Luck or Strategy? Some Insights Into Successful New Ventures

Journal of Business Venturing, 1999

This article tests the insights and predictions of venture success as offered by reporters and experts in Inc. magazine, to the predictions generated from an analysis of data from a venture screening questionnaire. The venture screening questionnaire, consisting of 85 items covering four broad categories: (1) Individual Characteristics; (2) Entrepreneurial Behaviors; (3) Strategy; and (4) Environment, was used to evaluate 27 "Anatomy of a Start-up" articles from Inc. magazine. The creation of the questionnaire was guided by the following premises: Individual Characteristics. We hypothesized that the chances of venture survival would be improved if: (1) entrepreneurs had substantial knowledge and ability at the beginning of the start-up story; (2) entrepreneurs gained knowledge and ability during the start-up process; and (3) entrepreneurs continued to demonstrate substantial knowledge and ability at the end of the start-up story.

International Journal of Management Reviews

In our paper 'New venture survival: A review and extension' in the International Journal of Management Reviews, we synthesized more than five decades of entrepreneurship, management and sociology research on the reasons why some new ventures survive and others fail. Based on our review and analysis, we provided an up-to-date systematization of the literature and a framework that includes important extensions to Stinchcombe's seminal work. Coad and Storey criticized our framework for basing venture outcome on skill-something that can be influenced by entrepreneurs and other stakeholders. In this paper, we argue that: (i) the distinction between survival and performance matters when thinking about the antecedents of these constructs; (ii) gambling is an incompatible analogy for entrepreneurship; and (iii) psychological processes cannot be ignored when studying new ventures' survival. We also correct some points made by Coad and Storey about our findings. We encourage future studies on new venture survival to be cautious of adopting a view of venturing as a 'game of chance'-which is, in our perspective, a potentially discouraging view for people pursuing entrepreneurship. four factors relate to characteristics of the owner(s): roles and tasks; time and effort; social relationship; links to shareholders' (p. 2). This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

SSRN Electronic Journal, 2001

Small Business Economics, 2006

Journal of Management …, 2007

Journal of Competitiveness, 2020

A start-up is a very small but dynamic enterprise in its early stage, and therefore the strategies involved are different from the strategies of mature enterprises. The aim of this research was to deepen and broaden the knowledge of the strategies regarding the launch of micro enterprises and thus improve their competitiveness and viability. Our two-phase field research identified a spectrum of business strategies using factor analysis. The strategies selected will help to better understand the activities of start-ups in a competitive environment. Half of the spectrum of the identified strategies explain start-ups as an ambitious action in the international space with an emphasis on defining a unique quality or an active action that is an expression of the viability and perception of the business environment. The other half of the spectrum consists of strategies that are unclear and non-conceptual, i.e. limited by no central idea. In the second phase of research, the share of rational and action strategies increased slightly. Nevertheless, the identified strategies, which are considered to be the natural approaches of start-ups, have shown little impact on performance that would confirm their rationale and efficiency. Of the generic strategies considered to be standard for any company, only the typology of a strategy clock, based on price along with value added criteria, showed an impact on start-up performance.

The process of new venture creation is characterized by the need to decide and take action in the face of uncertainty. Especially in the context of technology-based ventures uncertainty is substantial, posing difficulties for strategic decision-making based on prediction and planning. As alternative, more flexible and adaptive decision-making logics are being advanced. This study draws upon effectuation and causation as examples of planning-based and flexible decisionmaking logics, and investigates dynamics in the use of both logics. The study applies a longitudinal process research approach to investigate strategic decision-making in new venture creation over time. Combining qualitative and quantitative methods, we analyze 385 decision events across nine technology-based ventures. Our observations suggest a hybrid perspective on strategic decision-making, demonstrating how effectuation and causation logics are combined, and how entrepreneurs’ emphasis on these logics shifts and re-shifts over time. From our data, we induce a dynamic model which extends the literature on strategic decision-making in venture creation, illustrating how external and venture conditions - including not only uncertainty but also resource position and stakeholder pressure - lead to changes in venture scope, and thereby to shifts in the use of decision-making logics.

Foundations and Trends® in Entrepreneurship, 2016

… Theory and Practice, 1998

This article argues that new venture formation is a speciai case of strategic management theory. Thus, Sandberg & Hofer's (1987) model of new venture performance, which states that new venture performance is a function of industry structure, venture strategy, and the founding entrepreneur, must be extended to Inciude the resources and the organizational structure, processes, and systems developed by the venture to implement its strategy and achieve its objectives. The key assumptions underlying this model are presented, and specific propositions concerning how resources and organizational structure, processes, and systems affect new venture performance are developed. B, because of the social and economic value of new business enterprises , models leading to an improved understanding of the determinants of new venture performance represent significant contributions to the literature. Perhaps the most compelling model of new venture performance developed in the last decade was proposed by . Their model specified that the performance of a new venture was the consequence of a confluence of factors that encompass attributes of the entrepreneur (E), strategy (S), and industry structure (IS), as shown below.

Strategic Management Journal, 2001

Journal of International Business and Economics, 2017

This paper addresses the strategic decisions in a start-up using statistical decision theory. While considerable progresses have been made in the development of statistical decision models, little attention has been paid to applying them in the "real world" mostly in the entrepreneurship. Three points are demonstrated on the basis of results: the importance of using scientific tools to decisions making, mainly at the initial stage of a venture; the use of payoff matrix provided structure to the necessary elements to select that strategy that guarantees the greatest benefit for the entrepreneur, all on the basis of previous research; the use of these tools is an advantage for those who want to start a business and want to pass over a decision based solely on intuition and the apparent perception of a market opportunity; and the awareness by the entrepreneur about the importance of deepening the information needed to make decisions and use of tools to process it.

Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission.

Enterprise and Innovation Management Studies, 2000

In the words of Hubbard, Vetter and Little (1998, p. 252), 'systematic replication replaces piecemeal, untested results with useful findings that address practical problems.' We agree with this. We further hold that for empirical relationships to be really interesting and meaningful one should be able to make a strong case that they represent causal and generalizable relationships. In addition, they should allow a meaningful theoretical interpretation. In this study we try to adhere to such ideals by replicating and extending a theory-driven study of the effects of initial conditions on new venture performance (Cooper, Gimeno-Gascon & Woo, 1994) using a very large (7000+ cases) and high quality, longitudinal data set. Data on initial conditions were collected in 1995 (within a year after first registration) and outcomes were assessed in 1998. On a conceptual level, our results confirm those obtained by Cooper et al. (1994) regarding how general human capital, management know-how and industry affect marginal survival probability, as well as concerning the effects of financial and general human capability on the likelihood of becoming a high performance venture. The results sometimes coincide also on a very detailed level, such as the differential effect of gender on marginal survival vs. its effect on high performance. Other parts of Cooper et al's (1994) result could not be replicated. To some extent this may be due to weak operationalizations of certain constructs, but real sample and/or country differences may also play a role.