Killing our darling: why we need to let go of the entrepreneurial opportunity construct

We support Shane and Venkataraman’s (2000) basic idea of an “entrepreneurship nexus” where characteristics of the actor as well as those of the “opportunity” they work on influence action and outcomes in the creation of new economic activities. However, a review of the literature reveals that minimal progress has been made on the core issues pertaining to the nexus idea. We argue that this is rooted in fundamental and insurmountable problems with the “opportunity” construct itself, and demonstrate the state of confusion in the literature caused by inconsistent use of the construct within and across works and authors. As an alternative, we suggest the admittedly subjective notion of New Venture as a more workable alternative. We provide a comprehensive definition and explanation of this construct, and take steps towards improved conceptualization and operationalization of its subdimensions. With some further work on these conceptualizations and operationalizations it will be possible to implement a comprehensive research program that can finally deliver on the promise outlined by Shane and Venkataraman (2000).

Introduction

The issue of firm growth - how it is achieved and managed, and what consequences it has for different stakeholders - is both theoretically interesting and practically important. It is also an area of scholarly enquiry that has expanded very significantly since we started doing research on it in the 1980s and 1990s. In this volume we present and comment upon the most recent contributions we have made to this field of inquiry - separately, jointly and with various colleagues (who are included in the 'we/us article authors' used in the remainder of this introduction). While the chapters have been published before in various places, we think it valuable to gather them in one easily accessible place, which also allows space for our reflective commentary across the individual chapters. We hope readers will find the work a useful and worthwhile addition to the extant body of knowledge about firm growth. We also hope they will find that it- as its title suggests- brings new•/ perspectives on firm growth and its study, and that it can inspire future contributions by other researchers. This is important, because despite the growing volume of research on firm growth, many important questions still lack satisfactory answers. The current volume may be regarded as a follow-up of a previous collection where we- and Frederic Delmar- presented and commented on eight articles on (mostly small) firm growth that we had jointly or separately published up until that time (Davidsson et al., 2006). In that volume we organised the works under three broad themes: the conceptual and empirical complexity of the firm growth phenomenon; growth aspirations and motivations; and patterns and determinants of actual growth The current volume builds on and extends these themes. Only one of the chapters in the previous volume directly addressed the issue of drivers of actual growth. We add three more in this book, two of which expand on the (aspirations and motivations' theme by relating growth aspirations and motivations (or lack thereof) of the owner-manager to the actual growth achieved in the subsequent period.

Towards an integrative framework for future research on small firm growth

Our review has demonstrated that small firm growth is a complex phenomenon. The concept ‘growth’ denotes both a change in amount and the process by which that change is attained. Further, the growth can be achieved in different ways and with varying degrees of regularity, and it manifests itself along several different dimensions such as sales, employment, and accumulation of assets. This complexity has naturally led researchers to adopt different approaches to studying growth and to use different measures to assess it. Further, although our review shows that it can fruitfully be regarded as a growth issue, the research on small firms' internationalization has largely developed as a separate stream. Similarly, other relatively separate literatures have evolved, which effectively focus on different modes of growth although mostly without regarding the studies first and foremost as growth studies. This goes for topics such as mergers and acquisitions, diversification, and integration - research streams which have largely ignored the particularities of small firms and which in turn have been largely ignored among researchers focusing on small firm growth.

Organic and acquisitive growth : re-examining, testing and extending Penrose’s growth theory

The Theory of the Growth of The Firm by Edith Penrose, first published in 1959, is a seminal contribution to the field of management. Penrose's intention was to create a theory of firm growth which was logically consistent and empirically tractable (Buckley and Casson, 2007). Much attention, however, has been focused on her unintended contribution to the resource-based view (henceforth RBV) (e.g. Kor and Mahoney, 2004; Lockett and Thompson, 2004) rather than her firm growth theory. We feel that this is unfortunate because despite a rapidly growing body of empirical work, conceptual advancement in growth studies has been limited (Davidsson and Wiklund, 2000; Davidsson et ai., 2006; Delmar, 1997; Storey, 1994). The growth literature frequently references Penrose's work, but little explicit testing of her ideas has been undertaken. This is surprising given that Penrose's work remains the most comprehensive theory of growth to date. One explanation is that she did not formality present her arguments, favouring verbal exposition over formalized models (Lockett, 2005; Lockett and Thompson, 2004). However, the central propositions and conclusions of her theory can be operationalized and empirically tested.

Performance configurations over time: implications for growth-and profit-oriented strategies

Entrepreneurship research and practice places emphasis on company growth as a measure of entrepreneurial success. In many cases, there has been a tendency to give growth a very central role, with some researchers even seeing growth as the very essence of entrepreneurship (Cole, 1949; Sexton, 1997; Stevenson & Gumpert, 1991). A large number of empirical studies of the performance of young and/or small firms use growth as the dependent variable (see reviews by Ardishvili, Cardozo, Harmon, & Vadakath, 1998; Delmar, 1997; Wiklund, 1998). By contrast, the two most prominent views of strategic management – strategic positioning (Porter, 1980) and the resource-based view (Barney, 1991; Wernerfelt, 1984) – are both concerned with achieving competitive advantage and regard achieving economic rents and profitability relative to other competitors as the central measures of firm performance. Strategic entrepreneurship integrates these two perspectives and is simultaneously concerned with opportunity seeking and advantage seeking (Hitt, Ireland, Camp, & Sexton, 2002; Ireland, Hitt, & Sirmon, 2003). Consequently, both company growth and relative profitability are together relevant measures of firm performance in the domain of strategic entrepreneurship.

Evaluation of brief dietary questions to estimate vegetable and fruit consumption – using serum carotenoids and red-cell folate

Objective: To evaluate responses to self-administered brief questions regarding consumption of vegetables and fruit by comparison with blood levels of serum carotenoids and red-cell folate. Design: A cross-sectional study in which participants reported their usual intake of fruit and vegetables in servings per day, and serum levels of five carotenoids (α-carotene, β-carotene, β-cryptoxanthin, lutein/zeaxanthin and lycopene) and red-cell folate were measured. Serum carotenoid levels were determined by high-performance liquid chromatography, and red-cell folate by an automated immunoassay system. Settings and subjects: Between October and December 2000, a sample of 1598 adults aged 25 years and over, from six randomly selected urban centres in Queensland, Australia, were examined as part of a national study conducted to determine the prevalence of diabetes and associated cardiovascular risk factors. Results: Statistically significant (P<0.01) associations with vegetable and fruit intake (categorised into groups: ≤1 serving, 2–3 servings and ≥4 servings per day) were observed for α-carotene, β-carotene, β-cryptoxanthin, lutein/zeaxanthin and red-cell folate. The mean level of these carotenoids and of red-cell folate increased with increasing frequency of reported servings of vegetables and fruit, both before and after adjusting for potential confounding factors. A significant association with lycopene was observed only for vegetable intake before adjusting for confounders. Conclusions: These data indicate that brief questions may be a simple and valuable tool for monitoring vegetable and fruit intake in this population.

International entrepreneurship and firm performance over economic crisis

Small and medium firms (SMEs) that operate in global markets are vulnerable to external shocks in uncertain, hostile and volatile business environments given their limited resources and inexperience. In such environments entrepreneurial firms respond by making strategic choices to mitigate such vulnerabilities. This research examines one such important strategic choice – entrepreneurial posturing and its link to financial performance in Finnish SMEs during the global financial crisis. Findings suggest that the dimensions of entrepreneurial posturing have a differential effect on firm performance depending upon the severity of the business environment as well as the firm’s degree of internationalization. Implications for theory and practice are discussed and directions for future research provided.

Capable but not able : the effect of institutional context and search breadth on the absorptive capacity-corporate entrepreneurship relationship

This study investigates how the interaction of institutional market orientation and external search breadth influence the ability to use absorptive capacity to raise the level of corporate entrepreneurship. The findings of a sample of 331 supplier companies providing products and services to the mining industry of Australia and Iran indicate that the positive association between absorptive capacity and corporate entrepreneurship is stronger for companies with greater external knowledge search breadth. Moreover, operating in a less market-oriented institutional context such as, Iran diminishes the ability to utilise a firm’s absorptive capacity to raise their level of corporate entrepreneurship. Yet, firms operating in such contexts are able to overcome these disadvantages posed by their institutional context by engaging in broader external search of knowledge.

Entrepreneurial bricolage and young firm performance : the moderating effect of team composition

Many young firms face significant resource constraints during attempts to develop and grow. One promising theory that explicitly links to resource constraints is bricolage: a construct developed by Levi Strauss (1967). Bricolage aligns with notions of resourcefulness: using what’s on hand, through making do, and recombining resources for new or novel purposes. In this paper we further theorize and test the moderating effects of ownership team composition on bricolage and firm performance. Our findings suggest that team size, strong network ties, and functionality enhance the effects of bricolage in young firm performance.

Entrepreneurial network development as a sign of business emergence

This study aims to explain the entrepreneurial processes as developments of entrepreneurial networks. As a theoretical framework, this study adopts the theory of experimentally organized economy and competence blocs. As suggested by this theory, entrepreneurs select profitable innovations and commercialise them. Through logistic regressions on the subjective and objective dependent variables, we find that nascent firms’ various activities to network customers, innovators, investors, and employees are positively associated with the business emergence. This study identifies the roles of entrepreneurs and the other actors in the entrepreneurial processes.

The Australian rise of esomeprazole - was expenditure on samples a contributor?

Background Administrative data from the Australian Pharmaceutical Benefits Scheme (PBS) showed rapid growth of esomeprazole dispensing when it was launched. Australia has universal prescription medicine coverage (the PBS), which included esomeprazole from August 2002. Free samples of new medicines are commonly provided to doctors. Objectives To determine if a relationship exists between marketing expenditure on samples and the dispensing rate for esomeprazole in Australia between June 2002 and September 2006. Methods Quarterly sample expenditures at product/brand level for proton pump inhibitors (PPIs) for Australian general practitioners were obtained for July 2002 to September 2006. Corresponding PBS dispensing data were obtained for all PPIs and converted to defined daily dose (DDD)/1000 population/day. Spending on samples was calculated as dollars per dispensed prescription and plotted against time on the Australian market. Results: Total PPI usage increased from 34.2 to 50.8 DDD/1000 population/ day over the study period. Expenditure on samples per dispensed prescription was higher when a PPI was new on the market and diminished over 5-6 years to a relatively constant level. The rapid decline in this ratio was demonstrated by a case study following esomeprazole from launch in Australia for almost 5 years clearly demonstrating the initial investment to drive sales. Conclusion A relationship appears to exist between expenditure on esomeprazole samples and its usage in Australia. A high initial investment was followed by a rapid reduction in cost per prescription dispensed, predominantly due to growth in market share. This trend was consistent with other PPIs

Strategic renewal through design led innovation : findings from embedded practice

Strategic Renewal has been the subject of research in large organisations but has received relatively little attention in small and medium enterprises. Using case study examples of small and medium manufacturing firms, this paper presents the findings from a longitudinal action research project where participating companies explored design led innovation processes to find new ways to renew their businesses. Specifically our findings indicate that when designers act as innovation catalysts in embedded longitudinal action research, SMEs engage in strategic renewal, gain a deeper appreciation of their customers, become more aware of the value proposition of the company and engage in new practices to improve their competitive advantage.

The grapes of wrath: The Coonawarra dispute, geographical indications and international trade

The famous wine region of Coonawarra in South Australia has been promoted as ’Australia's other Red Centre', emphasizing its terra rossa soil and its cabernet sauvignon. In his atlas of the wine regions of Australia, John Beeston comments upon the rich and contested history of the region: ’Coonawarra is certainly the most famous cabernet sauvignon region in Australia, and some would argue, the most renowned wine region in Australia per se'. A reporter, Penelope Debelle, captures a sense of the legal conflict over the parameters of the boundaries of Coonawarra: ’Behind the name Coonawarra, an inglorious contest is being waged that pits the romance of South Australia's terra rossa cool-climate wine region against the cold commercial reality of the label.'This Chapter tells the story behind the Coonawarra litigation, addressing the parties to the dispute; the legal and historical context of the case; and the immediate impact case, as well as its lingering significance. It considers the ’Coonawarra' case as, very literally, a landmark in Australian jurisprudence in respect of intellectual property. This chapter engages in the methodology of ’legal storytelling'. In the field of new historicism, the use of anecdotes - petite histoire - has been seen as a useful way of challenging grand historical narratives. Joel Fineman has observed that the anecdote is ’the literary form or genre that uniquely refers to the real.' This chapter has three parts. Part 1 outlines the European Community - Australia Wine Agreement 1994, and the operation of the Australian Wine and Brandy Corporation Act 1980 (Cth). Part 2 considers the various stages of the dispute over the Coonawarra region - moving from the decision of the Geographical Indications Committee, to the ruling of the Administrative Appeals Tribunal; and the conclusive decision of the Full Court of the Federal Court of Australia. Part 3 examines the implications of the Coonawarra litigation for other wine regions of Australia - most notably, the King Valley in Victoria; but also the Hunter Valley in the New South Wales; and the Margaret River in Western Australia. The conclusion considers the ramifications of the European Community-Australia Wine Agreement 2007, which has been initialed by both sides.

The impact of international potentials, entrepreneurial motivations and firm stages on new venture internationalisation

Past research on early internationalising firms often examined factors and motivations potentially influencing internationalisation activities separately. The purpose of this paper was to investigate a set of indicators and their interplay with each other. Firstly, the impact of (a) international potential in the form of the depth and diversity of international experience and network contacts was investigated. Secondly, it was examined to what extent (b) motivational factors and (c) firm stages affect the relationship between international potential and internationalisation activities. This paper used longitudinal data from the Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE). Results suggest that the international potential of a new venture as a whole is a significant determinant of subsequent internationalisation activities. However, having a diverse international experience from a variety of foreign countries appears to be more beneficial than a long-lasting experience from only a limited number of foreign countries. Furthermore, analyses showed that the interplay of high growth ambitions and the depth of international experience positively affect internationalisation activities. Opportunity or necessity driven entrepreneurship, however, neither exaggerate nor weaken the positive relationship between international potentials and internationalisation activities. Similarly, no moderation by firm stages was found.

Academic entrepreneurship: A multilevel examination of individual, subunit and organizational effects

This study utilizes a multilevel approach to both estimate the relative importance of individual, subunit, and organization effects on entrepreneurial intentions in academia, as well as to investigate specific factors within the subunit effect and their interactions with other levels. Using a dataset of 2,652 researchers from 386 departments in 24 European universities, our findings reveal that intra-university differences, caused by the influence of the department, should not be ignored when studying academic entrepreneurship. Whereas researchers’ entrepreneurial intentions are mostly influenced by individual differences, department membership explains more variation than the university as a whole. Furthermore, drawing upon organizational culture literature, we identify a department’s adhocracy culture, characterized by flexibility and an external orientation, to be positively related to entrepreneurial intentions. Finally, consistent with trait activation theory, we find that strong adhocracy cultures reinforce the positive association between proactive personality and entrepreneurial intentions. This effect is further intensified when the university also has a technology transfer office with a substantial size. Our results have relevant implications for both academics and practitioners, including university managers, department heads and policy makers.