Jerzy Cieślik, Eimear Nolan, Martha O'Hagan-Luff and André van Stel
This study investigates entrepreneurial overconfidence (EOC) levels among solo entrepreneurs at the country level. Although transitions from solo to employer entrepreneur are…
Abstract
Purpose
This study investigates entrepreneurial overconfidence (EOC) levels among solo entrepreneurs at the country level. Although transitions from solo to employer entrepreneur are relatively rare, the solo self-employed have become an important source of potential job creation by virtue of the sharp increase in their numbers in the past two decades. When EOC levels are too high, job creation ambitions may be unrealistic and unrealised. Unrealised ambitions and business failure can lead not only to psychological and financial costs for the individual entrepreneurs involved, but at the societal level also to wasted government resources, and increased costs for the entrepreneurial ecosystem as a whole. Therefore, it is important to know more about the entrepreneurial overconfidence levels of solo entrepreneurs in different countries and their determinants.
Design/methodology/approach
Using Global Entrepreneurship Monitor data for 71 countries over the period 2013–2016, the authors construct a new measure of entrepreneurial overconfidence of solo entrepreneurs and relate this to three recently developed indicators of national culture.
Findings
The findings indicate that EOC levels are positively related to Joy (versus Duty), and negatively related to Trust (versus Distrust). Finally, no significant relationship between entrepreneurial overconfidence and Individualism is found in the study (versus Collectivism).
Research limitations/implications
Given the lack of literature examining the relationship between EOC levels and cultural variables hypotheses were developed using the existent body of knowledge in the area, which is at the early stage of development. The hypotheses derivation has used mostly theoretical arguments relating to the link between national culture and overconfidence of entrepreneurs in general, rather than relating specifically to solo entrepreneurs. The measure of EOC uses expectations of employment growth to proxy overconfidence, but other measures of entrepreneurial success may also be explored.
Practical implications
As the hiring of employees can be a costly process (Coad et al., 2017), it is important that entrepreneurs have realistic expectations of what it requires to hire employees. This is especially the case for solo entrepreneurs since they do not have experience of hiring their own employees. This paper addresses such issues at an aggregate level by exploring what factors explain country differences in overconfidence levels of solo entrepreneurs.
Social implications
It is worthwhile to distinguish between solo and employer entrepreneurs when studying their EOC levels, as the ambitions of these two types of entrepreneurs are different. Empirically, this study introduces a new measure of EOC tailored towards the solo self-employed.
Originality/value
This study contributes to entrepreneurship literature by expanding current knowledge on entrepreneurial overconfidence at the country level. Past research has studied EOC at the individual level, however limited research exists on the phenomenon of EOC from a country level perspective. This is important as unrealised entrepreneurial ambitions may not only create substantial costs for the individual entrepreneurs involved, it may also lead to substantial societal costs, including waste of government resources.
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Jerzy Cieślik and André van Stel
The purpose of this paper is to predict future career paths of university students, distinguishing between paid employment, running one’s own independent business and running a…
Abstract
Purpose
The purpose of this paper is to predict future career paths of university students, distinguishing between paid employment, running one’s own independent business and running a family business. The main predictor is the students’ current mode of entrepreneurial exposure, both in terms of the students running their own business, and in terms of their parents running their own business.
Design/methodology/approach
The study is based on a comprehensive survey held in May 2013 among 1,490 business and law students of Kozminski University in Warsaw, Poland. To predict future career expectations in ten years’ time, multinomial logit regressions were employed.
Findings
The authors find that, among students with a family business background, those students who are actively involved in their parents’ business are significantly more likely to pursue joining the family firm, rather than starting their own business.
Practical implications
In order to stimulate business succession, universities with a large proportion of students with family business background may consider launching dedicated programs promoting the interest of students in the businesses run by their parents.
Originality/value
The authors investigate to what extent active participation of university students in their parents’ business is associated with a higher probability to pursue a career in family business. The research has important implications in light of the increasing difficulty in Europe to find successors for family businesses.
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The purpose of this paper is to identify the role of the first and second generations in the process of internationalization of a family business active in the SME sector in…
Abstract
Purpose
The purpose of this paper is to identify the role of the first and second generations in the process of internationalization of a family business active in the SME sector in Poland.
Design/methodology/approach
Conducted research was qualitative in character. The research method used was the case study. A total of six case studies were developed that demonstrate the experiences of Polish exporters – family companies in the SME sector. The primary research tool was the unstructured questionnaire-based interview. Interviews were conducted over the years 2008-2009. The group of examined respondents included both the first and second generation.
Findings
Analysis of the developed case studies indicates that it was the first generation that was responsible for making decision and undertaking operations in the first phase. With time, that generation kept only decision-related responsibilities. The second generation tends to continue tradition rather than being an agent of change.
Originality/value
The main contribution of this paper has been to make a characterization of the process of internationalization of family businesses in the SME sector in Poland – a country undergoing radical systemic transition. Its large-scale effect is the commencement of the process of creating companies, including family businesses. On the other hand, it makes possible the defining of the role of the second generation in the process of internationalization of family businesses, regardless of whether that generation is a continuator of the initiative of the first generation or is itself the initiator of changes.
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Kevin Campbell and Magdalena Jerzemowska
The purpose of this paper is to provide an understanding of the importance of socioemotional wealth (SEW) to family firms in Poland viewed through the lens of the events…
Abstract
Purpose
The purpose of this paper is to provide an understanding of the importance of socioemotional wealth (SEW) to family firms in Poland viewed through the lens of the events surrounding the first hostile takeover bid of the post-communist era on the Warsaw Stock Exchange when the clothing company Vistula & Wólczanka (V&W) made an unsolicited, leveraged bid for the family-controlled jewelry company W. Kruk.
Design/methodology/approach
The 2008 takeover and its aftermath are described in the context of the corporate governance and legal environment in Poland. The case study events demonstrate the connection between firm behavior and SEW theory.
Findings
After the acquisition of W. Kruk by V&W, the Kruk family purchased stock in the newly named Vistula Group and gained influence over the supervisory board in concert with a business ally, eventually wresting back control of the company in the style of a Pac-Man “defense.” The case study illustrates the importance of SEW in family firm takeovers.
Research limitations/implications
The case study design has limitations for generalizability. Nevertheless the research highlights the important role of SEW preservation in understanding the market for corporate control of listed family firms in Poland.
Practical implications
Understanding the reaction by family firms to takeover bids requires recognition that there is a tradeoff between financial and SEW considerations, not just financial gains and losses.
Originality/value
The case study demonstrates the importance of SEW to family firms and suggests that the balance of power in takeovers on the Polish stock market rests with incumbent management.