Does an additional year of formal education affect the decision to become an entrepreneur? Using human capital theory as a conceptual lens, we explore three channels through which it might: productivity, certification, and health impacts. To test the mechanisms and uncover whether there are causal relationships between these variables, we exploit two exogenous changes to British compulsory schooling laws that generated sharp across-cohort differences in years of education. Using a fuzzy regression discontinuity design, we estimate that the reforms significantly reduced self-employment. We go on to explore which channels best explain this finding, and discuss implications for scholars and policymakers. • A Regression Discontinuity Design is used to obtain causal estimates of the relationship between high school education and adult entrepreneurship. • The study exploits as a natural experiment legal reforms to the national minimum school leaving age in Britain. • Estimates indicate a negative relationship between an additional year of schooling and engagement in self-employment. • The findings cast doubt on the notion that the additional schooling affected self-employment through productivity or credentialing channels. • Policy implications might be most applicable to developing countries where governments are exploring whether to raise school leaving ages.

This paper seeks to measure the extent to which entrepreneurs adjust their beliefs in the light of new information, instead of relying on past experience to guide their decision making. We build a model in which entrepreneurs continually receive valuable but noisy market signals about the true but unobserved productivity of their effort, and use this information to update their expectations of unobserved productivity. The model is estimated using a sample of over 700 self-employed Britons interviewed in 1999 and 2000. It is found that on average, these individuals adjust their expectations of unobserved productivity in the light of new information by only 16%. This suggests that while entrepreneurs do exploit new information, they give much greater weight to their prior beliefs when forming their expectations. Also, there are no significant differences in terms of expectation formation between males and females, employers and non-employers, and experienced and less experienced entrepreneurs. However, younger entrepreneurs respond significantly more sensitively to new information than older entrepreneurs do, with adjustment rates of 21% compared with 14%, respectively. We go on to discuss some policy implications of these findings, and briefly discuss several features of entrepreneurship education programs that might help entrepreneurs improve this aspect of their business performance.

In today's business landscape, the familiar traditional corporation has been augmented by new species, such as joint ventures, strategic alliances, and franchise chains. The properties of these new species, termed hybrid forms, are distinctly different from the traditional corporation. In this paper, we examine whether one hybrid form, the franchise chain, can coordinate elements of the marketing mix (price, quality, and advertising) in the pattern suggested by theory and achieved by the traditional corporation. Results suggest they cannot. Therefore, franchise chains appear to be unable to coordinate the elements of the marketing mix. Implications for theory and practice are discussed.

This paper presents some preliminary findings from a psychological study of entrepreneurial phenomena in Japan. A questionnaire was developed to identify two major ways in which entrepreneurs were different from managers of large corporations. First, the perceived difference between the entrepreneurs and managers was measured to create a Personal Difference Index (PDI). Second, the perceived difference between the entrepreneurs' firms and a typical large firm was measured to develop a Corporate Difference Index (CDI). The primary finding was that among the entrepreneurs, both PDIs and CDIs were much stronger than those of the corporate managers surveyed. Factor analysis of the questionnaire items were conducted and four factors relating to perceived differences between respondent and corporate managers were found: degree to which individuals prefer an entrepreneurial versus consensus decision style; degree to which the respondent prefers extrinsic over intrinsic rewards; degree to which the respondent prefers a commercially oriented over a functionally oriented structure; and degree to which the respondent prefers growth over security of firm. Entrepreneurs were found to have significantly higher preferences for entrepreneurial decision style, extrinsic rewards and a growth orientation. Four factors reflecting the perceived differences between respondent's firm and a typical firm were also assigned: degree to which decision processes are individualistic as opposed to following due process; degree of access to a supportive infrastructure; degree of technology management competence; and relative access to networks. Entrepreneurs felt that their firms rated higher on individualistic decision processes, had superior access to a supportive infrastructure, and had lower technological capabilities.

This report presents the results of a formal study of the corporate venture capital community in the United States, and is based upon responses to a questionnaire completed by 52 corporate venture capitalists (CVCs). The central question addressed in this study involves which approach to corporate venture capital is most likely to produce successful results. This question was addressed via cluster analysis which segregated the CVC community into two broad classes—“pilots,” which are marked by substantial organizational independence and “copilots,” which are highly dependent on corporate management with respect to venture funding and decision authority. Pilots achieve equal or higher levels of performance, and are plagued by far fewer obstacles, than their highly dependent counterparts. The results suggest the following: 1. The corporate venture fund should be established as an independent entity and should have access to a committed, separate pool of funds. This will enable CVCs to respond aggressively to, and manage, investment opportunities with minimal corporate interference. Such an independent entity will defuse justifiable concerns on the part of entrepreneurs related to such interference. 2. The fund should be managed by skilled venture professionals who may be drawn from the independent venture community or the small but growing pool of experienced CVCs. Corporate executives may comprise a part of the management team. 3. If the corporate venture fund hopes to attract top quality managers, it must be prepared to offer compensation and authority commensurate with their skill level. In short, corporate venture capitalists should be treated like independent venture capitalists. By organizing the fund as an independent entity, the political problem associated with establishing compensation levels above those of the corporation can be minimized. 4. All CVCs should establish a primary focus on the realization of financial objectives (i.e., return on investment). Strategic benefit objectives are not necessarily ill advised so long as they do not interfere with sound financial decision making. When they do, the corporate venture capital process is likely to become less effective. For instance, a corporate venture fund should only confine itself to investing in a few industries if there are sufficient high-grade investment opportunities within those industries to ensure adequate deal flow. The venture fund should not be pressured. Investments that appear exciting from a corporate perspective, for technological or marketing reasons, but are not financially attractive may well drain resources rather than produce opportunities. 5. Venture proposals failing on financial criteria might be referred to other parts of the corporation with the purpose of exploring an alternate relationship (e.g., a development contract or joint venture). If this is appealing to the corporation, a mechanism such as a corporate liaison or reporting system might be established to facilitate the flow of information. 6. A corporation should be willing to make a complete commitment of talent and capital if it establishes its own corporate venture fund. The corporation should then be willing to accept a limited role. If the corporation is unable to accept a limited role with respect to its own fund, it may be best for it to participate as an investor in a traditional fund, where such limitations will be enforced. However, this latter approach may significantly dilute or eliminate potential for strategic benefits.

Little is known about what really makes ventures succeed or fail and therefore, what one should consider when deciding whether or not to back a corporate venture. What is required are many more systematic studies of the venturing process. In this study we look at one small part of the process; the way in which managers go about evaluating a venture and what importance they attach to the various criteria they use to assess corporate ventures as they decide whether or not to support them. The other issue of interest is whether, with venture decision-making experience, there is a shift in the importance of criteria. Do managers inexperienced in venturing, start off with one set of weightings on criteria and then learn by experience to weigh criteria differently? Nearly every venture decision will be reviewed or have to pass some form of limited approval by, or get logistical support from, at least some managers who may be inexperienced. The degree of their support and approval will depend on the inexperienced managers' model of what constitutes an appropriate venture. Therefore, it is important to study both the novice and the experienced venture manager. This study used conjoint measurement procedures to quantify the importance of several factors to managers making go/no-go decisions as to whether they would support a series of hypothetical corporate ventures. The results indicate that there is a very high correlation between the judgements of inexperienced managers and those that have had some involvement in venture decision making. In virtually every case the direction of the preference for levels is identical. The effect of experience is not to change the model that the manager uses, but rather to crystallize the preferences and tradeoffs involved. The most interesting result was the overriding importance attached to corporate fit. The message is clear: do not expect support from any managers, inexperienced or otherwise, if there is no perceived fit between the firm and the venture. There were also relatively high levels of importance attached to seven other variables: size of investment, presence of an experienced venture champion, corporate experience with product, low threat of competition, utilization of proprietary technology, rate of return, and gross margin. For the sample in this study an optimal venture proposal can be described via the following criteria: •High corporate fit•Low initial investment•Experienced venture champion•Experience with product/service•Low competitive threat•Proprietory technology•High gross margin•High rate of return

This paper presents the preliminary and presently speculative conclusions of a psychological study of entrepreneurial phenomena in Japan and Silicon Valley. A questionnaire was developed to identify two major ways in which entrepreneurs were different from average managers of large corporations. First, the entrepreneurs' perceived difference between themselves and managers was measured to create a Personal Difference Index (PDI). Second, the entrepreneurs' perceived difference between their firms and a typical large firm was measured to develop a Corporate Difference Index (CDI). Our primary finding is that U.S. high-tech and Japanese entrepreneurs have the same minimum hurdle degree of entrepreneurial spirit. Both U.S. and Japaneses entrepreneurs require a certain minimum personal and corporate difference to overcome the obstacles to becoming an entrepreneur. However, the types of entrepreneurs in Japan and Silicon Valley are different. We also found that entrepreneurs with higher growth firms fell within a certain range of PDI's and GDI's. Entrepreneurs or entrepreneurial firms that were too similar or too different from corporate counterparts tended to fail or to remain small. This report presents the preliminary and presently speculative conclusions from a study of the characteristics of entrepreneurs in Japan and Silicon Valley. As a result of this study, we hope to understand better the following: • What are the universal characteristics of entrepreneurs?

This article examines the idea that there is a basic set of beliefs that entrepreneurs hold about themselves and about others in their society that, from the perspective of the entrepreneur, differentiate the two. The article suggests that this set of beliefs transcends cultures, and that these perceived differences may be linked to entrepreneurial activity. Analysis of survey responses from over 700 entrepreneurs in nine countries found that even among culturally very different societies there is a core set of perceptions, common across countries, that entrepreneurs hold about others in their countries. This supports the first two parts of the proposition, and suggests that entrepreneurial behavior may indeed stem from a pervasive set of entrepreneurial beliefs.

The literature identifies four important factors1 that determine the success of a corporate venture: culture, climate, and corporate support (Schon 1966; Kanter 1983; MacMillan, Block, and Subba Narasimha 1984; Fast and Pratt 1981; Roberts 1980; Maidique and Hayes 1984); structure and venturing effort (Burgelman 1983, 1985; Souder 1981; Maidique 1980; Block 1985; MacMillan and George 1985); planning, monitoring and evaluation (Vesper andHolmdahl 1973, Quinn 1979; Fast 1981; Block and MacMillan 1985); and strategy and environment (Cooper 1979, 1983; Hobson and Morrison 1983; Biggadike 1979). This paper focuses on the last of the above issues. It seeks to explore the importance of environment and strategy for corporate venture success. At the broadest level, two theoretical perspectives have dominated the organization-environment-strategy literature in recent years: population ecology and strategic adaptation. The population ecology perspective argues that organizational survival is determined by environmental selection (Hannan and Freeman 1979,1984; Aldrich 1979; Greenfield and Strickon 1986). Technological and demographic change results in “new resource sets” that provide opportunities for the expansion of existing, or the founding of new, organizations (Brittain and Freeman 1980). A shifting network of social linkages, both within and between existing firms, connects aspiring venture managers/entrepreneurs with resources and opportunities (Aldrich and Zimmer 1986). While managers develop and implement strategies, these strategies do not directly determine success. Instead, they are one of many sources of random variation that will be selected for, or against, by the environment. In contrast, the strategic adaptation perspective implies that new venture success is a function of the manager's or entrepreneur's ability to assess internal capabilities and environmental conditions for the purpose of developing and executing effective strategies (Andrews 1980; Porter 1980; Vesper 1980; Timmons 1982). The environment is viewed as a (major) constraint within which strategy is developed. Furthermore, environments are not immutable and are subject to negotiation and manipulation (Child 1972; Miles and Cameron 1982; MacMillan 1983). In recent years it has been acknowledged that both population ecology and strategic adaptation perspectives provides valuable insight. A new body of literature has emerged that attempts to reconcile these theories (Tushman and Anderson 1986; Van de Ven, Hudson and Schroeder 1984; Singh, House, and Tucker 1986; Aldrich and Auster 1986). This paper follows in this tradition and seeks to explore empirically the relative impact of strategy and environment on new corporate venture performance in industrial markets.

Individual-level opportunity recognition processes are vital to corporate entrepreneurship. However, little is known regarding how managerial communication impacts the effectiveness of idea suggestion systems in stimulating individuals' participation in intrapreneurial ideation. Integrating self-determination theory, creativity, and framing research, we theorize how different ways of inviting employees to submit proposals (opt-out/opt-in registration; provision of examples) affect the number and quality of submitted ideas. Our multi-method study (field experiment, vignette experiment, interviews) shows that (i) opt-out increases employee participation without reducing idea quality and (ii) the provision of examples enhances the usefulness of ideas but decreases novelty and the number of submissions.