Knowledge that Transforms

The dynamic ownership arrangements surrounding the venture capitalist–entrepreneur (VC–E) relationship inherent in new ventures make the examination of principals’ or venture capitalists’ (VCs) and agents’ (entrepreneurs) governance arrangements interesting to explore. This article examines the limitations of agency theory and then stewardship theory in explaining the behaviors of individuals in the VC–E relationship. Our analysis points out the potential problems inherent in each theory's explanatory ability as it relates to the VC–E relationship. Lastly, theoretical gaps in the VC–E relationship are discussed along with suggestions for new theory surrounding this important and intriguing relationship.

Anthropological kinship theory is explored for potential contributions to a theory of family business. This article considers the costs and benefits of a role for kinship in business. Both derive from the discrepancy between the normative orders of kinship and markets; respectively, long–term generalized reciprocity and short–term balanced reciprocity. Because the former reflects the morality of society as a whole, kinship integrates social fields more readily than more specialized orders like markets.

This exploratory study provides a review of the neglected area of entrepreneurial founder team turnover. A novel distinction is made between entrepreneurial founder team member entry and team member exit. Ninety owner–managed ventures were monitored between 1990 and 2000. Presented hypotheses relating to a team's human capital were explored using multivariate logistic regression analysis. Variables associated with entry were found not to be the same as those associated with exit. The size of the founding team was significantly negatively associated with subsequent team member entry. The link between team turnover and entrepreneurial team heterogeneity was mixed. Functional heterogeneity was weakly significantly positively associated with team member entry. Heterogeneity of prior entrepreneurial experience was significantly positively associated with team member exit. In addition, family firms were significantly negatively associated with team member exit. The average age of the team was not significantly associated with team member entry or exit. Additional insights in future research may be gathered if a broader definition of team turnover (i.e., considering team member entry and exit) is considered. Practitioner awareness of the different factors associated with team member entry and exit may encourage them to provide assistance, which facilitates the team building process over time in developing firms. Promising areas for additional research are highlighted.

The goal of this interdisciplinary study is to analyze the entrepreneurial personality in the context of resources, environment, and the startup process based on a configurational approach. The study focuses on the startup process. A questionnaire was developed to measure the configuration areas of personality, personal resources, environment, and organizing activities. A representative sample of 1,169 nascent entrepreneurs and new business owner–managers was examined. Three startup configurations were found which reveal different patterns of personality characteristics. These patterns are interpreted in the context of aspects of the environment, the resources, and the startup process.

This study examines the relationship between firm absorptive capacity and organizational responsiveness in the context of growth–oriented small and medium–sized enterprises (SMEs). By testing the different dimensions of absorptive capacity, external knowledge acquisition and intrafirm knowledge dissemination were found to be positively related to organizational responsiveness. In addition, the relationships between absorptive capacity and organizational responsiveness were moderated by environmental dynamism and the SMEs’ strategic orientation. Results demonstrate that the responsiveness of growth–oriented SMEs is expected to increase if (1) they have well–developed capabilities in external knowledge acquisition and intrafirm knowledge dissemination; (2) they have a well–developed external knowledge acquisition capability and adopt a more proactive strategy, such as being a prospector; (3) they face a turbulent environment and have a well developed internal knowledge dissemination capability. Implications and future research directions are provided.

Few studies in the mainstream management literature have included the family as a variable. The focus of this article is to describe (1) why there is a dearth of research using family as a variable; (2) how failing to use the family as a variable in organizational research can lead to incomplete or misleading findings; (3) the issues and concerns related to using the family as a variable in organizational research; and (4) options in research design for using the family as a variable. Given that the vast majority of organizations can be classified as “family firms,” including the family as a variable in research designs will provide researchers with theories that are more robust and that can be generalized to a larger population of organizations.

Greater managerial ownership in family firms need not mitigate agency problems, especially when each family controls a group of publicly traded and private firms, as is the case in most countries. Such structures give rise to their own set of agency problems, as managers act for the controlling family, but not for shareholders in general. For example, to avoid what we call “creative self–destruction,” a family might quash innovation in one firm to protect its obsolete investment in another. At present, we do not know whether these agency problems are more or less serious impediments to general prosperity than those afflicting widely held firms.

This research examines the effect of participation in an enterprise education program on perceptions of the desirability and feasibility of starting a business. Changes in the perceptions of a sample of secondary school students enrolled in the Young Achievement Australia (YAA) enterprise program are analysed using a pre–test post–test control group research design. After completing the enterprise program, participants reported significantly higher perceptions of both desirability and feasibility. The degree of change in perceptions is related to the positiveness of prior experience and to the positiveness of the experience in the enterprise education program. Self–efficacy theory is used to explain the impact of the program. Overall, the study provides empirical evidence to support including exposure to entrepreneurship education as an additional exposure variable in entrepreneurial intentions models.

This study focuses on small business managers‘ motivation to expand their firms. More specifically, we examine the relationships between expected consequences of growth on the one hand, and overall attitude toward growth on the other. Data were collected in three separate studies over a ten-year period using the same measuring instrument. The results suggest that noneconomic concerns may be more important than expected financial outcomes in determining overall attitude toward growth. In particular, the concern for employee well-being comes out strongly. We interpret this as reflecting a concern that the positive atmosphere of the small organization may be lost in growth. We conclude that this concern may be a cause for recurrent conflict for small business managers when deciding about the future route for their firms.