External orientation and business model adaptation in young and nascent firms : preliminary analysis from the CAUSSE project

Discovering factors that help or impede business model change is an important quest, both for researchers and practitioners. In this study we present preliminary findings based on the CAUSEE survey of young and nascent firms in Australia. In particular, we seek to determine an association between business model adaptation and external orientation among young and nascent firms within the random sample and amongst an oversample of high potential firms. The concept of external orientation is made operational by asking respondents whether, and to what extent, they rely on certain sources of advice and information. We find that high potential firms are more likely to have made at least some change to their business model, that greater use of external sources of advice is generally significantly associated with business model adaptation, but also that there appear to be different patterns of behaviour between the random sample and the over sample.

Do strategy choices matter for nascent firms? A study on effectuation and causation impacts on new ventures outcomes

Principal Topic : Nascent entrepreneurship has drawn the attention of scholars in the last few years (Davidsson, 2006, Wagner, 2004). However, most studies have asked why firms are created focussing on questions such as what are the characteristics (Delmar and Davidsson, 2000) and motivations (Carter, Gartner, Shaver & Reynolds, 2004) of nascent entrepreneurs, or what are the success factors in venture creation (Davidsson & Honig; 2003; Delmar and Shane, 2004). In contrast, the question of how companies emerge is still in its infancy. On a theoretical side, effectuation, developed by Sarasvathy (2001) offers one view of the strategies that may be at work during the venture creation process. Causation, the theorized inverse to effectuation, may be described as a rational reasoning method to create a company. After a comprehensive market analysis to discover opportunities, the entrepreneur will select the alternative with the higher expected return and implement it through the use of a business plan. In contrast, effectuation suggests that the future entrepreneur will develop her new venture in a more iterative way by selecting possibilities through flexibility and interaction with the market, affordability of loss of resources and time invested, development of pre-commitments and alliances from stakeholders. Another contrasting point is that causation is ''goal driven'' while an effectual approach is ''mean driven'' (Sarasvathy, 2001) One of the predictions of effectuation theory is effectuation is more likely to be used by entrepreneurs early in the venture creation process (Sarasvathy, 2001). However, this temporal aspect and the impact of the effectuation strategy on the venture outcomes has so far not been systematically and empirically tested on large samples. The reason behind this research gap is twofold. Firstly, few studies collect longitudinal data on emerging ventures at an early enough stage of development to avoid severe survivor bias. Second, the studies that collect such data have not included validated measures of effectuation. The research we are conducting attempts to partially fill this gap by combining an empirical investigation on a large sample of nascent and young firms with the effectuation/causation continuum as a basis (Sarasvathy, 2001). The objectives are to understand the strategies used by the firms during the creation process and measure their impacts on the firm outcomes. Methodology/Key Propositions : This study draws its data from the first wave of the CAUSEE project where 28,383 Australian households were randomly contacted by phone using a specific methodology to capture emerging firms (Davidsson, Steffens, Gordon, Reynolds, 2008). This screening led to the identification of 594 nascent ventures (i.e., firms that are not operating yet) and 514 young firms (i.e., firms that have started operating from 2004) that were willing to participate in the study. Comprehensive phone interviews were conducted with these 1108 ventures. In a likewise comprehensive follow-up 12 months later, 80% of the eligible cases completed the interview. The questionnaire contains specific sections designed to distinguish effectual and causal processes, innovation, gestation activities, business idea changes and ventures outcomes. The effectuation questions are based on the components of effectuation strategy as described by Sarasvathy (2001) namely: flexibility, affordable loss and pre-commitment from stakeholders. Results from two rounds of pre-testing informed the design of the instrument included in the main survey. The first two waves of data have will be used to test and compare the use of effectuation in the venture creation process. To increase the robustness of the results, temporal use of effectuation will be tested both directly and indirectly. 1. By comparing the use of effectuation in nascent and young firms from wave 1 to 2, we will be able to find out how effectuation is affected by time over a 12-month duration and if the stage of venture development has an impact on its use. 2. By comparing nascent ventures early in the creation process versus nascent ventures late in the creation process. Early versus late can be determined with the help of time-stamped gestation activity questions included in the survey. This will help us to determine the change on a small time scale during the creation phase of the venture. 3. By comparing nascent firms to young (already operational) firms. 4. By comparing young firms becoming operational in 2006 with those first becoming operational in 2004. Results and Implications : Wave 1 and 2 data have been completed and wave 2 is currently being checked and 'cleaned'. Analysis work will commence in September, 2009. This paper is expected to contribute to the body of knowledge on effectuation by measuring quantitatively its use and impact on nascent and young firms activities at different stages of their development. In addition, this study will also increase the understanding of the venture creation process by comparing over time nascent and young firms from a large sample of randomly selected ventures. We acknowledge the results from this study will be preliminary and will have to be interpreted with caution as the changes identified may be due to several factors and may not only be attributed to the use/not use of effectuation. Meanwhile, we believe that this study is important to the field of entrepreneurship as it provides some much needed insights on the processes used by nascent and young firms during their creation and early operating stages.

Business planning, innovation and performance in nascent firms

Debate about the relationships between business planning and performance has been active for decades (Bhidé, 2000; Mintzberg, 1994). While results have been inconclusive, this topic still strongly divides the research community (Brinckmann et al., 2010; Chwolka & Raith, 2011; Delmar & Shane, 2004; Frese, 2009; Gruber, 2007; Honig & Karlsson, 2004). Previous research explored the relationships between innovation and the venture creation process (Amason et al., 2006, Dewar & Dutton, 1986; Jennings et al., 2009). However, the relationships between business planning and innovation have mostly been invoked indirectly in the strategy and entrepreneurship literatures through the notion of uncertainty surrounding the development of innovation. Some posited that planning may be irrelevant due to the iterative process, the numerous changes innovation development entails and the need to be flexible (Brews & Hunt, 1999). Others suggested that planning may facilitate the achievement of goals and overcoming of obstacles (Locke and Latham, 2000), guide the venture in its allocation of resources (Delmar and Shane, 2003) and help to foster the communication about the innovation being developed (Liao & Welsh, 2008). However, the nature and extents of the relationships between business planning, innovation and performance are still largely unknown. Moreover, if the reasons why ventures should engage (Frese, 2009) –or not- (Honig, 2004) in business planning have been investigated quite extensively (Brinckmann et al., 2010), the specific value of business planning for nascent firms developing innovation is still unclear. The objective of this paper is to shed some light on these important aspects by investigating the two following questions on a large sample of random nascent firms: 1) how is business planning use over time by new ventures developing different types and degrees of innovation? 2) how do business planning and innovation impact the performance of the nascent firms? Methods & Key propositions This PSED-type study draws its data from the first three waves of the CAUSEE project where 30,105 Australian households were randomly contacted by phone using a methodology to capture emerging firms (Davidsson, Steffens, Gordon, Reynolds, 2008). This screening led to the identification of 594 nascent ventures (i.e., firms that were not operating yet at the time of the identification) that were willing to participate in the study. Comprehensive phone interviews were conducted with these 594 ventures. Likewise, two comprehensive follow-ups were organised 12 months and 24 months later where 80% of the eligible cases of the previous wave completed the interview. The questionnaire contains specific sections investigating business plans such as: presence or absence, degree of formality and updates of the plan. Four types of innovation are measured along three degrees of intensity to produce a comprehensive continuous measure ranging from 0 to 12 (Dahlqvist & Wiklund, 2011). Other sections informing on the gestation activities, industry and different types of experiences will be used as controls to measure the relationships and the impacts of business planning and innovation on the performance of nascent firms overtime. Results from two rounds of pre-testing informed the design of the instrument included in the main survey. The three waves of data are used to first test and compare the use of planning amongst nascent firms by their degrees of innovation and then to examine their impact on performance overtime through regression analyses. Results and Implications Three waves of data collection have been completed. Preliminary results show that on average, innovative firms are more likely to have a business plans than their low innovative counterpart. They are also most likely to update their plan suggesting a more continuous use of the plan over time than previously thought. Further analyses regarding the relationships between business planning, innovation and performance are undergoing. This paper is expected to contribute to the literature on business planning and innovation by measuring quantitatively their impact on nascent firms activities and performance at different stages of their development. In addition, this study will shed a new light on the business planning-performance relationship by disentangling plans, types of nascent firms regarding their innovation degres and their performance over time. Finally, we expect to increase the understanding of the venture creation process by analysing those questions on nascent firms from a large longitudinal sample of randomly selected ventures. We acknowledge the results from this study will be preliminary and will have to be interpreted with caution as the business planning-performance is not a straightforward relationship (Brinckmann et al., 2010). Meanwhile, we believe that this study is important to the field of entrepreneurship as it provides some much needed insights on the processes used by nascent firms during their creation and early operating stages.

New and young firms Entrepreneurship policy and the role of government – evidence from the Federation of Small Businesses survey

Purpose – The purpose of this paper is to investigate whether new and young firms are different from older firms. This analysis is undertaken to explore general characteristics, use of external resources and growth orientation. Design/methodology/approach – Data from the 2008 UK Federation of Small Businesses survey provided 8,000 responses. Quantitative analysis identified significantly different characteristics of firms from 0-4, 4-9, 9-19 and 20+ years. Factor analysis was utilised to identify the advice sets, finance and public procurement customers of greatest interest, with ANOVA used to statistically compare firms in the identified age groups with different growth aspirations. Findings – The findings reveal key differences between new, young and older firms in terms of characteristics including business sector, owner/manager age, education/business experience, legal status, intellectual property and trading performance. New and young firms were more able to access beneficial resources in terms of finance and advice from several sources. New and young firms were also able to more easily access government and external finance, as well as government advice, but less able to access public procurement. Research limitations/implications – New and young firms are utilising external networks to access several resources for development purposes, and this differs for older firms. This suggests that a more explicit age-differentiated focus is required for government policies aimed at supporting firm growth. Originality/value – The study provides important baseline data for future quantitative and qualitative studies focused on the impact of firm age and government policy.

Do strategy choices matter for nascent firms? Effectuation in the early stages of venture creation

This paper explores empirically effects of Effectuation on nascent firms’ performance. Three potential outcomes for nascent firms using different levels of effectuation and causation are investigated. Innovation, a measure of venture sophistication was introduced as a moderator. We examine a longitudinal random sample of 625 nascent firms collected over two years in Australia and provide support for our hypotheses. Results show that in situation of high uncertainty, nascent firms using effectuation are more likely to reach operational stage than their counterpart using causation.

Immigrants in the Czech Republic (With Special Reference to Ukrainian Workers and "Western" Firms Operating in Prague)

International migration has increased rapidly in the Czech Republic, with more than 150,000 legally registered foreign residents at the end of 1996. A large proportion of these are in Prague - 35% of the total in December 1996. The aim of this project was to enrich the fund of information concerning the "environment", reasons and "mechanisms" behind immigration to the Czech Republic. Mr. Drbohlav looked first at the empirical situation and on this basis set out to test certain well-known migration theories. He focused on four main areas: 1) a detailed description and explanation of the stock of foreign citizens legally settled in Czech territory, concentrating particularly on "economic" migrants; 2) a questionnaire survey targeting a total of 192 Ukrainian workers (98 in the fall 1995 and 94 in the fall 1996) working in Prague or its vicinity; 3) a second questionnaire survey of 40 "western" firms (20 in 1996 and 20 in 1997) operating out of Prague; 4) an opinion poll on how the Czech population reacts to foreign workers in the CR. Over 80% of economic immigrants at the end of 1996 were from European countries, 16% from Asia and under 2% from North America. The largest single nationalities were Ukrainians, Slovaks, Vietnamese and Poles. There has been a huge increase in the Ukrainian immigrant community over both space (by region) and time (a ten-fold increase since 1993), and at 40,000 persons this represents one third of all legal immigrants. Indications are that many more live and work there illegally. Young males with low educational/skills levels predominate, in contrast with the more heterogeneous immigration from the "West". The primary reason for this migration is the higher wages in the Czech Republic. In 1994 the relative figures of GDP adjusted for parity of purchasing power were US$ 8,095 for the Czech Republic versus US$ 3,330 for the Ukraine as a whole and US$ 1,600 for the Zakarpatye region from which 49% of the respondents in the survey came. On an individual level, the average Czech wage is about US$ 330 per month, while 50% of the Ukrainian respondents put their last monthly wage before leaving for the Czech Republic at under US$ 27. The very low level of unemployment in the latter country (fluctuating around 4%) was also mentioned as an important factor. Migration was seen as a way of diversifying the family's source of income and 49% of the respondents had made their plans together with partners or close relatives, while 45% regularly send remittances to Ukraine (94% do so through friends or relatives). Looking at Ukrainian migration from the point of view of the dual market theory, these migrants' type and conditions of work, work load and earnings were all significantly worse than in the primary sector, which employs well educated people and offers them good earnings, job security and benefits. 53% of respondents were working and/or staying in the Czech Republic illegally at the time of the research, 73% worked as unqualified, unskilled workers or auxiliary workers, 62% worked more than 12 hours a day, and 40% evaluated their working conditions as hard. 51% had no days off, earnings were low in relation to the number of hours worked. and 85% said that their earnings did not increase over time. Nearly half the workers were recruited in Ukraine and only 4% expressed a desire to stay in the Czech Republic. Network theories were also borne out to some extent as 33% of immigrants came together with friends from the same village, town or region in Ukraine. The number who have relatives working in the Czech Republic is rising, and many wish to invite relatives or children to visit them. The presence of organisations which organised cross-border migration, including some which resort to organising illegal documents, also gives some support for the institutional theory. Mr. Drbohlav found that all the migration theories considered offered some insights on the situation, but that none was sufficient to explain it all. He also points out parallels with many other regions of the world, including Central America, South and North America, Melanesia, Indonesia, East Africa, India, the Middle East and Russia. For the survey of foreign and international firms, those chosen were largely from countries represented by more than one company and were mainly active in market services such as financial and trade services, marketing and consulting. While 48% of the firms had more than 10,000 employees spread through many countries, more than two thirds had fewer than 50 employees in the Czech Republic. Czechs formed 80% plus of general staff in these firms although not more than 50% of senior management, and very few other "easterners" were employed. All companies absolutely denied employing people illegally. The average monthly wage of Czech staff was US$ 850, with that of top managers from the firm's "mother country" being US$ 6,350 and that of other western managers US$ 3,410. The foreign staff were generally highly mobile and were rarely accompanied by their families. Most saw their time in the Czech Republic as positive for their careers but very few had any intention of remaining there. Factors in the local situation which were evaluated positively included market opportunities, the economic and political environment, the quality of technical and managerial staff, and cheap labour and low production costs. In contrast, the level of appropriate business ethics and conduct, the attitude of local and regional authorities, environmental production conditions, the legal environment and financial markets and fiscal policy were rated very low. In the final section of his work Mr. Drbohlav looked at the opinions expressed by the local Czech population in a poll carried out at the beginning of 1997. This confirmed that international labour migration has become visible in this country, with 43% of respondents knowing at least one foreigner employed by a Czech firm in this country. Perception differ according to the region from which the workers come and those from "the West" are preferred to those coming from further east. 49% saw their attitude towards the former as friendly but only 20% felt thus towards the latter. Overall, attitudes towards migrant workers is neutral, although 38% said that such workers should not have the same rights as Czech citizens. Sympathy towards foreign workers tends to increase with education and the standard of living, and the relatively positive attitudes towards foreigners in the South Bohemia region contradicted the frequent belief that a lack of experience of international migration lowers positive perceptions of it.

Internationalization of Chinese and Korean firms

This article compares and contrasts the growth of Chinese and Korean multinational enterprises (MNEs). The article identifies the similarities and differences between Chinese and Korean MNEs in terms of motivations for internationalization, expansion strategies, and paths. The goal of this article is to contribute to the literature by shifting focus on host-country conditions to home-country conditions in explaining the drivers for firms' internationalization. We conclude that firms are motivated to expand abroad when faced with domestic competitive disadvantages resulting from absence or deficiency of one or more of Porter's Diamond attributes in their domestic market. Implications for further studies are also explored.

Entrepreneurship and family firms : a case study in growth and survival

Entrepreneurial marketing has gained popularity in both the entrepreneurship and marketing disciplines in recent times. The success of ventures that have pursued what are considered non-traditional marketing approaches has been attributed to entrepreneurial marketing practices. Despite the multitude of marketing concepts and models, there are prominent venture successes that do not conform to these and have thus been put in the ''entrepreneurial'' box. One only has to look to the ''Virgin'' model to put this in context. Branson has proven for example that not ''sticking to the knitting'' can work with the ways the Virgin portfolio has been diversified. Consequently, an entrepreneurial orientation is considered a desirable philosophy and has become prominent in such industries as airlines and information technology. Miles and Arnold (1991) found that entrepreneurial orientation is positively correlated to marketing orientation. They propose that entrepreneurial orientation is a strategic response by firms to turbulence in the environment. While many marketing successes are analysed in hindsight using traditional marketing concepts and strategies, there are those that challenge standard marketing textbook recommendations. Marketing strategy is often viewed as a process of targeting, segmenting and positioning (STP). Academics and consultants advocate this approach along with the marketing and business plans. The reality however is that a number of businesses do not practice these and pursue alternative approaches. Other schools of thought and business models have been developing to explain differences in orientation such as branding (Keller 2001), the service-dominant logic (Vargo and Lusch 2004) and effectuation logic (Sarasvathy 2001). This indicates that scholars are now looking to cognate fields to explain a given phenomenon beyond their own disciplines. Bucking this trend is a growing number of researchers working at the interface between entrepreneurship and marketing. There is now an emerging body of work dedicated to this interface, hence the development of entrepreneurial marketing as an alternative to the traditional approaches. Hills and Hultman (2008:3) define entrepreneurial marketing as ''a spirit, an orientation as well as a process of passionately pursuing opportunities and launching and growing ventures that create perceived customer value through relationships by employing innovativeness, creativity, selling, market immersion, networking and flexibility.'' Although it started as a special interest group, entrepreneurial marketing is now gaining recognition in mainstream entrepreneurship and marketing literature. For example new marketing textbooks now incorporate an entrepreneurial marketing focus (Grewal and Levy 2008). The purpose of this paper is to explore what entrepreneurial approaches are used by entrepreneurs and their impact on the success of marketing activities. Methodology/Key Propositions In order to investigate this, we employ two cases: 42Below, vodka producers from New Zealand and Penderyn Distillery, whisky distillers from Wales. The cases were chosen based on the following criteria. Firstly, both companies originate from small economies. Secondly, both make products (spirits) from locations that are not traditionally regarded as producers of their flagship products and thirdly, the two companies are different from each other in terms of their age. Penderyn is an old company established in 1882, whereas 42Below was founded only in 1999. Vodka has never been associated with New Zealand. By the same token, whisky has always been associated with Scotland and Ireland but never been with Wales. Both companies defied traditional stereotypes in marketing their flagship products and found international success. Using a comparative a case study approach, we use Covin and Slevin's (1989) set of items that purport to measure entrepreneurial orientation and apply a qualitative lens on the approaches of both companies. These are: 1. cultural emphases on innovation and R&D 2. high rate of new product introduction 3. bold, innovative product development 4. initiator proactive posture 5. first to introduce new technologies and products 6. competitive posture toward competitor 7. strong prolictivity for high risk, high return projects 8. environment requires boldness to achieve objectives 9. when faced with risk, adopts aggressive, bold posture. Results and Implications We find that both companies have employed entrepreneurial marketing approaches but with different intensities. While acknowledging that they are different from the norm, the specifics of their individual approaches are dissimilar. Both companies have positioned their products at the premium end of their product categories and have emphasised quality and awards in their communication strategies. 42Below has carved an image of irreverence and being non-conformist. They have unashamedly utilised viral marketing and entered international markets by training bartenders and hosting unconventional events. They use edgy language such as vodka university, vodka professors and vodka ambassadors. Penderyn Distillery has taken a more traditional approach to marketing its products and portraying romantic images of age-old tradition of distilling as key to their positioning. Both companies enjoy success as evidenced by industry awards and international acclaim.

Entrepreneurship and family firms : growth and survival

Family businesses dominate in a majority of economies (Astrachan and Shanker, 2003; Chrisman, Chua, and Sharma, 2005; Morck and Yeung, 2004). As entrepreneurial activities have been shown to be central to economic growth it is essential that family businesses, irrespective of ownership patterns, not only survive but also grow thus growing the economy overall. While a great deal is known about entrepreneurial activities and a body of knowledge is being developed in relation to entrepreneurial processes in family firms, more needs to be understood in relation to the dynamics of entrepreneurial activities at the individual family firm level. One area of particular interest is the dynamics within the business and the family and how these dynamics impact upon entrepreneurial activities. Specifically how relationships between and among family members engaged in the business can interact with professional non-family member senior executives. The senior executives can actively use their positions in such ways that initiatives suggested by family members are less successful than they might be. This paper addresses how ‘family’ aspects of a business can assist or impede the entrepreneurial activities of individuals. It takes into account some of the unique features of family businesses – such as the importance of ‘familiness’ as a competitive advantage; the direct links between ownership and control of a business and the recognition (often implicit) that individuals in families do make a difference to how the business functions (Habbershon and Williams, 1999, Sharma, 2004; and Tokarczyk, Hansen Green, and Down, 2007). This emphasis on individuals in families fits well with the idea of entrepreneur as individual, as expressed by Schumpeter (1934), Baumol et al (2007). The theoretical approach that adopted to explore the dynamics of processes occurring within family firms is structuration theory combined with a theory of embeddeness (Dacin, Ventresca and Beal, 1999; Giddens, 1979, 1984, Jack and Anderson, 2002; and Sarason, Dean and Dillard, 2006).

Why adopt now? Multiple case studies and survey studies comparing small, medium and large firms

While a number of factors have been highlighted in the innovation adoption literature, little is known about the key triggers of innovation adoption across differently-sized firms. This study compares case studies of small, medium and large manufacturing firms who recently decided to adopt a process innovation. We also employ organizational surveys from 134 firms investigating the factors which influence innovation adoption. The quantitative results support the qualitative findings that the external pressures are a trigger among small to medium firms, while the larger firm’s adoption was associated with internal causes.

When sparks fly : developing formal mentoring programs for the career development of young and emerging artists

Formal mentoring programs are accepted as a valuable strategy for developing young and emerging artists. This thesis presents the results of an evaluation of the SPARK National Young Artists Mentoring Program (SPARK). SPARK was a ten-month formal mentoring program managed by Youth Arts Queensland (YAQ) on behalf of the Australia Council for the Arts from 2003-2009. The program aimed to assist young and emerging Australian artists between the ages of 18-26 to establish a professional career in the arts. It was a highly successful formal arts mentoring program that facilitated 58 mentorships between young and emerging artists and professional artists from across Australia in five program rounds over its seven year lifespan. Interest from other cultural organisations looking to develop their own formal mentoring programs encouraged YAQ to commission this research to determine how the program works to achieve its effects. This study was conducted with young and emerging artists who participated in SPARK from 2003 to 2008. It took a theory-driven evaluation approach to examine SPARK as an example of what makes formal arts mentoring programs effective. It focused on understanding the program’s theory or how the program worked to achieve its desired outcomes. The program activities and assumed responses to program activities were mapped out in a theories of change model. This theoretical framework was then used to plan the points for data collection. Through the process of data collection, actual program developments were compared to the theoretical framework to see what occurred as expected and what did not. The findings were then generalised for knowledge and wider application. The findings demonstrated that SPARK was a successful and effective program and an exemplar model of a formal mentoring program preparing young and emerging artists for professional careers in the arts. They also indicate several ways in which this already strong program could be further improved, including: looking at the way mentoring relationships are set up and how the mentoring process is managed; considering the balance between artistic and professional development; developing career development competencies and networking skills; taking into account the needs of young and emerging artists to develop their professional identity and build confidence; and giving more thought to the desired program outcomes and considering the issue of timeliness and readiness for career transition. From these findings, together with principles outlined in the mentoring and career development literature, a number of necessary conditions have been identified for developing effective mentoring programs in the career development of young and emerging artists.

Why adopt now? Multiple case studies and survey studies comparing small, medium and large firms

While a number of factors have been highlighted in the innovation adoption literature, little is known about whether different factors are related to innovation adoption in differently-sized firms. We used preliminary case studies of small, medium and large firms to ground our hypotheses, which were then tested using a survey of 94 firms. We found that external stakeholder pressure and non-financial readiness were related to innovation adoption in SMEs; but that for large firms, adoption was related to the opportunity to innovate. It may be that the difficulties of adopting innovations, including both the financial cost and the effort involved, are too great for SMEs to overcome unless there is either a compelling need (external pressure) or enough in-house capability (non-financial readiness). This suggests that SMEs are more likely to have innovation “pushed” onto them while large firms are more likely to “pull” innovations when they have the opportunity.