Habitual Entrepreneurs Research Articles

The Role of Past Entrepreneurial Experience in the New Venture Creation Process: An Empirical Case on the Figure of a Serial Entrepreneur

In this paper we focus on the concept of serial entrepreneur - an important type of habitual entrepreneur - in order to explain the phenomenon of a new venture creation. In particular, we suppose that prior entrepreneurial experiences of an entrepreneur play a main critical role in the development of successful entrepreneurial skills useful to a new venture. Based on qualitative methodology and following a longitudinal perspective of analysis, we strive to understand how serial entrepreneurs foster (or perhaps impede) the new venture creation and development, advancing propositions regarding the importance of prior entrepreneurial experience - in terms of social networks development - for accelerating the entrepreneurial learning process useful to the launch and development of a new venture.

From Human Capital to Social Capital: A Longitudinal Study of Technology–Based Academic Entrepreneurs

This article develops theory relating to how differences in the human capital of academic entrepreneurs influence their ability to develop social capital that can address the barriers to venture development. We examine the development of social capital by three types of academic entrepreneurs with differing levels of entrepreneurship experience: nascent, novice, and habitual entrepreneurs. Using a longitudinal study, critical differences are observed between the structure, content, and governance of their social networks. We propose that entrepreneurs with prior business ownership experience have broader social networks and are more effective in developing network ties. Less experienced entrepreneurs likely encounter structural holes between their scientific research networks and industry networks. Support initiatives help attract industry partners for novice entrepreneurs from engineering and the material sciences but academics based within biological sciences encounter greater difficulties building such ties. Regardless of academic discipline, business ownership experience appears essential to learn to build relationships with experienced managers and potential equity investors.

Entrepreneurial Backgrounds, Human Capital and Survival in the Early Years after Start-Up

We examine whether founders’ backgrounds influence new firm survival in the early years after start-up. We develop hypotheses linking founders’ backgrounds to pre-entry capabilities associated with entrepreneurial human capital, highlighting the cases of spin-offs and habitual entrepreneurs. In particular, the subject of unemployment-driven entrepreneurship is explored. We find that both general and specific human capital play a key role in enhancing the early survival chances of entrepreneurs who left their employment to found new firms (which we deem opportunity-based entrepreneurs), but have little effect on the early survival chances of unemployment-driven entrepreneurs (which we deem necessity-based entrepreneurs). We infer that pre-entry capabilities of entrepreneurs are a key factor for both opportunity discovery and implementation.

Entrepreneurship for the Public Good Summer Institute Syllabus

Course Overview Entrepreneurship is part of the American dream. According to the Appalachian Regional Commission, the best hope for stabilizing and diversifying Appalachia's economy lies in the creation and expansion of businesses that provide jobs, build local wealth and contribute broadly to economic and community development. The need to expand and support entrepreneurial activity as a means for revitalizing Appalachian communities led to the creation of Berea College's Entrepreneurship for the Public Good (EPG) program. By developing leadership and business skills, students will be empowered with the tools necessary to make a difference in their communities. There is a need for entrepreneurs with creative business concepts and the courage to turn these concepts into sustainable enterprises that create jobs and produce value for customers. The theme for the 2006 Summer Institute is Gandhi's Be the Change you Wish to See with the end goal to produce service-oriented leaders for Appalachia and beyond. The course is organized into three major components pursued in parallel. First, to gain an understanding of Appalachia, students, in classroom presentations, will discuss the history, culture, development and other issues facing the region. In addition, they will complement their classroom discussions with first-hand experience as they work closely with local community-partner teams to assess community needs and formulate projects to address these. In the second component, students will be exposed to entrepreneurship and work to develop their own entrepreneurial mindset. According to Ian MacMillian, the entrepreneurial mindset is a powerful way to stop thinking and acting by the old rules and start thinking with the discipline of a habitual entrepreneur. Whether a student pursues a career in a nonprofit organization, for-profit business, or starts a venture, the entrepreneurial mindset is a valuable tool used to see opportunity and create positive change. Students will be challenged to create a new business opportunity and complete a feasibility study on the potential of the business. Finally, students will increase awareness of and build their own leadership skills. In addition to classroom sessions, discussions, experiential learning opportunities and self assessments students will apply leadership lessons to their work in student teams and with community partners. To help facilitate students' learning, the EPG program has teamed with a number of faculty members from Berea College and notable guest speakers/authors to help teach the components of entrepreneurship, leadership, community development and Appalachia. The goal is to create an active learning environment where we can share our own experiences and learn from the experience of others.

Are Serial Entrepreneurs Different? An Examination of Australian Microfirms

Serial entrepreneurs are business owner-operators who commence, operate and dispose of a number of business ventures. Whilst most entrepreneurial activity is related to one specific venture, serial entrepreneurs progressively “work through” a variety of different enterprises over time. Although the existence of such continuous or habitual entrepreneurs has been occasionally noted, little is presently known about the nature of such enterprising individuals and their firms. This paper draws on responses by 199 micro-small firms in New South Wales, Australia, to construct a more detailed picture of serial entrepreneurs. It examines the background and characteristics of these owner-operators, some aspects of their current operations, and whether the businesses of these serial entrepreneurs are more likely to grow than other entrepreneurial ventures. The results indicate that serial entrepreneurs tend to be male, relatively well educated, aged between 30–49, and Australian-born. Many (just under half) come from a family with a prior background in business ownership. A third of them concurrently operate another business, and the majority have a strong growth orientation. Testing of data between serial and other entrepreneurs revealed some statistically significant differences between the two cohorts. Compared to other entrepreneurs, serial entrepreneurs are more likely to concurrently operate another business; less likely to operate their current venture as a home-based enterprise; and more likely to want to expand their business in future. Serial entrepreneurs, when compared to other entrepreneurs, also tend to be slightly older, are more likely to be male, and are more inclined to buy a business as a going concern.

Learning from past experience: Footnotes on mindfulness and habitual entrepreneurship

Although scholars have long recognized that failure is endemic to entrepreneurial activity, they have implicitly argued that prior entrepreneurial experience positively affects opportunity discovery and opportunity exploitation. In contrast, I argue that the degree of mindfulness with which entrepreneurs use prior experience can both help and harm their ability to discover and exploit opportunities. I draw on several literatures, including studies of habitual entrepreneurship, behavioral learning theory, and theories of mindfulness, to develop a framework that yields insights about how, when and why habitual entrepreneurs’ use of past experience might improve the performance of their new ventures.

Rethinking entrepreneurship methodology and definitions of the entrepreneur

Purpose– The paper aims to highlight the potential of paradigm interplay for providing greater insight into entrepreneurship research, in this case definitions of the entrepreneur.Design/methodology/approach– Literature from entrepreneurship, organisation studies and strategy highlights the potential of multiple paradigm research. We demonstrate how to conduct such a study through paradigm interplay by applying four contrasting research perspectives to four case studies of habitual entrepreneurs.Findings– The practical challenges of conducting multiple paradigm research are illustrated. A number of consistent themes across all four paradigms provide some insight into the reasons why it is difficult to agree on a single definition of the entrepreneur. Insights into the value and operationalisation of multiple paradigm research in the field of entrepreneurship are provided.Research limitations/implications– An exhaustive review of definitions of the entrepreneur is not provided. This is a study into how multiple paradigm research can be used to enrich understanding. Advice for the conduct of studies employing paradigm interplay is presented.Practical implications– The same individuals or firms can be included or excluded depending on the definition employed. This can lead to confusion particularly in establishing eligibility and applicability of specific policy measures. Full awareness of underlying assumptions is required.Originality/value– Paradigm interplay is a new approach for entrepreneurship research

A longitudinal study of habitual entrepreneurs: starters and acquirers

This study provides insights into the characteristics and behaviour of habitual starter entrepreneurs (i.e. individuals who have established more than one business) and habitual acquirer entrepreneurs (i.e. individuals who have purchased/acquired more than one business). A human capital perspective is utilized to illustrate that the human capital accumulated by a habitual entrepreneur may influence their subsequent behaviour. Prior business ownership experience is discussed in relation to an entrepreneur's human capital accumulation, as well as their search and business opportunity identification behaviour. A case study approach is used to develop propositions that highlight the similarities and differences between habitual starter and acquirer entrepreneurs. Implications for researchers and practitioners are discussed.

Differences Between Private Firms Owned by Novice, Serial and Portfolio Entrepreneurs: Implications for Policy Makers and Practitioners

W ESTHEAD P., U CBASARAN D. and W RIGHT M. (2003) Differences between private firms owned by novice, serial and portfolio entrepreneurs: implications for policy makers and practitioners, Reg. Studies 37 , 187-200. Policy makers can target "hard' (i.e. financial) and "soft' (i.e. technical) assistance to firms. Some policy makers and practitioners are considering whether resources could be more effectively utilized if they were targeted towards habitual entrepreneurs, rather than in the form of additional initiatives to increase the pool of pure nascent entrepreneurs and novice entrepreneurs. To inform this policy debate, similarities and differences between 354 firms owned by novice, serial and portfolio entrepreneurs in Scotland are highlighted with regard to the process of financing businesses, organizational capabilities as well as the size and performance of the surveyed businesses. Presented empirical evidence confirms that portfolio entrepreneurs have more diverse experiences and more resources than either serial or novice entrepreneurs. On average, portfolio entrepreneurs appear to offer more attractive growth prospects than other entrepreneurs. A case for targeted support tailored to the aspirations and needs of portfolio (and serial) entrepreneurs is presented.

Explaining business groups started by habitual entrepreneurs in the Italian manufacturing sector

The technical (plant) and legal (company) units normally used in official statistics do not take into consideration the phenomenon of business groups: i.e. sets of companies controlled by the same entrepreneur. The main aims of this paper are to assess the presence of such groups in the Italian small firm manufacturing sector and to examine the causes of their formation. Two data sets are used: the first is a representative sample of Italian manufacturing firms while the second is a small sample of groups localized in the Region of the Marches. They show that groups are widely present among small and medium-sized enterprises (SMEs). Starting from the premise that the group is the result of the expansion of activities controlled by the same entrepreneur, this paper reports a first attempt to discriminate among three alternative propositions regarding the causes of such growth and the reasons for the adoption of the group form: (1) as the result of the firm's growth policy; (2) as the result of entrepreneurial dynamics; and (3) as the result of the capital accumulation process on the part of the entrepreneur or his/her family. The empirical analysis on the whole favours the first hypothesis.

Entrepreneurial Processes of Business Cluster Formation and Growth by ‘Habitual’ Entrepreneurs

Previous studies on habitual entrepreneurs have not researched in any depth the processes and strategies associated with the growth of business clusters by habitual entrepreneurs. To gain insights into these issues, case studies were conducted with habitual entrepreneurs who owned high-growth businesses in Scotland. The research involved the analysis of life histories and business genealogies. A diversity was found in the backgrounds of the entrepreneurs studied, in the types of ventures founded, and in strategies adopted to build up their cluster of companies. Entrepreneurial motives, strategies, and practices by habitual entrepreneurs in building their business ownership clusters not only can differ markedly from one entrepreneur or type of entrepreneur to another, but also by individual entrepreneurs over time. Despite this diversity, little evidence emerged that the growth of business ownership clusters was motivated by orthodox corporate management principles, though corporate management practices were employed in some cases to subsequently assimilate the new venture into a cluster. On balance, entrepreneurial opportunism was more prevalent than planned “survivalist” diversification. Further, the concept of “entrepreneurial” performance is introduced to distinguish performance through creating a cluster of ventures rather than through growing a single one.

Novice, portfolio, and serial founders: are they different?

There is growing interest in entrepreneurs who have been involved in more than one venture, yet to date there has been relatively little theoretical development and systematic empirical examination of the topic. In particular, there has been little attention to the potential heterogeneity of habitual entrepreneurship. This study aims to contribute to this emerging area in two ways. First, it outlines a conceptual typology of habitual entrepreneurs who have founded, purchased, or inherited businesses. Second, the empirical part of the study focuses on owner-managers, providing an exploratory analysis of the characteristics and effects of independent business ownership by novice, portfolio, and serial founders. Novice founders are those that have no prior entrepreneurial experience as either a founder, an inheritor, or a purchaser of a business. Portfolio founders retain their original business and inherit, establish, and/or purchase another business. Serial founders are those who sell their original business but at a later date inherit, establish, and/or purchase another business. The study derives propositions suggesting differences among the three types of founders. At the individual founder level of analysis, similarities as well as differences in the personal background, work experiences, reasons leading to the start-up of businesses, and personal attitudes to entrepreneurship of these three types of entrepreneurs are explored. At the organizational level of analysis, finance, employment and performance differences among the businesses owned by the three types of entrepreneurs are presented. The issues are examined using a sample of entrepreneurs who were the principal owner-managers of independent businesses in Great Britain. The sample included 389 novice founders (62.6%), 75 portfolio founders (12.1%), and 157 serial founders (25.3%). No statistically significant differences were found among the three groups of entrepreneurs with regard to the main industrial activity, geographical location, and the age of their businesses. Univariate and multivariate tests were used to examine potential differences between the groups. The results of the study show significant differences between portfolio and serial founders with regard to their parental background, work experience, and their age when they started their first business. Differences were also found with respect to reasons leading to start-up, personal attitudes to entrepreneurship, and sources of funds used during the launch period of the surveyed business. These findings suggest that habitual entrepreneurs cannot be treated as a homogeneous group. The analysis, however, failed to find any significant differences between the performance of the surveyed firms owned by habitual founders and novice founders and between the two types of habitual founders. The findings of the study indicate for researchers that there is a need to carefully define the unit of analysis in any examination of entrepreneurs. In particular, there is a need to take note of the heterogeneity of types of entrepreneur and to consider the entrepreneur as the appropriate unit of analysis rather than simply the firm. Although this study focused on habitual founders of businesses, the theoretical section of the study also identified other types of habitual entrepreneurs, such as serial corporate entrepreneurs and serial management buy-out and buy-in cases. These other types of habitual entrepreneurs would appear to warrant further analysis. The findings of this study have a number of implications for practitioners, especially venture capitalists. The absence of significant performance differences between novice and habitual entrepreneurs, which is consistent with the results from other studies, emphasizes the need for venture capitalists screening potential investees not to rely solely on previous experience. The study also has implications for policy-makers, especially with respect to decisions concerning the allocation of resources to assist nascent entrepreneurs, novice entrepreneurs, and habitual entrepreneurs. The similarities in business performance among novice, serial, and portfolio entrepreneurs suggests that policy-makers need to be careful in targeting scarce resources. Most notably, targeting resources to encourage talented nascent entrepreneurs to become novice entrepreneurs may offer returns which are at least as good as targeting resources to more experienced entrepreneurs.

Venture capitalists and serial entrepreneurs

Habitual entrepreneurship is receiving growing attention, much of which has focused on entrepreneurs who have started more than one venture. This paper examines the importance of habitual entrepreneurs to the venture capital industry, with particular emphasis on those who have exited from an initial investment in the venture capitalist's portfolio, termed serial entrepreneurs. As venture capital markets mature, increasing numbers of entrepreneurs are likely to exit from their initial enterprises, creating a pool of entrepreneurs with the potential for embarking on subsequent ventures. Venture capitalists making investments may invest both in entrepreneurs starting new ventures and those who purchase a venture through a management buy-out or buy-in. On this wider basis, the paper develops a classification of types of serial venture. A number of issues are raised for venture capitalists, notably the relative attractiveness of reinvesting in exited entrepreneurs and the policy they adopt in tracking and assessing such individuals.The paper addresses venture capitalists' perspectives on investing in serial entrepreneurs based on a representative sample of 55 UK venture capitalists (a response rate of 48.7%, and a follow-up survey of those who had more extensive experience of serial entrepreneurs (23 respondents). The results of the survey show that despite a strong preference for using an entrepreneur who had played a major role in a previous venture, the extent to which exiting entrepreneurs are funded from their own portfolio again is limited, though there is more extensive use of such individuals in a consultancy capacity. In screening entrepreneurs exiting from previous ventures for subsequent investments, venture capitalists scored attributes relating to commercial awareness, experience in a particular sector, and personal ambition of the entrepreneur most highly.Venture capitalists do make extensive use of serial entrepreneurs who have exited from other venture capitalists' portfolios, primarily to lead management buy-ins. Indications from the survey are that venture capitalists rarely assess entrepreneurs formally at the time of exit and that it is unusual to maintain formal links with entrepreneurs after they have exited. These apparent shortcomings suggest that perhaps investment opportunities are being missed. Those venture capitalists preferring serial entrepreneurs generally had a larger volume of funds under investment and were rather older than those venture capitalists who do not prefer to use serial entrepreneurs, reflecting the possibility that longer established venture capitalists have had more opportunity and experience in relation to second-time entrepreneurs.Investment appraisal factors were subject to a principal components analysis to identify underlying dimensions/relationships between them. With respect to the general investment appraisal factors, five factors were identified. Two factors were related to track record; one of these reflected ownership experience, while the other represented management experience. The third factor was related to personal attributes such as age, knowledge, and family background. The fourth factor represented links to the funding institution, and the final factor (a single variable factor) concerned financial commitment. The principal components analysis for screening factors on management buy-ins produced a single factor comprising all variables. These factors were then subject to a multivariate analysis of variance (MANOVA), with preference for use of a serial entrepreneur as the independent variable. The results suggest that there are significant differences between venture capitalists who prefer serial entrepreneurs and those who do not in respect to their business ownership experience, the length of their entrepreneurial careers, and the number of their previous ventures.The results of the study have implications for practitioners. First, the findings emphasize the importance of not considering previous venture experience in isolation but in the context of other key investment criteria. Second, the lack of strongly greater performance from serial, versus novice, entrepreneurs further emphasizes the care to be taken in assessing experienced entrepreneurs. Third, the relatively low degree of formal and rigorous post-exit assessment and monitoring by venture capitalists suggests that important opportunities to invest in experienced entrepreneurs may be missed.