1,720,975 research outputs found
Entrepreneurs and intertemporal decision making
No full textThis paper investigates the decision making behaviour of individuals with respect to attributes considered relevant to the assessment of potential venture opportunities. Using a decision making experiment, we were able to consider the behaviour of individuals taking into account their risk and time preferences. We find that while the respondent as a whole placed most weight on the potential payoffs when considering the value of a venture opportunity, we find significant individual differences in preference weightings across the attributes used in the study. By using a series of hypothetical venture vignettes, we also find some evidence that these differences in preference weightings may be useful in predicting choice behaviour in a more realistic entrepreneurial environment
The Impact of Overconfidence on Entrepreneurial Intentions
No full textResearchers have found that the determinants of entrepreneurial intention (or action) include general, specific, and social aspects of human capital as well as the possession of entrepreneurial attitudes toward income, independence, perquisites, risk and hard work. Recently the cognitive bias of overconfidence has been associated with entrepreneurship, with research showing that entrepreneurs exhibit greater overconfidence than do other managers. Accordingly it is useful to investigate the role of overconfidence in the decision to form an intention to become self-employed. This paper finds that overconfidence significantly drives the intention to behave entrepreneurially, and moreover has significant interaction effects with ownership motivation of nascent entrepreneurs. Interestingly, self-efficacy, and attitudes towards income, autonomy and risk were not significant determinant of intentions in this study, contrary to earlier studies
Making Do With Less: Firm Growth And Financial Performance Under Resource Constraints
No full textThis paper examines the financial resourcing behaviour of a sample of high growth firms. Firms growing faster than generated internally funds must finance this growth through external means or alternatively adopt bootstrapping measures aimed at increasing efficiency in working capital management. For a sample of manufacturing firms, we find that consistent with the pecking order theory; high growth firms have a preference for internal rather than external finance. More specifically, we find that the short term growth in sales to be largely financed through increased inventory turnover along with a reduction in gross margins. This raises questions about the longer term sustainability of this growth
A temporal typology of entrepreneurial opportunities: implications for optimal timing of entrepreneurial action: Implications for the optimal timing of entrepreneurial action
No full textEntrepreneurial opportunities emerge and dissipate over time, yet little is known about how and why they vary in their ephemerality and what the implications of temporal variance are for the optimal timing of entrepreneurial action. Building on the actualization theory of opportunity and signal processing theory, we propose that profit possibilities exist in the convolution of consumer desire, technical feasibility, and economic viability of an innovation. Conceiving consumer desire – a necessary ingredient of any profit opportunity – as consisting of fleeting or enduring consumer preferences and fixed or variable consumer expectations, we identify four possible distributions of consumer desire over time. We then show how the interaction of these distributions with technical feasibility functions produces a temporal typology of entrepreneurial opportunities. Our analysis suggests that, despite sharing conceptual similarities in structure, each type of opportunity emphasizes a different form of asymmetry across opportunity categories, which is likely to differentially affect the optimal timing of entrepreneurial action. We conclude by pointing out how considerations of time facilitate the move away from fruitless philosophical debates and toward a more theoretically nuanced and empirically informative view of the concept.</p
Entrepreneurial Attitudes and Entrepreneurial Intentions: A Cross-Culturals Study of Potential Entrepreneurs in India, China, Thailand and Australia
No full textThe intention of an individual to behave entrepreneurially arises because the entrepreneur perceives self-employment (or entrepreneurial behaviour within an organization) to be utility-maximizing, and thus forms the motivation to behave entrepreneurially. As argued elsewhere, the intention to behave entrepreneurially depends on the human capital of the individual. Here we argue that human capital includes not only personal abilities and social capital but also innate attitudes to aspects of entrepreneurship, such as independence, firm ownership and risk. Thus the motive for pursuing self employment (or any other entrepreneurial behaviour) is considered as a function of an individual’s abilities and attitudes. This study investigated the relationship between entrepreneurial attitudes and abilities and entrepreneurial intentions across four countries, viz: India, China, Thailand and Australia. We find that entrepreneurial attitudes are significant in explaining career decisions in all four countries with some variation in the relative importance of each of these attitudes. We also find cross-cultural differences in the degree to which entrepreneurial attitudes explain entrepreneurial intentions
Knowledge, Motivation and Entrepreneurial Opportunities: An Experimental Investigation using Functional Measurement
No full textPrincipal Topic\ud
An examination of how opportunities come to be, and in turn the how they are enacted by entrepreneurs will enhance our understanding of entrepreneurship. This study focuses on how opportunities come to be, or are recognized. Recent theorising has focused on cognitive explanations for variations in individual opportunity attention (McMullen and Shepherd, 2006), citing prior knowledge (Shane, 2001) and motivation as antecedents. This study seeks to make an original contribution by empirically examining the functional relationships between knowledge, motivation and entrepreneurial opportunity cognition.\ud
While scholars agree that prior knowledge is an important factor in the acknowledgement of opportunity it is still not clear how cognition or motivation impacts. This study aims to address this gap by simultaneously examining the relationships between knowledge, motivation and opportunity using the model of McMullen and Shepherd (2006) as a basis for the study. Where, we expect that the relationship between knowledge, motivation and opportunity may be described by a simple cognitive algebraic function of multiplication. Additionally, we expect that higher levels of knowledge and higher levels of motivation will be associated with an individual’s attention to the value of a particular opportunity.\ud
Method\ud
Subjects, drawn from a qualified sample of individuals interested in entrepreneurial activity, participated in an opportunity experiment. This experiment consisted of a series of vignettes, used to prime the attention to entrepreneurial opportunity, where orthogonal factors relating to knowledge and motivation were varied in a factorial design. Knowledge and motivation stimuli contained in the vignettes were jointly considered and subjectively integrated by the experiment participants, who in turn made individual judgements whether this constituted an opportunity. Further, functional measurement (Anderson, 1996) allowed the responses to these patterns of cues to be modelled using algebraic forms.\ud
Results and Implications\ud
An important outcome of this research is a better understanding of the motivational and cognitive factors that influence entrepreneurial opportunity. Furthermore, by using functional measurement to describe the structure of relationships between knowledge and motivation in term of simple algebra, we have the basis with which to model the cognitive information processing involved in opportunity recognition
Growth and Profitability in Small and Medium Sized Australian Firms
Full text linkThis study investigated the longitudinal behaviour of growth rates and profitability for a large sample of Australian firms. Similar to previous studies, growth rates were found to be much more volatile than profitability measures. Using a regression equation with lagged profit and growth variables, we found no evidence of a consistent relationship between growth and profitability. The longitudinal behaviour of the growth profitability relationship was also investigated. Consistent with previous research, we found that higher growth firms were on average younger. Similarly, high and low profit firms were found to be younger on average. Our results found that a higher proportion of firms pursuing the profitability pathway were much more likely to achieve high growth and profitability in following years. A much lower proportion of firms pursuing the growth pathway were likely to achieve above average performance in profitability in future years
Growing Profitable or Growing from Profits: Putting the Horse in Front of the Cart?
No full textFirm growth is almost universally portrayed as a good thing, and is commonly used as a measure of success. Applying resource-based reasoning, we argue that growth is often not a sign of sound development. Specifically, we hypothesize that firms which grow without first securing high levels of profitability tend to be less successful compared to firms that first secure high profitability at low growth. Empirical tests using two large, longitudinal data sets confirm that the profitable low growth firms are both more likely to reach the desirable state of high growth and high profitability and have a decreased risk of ending up performing poorly on both performance dimensions. The results suggest that academics, managers, investors and policy-makers may benefit by adopting a more nuanced view of firm growth that explicitly incorporates its intricate relationship with profitability
Integrating Entrepreneurial Intentions and Actions: The Roles of Desirability and Feasibility
No full textEstablished entrepreneurial intentions models argue that entrepreneurial intentions are largely a function of perceptions of desirability and perceptions of feasibility. Recent research however, has suggested that the relationship between perceptions of desirability and perceptions of feasibility may be more complex. In this paper we investigate how perceptions of desirability interact with perceptions of feasibility in the formation of entrepreneurial intentions. Using a relatively large multi-country sample we find that consistent with previous research, entrepreneurial intentions are positively related to both perceptions of desirability and perceptions of feasibility. In addition, we find evidence of a significant interaction effect between perceptions of desirability and perceptions of feasibility. While conventional wisdom might suggest a positive interaction, we find this interaction effect to be negative. Thus, the study not only supports the contention by McMullen & Shepherd (2006) that individuals who are not necessarily highly motivated might act entrepreneurially if they have high perceived self-efficacy, but also supports the converse argument that highly motivated individuals might act entrepreneurially even if they have low perceived self-efficacy. These findings have important implications for both theory and practice
The performance of young firms: patterns of evolution in the growth-profitability space
No full textThe aim of this paper is to provide a better understanding of the evolution of small firm performance. We do so by studying performance changes on a two dimensional "growth– profitability performance space".\ud
It is well established that both growth and profitability are important dimensions of SME performance. The majority of earlier studies tend to focus on the evolution of firm growth or profitability separately. Alternatively, they explore the impact of growth on profitability and vice versa.\ud
A primary difficulty is studying this phenomena is the complex inter-relationship between growth and profitability. There are sound theoretical arguments that growth affects future profitability, and that profitability allows future growth. Of course, industry conditions and economic cycles affect the competitiveness of the market environment, and in turn both growth and profitability of firms. Microeconomic perspectives argue that a trade-off often exists between short term growth and profitability. Many econometric studies have empirically established relationships between growth and profitability, but the exact nature of these relationships and causality remains unresolved.\ud
These considerations lead us to the central research question of this paper: How do young and small firms evolve on the dual performance dimensions of profitability and growth? The current paper adds to our knowledge of firm evolution by studying the dual performance measures of growth and profitability simultaneously. We examine the longitudinal behaviour of firms using the ABS BLS database of SME from 1995-1998. \ud
In our analysis we assign firms to initial performance positions (low, medium, high) along the two performance dimensions (growth and profitability), for a total of nine groups. Consistent with previous research that reveals younger firms have higher average growth rates, our results indicate young firms are most likely to be in the higher growth performance groups. Interestingly, they are most likely to have either relatively high profits (Star Group) or relative low profits (Growth Focus). Of these two groups, not surprisingly, firms in the Star group have much better future performance. However, the Growth Focus firms on average have poorer future performance than all other firms (other than low growth / low profit). In general, firms in the high profit groups had substantially better future prospects than firms in low performance groups. As firms age further, they are most likely to transition towards the Middle, Low Growth and Poor groups. Older firms are particularly unlikely to be in the high growth / low profit group
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