Hostage Management and Human Resources Department, Fisher College of Business, The Ohio State University, USA. Martin Ruef Stanford University, Department of Sociology, Princeton University, USA Matild Sagi TARKI, Budapest, Hungary.
WHY STUDY ENTREPRENEURSHIP?
The chapters in this book highlight many of the issues central to the study of entrepreneurship today and are also groundbreaking in this field. As this chapter shows, the impact of self-employment extends far beyond economics and finance, shaping outcomes typically studied in family research.
THE ENTREPRENEURSHIP PROCESS
Noam Wasserman also focuses on changes within organizations in his research into a transformation underway in the structure of venture capital firms. Drawing on a conceptual model of small business growth, they argue that companies have gained credibility by associating with clusters, and they track the growth of key wineries in the area.
CONTEXT AND OPPORTUNITIES
The chapters in the final part of this book analyze the role that context and opportunity play in the entrepreneurship process. In particular, Mizrachi emphasizes the importance of the need for achievement, willingness to take risks, innovativeness and a desire to accumulate wealth in the process of becoming an entrepreneur.
The chapters in this volume draw attention to many of the areas of entrepreneurship research that are currently attracting scholarly attention. At the same time, data on entrepreneurship is improving and, as a result, researchers are able to ask increasingly provocative questions.
WHY STUDY
ENTREPRENEURSHIP?
ENTREPRENEURSHIP AND INEQUALITY
ABSTRACT
INTRODUCTION
INEQUALITY
We offer propositions whose testing would require such data and thus justify a new research thrust in the field of entrepreneurship. Since the industrial revolution spread from england to other western capitalist societies in the 19th century, a pervasive socio-political ideology has encouraged a.
ENTREPRENEURSHIP
In the remainder of this chapter, we focus on the study of entrepreneurship as the creation of new organizations, and we will label people who create and manage organizations during their early years as "entrepreneurs," consistent with the way sociological research. on entrepreneurship is characteristically adapted. Taken together, the TEA indicators provide a reasonable estimate of the level of entrepreneurial activity in a nation's workforce.
SOCIETAL LEVEL ECONOMIC INEQUALITY AND ENTREPRENEURSHIP
The four countries with the highest levels of inequality – Mexico, Chile, South Africa and Brazil – have low to moderate levels of entrepreneurship. This result further supports our contention that moderate levels of economic inequality are favorable to opportunity entrepreneurship.
INEQUALITY AND ENTREPRENEURSHIP IN THEORETICAL PERSPECTIVE
In addition, the labor market options facing workers in the "new" economy have changed dramatically. At the opposite end of the spectrum, liberal regimes have high levels of wealth inequality and mechanisms to encourage labor market participation as a source of income and mobility.
DISCUSSION AND CONCLUSION
We have outlined a perspective that focuses on cross-national comparisons of the factors that influence the level of economic inequality in a country. Schumpeter, a dominant voice in the entrepreneurship literature of the last century, emphasized the role entrepreneurs play in introducing variety into organizational populations and societies (Becker and Knudsen 2002).
NOTES
Given the importance these resources have in the founding process, prevailing patterns in gender inequality may do more to limit entrepreneurial opportunities than entrepreneurship will do to disrupt gender inequality. Moreover, problems of social justice arise when social groups have unequal access to economic and social resources that are important in the process of entrepreneurship.
ACKNOWLEDGMENTS
1982. The deindustrialization of America: Factory closings, community abandonment, and the dismantling of basic industries. Financial capital, human capital, and the transition to self-employment: Evidence from intergenerational ties. ''Journal of Labor Economics 18:282–304.
ECONOMIC FREEDOM OR SELF- IMPOSED STRIFE: WORK–LIFE
Work-life conflict can also be tension-based when people do not have enough energy to satisfy both work and family roles (Greenhausand Beutell 1985). Accordingly, we investigate work-life conflict by examining how work interferes with life (WIL) and how life interferes with work (LIW).
LITERATURE REVIEW AND HYPOTHESIS
Some evidence even suggests that self-employed people have gendered patterns of work-family conflict. Furthermore, self-employed people often create the same restrictive work arrangements that cause work-life conflict in other employment relationships (Jurik 1998).
RESULTS
It appears that these two forms of control benefit both the self-employed and wage workers. However, the correlations indicate that working from home is only associated with higher levels of LIW and only among wage workers.
MECHANISMS AFFECTING WIL
Only the interaction with self-employment was significant, suggesting that self-employment affects WIL among men and women for the same reasons. Overall, these results indicate that self-employment has more benefits for women than for men.
MECHANISMS AFFECTING LIW
We also find that people living with a partner or spouse report more LIW than single parents who form the reference category. We also find that being part of a dual-earner couple is associated with less LIW.
CONCLUSION
Construction and initial validation of a multidimensional measure of work-family conflict.''Journal of Professional Behavior56:249-276. Antecedents and outcomes of work-family conflict – Testing a work-family interface model.''Journal of Applied Psychology77:65–78.
THE ENTREPRENEURSHIP PROCESS
ORIGINS OF ORGANIZATIONS
THE ENTREPRENEURIAL PROCESS
This chapter is motivated by the lack of empirical findings in the entrepreneurship literature and a proposal for the design of a process-based organizational setting. A second concern stems from the diversity of human capital that underlies empirical research on start-up processes in the entrepreneurship literature.
THE PROCESS OF ORGANIZATIONAL FOUNDING
One finds that much research emphasizing the operational start - Hannan and Freeman's (1989) study of half-icon conductor manufacturers (see also Schoonhoven et al. 1990); the Baum, Korn and Kotha (1995) study of fax transmission services; the Delacroix and Solt (1988) study of wineries; and the Hannan et al. 1995) study of car manufacturers – examines forms embedded in environments of high technical complexity. On the other hand, my study of medical schools suggests that deviations from a dominant organizational model that uses an alternative, pre-existing template can actually increase the rate of operational initiation.
CONTEXTUAL INFLUENCES ON FOUNDING STAGES
On the one hand, the creation of new knowledge (or the synthesis of existing knowledge to create new products) can prolong business entry (Schoonhoven et al. 1990). Contextual influences on the timing of establishment. Note: Positive signs (+) indicate that the characteristic increases the rate at which entrepreneurs complete a start-up.
DATA, MEASURES, AND METHODOLOGY
The only wrinkle in this general model is the culminating stage of resource mobilization (in the form of external financing), which often occurs sometime after preliminary mobilization efforts (eg writing a business plan) have been undertaken. Norms of social organization – the initial employment of employees – are also affected by the structure of a developing venture (Model 3).
DISCUSSION
A complete micro-analysis of organizational founding begins with potential entrepreneurs as the units of analysis (Zucker 1989), while corresponding macro-analytic accounts consider founding rates at the level of the organizational population or industry. Central to the development of this broader micro-level account of the dynamics of organizational founding are representative samples of potential entrepreneurs from the general population, such as the PSED.
APPENDIX. : SELECTED COMPONENTS OF SURVEY INSTRUMENT
46 High Tech computers/hardware 47 High Tech computers/software 48 High Tech consumer/electronics 49 High-tech multimedia products 50 High-tech networks. Please rate each of the following items on a scale of 1 to 10, with "1" being the lowest and "10" being the highest.
TECHNOLOGICAL RESOURCES AND NEW FIRM GROWTH: A
COMPARISON OF START-UP AND ADOLESCENT VENTURES $
Differences in these capabilities can affect the potential profits that new ventures derive from their various technological resources (Zahra 1996b). Appreciating the differences that may exist between technological resources and new business growth in low vs.
THEORY AND HYPOTHESES
New high-tech industries have unique characteristics that can affect the profitability of the technological resources used by companies to achieve growth (Oakey, Rothwell, and Cooper 1988). Therefore, new ventures competing in high-tech industries often benefit from using different technological resources than those used in low-tech industries.
ANALYSIS AND RESULTS
The study results support the RBV's key propositions by demonstrating that a company's technological resources can generate a competitive advantage that improves sales growth. As a result, firms must have a longer investment horizon, leading to longer lags between the accumulation of technological resources and sales growth.
MANAGEMENT PARADIGM
CHANGE IN THE UNITED STATES
A PROFESSIONAL AUTONOMY PERSPECTIVE
Changes in management paradigms are due to managers' desire to maintain professional autonomy in light of changing relationships with employees and owners. Instead, we wish to focus on the sensitizing concept of professional autonomy to broaden our understanding of management paradigm shifts and to provide continuity with prior explanations of management behavior (see Chandler 1977; Burawoy 1985; Barley and Kunda 1992).
PROFESSIONAL AUTONOMY AND PROFESSIONAL PROJECTS
Investors expose themselves to company-specific dependencies by investing heavily in company-specific assets that cannot easily be converted to other uses without incurring significant transaction costs. As these stakeholders seek to reduce firm-specific dependence, their actions may erode managers' professional autonomy.
ENTREPRENEURIALISM, 1860–1910
From there, we examine the rise of successive managerial paradigms (scientific management, human relations management, and human resource management) through the sensitizing lens of professional autonomy. The dates of the various paradigms are approximations, although they are largely derived from Wren 1994.) We then discuss the next management paradigm, neo-entrepreneurialism, and discuss the organizational implications of this emerging management ideology. An initial reduction in employee company-specific uncertainty, but this reverses with the advent of ILM.
FROM ENTREPRENEURIALISM TO SCIENTIFIC MANAGEMENT, 1910–1940
Managers could now reduce their dependence on skilled employees and at the same time reduce uncertainty about returns to investors.
FROM SCIENTIFIC MANAGEMENT TO HUMAN RELATIONS, 1940–1970
Due to the growth of the corporate form, the number of potential employers on the labor market decreased. The increase in the ratio of people to businesses was (in part) the result of the growth of the corporate form (from Senator Wagner's speech, Congressional Record 1935), as well as immigration and the movement of workers from farms to businesses. the cities (see Bogue 1959).
FROM HUMAN RELATIONS TO HUMAN RESOURCE MANAGEMENT, 1970–2000
From the 1970s, an increasing number of top managers with financial backgrounds were selected for key positions in organizations (Fligstein 1990). Most of the changes involved in the shift from human relations to human resources were invisible to non-supervisory employees on a day-to-day basis.
NEOENTREPRENEURIALISM: THE EMERGENCE OF A NEW PARADIGM
This measure of highly skilled labor is an attempt to reduce their dependence on certain companies in terms of managerial staffing measures (eg downsizing, outsourcing). Neo-entrepreneurship is a change in mindset about the employment relationship, where workers are not viewed as employees, but as independent contractors.
PROFESSIONAL AUTONOMY IN CONTRAST TO OTHER EXPLANATIONS OF EMERGING
In Williamson's view, hierarchies and bureaucracies develop because of the high transaction costs associated with monitoring contracts in situations where actors have incentives to act opportunistically or where the ability to negotiate favorable contracts is curtailed by bargaining with small numbers. Managers try to reduce these transaction costs by changing the composition of the human capital they use in their firms.
MANAGERIAL THOUGHT AND ACTION
The first involves using the transaction cost perspective as a lens for viewing changes in management paradigms. Detours towards the professionalization of all: contemporary issues in the study of the professions. ''Research in the sociology of organizations.
UPSIDE-DOWN VENTURE CAPITALISTS AND THE
PYRAMIDAL FIRMS: INEVITABLE PROGRESSION, OR FAILED
In the late 1990s, several venture capital firms such as Crescendo Ventures (Wasserman 2003), Atlas Venture, and Battery Ventures began to attempt to move to pyramid structures with the same “institutionalization and professionalization” (McKenna 2001:673). ) that previously occurred in management consulting firms and other PSFs. A discussion of this development is covered in the competitive quotations at the beginning of this chapter.
ORGANIZATIONAL STRUCTURE AND PROFESSIONAL SERVICES FIRMS
As we will see below, the level of development of the company, the availability of capital and the nature of the work performed in the company played a key role in the transition to pyramids. These barriers to change could prevent companies in the industry from following suit.
RESEARCH APPROACH
Overall, in about a third of the organizations I studied, I spoke with multiple participants in the firm. Most of the firms were based in California and Boston, the two largest markets for VCs, but my interviewees also included VCs working in other parts of the Northeast and Midwest.
TRIGGERS, BARRIERS, AND ORGANIZATIONAL CONTEXTS
A COO who had just returned from his company's annual meeting with its LPs said that the LPs had been very supportive of the firm's efforts to transition to a pyramid structure.7. Many of the GPs I interviewed stated that having a lot of capital was important in the industry for a number of reasons.
