Venture idea newness, relatedness and performance in nascent ventures

Principal Topic The study of the origin and characteristics of venture ideas - or ''opportunities'' as they are often called - and their contextual fit are key research goals in entrepreneurship (Davidsson, 2004). We define venture idea as ''the core ideas of an entrepreneur about what to sell, how to sell, whom to sell and how an entrepreneur acquire or produce the product or service which he/she sells'' for the purpose of this study. When realized the venture idea becomes a ''business model''. Even though venture ideas are central to entrepreneurship yet its characteristics and their effect to the entrepreneurial process is mysterious. According to Schumpeter (1934) entrepreneurs could creatively destruct the existing market condition by introducing new product/service, new production methods, new markets, and new sources of supply and reorganization of industries. The introduction, development and use of new ideas are generally called as ''innovation'' (Damanpour & Wischnevsky, 2006) and ''newness'' is a property of innovation and is a relative term which means that the degree of unfamiliarity of venture idea either to a firm or to a market. However Schumpeter's (1934) discusses five different types of newness, indicating that type of newness is an important issue. More recently, Shane and Venkataraman (2000) called for research taking into consideration not only the variation of characteristics of individuals but also heterogeneity of venture ideas, Empirically, Samuelson (2001, 2004) investigated process differences between innovative venture ideas and imitative venture ideas. However, he used only a crude dichotomy regarding the venture idea newness. According to Davidsson, (2004) as entrepreneurs could introduce new economic activities ranging from pure imitation to being new to the entire world market, highlighting that newness is a matter of degree. Dahlqvist (2007) examined the venture idea newness and made and attempt at more refined assessment of the degree and type of newness of venture idea. Building on these predecessors our study refines the assessment of venture idea newness by measuring the degree of venture idea newness (new to the world, new to the market, substantially improved while not entirely new, and imitation) for four different types of newness (product/service, method of production, method of promotion, and customer/target market). We then related type and degree of newness to the pace of progress in nascent venturing process. We hypothesize that newness will slow down the business creation process. Shane & Venkataraman (2000) introduced entrepreneurship as the nexus of opportunities and individuals. In line with this some scholars has investigated the relationship between individuals and opportunities. For example Shane (2000) investigates the relatedness between individuals' prior knowledge and identification of opportunities. Shepherd & DeTinne (2005) identified that there is a positive relationship between potential financial reward and the identification of innovative venture ideas. Sarasvathy's 'Effectuation Theory'' assumes high degree of relatedness with founders' skills, knowledge and resources in the selection of venture ideas. However entrepreneurship literature is scant with analyses of how this relatedness affects to the progress of venturing process. Therefore, we assess the venture ideas' degree of relatedness to prior knowledge and resources, and relate these, too, to the pace of progress in nascent venturing process. We hypothesize that relatedness will increase the speed of business creation. Methodology For this study we will compare early findings from data collected through the Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE). CAUSEE is a longitudinal study whose primary objective is to uncover the factors that initiate, hinder and facilitate the process of emergence and development of new firms. Data were collected from a representative sample of some 30,000 households in Australia using random digit dialing (RDD) telephone survey interviews. Through the first round of data collection identified 600 entrepreneurs who are currently involved in the business start-up process. The unit of the analysis is the emerging venture, with the respondent acting as its spokesperson. The study methodology allows researchers to identify ventures in early stages of creation and to longitudinally follow their progression through data collection periods over time. Our measures of newness build on previous work by Dahlqvist (2007). Our adapted version was developed over two pre-tests with about 80 participants in each. The measures of relatedness were developed through the two rounds of pre-testing. The pace of progress in the venture creation process is assessed with the help of time-stamped gestation activities; a technique developed in the Panel Study of Entrepreneurial Dynamics (PSED). Results and Implications We hypothesized that venture idea newness slows down the venturing process whereas relatedness facilitates the venturing process. Results of 600 nascent entrepreneurs in Australia indicated that there is marginal support for the hypothesis that relatedness assists the gestation progress. Newness is significant but is the opposite sign to the hypothesized. The results give number of implications for researchers, business founders, consultants and policy makers in terms of better knowledge of the venture creation process.

Safer construction voluntary code of practice : implications for SMEs

The majority of Australian construction firms are small businesses, with 97% of general construction businesses employing less than 20 employees and 85% employing less than five employees (Lin and Mills, 2001; Lingard and Holmes, 2001). The Australian Bureau of Statistics’ definition of a small to medium enterprise was used for the purpose of this study (McLennan, 2000). This included small business employing less than twenty people and medium business employing less than 200 people. Although small to medium enterprises (SME) make up the major share of construction organisations in Australia, there is a paucity of published research in relation to occupational health and safety (OHS) issues for this group. Typically, SME organisations “are frequently undercapitalized and depend on continuous cash flow for their continued business” (Cole, 2003; 12). Research by Lin and Mills (2001) indicates that these factors influence the smaller operators’ ability and motivation to achieve high levels of OHS compared to larger firms which tend to integrate OHS into their management systems. According to Lin and Mills (2001; 137) small firms “do not feel the need to focus on OHS in their management systems, instead they often believe that the control of risk is the responsibility of employees”. This report documents findings from a qualitative research study that examined SME organisations’ views of a newly developed voluntary code of practice (VCOP), and ways in which they might implement the code in their businesses. The research also explored respondents’ awareness of current safety issues in industry in the context of their personal experiences.

Designing self sustaining support for micro-enterprises in sub-Saharan Africa : a pilot

Small and micro-enterprises play a significant part in most economies. However, in developing countries these enterprises have often been planned and implemented from a poverty alleviation perspective, rather than as entrepreneurial activities and growing businesses (Mead & Liedholm 1998, Toye 1993). This paper explores a model for sustainable support to micro-enterprises in a developing country context. Sustainability is critical if micro-enterprises are to grow. The traditional philanthropic model for funding micro-enterprises leaves local communities dependent on the priorities of donors which may not always be consistent with those of the community. Long term sustainability requires a move to a model that broadens the base of both economic and intellectual resources, that builds capacity as well as providing ‘start-up’ funding through mechanism such as micro-credit (Elkington & Hartigan 2008). Designing for sustainable enterprise development includes responding to the community’s priorities, investigating individual problems and solutions, encouraging agency and active involvement in goal setting, with on-going consultation and co-development of solutions. Recognising the importance of experimentation we have moved beyond existing forms to prototype new ways of working which provide continuity of financial and intellectual support for local initiatives. The paper reviews existing micro finance and microcredit practices and suggests a new approach to establish and support enterprises with financial and knowledge resources for sustainable business practices. Principles underlying such a program and the initial steps are described.

Measuring the managerial benefits of tax compliance : a fresh approach

Managerial benefits of tax compliance have been identified by many authors in the tax compliance costs literature; they have however often been ignored when measuring the net effect of tax compliance on business taxpayers because it was believed that the measurement of such benefits was impossible or difficult. This paper first discusses the theoretical issues surrounding the valuation of managerial benefits, including the related tax/ accounting costs overlap problem; it then proposes a fresh approach for measuring managerial benefits. The proposed measurement model incorporates a subjective evaluation of useful accounting information by owner‑managers and objective measurements of accounting costs. Two main components of managerial benefits are identified: the incremental value of managerial accounting information and the savings on reporting costs. A study of small businesses conducted in late 2006, compared accounting practices between tax complying entities (TCEs) and tax compliance free entities (TFEs) and investigated how accounting information was valued by owner-managers in TCEs. The research adopted a mixed methodological design including a major quantitative phase followed by a minor qualitative phase. The results show that while a vast majority of TFEs maintained basic accounting functions, record keeping requirements imposed by tax compliance led to the implementation of more sophisticated accounting systems in TCEs. It was also found that TCE owner-managers assigned a relatively significant value to the managerial accounting information that is generated as a result of record keeping imposed by tax compliance, suggesting that substantial managerial benefits might be derived.

Marketing buzz : towards a framework for entrepreneurs

Despite the increasing recognition of the importance of word of mouth as an integral component of a firms’ marketing efforts, there has been little emphasis on developing suitable guidelines for entrepreneurs who wish to leverage scarce resources by pursuing more innovative marketing techniques. In addition, although there has been a great deal of research into the nature of social networks and interpersonal communication via word of mouth, there have been few attempts to link this research with the firms marketing strategy. In this paper, we consider the diffusion of innovation literature and recent research into social network structure and propose a framework that may be useful for enhancing the marketing efforts of entrepreneurial firms.

Towards a model of understanding strategic decision-making in micro-firms : exploring the Australian information technology sector

This study explores strategic decision-making (SDM) in micro-firms, an economically significant business subsector. As extant large- and small-firm literature currently proffers an incomplete characterization of SDM in very small enterprises, a multiple-case methodology was used to investigate how these firms make strategic decisions. Eleven Australian Information Technology service micro-firms participated in the study. Using an information-processing lens, the study uncovered patterns of SDM in micro-firms and derived a theoretical micro-firm SDM model. This research also identifies several implications for micro-firm management and directions for future research, contributing to the understanding of micro-firm SDM in both theory and practice.

ACE's role in developing Australia's human capital : a structural analysis

This project explored ways in which Adult and Community Education (ACE) could make a greater contribution to the human capital development outcome under the National Reform Agenda (NRA), and increase the number of skilled workers in Australia. Data on current vocational and non-vocational ACE programs was analysed. Strategies to improve ACE were collated for consideration by government authorities and ACE providers. There is much diversity in the perceived role and activities of ACE. Researchers have found it challenging to create a profile that depicts the whole sector, particularly in the absence of much reliable, valid and comparable data on ACE activities and outcomes. However, there is evidence indicative of ACE’s assistance in re-engaging with learning and training, and initiating pathways to further training or employment. The potential for ACE to make a bigger contribution to skilling Australia is recognised by governments across the nation (Senate Employment, Workplace Relations, Small Business and Education Committee, 1997). Yet policy changes to facilitate an increased role of ACE in the skilling process, and resourcing for ACE programs continue to receive less attention. This project explored three research questions: • What does the current profile of the ACE sector look like? • How is ACE contributing to reducing the skills deficit? • How can ACE enhance its contributions to reduce the skills deficit and achieve the human capital development outcome of the National Reform Agenda? The responsiveness

Network structure, knowledge governance, and firm performance : evidence from innovation networks and SMEs in the UK

It is increasingly understood that learning and thus innovation often occurs via highly interactive, iterative, network-based processes. Simultaneously, economic development policy is increasingly focused on small and medium-sized enterprises (SMEs) as a means of generating growth, creating a clear research issue in terms of the roles and interactions of government policy, universities, and other sources of knowledge, SMEs, and the creation and dissemination of innovation. This paper analyses the contribution of a range of actors in an SME innovation creation and dissemination framework, reviewing the role of various institutions therein, exploring the contribution of cross-locality networks, and identifying the mechanisms required to operationalise such a framework. Bivariate and multivariate (regression) techniques are employed to investigate both innovation and growth outcomes in relation to these structures; data are derived from the survey responses of over 450 SMEs in the UK. Results are complex and dependent upon the nature of institutions involved, the type of knowledge sought, and the spatial level of the linkages in place but overall highlight the value of cross-locality networks, network governance structures, and certain spillover effects from universities. In general, we find less support for the factors predicting SME growth outcomes than is the case for innovation. Finally, we outline an agenda for further research in the area.

Positive design and construction of mechanisms for the sustainable development in microenterprises in Africa

Enterprise development and its contribution to societal and economic outcomes are well known. However, limited research into microenterprises and the practices of microfinance and microcredit in developing countries has been carried out. This chapter presents the findings of research based on six years of engagement with the microentrepreneurs of Beira in Mozambique and suggests a model for responsible and sustainable support for enterprise development in developing economies. Building on semistructured interviews, observation, and participatory action research, this research project articulates a new approach supportive of enterprise development, as a process of cocreation with local people and based on sustainability principles. These findings are part of a longitudinal study of the successes and failures of small enterprises and their impact on social and economic activity.

L'informativa di bilancio nelle imprese familiari di piccole dimensioni : caratteri distintivi e aspetti evolutivi

SOMMARIO: 1. I fattori che incidono sulla funzione informativa del bilancio nelle imprese familiari. 2. Funzione, obiettivi e attese informative nella comunicazione esterna delle imprese familiari. 3. I caratteri del “familismo” nei prospetti di bilancio. 4. Verso un nuovo modello di bilancio per le imprese familiari: riflessioni critiche e spunti per la ricerca.

Is providing micro-credit social responsible?

Micro-finance, which includes micro-credit as one it its services, has become big business with a range of models – from those that operate on a strictly business basis to those who come from a philanthropic base, through Non Government organisations (NGOs). Success is often measured by the numbers involved and the repayment rates – which are very high, largely because of the lending models used. The purpose of this paper is to identify whether the means used to deliver micro-credit services to the poor are socially responsible. This paper will explore the range of models currently used and propose a model that addresses some of the social responsibility issues that appear to plague delivery. The model is being developed in Beira, the second largest city in Mozambique. Mozambique exhibits many of the characteristics found in other African countries, so the model, if successful, may have implications for other poor African nations.

Developing strong social enterprises : a documentary approach

Social enterprises are diverse in their mission, business structures and industry orientations. Like all businesses, social enterprises face a range of strategic and operational challenges and utilize a range of strategies to access resources in support of their venture. This exploratory study examined the strategic management issues faced by Australian social enterprises and the ways in which they respond to these. The research was based on a comprehensive literature review and semi-structured interviews with 11 representatives of eight social enterprises based in Victoria and Queensland. The sample included mature social enterprises and those within two years of start-up. In addition to the research report, the outputs of the project include a series of six short documentaries, which are available on YouTube at http://www.youtube.com/user/SocialEnterpriseQUT#p/u. The research reported on here suggests that social enterprises are sophisticated in utilizing processes of network bricolage (Baker et al. 2003) to mobilize resources in support of their goals. Access to network resources can be both enabling and constraining as social enterprises mature. In terms of the use of formal business planning strategies, all participating social enterprises had utilized these either at the outset or the point of maturation of their business operations. These planning activities were used to support internal operations, to provide a mechanism for managing collective entrepreneurship, and to communicate to external stakeholders about the legitimacy and performance of the social enterprises. Further research is required to assess the impacts of such planning activities, and the ways in which they are used over time. Business structures and governance arrangements varied amongst participating enterprises according to: mission and values; capital needs; and the experiences and culture of founding organizations and individuals. In different ways, participants indicated that business structures and governance arrangements are important ways of conferring legitimacy on social enterprise, by signifying responsible business practice and strong social purpose to both external and internal stakeholders. Almost all participants in the study described ongoing tensions in balancing social purpose and business objectives. It is not clear, however, whether these tensions were problematic (in the sense of eroding mission or business opportunities) or productive (in the sense of strengthening mission and business practices through iterative processes of reflection and action). Longitudinal research on the ways in which social enterprises negotiate mission fulfillment and business sustainability would enhance our knowledge in this area. Finally, despite growing emphasis on measuring social impact amongst institutions, including governments and philanthropy, that influence the operating environment of social enterprise, relatively little priority was placed on this activity. The participants in our study noted the complexities of effectively measuring social impact, as well as the operational difficulties of undertaking such measurement within the day to day realities of running small to medium businesses. It is clear that impact measurement remains a vexed issue for a number of our respondents. This study suggests that both the value and practicality of social impact measurement require further debate and critically informed evidence, if impact measurement is to benefit social enterprises and the communities they serve.

External collaboration for innovation can alleviate the effect between the past innovation abandonment and future innovation introduction among SMEs

This study investigates the links between product innovation and external collaboration and between future product innovation and past abandonment in small and medium sized firms. Our findings from 449 manufacturing firms indicated firms that sought ideas or solutions from an external network such as suppliers, or business partners reported higher levels of new product introduction than firms without any external collaboration. Further, firms with past abandonment experiences reported higher levels of new product introduction than firms without such experience. Additionally, the findings indicated that firms with external collaboration were more likely to introduce new products even if they had previously experienced abandonment of a product innovation than firms without external collaboration. Implications, limitations and future research are outlined.

Panel studies of new venture creation: a methods-focused review and suggestions for future research

Longitudinal panel studies of large, random samples of business start-ups captured at the pre-operational stage allow researchers to address core issues for entrepreneurship research, namely, the processes of creation of new business ventures as well as their antecedents and outcomes. Here, we perform a methods-orientated review of all 83 journal articles that have used this type of data set, our purpose being to assist users of current data sets as well as designers of new projects in making the best use of this innovative research approach. Our review reveals a number of methods issues that are largely particular to this type of research. We conclude that amidst exemplary contributions, much of the reviewed research has not adequately managed these methods challenges, nor has it made use of the full potential of this new research approach. Specifically, we identify and suggest remedies for context-specific and interrelated methods challenges relating to sample definition, choice of level of analysis, operationalization and conceptualization, use of longitudinal data and dealing with various types of problematic heterogeneity. In addition, we note that future research can make further strides towards full utilization of the advantages of the research approach through better matching (from either direction) between theories and the phenomena captured in the data, and by addressing some under-explored research questions for which the approach may be particularly fruitful.

Beware of geeks bearing gifts? Online latent and untapped outlets for farmers' markets in South East Wales

This chapter sets out to identify related issues surrounding the use of Information and Computer Technology (ICT) in developing relationships between local food producers and consumers (both individuals and businesses). Three surveys were conducted in South- East Wales to consider the overlapping issues. The first concerned the role of ICT in relationships between farmers’ market (FMs) vendors and their traditional customers. The second survey examined potential new markets for farmers in the propensity of restaurants and hotels to buy locally, the types and sources of purchases made and the modes of advertising of these businesses. The final survey focused on the potential to expand local web- based selling of farmers’ produce in the future, by examining the potential market of high ICT- use small hotels. Despite the development of tailored ICT facilities, farmers’ market vendors and current individual customers are antipathetic to them. In addition, whilst there is a desire for more local produce particularly amongst independent local restaurants and hotels, this has not been capitalised upon and there is much work to be done even amongst high ICT-use small hotels, to expand the range and scope of farmers’ markets. This raises the need for creation and utilisation of enhanced logistics, payment and marketing management capacity available through a web- based presence, linked to promotion of FMs in business- to- business (B2B) links with local restaurants and hotels. This linked quantitative research highlights the potential value in substantial development of both web portals and supporting logistics to exploit this potential in the future.