Knowledge that Transforms

A model of the relationships between pre-organlzational Information processing and environmental load specifies an interaction effect on new organization creation. The model proposes that levels of Information-processing ability In pre-organlzational networks can be either superoptimal or suboptimal relative to the levels of environmental load encountered by intending entrepreneurs. Either condition will reduce the likelihood that the entrepreneurs’ Intentions will be realized. However, when an appropriate balance between Information-processing ability and environmental load Is achieved, the likelihood of new organization creation increases. Environmental load Is described in terms of information load and information diversity. Entrepreneurs’ information-processing ability is specified In terms of pre-organlzational size, interconnectivity, and frequency of communication.

This model applies theories of organizational socialization to characterize the aspiring entrepreneur's journey from neophyte to firm founder and to Identify factors that may Influence the transition from a pre-organization to the formation of a new organization. The model distinguishes two identifiable stages which shape organization formation—Anticipatory Socialization and New Entrepreneur Socialization. Anticipatory Socialization characterizes the predisposing characteristics and experiences that precede the cognitive choice to become an entrepreneur. New Entrepreneur Socialization specifies the critical variables that Influence the new recruit once the decision Is made to start a firm. Three factors determine the transition into the entrepreneurial role: Motivational Bases for Adaptation, Socializing Agents and the Structural Context of the Entrepreneurial Setting. The eventual outcome of entrepreneurial socialization, Organization Formation, Is the survival or discontinuance of the venture. A model of entrepreneurial socialization focuses attention on the adaptive Intra-personal and Inter-personal processes that shape the new venture creation process.

Sociological perspectives and research provide important and distinctive contributions to the understanding of entrepreneurship in three ways. The first is through the development of societal conceptions regarding productive activities that encompass the entrepreneurial role or function. The major alternatives emphasize socioeconomic systems as (a) moving toward an equilibrium (reflecting a broad consensus) or (b) reflecting the outcome of class competition (emphasizing conflict resolution). Both assume the inevitable dominance of massive productive organizations. These conceptions have recently been supplemented with attention to the dual nature of advanced economies or the benefits of flexible specialization. The second is through attention to specific societal characteristics affecting entrepreneurship: modernization; the role of the state in economic development; variations in the scope and nature of the unregistered (underground) economy; and the character of organizational populations and their ecological niche as they affect new firm foundings. The third is through attention to the impact of social context on the decisions of individuals to pursue entrepreneurial options. This includes attention to the individual's life course stage; social networks and embeddedness; ethnicity; and work experiences.

Recent evidence of entrepreneurship's significant contribution to economic growth and development challenges the dominance of general equilibrium theory in macroeconomic thought. Microeconomics has long criticized the assumptions of the neoclassical economic model which underlies general equilibrium theory but has not swayed the grasp that general equilibrium theory has over macroeconomic policy formulation. Yet, general equilibrium theory does not incorporate entrepreneurship; on the contrary, the assumptions of this model exclude entrepreneurship as an economic variable. Now, however, as microeconomic research finds more and more evidence confirming the importance of new business formation and growth, general equilibrium theory remains incapable of adapting to this reality. And, this theory frequently produces policy prescriptions that favor large, established firms over new, small firms. This paper describes the weaknesses of general equilibrium theory that are relevant to entrepreneurship. Then, after reviewing the growing evidence supporting entrepreneurship, it describes Schumpeter's model of creative destruction and demonstrates how entrepreneurship empirical research supports this model. It concludes by urging economists to desert general equilibrium theory and search for a new macro-theory that incorporates entrepreneurship.

The article offers an overview of strategic management and its various schools of thought, followed by a summary of the field of entrepreneurship and its own disagreements over definition and boundaries. It suggests that strategic management might help resolve such disagreements through its focus on “the entrepreneurial work of the organization,” which is based on variables that describe the organization's industry, resources, processes, and strategy. Finally, the article both describes and proposes contributions of strategic management to entrepreneurship theory, specifically addressing issues of new business creation, innovation, opportunity seeking, risk assumption, top management teams, and group processes in strategic decisions.

This paper presents guidelines for integrating daughters into family business management. Based upon the results of an empirical study of daughters working with their founder/fathers in 18 family-owned firms, this paper indicates that the daughter represents an often untapped resource within the family firm and may be particularly suited for working in collaboration with the father/founder to manage the family firm. Key aspects of the daughter's particular strengths in working with the father to manage the family firm are stressed, and steps for integrating the daughter into family firm management are proposed.

A model of employment status (self-employed vs. wage-or-salary employed) choice based on psychological, sociological and cognitive variables resolves the traditional shortcomings of occupational tracking models (general applicability, black box treatment of individual processes, and tracking exceptions or “failures”) by using the cognitive heuristics of availability, representativeness and adjustment from an anchor. The model is presented, its components and processes are described, it is partially operationalized in a small example, and implications for future use are briefly considered.

This paper attempts to explain the observations that not all Individuals have the potential to found organizations, and that of those who do, not all try or succeed. Three dimensions to organization formation are proposed: propensity to found, intention to found, and sense making. These three dimensions lead to a decision to found the venture, or to abandon the attempt. Several propositions are derived from the model.