The International Library of Entrepreneurship: New Firm Startups

Citation

Lee, R. (2007), "The International Library of Entrepreneurship: New Firm Startups", International Journal of Entrepreneurial Behavior & Research, Vol. 13 No. 6, pp. 380-383. https://doi.org/10.1108/13552550710829188

This book adopts a multidisciplinary approach to discuss a prominent area of entrepreneurial research: new venture start‐up. The editor, Per Davidsson, makes an explicit attempt to undertake an evaluation of new venture start‐up through incorporating fields such as management, economics, psychology, sociology and geography. The book forms part of a wider collection entitled “The International Library of Entrepreneurship Research” and comprises a selection of broad ranging papers that attempts to inspire researchers, students and policymakers. The selection of papers in this volume represents conceptual and literature review based studies, while also assembling core empirical studies ranging from large‐scale surveys, case studies and interview approaches. The subsequent layout of the book is organised into six parts comprising 25 papers.

Papers in Part I (Papers 1‐2) focus on defining new venture start‐up and provide an introductory overview of the theoretical attributes to be discussed throughout the book. Opening with Ucbasaran et al.'s (2001) conceptual paper, the focus of research attempts to simplify the masses of fragmented start‐up research into separate and distinctive categories:

• •

  entrepreneurship theory;

• •

  types of entrepreneur;

• •

  entrepreneurial processes;

• •

  organisational forms;

• •

  external environment; and

• •

  outcomes.

Regarding the second paper, van der Veen and Wakkee (2004) continue the trend for rationalising a framework for which to place the many themes of start‐up literature. The processes of opportunity identification, exploitation and value creation while considering the individual and environmental factors that may impact upon venture performance are discussed.

Papers included in Part II (Papers 3‐6) provide an important and well‐informed discussion on the environmental factors that influence new firm start‐up. Baumol (1990) formulates a hypothesised argument where entrepreneurial start‐up is predominantly influenced by institutional support around industry evolution and not creative destruction. Reynolds et al. (1994) shed considerable light on the macro‐economic indicators of population growth, urban development, personal household wealth and government spending that contributes to firm birth rate. Conversely, Dean and Meyer (1996) evaluate the micro‐economic and industrial indicators of rate of demand, sales dynamics and vertical integration that are deemed important statistical predictors of new venture formation. Finally, Low and Abrahamson (1997) extend the complexities of the previous articles and enable an understanding of the growth and maturation of industries that enable the exploitation of opportunities.

Papers included in Part III (Papers 7‐11) represent findings that characterise the individual persons who engage in new venture start‐up. Cromie's (2000) heavily cited article discusses from a “psychological” based survey the personality traits such as need for attainment, locus of control and creativity considered important for new venture start‐up. Alternatively, Forbes's (1999) literature review based article emphasises the “cognitive” perspective where individual entrepreneurs employ intuitive “heuristics” or “rules of thumb” that help explain why entrepreneurs are often classified as “different people”. In adopting a literature field with great currency, Shane (2000) identifies the complex forms of knowledge that facilitate start‐up and differs greatly to the economic and industrial approaches. What Shane's (2000) study ultimately argues using a rich case study approach is that knowledge and “know how” is essential for the exploitation and growth of the venture. Furthermore, Stanworth (1989) incorporates a conceptual argument from the sociological perspective that explains how demographic characteristics such as ethnicity, gender, age and occupation limit specific opportunities to individuals with relevant levels of human capital. Lastly, and also a growth area, Ruef (2002) conducts a network survey similar to Burt et al. (2000) to evaluate why effective entrepreneurial ventures utilise both durable network ties with strong actors and diverse weak actors for continuous innovation.

Papers included in Part IV (Papers 12‐15) discuss where value creation may potentially be obtained from strategic evaluation in the light of competitive business pressures. Katz and Gartner's (1988) literature based article identifies the important attributes of intentionality and available resources that explain how a venture comes into being. Amit and Zott (2001) specifically explore from case evidence the value creation of e‐businesses and argue that entrepreneurs should strive to identify those network actors, market structures and governance mechanisms that reduce operating costs. Moreover, Carter et al. (1994) also distinguish some key activities from a factor analysis that include market sensitivity, technology development, product distinctiveness, site appeal, service quality and price differentiation that encourage successful ventures. Finally, Durand and Coeurderoy (2001) emphasise from statistical evidence the varied levels of cost leadership, innovative differentiation and marketing differentiation that productively impact on venture performance during early and late entrance.

Papers included in Part V (Papers 16‐20) discuss the process issues of new venture start‐up. This section complements the individual approach to entrepreneurship and provides insightful analysis of the opportunity identification and decision making sequences that potentially give rise to that “eureka” and “a‐ha!” moment. Thus, Bhave's (1994) process model of new venture creation identifies the externally driven aspects of technology, markets and customer events that combine with and influences the internal decision making of an entrepreneur. Sarasvathy (2001) provides an interesting piece and hypothesises the role of self‐effectuation and how the combinations of “who I am”, “what I know” and “whom I know” may influence the human aspirations that guide a new ventures path. Incorporating a contextual analysis, Carter et al. (1996) observed from a longitudinal survey that those who started a business over those who gave up/were still trying undertook proactive activities in an aggressive manner such as looking for facilities and equipment, seeking financial support, forming a legal entity, organising a lease and so on. In a similar vein, Alsos and Kolvereid (1998) produce statistical evidence that parallel founders over novice/serial founders carry out more gestation activities such as hiring employees, buying equipment and organising a start‐up team to obtain a business licence quicker. Finally, Delmar and Shane (2004) argue from a survey of Swedish firms that legitimising a sequence of events during start‐up such as creating ties to external market players and establishing routines to accrue resources enhance the new ventures advantageous position.

Papers included in Part VI (Papers 21‐25) discuss the difficult task for researchers and policy makers to assess the outcomes of entrepreneurial performance during start‐up. Per Davidsson includes two articles by Cooper, the first in 1993 and the second in 1998. Both articles clearly articulate a sentiment that performance assessment is a difficult task due to the idiosyncrasy of many new venture providers. Thus, a weakness within entrepreneurial research is that scholars predominantly measure turnover, labour and assets that originate within economic fields to determine growth. Assessment should strive to learn more relevant and contextually orientated indicators such as the non‐economic pursuit of lifestyle rewards. However, Geroski (1985) importantly conceptualises previous empirical evidence from an economic perspective that market entry is a slow process before financial incentives and profitability is accrued and that these slow entry rates are constantly thought of as an obstacle to growth. Davidsson et al. (1998) contribute from a secondary statistical set an even further outcome argument where entrepreneurial start‐up has a productive effect on regional economic vibrancy and job development. Finally, Jakson et al. (1999) bring a favourable study to the book and include the content of measurement within a different context namely transition economies. What the authors argue is that the success of transition and post‐communist countries is reliant on the creation of new firms rather than subsidising old firms. Since this is a relatively new area, the authors provide interesting support and proposition for taking into account regional differences.

Overall, the book presents an interesting discussion on the myriad of literature that attempts to explain new venture start‐up. As emphasised, the book is likely to appeal to academic researchers, scholars and policy makers with an interest in new venture start‐up. Per Davidsson is right to make an explicit attempt to clarify and categorise the vast literature that exists. I feel that he has achieved a rich and insightful selection of papers that will undoubtedly help anyone interested in start‐up to co‐ordinate a systematic approach to literature reviews and develop potential research gaps. I also agree with those areas considered ripe for research that are emphasised throughout the book. That is, the nature of entrepreneurship is a business function and the topic suffers an inseparable relation to wider business and management literature. Incorporating strategy and IT literature could shed considerable light on the process based gestation activities that influence success or failure. The nature of entrepreneurial teams is also an essential element for considering how new ventures exchange ideas and resources. However, I would challenge Davidsson for neglecting to include research on the role of networking and social capital during the formation of new ventures. Some of the most notable conceptualisations of recent work has analysed the collaborative role of business interaction and those elements of bridging structural holes or gaps between networks that help ventures emerge. Since important resources during start‐up do not just appear, I would have expected Davidsson to evaluate the nature of collaboration and the social capital elements of relational norms, trustworthiness and communicative understanding that integrate entrepreneurs into wider networks during resource acquisition (see Aldrich and Zimmer, 1986; Birley, 1985; Cooke and Wills, 1999; Davidsson and Honig, 2003; Liao and Welsch, 2005; Yli‐Renko et al., 2001). Nevertheless, Davidsson has compiled a book that should be an essential guide to understanding the complexities of new venture start‐up.