Knowledge that Transforms

Most research on entrepreneurship focuses on entrepreneurs' human and social capital as the drivers of new venture performance. However, less is known about how much the endowments of other strategic human resources, namely board directors, influence new venture performance. To generate new insights on this topic, we theorize and empirically investigate to what extent, and under which conditions, the experience of outside board directors affects new venture growth. Our analysis of Norwegian registry data on 15,594 new ventures does not provide immediate evidence that the presence of outside board directors or their experiences drive new venture growth. However, post hoc analysis suggests that the timing of board entry, combined with industry and directorial experience, plays a significant role in shaping growth outcomes. Additionally, the impact of industrial and directorial experience varies depending on the industry environment. • Outside board directors bring limited benefit to new ventures unless they have specialized expertise and proven experience. • The impact of outside board experience is greatest for newly appointed members with with industry experience. • Appointment timing matters: combining industry expertise with directorial background in outside board members drives growth. • In volatile sectors, outside directors with industry expertise provide much more benefit than directorial background alone.

The present paper argues and tests the proposition that firms with older top and middle managers produce fewer entrepreneurs, because these firms offer less chances to their employees to enter managerial positions that provide valuable experience for entrepreneurship (rank effect theory). Empirical work using linked employer-employee microdata for Portugal support this. The rank effect is stronger in firms with older top managers. Employees who progress slower into managerial ranks are not pushed into entrepreneurship but are more likely to take on jobs as employees in other firms. Overall, our results suggest that firms with younger management ranks offer more chances for workers to enter managerial positions and, therefore, spawn more entrepreneurs. A common career pathway leading towards entrepreneurship materializes through gaining experience working as a wage employee. In particular, work in top and middle management roles involving leadership and responsibility for strategic decisions should provide experience, knowledge and networks that are valuable for entrepreneurship. Founders of prominent unicorns and start-up ventures throughout the world have acquired significant managerial experience. Top and middle management roles often involve tasks that demand a broad range of skills associated with obtaining and deploying resources, as well as organizing and managing people. Furthermore, top and middle managerial positions expose individuals to ample opportunities for obtaining new knowledge and learning, including knowledge about new business opportunities. A recent theory named the rank effect suggests that in societies with older workforces, younger workers are less likely to become entrepreneurs because they are unable to acquire the experience and skills required for entrepreneurship. In aging societies, top and middle managers are more likely to be older and hold on to their positions for longer, thereby blocking younger subordinates from reaching managerial ranks. Since younger people are more likely to possess the energy, creativity, risk-taking and innovative abilities that enable and motivate entrepreneurs, if fewer young employees hold top and middle managerial ranks (so they can acquire essential experience), entrepreneurship rates will likely decline. Arguably, the rank effect argument overlooks that, if workers are indeed blocked from progressing to managerial positions in firms with older workforces and managers, frustration caused by lack of career advancement may also lead them to leave, either by seeking employment in another firm, or possibly by becoming entrepreneurs themselves. If non-managerial workers frustrated with lack of career progress are more likely to become entrepreneurs, the basic argument of rank theory – that managerial experience is a vital determinant of entrepreneurial ability and motivation – is significantly weakened. In this article we look at how corporate careers unfold over time towards entrepreneurship, focusing on whether reaching top and middle managerial ranks is indeed a steppingstone towards entrepreneurship. In particular, we seek to find out whether firms with older top and middle managers offer lower chances for workers to reach key managerial ranks and, as a byproduct of those lower chances, are less likely to spawn entrepreneurs. We also examine whether slower than average career progress towards managerial ranks is likely to lead employees to entrepreneurship, or to move jobs to a different firm. Lastly, we test if obtaining top managerial experience may be more strongly linked with likelihood of entrepreneurial transition than obtaining middle managerial experience. To test our ideas, we use detailed matched employer-employee data for Portugal and focus on wage workers who start a new job spell between 2005 and 2015. We use discrete-time hazard models to investigate whether the age structures of firms' managerial workforces are related with a reduced likelihood for the firm's employees to become entrepreneurs, by lowering their chances to progress in their careers by reaching top and middle managerial roles. Our main results indicate that top and middle management experience increases the likelihood of workers becoming entrepreneurs, with top management experience leading to the highest likelihood of entrepreneurial transitions. In firms with older managers, workers are less likely to reach key managerial positions and, therefore, less likely to become entrepreneurs. We also find that slower than average advancement towards managerial ranks is likely to lead workers to move to jobs in other firms, but not to entrepreneurship. Our results suggest that holding top and middle management ranks is an important steppingstone for those individuals whose career path progresses from wage employment to entrepreneurship. A firm's propensity to produce entrepreneurs likely depends not just on its ability to generate new ideas and products but is also related with the age structure of its managerial workforce. Moreover, firms' organizational forms and structures, as they relate to the numbers and functions of top and middle managers, are also likely to influence the spawning of entrepreneurs. • We argue that working in firms with older managers lowers one's chances of becoming an entrepreneur • This happens because in firms with older managers workers are less likely to have reached managerial ranks • Aquiring managerial skills and experience increases the likelihood of becoming an entrepreneur • These propositions are supported using detailed matched employer-employee data from Portugal • The results support the proposition that entrepreneurship is likely to decline in aging societies

While the entrepreneurship literature has explored distinct types of opportunities, such as sustainable, unsustainable, social, and commercial, the diverse and integrated processes through which each type of opportunity is exploited remain poorly understood. Indeed, prior research tends to conceptualize opportunity exploitation as uniform and binary, such as sustainable or unsustainable, rather than as a set of dynamic processes and activities shaped by local contexts. Through an inductive study of the South African abalone industry, we explore entrepreneurial variants—differentiated processes and activities of opportunity exploitation—offering a framework for identifying and interpreting the integrated mechanisms through which opportunities are exploited within a local system. We found that the community members perceive that these entrepreneurial variants generate two primary dynamics: pernicious dynamics (i.e., processes that community members believe diminish the functioning of the community) and symbiotic dynamics (i.e., processes that community members believe enhance the functioning of the community). We shed light on how a local system comprises multiple entrepreneurial variants, each embodying distinct relationships with and implications for the local ecology, people, and place. We also offer insights into when mostly unsustainable entrepreneurship can involve symbiotic dynamics and when mostly sustainable entrepreneurship can involve pernicious dynamics. We conclude by discussing the implications for both entrepreneurship theory and practice. Executive summary Opportunity exploitation is a core element of entrepreneurship. Scholars have recently begun investigating unsustainable entrepreneurship, where entrepreneurs exploit opportunities in ways that cause harm to the natural environment. Scholars have also examined sustainable entrepreneurship, where entrepreneurs exploit opportunities that generate solutions to diminish the harm caused to the natural environment. Indeed, much of the existing entrepreneurship literature has relied on binary constructions, such as the exploitation of sustainable or unsustainable opportunities or of social or commercial opportunities. These constructions largely focus on singular underlying processes and outcomes of opportunity exploitation, offering limited insights into how opportunity exploitation may involve multiple, overlapping, or even conflicting processes and activities within a local system. Thus, while prior research has often conceptualized opportunity exploitation in static and binary terms, a deeper understanding of the dynamic, context-dependent processes and activities through which opportunities are exploited remains elusive. In particular, we lack a structured framework to examine the underlying interconnected processes and activities of opportunity exploitation. Advancing such a framework would allow scholars and practitioners to move beyond reductive classifications of ‘beneficial’ or ‘harmful’ and toward a more nuanced, systemic understanding of entrepreneurship as it unfolds within specific local contexts. Therefore, in this study, we inductively explore how changes in a local system give rise to distinct entrepreneurial variants—differentiated processes and activities of opportunity exploitation. We also explore how these entrepreneurial variants interrelate and affect the functioning of the local community in which they are embedded. Our exploration of the South African abalone industry reveals that the entrepreneurs in this industry pursue different entrepreneurial variants following a regulatory event, leading to markedly different outcomes. We found that these entrepreneurial variants result in both the depletion and preservation of resources while hindering or supporting the functioning of the local community in which they are embedded. We found two primary dynamics at play within this system: pernicious dynamics (i.e., processes that community members believe diminish the functioning of the community) and symbiotic dynamics (i.e., processes that community members believe enhance the functioning of the community). We also found when mostly unsustainable entrepreneurship can involve symbiotic dynamics and when mostly sustainable entrepreneurship can involve pernicious dynamics. Our study makes several important contributions to the entrepreneurship literature. First, we shed light on entrepreneurial variants, providing a framework for explaining the interrelated processes and activities through which opportunities are exploited within a local system. Second, we contribute to theories of opportunities by offering insight into the markedly distinct processes and activities underlying opportunity exploitation, emphasizing how these unfold through the interactions of entrepreneurs embedded within a local system. Third, we extend theories of sustainability by exploring entrepreneurs who exploit opportunities that mostly harm the natural environment, entrepreneurs who exploit opportunities that mostly generate sustainable alternatives to preserve the natural environment, and the richness of the relationship between them in impacting a local community's functioning.

Entrepreneurial action under uncertainty requires resource commitment, yet the cognitive mechanisms enabling such decisions remain underexplored. This study investigates the role of venture-specific knowledge (VSK) in entrepreneurial action, focusing on two distinct cognitive pathways: refinement, which enhances understanding to address ignorance, and conviction, which strengthens confidence to overcome doubt. Using a causal map representation of VSK, we demonstrate that refinement and conviction independently drive personal financial investment, while also acting as substitutes when one pathway reaches its limits. Our findings extend entrepreneurial action theory by highlighting the distinct cognitive processes underlying VSK. Furthermore, we examine how these pathways interact with individual traits such as entrepreneurial self-efficacy (ESE) and uncertainty avoidance, revealing nuanced moderating effects. These insights advance understanding of entrepreneurial decision making under irreducible uncertainty and provide implications for both theory and practice.

Hyped ventures attract valuable resources by framing their goals in line with the hype. However, in doing so they risk adopting problematic conduct that undermines their moral legitimacy and requires repair. To explore the overlooked internal dynamics of this phenomenon, we conduct a longitudinal case study of a hyped fintech venture that lost and repaired its legitimacy. Our paper uncovers that how hyped ventures frame the moral boundaries of the pursuit of growth influences their conduct and, in turn, facilitates the loss or repair of their legitimacy. Two dynamics underline this process: the activation of intense emotions among employees and the entrenchment of distinct organizational cultures. Importantly, our study reveals that when ventures are hyped, a “growth at all costs” frame risks kindling “antagonistic excitement” among employees and facilitating a “hubristic culture” that supports morally reckless practices. By shedding light on these dynamics within hyped ventures, our study contributes to scholarship on entrepreneurial framing, cultural entrepreneurship, and tech venture legitimacy.

Entrepreneurs seeking legitimacy for their stigmatized products with mainstream audiences must deploy strategies to redefine their products' cultural significance. This paper investigates how the body, often a focal point of stigma, serves as the foundation for these strategies. Through an analysis of exemplary cases in the sex toy industry, we identify three strategies—visibilizing, obfuscating, and transforming—used by entrepreneurs to deal with different sources of stigma, including tribal stigma, blemishes, and abominations associated with the products. Our findings provide novel insights into the role of the body in entrepreneurial strategies to tackle stigma and gain legitimacy for their products, thereby contributing to the literatures on entrepreneurship in stigmatized settings and cultural entrepreneurship.

Over the last few years, the world has witnessed the emergence of a poly-crisis era in which overlapping, causally entangled crises, such as pandemics, war, inflation, natural disasters, etc. converge to challenge assumptions of societal stability upon which much of the field's knowledge base has been developed over the last few decades. In this editorial, we propose a poly-crisis perspective to entrepreneurship and compare it with entrepreneurship under both normal times and a single crisis. In doing so, we highlight the need to reexamine the boundary conditions of our models and to propose some questions, constructs, and methods that deserve increased attention in a world where institutional uncertainty is the rule rather than the exception.

While we understand the importance of entrepreneurs listening to stakeholders, we lack a sufficient theory-driven understanding of why some entrepreneurs and their ventures can listen to their stakeholders more effectively than others. We offer a listening model of venture growth based on listening theories and the literatures on new ventures and capability development. Listening is initially facilitated by entrepreneurs' cognitive and behavioral processes, but continued venture growth creates a paradox for entrepreneurs. Listening to stakeholders may also deplete entrepreneurs' personal resources, diminishing their listening capacity. This paradox can be overcome by generating their ventures' listening capability—behavioral routines and attention structures for listening—enabling them to acquire and interpret quality information from stakeholders more effectively to build or adapt the capabilities necessary for venture growth. The ventures' listening capability acts as a dynamic capability, which itself can be dynamic. This listening model of venture growth contributes to the entrepreneurship literature on stakeholders, entrepreneurs' abilities, and ventures' capabilities and dynamic capabilities. Executive summary Entrepreneurs need to acquire resources from stakeholders to create and grow their ventures. Therefore, stakeholder enrollment is a critical task for entrepreneurs. The predominant research on stakeholder enrollment has been on entrepreneurs' overt behaviors to secure the support of stakeholders—a unidirectional communication pattern in which entrepreneurs communicate to audiences and stakeholders listen to and decide whether to commit their resources to ventures. However, entrepreneurs need to communicate and listen to their stakeholders. Although scholars recognize the importance of entrepreneurs listening to stakeholders, we lack sufficient understanding of why some entrepreneurs and their ventures can listen to their stakeholders more effectively than others and thus acquire and use stakeholder support critical for venture growth. Therefore, we ask, Why are some entrepreneurial actors more effective at listening to stakeholders than others? To address this question, we integrate theories of listening and the literatures on new ventures and the creation of organizational capabilities to develop a listening model of venture growth. This model explains the importance and the limitations of entrepreneurs' listening ability in acquiring and interpreting stakeholder information for venture growth. Venture members can learn from and formalize entrepreneurs' listening ability to build ventures' listening capability, which overcomes the entrepreneurs' listening limitations. Ventures' listening capability includes acquiring and interpreting stakeholder information to inform and/or change additional capabilities critical for venture growth. Specifically, the model begins with communication from stakeholders to an entrepreneur and their venture. The entrepreneur engages cognitively in listening to the stakeholders' communication and acquiring and interpreting this stakeholder information. The entrepreneur also listens behaviorally, providing back-channeling that encourages the stakeholders to share more high-quality information. The entrepreneur's listening ability can enhance and change the venture's capabilities. However, the entrepreneur's ability to notice and interpret stakeholder information is limited. Other venture members can learn the entrepreneur's cognitive and behavioral listening to represent an organizational-level listening capability. This listening capability is reflected in the venture's routines and attention structures. The venture's listening capability can build and adapt the venture's nonlistening capabilities. The venture's capabilities drive venture growth. Because the listening capability generates and enables the interpretation of more high-quality stakeholder information, the venture can use this information to change its capabilities to obtain or maintain a tight fit with a changing environment. In doing so, the venture's listening capability represents a dynamic capability—listening can change the venture's capabilities. As the venture grows, the strain on the entrepreneur's listening ability further constrains the entrepreneur as a source of information for building and adapting the venture's capabilities. Venture growth also stretches the venture's listening capability, leading to changes in this listening capability and thus building and adapting the venture's nonlistening capabilities for subsequent venture growth. Venture growth can also lead to an increase in stakeholders and, thus, more stakeholder information to be noticed and interpreted by the venture's listening capability and to adapt the venture's nonlistening capabilities if necessary. With this work, we make three primary contributions to the entrepreneurship literature: We provide theoretical insights into (1) the workings of entrepreneurs' listening ability for promoting venture growth; (2) entrepreneurs' learning from their listening ability and formalizing this ability into organizational capabilities, which is critical for information to enact nonlistening capabilities for venture growth; and (3) a venture's listening capability as a dynamic capability.

While resource-dependency theories suggest that heterogenous directors in new venture boards contribute important knowledge and networks, research on boardroom homophily highlights that dissimilar directors are more likely to leave, especially under adverse conditions. To date, there is limited evidence on whether such mechanisms also prevail in the venture context where founder-managers retain excessive control over director appointments. We analyze director tenure in 28,295 Swedish ventures, finding that dissimilar directors are more likely to leave the board when ventures are operating in favorable conditions but only when considering knowledge diversity. Post-hoc analyses of directors' post-exit career paths and qualitative interviews with CEOs and directors help clarify the mechanisms that cause diverse directors to depart venture boards more often. Specifically, lifecycle demands and venture profitability ease resource-dependence pressures on director retention, thus feeding homogeneity in board expertise. Our findings provide insights into the homogenizing nature of new ventures' upper echelons as they evolve into mature organizations. Executive summary Boards are a vital resource for early-stage ventures, offering advice, funding connections, and strategic guidance — especially when directors bring diverse expertise. Yet, as ventures grow and succeed, that diversity can erode. Our study of over 28,000 Swedish owner-managed firms shows that directors whose expertise differs from that of the founder(s) are more likely to leave—not during hardship, but when the business is performing well. Interviews with several founders and directors further suggest that as ventures mature, they increasingly rely on internal capabilities and shift toward boards that reflect the founder's evolving preferences. These dynamics lead to more homogenous boards over time, potentially narrowing the range of perspectives available in the board. For founders and policymakers, the findings highlight a key challenge: keeping diverse directors around not just at the start, but as the company scales.

Coordination frictions prevent the efficient adoption and governance of blockchain-based platforms. Crypto funds (CFs) create value by smoothing frictions on decentralized digital platforms (DDPs). CF-backed DDPs obtain higher valuations in the primary token market, outperform their peers after issuing tokens, and benefit from token price appreciation around CF investment disclosure in the secondary market. Primary transaction data from the Ethereum ledger shows that the valuations of DDPs with meager adoption and a higher centralization of token ownership benefit more from CF backing. The positive valuation and performance effects for CF-backed DDPs are more pronounced for CFs that are more central in investor networks.