Interactions of decision mechanisms in an entrepreneurial firm’s journey to become a major player in its industry

This study discusses the interactions of different decision-making mechanisms in the process of change of a successful entrepreneurial dairy firm in Vietnam. The purpose of the study is to construct a theoretical framework, which explains the interactions between effectual and causal decision-making processes in different phases of business, and to provide a real life example with practical recommendations for entrepreneurs and managers. In order to achieve this purpose, a preliminary theoretical framework was built, using process theories applied to different decision making modes, referred to as causation and effectuation. The case was studied through ethnographic research method, with three semi-structured interviews, one unstructured interview, secondary data and observations within four months in 2013-2014. After the data was analyzed, a modified framework was drawn from the result. The finding of this study shows that there was an interaction between effectual and causal decision-making processes in different stages of the company’s development. The entrepreneur applied effectual decision-making process to develop a unique business model and a new dairy market segment. However, when a new market demand arose, the company’s resources became insufficient, they thus had to shift to causation process to adapt to market change. Simultaneously, with better-accumulated resources, the entrepreneur continued the effectuation process to create another brand new dairy market segment. This study, thus, contributes to effectuation theory, emphasizing the necessity of combining effectual and causal decision-making processes in different phases of business. It is suggested that business would develop with an effectual process until a business model is viable for growth. It continues to use this process up to a certain degree. When the market changes, the company needs to collect more means to adapt to the changes. They need to set new goals and this is a shift to the use of causal process, which builds on prediction. It uses goals and teleology as driving mechanisms and tries to exploit and fill potential resource gaps to achieve these goals. At the same time, there are new iterations that look to establish new lines or types of business with the given means, which are now well established. This again employs effectual mechanisms, which are based on evolutionary process, until they reach the stage of viable tested business model. Moreover, this study hopes to provide know-how to entrepreneurs and managers of small companies in similar situations, suggesting how to combine effectual and causal decision-making processes to deal with various circumstances in different times.

Market Orientation in Rapidly Internationalizing Small Companies — Evidence from the Software Industry

For more than a decade, researchers have been aware of the increased pace of small-firm internationalization and the greater effect of these rapidly growing small businesses on the wealth, international trade, and job-creation opportunities of countries. Due to the small size of the home market, Finnish companies have been generally considered highly interested in internationalization. One particular domain in which rapid internationalization has been considered feasible is the global software business, with its knowledge-intensive nature and high growth potential. However, over time the failure rate of small entrepreneurial firms has remained especially high in high-technology markets. One of the reasons for this seems to lie in the fact that these companies are often formed by people with a strong technological background but limited competences in other areas. Further, research on the marketing capabilities of rapidly internationalizing high-tech firms has been scarce thus far. In addition, while there is much research on the first years of operations of rapidly internationalizing companies, it is not well known what becomes of them later on. Therefore, there is a need for more investigation into the managerial mindset, competences and decision-making in these small companies, especially from the perspective of how they acquire and exploit market knowledge, and enhance their networking capabilities in order to promote international expansion. The present study focuses on market orientation in small software firms that internationalize their operations rapidly in global software markets. It builds on qualitative data to illustrate how these companies develop their market-oriented product-market strategies during the process of increasing international commitment. It also shows how they manage their network relationships in order to be able to offer better customer service and to thrive in the fierce global competition. The study was conducted in the empirical context of Finnish small software companies, and the main data consists of interviews with top managers in these businesses. The interviews were designed to cover a minimum period of five years of the company's international operations, thus offering a retrospective in-depth perspective on market orientation, internationalization and partnerships in the given context. One particular focus is on less successfully internationalized software companies, and the challenges they face when approaching international markets. This study makes a significant contribution to the literature on market orientation for several reasons. First, building on data from the software industry, it clarifies the existing theory in the context of rapid internationalization and network relationships. Secondly, it provides a good body of evidence on market orientation in both successfully and less successfully internationalized companies, and identifies the key related differences between the two company groups. Thirdly, it highlights the importance of inter-firm networks in the rapid internationalization of small software firms, providing companies with important market knowledge and, in some cases, management challenges. Fourthly, this investigation clarifies market orientation in the context of different software-product strategies, thus, combining the perspectives of market orientation in both manufacturing and services. In sum, the results of the study are significant for both small software firms and public-policy makers since they shed light on the market-oriented managerial mindset and the market-information gathering and sharing processes that are needed in successful rapid internationalization.

The influence of strategic entrepreneurship on firm performance

In the study the recently developed concept of strategic entrepreneurship was addressed with the aim to investigate the underlying factors and components constituting the concept and their influence on firm performance. As the result of analysis of existing literature and empirical studies the model of strategic entrepreneurship for the current study is developed with the emphasis on exploration and exploitation parts of the concept. The research model is tested on the data collected in the project ―Factors of growth and success of entrepreneurial firms in Russia‖ by Center for Entrepreneurship of GSOM in 2007 containing answers of owners and managers of 500 firms operating in St. Petersburg and Moscow. Multiple regression analysis showed that exploration and exploitation presented by entrepreneurial values, investments in internal resources, knowledge management and developmental changes are significant factors constituting strategic entrepreneurship and having positive relation to firm performance. The theoretical contribution of the work is linked to development and testing of the model of strategic entrepreneurship. The results can be implemented in management practices of companies willing to engage in strategic entrepreneurship and increase their firm performance.

Value creation through business model in international entrepreneurship

Business model in the context of international entrepreneurship is a rather new topic in academic literature. The objective of this thesis is to examine value creation through business models in internationally entrepreneurial firms. The study examines value creation through the two partner interfaces and the customer interface of a company. Central for the study is the consideration of also the partners’ incentives. Business model construct is studied by defining the concept, examining its elements and the relationship with strategy – concluding with value creation through the concept. The international entrepreneurship chapter focuses on internationally entrepreneurial firms, inspecting the drivers behind international entrepreneurship and studying value network concept. Value creation functions as a driving theme in the theory discussion. The empirical research of the study focuses on eight Finnish internationally entrepreneurial software companies. The study is conducted as a qualitative cross-case analysis building on the single case company business model analyses. The findings suggest that the business models of software companies incorporate vast similarities. However, the degree of international experience has influence on the companies’ value creation and the way they organize their activities both in upstream and downstream of the value chain.

International Entrepreneurship in Bottom of the Pyramid Markets – Overcoming institutional constraints

Bottom of the pyramid (BoP) markets are an underserved market of approximately four billion people living on under $5 a day in four regional areas: Africa, Asia, Eastern Europe and Latin America. According to estimations, the BoP market forms a $5 trillion global consumer market. Despite the potential of BoP markets, companies have traditionally focused on serving the markets of developed countries and ignored the large customer group at the bottom of the pyramid. The BoP approach as first developed by Prahalad and Hart in 2002 has focused on multinational corporations (MNCs), which were thought of as the ones who should take responsibility in serving the customers at the bottom of the pyramid. This study challenges this proposition and gives evidence that also smaller international new ventures – entrepreneurial firms that are international from their birth, can be successful in BoP markets. BoP markets are characterized by a number of deficiencies in the institutional environment such as strong reliance on informal sector, lack of infrastructure and lack of skilled labor. The purpose of this study is to increase the understanding of international entrepreneurship in BoP markets by analyzing how international new ventures overcome institutional constraints in BoP markets and how institutional uncertainty can be exploited by solving institutional problems. The main objective is divided into four sub objectives. • To describe the opportunities and challenges BoP markets present • To analyze the internationalization of INVs to BoP markets • To examine what kinds of strategies international entrepreneurs use to overcome institutional constraints • To explore the opportunities institutional uncertainty offers for INVs Qualitative approach was used to conduct this study and multiple-case study was chosen as a research strategy in order to allow cross-case analysis. The empirical data was collected through four interviews with the companies Fuzu, Mifuko, Palmroth Consulting and Sibesonke. The results indicated that understanding of the wider institutional environment improves the survival prospects of INVs in BoP markets and that it is indeed possible to exploit institutional uncertainty by solving institutional problems. The main findings were that first-hand experience of the markets and grassroots levels of information are the best assets in internationalization to BoP markets. This study highlights that international entrepreneurs with limited resources can improve the lives of people at the BoP with their business operations and act as small-scale institutional entrepreneurs contributing to the development of the institutional environment of BoP markets.

Market orientation and performance in entrepreneurial SMEs

Market orientation is the organizational culture that creates the necessary behaviors for continuous additional value for customers and thus continuous superior performance for the business. The field of market orientation has been studied repeatedly during the past two decades. Yet research has concentrated on large firms in large domestic markets creating a need for diversifying research. The master’s thesis at hand examined the general incidence of market orientation among SMEs from five different industries as well as its consequences on SME performance. The empirical part of the thesis was conducted with a web-based survey that resulted in 255 responses. The data of the survey was analyzed by statistical analysis. The incidence of market orientation varied among dimensions and market orientation did not show any direct effect on firm performance. Customer orientation was the only dimension that showed a direct (positive) effect. On the contrary, moderating effects were found which indicate that the effect of market orientation in SMEs is influenced by other factors that should receive further attention. Also industry specific differences were discovered and should be further examined.

The Interplay between Market Orientation and Entrepreneurial Orientation - Empirical Evidence from SMEs

The purpose of this thesis is to investigate how the dimensions of market orientation and entrepreneurial orientation are carried out in small and medium-sized enterprises (SME). In addition, the research aims to answer how these strategic orientations are apparent in SMEs, how the orientations co-vary, and how the dimensions of orientations are carried out in successful SMEs. The qualitative case study was participated by 16 SMEs. The research sample was gathered trough face-to-face interviews, consisting of Likert scale statements and open-ended questions. The main restriction of implementing market and entrepreneurial orientations in SMEs were scarce resources. Thus, the enterprises were required to make trade-offs between the different dimensios of orientations. Risk-aversive enterprises had emphasis on reactive customer orientation whereas, willing to take risks was generally related to proactiveness. Proactive enterprises utilized interfunctional coordination, and innovativeness was supported by value network coordination. The majority of the successful enterprises were growth-oriented, aiming to be technologial leaders in their industries. The successful firms placed similar emphasis on customer and product orientation.

Entrepreneurial orientation in small and medium-sized enterprises during economic crisis

The economic importance of small and medium-sized enterprises (SMEs) and entrepreneurship has increased significantly in recent decades and entrepreneurial activity and SMEs are deemed vital to economic progress. Therefore, it is justifiable to study how small firms and entrepreneurs can enhance their performance and emergence in the turbulent economic environment. The concept of entrepreneurial orientation (EO) has recently attracted considerable attention in the field of entrepreneurship research. EO generally refers to a firm’s propensity to be innovative, to be proactive and to take risks. A majority of EO studies so far have found that adopting EO associated entrepreneurial behaviors will help firms to create or sustain a high level of performance. This dissertation explores the main drivers and performance implications of EO for SMEs in time of economic crisis. Hence the first objective of this dissertation is to examine the performance implications of EO and to test the role of EO on how firms are treated by the crisis at operative level. The second objective is to expand the prevailing understanding of determinants of EO by exploring the relationship between owner's work related values, attitudes, demographic characteristics, firm’s financial resources and EO. EO was found to be a significant and positive factor behind a firm’s long run growth. Hence it can be said that EO has positive implications for firm performance. But on the other hand, during a time of economic crisis the different dimensions of EO had both positive and negative effects on performance of SMEs. The performance implications varied across different stages of the crisis and were also dependent on what measure was used for measuring the performance. The main drivers of EO in SMEs were the personal work related values of the entrepreneur and his/her prior experience as an entrepreneur. The intrinsic work values related to interest, responsibility, challenge, self-development or intellectual stimulation and values related to status, power, achievement and recognition had a positive effect on the level of EO. On the other hand, extrinsic values related to high income, material possessions, benefits such as generous holidays, job security, and comfort through good working conditions decreased the level of EO

The value of future opportunities: comparison of information technology firms and forest companies

There are several alternatives for valuing the future opportunities of firms. The traditional appraisal methods for single projects such as net present value, internalrate of return and payback rules have been criticized in recent years. It has been said that they do not take into account all growth opportunities of firms. At the company level, business valuation is traditionally based on financial and market information. Yield estimates, net worth values and market values of shares are commonly used. Naturally, all valuation methods have their own strengths and shortcomings. In the background of most estimation rules there is the idea that the future of the firms is quite clear and predictable. However, in recent times the business environment of most companies has changed to a more unpredictable direction and the effects of uncertainty have increased. There has been a growing interest in estimating the risks and values of future possibilities. The aim of the current paper is to describe the difference between the value of futureopportunities in information technology firms and forest companies, and also toanalyse the backgrounds for the observed gap.

Dynamic Capabilities and Firm Performance

Firms operating in a changing environment have a need for structures and practices that provide flexibility and enable rapid response to changes. Given the challenges they face in attempts to keep up with market needs, they have to continuously improve their processes and products, and develop new products to match market requirements. Success in changing markets depends on the firm's ability to convert knowledge into innovations, and consequently their internal structures and capabilities have an important role in innovation activities. According 10 the dynamic capability view of the firm, firms thus need dynamic capabilities in (he form ofassets, processes and structures that enable strategic flexibility and support entrepreneurial opportunity sensing and exploitation. Dynamic capabilities are also needed in conditions of rapid change in the operating environment, and in activities such as new product development and expansion to new markets. Despite the growing interest in these issues and the theoretical developments in the field of strategy research, there are still only very few empirical studies, and large-scale empirical studies in particular, that provide evidence that firms'dynamic capabilities are reflected in performance differences. This thesis represents an attempt to advance the research by providing empirical evidence of thelinkages between the firm's dynamic capabilities and performance in intenationalization and innovation activities. The aim is thus to increase knowledge and enhance understanding of the organizational factors that explain interfirm performance differences. The study is in two parts. The first part is the introduction and the second part comprises five research publications covering the theoretical foundations of the dynamic capability view and subsequent empirical analyses. Quantitative research methodology is used throughout. The thesis contributes to the literature in several ways. While a lot of prior research on dynamic capabilities is conceptual in nature, or conducted through case studies, this thesis introduces empirical measures for assessing the different aspects, and uses large-scale sampling to investigate the relationships between them and performance indicators. The dynamic capability view is further developed by integrating theoretical frameworks and research traditions from several disciplines. The results of the study provide support for the basic tenets of the dynamic capability view. The empirical findings demonstrate that the firm's ability to renew its knowledge base and other intangible assets, its proactive, entrepreneurial behavior, and the structures and practices that support operational flexibility arepositively related to performance indicators.

Pienen matkailuyrityksen yrittäjän taival : Oppiminen yrittäjyysprosessissa

Tämä tutkimus liittyy keskusteluun yrittäjyydestä, strategisesta prosessista ja kasvunmerkityksestä pienissä yrityksissä ja edelleen keskusteluun yrittäjästä oppijana, tilaisuuteen tarttujana ja toisaalta elämäntapaansa vaalivana yksilönä. Yrittäjän oppiminen on liitettävissä keskusteluun oppimisesta organisaatioissa, mikä tässä ymmärretään yrittäjän, yksilön oppimisena ja mahdollisuutena innovointiin ja uusiutumiseen yrittäjyysprosessissa. Tutkimuksen tavoitteena on etsiä yrittäjän oppimisen tapoja ja tuotoksia, roolia ja merkitystä strategisessa liiketoimintaprosessissa, jossa yrittäjän arvot ja pienen matkailu- ja perheyrityksen kulttuuri ohjaavat yrittäjän toimintatapaa. Edelleen tavoitteena on hahmottaa yrittäjän oppimisen ja kompetenssin ilmenemistä muutoksissa ja sidosryhmäsuhteissa. Työn lähestymistapa on hermeneuttinen. Yrittäjää lähestytään kokonaisvaltaisena yksilönä näkökulmasta, jossa yrittäjyyden prosessi ymmärretään inhimillisenä ja luovana toimintana sekä jatkuvana muutoksena. Yrittäjä nähdään oman prosessinsa määrittäjänä ja parhaana asiantuntijana. Empiirinen aineisto on laadullista. Vanhatyrittäjähaastatteluin vuosina 1998 - 99 kerätyt aineistot tarjosivat kokeilumahdollisuuden aineiston analysoinnin aloittamiseksi. Aineistojen kapean näkökulmanlaajentamiseksi kerättiin lisäaineisto neljältä yrittäjältä keskusteluin vuonna2003. Tämä Itä-Suomessa matkailualan yrittäjiltä kerätty uusi aineisto muodostaa tämän tutkimuksen keskeisen aineiston. Yrittäjyyden aiemmasta tutkimuksesta nousseet näkökulmat ovat suunnanneet tämän työn empiirisen aineiston tarkastelua. Tarkastelun kohteena ovat yrittäjä oppijana yrittäjyysprosessissaan ja yrittäjähistoriansa taitekohdissa sekä oppimisen näkyminen yrittäjän arvomaailmassa, matkailuyrityksen kulttuurissa ja sidosryhmäyhteistyössä. Tutkimuksen tulokset osoittavat, että yrittäjille jatkuva muutos on arkipäiväistä työtä. Yrittäjät hallitsevat omaa oppimis- ja yrittäjyysprosessiaan. He asettavat itse tavoitteensa liiketoiminnan suhteen, ymmärtävät liiketaloudellisia realiteetteja riittävästi; erityisesti riskien hallinta on ominaista yrittäjille. Yritysten menestystä osoittaa se, että niissä on pystytty kasvattamaan toimintaa määrällisten mittareiden puitteissa tai ainakin yrittäjän omiin tavoitteisiin on päästy. Yrittäjien oppimis- ja uusiutumiskykyä todistaa yritysten olemassaolo sinänsä ja jatkuva olemassaolon kamppailu vaikuttamalla sidosryhmiin. Vaikka näitä yrittäjiä ei anglosaksisen, schumpeterilaisen määrittelytavan mukaan voida määritellä käsitteellä 'entrepreneur', voidaan kuitenkin väittää, että heidät voidaan ymmärtää 'yrittäjyys' yrittäjiksi - rohkeiksi, uteliaiksi, itsenäisiksi, oppiviksi ja jatkuvasti uusiutuviksi yksilöiksi, jotka luovat jatkuvasti uutta arvoa yritystoiminnallaan. Oppiminen ilmenee prosessissa niin, että yrittäjät hakevat uutta tietoa sosiaalisesta suhdeverkostostaan, asiakkaiden käyttäytymisestä ja reaktioista sekä havainnoivatympäristöään tarkasti tehden vertailuja oman yrityksenä näkökulmasta alan muihin yrityksiin ja toimivat yhteistyössä muiden yrittäjien kanssa. He kyseenalaistavat omaa ja yrityksensä toimintaa, laativat suunnitelmia yrityksen laajentamiseksi tai toimintojen lisäämiseksi, mutta myös toiminnoista luopumiseksi. Oppiminenja uusiutuminen näkyvät visioissa, joissa yritystoimintaa varaudutaan muuttamaan siten, että se vastaa kulloisenkin tilanteen vaatimuksia Kuitenkin yrittäjät ovat ymmärrettävissä toimintaa ennakoiviksi, eivät niinkään toimintaa sopeuttaviksi yksilöiksi. Ennakointi voidaan nähdä muutosten työntövoimana, jolloin yrittäjät ovat enemmänkin yritystensä eteenpäin työntäjiä kuin yritystensä vetäjiä. Yrittäjät ovat omissa yrityksissään paras mahdollinen kyvykkyys- ja osaamisresurssi, joka näyttää siirtyvän näissä yrityksissä myös seuraavan sukupolven käyttöön käytännön esimerkkien ja hiljaisen tiedon kautta. Jokaiselle yrittäjälle on muotoutunut oma selviytymisstrategiansa tai toimintamallinsa, jossa on nähtävissä yrittäjän koko yrittäjyyden historian aikana ja yrittäjyysprosessissa tapahtuvan oppimisen muotoutuminen yrittäjän osaamiseksi. Näissä selviytymisstrategioissa on havaittavissa yrittäjän oma arvokäsitys, perheyrityksen kulttuuri, suhtautumistapa ympäristöön ja yrittäjän oma, persoonallinen toimintatapa yrittäjänä.

Risks in R&D Collaboration between Small and Large Firms

The main aim of this thesis was to find out what kinds of risks arise from collabo-ration in R&D between small and large firms. The suitability and gain of some buyer/supplier risk frameworks in examining of R&D collaboration has been in-vestigated. A risk model has been based on the buyer/supplier risks models found in the literature. Its applicability has been tested empirically by means of theme interviews with firm representatives. The risk classification framework received some confirmation. But the study also showed that the theoretical framework was not completely adequate, as a new risk class arose from communication. Collaboration causes risks, and these risks should be taken into account when R&D collaboration is planned. The advantage of risk examination is the possibility to decrease failures and losses, and to in-crease possibilities for success and economical benefits. This study should be used as a managerial analysis tool in trying to understand the form and concept of risk in risk expectancy.

Coopetitive advantage – How firms create and appropriate value by collaborating with their competitors

Collaboration between competing firms (coopetition) has emerged as an important issue forn business practice in many industries. Extant literature has examined coopetition on many levels of analysis, but lacks clarity in distinguishing it explicitly from cooperation between noncompeting organizations. Because of this, the performance implications of coopetition from the perspective of an individual firm are still ambiguous – some research suggests positive results whereas other studies suggest detrimental outcomes. The aim in this dissertation is to narrow these gaps by exploring how firms create and appropriate value through collaboration with their competitors. The dissertation is divided into two parts. The first part comprises an overview of the relevant literature, as well as the conclusions of the whole study, and the second part includes six research publications. Both qualitative and quantitative methodologies are utilized. The results suggest that coopetition embodies the distinctive logic of value creation and appropriation from the perspective of an individual firm, and thus differs in terms of performance implications from cooperation between non-competitors. The distinction comes from the fact that competitors have somewhat similar understanding, capabilities and interest related to certain markets, which is potentially both challenging and beneficial in terms of the individual firm’s competitiveness. It appears from the findings that there are distinctive firm-external and firm-specific factors affecting the success of a coopetition strategy. This study makes three main contributions. First, on the conceptual level it shows the distinction between coopetition and cooperation between non-rivals as a collaborative inter-organizational relationship. Secondly, it sets out a framework and propositions that enhance understanding of how value is created and appropriated in coopetition from the perspective of an individual firm. Thirdly, it offers empirical evidence of how coopetition affects firms’ innovation and market performance, and identifies the focal internal and external factors involved. In general terms, the thesis adds to our knowledge of how a firm can successfully utilize a coopetition strategy in its pursuit of improved performance.

Success of service-intensive manufacturing firms - resource-based view

The main objective of this study is to examine the relationships between resources, competitive advantage and firm success. The study focuses, on one hand, on the financial performance of service-intensive manufac-turing firms against competitors with a lower service intensity and, on the other hand, on the resources as drivers for competitive advantage and success. The purpose of the theoretical part is to link the study in the field of the strategy research. The empirical part of the study is based on the quantitative analyses of the survey data collected from 50 major suppliers of industrial machinery and transportation equipment in Europe and North America. Results indicate that service-intensive manufacturing firms have performed better and their performance has been more stable vis-à-vis their peers. The main resources that differentiate service-intensive manufacturing firms from their non-service intensive competitors are service strategy and service-oriented top management. The analyses on the VRIO resources produced only a limited amount of information and solely service-centred culture appeared to be a rent generating resource.