Founding Entrepreneur Research Articles

The evolution of the Wellcome Trust and market-based philanthropy in the UK

In the late nineteenth and early twentieth century the industrial wealth of super-rich entrepreneurs in the United States produced a systematised philanthropy, seeking to address the fundamental causes of societal problems. These entrepreneurs created a new institution, the philanthropic foundation, to achieve their objectives, and influence and change social structures. Building on explanations of these philanthropic ventures as manifestations of entrepreneurial philanthropy, this paper examines the emergence and evolution of the Wellcome Trust. Created in 1936, the Wellcome Trust was funded from the profits of a pharmaceutical multinational, in which the Trustees held the entire share capital. Based on archival research, we examine the development of a market-based philanthropy, whereby successive generations of trustees managed the competing priorities of a multinational enterprise and a philanthropic organisation. In so doing this research offers a new understanding of entrepreneurial philanthropy’s scope: focused on the activities of trustees, rather than the founding entrepreneur.

The impact of industry 4.0 on the 2017 version of the Uppsala model

The emergence of Industry 4.0 offers firms internationalization opportunities employing digital platforms and emerging technologies. Relying upon the Uppsala model as applied in light of a firm case study, we contribute to the validity of the Uppsala model 2017. We respond to the counterpoint by Coviello, Kano, and Liesch (2017) to the Uppsala 2017 model, answering the question, What is the impact of Industry 4.0 on the validity of the 2017 version of the Uppsala model? This study builds on a qualitative research methodology through a single case study of Delivery Hero, a global service provider firm. We adopt an extensive longitudinal approach to understand a startup firm’s digital business concept and business evolution, including its internationalization paths. We conclude that the mechanisms of the Uppsala model are valid, but their characteristics have changed by digital and globalized value-adding processes. The dynamic capabilities possessed by the founding entrepreneur turn out to constitute a critical micro foundation for the firm’s international business success. Our findings explain these change mechanisms, illustrating the stepwise progression process led by entrepreneurial decision-making. Industry 4.0 technologies have changed the very manner by which firms arrange their value-adding activities with their business stakeholders in course of the firm’s internationalization. By relying on reasonable business targets, algorithms, and data management systems, real-time market monitoring enables international startup firms to learn and adopt local identities faster, thereby efficiently alleviating liabilities of foreignness.

Founding entrepreneur’s dilemma: Stay or exit the firm following an acquisition? An international comparison

Many differences exist between founders that decide to maintain ownership of their firm and those that surrender ownership. Few studies have addressed what founders decide to do once their firm has been acquired, and even fewer have looked at this phenomenon from an international point of view. By utilizing Prospect Theory, we address this research question through a database of 6,271 founding entrepreneurs from North America, Europe, and Asia. We compare and contrast founders who choose to remain within the company with those that exit and move on to a different activity after their enterprise has been acquired. Our empirical analysis suggests that founders’ tenure, entrepreneurial experience, education level, international experience, and their world region of residence, together with the firm’s stock exchange listing, act as significant antecedents of the founding entrepreneur’s choice to exit the firm after acquisition.

Embracing entrepreneurial action through effectuation in social enterprise

PurposeMainstream entrepreneurship research tends to adopt either the causation or effectuation perspective in their studies. Yet, the social enterprise literature has largely focussed on the bricolage perspective to explain social entrepreneurial action. The authors argue that when investigating legitimacy driven opportunity pursuit of an enterprise’s pre-emergence stage, all three perspectives of causation, effectuation and bricolage are required. The purpose of this paper was to address the research question how does effectuation determine entrepreneurial action in the pre-emergence of a social enterprise?Design/methodology/approachAn in-depth single case study approach was used based on the data provided by the founding entrepreneur of Good-Faith Learning social enterprise in Australia.FindingsThe results demonstrated the complementary evolution of the three perspectives. In the following sequence, the effectuation, causation and bricolage actions were identified during the pre-emergence stage of the Good-Faith Learning social enterprise. Specifically, the input–process–output perspective of the study confirmed that the initial stage reflects on the effectual means linked to the causation-based strong articulation of the social vision and mission. The process stage dominates the bricolage approach to resourcing leading to effectual outcomes subsequently. Further, the specific actions of the pre-emergence stage are comprised legitimacy driven symbolic management approaches conveying the entrepreneur’s credibility and commitment, professional organising through website, gut-instinct based team selection, and organisational achievement.Research limitations/implicationsThe future research may conduct multiple case study analysis with multiple respondents to observe the consistency or deviations of the patterns identified in this study.Originality/valueThis single case study demonstrates the complementary existence of causation, effectuation and bricolage elements in entrepreneurial actions in a single social enterprise context and advances the social entrepreneurship literature.

From “manager” to “strategist”

PurposeFew high-growth firms (HGFs) are able to maintain high-growth over time. The purpose of this paper is to find out why only a small number of firms become persistent HGFs, explicitly focusing on the role of the founding entrepreneur in this process.Design/methodology/approachInitially, 28 semi-structured interviews were performed with high-growth entrepreneurs to discover why so few founders could become persistent high-growth entrepreneurs. In a second phase, four case studies were conducted to uncover the factors that facilitate a swift evolution from the “managerial” role to the “strategic” role.FindingsHigh-growth entrepreneurs, who quickly make a transition from a managerial role into a strategic role are more likely to keep their firm on its high-growth trajectory. This transition is made possible by: the early development of strategic skills; the presence of a high quality human capital base; and an organizational structure with characteristics from Mintzberg’s “machine bureaucracy.”Practical implicationsThe results are vital for entrepreneurs of “one-shot” HGFs with the ambition to make their firm a “persistent” HGF. If high-growth rates are to be sustained, the three factors that emerged from the authors’ analysis should foster the delegation of managerial tasks, resulting in an easier transition toward a “strategic role.”Originality/valueInsights are valuable as both founders and governmental institutions can benefit from knowing which factors contribute to a successful phase transition from “manager” to “strategist.”

Structuration and Learning in a Software Firm

This case study presents the evolution of a software firm from startup into early internationalization. Building on a structuration theory, the case is framed within a conceptual model that illustrates the way skills and routines co-evolve both at the level of the founding entrepreneur (agency) and of the firm (structure). As such, this article contributes to an emergent structurational view of technology-based entrepreneurship. Such views places emphasis on learning both at the individual and collective level, in terms of software engineering, commercial, managerial and strategic capabilities. In addition, it supports a dynamic perspective of entrepreneurship in the software industry by covering not only the startup phase but also early growth and consolidation of the firm.

Why Black entrepreneurs are motivated and persistent despite lower business performance

Grounded in AMO (ability, motivation, opportunity) theory, this study takes a first step at bringing race back into the entrepreneurship literature to predict how the race of the founding entrepreneur (i.e., Black or White) influences motivation to start a business, business success, and business persistence. Facts are presented which describe that due to historic and lingering present societal discrimination, Blacks tend to have fewer opportunities in the highest ranking positions of Corporate America and they are underrepresented in the upper echelons relative to their proportion of the workforce. Using a sample from the Panel Study of Entrepreneurial Dynamics II (PSED II), we find that Blacks have fewer relevant stills to start one’s own business (e.g., less managerial experience) compared to Whites, but they have stronger motivation to start one’s own business to make new opportunities for oneself and one’s family by being one’s own boss. We hypothesize and find that Blacks are more likely to start businesses than Whites, and that although Black entrepreneurs are less financially successful than White entrepreneurs, they are also more persistent than White entrepreneurs. The positive association between Black entrepreneur race and business persistence is partially mediated by higher levels of motivation to run one’s own business.

Governance in entrepreneurial ecosystems: venture capitalists vs. technology parks

We argue two alternative routes that lead entrepreneurial start-ups to acquisition outcomes instead of liquidation. On one hand, acquisitions can come about through the control route with external financers such as venture capitalists (VCs). VCs take control through their board seats along with other contractual rights that can bring about changes in a start-up necessary to successfully attract a strategic acquirer. Consistent with this view, we show that VCs often replace the founding entrepreneur as CEO long before an acquisition exit. On the other hand, acquisitions can come about through more advice and support provided to the start-up, such as that provided by an incubator or technology park. Based on a sample of 251 Crunchbase companies in the USA over the years 2007 to 2014, we present evidence that is strongly consistent with these propositions. Further, we show a tension between VC backing of start-ups resident in technology parks insofar as such start-ups are slower to become, and less likely to be, acquired.

Women's World Banking: The Early Years

This case serves multiple teaching purposes. It can be used effectively in an entrepreneurship course or for a discussion of entrepreneurship in the context of nonprofit organizations. Women's World Banking (WWB) is a unique worldwide financial institution that serves as an international model for the delivery of credit and management expertise to microbusinesses in less-developed economies. WWB represents the breakthrough innovation in market creation, product development, and new organizational forms discussed by Joseph Schumpeter (an economist who studied entrepreneurship). The organization is a network that operates with autonomous affiliates connected in a global web. The case focuses on the creation of the organization and its founding entrepreneur. It is a useful tool for discussing the characteristics of entrepreneurial founders, innovation, and growth challenges in the early years. It can be used effectively with the Harvard Business School case on Women's World Banking to discuss leadership succession and further challenges of rapid growth. Excerpt UVA-ENT-0025 WOMEN'S WORLD BANKING: THE EARLY YEARS It was January 1990. Michaela Walsh had to make a major decision, whether to end her tenure as President of Women's World Banking (WWB) or to stay on for a few more years. She had repeatedly talked with members of the board of directors about leaving in the fall of 1990, but no one seemed to believe her. On the one hand, she had accomplished her goalCto establish an internationally respected and innovative financial institution. In many ways, Walsh's vision for WWB had been realized: the organization had grown to 44 affiliates in 35 countries through which $ 11.6 million had flowed to entrepreneurs in less economically developed areas around the world who otherwise might never have started or built their own businesses. On the other hand, was WWB on sufficiently stable foundations? Who should the successor be? Walsh knew the organization's future depended on its capacity to strengthen and expand its management and services. Walsh's thoughts shifted to plans for her next innovative project, the creation of a venture-capital fund. The excitement of this new challenge was as compelling as the demands of WWB in its early years had once been. She knew she had to make a decision because discussion of a successor would need to take place at the upcoming board meeting in April. Beginnings The seeds for WWB were planted in 1975 at the United Nations International Women's Year Conference in Mexico City. The conference, which launched the United Nations Decade for Women stressed the high cost of traditional cultural practices and legal and financial requirements that undermined women's active participation in the economic mainstream. Walsh attended the conference as an observer at the request of her employer at the time, the Rockefeller Brothers Fund. A group of fifteen delegates—women from diverse cultures—met to discuss obstacles to women's participation in business and agreed that access to credit and business training were major hurdles all over the world. This group resolved to create a vehicle to support women who had entrepreneurial qualities but who lacked the capital and management skills to build viable businesses. These delegates became the nucleus for Women's World Banking. Start-Up . . .

Selling all good: how small new entrants can compete

Synopsis Chris Morrison and two partners introduced the first Fairtrade bananas in New Zealand in a bid to improve the social and environmental impacts of banana consumption. The trio started All Good Bananas in 2010. Using social media as a key marketing tool, the startup had grown to take a 5 percent market share in a fiercely competitive industry dominated by big players. In 2012, the entrepreneurs needed to decide the best way to increase sales of ethically sourced products under the All Good brand. Should they expand their share of the banana market or diversify into drinks? Research methodology The case is primarily based on tape-recorded interviews by the authors with the founding entrepreneur and three employees of All Good from May to July 2012 and an analysis of the company’s website and social media activities. Other publicly available information sources were drawn upon, and a discussion held with a New Zealand national grocery chain CEO. Relevant courses and levels This case has been written for use in classes in undergraduate and graduate level entrepreneurship, strategic management and sustainability. The case can be used to illustrate how very small resource-constrained startups can compete in an industry dominated by large multinational corporations, and how Fairtrade might provide a worthy differentiation focus. It is open to a consideration of judo economics. While several of the questions ask students to consider the New Zealand context in which this case is set, knowledge of New Zealand and the various industries beyond what is offered in the case is not necessary. Theoretical bases At a broad level the case illustrates how a small, resource-constrained startup can compete against much, much larger players through a niche Fairtrade product focus and the use of alternative marketing strategies such as guerrilla marketing and social media. In relation to the competitive dynamics within an industry, this case can be used to illustrate the concept of judo economics (also referred to as judo strategy). Both the utility and potential limits of judo economics can be demonstrated through the case by considering current activities and potential future dynamics.

Venture Capital and Entrepreneurial Growth by Acquisitions: A Case Study from Emerging Markets

Expansion through acquisitions with the assistance of venture capital offers a unique business opportunity for entrepreneurial firms in the emerging markets of Central and Eastern Europe. This article focuses on Green Booth, a venture capital–backed entrepreneurial firm that expanded its business through acquisitions. The case study analyzes two financial development scenarios and provides actual financial results. The case also notes the value of proceeds achieved by the founding entrepreneur and participating venture capitalists.

Conceived globals: entrepreneurs' transnational networking, across phases, and embedded in culture

A firm may be conceived global, in the sense that, before its birth, the founding entrepreneur has a transnational network of advisors which provides an embedding for organising the upstart that may include assembling resources and marketing abroad. The purpose is to account for the entrepreneurs' transnational networking as it originates in the pre-birth phase of intending to start, and as it evolves through the starting and into the operating phases, in context of culture. By using sample from 61 societies with 88,628 entrepreneurs we found that entrepreneurs are networking transnationally across the intending, starting and operating phases, fairly constantly with only small fluctuations. The firm is conceived global in terms of the entrepreneur's transnational networking already in the pre-birth phase, when the entrepreneur is intending to start the firm. These phase effects hardly depend on attributes and culture which have separate effects. Being man, young, educated and having entrepreneurial competencies promote transnational networking extensively. Networking is embedded in culture, in the way that transnational networking is more extensive in secular-rational culture than in traditional culture.

Governance in Entrepreneurial Ecosystems: Venture Capitalists vs. Technology Parks

We argue two alternative routes that lead entrepreneurial start-ups to acquisition outcomes instead of liquidation. On one hand, acquisitions can come about through the control route with external financers such as venture capitalists (VCs). VCs take control through their board seats along with other contractual rights that can bring about changes in a start-up necessary to successfully attract a strategic acquirer. Consistent with this view, we show that VCs often replace the founding entrepreneur as CEO long before an acquisition exit. On the other hand, acquisitions can come about through advice and support provided to the start-up, such as that provided by an incubator or technology park. Based on a sample of 251 Crunchbase companies in the U.S. over the years 2007 to 2014, we present evidence that is strongly consistent with these propositions. Further, we show that the data indicate a tension between VC-backing of start-ups resident in technology parks insofar as such start-ups are slower to become, and less likely to be, acquired.

Entrepreneurial Spawning: Experience, Education, and the Role of Venture Capital

We present theory and evidence on the careers of high-tech entrepreneurial founders prior to obtaining venture capital (VC), and after VC exit. Prior to obtaining VC, entrepreneurs may have started other ventures, worked as a salaried employee in a startup, or worked for a large company. Upon VC exit, the founding entrepreneur may become a salaried employee, start another firm (‘serial entrepreneur’), or become a business angel that invests in other entrepreneurs. Our detailed data resting on the CrunchBase online database indicate that VC exit systematically spawns serial entrepreneurs only in cases where the entrepreneur (1) had experience either in founding other startups or working for a startup prior to receiving VC, (2) had a ‘jack-of-all-trades’ education, or (3) achieved substantial financial success upon VC exit.

When new party X has the ‘X factor’

There is no single, correct answer to the question ‘what type of party is new party X?’ nor is there a foolproof way of gauging new-party X’s prospects of survival as a parliamentary actor. The recent literature on new parties predicts a relatively low survival rate for ‘entrepreneur parties’, defined as parties formed without a measure of support from an external ‘promoter’ organisation. Charisma alone, the argument goes, is unlikely to be sufficient for party ‘sustainability’. This article, however, identifies a sustainable type of new party in which the founding entrepreneur, acting without specific external group support, combines charismatic leadership and organisational leadership to create a stable mass membership party. The article’s empirical section focuses on the evolution of one such ‘charisma plus’ or ‘resilient entrepreneurial party’ — the True Finns — and, based on personal interviews with its long-serving leader, it does so from the express standpoint of the party entrepreneur.

Small Firm Survival and Innovation

This paper explores ‘evolution’ as a means of complementing our understanding and interpretation of creative innovation networks in small firms. The abstracted evolutionary mechanisms of variation, selection and retention (VSR) are employed to add a more dynamic interpretative framework to the reading of social networks and group structures. The paper thus presents a lens through which to appreciate creativity as an evolving and shared process. The principal aim of this research is to illustrate otherwise tacit informal relations within a small business through the application of a qualitative approach to social network analysis (SNA) and, in doing so, to present intra-firm relations as central to creativity and innovation – particularly as the organizational structure moves beyond the dominance of the founding entrepreneur.

The roles of R&D in new firm growth

Innovative start-ups are an important driver of economic growth. This article presents empirical evidence on the effects of research and development (R&D) on new product development, interfirm alliances and employment growth during the early life course of firms. We use a dataset that contains a sample of new firms that is representative of the whole population of start-ups. This dataset covers the first 6 years of the life course of firms. It is revealed that R&D plays several roles during the early life course of high-tech as well as high-growth firms. The effect of initial R&D on high-tech firm growth is through increasing levels of interfirm alliances in the first post-entry years. R&D efforts enable the exploitation of external knowledge. Initial R&D also stimulates new product development later on in the life course of high-tech firms, but this does not seem to affect firm growth. R&D does not affect the growth rate of new low-tech firms, which seem to be driven mainly by the growth ambitions of the founding entrepreneur. The results show that R&D matters for a limited but important set of new high-tech and high-growth firms, which are key in innovation and entrepreneurship policies.

The Company They Keep: Innovation Returns To Corporate Venture Capital In The Medical Device Industry, Entrepreneurial Clinicians, and Competitive Coinvestors

Corporate venture capitalists (CVC) invest in entrepreneurial startups for financial and strategic goals. CVCs may use direct equity investment to stimulate innovation that is appropriable by the investing firms. At the same time, CVC is also used for strategic goals which may include blocking competitors or gaining a window on competitor’s technology. In this paper, I analyze corporate venture capital (CVC) investment and innovation performance in the medical device industry. I provide project level evidence that CVC investment is associated with the production of knowledge by the startup that is appropriated by the investing firm. In a given industry, CVCs share a common pool of potential startups in which to invest. Empirically, the likelihood of production of relevant knowledge by the startup is greater if the founder is an entrepreneurial clinician as opposed to a non-clinician background. At the same time, the likelihood of production of relevant knowledge for the investing CVC is diminished if multiple CVCs (competitive CVCs) coinvest in the same startup firm. The suppression of innovation performance is pronounced in higher rounds of investment. This paper makes significant contributions to our understanding of project level dynamics and the innovation returns to CVC. This paper also contributes to our understanding of innovation in the medical device industry and the significance of entrepreneurial physicians (clinicians) as the founding entrepreneur.

Looking for Joan of Arc: Collaboration in the Rise and Fall of Heroes

This article adapts Actor Network Theory to illustrate the construction of heroes and their abandonment. It focuses more specifically on the rise and fall of an iconic New Zealand private training enterprise, Carich, and its founding entrepreneur Caron Taurima. Drawing on media, web sources and interviews, the study reflects on the uncritical way heroes are constructed and makes comparisons with the story of Joan of Arc. It shows how the notion of ‘Carich‐as‐a‐successful‐business’ was encouraged and developed by human and non‐human actors, how revenues were inflated, and how the business founder’s personal charisma superseded hard financial questions. The article problematizes the roles of various actors, particularly hero‐seeking media, politically‐correct Crown agencies, and those supposedly objective umpires of business acumen who offer national awards to ‘outstanding’ entrepreneurs.

Small firm‐large firm experiences in managing NPD projects

PurposeThe purpose of this research paper is to present a modified framework for the waves of change of new product development of McGrath.Design/methodology/approachA qualitative study of new product development (NPD) in four electronic firms (two small indigenous/two large multinational) was conducted. In‐depth interviews were held with employees, including the founding entrepreneur in each of the small firms.FindingsAnalysis of strategic, organisational and development factors shows that firms face different challenges during their NPD process – some related to size. Also, as firms grow, NPD learning may be lost.Research limitations/implicationsThe research findings are stated as a result of four cases studies – two in large firms and two in small firms. Further research will establish the generalisability of these findings.Practical implicationsThe electronics industry is renowned for its aggressive competitive environment where successful entrepreneurs continuously innovate product and process development. The framework presented will be of use to entrepreneurs who focus on NPD.Originality/vlaueA modified version of McGrath's framework, showing separate categories for small and large firms, is presented. These modifications recognise that there are differences between NPD in small and NPD in large firms.