Venture Formation Research Articles

Governance and capabilities: Asia’s entrepreneurial performance and stock of venture forms

Asian economies display large evident differences in their entrepreneurial capabilities and performance. While existing explanations of these differences have largely focused on formal and informal background institutions, we instead emphasize differences in national stocks of venture forms. We suggest that alternate venture forms, because of their different governance characteristics, possess unique entrepreneurial capabilities and pursue distinct opportunities. Consequently, nations must possess a diverse and balanced stock of venture forms and have such forms engaged in the unique and complementary activities for which they are best suited. Viewed in this light, addressing national limitations in entrepreneurial performance requires changes in stocks of venture forms. In developing the policy implications of our analysis, we highlight the past successes and current development challenges of Japan, Korea, Singapore, Hong Kong, Taiwan, and mainland China.

The role of culture at different levels of analysis

The past few decades have seen a tremendous growth in work patterns that involve social actors from different cultural backgrounds interacting with one another, as shown by the increase in number and forms of international staff (Collings et al., 2007) or the rise in the formation of international joint ventures (Pothukuchi et al., 2002). Even actors whose scope of activity is limited to a domestic context are likely to be exposed to foreign cultures as they collaborate with coworkers, partners, suppliers and clients from different ethnic and cultural origins. Although research at the interface between the domestic and international context is still relatively scarce, for example as illustrated by the limited attention that local nationals have received in international assignment research (Toh and DeNisi, 2007; Vance and Ring, 1994), scholars widely agree that culture transcends and thus forms an integral part of many aspects in business. One stream of research has explored the multiple layers that constitute culture and that differ in terms of their degree of tangibility and visibility, distinguishing between observable artifacts and behaviors, deeper-level values and basic assumptions (e.g. Schein, 1992). In this vein, existing cross-cultural research has mainly conceptualized culture as a system of shared, underlying values that explain (Hofstede, 1980; Schwartz, 1994) but may also potentially vary from (House et al., 2004) behavioral practices. Another debate has centered on the multiple levels at which culture has been conceptualized to operate (Chao, 2000; Leung et al., 2005). It has been common to consider a hierarchy of levels in which lower levels are nested within higher levels, for example an individual working in a team that forms part of an organization that, in turn, operates in a specific national market. However, these scholars increasingly also point to the cross-level effects that occur when changes at one cultural level influence and reshape other levels. Although the resulting implications are highly relevant to the understanding of cultural phenomena at large, levels issues in cross-cultural research have thus far focused mainly on the different levels at which national culture influences behavioral outcomes, broadly distinguishing between individual, group, and organization-level effects. In this respect, national culture has been shown to have both direct and moderated effects on a wide range of individual and interpersonal attitudes, cognitions and behaviors (Tsui et al., 2007), impact on team processes (Gelfand et al., 2007) and influence various organizational systems, structures and practices, including capital International Journal of Cross Cultural Management 10(2) 131–136 a The Author(s) 2010 Reprints and permissions: sagepub.co.uk/journalsPermissions.nav DOI: 10.1177/1470595810376429 ccm.sagepub.com CCM International Journal of Cross Cultural Management

The problems of using social networks in entrepreneurial resource acquisition

This article identifies and classifies the problems perceived by entrepreneurs when they use social network ties (direct and indirect ties) to acquire resources during the early stages of new venture formation process. On the basis of field interviews with 128 high-tech entrepreneurs in Singapore, the author finds that entrepreneurs have a high level of awareness of the potential problems of social networks, though they rely extensively on network ties. Substantial variations occur across the three dimensions of potential problems (information, influence and solidarity) and three types of resources (financial resources, key team members and lead users). This study offers a more complete understanding of how and why entrepreneurs use social networks and the influence of their use on the entrepreneurial process.

Technological joint venture formation under the real options approach

Technological joint ventures, as powerful mechanisms to attain innovation, have become commonplace. Firms form TJVs in an effort to access future technological opportunities without losing flexibility in uncertain contexts. The real options approach allows the essence of such managerial thinking to be captured, although research in this line remains scarce. Drawing on the real options approach and using an eight-year panel of 4050 Spanish manufacturing firms, we examine under which conditions firms form technological joint ventures. We find that a firm's propensity to form technological joint ventures is positively related to its absorptive capacity and to the degree of environmental technological uncertainty, and negatively related to the risk of pre-emption by rivals and the existence of opportunity costs. Our study contributes to bridging the gap between finance theory and strategic analysis. In addition, it shows practitioners the applicability of the real options approach for decision-making. Results suggest that public policies should particularly, although not exclusively, foster participation of young and small firms in technological joint ventures. We also suggest using managerial perceptions as a guide for channeling public grants.

An invitation to reproducible computational research

1. I NTRODUCTION I am genuinely thrilled to see Biostatistics make a formal venture into computational reproducibility, and I congratulate the editors of Biostatistics on taking this much needed step. I find the policies being adopted by Biostatistics eminently practical, and I hope that many authors will begin using this option. In my comments, I will try to explain how I came to believe in the importance of reproducibility and why I think others may find it in their interest and in the community interest. I will then briefly mention some efforts in other disciplines.

University capabilities in facilitating entrepreneurship: A longitudinal study of spin-off ventures at mid-range universities

This paper investigated how universities facilitate the process of spin-off venture formation based on academic research. Building on a capability perspective, we add to the literature on university characteristics and resources by exploring how the university context impacts the entrepreneurial process. We based our study on two mid-range universities and followed the start-up process of four spin-off ventures. Based on the results of our longitudinal study, we propose a set of three university capabilities that facilitate the venture-formation process: (1) creating new paths of action, (2) balancing both academic and commercial interests, and (3) integrating new resources. Each capability is particularly important for specific phases in the venturing process. Our findings suggest that these capabilities are dependent on prior spin-off experience and reside within several actors both inside and outside of the university. Furthermore, universities with weaknesses in the identified areas can take strategic action to develop these capabilities to some degree.

Internationalisation of family businesses – evidences from joint venture formations at Danfoss

This paper focuses on the international joint venture formation process of family businesses. The reason behind Danfoss' decision to cooperate with two competing family businesses in Japan and China as well as two non-family businesses in Canada and Great Britain will be analysed. In-depth qualitative interviews reveal the driving forces on both sides and show how the psychic distance can be reduced between the different parent firms including the Joint Venture (JV) child. The purpose of this study is to compare equal split or equity joint ventures of non-family and family firms regarding the formation process, including competences and cultures. The study indicates which core competences of a family business matter when cooperating in equal split joint ventures. Implications for family business owners and ideas for future research are discussed.

Learning from Broadcasts of Project Participation: The Selection of Second-Tier Actors During Project Venture Formation in the Movie Industry, 1931-40

The disintegration of project ventures after task completion creates challenges for the retention and transfer of knowledge to future projects. Consequently, it is not clear to what degree and under what conditions learning across projects occurs in project-venture settings. This study argues that the industry-wide broadcasting of project participants’ identities plays a key role in supporting performance-outcome learning during the formation of project-venture teams. In a stratified random sample of 233 U.S. movie projects between 1931-1940, performance-outcome learning affected the selection of second-tier participants. Such learning, however, was conditional on the industry-level availability of both project participant information and project performance for prior projects. Industry-wide broadcasting of participants’ identities by individual projects in the form of on-screen credits was sufficient to enable this form of performance outcome learning in the movie industry. The emergence of the internet has created similar industry-wide broadcasting opportunities for other project venture systems.

WITHDRAWN: The effects of founding team diversity and social similarity on venture formation

WITHDRAWN: The effects of founding team diversity and social similarity on venture formation

Joint venture instability and monitoring

PurposeThe purpose of this paper is to build a theory of joint venture formation and instability based on synergy and monitoring.Design/methodology/approachThis problem is formulated as a dynamic game and solved using the notion of subgame perfect Nash equilibrium.FindingsIt was found that monitoring problems may prevent the joint venture from forming at all. Moreover, joint venture formation usually involves over‐monitoring, and ex post could involve cheating by one, or both the firms. Faced with the possibility of over‐monitoring, firms may choose to under‐invest in improving the input quality. The paper develops some testable implications of this theory.Originality/valueThe contribution of this paper is both methodological, as well as in terms of generation of new insight. It provides a framework that allows one to analyze issues like both sided moral hazard, as well as monitoring in joint ventures. New insights are that monitoring issues can take several forms including over‐ and under‐monitoring by partner firms, and, there is a linkage between such monitoring problems and joint venture instability.

Convergência Tecnológica e a Formação de Novos Tipos de Alianças Estratégicas: uma análise do desenvolvimento dos Personal Digital Assistant (PDAs)

As associações entre empresas não são fato novo. Todavia, principalmente a partir da década de 1980, as influências da internacionalização da competição e as pressões tecnológicas impuseram grandes mudanças na conformação desses arranjos. Verificou-se recentemente um forte crescimento dos acordos cooperativos entre firmas. Aqueles acordos que priorizam estratégias de aperfeiçoamento em termos de competência tecnológica passaram a ter grande participação na concorrência. Este artigo usa o conceito de redes de empresas, que permite a percepção de que é viável basear-se na competência de outras empresas para concorrer com maior eficácia, para a análise da natureza das alianças estratégicas a partir da convergência tecnológica em multimídia. Mais especificamente, o artigo analisa a formação da joint venture entre a fabricante de celulares Ericsson e a fabricante dos produtos eletrônicos de consumo amplo Sony para o desenvolvimento da terceira geração de celulares.

Encouraging Enterprise for Ph.D. Students and Postdoctoral Fellows

Encouraging Enterprise for Ph.D. Students and Postdoctoral Fellows

The Spatial Dispersion of Informal Investment at a Regional Level: Evidence from the UK

Although there have been various studies on the geographical specialization of venture capital in the UK, there remains a gap in the research on regional differences in the behaviour of those informal investors who make a significant contribution to the funding of entrepreneurial ventures. Utilizing a unique data set from the Global Entrepreneurship Monitor project, this study will estimate the level of informal investment activity across the different regions of the UK. The relationship between informal investment and early stage formal venture capital availability is also examined to determine which areas display the greatest funding gaps in the provision of equity finance. It shows that while formal and informal investments are heavily concentrated in highly prosperous areas such as London and the South East of England, informal investments make a larger relative contribution to early stage and expansion equity capital within poorer regions.

Towards a Dynamic Model of Founding: Unlocking the Origins of Organizational Variation - Executive Summary

How do entrepreneurs make strategic decisions during new venture formation? This is an important question because the strategies that entrepreneurs select have critical short- and long-term implications (Eisenhardt and Schoonhoven, 1990). In the short-term, an entrepreneur's strategy choices will affect the new venture's likelihood of survival. In the long-term, the entrepreneur's strategy choices will affect the direction of the new venture's growth as well as its level of competitive advantage within the industry. This phenomenon, whereby initial choices are consequential for a new venture's short- and long-term existence, is termed an effect (Stinchcombe, 1965). The occurrence of imprinting effects has been demonstrated by an abundance of empirical research across a variety of industry settings (e.g., Romanelli, 1989). In some cases, research has even shown that imprinting effects exhibit positive feedback, such that initial choices become more influential over time (Eisenhardt and Schoonhoven, 1990). While a great deal of research has shown the importance of imprinting effects for a new venture's development, there has been relatively little research that explores how entrepreneurs come to the initial decisions that underlie these effects. Although little is known regarding the factors that affect an entrepreneur's strategic decision-making during new venture formation, past evidence points to several factors that may be influential. In particular, past research highlights both factors in the environment (e.g., public policy, competitive pressure, and product technology) as well as factors internal to the new venture (e.g., personality and knowledge of the founder and founding team) (e.g., Shane and Khurana, 2003). In this dissertation I focus on knowledge rather than the environment or personality characteristics for two primary reasons. First, while the nature of the environment can explain general trends within an industry (e.g., overall entrepreneurial activity), it cannot explain why specific individuals respond differently to the same industry environment. Second, the research on personality characteristics has generally yielded mixed results suggesting, at best, a weak relationship between personality traits and decision-making outcomes (Aldrich, 1999). In this dissertation, I examine how an entrepreneur's prior knowledge relates to the strategy choices he/she makes during new venture formation. I also examine how the founding team members affect the entrepreneur's decision-making. I first develop a set of predictions and then test these predictions using data from 120 new ventures in the United States air transportation industry from 1995-2005. In the following pages I present an executive summary that reviews the key predictions and findings from my research. I conclude the executive summary by discussing the implications of my research for practicing entrepreneurs, investors, and public policy.

Tariff Jumping and Joint Ventures

It is well known that high tariffs tend to induce foreign direct investment (FDI) by encouraging the investors to jump the “tariff wall.” This paper examines the economic interaction among tariffs, FDI, and international joint ventures (IJV). We show that in the presence of a strong local competitor, even if opening a fully owned subsidiary is not profitable to a foreign firm, the foreign firm may still enter the host country market through IJV. However, IJV is not profitable for sufficiently high tariff rates. Hence, we argue that liberal trade policies may attract foreign investments through the formation of joint ventures.

Entrepreneurial couples in new venture creation: reflections on expectations, reality and family relationships

Three hundred and forty-four north Louisiana, USA, entrepreneurial couples were interviewed to determine the impact on entrepreneurs and their spouses of starting and managing a new venture. There was commonality between entrepreneurs and their spouses related to expectations and outcomes for and from the new venture. More couples actually felt happier and financially better off after starting and running a businesses than they had expected. Some realised that the time and effort required were important negatives. Most entrepreneurs and their spouses would start a new venture again given the learning that occurred in the new venture formation process.

The antecedents of foreign joint venture formation in transition economies – a longitudinal analysis

This research can be broadly characterised as considering the reasons a firm from a developed nation would seek to invest in a transition economy. Where research has been undertaken into the determinants of investment from the recipient point of view, it has tended to investigate the decision in terms of national systems (Bevan and Estrin, 2000; Resmini, 2000) rather than in terms of the characteristics of those individual firms that receive the investment (Campos & Kinoshita, 2002; Janicki & Wunnava, 2004).

Learning In Hybrid-Project Systems: The Effects of Project Performance on Repeated Collaboration

This study advances contingency theories of performance-outcome learning in hybrid-project systems, in which both project participants and superordinate organizations influence the formation of project ventures. We propose that performance-outcome learning depends on the perceived relevance of prior performance and on organizational control over project participants. We examine this framework using data on 239 U.S. movie projects from the years 1931-40. In keeping with our theory, higher project performance led to future collaborations with the same partners, contingent on prior collaborations, project similarity, and organizational control. Our findings imply distinct patterns of network evolution and unfolding adaptation of hybrid-project systems through slow-moving, local adjustments.

Comparative Entrepreneurial Cognitions and Lagging Russian New Venture Formation: A Tale of Two Countries*

Changes in Russian government and economic systems over the last 15 years led to expectations of increased entrepreneurial activity. Yet potential entrepreneurs are deciding to venture at a much lower rate than anticipated. New venture creation in Russia is occurring at a rate that is considerably lower than that of the United States and Western Europe.This research examines cognitive similarities and differences among Russian and U.S. entrepreneurs and nonentrepreneurs to find a possible explanation. Multivariate analysis of variance and multiple discriminant analysis results found similarities between U.S. and Russian experts and U.S. and Russian novices with respect to arrangements, willingness, and ability scripts, but differences in these scripts were found between experts and novices, particularly in Russia. Implications for entrepreneurship cognition research and public policy are discussed.

VALUATION BIASES AND THE PERSISTENCE OF INTERNATIONAL JOINT VENTURES.

The article discusses the formation and management of international joint ventures (IJVs). Reasons for choosing an IJV as a vehicle for expansion into foreign markets are noted. It is said that IJV...