Three essays on a longitudinal analysis of business start-ups using the Kauffman Firm Survey

This dissertation focused on the longitudinal analysis of business start-ups using three waves of data from the Kauffman Firm Survey. ^ The first essay used the data from years 2004-2008, and examined the simultaneous relationship between a firm's capital structure, human resource policies, and its impact on the level of innovation. The firm leverage was calculated as, debt divided by total financial resources. Index of employee well-being was determined by a set of nine dichotomous questions asked in the survey. A negative binomial fixed effects model was used to analyze the effect of employee well-being and leverage on the count data of patents and copyrights, which were used as a proxy for innovation. The paper demonstrated that employee well-being positively affects the firm's innovation, while a higher leverage ratio had a negative impact on the innovation. No significant relation was found between leverage and employee well-being.^ The second essay used the data from years 2004-2009, and inquired whether a higher entrepreneurial speed of learning is desirable, and whether there is a linkage between the speed of learning and growth rate of the firm. The change in the speed of learning was measured using a pooled OLS estimator in repeated cross-sections. There was evidence of a declining speed of learning over time, and it was concluded that a higher speed of learning is not necessarily a good thing, because speed of learning is contingent on the entrepreneur's initial knowledge, and the precision of the signals he receives from the market. Also, there was no reason to expect speed of learning to be related to the growth of the firm in one direction over another.^ The third essay used the data from years 2004-2010, and determined the timing of diversification activities by the business start-ups. It captured when a start-up diversified for the first time, and explored the association between an early diversification strategy adopted by a firm, and its survival rate. A semi-parametric Cox proportional hazard model was used to examine the survival pattern. The results demonstrated that firms diversifying at an early stage in their lives show a higher survival rate; however, this effect fades over time.^

Anarchy In The Airways

In his dialogue - Anarchy In The Airways - Joseph C. Von Kornfeld, Assistant Professor, College of Hotel Administration, University of Nevada, Las Vegas initially states: “Deregulation of the airline industry has brought about financial vulnerability for the traveling public. The author analyzes the situation since that point in time and makes recommendations for some solutions.” In this article, Assistant Professor Von Kornfeld, first defines the airline industry in its pre-regulated form. Then he goes into the ramifications and results of deregulating the industry, both in regards to the consumer, and in deregulation’s impact on the airlines themselves. “The most dramatic consequence of the pressures and turbulence of airline deregulation has been the unprecedented proliferation of airline bankruptcies,” Von Kornfeld informs. “Prior to the deregulation of the U.S. airline industry in 1978, U.S. air carriers operated in a business environment that was insulated from the normal stresses and strains of open competition. They were restricted from actively competing with fares and routings by the Civil Aeronautics Board (CAB),” Von Kornfeld says. In leveling the playing field, Von Kornfeld offers, “Each carrier was restricted to specific geographic routes, with those routes limited to two or three competing carriers. The only thing that set carriers apart in this CAB defined atmosphere was their ability to either advertise, or to enhance their level of service; or both. “…ultimately paid for by the passenger through fare increases sanctioned by the CAB,” Von Kornfeld states. “Airline service standards were unquestionably superior during the regulated environment,” Von Kornfeld renders an interesting observation. He does mention, however, that carrier safety was also considered a concern immediately prior to, and then after deregulation. “The major controversy focused on the allegation that safety and maintenance standards would be compromised due to the financial pressures brought about by an openly competitive environment,” Von Kornfeld says. Pricing, as well as labor unions are important factors in the equation, and Von Kornfeld addresses their relevance in the deregulated environment. “The primary rationalization for deregulation was to facilitate a more openly competitive environment. The increased competition was to ultimately have benefitted the consumer. Ironically, that’s not entirely the case, Von Kornfeld elaborates. In addressing some of the negative aspects of airline deregulation, Von Kornfeld suggests that some sort of federal re-regulation may be in order.

The Food Service Industry Environment: Market Volatility Analysis

In their dialogue entitled - The Food Service Industry Environment: Market Volatility Analysis - by Alex F. De Noble, Assistant Professor of Management, San Diego State University and Michael D. Olsen, Associate Professor and Director, Division of Hotel, Restaurant & Institutional Management at Virginia Polytechnic Institute and State University, De Noble and Olson preface the discussion by saying: “Hospitality executives, as a whole, do not believe they exist in a volatile environment and spend little time or effort in assessing how current and future activity in the environment will affect their success or failure. The authors highlight potential differences that may exist between executives' perceptions and objective indicators of environmental volatility within the hospitality industry and suggest that executives change these perceptions by incorporating the assumption of a much more dynamic environment into their future strategic planning efforts. Objective, empirical evidence of the dynamic nature of the hospitality environment is presented and compared to several studies pertaining to environmental perceptions of the industry.” That weighty thesis statement presumes that hospitality executives/managers do not fully comprehend the environment in which they operate. The authors provide a contrast, which conventional wisdom would seem to support and satisfy. “Broadly speaking, the operating environment of an organization is represented by its task domain,” say the authors. “This task domain consists of such elements as a firm's customers, suppliers, competitors, and regulatory groups.” These are dynamic actors and the underpinnings of change, say the authors by way of citation. “The most difficult aspect for management in this regard tends to be the development of a proper definition of the environment of their particular firm. Being able to precisely define who the customers, competitors, suppliers, and regulatory groups are within the environment of the firm is no easy task, yet is imperative if proper planning is to occur,” De Noble and Olson further contribute to support their thesis statement. The article is bloated, and that’s not necessarily a bad thing, with tables both survey and empirically driven, to illustrate market volatility. One such table is the Bates and Eldredge outline; Table-6 in the article. “This comprehensive outline…should prove to be useful to most executives in expanding their perception of the environment of their firm,” say De Noble and Olson. “It is, however, only a suggested outline,” they advise. “…risk should be incorporated into every investment decision, especially in a volatile environment,” say the authors. De Noble and Olson close with an intriguing formula to gauge volatility in an environment.

Toward A Better Understanding of the Evolution of Hotel Development: A Discussion of Product-specific Lodging Demand

In his essay - Toward a Better Understanding of the Evolution of Hotel Development: A Discussion of Product-Specific Lodging Demand - by John A. Carnella, Consultant, Laventhol & Horwath, cpas, New York, Carnella initially describes his piece by stating: “The diversified hotel product in the united states lodging market has Resulted in latent room-night demand, or supply-driven demand resulting from the introduction of a lodging product which caters to a specific set of hotel patrons. The subject has become significant as the lodging market has moved toward segmentation with regard to guest room offerings. The author proposes that latent demand is a tangible, measurable phenomenon best understood in light of the history of the guest room product from its infancy to its present state.” The article opens with an ephemeral depiction of hotel development in the United States, both pre’ and post World War II. To put it succinctly, the author wants you to know that the advent of the inter-state highway system changed the complexion of the hotel industry in the U.S. “Two essential ingredients were necessary for the next phase of hotel development in this country. First was the establishment of the magnificently intricate infrastructure which facilitated motor vehicle transportation in and around the then 48 states of the nation,” says Carnella. “The second event…was the introduction of affordable highway travel. Carnella goes on to say that the next – big thing – in hotel evolution was the introduction of affordable air travel. “With the airways filled with potential lodging guests, developers moved next to erect a new genre of hotel, the airport hotel,” Carnella advances his picture. Growth progressed with the arrival of the suburban hotel concept, which wasn’t fueled by developments in transportation, but by changes in people’s living habits, i.e. suburban affiliations as opposed to urban and city population aggregates. The author explores the distinctions between full-service and limited service lodging operations. “The market of interest with consideration to the extended-stay facility is one dominated by corporate office parks,” Carnella proceeds. These evolutional states speak to latent demand, and even further to segmentation of the market. “Latent demand… is a product-generated phenomenon in which the number of potential hotel guests increases as the direct result of the introduction of a new lodging facility,” Carnella brings his unique insight to the table with regard to the specialization process. The demand is already there; just waiting to be tapped. In closing, “…there must be a consideration of the unique attributes of a lodging facility relative to its ability to attract guests to a subject market, just as there must be an examination of the property's ability to draw guests from within the subject market,” Carnella proposes.

Three Essays on a Longitudinal Analysis of Business Start-ups using the Kauffman Firm Survey

This dissertation focused on the longitudinal analysis of business start-ups using three waves of data from the Kauffman Firm Survey. The first essay used the data from years 2004-2008, and examined the simultaneous relationship between a firm’s capital structure, human resource policies, and its impact on the level of innovation. The firm leverage was calculated as, debt divided by total financial resources. Index of employee well-being was determined by a set of nine dichotomous questions asked in the survey. A negative binomial fixed effects model was used to analyze the effect of employee well-being and leverage on the count data of patents and copyrights, which were used as a proxy for innovation. The paper demonstrated that employee well-being positively affects the firm's innovation, while a higher leverage ratio had a negative impact on the innovation. No significant relation was found between leverage and employee well-being. The second essay used the data from years 2004-2009, and inquired whether a higher entrepreneurial speed of learning is desirable, and whether there is a linkage between the speed of learning and growth rate of the firm. The change in the speed of learning was measured using a pooled OLS estimator in repeated cross-sections. There was evidence of a declining speed of learning over time, and it was concluded that a higher speed of learning is not necessarily a good thing, because speed of learning is contingent on the entrepreneur's initial knowledge, and the precision of the signals he receives from the market. Also, there was no reason to expect speed of learning to be related to the growth of the firm in one direction over another. The third essay used the data from years 2004-2010, and determined the timing of diversification activities by the business start-ups. It captured when a start-up diversified for the first time, and explored the association between an early diversification strategy adopted by a firm, and its survival rate. A semi-parametric Cox proportional hazard model was used to examine the survival pattern. The results demonstrated that firms diversifying at an early stage in their lives show a higher survival rate; however, this effect fades over time.