Models of Start-up Thinking and Action: Theoretical, Empirical and Pedagogical Approaches: Volume 18

This chapter outlines a design-science perspective of entrepreneurship. It zooms in on the junction between present and future to distinguish entrepreneurship as a natural and as an artificial phenomenon. While the current study of entrepreneurship speaks to the former, it has been silent on the latter. The chapter discusses design as a distinct mode of research, opportunity as a design artifact, and the generative power of recursive action to make the case for problematizing entrepreneurial action as a focus of research. It then defines its research questions, discusses the logic and process for addressing them, and outlines the nature of research outputs.

Entrepreneurship involves complex interactions between individuals and environments but there is little research on these dynamics. We address this gap by conducting an inductive qualitative study of entrepreneurs in the exclusive tourist destination of Tiradentes, Brazil. Tiradentes has a unique architectural, cultural, and economic heritage that serves as a unique sociocultural backdrop that influences entrepreneurs’ models of start-up thinking and action. Specifically, our investigation revealed that entrepreneurs’ backgrounds (native vs. nonnative) and social identities come together with the sociocultural fabric of the community in a way that moved them towards a “Joia” or “Bijuteria” orientation, each of which were associated with a distinct mindset. This diversity had implications for entrepreneurs’ conceptualizations of start-up models possible within the backdrop of Tiradentes sociocultural fabric and this influenced the actions entrepreneurs took such as the geographic location chosen for the business and the business practices used. We discovered that entrepreneurs favoring one orientation over another tended to occupy predictable physical and social positions in the community while also espousing similar values and perspectives. These results are used to elaborate the theory on the link between the external and internal explanation for entrepreneurial thinking and action. The net effect is new understanding regarding ways models of start-up thinking and action can be investigated.

In this chapter, we examine two theorized approaches to entrepreneurial activity: experiential versus prediction based strategies. We empirically assess the comparative performance of several commonly recommended approaches – researching customer needs, researching the competitive landscape, writing a business plan, conceptually adapting the business plan or experimentally adapting the primary business activity. We found that the majority of nascent entrepreneurs began with a business plan, but only about a third adapted their plan in later stages. We also found that talking with customers and examining the competitive landscape were normative activities. Those who started a plan were more likely to create a venture, although the effects much stronger for those who changed their plan later on, as well as for those who researched customer needs.

Our results show that the selection of these activities is both ubiquitous and driven by pre-start-up experience and new venture characteristics. The activities themselves do not robustly link with successful new venture foundation. Hence, pre-start-up experiences, venture characteristics, and the institutional environment are more important in explaining successful performance than recommended activities. Implications for research, practice, and pedagogy are discussed.

Social entrepreneurs who use market mechanisms to solve wicked problems (Rittel & Webber, 1973) may benefit from practices based on design thinking. Design thinking offers approaches to work iteratively on both problem and solution spaces collaboratively with multiple diverse stakeholders, which is characteristic of innovating for social change. This research conceptualizes designing as a construct formed by three practices: making improvements, generating creative leaps, and problem-solving. Using Boland and Collopy’s (2004) conception of a sense-making manager, it proposes “how” nascent social entrepreneurs take actions and also proposes “what” specific activities they undertake for the development of the venture. A conceptual model proposing “what” it is that social entrepreneurs do and “how” they go about their activities affecting new venture development is tested using structural equation modeling. Preliminary support for the predictive capability of the model is encouraging, suggesting that practices based on design thinking may be further developed in order to advance theoretical understanding of the application of design thinking for social entrepreneurship.

This chapter will describe and analyze the evolution of the structure, content, and other key parameters of business plans in international business plan competitions from the beginnings of such competitions in 1991 through the current time. In particular, the chapter will describe how these competitions have evolved through the current time, the standardization of the structure and content of the plans submitted to these competitions, and the changes that have occurred in their structure and content over time. Then it will explain why these changes have occurred. Specifically, that most of the changes that have occurred in these various areas is a direct or indirect result of pressures on the competitions from the major judges used in them – namely U.S. venture capitalists. Appendices A and B will describe the evaluation criteria used in two of the major competitions – Moot Corp/Venture Labs^® and the Georgia Bowl^® – in more detail, while Appendices C and D will provide information on the Term Sheets and decision-making processes used by such venture capitalists. Appendix E contains four Exhibits that provide additional insights into U.S. venture capitalists’ thought processes. The chapter will conclude with a discussion of the additional changes that are likely to happen in the future.

Whether or not nascent entrepreneurs should spend time developing a business plan is still an issue of debate for both scholars and practitioners. This chapter contributes to a better understanding on the uses and expectations of planning among business start-ups by taking a deeper and more granular approach than previous research. The chapter examines not only if planning is used but also how it is used and how this changes over time. Contrary to current thinking, the research suggests that for most firms the issue of planning may be a question of choice more than a request from institutional pressure. The insights developed in this chapter provide a foundation for future theorizing about the antecedents and effects of business planning for start-ups.

Entrepreneurship education has been largely treated as a pedagogical “black box.” Despite the emergence of popular entrepreneurship models such as business planning, the lean startup, or business model canvas, neither theoretical nor pedagogical foundations are typically evident. This limits the accumulation of useful evidence that could inform better teaching practices. In this chapter, we develop a set of conceptual models anchored in learning theory regarding how entrepreneurship education should be taught to students. These conceptual models are built on the techniques of entrepreneurship pedagogy such as experiential education. They are developed for three groups of students: students without any entrepreneurship experience, students with previous entrepreneurship experience, and students who are currently running their start-ups. A set of potential variables that could be used for course evaluation purposes is also included. The proposed models meet the needs of students with different levels of entrepreneurship experience. Theoretically, we demonstrate that entrepreneurship students should not be treated as a homogeneous group, as they have different levels of startup experience and different educational needs. Lecturers of entrepreneurship programs could choose the suitable model proposed in this chapter in teaching based on the characteristics of their students. The chapter provides novel insights with regard to how entrepreneurship programs should be designed for students with different levels of entrepreneurship experience.