Growth Of New Ventures Research Articles

THE RELATIONSHIP BETWEEN THE ENTREPRENEURS’ SOCIAL CAPITAL AND NEW VENTURE GROWTH

Entrepreneurial activities can stimulate the vitality of the market economy, promote the flow of production factors and the adjustment of industrial structure, and play an important role in the economic and social development of a country or region. However, the social capital of the entrepreneur is very important for the new venture to break through the congenital defect and industry barrier and get the chance of growth. 
 The quantity and quality of social capital owned by entrepreneurs can promote the growth of start-ups, and it can also promote the growth of enterprises after improving the effect of identifying growth opportunities. This paper focuses on the relationship between the social capital of entrepreneurs and the growth of New Ventures and analyzes the relationship between the social capital of entrepreneurs, the recognition of growth opportunities, and the growth of new ventures with the growth opportunity as the intermediary variable, this paper analyzes the mechanism of the influence of entrepreneur social capital on the growth of new ventures, and constructs the theoretical model of “Entrepreneur social capital-recognition of growth opportunity-growth of new ventures”, this study considers the moderating effect of business environment dynamics on Growth Opportunity Identification and start-up growth. Through the test, we draw the following conclusions: first, the social capital of entrepreneurs has a positive impact on the growth of new ventures; second, the social capital of entrepreneurs has a positive impact on the identification of growth opportunities; Third, the growth opportunity recognition plays an intermediary role in the entrepreneur social capital to the new venture growth; fourth, the dynamic business environment plays a moderating role in the growth opportunity recognition and the new venture growth.

“Balanced” or “polarized” entrepreneurial ecosystem types? Evidence from Italy

Entrepreneurial ecosystems (EE) are particular systems of interdependent actors and relations that directly or indirectly support the creation and growth of new ventures. EE can vary a lot, based on a unique and dynamic combination of several elements whose relevance can differ across regions. Most studies acknowledged, or ex-ante assumed, that EE elements are all relevant to the same extent, yet others suggest that some EE elements are more important in creating the environmental conditions necessary to foster entrepreneurship in a specific territory. In this paper, we contend that research should provide evidence on this territory-specific matter. Specifically, more evidence is needed on the relevance of each EE element at regional level—as we lack empirical analysis that discriminates between EE types according to elements’ importance. To fill this gap, we assess and characterize the existence of EE types at the regional level in Italy. Our findings suggest that four EE types exist, and they are characterized by a balanced combination of EE elements. On the basis of our results, we generate propositions providing insights that may be useful for future research and policymaking.

Impact of Entrepreneurial Team Contractual Governance on New Venture Resilience: The Mediating Role of Resource Bricolage

Entrepreneurial teams are seen as pilots with which to steer growth in new ventures. However, there is currently a lack of studies exploring how they work under conditions of uncertainty. Based on the upper echelons theory and institutional theory, this study aims to reveal the role of entrepreneurial teams in new venture resilience through a questionnaire survey. Based on the data of 549 valid respondents, we find that resource bricolage is the key factor in new venture resilience, for which entrepreneurial team autonomy management governance is the most effective means. Specifically, (1) Entrepreneurial team profit-sharing governance and management autonomy governance significantly improve new venture resilience, whereas equity governance does not. (2) All the assessed means of entrepreneurial team contractual governance positively stimulate resource bricolage, with management autonomy governance playing the greatest role. (3) Resource bricolage significantly promotes new venture resilience and plays a complete mediating role in the relationship between equity governance and organizational resilience, and also plays a partial mediating role in the relationships of profit-sharing governance and management autonomy governance in regard to organizational resilience. These results suggest that entrepreneurial teams should prioritize authorizing further management rights to encourage team members to take on additional responsibilities, which could improve the resource bricolage capacities of new ventures and thus strengthen their resilience in tackling struggles.

The roles of innovation strategy and founding team diversity in new venture growth

Using fsQCA, this study explores how venture strategy, as well as founding team knowledge diversity and demographic diversity interact to explain revenue growth of new ventures. Based on a longitudinal dataset containing 210 new ventures, we find that the effects of team diversity are complex such that different diversity conditions explain short-term (i.e. one year) compared to sustained growth (i.e. over three years) and that their role is contingent on the venture’s strategy. We identify three recipes that explain revenue growth in the short-term and four recipes that explain revenue growth in the longer-term. One recipe is the same for both time periods pointing towards the potential role of imprinting of certain team diversity conditions in combination with an innovation strategy. Our findings provide a nuanced and in-depth picture of the relative relevance of an innovation strategy, knowledge diversity, and demographic diversity at distinct stages of venture founding.

Financial Resources and New Venture Growth: Effects of Venture Origin and Institutional Environment

Financial resources are generally known to have a positive impact on new venture growth, but various conditions may play complex roles on this relationship. This study investigated the roles of venture origin and characteristics of institutional environment in the context of the relationship between financial resources and growth of new ventures. We posit that financial resources are more critical for independent ventures (IVs) compared to corporate ventures (CVs), because IVs have more discretion and greater incentives for growth and leading them to use financial resources more extensively than CVs. Furthermore, we posit that financial resources are more critical for IVs’ growth in market-oriented institutional environment than in government-driven institutional environment, because market-oriented institutional environment requires more discretional resource management for IVs and thus financial resources should play more critical roles in market-oriented institutional environment. We find broad support for these arguments in a comprehensive data set representing South Korean new venture firms from 1991 to 2009.

Founders' Creativity, Business Model Innovation, and Business Growth.

Given the existing studies on the role of different founders’ personalities in the growth of new ventures, we take the digital technology start-ups as the research object and focus on the role of founders’ creativity. In this study, we assess the relationship between founders’ creativity and business growth. According to the framework of upper echelons theory, we propose several hypotheses. Based on the investigation of 153 new ventures in China’s transition economy, we find that: (1) founders’ creativity has a positive impact on the growth of enterprises; (2) business model innovation positively mediates the relationship between founders’ creativity and enterprise growth; (3) work experience is found to be a moderator of the relationship between founders’ creativity and business model innovation. The conclusion of our analysis not only helps to further deepen the research on the growth process of start-ups but also helps to further expand the important role of business model innovation and founders’ work experience in the growth of new firms.

Kewirausahaan sebagai Pahlawan Tanpa Tanda Bintang selama Krisis Ekonomi COVID-19: Perspektif Indonesia

The COVID-19 pandemic has had a significant and catastrophic impact on businesses and the global economy. During the Covid 19 pandemic, we have identified internal and external empowerment from business creation. This study aims to provide entrepreneurial insight, implementation and dynamics to demonstrate the role of entrepreneurship in times of adversity in the Indonesian Context. The researcher provides an exploratory narrative that emerges from leading Indonesian scholars, identifying entrepreneurial initiatives for the creation and growth of new ventures. This research is in the form of insights related to the entrepreneurial mindset, the multi-dimensional effects of resilience and entrepreneurship, entrepreneurship education, entrepreneurial empowerment and ecosystem entrepreneurship. The results of this study regarding the context and empirical results. We postulate that entrepreneurship will be the unsung heroes during the current Covid-19 economic crisis.

Generative Emergence: Exploring the Dynamics of Innovation and Change in High‐Potential Start‐Up Ventures

AbstractStart‐up and early growth of new ventures is a complex process, filled with challenges and learning amidst continuous dynamic change. Understanding these dynamics is a critical goal for entrepreneurs and has been researched by entrepreneurship scholars using complexity sciences. Building on this literature, we explore the ‘dynamics of emergent change’ by interviewing 20 founders/CEOs of young, high‐potential ventures in the Republic of Ireland to generate theory on how these dynamics are experienced throughout the start‐up journey. Our findings suggest a set of process dynamics that are commonly experienced as instability, tension, non‐linear change, unpredictability and surprise, as well as the outcome dynamics of emergent structures, ongoing creation of new knowledge and enhanced capabilities. These are experienced across every aspect of entrepreneurship, from within the specific innovation, through marketing, operations and finance. These findings contribute towards our understanding of how the entrepreneurs deal with these dynamics. Given the current success of their venture, we take their suggestions as an outline for ‘generative leadership’ – behavioural and strategic tools for enhanced venture growth and development.

How digital technology promotes entrepreneurship in ecosystems

In recent years, countries have adopted policies seeking to promote the development and adoption of innovative digital technologies and grow their entrepreneurial ecosystems. In this paper, we review and analyze the vast literature on how digital technologies foster the birth, development and growth of new ventures and how these firms employ these technologies to shape the evolution of their ecosystems. Our analyses highlight the intimate links among ecosystem development, digital technologies and the active role that new ventures play, depicting a complex evolutionary process. We also discuss the role of pioneering, disruptor and imitator digital new ventures in the growth of their ecosystems. We also discuss the theoretical, policy and managerial applications of our work.

Are start-ups funded by public venture capital different? New cross-country evidence from micro-data

Abstract Given the sizeable amount of public investments in venture capital (VC) in many countries, an emerging empirical literature investigates the impact of government venture funds on firm performance. We reassess the key findings of this literature using a new database on innovative start-ups and VC investments, which is unprecedented for granularity and comprehensiveness and covers a longer, more recent time period. Our analysis confirms the established finding that start-ups backed by government VC underperform start-ups backed by private investors. Differently from the extant literature, instead, we do not find that mixed public–private investments in the first stage are associated with additional private investments in later funding rounds. We interpret this as evidence that public VC is bounded to fail without an ongoing commitment throughout the process of development and growth of new ventures.

Sales growth or employment growth? Exporting conundrum for new ventures

Purpose Previous studies primarily focus on how to achieve better performance in the international markets, but few centers on whether internationalization is a promising strategy for new ventures’ growth and development. Based on two pioneering frameworks Conservative, Predictable, and Pacemaker (CPP) model and the 7-P model, this paper fills this gap by analyzing how exporting exert heterogeneous effects on two types of growth, sales growth and employment growth. Accordingly, this paper aims to favor market-oriented new ventures to make a strategy on expanding international markets. Design/methodology/approach This study is based on firm-level data from the Chinese Industrial Enterprises Database. The year 2005 was used as the shock year. By conducting the propensity score matching method, 793 couples of matched new ventures were collected with sales growth and 686 couples with employment growth. The difference-in-differences method was applied to analyze the various influences that exporting has on new ventures’ sales growth and employment growth. Findings The main finding of this paper is that new ventures that exported can achieve better sales growth than their counterparts that only operated domestically, whereas new ventures that remain in the domestic market have no difference in employment growth from those that exported. Research limitations/implications This study shows that exporting is especially beneficial for market-seeking new ventures. Because the study is based on Chinese data, scholars of international business can conduct further research on other countries with different economic structures. Originality/value Theoretically, this paper contributes to both international business theory and entrepreneurship theory by combining the CPP model and the 7-P model. Practically, this paper shows that exports mainly benefit the sales growth of new ventures. This suggests that business practitioners should consider their growth goals before they choose to enter the global market.

Built to Sustain: The Effect of Entrepreneurial Decision-Making Logic on New Venture Sustainability

How entrepreneurs make entrepreneurial decisions to improve entrepreneurial performance is a popular concern in both theoretical and practical circles. Existing studies mostly analyze the effect of entrepreneurial decision-making logic on the survival and growth of new ventures from the perspective of financial performance, but few studies focus on new venture sustainability. Based on datasets from the first two survey rounds of CPSED (Chinese Panel Study of Entrepreneurial Dynamics), this paper selects a group of 259 entrepreneurs as a sample and uses logistic regression analysis as a research method. The purpose of this study is to examine the effects of entrepreneurial decision-making logic on new venture sustainability. There are two main entrepreneurial logics, namely effectuation and causation. The paper discusses causation in terms of four dimensions, namely goal orientation, expected returns, competitive analysis, and avoiding contingencies. It examines effectuation in terms of the dimensions of means orientation, affordable loss, partnerships, and leveraging contingencies. The empirical results show that goal orientation plays a negative role in promoting new venture sustainability, while avoiding contingencies has a positive influence on it. Partnerships are conducive to new venture sustainability, while means orientation and leveraging contingencies have a negative effect.

Are Start-ups Funded by Public Venture Capital Different? New Cross-Country Evidence from Micro-Data

Abstract Given the sizeable amount of public investments in venture capital (VC) in many countries, an emerging empirical literature investigates the impact of government venture funds on firm performance. We reassess the key findings of this literature using a new database on innovative start-ups and VC investments, which is unprecedented for granularity and comprehensiveness and covers a longer, more recent time period. Our analysis confirms the established finding that start-ups backed by government VC underperform start-ups backed by private investors. Differently from the extant literature, instead, we do not find that mixed public–private investments in the first stage are associated with additional private investments in later funding rounds. We interpret this as evidence that public VC is bounded to fail without an ongoing commitment throughout the process of development and growth of new ventures.

The early growth of start-ups: innovation matters. Evidence from Italy

PurposeDespite the relevance of innovation in entrepreneurship literature, empirical research on the innovation-performance relationship in start-ups is underdeveloped and shows controversial results. To bridge this gap, the aim of this paper is to investigate the role of innovativeness on new venture performance in the early stage of the life cycle.Design/methodology/approachRegression modelling and propensity score matching are used to reveal systematic differences in growth between innovative start-ups (ISUPs) and non-innovative start-ups. We use an ad hoc dataset obtained through merging the financial database AIDA with data from administrative sources (Italian Chambers of Commerce and the Italian Ministry for Economic Development).FindingsThe results show that differences in growth can be explained by the different levels of innovativeness in new ventures. Moreover, unlike in prior studies, the innovation inputs matter more than innovation outputs. Indeed, the results support the idea that innovation policies can contribute to maximising the potential of start-ups.Practical implicationsThe findings provide suggestions for policy makers and entrepreneurs to help firms configure ex ante appropriate actions to support the growth of new ventures in the start-up stage.Originality/valueThis study is the first to use the new objective measure of start-up innovation, available from the Italian LD 221 register. Second, different types of innovation are investigated as antecedents of firm growth. Third, we employ propensity score matching, which favours revealing systematic differences in growth between ISUPs and non-innovative start-ups. Fourth, the results of our study are the first to offer evidence on the effectiveness of the new Italian sustaining ISUPs policy.

Does ethics really matter to the sustainability of new ventures? The relationship between entrepreneurial ethics, firm visibility and entrepreneurial performance.

This paper aims to explore whether entrepreneurial ethics can improve entrepreneurial performance in new ventures. The dynamic impact of entrepreneurial ethics on entrepreneurial performance (survival and sustainable growth) is investigated from an institutional perspective, and the moderating role of firm visibility between them is explored. From different regions of China, 296 valid questionnaires are obtained and analyzed. We find that entrepreneurial ethics is adverse to the survival of new ventures but conducive to their sustainable growth of new ventures. We also find that high firm visibility can help entrepreneurial ethics be more effective in improving entrepreneurial performance. This study provides a new insight to explain the theoretical controversy of entrepreneurial ethics and provides guidance for the establishment of the internal ethical structures of new ventures. Suggestions for government and industry regulators on the management of entrepreneurial ethics are also provided.

A Multiple Mediation Analysis of the Growth in New Ventures

The objective of this study was finding the relationship between emotional intelligence and academic achievement. 384 students from secondary and high secondary school participated in this study. A significant relationship was found between academic achievement and Emotional Intelligence with the p-value = 0.01. The mean difference in emotional intelligence score of the students who secured high academic scores were found high. i.e. 58.57 as compared to the mean of emotional intelligence score of the students who secured low academic scores i.e. 56.93. A significant correlation was also found between Emotional Intelligence and academic scores(r=0.130). The results of the study suggest that higher emotional intelligence leads to better educational outcomes. An individual with a high level of Emotional Intelligence could have a strong, stable, and positive state of emotional well-being. Students who have a positive state of emotional wellbeing are more open to new experiences, which research has shown to lead to more learning.

An interactive perspective of managers’ functional experience and managerial ties of new ventures in transition economies

ABSTRACTUsing a sample of new ventures in China, this study examined the roles of the two different types of managerial resources, i.e. managerial ties and functional experience, simultaneously and interactively. It suggests that both of them have positive influences on new venture performance, and managerial ties remain the main factor that contributes to firm success. Political ties have a positive effect on sales growth but have an inverted U-shaped relationship with profit growth of new ventures, while the effect of business ties on firm performance is monotonic and positive. Finally, it suggests that the complementary effect occurs between political ties and functional experience, while the substitution effect occurs between business ties and marketing experience.

Technological Resources, Financial Slack and New Venture Growth: The Effect of Venture Origin

The paper examines how technological resources and financial slack affect the growth of new ventures (companies ten years or younger) depending on their origin. I posit that technological resources...

Is Wisdom of Crowds a Positive Signal? Effects of Crowdfinancing on Subsequent Venture Capital Selection

Venture capital investors, whose decisions are highly consequential for the survival and growth of new ventures, serve as gatekeepers for the diffusion of radical innovation. In recent years, crowdfunding – an innovation in the start-up finance arena – is emerging as a viable route for entrepreneurs to secure scarce early-stage financing. While venture capital remains the most important source of funding for young innovative firms in later stages, it is important to study the interactions between new and traditional forms of venture financing. This study examines the impact and signaling effects of prior (crowd-based) funding on subsequent venture capital funding rounds. Drawing on a choice experimental research design and data on 5,280 selection decisions by 120 venture investors, the results indicate that “the crowd” is generally seen as a negative signal, but that it can generate certain positive signals to which professional venture investors react in their decision making. We find causal evidence that young firms with a previous crowdinvesting (securities-based crowdfunding) are typically not selected by venture investors, whereas high pledges of (reward-based) crowdfunding, collected fast by start-ups with a B2C business model, can have a positive effect on VC managers’ funding decisions. Our findings also suggest that traditional forms of pre-funding, i.e., prior business angel investments, by contrast significantly increase the likelihood of subsequent financing rounds. Theoretical and managerial implications are discussed.

Total rewards components and work happiness in new ventures

PurposeThe purpose of this paper is to examine the influence of total rewards components (monetary, material and non-monetary) on happiness of employees working in Indian technology-based new ventures. Further, with the theoretical lens of social exchange theory, the mediating role of work engagement between total rewards perceptions and work happiness relationship has also been evaluated.Design/methodology/approachA survey of 201 employees working in Indian technology-based new ventures was conducted. Structural equation modeling was utilized to measure the proposed theoretical model. Regression analysis was conducted to test the direct effects of the hypothesized relationships. Sobel test and bootstrapping analysis were utilized to test the indirect effects of the proposed hypothesized relationship.FindingsThe findings supported the hypotheses that employees’ perceptions of total rewards have a significant impact on employee work engagement and happiness at work. However, individual component of total rewards, i.e. monetary rewards, demonstrated an insignificant impact on the employee work happiness. Work engagement was positively related to work happiness and fully mediated the relationship between total rewards perceptions and work happiness.Practical implicationsSpecial attention should be given to enhance the material and non-monetary rewards, specifically strengthening the feeling of appreciation, learning and growth opportunities and improving feedback functions. Given the challenges of new ventures (productivity and efficiency of talent), management of total rewards mix should be considered as the main concern of human resource (HR) managers and management (founders). The paper also provides important implications for designing a reward system that enhances employee productivity and efficiency in the unstructured and ambiguous work environment of new ventures.Originality/valueThe present study has significant contributions to the HR, entrepreneurship and positive psychology literature. It is an attempt to understand the association between total rewards components and work happiness via mediating mechanism, i.e. work engagement in new ventures. It also extends research in the entrepreneurial context. The emergence and growth of new ventures in India has meant a growing importance for understanding employees’ needs and expectations and guaranteeing their happiness. The findings of the study contribute to social exchange theory, Vroom’s expectancy and self-determination theory. This research is also a rare investigation of employees’ perspectives in an entrepreneurial context.