Entrepreneurship in a Global Context
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ENTREPRENEURSHIP IN A GLOBAL CONTEXT This collection presents selected papers from the Fourth Annual Global Conference on Entrepreneurial Research, held in 1994 at INSEAD, France. Covering a wide selection of themes, methodological approaches and organization types, the papers aim to provide global perspectives on a variety of possible approaches to entrepreneurial research. Employing a multidisciplinary approach, the papers cover all aspects of current Entrepreneurship theory in multinationals, economics, organizational sociology, marketing, leadership and finance. Other issues discussed include gender and networking, strategies in entrepreneurial growth, job satisfaction and franchising. A number of case studies highlight specific examples of entrepreneurship around the world, including the reform of state-owned enterprises in China and Vietnam, regional business creation in Quebec and the Italian tannery industry. The first volume dealing with international entrepreneurship to draw on both eastern and western perspectives, this will be of interest to students and researchers in international business and related areas. Sue Birley is Director of Research and Professor at the Management School, Imperial College, London. Ian C.MacMilIan is Executive Director of the Sol. C.Snider Entrepreneurial Centre and the George W.Taylor Professor of Entrepreneurial Studies at the Wharton School at the University of Pennsylvania. © 1997 Sue Birley and Ian C.MacMillan ROUTLEDGE STUDIES IN INTERNATIONAL BUSINESS AND THE WORLD ECONOMY 1 STATES AND FIRMS Multinational Enterprises in Institutional Competition Razeen Sally 2 MULTINATIONAL RESTRUCTURING, INTERNATIONALIZATION AND SMALL ECONOMIES The Swedish Case Thomas Andersson, Torbjörn Fredriksson and Roger Svensson 3 FOREIGN DIRECT INVESTMENT AND GOVERNMENTS Catalysts for Economic Restructuring Edited by John Dunning and Rajneesh Narula 4 MULTINATIONAL INVESTMENT AND ECONOMIC STRUCTURE Globalization and Competitiveness Rajneesh Narula 5 ENTREPRENEURSHIP IN A GLOBAL CONTEXT Edited by Sue Birley and Ian C.MacMillan © 1997 Sue Birley and Ian C.MacMillan ENTREPRENEURSHIP IN A GLOBAL CONTEXT Edited by Sue Birley and Ian C.MacMillan London and New York © 1997 Sue Birley and Ian C.MacMillan First published 1997 by Routledge 11 New Fetter Lane, London EC4P 4EE Simultaneously published in the USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 Routledge is an imprint of the Taylor & Francis Group This edition published in the Taylor & Francis e-Library, 2003. © 1997 Sue Birley and Ian C.MacMillan All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalogue record for this book has been requested ISBN 0-203-43516-8 Master e-book ISBN ISBN 0-203-74340-7 (Adobe eReader Format) ISBN 0-415-13132-4 (Print Edition) © 1997 Sue Birley and Ian C.MacMillan CONTENTS List of figures List of tables List of contributors Introduction 1 STRONG TIES, WEAK TIES AND STRANGERS: DO WOMEN OWNERS DIFFER FROM MEN IN THEIR USE OF NETWORKING TO OBTAIN ASSISTANCE? Howard E.Aldrich, Amanda Brickman Elam and Pat Ray Reese 2 THE DETERMINATION OF OPTIMAL MARKETING EXPENDITURES: AN APPLICATION OF OPTION THEORY Saugata Banerjee, William D.Bygrave and Benôit F.Leleux 3 UNFINISHED BUSINESS: OBSTACLES TO ENTREPRENEURSHIP IN THE REFORM OF STATE-OWNED ENTERPRISES IN CHINA AND VIETNAM Max Boisot 4 CREATING VALUE ON THE BALANCE SHEET: CAPITAL STRUCTURES OF NEW BUSINESSES Richard N.Cardozo, Paul Severn, Anne Sickels, and Alexander Ardishvili 5 COPING WITH INDUSTRY TRANSFORMATION: THE CASE OF THE ITALIAN TANNERY INDUSTRY Paola Dubini and Umberto Lago 6 EXTRAORDINARY FEATS OF ENTREPRENEURIAL ENTERPRISE: STRATEGIES FOR RAPID, SUSTAINED GROWTH Thomas D.Kraemer and S.Venkataraman 7 TEAM PROCESSES AND PROGRESS IN INNOVATION: THE ROLE OF JOB SATISFACTION AT PROJECT LEVEL Atul A.Nerkar, Rita Gunther McGrath and Ian C.MacMillan © 1997 Sue Birley and Ian C.MacMillan 8 REGIONAL BUSINESS CREATION AND ‘PUSH’ FACTORS: THE CASE OF QUEBEC Gilles Roy, Jean-Marie Toulouse and Luc Vallée 9 AN INVESTIGATION OF CONFLICT IN THE FRANCHISEE- FRANCHISOR RELATIONSHIPS: FINDINGS OF THE PILOT STUDY Steven Spinelli Jr and Sue Birley Appendix I Appendix II Appendix III © 1997 Sue Birley and Ian C.MacMillan FIGURES 1.1 Framework of network relationships 1.2 Percentage of owners who asked for assistance in obtaining four resources, by sex. Question: ‘During the past year, have you asked for…?’ 1.3 Number of lawyers who were contacted, by sex 1.4 Owner’s relationship to the last person they contacted for assistance, by sex. ‘Percent who had specific type of relation to person contact’ 1.5 Percentage of owners who contacted a man to obtain specific assistance, by sex 1.6 Percentage of owners who paid market rate for the assistance they obtained, by sex 1.7 Owners’ ratings of the quality of the assistance they obtained, on a scale of 0 to 100, by sex 1.8 Percentage of owners who say that they changed their business practices as a result of the assistance they obtained, by sex 4.1 Weighted average cost of capital 4.2 Insolvency and shareholder value as a function of debt-equity ratio 4.3 Optimizing WACC and insolvency 4.4 Value to present shareholder as a function of WACC, insolvency cost and dilution 4.5 Impact of control of agents 4.6 Shareholder value as a function of flexibility and insolvency 4.7 Optimum debt-equity ratio to maximize value of present shareholders as a function of WACC, insolvency costs, control (agency) costs, flexibility costs and cost of dilution 5.1 Focus on differentiation strategy 5.2 Industrial strategy 5.3 Group strategy 7.1 Tests of hypotheses © 1997 Sue Birley and Ian C.MacMillan TABLES 1.1 Sample size and response rates 1.2 Personal and business characteristics of sample at Time 1 (1990) 6.1 Distribution of firms for each factor 6.2 Distribution of firms between mode of growth, product market mix and proprietary asset or invention at founding 6.3 Computer, electronics, and measurement industries concentration 6.4 Mean years to Fortune 500 entry 6.5 Mean daily raw return by growth process 6.6 Mean daily risk weighted return by growth process 7.1 Means, standard deviations and Pearson correlation coefficients 7.2 Results of varimax rotated factor analysis 7.3 Results of regression analyses on performance 7.4 Results of regression analyses on performance with controls 8.1 Anticipated dependent variables 8.2 Rank of the subprovincial regions (SR) in Quebec 8.3 Rank of the census metropolitan areas (CMA) of Quebec 8.4 Independent variables used in the empirical tests 8.5 Regression analysis for CNT8692EH/OLS: geographical groupings I, II, III and IV 8.6 Regression analysis for CNT8692EH/OLS: geographical groupings II and III including employment variations © 1997 Sue Birley and Ian C.MacMillan CONTRIBUTORS Howard E.Aldrich is Kenan Professor of Sociology, Director of the Industrial Relations Curriculum, Director of the Sociology Graduate Studies Program, and Adjunct Professor of Business at the University of North Carolina, Chapel Hill, USA. Alexander Ardishvili, Carlson Center for Entrepreneurial Studies, Carlson School of Management, University of Minnesota, USA. Saugata Banerjee is Assistant Professor of Finance, Koc University, Istanbul, Turkey. Sue Birley, Management School, Imperial College, London. Max Boisot, E.S.A.D.E., Barcelona, Spain. Amanda Brickman Elam is a second-year graduate student in Sociology at the University of North Carolina, Chapel Hill. William D.Bygrave is the Frederic C.Hamilton Professor for Free Enterprise and Director of the Center for Entrepreneurial Studies at Babson College, Maryland, Visiting Professor at INSEAD (the European Institute of Business Administration) and Special Professor at the University of Nottingham. Richard N.Cardozo, Carlson Center for Entrepreneurial Studies, Carlson School of Management, University of Minnesota, USA. Paola Dubini, Universita Bocconi, Milan, Italy. David Forlani, University of Minnesota, USA. William B.Gartner is the Director of the Center for the Study of Enterprise and a Professor in the Department of Management, College of Business Administration, San Francisco State University. Rita Gunther McGrath is Assistant Professor in the Graduate School of Business at Columbia University. She received her PhD from the Wharton School of the University of Pennsylvania. Thomas D.Kraemer, Wharton School of the University of Pennsylvania, USA. Umberto Lago, Universita Bocconi, Milan, Italy. © 1997 Sue Birley and Ian C.MacMillan Benoît F.Leleux is assistant professor in the Department of Finance at Babson College, Maryland, USA. He obtained his PhD at INSEAD, where he specialized in both Corporate and Entrepreneurial Finance and is still a visiting professor. Ian C.MacMillan is George W.Taylor Professor of Entrepreneurial Studies in the Department of Management of the Wharton School of University of Pennsylvania. He is Executive Director of the Sol C.Snider Entrepreneurial Center. Shuichi Matsuda, Waseda University, Japan. John W.Mullins, University of Denver, USA. Atul A.Nerkar is a doctoral candidate in the Department of Management at