www.qut.edu.au. Queensland University of Technology. Panel Studies of New
Venture Creation: a Review and Suggestions for Future Research. Per
Davidsson.
Queensland University of Technology
www.qut.edu.au
Panel Studies of New Venture Creation: a Review and Suggestions for Future Research Per Davidsson & Scott R. Gordon
www.qut.edu.au
Paul D. Reynolds
Recipient of the 2004 “Global Award for Entrepreneurship Research” Queensland University of Technology
www.qut.edu.au
Panel Studies of Nascent Entrepreneurs/ Venture Creation: Historical roots e.g. Gartner (1988); Katz & Gartner, 1988; Bhave, 1994
PrePSED Pilots
GEM
PSED
PSED 2
SwPSED; Other country sudies Queensland University of Technology
e.g. Sarasvathy, 2001; Shane, 2000; Baker & Nelson, 2005; Dahlqvist, 2007
CAUSEE
e.g. China; Switzerland …
PSED-type Research: Basic Procedure
www.qut.edu.au
• Approach a very large, random sample of households or individuals • Screen this sample for ‘nascent entrepreneurs’ = individuals currently involved in an active business start-up that is not yet an up-and-running firm • Conduct a longer interview with those qualified as well as a randomly selected comparison group • An important part of the contents concerns the initiation/completion and timing of a range of ‘gestation activities’ • Follow up over time (every 6-12 months over 12-72 months)
Queensland University of Technology
www.qut.edu.au
Basic Rationales • Overcome under coverage of smallest/newest entities • Achieve international comparability • Overcome selection bias • Overcome hindsight bias/memory decay • Allow the study of process issues • Get temporal order of measurement right for causal analysis
Queensland University of Technology
www.qut.edu.au
Studies of Nascent Entrepreneurs(hip) = the study of individuals who are currently involved in a business start-up. They may or may not have started other firms before (‘nascent’ is not equal to ‘novice’) = the study of on-going start-up efforts during their creation. They may or may not become up and running firms. • Level of analysis issue • Representativeness of sample issue Queensland University of Technology
www.qut.edu.au
Reviewed Works • All 78 PSED-type manuscript that have been published or accepted into peer reviewed, scholarly journals • Based on data sets from US, Canada, Netherlands, Norway and Sweden • Plus a peep into other types of publications (not ignoring, but not striving for completeness outside of the journals) Queensland University of Technology
www.qut.edu.au
Articles published by data set and journal outlet 50 Total articles Non-US articles SSCI journals SSCI entrepreneurship journals
4
30
3
20
2
10
1
0
0 1992 - 1997
1998 - 2001
2002 - 2005
Publishing period
Queensland University of Technology
2006 - 2010
Annual article rate by outlet
Articles published
40
5
Summary of findings on the characteristics of nascent entrepreneurs.
Article Carter et al. (2003) Cassar & Craig (2009)
Sa
Gb
Nc
Wd
US
A
558
1
US
A
198
4
Cassar (2006)
US
A
500
1
Cassar (2007)
US
E
170
4
SE
E
408
5
SE
E
380
4
SE
A
1113
1
CA
E
119
3
CA
E
91
5
Diochon et al. (2008)
CA
E
91
5
Gatewood et al. (1995)
US*
E
85
2
US
E
1114
2
US
A
1050
1
US
A
462
1
Chandler et al. (2005) Davidsson & Honig (2003) Delmar et al. (2000) Diochon et al. (2005a) Diochon et al. (2007)
Johnson et al. (2008) Kim et al. (2006) Liao & Welsch (2003)
University of LiaoQueensland & Welsch US A 544 1 Technology (2005)
www.qut.edu.au Findings NEs no different than GP in seeking independence, but less motivated by roles and Motivation NEs vs. GPf recognition. Male NEs likely cite innovation and financial success as career reasons. NEs exhibit hindsight bias. Unsuccessful NEs correct their previous overestimation of Cognitive biases NE subgroups their chances of success. More highly educated exhibit less overconfidence. Individuals with higher levels of financial and human capital harbor greater growth Human capital NE subgroups intentions. Independence and self-realization are important motivations for entry. Financial Motivation NEs vs. GP motivations determine growth preferences, most strongly so for women. Team composition Large NE teams are more likely than small NE teams to take on additional members, Social capital over time but not more likely to drop members. Social and Bridging and bonding social capital are robust predictors for engagement in NE-ship; NEs vs. GP human capital as is general human capital and prior start-up experience. Higher levels of HC are associated with NE status. Males, recent immigrants, and Atheoretical NEs vs. GP those between 25-34 years, and those with role models are more likely to engage. No gender or general human capital differences in likelihood that NEs would abandon Eclectic Gender their venture. Attribution NE subgroups NEs predominantly offer internal-stable attributions in describing positive situations. theory Neither NEs with prior start-up experience, nor those with business education had Human capital NE subgroups discernibly more financial management capability than novices/no business education. Male-female differences in how NEs attribute entry. Males are more likely cite Attribution Gender external factors; females tend to be driven by internal factors, while both have stable theory cognitions. NEs are more likely to have an ‘innovator’ cognitive style than the GP. This cognitive Cognitive style NEs vs. GP style is also associated with optimism as regards to sales. Neither financial nor cultural capital discriminates NEs from the GP on entry. Human Forms of capital NEs vs. GP capital is a significant advantage, especially education or managerial experience. High tech NEs vs. Structural, relational and cognitive social capital leads to growth intentions. Structural Social capital others social capitals' effect on aspiration is less for technology based NEs. NEs vs. GP, high No quantitative differences in various dimensions of SC between NE and the GP. Social capital tech NEs vs. However patterns of association between social, relational and cognitive SC do others differentiate NEs. Technology based NEs have higher relational capital.
Theorye
Comparison
www.qut.edu.au
Characteristics of nascent entrepreneurs
Antecedents and characteristics of the new venture creation process
Person & process D [7]
Person A [19]
Process B [9]
G [2] Person & outcomes E [11]
Process & outcomes F [10]
Explaining new venture creation process outcomes Outcomes C [13]
Queensland University of Technology
www.qut.edu.au
Articles published by research topic and complexity 20
Articles published
16 14
People Process Outcomes Single topic Multiple topics
5
4
12 3
10 2
8 6
1
4 0
2 0 1992 - 1997
1998 - 2001
2002 - 2005
Publishing period
Queensland University of Technology
2006 - 2009
Annual article rate by complexity
18
6
www.qut.edu.au
FINDINGS REGARDING CHARACTERISTICS OF NASCENT ENTREPRENEURS (I) • As regards resource endowments, results largely confirm prior research: – NEs have more Human Capital (S-E exp; Education) – Social capital more varied results. Close role model no longer important in the US? – Household wealth; income has no or little effect (but NEs with more money have higher aspirations) – Methods issue lurking!
Queensland University of Technology
www.qut.edu.au
FINDINGS REGARDING CHARACTERISTICS OF NASCENT ENTREPRENEURS (II) • As regards motivation and cognition, the research stream has produced novel and surprising findings: – Little or unexpected difference from others in “career motivation” – Strong evidence against push motivation (‘revenge’) – NEs are more risk averse than others!? – NEs have higher ‘Need for Closure’ – preference for order and predictability! – Theory/representativeness issue lurking! Queensland University of Technology
www.qut.edu.au
FINDINGS REGARDING CHARACTERISTICS OF NASCENT ENTREPRENEURS (III) • The majority works in partnerships or teams • The majority of ‘teams’ is ‘romantic’ • The majority of the remaining teams aren’t exactly ‘textbook’ teams, either • The functionally well-balanced team that was assembled purely for business purposes is a rare occurrence • Theory/representativeness issues lurking!
Queensland University of Technology
www.qut.edu.au
Population prop. = 2/7 ventures Sampling prop = 2/3 ventures (because 10/15 individuals belong to teams)
Queensland University of Technology
www.qut.edu.au
Fundamental issue with investigating ‘Characteristics of Nascent Entrepreneurs’ • It’s a bit like comparing ‘holiday makers’ to other people… • Some of whom will, of course, go on vacation next week… • So perhaps we should be looking at ‘what does the NE experience do to the person’ rather than ‘what person characteristics make you become NE’?
Queensland University of Technology
www.qut.edu.au
Findings regarding new venture creation process (I): Discovery • Relatively non-systematic search for opportunity, and processes triggered by a particular idea rather than by a wish to become a founder-manager seem to be relatively more common than systematic, textbooklike processes • Importantly, however, this descriptive result does not necessarily have any prescriptive implications. Even if less common those ventures resulting from systematic search may achieve better outcomes Queensland University of Technology
www.qut.edu.au
Findings regarding new venture creation process (I): Exploitation • Enormous variation in duration • Enormous variation in sequence – Liao, Welsh and Tan (2005): “firm gestation is a complex process that includes more than simple, unitary progressive paths” (2005: 15) and “a process where developmental stages are hardly identifiable” (2005: 13).
• However, there are systematic sub-group differences • Additional method challenges • Theoretical boundary challenges Queensland University of Technology
Sampling day www.qut.edu.au
Annual prop. = 25/75 Sampling prop = 50/50
Queensland University of Jan 1. Technology
May 1
Sep. 1
Dec . 31
Sampling day www.qut.edu.au
Queensland University of Jan 1. Technology
May 1
Sep. 1
Dec . 31
www.qut.edu.au
Methods Insights • Level of analysis issues: The sampling procedure yields a representative sample of current nascent entrepreneurs, but a biased sample of emerging ventures or of entrepreneurial teams • There is a problem with a substantial group of ‘dilettante dreamers’ who never put their effort to an ‘acid test’ • Another group start more ambitious ventures but take longer to get up and running – and may mistakenly appear less ‘successful’ – CAUSEE: Higher tech; higher ambition take longer; retailing and brick-and-mortar-only get up quicker (but retail have lower survival once they are up and running)
Queensland University of Technology
www.qut.edu.au
CAUSEE Digression: Analysis Example Outcome
Operational
Operational
Still Trying
Contrast
vs.
vs.
vs.
Outcome Driver
Terminated
Still Trying
Terminated
Characteristic 1
++++
++
++++
Characteristic 2
none
––
++++
Characteristic 3
none
+
–––
Characteristic 4
++++
none
none
Characteristic 5
none
none
++++
Characteristic 6
none
none
none
Queensland University of Technology
www.qut.edu.au
Methods insight: In this type of research it is important to – Control for type of venture – Analyse different types of outcomes at different points in time Otherwise all sorts of confounding effects will blur our understanding
Queensland University of Technology
FINDINGS REGARDING DRIVERS OF OUTCOMES(I)
www.qut.edu.au
• Some 33-50% of nascent ventures ever reach an operational stage (self-perceived / regular sales) • HC influences appear weak or inconsistent • Effects of financial endowment variables and social capital indicators are also unimpressive… • And a cursory look at the results for motivation and expectation isn’t very enlightening, either • …but there’s more to be said… • …and measures of actual investment of capital (HC,FC,SC) tend to come out with positive effects Queensland University of Technology
www.qut.edu.au
Why the weak overall results? • It may be overly simplistic to assume that effects on outcomes are direct, linear and generalizable across all types of ventures, founders, and environments • The venture and the individual are distinct levels of analysis. The respondents may not invest all their capital in the focal venture, and the venture may draw on capital from multiple individuals • The opportunity cost structure needs to be considered when assessing the effects of human capital on outcomes • Outcomes for independent ventures are hard to assess, predict and interpret – especially when the respondents try to start very different ventures Queensland University of Technology
a) + denotes a sig. positive effect; 0 denotes no significant effect; - denotes a sig. negative effect (p
