Knowledge that Transforms

This thesis aspires to advance understanding of how start-up firms’ and small and medium sized firms’(SMEs) network relationships affect acquisition of financing and information necessary to achieve firmbusiness development through the exchange in business relationships. It contributes to research on socialstructure by clarifying how network relationships that facilitate exchange have a positive effect on firmbusiness development, defined as subjective and objective enhancement of firm performance.The empirical setting consists of case studies in entrepreneurial start-up firms and of quantitative researchin SMEs. The findings show that in the start-up phase of firm development, network relationships that areembedded in social attachment and shared cognitive schemes constitute means to acquire informationcontaining referrals to new business partners, thus affecting the structural development of start-ups firms’business network. Findings further show that relationships to banks are important in order to fund thisstructural development. The thesis also shows the effects of banks, as institutional actors, on SMEs’investments in international business relationships and the effects of such investments on SMEs’ businessdevelopment. It is shown that relationships to domestic and local banks in different ways affect SMEs’specific investments in international business relationships. A local bank relationship decreases the SME’srelationship specific investments, while a domestic bank relationship increases relationship specificinvestments. There is however an indirect positive effect of a local bank relationship on the SME’srelationship specific investments, mediated by a positive effect of the SME’s relationships to other localinstitutional actors. The results further show that increases in relationship specific investments promoteSMEs’ business development. Findings made in this thesis also show that institutions, experiencedthrough interaction in the international business relationship, positively affect relationship specificinvestments and the performance enhancement of such investments. A general conclusion drawn fromthe findings presented in this thesis is the relevance of a type of actor - actors that facilitate exchangesamong firms and their business partners who are, or wish to be, independent - to the businessdevelopment of start-ups and SMEs.This thesis challenges banks to increase cognitive alignment with customers of start-up firms and toconsider corporate customers in view of their business relationships and network structure. Theseapproaches are suggested to facilitate bank’s assessment of firm creditworthiness.

Todd Wichmann and Rich Owen must decide whether to leave their dream jobs working for Procter & Gamble (P&G) and start their own business. They need to engage in the business planning process to decide whether to purchase Oxydol, one of the oldest detergent brands at P&G. This includes assessing whether Oxydol represents a good opportunity and if they can turn around the brand's declining sales. The most difficult challenge for Todd and Rich, though, involves finding venture capital funding for purchasing a detergent brand at a time when venture capitalists invest mainly in high technology and Internet ventures.

Blue Moon began as a natural foods market and deli in Exeter, New Hampshire, added a small restaurant, and had just opened an upstairs space for classes by local instructors. Founder Kathy Gallant had a vision that had evolved over time and a strong commitment to her customers and employees. At the end of 2002, Kathy was considering future paths for Blue Moon and herself. She was contemplating ways eventually to leave the business but still had many ideas for Blue Moon and its community.

This teaching case describes an ethical dilemma for a small business owner operating in the challenging business environment of Belarus, 2003. Each of his four options is a viable consideration depending on the perspective through which it is considered: his role as an individual, his role within his social network, and his role as a business executive. Students learn to evaluate each option and to make difficult decisions. The case is most appropriate for ethics or decision–making classes in the areas of Organizational Behavior, Leadership, or International Management. This case would also be relevant in an executive education program.

This case focuses on the decisions confronting Marc van der Bilt and his family. At the age of 59, Marc had been a franchisee of the Dutch DA drugstore chain for 23 years and had always planned to remain one until his retirement. In the spring of 2003, however, a change of management at the DA headquarters sparked major strategic changes to the DA chain that placed Marc and his family in a difficult position. They must decide on the future of their family business; should they go along with their franchisor's new plans or not?

The author provides preliminary and provocative results regarding the impact of health insurance mandates on the propensity of entrepreneurs to start new organizations. In keeping with a well–observed propensity for individuals to adjust their economic calculations in anticipation of future costs/benefits, the evidence suggests that when confronted with such mandates, potential entrepreneurs may either abandon entrepreneurial ambitions or seek to minimize mandate costs through jurisdictional arbitrage with appreciable implications for state and national level approaches to health care, health insurance provision, and workers.

The study by Khavul, Bruton, and Wood was an attempt to shed light on informal family businesses in East Africa, a group seldom studied. By applying the tenets of grounded theory the authors were able to successfully provide some insight into family business in this region. This commentary provides insight into the research by discussing the findings in light of the three–dimensional model of family business and attempts to limit agency costs based on cultural–based rights of the extended family. Also discussed here is a finding that may indicate a gender–related issue in opportunity identification and exploitation.