Knowledge that Transforms

This article seeks to link the domains of corporate governance, investment policies, competitive asymmetries, and sustainable capabilities. Conditions such as concentrated ownership, lengthy tenures, and profound business expertise give some family–controlled business (FCB) owners the discretion, incentive, knowledge, and ultimately, the resources to invest deeply in the future of the firm. These long–term investments accrue from particular governance conditions and engender competitive asymmetries—organizational qualities that are hard for other firms to copy, and thus, if tied to the value chain, create capabilities that are sustainable. Investments in staff and training, e.g., create tacit knowledge and preserve it within the firm. Investments in enduring relationships with partners enhance access to resources and free firms to focus on core competencies. And devotion to a compelling mission dedicates most of these investments to a core competency. When such investments are farsighted, orchestrated, and ongoing, capabilities will tend to evolve in a cumulative trajectory, making them doubly hard to imitate and thereby extending competitive advantage. Arguments are supported by making reference to the literature on corporate governance and agency theory and to emerging research on FCBs.

Research articles on women's entrepreneurship reveal, in spite of intentions to the contrary and in spite of inconclusive research results, a tendency to recreate the idea of women as being secondary to men and of women's businesses being of less significance or, at best, as being a complement. Based on a discourse analysis, this article discusses what research practices cause these results. It suggests new research directions that do not reproduce women's subordination but capture more and richer aspects of women's entrepreneurship.

Entrepreneurship—the recognition and exploitation of opportunities—is valuable within organizations as well as in the establishment of new ventures. Some studies have addressed the issue why some individuals take advantage of opportunities and some do not. While some studies find that psychological variables, personality traits and demographic factors may distinguish entrepreneurial activity, these findings are equivocal. Other research has looked to the importance of social capital and network ties to new venture creation. Yet, there is little discussion regarding the possibility that social capital and personal factors interact and influence entrepreneurial behavior. Drawing from social cognitive theory (Augoustinos & Walker, 1995; Fiske & Taylor, 1984; Bandura, 1986; Wood & Bandura, 1989) this paper advances a model suggesting that entrepreneurial behavior is a result of the interplay of environments (i.e., social networks) and certain cognitive biases in entrepreneurs. We propose that both individual cognition and social capital are important in understanding entrepreneurial behavior. If the domain of entrepreneurship is “…the nexus of two phenomena: the presence of lucrative opportunities and the presence of enterprising individuals” (Shane & Venkataraman, 2000) then our model suggests an explanation of this nexus through exploring how both external (i.e., social capital) and internal factors (i.e., cognition) affect why some people and not others exploit opportunities.

The importance of justice perceptions in fostering positive job attitudes and value–creating behaviors in organizations is well established in the literature. Despite this, only a handful of studies have addressed justice in family firms, and none have presented a theoretical model illustrating how nonfamily employees’ justice perceptions may be influenced by family involvement in family firms. Here, we suggest that the level of family influence impacts the justice perceptions of nonfamily employees primarily through its effect on the human resource (HR) practices within family firms. Specifically, we propose that low levels of family influence tend to have little impact on the fairness of HR practices, that moderate levels of family influence tend to have positive effects on the fairness of HR practices, and that high levels of family influence tend to have negative effects on the fairness of HR decision processes and outcomes. Accordingly, we present and provide a conceptual support for a model that outlines the proposed relationships among family influence, family firms’ HR practices, and the justice perceptions of nonfamily employees.

Entrepreneurship has been the engine propelling much of the growth of the business sector as well as a driving force behind the rapid expansion of the social sector. This article offers a comparative analysis of commercial and social entrepreneurship using a prevailing analytical model from commercial entrepreneurship. The analysis highlights key similarities and differences between these two forms of entrepreneurship and presents a framework on how to approach the social entrepreneurial process more systematically and effectively. We explore the implications of this analysis of social entrepreneurship for both practitioners and researchers.

Alternative explanations of franchising offer contrasting predictions as to how the proportion of franchised outlets changes as franchisors age. We propose that two dominant views—resource–scarcity and agency theory—can be integrated by delineating when each is most relevant. Data from 102 franchisors over a 21–year period suggest that resource–scarcity considerations take precedence when franchisors are young, but that agency considerations prevail as franchisors age. Thus, the proportion franchised exhibits a cubic pattern as franchisors age—increasing rapidly at first, decreasing, and then increasing again. Future researchers and practitioners alike can benefit from understanding how the relative influences of resource and agency considerations shift over time.

Given the importance and prevalence of new venture failure, having a better understanding of the factors that affect its occurrence is a paramount research objective. In view of the increased focus on venture capital firms (VCFs) as important stakeholders for entrepreneurial ventures, in this study we examined the relationship between VCFs’ investment strategies and their portfolio failure rates. We examined two aspects of a VCF's investment strategy: (1) the extent to which the VCF develops specialized expertise and (2) the extent to which the VCF undertakes investments in cooperation with other investors through syndication. We tested our hypotheses on longitudinal data of the realized strategies of 200 U.S.–based VCFs over a 12–year period. We found that a VCF's specialized development stage expertise had a negative effect on the proportion of defaults in the VCF's portfolio. We also found that the level of syndication positively—rather than negatively—affected the proportion of defaults. We discuss our findings from both theoretical and practical points of view.