The role of informal capital on new venture formation and growth in China

We examine how institutional factors may affect microlevel career decisions by individuals to create new firms by impacting their ability to exercise entrepreneurial preferences, their accumulation of human capital, and the opportunity costs associated with new venture formation. We focus on an important institutional factor—immigration-related work constraints—given that technologically intensive firms in the United States not only draw upon immigrants as knowledge workers but also because such firms are disproportionately founded by immigrants. We examine the implications of these constraints using the National Science Foundation’s Scientists and Engineers Statistical Data System, which tracks the careers of science and engineering graduates from U.S. universities. Relative to natives, we theorize and show that immigration-related work constraints in the United States suppress entrepreneurship as an early career choice of immigrants by restricting labor market options to paid employment jobs in organizational contexts tightly matched with the immigrant’s educational training (job-education match). Work experience in paid employment job-education match is associated with the accumulation of specialized human capital and increased opportunity costs associated with new venture formation. Consistent with immigration-related work constraints inhibiting individuals with entrepreneurial preferences from engaging in entrepreneurship, we show that when the immigration-related work constraints are released, immigrants in job-education match are more likely than comparable natives to found incorporated employer firms. Incorporated employer firms can both leverage specialized human capital and provide the expected returns needed to justify the increased opportunity costs associated with entrepreneurial entry. We discuss our study’s contributions to theory and practice.

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The Role of Accelerator Designs in Mitigating Bounded Rationality in New Ventures

Administrative Science Quarterly ◽

10.1177/0001839218782131 ◽

2018 ◽

Vol 64 (4) ◽

pp. 810-854 ◽

Cited By ~ 25

Author(s):

Susan L. Cohen ◽

Christopher B. Bingham ◽

Benjamin L. Hallen

Keyword(s):

Bounded Rationality ◽

New Ventures ◽

Multiple Case Study ◽

New Venture ◽

External Information ◽

Start Up ◽

Multiple Case ◽

Established Firms

Using a nested multiple-case study of participating ventures, directors, and mentors of eight of the original U.S. accelerators, we explore how accelerators’ program designs influence new ventures’ ability to access, interpret, and process the external information needed to survive and grow. Through our inductive process, we illuminate the bounded-rationality challenges that may plague all ventures and entrepreneurs—not just those in accelerators—and identify the particular organizational designs that accelerators use to help address these challenges, which left unabated can result in suboptimal performance or even venture failure. Our analysis revealed three key design choices made by accelerators—(1) whether to space out or concentrate consultations with mentors and customers, (2) whether to foster privacy or transparency between peer ventures participating in the same program, and (3) whether to tailor or standardize the program for each venture—and suggests a particular set of choices is associated with improved venture development. Collectively, our findings provide evidence that bounded rationality challenges new ventures differently than it does established firms. We find that entrepreneurs appear to systematically satisfice prematurely across many decisions and thus broadly benefit from increasing the amount of external information searched, often by reigniting search for problems that they already view as solved. Our study also contributes to research on organizational sponsors by revealing practices that help or hinder new venture development and to emerging research on the lean start-up methodology by suggesting that startups benefit from engaging in deep consultative learning prior to experimentation.

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Imprenditorialitŕ e nascita di nuove imprese innovative in Europa: un'analisi delle determinanti in alcuni settori ad alta tecnologia

Economia e Politica Industriale ◽

10.3280/poli2009-001006 ◽

2009 ◽

pp. 67-92

Author(s):

Camilla Lenzi ◽

Maria Luisa Mancusi

Keyword(s):

New Ventures ◽

Jel Classification ◽

New Venture ◽

Entrepreneurial Activity ◽

Work Experiences ◽

Start Up ◽

Geographical Regions ◽

New Firm ◽

The University

- This paper evaluates the importance of some key elements in the process leading to the birth and start-up of a new firm. We focus on a sample of recently founded and innovative European firms in technological fields characterised by strong innovative and competitive dynamics in the last 15 years. Emphasis is placed both on the role of the founder and on the assets exploited and developed in the new ventures early stages. The analysis of the questionnaire confirms the importance of the intellectual capital of the founder and of the scientific and technological knowledge acquired during advanced studies or previous work experiences. It further confirms the importance of the human and financial capital (particularly, access to external funds) necessary to the start of entrepreneurial activity, of intellectual property rights and of the network of relationships with actors having complementary knowledge and assets (other firms, universities and public research centres, parent organisation). The analysis finally highlights interesting differences both at the geographical and sectoral level. Differences across geographical regions include the degree of development of financial markets and the opportunities to access external financial resources, but also and mostly the functions performed and the effectiveness of the university system. On the other side, differences across sectors include the assets exploited in founding the new venture and the key competences that allow it to survive and eventually grow. Keywords: entrepreneurship, spin-off, patent Parole chiave: imprenditorialitŕ, spin-off, brevetto Jel Classification: L10, M13, O30

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Entrepreneurial Leadership and New Venture Innovativeness: The Moderating Role of Employee Ownership

Academy of Management Proceedings ◽

10.5465/ambpp.2021.12064abstract ◽

2021 ◽

Vol 2021 (1) ◽

pp. 12064

Author(s):

Christoph Brütting ◽

Tessa Christina Flatten

Keyword(s):

Employee Ownership ◽

New Venture ◽

Entrepreneurial Leadership ◽

Moderating Role

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Cognitive Biases, Risk Perception, and Individual's Decision to Start a New Venture

International Journal of Service Science Management Engineering and Technology ◽

10.4018/ijssmet.2018070102 ◽

2018 ◽

Vol 9 (3) ◽

pp. 14-29 ◽

Cited By ~ 6

Author(s):

Salma Zaiane ◽

Fatma Ben Moussa

Keyword(s):

Risk Perception ◽

Cognitive Biases ◽

New Venture ◽

Illusion Of Control ◽

Mediating Role ◽

Correlation And Regression Analysis ◽

Reduce Risk ◽

Relationship Of ◽

The Relationship

The purpose of this article is to investigate the relationship of overconfidence and illusion of control towards the start of new venture, taking in consideration the mediating role of risk perception in the context of Tunisia. This article examines students' responses to surveys based on a teaching case titled “Optical Distortion, Inc.” The authors tested hypotheses by correlation and regression analysis. The results show that the perception towards risk associated with new venture plays an important role in decision-making. Moreover, they find that overconfidence and illusion of control reduce risk perception associated to the decision to start a venture. While overconfidence directly affects the decision to start a venture and indirectly through its effect on reducing the risk perception, illusion of control has neither a direct nor an indirect impact on that. These results partially confirm those of Simon show that the mediation exists but partially.

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New Venture Growth: Role of Ecosystem Elements and Prior Experience

Entrepreneurship Research Journal ◽

10.1515/erj-2018-0215 ◽

2019 ◽

Vol 10 (1) ◽

Author(s):

Sumita Sarma ◽

Jacob M. Marszalek

Keyword(s):

Firm Growth ◽

New Venture ◽

Moderating Effects ◽

Entrepreneurial Ecosystem ◽

New Firm ◽

Micro Level ◽

New Venture Growth ◽

Prior Experiences ◽

Level Analysis

AbstractEntrepreneurial ecosystems provide a rich context for analyzing entrepreneurial outcomes such as new venture growth. In most entrepreneurship research, influence of context or environment is undermined or controlled. Also, most studies consider either macro- or micro-level factors using single-level analysis, which mute the higher-level influences on new firm growth. To overcome these gaps, we empirically consider macro- and micro-level factors together, and their cross-level interactions to portray the nexus of entrepreneurs and entrepreneurial ecosystem in growth of new independent ventures in the various US metros. Our findings provide interesting insights on the moderating effects of prior experiences of founders on ecosystem attributes and firm growth.

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