Business Creation Processes in Australia : What Start-Up Attempts Get Up and Running, and Why? - A Preliminary Assessment

The Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE) is the largest study of new firm formation that has ever been undertaken in Australia. CAUSEE follows the development of several samples of new and emerging firms over time. In this report we focus on the drivers of outcomes – in terms of reaching an operational stage vs. terminating the effort – of 493 randomly selected nascent firms whose founders have been comprehensively interviewed on two occasions, 12 months apart. We investigate the outcome effects of three groups of variables: Characteristics of the Venture; Resources Used in the Start-Up Process and Characteristics of the Start-Up Process Itself.

Business model construction : the importance of regime of appropriability strategies

To date, most theories of business models have theorized value capture assuming that appropriability regimes were exogenous and that the firm would face a unique, ideal-typical appropriability regime. This has led theory contributions to focus on governance structures to minimize transaction costs, to downplay the interdepencies between value capture and value creation, and to ignore revenue generation strategies. We propose a reconceptualization of business models value capture mechanisms that rely on assumptions of endogeneity and multiplicity of appropriability regimes. This new approach to business model construction highlights the interdependencies and trade-offs between value creation and value capture offered by different types and combinations of appropriability regimes. The theory is illustrated by the analysis of three cases of open source software business models

The roles and importance of formal and informal sources of business support in young firms : evidence from the UK’s 2008 Federation of Small Business Survey

Objectives This research explores the relationship between young firms, their growth orientation-intention and a range of relationships which can be seen to provide business support. Prior-work Research indicates that networks impact the firm’s ability to secure resources (Sirmon and Hitt 2003; Liao and Welsch. 2004; Hanlon and Saunders 2007). Networks have been evaluated in a number of ways ranging from simple counts to characteristics of their composition (Davidsson and Honig 2003), strength of relationships (Granovetter 1973) and network diversity (Carter et al 2003). By providing access to resources and knowledge (from start-up assistance and raising capital, (e.g. Smallbone et al, 2003), networks may assist in enabling continued persistence during those times where firms may experience resource constraints owing to firm growth (Baker and Nelson 2005). Approach The data used in this research was generated in the 2008 UK Federation of Small Businesses (FSB) survey. Over 1,000 of the firms responding were found to fall into the category of “young”, ((defined as firms under 4 years old). Firms were considered the unit of analysis with the entrepreneur being the chief spokesperson for the firm. Preliminary data analysis considered key demographic characteristics and industry classifications, comparing the FSB data with that of the UK government’s own (BERR) Small Business Surveys of 2007 and 2008, to establish some degree of representativeness of the respondents. The analysis then examined networks with varying potential ability to provide support for young firms, the networks measured in terms of number, diversity, characteristic and strength in its relationship to young firm growth orientation. The diversity of business-support-related relationships ranged from friends and family, through professional services, customers and suppliers, and government business services, to trade associations and informal business networks. The characteristics of these formal and informal sources of support for new businesses are examined across a range of business support-type activities for new firms. The number of relationships and types of business support are also explored. Finally, the strength of these relationships is examined by analysis of the source of business support, type of business support, and links to the growth orientation-intention of the firm, after controlling for a number of key variables related to firm and industry status and owner characteristics. Results Preliminary analysis of the data by means of univariate analysis showed that average number of sources of advice was around 2.5 (from a potential total of 6). In terms of the diversity of relationships, universities had by far the smallest percentage of firms receiving beneficial advice from them. Government business services were beneficially used by 40% of young firms, the other relationship types being around the 50-55% mark. In terms of characteristics of the advice, the average number of areas in which benefit was achieved was around 5.5 of a maximum of 15. Start-up advice has by far the highest percentage of firms obtaining beneficial advice, with increasing sales, improving contacts and improving confidence being the other categories at or around the 50% mark. Other market-focused areas where benefits were also received were in the areas of new markets, existing product improvements and new product improvements, where around 40% of the young responding firms obtained benefit. Regression techniques evaluating the strength of these relationships in terms of the links between business support (by source of support, type of support, and range of support) and firm growth orientation-intention focus highlighted a number of significant relationships, even after controlling for a range of other explanatory variables identified in the literature. Specifically, there was found to be a positive relationship between receiving business advice generally (regardless of type or source) and growth orientation. This relationship was seen to be stronger, however, when looking at the number of types of beneficial advice received, and stronger again for the number of sources of this advice. In terms of individual sources of advice, customers and suppliers had the strongest relationship with growth, with Government business services also found to be significant. Combining these two sources was also seen to increase the strength of the relationship between these two sources of advice and growth orientation. In considering areas of support, growth was most strongly positively related to advice that benefited the development of new products and services, and also business confidence, but was negatively related to advice linked to business recovery. Finally, amalgamating the 4 key types and sources of advice to examine the impact of combinations of these types and sources of advice also improved the strength of the relationship. Implications The findings will assist in the understanding of young firms in general and growth more specifically, particularly the role and importance of specific sources, types and combinations of business support used more extensively by new young growth-oriented firms. Value This research may assist in processes designed to allow entrepreneurs to make better decisions; educators and support organizations to develop better advice and assistance, and Governments design better conditions for the creation of new growth-oriented businesses.

Context change archetypes : understanding the impact of context change on business processes

The emergence of Enterprise Resource Planning systems and Business Process Management have led to improvements in the design, implementation, and overall management of business processes. However, the typical focus of these initiatives has been on internal business operations, assuming a defined and stable context in which the processes are designed to operate. Yet, a lack of context-awareness for external change leads to processes and supporting information systems that are unable to react appropriately and timely enough to change. To increase the alignment of processes with environmental change, we propose a conceptual framework that facilitates the identification of context change. Based on a secondary data analysis of published case studies about process adaptation, we exemplify the framework and identify four general archetypes of context-awareness. The framework, in combination with the learning from the case analysis, provides a first understanding of what, where, how, and when processes are subjected to change.

Managing a portfolio of corporate venture units : challenges in achieving within-unit focus and between-unit coordination

Principal Topic: There is increasing recognition that the organizational configurations of corporate venture units should depend on the types of ventures the unit seeks to develop (Burgelman, 1984; Hill and Birkinshaw, 2008). Distinction have been made between internal and external as well as exploitative versus explorative ventures (Hill and Birkinshaw, 2008; Narayan et al., 2009; Schildt et al., 2005). Assuming that firms do not want to limit themselves to a single type of venture, but rather employ a portfolio of ventures, the logical consequence is that firms should employ multiple corporate venture units. Each venture unit tailor-made for the type of venture it seeks to develop. Surprisingly, there is limited attention in the literature for the challenges of managing multiple corporate venture units in a single firm. Maintaining multiple venture units within one firm provides easier access to funding for new ideas (Hamel, 1999). It allows for freedom and flexibility to tie the organizational systems (Rice et al., 2000), autonomy (Hill and Rothaermel, 2003), and involvement of management (Day, 1994; Wadwha and Kotha, 2006) to the requirements of the individual ventures. Yet, the strategic objectives of a venture may change when uncertainty around the venture is resolved (Burgelman, 1984). For example, firms may decide to spin-in external ventures (Chesbrough, 2002) or spun-out ventures that prove strategically unimportant (Burgelman, 1984). This suggests that ventures might need to be transferred between venture units, e.g. from a more internally-driven corporate venture division to a corporate venture capital unit. Several studies suggested that ventures require different managerial skills across their phase of development (Desouza et al., 2007; O'Connor and Ayers, 2005; Kazanjian and Drazin, 1990; Westerman et al., 2006). To facilitate effective transfer between venture units and manage the overall venturing process, it is important that firms set up and manage integrative linkages. Integrative linkages provide synergies and coordination between differentiated units (Lawrence and Lorsch, 1967). Prior findings pointed to the important role of senior management (Westerman et al., 2006; Gilbert, 2006) and a shared organizational vision (Burgers et al., 2009) to coordinate venture units with mainstream businesses. We will draw on these literatures to investigate the key question of how to integratively manage multiple venture units. ---------- Methodology/Key Propositions: In order to seek an answer to the research question, we employ a case study approach that provides unique insights into how firms can break up their venturing process. We selected three Fortune 500 companies that employ multiple venturing units, IBM, Royal Dutch/ Shell and Nokia, and investigated and compared their approaches. It was important that the case companies somewhat differed in the type of venture units they employed as well as the way they integrate and coordinate their venture units. The data are based on extensive interviews and a variety of internal and external company documents to triangulate our findings (Eisenhardt, 1989). The key proposition of the article is that firms can best manage their multiple venture units through an ambidextrous design of loosely coupled units. This provides venture units with sufficient flexibility to employ organizational configurations that best support the type of venture they seek to develop, as well as provides sufficient integration to facilitate smooth transfer of ventures between venture units. Based on the case findings, we develop a generic framework for a new way of managing the venturing process through multiple corporate venture units. ---------- Results and Implications: One of our main findings is that these firms tend to organize their venture units according to phases in the venture development process. That is, they tend to have venture units aimed at incubation of venture ideas as well as units aimed more at the commercialization of ventures into a new business unit for the firm or a start-up. The companies in our case studies tended to coordinate venture units through integrative management skills or a coordinative venture unit that spanned multiple phases. We believe this paper makes two significant contributions. First, we extend prior venturing literature by addressing how firms manage a portfolio of venture units, each achieving different strategic objectives. Second, our framework provides recommendations on how firms should manage such an approach towards venturing. This helps to increase the likelihood of success of their venturing programs.

Micro-family-owned business : transitory survival mechanism or long term wealth creator?

Principal Topic: Entrepreneurship is key to employment, innovation and growth (Acs & Mueller, 2008), and as such, has been the subject of tremendous research in both the economic and management literatures since Solow (1957), Schumpeter (1934, 1943), and Penrose (1959). The presence of entrepreneurs in the economy is a key factor in the success or failure of countries to grow (Audretsch and Thurik, 2001; Dejardin, 2001). Further studies focus on the conditions of existence of entrepreneurship, influential factors invoked are historical, cultural, social, institutional, or purely economic (North, 1997; Thurik 1996 & 1999). Of particular interest, beyond the reasons behind the existence of entrepreneurship, are entrepreneurial survival and good ''performance'' factors. Using cross-country firm data analysis, La Porta & Schleifer (2008) confirm that informal micro-businesses provide on average half of all economic activity in developing countries. They find that these are utterly unproductive compared to formal firms, and conclude that the informal sector serves as a social security net ''keep[ing] millions of people alive, but disappearing over time'' (abstract). Robison (1986), Hill (1996, 1997) posit that the Indonesian government under Suharto always pointed to the lack of indigenous entrepreneurship , thereby motivating the nationalisation of all industries. Furthermore, the same literature also points to the fact that small businesses were mostly left out of development programmes because they were supposed less productive and having less productivity potential than larger ones. Vial (2008) challenges this view and shows that small firms represent about 70% of firms, 12% of total output, but contribute to 25% of total factor productivity growth on average over the period 1975-94 in the industrial sector (Table 10, p.316). ---------- Methodology/Key Propositions: A review of the empirical literature points at several under-researched questions. Firstly, we assess whether there is, evidence of small family-business entrepreneurship in Indonesia. Secondly, we examine and present the characteristics of these enterprises, along with the size of the sector, and its dynamics. Thirdly, we study whether these enterprises underperform compared to the larger scale industrial sector, as it is suggested in the literature. We reconsider performance measurements for micro-family owned businesses. We suggest that, beside productivity measures, performance could be appraised by both the survival probability of the firm, and by the amount of household assets formation. We compare micro-family-owned and larger industrial firms' survival probabilities after the 1997 crisis, their capital productivity, then compare household assets of families involved in business with those who do not. Finally, we examine human and social capital as moderators of enterprises' performance. In particular, we assess whether a higher level of education and community participation have an effect on the likelihood of running a family business, and whether it has an impact on households' assets level. We use the IFLS database compiled and published by RAND Corporation. The data is a rich community, households, and individuals panel dataset in four waves: 1993, 1997, 2000, 2007. We now focus on the waves 1997 and 2000 in order to investigate entrepreneurship behaviours in turbulent times, i.e. the 1997 Asian crisis. We use aggregate individual data, and focus on households data in order to study micro-family-owned businesses. IFLS data covers roughly 7,600 households in 1997 and over 10,000 households in 2000, with about 95% of 1997 households re-interviewed in 2000. Households were interviewed in 13 of the 27 provinces as defined before 2001. Those 13 provinces were targeted because accounting for 83% of the population. A full description of the data is provided in Frankenberg and Thomas (2000), and Strauss et alii (2004). We deflate all monetary values in Rupiah with the World Development Indicators Consumer Price Index base 100 in 2000. ---------- Results and Implications: We find that in Indonesia, entrepreneurship is widespread and two thirds of households hold one or several family businesses. In rural areas, in 2000, 75% of households run one or several businesses. The proportion of households holding both a farm and a non farm business is higher in rural areas, underlining the reliance of rural households on self-employment, especially after the crisis. Those businesses come in various sizes from very small to larger ones. The median business production value represents less than the annual national minimum wage. Figures show that at least 75% of farm businesses produce less than the annual minimum wage, with non farm businesses being more numerous to produce the minimum wage. However, this is only one part of the story, as production is not the only ''output'' or effect of the business. We show that the survival rate of those businesses ranks between 70 and 82% after the 1997 crisis, which contrasts with the 67% survival rate for the formal industrial sector (Ter Wengel & Rodriguez, 2006). Micro Family Owned Businesses might be relatively small in terms of production, they also provide stability in times of crisis. For those businesses that provide business assets figures, we show that capital productivity is fairly high, with rates that are ten times higher for non farm businesses. Results show that households running a business have larger family assets, and households are better off in urban areas. We run a panel logit model in order to test the effect of human and social capital on the existence of businesses among households. We find that non farm businesses are more likely to appear in households with higher human and social capital situated in urban areas. Farm businesses are more likely to appear in lower human capital and rural contexts, while still being supported by community participation. The estimation of our panel data model confirm that households are more likely to have higher family assets if situated in urban area, the higher the education level, the larger the assets, and running a business increase the likelihood of having larger assets. This is especially true for non farm businesses that have a clearly larger and more significant effect on assets than farm businesses. Finally, social capital in the form of community participation also has a positive effect on assets. Those results confirm the existence of a strong entrepreneurship culture among Indonesian households. Investigating survival rates also shows that those businesses are quite stable, even in the face of a violent crisis such as the 1997 one, and as a result, can provide a safety net. Finally, considering household assets - the returns of business to the household, rather than profit or productivity - the returns of business to itself, shows that households running a business are better off. While we demonstrate that uman and social capital are key to business existence, survival and performance, those results open avenues for further research regarding the factors that could hamper growth of those businesses in terms of output and employment.

Confusion with diffusion? Unravelling is diffusion and innovation literature with a focus on SMEs

The aim of this paper is to contribute to the understanding of various models used in research for the adoption and diffusion of information technology in small and medium-sized enterprises (SMEs). Starting with Rogers' diffusion theory and behavioural models, technology adoption models used in IS research are discussed. Empirical research has shown that the reasons why firms choose to adopt or not adopt technology is dependent on a number of factors. These factors can be categorised as owner/manager characteristics, firm characteristics and other characteristics. The existing models explaining IS diffusion and adoption by SMEs overlap and complement each other. This paper reviews the existing literature and proposes a comprehensive model which includes the whole array of variables from earlier models.

Pockets of creativity in business processes

Creative processes, for instance, the development of visual effects or computer games, increasingly become part of the agenda of information systems researchers and practitioners. Such processes get their managerial challenges from the fact that they comprise both well-structured, transactional parts and creative parts. The latter can often not be precisely specified in terms of control flow, required resources, and outcome. The processes’ high uncertainty sets boundaries for the application of traditional business process management concepts, such as process automation, process modeling, process performance measurement, and risk management. Organizations must thus exercise caution when it comes to managing creative processes and supporting these with information technology. This, in turn, requires a profound understanding of the concept of creativity in business processes. In response to this, the present paper introduces a framework for conceptualizing creativity within business processes. The conceptual framework describes three types of uncertainty and constraints as well as the interrelationships among these. The study is grounded in the findings from three case studies that were conducted in the film and visual effects industry. Moreover, we provide initial evidence for the framework’s validity beyond this narrow focus. The framework is intended to serve as a sensitizing device that can guide further information systems research on creativity-related phenomena.

Business Process Model Merging : An Approach to Business Process Consolidation

This paper addresses the problem of constructing consolidated business process models out of collections of process models that share common fragments. The paper considers the construction of unions of multiple models (called merged models) as well as intersections (called digests). Merged models are intended for analysts who wish to create a model that subsumes a collection of process models - typically representing variants of the same underlying process - with the aim of replacing the variants with the merged model. Digests, on the other hand, are intended for analysts who wish to identify the most recurring fragments across a collection of process models, so that they can focus their efforts on optimizing these fragments. The paper presents an algorithm for computing merged models and an algorithm for extracting digests from a merged model. The merging and digest extraction algorithms have been implemented and tested against collections of process models taken from multiple application domains. The tests show that the merging algorithm produces compact models and scales up to process models containing hundreds of nodes. Furthermore, a case study conducted in a large insurance company has demonstrated the usefulness of the merging and digest extraction operators in a practical setting.

Modelling complex resource requirements in Business Process Management Systems

Real-world business processes are resource-intensive. In work environments human resources usually multitask, both human and non-human resources are typically shared between tasks, and multiple resources are sometimes necessary to undertake a single task. However, current Business Process Management Systems focus on task-resource allocation in terms of individual human resources only and lack support for a full spectrum of resource classes (e.g., human or non-human, application or non-application, individual or teamwork, schedulable or unschedulable) that could contribute to tasks within a business process. In this paper we develop a conceptual data model of resources that takes into account the various resource classes and their interactions. The resulting conceptual resource model is validated using a real-life healthcare scenario.

Developing reflective practitioners online: The business of blogs in work integrated learning

Reflective practice is widely considered across discussions around educational psychology, professional identity, employability of graduates, and generic or graduate capabilities. Critical reflection is essential for providing a bridge between the university and the workplace, and for ultimately preparing work ready graduates (Patrick et al, 2008). Work integrated learning, particularly through internships and work placements for students, is viewed as a valuable approach for students developing skills in reflective practice. Reflective journals are one of the tools often used to encourage and develop student reflection. Shifting the reflective journal to an online interface as a reflective blog presents opportunities for more meaningful, frequent and richer interaction between the key players in a work integrated learning experience. This paper examines the adoption, implementation and refinement of the use of reflective blogs in a work integrated learning unit for business students majoring in advertising, marketing and public relations disciplines. The reflective blog is discussed as a learning and assessment tool, including the approaches taken to integrate and scaffold the blog as part of the work integrated learning experience. Graduate capabilities were used as cornerstones for students to frame students’ thinking, experiences and reflection. These capabilities emphasise the value of coherent theoretical and practical knowledge, coupled with critical, creative and analytical thinking, problem solving skills, self reliance and resilience. Underlying these graduate capabilities is a focus on assessment for learning matched with assessment of learning. Using specific triggers and prompts as part of the reflective process, and incorporating ongoing feedback from academic supervisors, students moved from descriptive levels of reflection, to more meaningful and critical reflection. Students’ blogs are analysed to identify key themes, challenges and achievements in the work integrated learning experience. Suggestions for further development and improvement, together with a model of best practice, are proposed.

Engaging operations management students by designing the unit with industry focus

Operations management is an area concerned with the production of goods and services ensuring that business operations are efficient in utilizing resource and effective to meet customer requirements. It deals with the design and management of products, processes, services and supply chains and considers the acquisition, development, and effective and efficient utilization of resources. Unlike other engineering subjects, content of these units could be very wide and vast. It is therefore necessary to cover the content that is most related to the contemporary industries. It is also necessary to understand what engineering management skills are critical for engineers working in the contemporary organisations. Most of the operations management books contain traditional Operations Management techniques. For example ‘inventory management’ is an important topic in operations management. All OM books deal with effective method of inventory management. However, new trend in OM is Just in time (JIT) delivery or minimization of inventory. It is therefore important to decide whether to emphasise on keeping inventory (as suggested by most books) or minimization of inventory. Similarly, for OM decisions like forecasting, optimization and linear programming most organisations now a day’s use software. Now it is important for us to determine whether some of these software need to be introduced in tutorial/ lab classes. If so, what software? It is established in the Teaching and Learning literature that there must be a strong alignment between unit objectives, assessment and learning activities to engage students in learning. Literature also established that engaging students is vital for learning. However, engineering units (more specifically Operations management) is quite different from other majors. Only alignment between objectives, assessment and learning activities cannot guarantee student engagement. Unit content must be practical oriented and skills to be developed should be those demanded by the industry. Present active learning research, using a multi-method research approach, redesigned the operations management content based on latest developments in Engineering Management area and the necessity of Australian industries. The redesigned unit has significantly helped better student engagement and better learning. It was found that students are engaged in the learning if they find the contents are helpful in developing skills that are necessary in their practical life.

Configurable multi-perspective business process models

A configurable process model provides a consolidated view of a family of business processes. It promotes the reuse of proven practices by providing analysts with a generic modelling artifact from which to derive individual process models. Unfortunately, the scope of existing notations for configurable process modelling is restricted, thus hindering their applicability. Specifically, these notations focus on capturing tasks and control-flow dependencies, neglecting equally important ingredients of business processes such as data and resources. This research fills this gap by proposing a configurable process modelling notation incorporating features for capturing resources, data and physical objects involved in the performance of tasks. The proposal has been implemented in a toolset that assists analysts during the configuration phase and guarantees the correctness of the resulting process models. The approach has been validated by means of a case study from the film industry.

Fitting airport privatisation to purpose : aligning governance, time and management focus

Where airports were once the sole responsibility of their governments, liberalisation of economies has seen administrative interests in airport spaces divested increasingly towards market led authority. Extant literature suggests that actions in decision spaces can be described under broad idealised forms of governance. However in looking at a sample of 18 different airports it is apparent that these classic models are insufficient to appreciate the contextual complexity of each case. Issues of institutional arrangements, privatisation, and management focus are reviewed against existing governance modes to produce a model for informing privatisation decisions, based on the contextual needs of the individual airport and region. Expanding governance modes to include emergent airport arrangements both contribute to the existing literature, and provides a framework to assist policy makers and those charged with the operation of airports to design effective governance models. In progressing this framework, contributions are made to government decision makers for the development of new, or review of existing strategies for privatisation, while the private sector can identify the intent and expectations of privatisation initiatives to make better informed decisions.

The effectiveness of literalism-symbolism in business-to-business advertising

A basic element in advertising strategy is the choice of an appeal. In business-to-business (B2B) marketing communication, a long-standing approach relies on literal and factual, benefit-laden messages. Given the highly complex, costly and involved processes of business purchases, such approaches are certainly understandable. This project challenges the traditional B2B approach and asks if an alternative approach—using symbolic messages that operate at a more intrinsic or emotional level—is effective in the B2B arena. As an alternative to literal (factual) messages, there is an emerging body of literature that asserts stronger, more enduring results can be achieved through symbolic messages (imagery or text) in an advertisement. The present study contributes to this stream of research. From a theoretical standpoint, the study explores differences in literal-symbolic message content in B2B advertisements. There has been much discussion—mainly in the consumer literature—on the ability of symbolic messages to motivate a prospect to process advertising information by necessitating more elaborate processing and comprehension. Business buyers are regarded as less receptive to indirect or implicit appeals because their purchase decisions are based on direct evidence of product superiority. It is argued here, that these same buyers may be equally influenced by advertising that stimulates internally-directed motivation, feelings and cognitions about the brand. Thus far, studies on the effect of literalism and symbolism are fragmented, and few focus on the B2B market. While there have been many studies about the effects of symbolism no adequate scale exists to measure the continuum of literalism-symbolism. Therefore, a first task for this study was to develop such a scale. Following scale development, content analysis of 748 B2B print advertisements was undertaken to investigate whether differences in literalism-symbolism led to higher advertising performance. Variations of time and industry were also measured. From a practical perspective, the results challenge the prevailing B2B practice of relying on literal messages. While definitive support was not established for the use of symbolic message content, literal messages also failed to predict advertising performance. If the ‘fact, benefit laden’ assumption within B2B advertising cannot be supported, then other approaches used in the business-to-consumer (B2C) sector, such as symbolic messages may be also appropriate in business markets. Further research will need to test the potential effects of such messages, thereby building a revised foundation that can help drive advances in B2B advertising. Finally, the study offers a contribution to the growing body of knowledge on symbolism in advertising. While the specific focus of the study relates to B2B advertising, the Literalism-Symbolism scale developed here provides a reliable measure to evaluate literal and symbolic message content in all print advertisements. The value of this scale to advance our understanding about message strategy may be significant in future consumer and business advertising research.