Knowledge that Transforms

Research Summary Taking a strategic human capital perspective on corporate venturing by employees, we consider the potential influence of their job and group experiences within the firm. Because building new ventures requires diverse functional knowledge, greater job specialization could create a barrier to undertaking corporate venturing. However, working in more functionally diverse groups within the firm can facilitate venturing—especially for more specialized employees—by enabling them to develop the skills needed to work with others who have such diverse knowledge. We test our hypotheses using a longitudinal dataset from over 16,000 employees in a large corporation. Our findings advance understanding of the micro‐foundations of internal corporate venturing, how bureaucracies shape corporate entrepreneurship, and how employees can build knowledge and skills with strategic value for the firm. Managerial Summary We examine how firms can prepare their employees to undertake corporate venture building activities by shaping their work experiences inside the firm. In a study of employees' work histories within a large corporation, we find that employees who had worked in more functionally diverse groups were more likely to undertake internal corporate venturing. Such experience was particularly important for those who had worked in more specialized jobs, since it could help them collaborate and connect with others with diverse functional knowledge. Our findings suggest that firms hoping to promote strategic growth and increase their competitiveness through corporate venture building consider providing employees with work experiences that help them develop cross‐functional knowledge and skills.

Research Summary While extant research has studied extensively the consequences of chief executive officer (CEO) succession, we explore the concept of family CEO mentoring (from a departing family CEO to a younger family leader) as a potential driver of post‐succession performance in family firms. Drawing on stewardship theory and using a data set of 1787 Italian firms experiencing a CEO succession over 14 years, we show that family CEO mentoring positively influences post‐succession financial performance. We then argue and empirically confirm that the performance benefit of family CEO mentoring is enhanced by the presence of nonfamily members on the board but is dampened by industry turbulence. We conclude by discussing the implications of our findings for research on CEO mentoring, CEO succession, and family business performance. Managerial Summary To thrive across generations, family firms need to navigate the many complexities of chief executive officer (CEO) succession. One way to overcome the challenge is to have a departing family leader who provides mentoring to the younger family leader. Our examination of 1787 Italian family firms that experienced CEO succession in the period 2003–2016 suggests that family CEO mentoring drives better post‐succession firm performance, especially when there is a high presence of nonfamily directors in the boardroom and when the firm operates in low‐volatility industries. This study enhances the understanding of CEO succession by integrating the role of family CEO mentoring as a driver of post‐succession financial performance.

Research Summary This study reviews four decades of fragmented and contradictory empirical literature on the real effects of private equity (PE) buyouts on portfolio companies, differentiating between efficiency and growth outcomes. We hypothesize how institutional forces, including regulatory, cognitive, and normative institutions explain heterogeneity in post‐buyout efficiency and growth across time and countries. We argue that competition and population‐level learning have shifted the cognitive frame underlying value creation in buyouts from financial engineering toward operational engineering and strategic entrepreneurship. Using meta‐analysis, we find support for several of our hypotheses using samples from 66 empirical studies across the finance, management, economics, and entrepreneurship disciplines. Managerial Summary This study delves into four decades of fragmented private equity (PE) literature to unravel the practical implications for post‐buyout efficiency and growth. Using meta‐analysis, we explore the role of institutional forces—regulatory, cognitive, and normative—in shaping outcomes across diverse temporal and geographical contexts. We observe an overall paradigm shift in PE value creation over time, transitioning from focusing on financial engineering to operational value creation and strategic entrepreneurship. This transformation is driven by heightened competition and widespread population‐level learning. Validating our hypotheses through a thorough examination of 66 empirical studies spanning finance, management, economics, and entrepreneurship disciplines, our findings offer insights for policymakers and practitioners navigating the nuanced landscape of PE buyouts.

Research Summary Digital platforms have revolutionized business sectors; however, despite their significant success, platform unicorns remain rare. While extensive research exists on digital platform growth, it is uncertain what entrepreneurial decisions achieve unicorn status. We address the research question of what combination of complementary entrepreneurial decisions increases and decreases the likelihood of becoming a platform unicorn. The study examines 125 digital mental health platform ventures, including 12 unicorns, using the Dealroom database and decision tree methodology. We provide combinations of complementary decisions concerning fundraising timing, funding sources, digital technologies, and business model choices that affect a platform venture's probability of becoming a unicorn. The study offers decision profiles for navigating the uncertainties of the digital age. We discuss implications for strategic entrepreneurship and a judgment‐based approach. Managerial Summary In the digital age, achieving unicorn status depends on the right combination of complementary decisions about fundraising timing, funding sources, digital technology, and business model choices. Entrepreneurs dealing with uncertainty frequently rely on their intuition to make such decisions. Our research complements intuition with evidence that can now be obtained by deploying artificial intelligence tools like decision trees and highlights complementary decision profiles that have a higher likelihood of becoming unicorns, such as profiles with early‐stage funding, no government funding, and deep tech serving the B2B market. Conversely, we identify combinations with less than 1% success rates, indicating failed judgments. Research insights can help entrepreneurs and investors make better‐informed decisions to enhance mental health platform venture success and be aware of possible failure.

Research Summary This study examines how academic entrepreneurs refine business ideas in response to external critique and how these responses relate to performance. We develop a framework that links feedback (critique), business‐idea changes (pivots), and performance, and test it using detailed data on external stakeholder feedback, changes to the business idea's core and periphery, and commercialization outcomes in 316 academic‐led teams. We find that academic entrepreneurs frequently modify their business idea's core in response to negative feedback, and that core changes—rather than peripheral ones—are positively associated with commercialization. Challenging the idea that all entrepreneurs are inertial, we find that academic entrepreneurs both actively embrace and benefit from changes to the business idea's core. By tracing the feedback‐response dynamics of business idea components, our study adds granularity to research on pivoting. Managerial Summary Entrepreneurs often face a choice between reworking the core of a business idea and making changes to its periphery. Analyzing 316 academic‐led teams seeking to commercialize technologies using the Lean Startup Method, we find that academic‐led teams frequently change their idea's core in response to negative feedback—and that only core changes, rather than peripheral changes, are linked to improved commercialization outcomes. Overall, the results show the effectiveness of the Lean Startup Method and demonstrate that focusing feedback on the core of the business idea is an effective way to provide feedback to academic entrepreneurs.

Research Summary Because invention activities involve accessing, identifying, and recombining relevant prior art, startups confront significant search cost and effort. Using Google Patents's 2006 digitization of inventive records as a natural experiment, we examine how digitization affects the directionality and nature of entrepreneurial innovation. We analyze 17,664 US‐based startups in the life sciences industry and find that digitization increases the quantity and quality of prior art used as innovation inputs and those of patent applications generated as innovation outputs. Moreover, our findings indicate that digitization enables startups to transcend local searches for relevant inputs and increase both their entry into new technological domains and output utility. Our study sheds new light on how digitization and its search functionalities reshape startup innovation in the digital era. Managerial Summary Google Patents's 2006 digitization of inventive records transformed entrepreneurial innovation in the US Analyzing 17,664 life sciences startups, we find that digitization enhances search efficiency by alleviating constraints in accessing knowledge while boosting search effectiveness by improving inventive experimentation as online search features make identifying and utilizing relevant external knowledge timelier and more precise. Digitization enables startups to utilize greater volume, higher quality, and more diverse knowledge from prior art while also reinforcing invention outcomes, expanding into new technological domains, and generating more impactful inventions. This study highlights how digitization democratizes access to knowledge and improves search effectiveness and entrepreneurial experimentation, ultimately transforming the startup innovation landscape. Overall, digitization disproportionately benefits startups in areas geographically remote from physical knowledge repositories.

Research Summary Entrepreneurs have increasingly entered digital crowdfunding platforms as a viable option for acquiring capital. This paper examines how high‐performance outliers—projects that raised substantial amounts of capital—affect other entrepreneurs' decisions to enter crowdfunding. The present study focuses on the two largest rewards‐based crowdfunding platforms, Kickstarter and Indiegogo. Results indicate that, following outliers, entry was relatively higher on the platform with less restrictive, entrant‐friendly governance (i.e., Indiegogo). This effect was more pronounced among low‐quality entrants and moderated by projects in categories that have higher capital requirements. The findings suggest that differences in platform governance influence how subsequent entrepreneurial entrants behave. Managerial Summary Entrepreneurs use crowdfunding as a viable source of capital. This paper looks at how outliers—projects that raise substantial capital—affected subsequent entry decisions by other entrepreneurs onto the two largest platforms, Kickstarter and Indiegogo. Outliers led to relatively more projects joining Indiegogo, but those projects were disproportionately of low quality. Projects in categories that typically seek more money disproportionately joined Kickstarter. When considered in the context of platform competition, not only does platform governance affect levels of entry on a platform, it also alters the relative mix of entrants that join each platform.

Research Summary Access to markets is critical for entrepreneurial success, yet many face significant barriers. This study argues that digital platforms functioning as peer‐to‐peer marketplaces can facilitate entrepreneurial activity by improving market access for new ventures. Using the staggered entry of Craigslist into various markets, we find that Craigslist's entry increased local entrepreneurial activities, especially in low‐income regions. Moreover, individuals from lower‐income households, as well as Black and immigrant communities, were more likely to create new ventures following Craigslist's entry. Firms founded after Craigslist's entry were also smaller in size, potentially reflecting more efficient management, and primarily operated in B2C rather than B2B sectors. This study highlights how multisided platforms can empower individuals with limited market access and resources, ultimately democratizing entrepreneurship in the digital age. Managerial Summary Access to markets is essential for entrepreneurs to succeed, yet many face significant challenges in starting and growing their businesses. This study demonstrates how digital platforms like Craigslist can help overcome these barriers and create opportunities for more people to participate in entrepreneurship. When Craigslist expanded to new locations, it increased small business activity, particularly in low‐income areas. Individuals from lower‐income households, as well as Black and immigrant communities, were especially likely to benefit from it when starting businesses. These businesses were smaller in size, potentially indicating more efficient management and more B2C‐focused operations. This research underscores how digital platforms can make markets more accessible for traditionally disadvantaged groups, fostering a more inclusive entrepreneurial ecosystem.

Research Summary This Special Section of the Strategic Entrepreneurship Journal explores how business model innovation (BMI) can address grand challenges (GCs), including a rtificial intelligence (AI), b usiness and global unrest, and c limate change through a proposed “ABC” classification and “BMI‐GC” concept. Highlighting BMI's role as a boundary‐spanning, collaborative approach to innovation, we demonstrate its potential to drive sustainable solutions by rethinking value creation, delivery, and capture mechanisms. We examine how BMI may foster resilience and help firms and organizations adapt to global volatility, integrate ethical AI, and advance sustainability in business ecosystems. We offer a roadmap for future inquiry into BMI‐GC, including measurement and assessment, digital transformation, and collaborative ecosystems. By embracing these research pathways, scholars can contribute to a deeper theoretical and practical understanding of BMI to address grand challenges. Managerial Summary We investigate how business model innovation (BMI) can help tackle pressing global challenges (GCs), including a rtificial intelligence (AI), b usiness and global unrest, and c limate change, captured in a proposed “ABC” classification and “BMI‐GC” concept. We illustrate how BMI can help firms and organizations create sustainable, resilient, and future‐proof solutions. Practical strategies include integrating ethical AI, embedding flexibility in business models to withstand volatility, and adopting sustainable practices that align with regulatory and market demands supported by BMI. The paper identifies key opportunities for businesses to rethink how they create and deliver value, and foster collaboration across ecosystems. Through the ABC classification and BMI‐GC concept, we show how BMI can help enhance competitive advantage while responding proactively to the complexities of a rapidly changing world.

Research Summary This article draws upon regulatory focus theory to examine the ways in which founders influence entrepreneurial orientation and performance in young ventures. Findings from studies of young ventures in Ghana ( N = 226) and Kenya ( N = 205) suggest that founder promotion focus has a positive effect on entrepreneurial orientation, while founder prevention focus has a negative effect. Furthermore, we find that entrepreneurial orientation mediates the effects of founder regulatory focus on young venture performance and that the strategic decision speed of founders moderates the entrepreneurial orientation—venture performance relationship. The results extend theory on entrepreneurial orientation and regulatory focus by elucidating the role of founders' characteristics in setting an entrepreneurial tone for their firms and enhancing the effects of entrepreneurial orientation on venture performance. Managerial Summary With this article, we highlight the roles of regulatory focus and decision speed with entrepreneurial orientation (EO) to suggest the founder is vital in setting an entrepreneurial tone in their organizations. Leaders in young ventures should realize that their dispositions have outsized influence in both the development of EO and how EO is put into action. Founders who recognize the merits of cultivating a promotion‐focused orientation can strategically leverage this orientation to fuel their ventures' EO. Conversely, the negative influence of founder prevention focus on EO signifies the potential challenges associated with risk aversion and loss avoidance in entrepreneurial ventures. Finally, leaders who acknowledge the significance of quick, informed decisions are better positioned to leverage the positive impact of EO on new venture performance.