Founding Entrepreneurs Research Articles

Stay or Leave? The Role of Psychological Contract Violation of Entrepreneurial Founder Team Members

Stay or Leave? The Role of Psychological Contract Violation of Entrepreneurial Founder Team Members

Trigger points and high growth firms: the vital role of founder “sensing” and “seizing” capabilities

PurposeResearch on high growth firms is booming yet a strong conceptual understanding of how these firms obtain (and sustain) rapid growth remains (at best) partial. The main purpose of this paper is to explore the role founders play in enabling episodes of rapid growth and how they help navigate this process.Design/methodology/approachThis paper reports the findings from a qualitative study involving in-depth interviews with entrepreneurs enlisted onto a publicly funded high growth business accelerator programme in Wales. These interviews explored the causes of the firms rapid growth, their key growth trigger points and the organisational consequences of rapid growth.FindingsThe research reveals that periods of high growth are intrinsically and inextricably inter-linked with the entrepreneurial traits and capabilities of their founders coupled with their ability to “sense” and “seize” pivotal growth opportunities. It also demonstrates founder-level dynamic capabilities enable firms to capitalise on pivotal “trigger points” thereby enabling their progression to a new “dynamic state” in a firm’s temporal evolution.Originality/valueThe novel approach towards theory building deployed herein is the use of theoretical elaboration as means of extending important existing theoretical constructs such as growth “trigger points” and founder dynamic capabilities. To capitalise on these trigger points, founders have to undergo a process of “temporal transitioning” to effectively manage and execute the growth process in firms. The work also has important policy implications, underlining the need for more relational forms of support for entrepreneurial founders.

Private equity and entrepreneurial investments: understanding the determinants of founder-CEO succession in the Caribbean

ABSTRACT Our study develops a contextually embedded institution-theoretic model of the major influences precipitating entrepreneurial founders’ leadership succession. Drawing on a unique sample of 184 listed firms from 10 national securities markets across the Caribbean region, we find that both business group (BG) and private equity (PE) ownership are associated with an increased likelihood of founder retention. The results also show that firms’ adoption of shareholder value corporate governance negatively moderates the BG main effect, while positively moderating its PE counterpart. We argue that this is reflective of a simpler lifecycle in emerging economies centred on one major transition, namely the transition from internal to external resource provision.

Forecasting entrepreneurial motivations and actions: development and validation of the entrepreneurial trigger scale

PurposeThe purpose of this paper is to evaluate the insights of founding entrepreneurs to understand what they consider as motivating factors in their decision to act upon entrepreneurial intentions. Using this information, the entrepreneurial trigger event influence was conceptualized, and a scale developed for use in subsequent testable models.Design/methodology/approachQualitative and quantitative techniques were used to construct an instrument that measures the presence and influence of entrepreneurial behavior triggers. The concept of triggering events was explored with 14 founding entrepreneurs. Themes emerged from this enquiry process which informed the development of four primary entrepreneurial triggering events. Over 600 entrepreneurs participated in the study. Exploratory factor analysis was used to identify dimensions of entrepreneurial triggers and was tested using confirmatory factor analysis.FindingsEntrepreneurs perceive that personal fulfillment and job dissatisfaction serve as two significant trigger events which will lead individuals to engage in entrepreneurial behaviors. This research supports theorizing that suggests entrepreneurial trigger events have influence in motivating individuals to act upon entrepreneurial intentions and some trigger events may have more influence toward behavior than others.Research limitations/implicationsThis research is subject to multiple limitations. Trigger events were limited to those identified in literature and the interviews. Most entrepreneurs participating in this study were from a limited geographic region. The entrepreneurs in this study reported their triggering event based on their memory which could have been affected by inaccurate recall or memory bias. No attempt has been made to model the comparative effects of the different variables on entrepreneurial outcomes. Finally, the entrepreneurial trigger event instrument did not measure the participant's demographics or psychographics which could have played a role in the influence of reported trigger event.Practical implicationsThis study extends previous research that trigger events serve as catalysts for entrepreneurial behavior. Findings support the premise that different types of triggers have different levels of influence as antecedents of entrepreneurial behavior. Specifically, positive, negative, internal and external entrepreneurial triggering events were explicated. The Entrepreneurial Trigger Event Scale created to facilitate this study enables researchers to explore the effects of types and perceived influences of precipitating trigger events on the intentions of the individual that result in entrepreneurial behavior. The optimized instrument further expanded Shapero's (1975) proposed theory of the origins of entrepreneurial behavior.Social implicationsThe development of a scale provides researchers with the opportunity to include the influence of entrepreneurial trigger events, as perceived by entrepreneurs, in future testable models. Entrepreneurial development organizations can use the knowledge to assist in understanding when potential entrepreneurs may act upon entrepreneurial intentions. Information gained can have significant implications for understanding the initiation of entrepreneurial behavior, entity establishment and business growth.Originality/valueThis research responds to a call for investigation into the influence of entrepreneurial trigger events on a person's decision to act upon entrepreneurial intentions. It is an early attempt to conceptualize a relevant construct of entrepreneurial trigger event influence and to develop a scale for use in empirical testing. It is distinguished by using planned behaviors, push and pull, motivation and drive reduction theories. These theories are applied to the perceptions of successful entrepreneurs to develop a construct and validate it.

Dialogue and the micro-processes of founder meaning-making during growth

This article draws upon dialogic theory to explore how meaning is co-constructed in dialogue as founding entrepreneurs devise strategies for venture growth. Drawing from a longitudinal study of the impact of a UK University business growth programme upon such strategies, we identify ways in which dialogue influences the meanings attributed to the adoption of, or resistance to, growth strategies. ‘Productive’ dialogue emerging from a diverse range of relevant voices encouraged founders to reflect upon the meanings given to current growth initiatives whilst devising future strategies. Conversely, founders could use ‘degenerative’ dialogue to block the voices of others in order to resist change and protect existing meanings. We contribute to debate by utilising dialogic theory as a conceptual tool to illustrate how business growth programmes shape the meanings founders apply to embrace, or resist strategic change, to effect venture growth.

Entrepreneurial founder's social ties, institutions, and firm's productivity: Evidences from China's newly listed firms

Social ties, as informal institutions, contribute to firms’ performance in emerging economies. Formal market-supporting institutions in emerging economies are in general less developed, social ties cultivated by entrepreneurs thus serve as substitutes for formal institutional support. However, the role of social ties as informal institutions and interactions between social ties and market-supporting institutions are yet to be fully explored. Using the sample of 428 newly listed firms on the Growth Enterprise Market of Shenzhen Stock Exchange of China between 2009 and 2016, this paper examines the interplays among the entrepreneurial founder's political ties and managerial ties, marketization, and firm's productivity, measured by firm-level total factor productivity. Our findings indicate that the entrepreneurial founder's managerial ties enhance firm productivity whilst political ties reduce productivity. We also find that marketization positively moderates the effects of the entrepreneurial founder's political and managerial ties on productivity. Our findings demonstrate the strategic importance of the informal institutions and contribute to an improved understanding of the complementary effects between social ties and marketization in an important emerging economy.

Challenges surrounding succession planning in FamilyOwned Businesses in Zimbabwe: Views of the founding entrepreneurs of the businesses at Chikarudzo Business Centre in Masvingo District

Challenges surrounding succession planning in FamilyOwned Businesses in Zimbabwe: Views of the founding entrepreneurs of the businesses at Chikarudzo Business Centre in Masvingo District

How to enter paradise on earth: a case study of Aava

Theoretical basis This case has been tested twice in the classroom of 40 students in two leading Indian institutions, IIM Ahmedabad (among a group of 40 faculty development programme participants) and Central University of Kashmir (among a group of 40 MBA marketing students). The teaching note has been well prepared and all modifications in both the main case as well as teaching note stand updated. Research methodology The data for the case was collected using both primary and secondary sources. The author managed to have a face-to-face interview with the company's Vice President, Mr Sheroy Mehta at Indian Institute of Management, Ahmedabad, and get the preliminary data for the case. The author could also manage to carry out personal interactions with PureMax mineral water owners, a leading brand in Jammu and Kashmir, India. Some of the supplementary data were sourced from secondary sources and properly referenced. Case overview/synopsis The discussion questions invite students to consider several environmental challenges often faced by entrepreneurs. Students are encouraged to demonstrate their practical and theoretical knowledge by addressing genuine challenges across a typically broad entrepreneurial management spectrum, including product design, positioning and sustainability. This case was written following extensive interaction with the founding entrepreneurs at Ahmedabad, Gujarat, using a critical marketing perspective and the author's primary research. This case is targeted at postgraduate and undergraduate management students taking a marketing, strategic management or entrepreneurship course. Complexity academic level This case study is relevant for marketing management and brand management courses and could also be used for strategic management classes. This case was written to view the general requirement of the MBA marketing syllabus in most Asian universities in general and Indian universities in particular. This case can also be used for undergraduate students of business management and commerce.

Who are the founders of venture capital‐backed initial public offering companies in the United States?

AbstractPrior research acknowledged the importance of founders in affecting firm strategy and performance, but large empirical analyses of profiles of entrepreneurial founders are scant, in part because of the difficulty in collecting founder data. This study represents the first effort to study entrepreneurial founders across half a century. Using a hand‐collected unique and comprehensive dataset, this research sheds light on the demographic, educational, and career characteristics of founders for the venture capital (VC)‐backed initial public offering (IPO) companies during 1960–2015. The research has useful implications for researchers and practitioners. By understanding who the founders are and where they come from, this article scratches the surface of founder characteristics and firm performance from which further work could build on and provides useful information for founders who are likely to seek VC‐funding and IPO to build realistic expectations, VC firms who are interested in investing in potentially rewarding and promising new ventures to select good targets, and governments that struggle to promote entrepreneurial efforts and enhance economic development, in general, to come up with appropriate policies.

Understanding Entrepreneurship Training in Incubation Hubs

Many scholars regard the incubation process as a mystery because little is known about what unfolds inside incubation hubs. The business incubation process is a critical initiative that can aid in the growth of new firms. However, little research has been conducted to corroborate what occurs within an incubation hub. The study was aimed at understanding what happens to start-ups in incubation hubs. The research was conducted among Harare start-up founding entrepreneurs. The case study approach was used in this qualitative study. Data was gathered using an interview guide. The sample comprised 21 start-up founders divided into three focus groups. Incubation hubs have a good impact on start-up development, according to the research. The findings offer a rare glimpse into the activities of incubation hubs. It was concluded that incubation hubs make a significant contribution that was critical to the development and survival of start-ups. The study contributed to the theoretical gap by adding more literature on start-up development.

Relational composition and member turnover of entrepreneurial founder teams at the nascent stage: a typology and empirical evidence

Team composition matters in shaping entrepreneurial outcomes. Focusing on the preexisting relationships among team members, this study examines how the social relational structure of entrepreneurial founder team influences membership turnover. After distinguishing entrepreneurial teams into family-only, non-family only, and family/non-family mixed ones, the study explores the possibility that family ties can serve as a glue in family-only teams, while they can become a source of schism in teams mixed with family and non-family members. Using data from the Panel Study of Entrepreneurial Dynamics, this research finds that family-only teams have a stable and rigid relational structure with low levels of both member exit and entry, while family/non-family mixed teams have the most vulnerable structure where members tend to leave but new members are unlikely to be recruited. Additionally, non-family teams have an unstable and fluidic structure with a high rate of both member exit and entry. These findings have implications for advancing our understanding of how social relational composition influences the organizational outcomes of entrepreneurial teams.

Prim ‘A’ Geniture: Gender Bias and Daughter Successors of Entrepreneurial Family Businesses

Entrepreneurs establishing businesses from research and innovation eventually must consider the succession of their firms. Often the enterprise is passed to a family member to continue the vision and legacy of the entrepreneurial founder. While typically the norm of primogeniture dictates that the eldest son is the recipient, today, with changing societal attitudes toward women’s leadership, daughters often find themselves as the firm leader. While some daughters report advantages, others experience significant gender bias in the successor-leader role. Using a critical realist methodology, this exploratory study used interviews from three daughters who were either the successor-leader or were in the process of becoming the successor-leader of a business founded by their father to identify mechanisms within the family, the family business and societal social structures that caused them to experience gender bias. Marxist feminist notions of patriarchy and its roots within the family structure were applied as an a priori theory to identify potential mechanisms that cause gender bias. While this ‘triple patriarchy’ was expected to explain the cause of gender bias, the data suggest that when daughter successors receive validation by their father, any mechanisms that may have caused gender bias are counteracted by others that enable a daughter to be accepted as the successor-leader.

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.

Family events and new venture survival: effects of positive and negative affect on entrepreneurs

This paper investigates how family events impact founding entrepreneurs’ psychological affect during the new venture creation process and whether their ventures commenced before such events continue to be viable. We also explore the impact of the interaction of family events and overconfidence on new venture survival. We use panel data drawn from the Australian Household, Income and Labor Dynamics (HILDA) survey, focusing on non-venture related, family event-induced psychological affect that entrepreneurs may experience as a predictor of their new venture survival. Our accelerated failure time model results are consistent with past arguments in the social psychology literature, that ceteris parabis, positive events have a positive influence and negative events have a negative influence on survival. However, when entrepreneurial overconfidence is considered, although the interaction between negative family events and entrepreneur overconfidence spurs cautious behaviour to a small degree as anticipated, it is positive events interacting with overconfidence that makes the biggest impact (negative) on the new venture. The research contributes to our understanding of the embeddedness of family in the entrepreneurial process – specifically how major family events, such as the birth and death of a child and marriage and divorce, which seemingly have little or nothing to do with the new venture, can impact its survival. New founders experiencing a major family event(s) can be psychologically affected through their feelings, emotions and moods. The viability of the startups they helm depend on their ability to manage these stressors. It challenges past assumptions by revealing how positive family events can have comparatively greater negative impact on new venture survival than negative ones. Keywords: Family events; psychological affect; overconfidence; new venture survival; affect spin

How do founder-CEOs sell their remaining ownership shares? Theory and evidence

PurposeIn this paper, the author attempts to answer an important question upon founder-CEOs' exiting: How do they sell their remaining ownership shares? The literature has largely been silent on this question, and therefore is missing an important piece of the puzzle on the final stage of the founding entrepreneurs' involvement in their companies.Design/methodology/approachThe author uses both theoretical models and empirical methods to examine how founder-CEOs sell their remaining ownership shares.FindingsThe author finds that founder-CEOs of high-growth firms and those with high managerial ability are more likely to sell remaining ownership shares gradually rather than suddenly. Moreover, if either the growth or the managerial ability is high, founder-CEOs managing firms with high volatility tend to sell gradually.Originality/valueThis paper provides insights into the final stage of founding entrepreneurs' involvement in companies. The methodology of pattern recognition also helps investors and regulators in tracking and monitoring stock trading of founders and other company insiders.

How Do Founder-CEOs Sell Their Remaining Ownership Shares? Theory and Evidence

I use both theoretical models and empirical methods to examine how founder-CEOs sell their remaining ownership shares. I find that founder-CEOs of high-growth firms and those with high managerial ability are more likely to sell remaining ownership shares gradually rather than suddenly. Moreover, if either the growth or the managerial ability is high, founder-CEOs managing firms with high volatility tend to sell gradually. This paper provides insights into the final stage of founding entrepreneurs' involvement in companies. The methodology of pattern recognition also helps investors and regulators in tracking and monitoring stock trading of founders and other company insiders.

Open innovation within high-tech SMEs: A study of the entrepreneurial founder's influence on open innovation practices

This study aims to deepen our knowledge of the SME ‘human’ role within open innovation adoption. To achieve this, we explore how the SME leader, namely the founder/CEO managerial characteristics influence the SMEs open innovation adoption dynamics (i.e. mechanisms, partners, motives and sequence of adoption). The empirical analysis is based on seven Irish medical device SME case studies achieving high growth ambitions at an international level. Our findings demonstrate that SME open innovation adoption is exemplified by a project based as opposed to an organisational level rationale and a natural tendency to pivot back towards the closed paradigm through a ‘switchback' strategy once the need has been addressed. In turn, SMEs develop open innovation capabilities on a project by project basis and mature as a consequence, thus highlighting the importance of the ‘doing, using, interacting’ mode of learning within SME OI development. Furthermore, SMEs tend to adopt a common sequential and temporal pathway commencing with a commercialisation focus through the outside-in mode followed by a complex, coupled co-creation mode. This study also provides insights into how the founder/CEO's characteristics influence OI adoption dynamics using the West and Bogers (2014) obtaining, integrating and commercialising framework thus extending upper echelons theory (UET) and strengthening the connection between open innovation and entrepreneurship theory.

The Paradox of Resource Provision in Entrepreneurial Teams: Between Self-Interest and the Collective Enterprise

Viewing entrepreneurship as a form of collective action, this paper investigates the tension between an entrepreneurial team’s reliance on collective efforts for achieving success and individual members’ tendencies to withhold their personal resources. We argue that the precarious nature of the early founding stage and the difficulty of redeploying some resources for other uses amplify the risk of early-stage resource contributions and may lead to team members withholding resources or even free riding. Two conditions may help overcome such collective action problems: adopting a formal contract to specify rewards and sanctions and encouraging reciprocal exchange among team members through the lead entrepreneur’s voluntary contributions. Analyzing a nationally representative multiwave panel study of entrepreneurial teams in the United States, we show that early-stage team members are reluctant to provide resources tailored to the business, even though such resources are critical to venture survival. We find that presigned formal contracts and founding entrepreneurs’ initial contributions make members’ contributions of such resources much more likely. Lead entrepreneurs’ voluntary contributions to their businesses, signified by their provision of resources that impose high risks on themselves but increase the viability of the business, help mitigate collective action problems within entrepreneurial teams.

Do Immigrant Entrepreneurs Have Natural Cognitive Advantages for International Entrepreneurial Activity?

Are entrepreneurs with an immigration background more willing to internationalize their entrepreneurial firms compared to their nonimmigrant peers? Previous research has already emphasized that immigrant entrepreneurs possess superior human resources and social capabilities—such as international experience, networks and language skills—that help them to better identify and evaluate international entrepreneurial opportunities. However, literature other than capability-based explanations is rare, and thus it is not yet understood in what sense immigrant entrepreneurs differ from other entrepreneurs in terms of their cognitive characteristics for international entrepreneurial activity. This study addresses this gap by involving a quantitative study of Berlin-based high-tech founding entrepreneurs to empirically investigate how immigrant entrepreneurs vary in their cognitive characteristics, and how this affects their intention to engage in international entrepreneurship. The findings show that immigrant entrepreneurs possess higher levels of proactive behavior, which lead to a more favorable evaluation of international business opportunities, and in turn positively affect the willingness to engage in international entrepreneurial activity. This contributes to a deeper understanding of immigrant entrepreneurs’ natural cognitive advantages and the role they play for entrepreneurial growth, success and national economic development.

Selective subsidies, entrepreneurial founders' human capital, and access to R&D alliances

We investigate if and to what extent the receipt of a “selective” subsidy – a public subsidy awarded through a competitive procedure – helps new technology-based firms (NTBFs) to access R&D alliances. In particular, we theoretically enquire and empirically analyze which founding team-level characteristics allow NTBFs to: i) get a selective subsidy; and ii) access an R&D alliance with another firm or a public research organization/university, once the subsidy is awarded. We use a sample of 902 NTBFs that operate in Italy, where industrial policy has never had an explicit and exclusive mandate neither for targeting NTBFs nor for easing their access to R&D networks. By means of several identification strategies and estimation methods, our results point to the relevance of selective subsidies in facilitating NTBFs to enter R&D alliances, independently from the objective of the policy measure. Second, founders’ technical education figures as a key determinant to get the first selective subsidy. Finally, founders’ previous industry-specific work experience allows NTBFs to better exploit the selective subsidy, by positively moderating the impact of the subsidy on the likelihood to establish a corporate R&D alliance.