Venture Effort Research Articles

Unpacking the nonlinear effect of self‐efficacy in entrepreneurship: Why and under which condition more is not better

AbstractSelf‐efficacy exerts a positive impact on several self‐regulatory functions to support goal accomplishment and performance. However, in contexts that are characterized by uncertainty and ambiguity, such as entrepreneurship, there might be a tipping point to this relationship, prompting calls for deeper investigations on the nonlinear effect. In particular, the underlying mechanisms explaining why and when the nonlinear effect occurs are unclear. Drawing on theories of self‐regulation, we examine the nonlinear effect of entrepreneurial self‐efficacy on venture goal progress through the entrepreneur's active feedback‐seeking and venture effort. We also propose that the entrepreneur's state error mastery orientation moderates the nonlinear effect. Conducting a six‐wave repeated measures study among 84 early‐stage entrepreneurs in a business accelerator in the Philippines, we use a within‐person approach to test our hypotheses and research model. Results suggest that self‐regulatory mechanisms in terms of feedback seeking, effort, and state error mastery orientation help to unpack why and when self‐efficacy exerts a nonlinear effect on performance outcomes.

Wimp out or take off? Temporal dynamics in new venture effort after exposure to entrepreneurial obstacles

PurposeThe present research integrates conservation of resources theory (COR) and adaptation theory to investigate the dynamics of entrepreneurs' reactions to obstacles. Furthermore, this research explores whether entrepreneurs' effort allocations following an obstacle influence how entrepreneurs appraise subsequent loss-related events. Finally, this research seeks to understand why some entrepreneurs handle obstacles better than others by considering the role of optimism.Design/methodology/approachThis research utilized a longitudinal survey with 130 nascent entrepreneurs across 4 time periods. This research used a multivariate latent change analysis model to examine the temporal dynamics of new venture effort after exposure to obstacles.FindingsThe results indicated that entrepreneurial obstacles at time t were associated with decreased effort in new ventures at time t+1. Furthermore, new venture effort at time t was associated with decreased effort in new ventures at time t+1. The results also demonstrated that the allocation of greater effort may lead to a decrease in subsequent obstacle appraisals, a relationship that also varies as a function of nascent entrepreneurs' optimism.Originality/valueThis research extends the understanding of the dynamic pattern of reactions following exposure to entrepreneurial obstacles. The findings suggest that, rather than being straightforward, reactions are likely to ebb and flow over time.

Entrepreneurial Passion as Mediator of the Self–Efficacy to Persistence Relationship

What makes some entrepreneurs persist in their venture efforts while others quit? Self–efficacy has robustly been found to drive persistence, yet recent work suggests that affect, in particular entrepreneurial passion, may also enhance persistence. We empirically examine the possibility that the long–standing relationship between self–efficacy and persistence might be mediated by entrepreneurial passion. Using data from 129 entrepreneurs, we find that the self–efficacy to persistence relationship is mediated by passion for inventing and for founding but not by passion for developing firms. The passion of entrepreneurs appears to help explain the relationship between entrepreneurial self–efficacy and sustained entrepreneurial action.

How do feelings influence effort? An empirical study of entrepreneurs’ affect and venture effort.

How do feelings influence the effort of entrepreneurs? To obtain data on this issue, the authors implemented experience sampling methodology in which 46 entrepreneurs used cell phones to provide reports on their affect, future temporal focus, and venture effort twice daily for 24 days. Drawing on the affect-as-information theory, the study found that entrepreneurs' negative affect directly predicts entrepreneurs' effort toward tasks that are required immediately. Results were consistent for within-day and next-day time lags. Extending the theory, the study found that positive affect predicts venture effort beyond what is immediately required and that this relationship is mediated by future temporal focus. The mediating effects were significant only for next-day outcomes. Implications of findings on the nature of the affect-effort relationship for different time lags are discussed.

Corporate entrepreneurship and financial performance: The case of management leveraged buyouts

Leveraged buyouts (LBOs) have created much controversy in the literature, centering on their potential effect on a company's ability to innovate, engage in new ventures, and support entrepreneurial projects. Some believe that post-LBO debt reduces the financial resources available for entrepreneurial activities. Conversely, others argue that, despite the burden of debt, some LBOs provide executives with an opportunity to innovate and take risks (Malone 1989). However, past studies have focused primarily on changes in R&D spending and ignored other corporate entrepreneurship (CE) activities a firm might pursue. Additionally, these studies have not documented the changes in CE after a management-led LBO. Thus, past studies offer only a snapshot of the effect of LBOs on CE. Finally, earlier studies did not directly examine the association between changes in entrepreneurial activities after the LBO and changes in performance. To address these shortcomings, this study adds to the literature in three ways. First, it compares a company's pre- and post-LBO commitment to corporate entrepreneurship (CE), measured along two dimensions: innovation and venturing. Second, the study compares pre- and post-company performance levels. Third, the study shows how changes in a company's entrepreneurial activities impact performance. Therefore, the following hypotheses were tested: H1: A company's commitment to CE activities increases after an LBO. H2a: Company performance will be higher after an LBO than before the transaction. H2b: Post-LBO company performance will surpass that of the firm's industry average. H3: Changes in post-LBO CE activities (venturing and innovations) are positively associated with company financial performance. Data were collected from 47 LBO companies. Data were gathered from secondary sources to augment and validate interview data. Data collected from two executives per firm were averaged and the mean was then used in all analyses. Data covered the three years immediately before and three years immediately after the LBO. Companies in the sample were selected based on three criteria. First, at least 25% of the value of the LBO should have been paid by the firm's senior executives (vice presidents and higher). Second, the firm must have gone through a single LBO and must have remained private through the period of the study that eliminated reverse LBOs from consideration. Finally, the firm must have undergone its LBO at least three years before data collection. This provided an opportunity to observe changes in a company's CE and performance. Multivariate analysis of covariance (MANCOVA), analysis of covariance (ANCOVA), and multiple regression were used to test the study's hypotheses. The results supported H1, showing that LBO companies increased their commitment to developing new products; placed greater emphasis on commercializing their technology; enhanced the quality and size of their R&D function; and intensified their new venture efforts. However, R&D spending did not change significantly after the LBO. The results also showed that post-LBO company performance was significantly higher than pre-LBO levels and the industry's average, thus supporting H2a and H2b. Finally, as stated in H3, changes in a company's CE activities were significantly associated with changes in post-LBO company performance. Leveraged buyouts (LBOs) have created considerable controversy among scholars, executives and public policy-makers. Concern centers on the potential impact of an LBO on a company's willingness to innovate and engage in entrepreneurial ventures. To date, little empirical research has been devoted to documenting the changes that occur in a company's entrepreneurial behavior after an LBO and to linking these changes to company performance. Using data from 47 LBOs, this study's results lead to three conclusions. First, companies reported increases in their product development, technology-related alliances, R&D staff size and capabilities, and new business creation activities. Moreover, these firms did not change their R&D spending or the focus of R&D projects. Second, post-LBO company performance was higher than pre-LBO levels. Third, changes in corporate entrepreneurship activities after LBOs were significantly and positively associated with changes in company performance.

Finding and Commercializing New Businesses

OVERVIEW: A methodology for technology-based industrial companies is suggested that can systematically improve and diversify their business portfolios. The proposed Business Renewal function is based on lessons learned from successful and unsuccessful corporate-level new business development experiments over the past 30 years (e.g., the New Venture effort at Du Pont in the 1960s). The author argues that the business function described here, and built from historical trial and error, will be an effective approach for the successful worldwide business enterprises of the future. After defining the function, an ideal scenario for its design and implementation is discussed including its formation, charter, functions, organization, and staffing. Criteria for a business are discussed and the process for finding and developing such related diversifications is described. Several potential pitfalls in establishing and operating such a function are derived from past failures. Over the next decade I anticipate a significant resurgence of corporate-level efforts to bring new businesses into the corporation. I believe the basic methodology described in this article will become an important tool of the successful worldwide business enterprise. The proposal set forth here for a corporate business renewal function is based upon the experience of myself and many others in conceptualizing, initiating, operating, and studying corporate-level business groups in large and diverse industrial companies. At least 270 companies have experimented with these techniques since the early 1960s, and 65 have been identified and discussed in the literature. I have been intimately involved with the first of these, at Du Pont, and with four others not discussed in the literature. As many as 200 additional companies may have experimented with various aspects of corporate-level business renewal, particularly with internal venturing (1-4). The need for effective business is becoming increasingly vital to the success of U.S. industrial companies as the economy cycles, foreign competition becomes stronger, existing businesses mature, and profitability levels off. This was so in the 1960s and it is so in the 1990s. Corporations must continually renew and revitalize their business portfolios. They must deliberately encourage and nurture the nucleation of new businesses to rebalance the portfolio as existing businesses change, provide alternative growth mechanisms, improve financial performance, stimulate change and counter stagnation, improve their image, keep ahead of fast-moving competition, and provide an avenue for the diversification that is so essential in a changing environment. The process for renewing the business portfolio is one of change, which makes it inherently difficult. It is made doubly difficult because brining new businesses into the corporation is counter to the experience of most executives, who make their mark by excelling at managing and controlling established businesses. It has often been said that the special demands of managing a new business are exactly opposite those of managing an ongoing business (See 5, for example). These two very different management techniques have rarely coexisted in a company, and some think they cannot (6); yet they must if the company is to cope successfully with worldwide competition and change. There is a continuing and pressing need for a compatible innovation process that is less risky, more effective and less costly (7). RENEWAL IN THE CORPORATION Corporate business (CBR) as defined here is based on the much-discussed idea that the success of a large corporation's diversification and revitalization strategy rests upon the ability to simulate, within the firm, the key environmental characteristics of successful individual entrepreneurs (12-Z5) and venture capitalists (5,1-18) outside the firm. …

Time Perspectives in International Joint Ventures:

This paper recognizes a new era for international joint ventures (IJVs) in which venturers must agree to center the venture's efforts in developing new products, regardless of its previous primary purpose. After the reasons behind the cyclical evolution in the purposes and motivations of the venturers is reviewed, the paper argues that time is a multi-dimensional variable which every organization enacts in a unique fashion. IJVs must entrain the respective time reckoning systems of the partners if the venture is to avoid strategic and operational difficulties. Assuming that the venturers' temporal asymmetry yields asynchrony in the venture, the venturers' divergent time horizons are used to demonstrate the likely impact on marketing issues. This concept extends the literature on problems unique to IJVs by identifying an element which will help assess the compatibility of potential IJV partners throughout the life cycle of the venture's industry as well as provide a neutral issue on which all entities may ...