Would-be Entrepreneurs Research Articles

Viability of Self-Employment

Empirical studies on self-employment uniformly cite the high mortality rate in both developed and developing countries. Several studies on the entry into self-employment incorporate a savings constraint. Policy makers and international aid agencies have responded by providing credit to would-be entrepreneurs yet the mortality rate persists. We formulate a model of the viability of self-employment that incorporates the impact of cost perceptions at the time of entry. We use the ability to meet monthly loan repayment ratios as a measure of viability since loans are usually the largest explicit cost. Our results have important policy implications on the desirability of interest rate subsidies, the size of initial capital relative to market size and criteria for granting additional credit to existing enterprises.

What's New in the Launching of Start-ups?

The exploitation of knowledge and experience is increasingly important to companies operating in the globalized economy, faced with intense competition and striving to make headway in difficult markets. If such exploitation is important for existing companies, able to develop their own knowledge from previous experience, it is critical for new ventures that have no direct real-world experience on which to draw. Would-be entrepreneurs now operate in a very different business environment from that of their predecessors and they need new forms of entrepreneurship education and new methods of pre-launch trial and analysis for start-ups. The transition from ‘nature’ to ‘nurture’ in the approach to and perception of entrepreneurship, coupled with the increasingly engaged economic role of higher education institutions and research centres can be manipulated effectively to improve the prospects for success of high-expectation entrepreneurs. This article demonstrates how Curley and Formica's model of the experimental laboratory for would-be entrepreneurs responds to the new business environment and the new thinking.

Resourcing Lab Experiments for New Ventures: The Potential of a Start-up Database

Curley and Formica introduce a new concept for high-expectation start-ups, involving the use of ‘laboratory experiments’. These experiments prepare potential entrepreneurs for the challenges they will face by providing a combination of interactive business experience and an opportunity to deepen their knowledge of their future markets. This article argues that a database providing information about previous start-ups could be of great use to the would-be entrepreneur and would enhance the value of the experimental phase. The database would provide instant access to information that would contribute to the experimental process. Ready access to the histories of previous start-ups would help new entrepreneurs to learn from the successes and failures of others. In this respect it would increase their chances of turning their ambitious business ideas into practical realities outside the simulation bubble.

Pre-emptive or Arbitrary

This article analyzes the determinants of the variation in the levels of lethal violence against civilians during a civil war. It departs from the usual explanations of this variation, advancing two different logics to account for civilians' victimization: strategic violence directed to avoid rebellions by targeting would-be political entrepreneurs and violence as a consequence of the breakdown of the state's authority. It uses a new data set on violence against civilians during the Spanish Civil War of 1936 to 1939.

Financing Constraints and Entrepreneurship

Financing constraints are one of the biggest concerns impacting potential entrepreneurs around the world. Given the important role that entrepreneurship is believed to play in the process of economic growth, alleviating financing constraints for would-be entrepreneurs is also an important goal for policymakers worldwide. We review two major streams of research examining the relevance of financing constraints for entrepreneurship. We then introduce a framework that provides a unified perspective on these research streams, thereby highlighting some important areas for future research and policy analysis in entrepreneurial finance.

The illusions of entrepreneurship: the costly myths that entrepreneurs, investors, and policy makers live by

There are far more entrepreneurs than most people realize. But the failure rate of new businesses is disappointingly high, and the economic impact of most of them disappointingly low, suggesting that enthusiastic would-be entrepreneurs and their investors all too often operate under a false set of assumptions. This book shows that the reality of entrepreneurship is decidedly different from the myths that have come to surround it. Scott Shane, a leading expert in entrepreneurial activity in the United States and other countries, draws on the data from extensive research to provide accurate, useful information about who becomes an entrepreneur and why, how businesses are started, which factors lead to success, and which predict a likely failure. The Illusions of Entrepreneurship is an essential resource for everyone who has dreamed of starting a new business, for investors in start-ups, for policy makers attempting to facilitate the formation and survival of new businesses, and for researchers interested in the economic impact of entrepreneurial activity. Scott Shane offers research-based answers to these questions and many others: * Why do people start businesses? * What industries are popular for start-ups? * How many jobs do new businesses create? * How do entrepreneurs finance their start-ups? * What makes some locations and some countries more entrepreneurial than others? * What are the characteristics of the typical entrepreneur? * How well does the typical start-up perform? * What strategies contribute to the survival and profitability of new businesses over time?

Determinants of entrepreneurial activities in China

The institutional environment – including protection of private properties and contract enforcement – has been rather unfavorable for the emergence and development of China's private enterprises. This is in sharp contrast to the case of the developed economies where the institutional environment is conductive to the entrepreneurial activities and only the personal attributes of would-be entrepreneurs determine their entrepreneurship decision. We thus propose a theoretical framework for the entrepreneurship decision in China with a focus on the role of the institutional environment. Using a life-histories survey data of 2854 respondents from twenty cities in China, we find strong support for the impacts of the institutional environment and its interactions with other determinants of entrepreneurship decision.

The innovative brain

'Hot' decision-making, involving the evaluation of reward and punishment, is essential to the entrepreneurial process and may be possible to teach, argue Barbara Sahakian and her coauthors. Comparisons of the performance of successful entrepreneurs and more conventional managers in cognitive tests could help define the nature of 'functional impulsivity'. Then, perhaps, would-be entrepreneurs will be able to learn the art of 'hot' decision-making characteristic of the breed.

Venture Capital, Entrepreneurship, and Regional Economic Growth

Using a panel of U.S. metropolitan areas from 1993 to 2002, we find that an increase in the local supply of venture capital (VC) positively affects (i) the number of firm starts, (ii) employment, and (iii) aggregate income. Our results remain robust to a wide variety of specifications, including ones that address potential endogeneity in the supply of venture capital. The magnitudes of the effects, moreover, imply that venture capital stimulates the creation of more firms than it directly funds. That result appears consistent with either of two mechanisms: One, would-be entrepreneurs that anticipate a future need for financing more likely start firms when the supply of capital expands. Two, companies funded by venture capital may transfer tacit knowledge to their employees thereby enabling spinoffs, and may encourage both their own employees and others to become entrepreneurs through demonstration effects.

Risky choices in new venture decisions—experimental evidence from Germany and the United States

This article presents a model of entrepreneurial risk-taking behavior in different cultural settings. Young entrepreneurs and entrepreneurship students in Germany and the United States were tested by means of an experimental design to evaluate the underlying model and to identify cultural differences in the decision to start a company. The central research question states: How does the cultural context influence the decision-making and risk-taking behavior of entrepreneurs? The overall result of the international sample indicates that the significant differences between entrepreneurs and nonentrepreneurs in risk-taking behavior are culturally driven. Thus, this study extends earlier US studies that distinguish between risk propensity and risk perception in respect of entrepreneurs’ risk behavior within an international, intercultural sample. Furthermore, the survey researches the influence of the personal traits overconfidence and worry. From a managerial perspective, “would-be entrepreneurs” can use the conducted experiment as an individual diagnostic instrument, making it possible to identify individual anomalies in risk and decision-making behavior and, consequently, contribute to a better understanding of suitable entrepreneurial behavior as well as to reveal discrepancies between self-assessment and actual behavior.

DO THEY SEE WHAT WE SEE?: A CRITICAL NORDIC TALE ABOUT PERCEPTIONS OF ENTREPRENEURIAL OPPORTUNITIES, GOALS AND GROWTH

This paper serves as an overview of a decade of the authors' theoretical reviews, participant observations, empirical studies, quasi-experimental research, qualitative interviews, personal consulting, firm incubation, and action research with firms, clusters, and regional groups in both the information technology and biotechnology sectors in Finland. Interpretations of our findings are told using a narrative format, based on Nordic mythology. This story-telling approach is used to express the perceptions of entrepreneurship by various players in society. It discusses what happens when public policies are based on perceptions very different from, and in potential conflict, with those of the would-be entrepreneur. The paper addresses the current and very real problem in many Nordic countries where enormous efforts are invested in pushing technology creation assuming at the simultaneous creation of entrepreneurial high growth firms. Results show extremely low entrepreneurial activity and declining interest towards entrepreneurship as a career alternative. For those firms that do emerge growth does not seem to be the primary goal. The conclusions are discussed in terms of the long term prognosis for developing an entrepreneurial society in economically advanced nations to take advantage of the technological developments supported by governmental research funding.

Entrepreneurship with Special Reference to the Status of Small Business Entrepreneurship: A Case Study Of Gondar, Ethiopia

This paper looks at the concept of Small Business Entrepreneurship in Gondar, Ethiopia, reviewed its performance using some basic indicators. The study revealed that entrepreneurship development is essential not only to solve the problem of economic development but also to solve the problem of unemployment, unbalanced area development, concentration of economic power and diversion of profits from traditional sources or avenues. It noted that financial and physical facilities are not the only crucial inputs in the development of small business entrepreneurship, other inputs like government and support service systems. The small business enterprises and entrepreneurs faced the main problems of poor start-up capital and other financial constraints, technological obsolescence, poor managerial skills and knowledge, irregular supply of raw materials. Other problems include, poor marketing techniques and strategies, unorganized nature of operations, sole proprietorship dominated ownership structure, unskilled labour force and family management dominance, other infrastructural deficiencies and poor government support and encouragement, etc. It recommended that to improve the functioning and performance of small business entrepreneurship in Gondar, the following issues should be critically addressed: liberalization of government policies, attitudinal changes and proper training and development of existing and would-be entrepreneurs in the use of latest technology. Other recommendations include, 20 adequate training on modern management practice on human resource, financial, marketing, production, and innovation, effective management information systems, setting up an apex institution to regulate and monitor entrepreneurship education, etc. African Research Review Vol. 1 (2) 2007: pp. 19-48

Pre-start-up formal business plans and post-start-up performance: A study of 116 new ventures

This study examined whether writing a business plan before launching a new venture affects the subsequent performance of the venture. The dataset comprised new ventures started by Babson College alums who graduated between 1985 and 2003. The analysis revealed that there was no difference between the performance of new businesses launched with or without written business plans. The findings suggest that unless a would-be entrepreneur needs to raise substantial start-up capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan before opening a new business.

Fickle Rooster Productions: Making a Business from a Hobby

It is the dream of many would-be entrepreneurs to slide seamlessly from their pursuit of a favourite hobby into the establishment and operation of a business based on their favourite pastime. The creative industries, including arts and crafts, designer fashion, film, theatre and the performing arts, broadcast media and recorded music (Henry and Johnston, 2005) are a particularly fertile area for the extension of personal hobbies into new businesses. Indeed, being a creative micro-business 'seems to be the ultimate role model in business nowadays' (Poettschacher, 2005, p 177). Focusing on one of the creative industries, recorded music, this case explores the motivations, early setbacks and accomplishments of a business founder within the first three years of trading, as well as providing an account of a business's changing trading focus over time. The case highlights the many and various challenges faced by a new business owner and suggests that business development is often beset by discontinuous and critical incidents.

Entrepreneurial processes and the social construction of opportunity

In contrast to structurally-determinist and cognitive/agency-oriented views of opportunity recognition, it is argued that opportunity formation is relationally and communally constituted — an insight that is not recognized in descriptive or linear process models of opportunity recognition. To arrive at this claim, use is made of social constructionist ideas. These ideas have been frequently applied in entrepreneurship studies but less attention has been given to the relational aspects of social constructionist thinking particularly with regard to opportunity formation processes. To aid this line of enquiry an analysis is undertaken of a sibling-autobiographical account of a high-profile business venture, Coffee Republic. This account has been crafted by the sibling partnership with a particular audience in mind (the would-be entrepreneur) with guidelines and principles on how ‘anyone can do it’. However, it is not utilized here as a good specimen of business venturing to be probed for particular (hidden) meanings. Instead, the account is evaluated in order to illustrate how individualistic statements about opportunity discovery can be reconceptualized as relationally and communally constituted – an emphasis which is important for widening our theoretical understanding of the activities that we label entrepreneurship.

Counseling would‐be entrepreneurs

The aim of this article is to provide counselors, academic advisers, and career coaches with a basic understanding of entrepreneurial careers. After presenting a brief history of entrepreneurship, the authors discuss various psychological, social, and economic factors associated with selecting, preparing for, and remaining successful in an entrepreneurial career. They also discuss various ways counselors can help aspiring entrepreneurs achieve their goals. An extensive annotated bibliography of online entrepreneurship resources is included.

ViPiA: A Project for European Entrepreneurship

The Virtual Pre-Incubator Accelerator (ViPiA) is a two-year project funded by the European Commission. The main goal of the programme is to create a training package for would-be entrepreneurs to assist them in developing their new venture concepts to a level at which they become attractive to potential investors. This paper describes and discusses the ViPiA project and the approach adopted in the development of its virtual learning network. The network, accessed via the ViPiA portal, offers support to entrepreneurs by providing valuable services to help them transform their ideas into successful start-ups.

Virtual Pre-Incubator: a new entrepreneurship approach

This paper presents and analyses the Virtual Pre-Incubator approach. In brief, Virtual Incubation can act as a stepping stone for potential pre-incubator and incubator clients. On the basis of the above-mentioned approach, a pilot project is established with the purpose of providing an environment where all would-be entrepreneurs, with a feasible business idea will be involved in a learning process that would help them to acquire the tools and skills required to implement their ideas for a successful start-up.

Knowledge and expertise for high-technology entrepreneurship: a tale of two sectors

The last three decades have witnessed fundamental structural changes in many western economies. Traditional sectors have seen dramatic reductions in manpower needs and large organisations have reorganised and rationalised. As in-house jobs have disappeared, opportunities for entrepreneurial, small firms to meet the outsourcing needs of growing numbers of organisations have increased dramatically. Agencies and government departments concerned with economic development and boosting levels of new firm formation are keen to encourage would-be entrepreneurs to establish ventures. While the provision of external support and the role of mentors through the venture creation process are valuable inputs into the process, the entrepreneur is arguably the most important resource. Understanding the role of the entrepreneur in the start-up process, and the knowledge and skills which he requires to perform his role effectively, will assist those seeking to enhance levels of new venture creation. This paper explores the sources and development of knowledge and skills in a group of 94 high-technology small firm founders in software and electronics. Marked differences are apparent in the background and experiences of entrepreneurs in the two sectors, as the founders have travelled contrasting routes to arrive at the entrepreneurial starting line. Findings are of significance for agencies supporting technology-based firm development and would-be entrepreneurs considering enterprise creation opportunities.

Exploring the pre-entrepreneurial careers of high-technology entrepreneurs

The encouragement of high-technology entrepreneurship is an increasing focus of enterprise agency activities in growing numbers of developed economies. Universities are playing a role in the development of entrepreneurial capital through a range of initiatives and programmes targeted at enhancing levels of enterprise awareness and skills at undergraduate and postgraduate levels. The effectiveness of such programmes is sometimes judged by the number of students starting a business when they graduate. This paper argues that such an approach fails to understand the nature of the pre-entrepreneurial career. Evidence is presented from a study of entrepreneurs in the electronics and software sectors, which demonstrates that sizeable numbers of firms are established by those in mid-career, after a significant time working as an employee. During this period, the entrepreneur gains knowledge and develops skills and networks, which facilitate the establishment of well-conceived and sustainable ventures. This paper suggests that secondary and tertiary education and workplace-based learning are complementary components in the development of would-be entrepreneurs, and that the numbers of individuals able to embark directly on an entrepreneurial venture will be very limited.