Knowledge that Transforms

In strategic opportunity pursuit, decision incongruence (the gap between the decision‐making rationale that an individual conveys to others and the rationale that informs his/her actual decisions) can lead to difficulties achieving the commitment necessary to grow a venture. To understand why some individuals have greater decision incongruence in strategic opportunity pursuit than others, we conducted a field experiment to test how a configuration of theoretically‐based capability‐building mechanisms—codification, general human capital, and specific human capital—affected 127 CEO s' decision incongruence. The results indicate that codification decreases decision incongruence the most for CEOs with low general but high specific human capital.

The value of real options has been discussed extensively—it helps explain managerial decisions in designing the rollout of bold initiatives in uncertain environments. However, few studies directly trace the impact of option usage on the performance of such entrepreneurial initiatives. Do all firms benefit from the flexibility that options confer? To answer this question, I collected detailed survey data on individual options designed into the implementation plans of entrepreneurial initiatives, focusing exclusively on options that were, eventually, in the money. The sample observations display significant variation in the degree to which flexibility benefit was realized from options, if at all. I find that this variance stems, in part, from heterogeneous organizational capability, regarding not only option creation but also option maintenance, exercise, and governance. These results imply that attainable benefit is highly firm specific. Holding valuable options does not predict performance of entrepreneurial initiatives, unless it is accompanied by active management of the option life cycle.

Knowledge flow between two firms has been found to be enhanced by both technological relatedness and social interaction. We build on work in education psychology and consider how cognitive and social aspects of learning may be compensatory. Using a sample of 61 alliances involving E li L illy and its partners, we find the importance of social interaction between Lilly and its partner to partner learning decreased as their technological relatedness increased. Likewise, the importance of technological relatedness to partner learning decreased as social interaction increased. This study provides nuance on the criticality of technological relatedness and social interaction for learning.

This study seeks to disentangle claims of institutional and organizational learning theories and to shed light on the impact of Knightian (environmental) uncertainty in discovery opportunities. This article suggests, and finds empirical support for, the concept that emerging professional service industries retain high levels of causal ambiguity. High uncertainty interferes with institutional theory's claim of mortality reduction through isomorphism, but leads to superstitious learning, increasing organizational mortality hazard. Education and experience of entrepreneurs help them identify discovery (exogenous) opportunities for entrepreneurial rents, while high (but untheorized) levels of uncertainty interfere in their ability to successfully exploit these same opportunities.

This study focuses on the role of strategic learning as a mediating construct between opportunity‐seeking (exploration) and advantage‐seeking (exploitation) strategies and profit performance. Prior studies argue that the effect of these core elements of strategic entrepreneurship (exploration and exploitation) cannot be fully captured through their direct effects on profit performance, but that this relationship consists of mediating factors. This study proposes that the process of strategic learning, through its intraorganizational elements that enable the dissemination, interpretation, and implementation of strategic knowledge, enables firms to capitalize on the benefits of both exploration and exploitation strategies. Results from 206 Finnish software firms indicate that strategic learning fully mediates the relationship between exploration, exploitation, and profit performance. The result contributes by stressing the importance of strategic learning processes, especially in conjunction with entrepreneurial exploration strategies. Furthermore, the study demonstrates that the effect from exploration to strategic learning is moderated by the level of exploitation. This moderation effect suggests that the strategic learning is limited, being a path dependent capability that favors exploitation over exploration when stretched. However, strategic learning effectively allows both types of strategies to improve profit performance.

Second‐order competences, a type of dynamic capability, enable firms to engage in a process of Schumpeterian competition. This study examines the effects of marketing and R&D second‐order competences (the abilities to create new market‐related and technological resources) on firm profitability. Based on multiple informant surveys and archival data from U.S. public manufacturing firms, competitive turbulence is found to present contrasting contingencies for the effects of these competences on return on assets (ROA). The effect of marketing competence on ROA was positive under stable and moderate competitive conditions, whereas the effect of R&D competence on ROA was positive under volatile competitive conditions.

Despite the increasing importance of faculty entrepreneurship to technology diffusion, wealth creation, and economic growth, we know little about the effects that academic faculty turned entrepreneurs have on the performance of new technology ventures. We argue faculty inventors select their most promising projects for commercialization. We further posit that star faculty founders have positive effects on new venture performance, above and beyond that of the average faculty founder. In addition, we develop two contingency hypotheses to unearth specific situations when ‘stars shine.’ We posit that star faculty founders are able to overcome geographic distance to venture capitalists as well as the disadvantages of not being affiliated with a top research university. We test our hypotheses on a broad sample of 238 university‐related new technology ventures at 65 U . S . universities.

Entrepreneurship enjoys widespread appeal in nearly all capitalist nations, but start‐up success has proved elusive for most entrepreneurs. We explain the low likelihood of entrepreneurial success by focusing on the contrast between organizational forms in terms of cultural codes that tap into widely held perceptions versus organizational forms in terms of blueprints that sustain effective guidance for organizational activities. The dilemma facing nascent entrepreneurs during their life course is the incomplete and fragmentary nature of these opportunities for learning about start‐up practices. We conclude the article by offering suggestions for further research to discover what entrepreneurs actually do during the start‐up process.

This study explores how firms learn heuristics from negative outcomes. Prior literature has suggested that learning is strongly affected by whether attributions for negative outcomes are internal or external. Our data complement this view by revealing a new and different pattern. Specifically, they show that learning heuristics appears more dependent on whether attributions are convergent or divergent across hierarchical levels. Moreover, our data show that formal communication influences the convergence and divergence of those attributions. Besides setting forth an emergent framework for how firms learn heuristics and shedding light on the microfoundations of dynamic capabilities, a central contribution of this article is uncovering important missing components of organizational learning.