methods for data collection were used, such as interviews, observations and secondary data. Findings The study reveals how differences in culture, communication and work methods across stakeholders and sectors affect and delay the process of gaining access to data. Moreover, how various forms of knowledge are expressed differently throughout the user journeys of the start-up firms, with stronger dependency on explicit and codified in early phase, and tacit and experience-based knowledge in later stages, each stage relating to the maturity of the entrepreneurial ecosystem for data-driven innovation. Therefore, the ecosystem for data-driven innovation may be further developed through arenas for collaboration that simplify the process for access to – and use of public data. Originality/value The study reveals how young entrepreneurial firms identify opportunities whilst simultaneously facing substantial barriers when they seek to take advantage of publicly available data and transforming them into value creating activities. The study contributes to the theoretical understanding of data-driven innovation by exploring the user journeys of start-up firms and identifying the challenges they face when utilizing public data, highlighting the importance of a mature ecosystem, collaboration for market development and the evolving role of tacit and experience-based knowledge throughout the business development process.

Discursive Strategy in ‘Self-Celebritizing’ Entrepreneurial Firms: Video-Based Analysis of SpaceX

Discursive Strategy in ‘Self-Celebritizing’ Entrepreneurial Firms: Video-Based Analysis of SpaceX

The Impact of Underperformance on Chief Executive Officer Turnover in Entrepreneurial Firms

The Impact of Underperformance on Chief Executive Officer Turnover in Entrepreneurial Firms

Timing Matters! Experimentation and Product Performance in Entrepreneurial Firms

Timing Matters! Experimentation and Product Performance in Entrepreneurial Firms

Stock liquidity and the signaling value of patents: Evidence from china's national equities exchange and quotations market

Young and technology-oriented firms suffer from asymmetric information in seeking access to finance. An increase in stock liquidity can improve a firm's stock price informativeness and mitigate such information problems. We expect that firms will patent less when they face an increase in liquidity if patenting is used as a costly signal mechanism to demonstrate firm quality. By examining an exogenous policy shock that dramatically improves the stock liquidity of treated firms in China's National Equities Exchange and Quotations (NEEQ) market, we document evidence that treated firms patent less after the shock. Our findings reveal the importance of liquidity in reducing the deadweight costs caused by asymmetric information and the signaling value of patenting, and urge caution regarding the sole use of patent applications to measure innovation performance in entrepreneurial firms.

Emergence and Growth Strategy of Entrepreneurial Firms: Evidence Based on Large-Scale Data

Emergence and Growth Strategy of Entrepreneurial Firms: Evidence Based on Large-Scale Data