Knowledge that Transforms

The changing environment faced by Hong Kong-based entrepreneurs undertaking production in southern China provides the broad context for the Wah Hoi case. Since starting production in Guangdong province in 1988, Wah Hoi has grown rapidly. However, in the mid-1990s, the founder and owner of Wah Hoi, Mr. Fred Mok, has to address a number of problems. These include a need to re-evaluate several joint venture agreements; pressures from cost inflation and regulatory changes in China; a tough competitive environment in overseas markets; and policy issues relating to Wah Hoi's international marketing strategy.

Willy Korf was a well-known German entrepreneur who emerged from the chaos at the end of World War II to transform the steel industry. The following case recounts the events of his rise, his bankruptcy following the collapse of the world steel industry in the 1980s, and his emergence as a champion of an innovative steel-making furnace.

1,095 responses were received from a telephone survey of independent inventors. The majority of inventors surveyed (89%) are male, and a plurality of their inventions are designed for consumer products (47%). Conditional on commercializing their invention, and at development costs about 1/8 of those in established firms, inventive efforts by independent inventors lead to gains virtually comparable to those of established firms. Their innovations survive for about as long as the average start-up. Gross profit margins are comparable to the pharmaceutical industry (29%). However, only a small fraction of inventions developed by independent inventors reach the market (6.5%). The probability of reaching the market is four to eight times less than for inventions developed by established firms. Why do only a fraction of inventions developed by independent inventors become commercialized when those that do commercialize are quite profitable and survive for as long as other start-ups?

Terry Smith has spent the last six months preparing to purchase a Beano's Ice Cream franchise. Because his personal assets were limited, Smith needed a partner who could finance the purchase. After Smith found a prospective partner, Barney Harris, they negotiated a purchase price with Beano's. Then, Harris gave Smith a partnership proposal. As the case opens, Smith is evaluating the partnership proposal. His three choices are: to accept Barney Harris's partnership proposal, to make a counter proposal, or to try to find a new partner.

Opportunity recognition and opportunity-directed behavior are at the core of entrepreneurial efforts in both new and existing ventures. This study examines characteristics and behaviors related to future time orientation and their association with the pursuit of entrepreneurial opportunity. We find that strategic change in young technology-based ventures is associated with top management teams who are perceived as being more future-oriented. Communication patterns linking future- and present-oriented managers are also associated with strategic change. The findings of this empirical study indicate that technology-based ventures should place substantial emphasis on identifying, embracing, and widely communicating ideas that challenge the status quo. Out of this process the entrepreneurial approach is reinvigorated with new opportunities for proactive strategic change and growth. Ways in which new venture management may take steps to recognize and move proactively on emerging new opportunities are suggested.

The owners of America's fastest-growing private companies listed in Inc. 500 magazine in 1995 kept their wage jobs for an average of four months after the birth of their new ventures. Why didn't they immediately commit themselves full-time to the new venture? The answer is their need for money. The earned wages contribute to the survival of the individual by covering living expenses and to the survival of the business by allowing the Investment of some of the wage income into it. We address the question of when the best time is for an entrepreneur to leave a wage job and become a full-time entrepreneur. We show that the optimal time-allocation policy is driven by the entrepreneur's tolerance for work and by how the returns behave with respect to time allocation in the venture. By utilizing an analytical approach we suggest some productive new directions for entrepreneurship research.