“Growth Intentions and Expansion Plans of New Entrepreneurs in Transforming Economies
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“GROWTH INTENTIONS AND EXPANSION PLANS OF NEW ENTREPRENEURS IN TRANSFORMING ECONOMIES: AN INVESTIGATION INTO FAMILY DYNAMICS, ENTREPRENEURSHIP AND ENTERPRISE DEVELOPMENT" by David Pistrui A dissertation submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Business Administration Universitat Autonoma de Barcelona i ABSTRACT The focus of this study is to investigate the entrepreneurial growth intentions and expansion plans of new entrepreneurs in a transforming economy. As a focused method of investigation one country, Romania is examined. The study probes both the conceptual dimensions associated with the socio-cultural forces shaping transition, and the theoretical concepts associated with entrepreneurial centered socio-economic growth and development. Specifically the dissertation investigates the relationships between entrepreneurship, family dynamics and private enterprise development during socio- economic transition in Romania. The general research question posed is “What are the levels, and specific types of expansion plans found among new entrepreneurs in the former Soviet Bloc nation of Romania; what are the predictors of these expansion plans; and how do the environmental value systems and family dynamics impact planned growth?” The objective of this study is to examine thoroughly the different individual, group and environmental dimensions which impact entrepreneurial venture development via planned growth intentions and expansion plans. The study’s central objectives are to 1) to identify what types of planned growth initiatives entrepreneurs intend to pursue, 2) to ascertain the levels of intensity entrepreneurs have towards planned growth, and 3) to investigate the impact family dynamics have on planned growth intentions. A theoretical multidimensional model of the predictors of expansion plans is developed. Specifically, a set of exogenous variables comprising a sequence of relationships are hypothesized to be related to entrepreneurial expansion plans. Three dimensions comprise the predictive model; 1) Micro level variables associated with the entrepreneur’s personality, 2) Intermediate level variables related to societal dynamics, ii including family involvement and 3) Macro level variables affiliated with the comprehensive environment entrepreneurs operate in. The results of a survey of 410 Romanian entrepreneurs is used to test the multidimensional model. Data has been collected via the Entrepreneurial Profile Questionnaire which has been validated in Europe, Asia, and North and South America. The sample includes a rich cross section across a variety of industrial groups. Data is analyzed using a combination of descriptive and relational research techniques. A series of multivariate statistical procedures is employed to analyze the data and test the multidimensional model. iii TABLE OF CONTENTS ABSTRACT i LIST OF TABLES xx LIST OF FIGURES xxiii ACKNOWLEDGMENTS xiv 1-INTRODUCTION 1 1.1-Why Study Growth? 1 1.1.1-Neoclassical Economic Theory And Small Business Growth 2 1.1.2-Multidimensional Forces And Entrepreneurial Led 3 Small Business Growth 1.1.3-A Crossroads For Entrepreneurship Research: 3 Traditional Measures Of Growth 1.1.4-The Need To Know More-Entrepreneurship And The Future 4 1.2-Lack Of A Unified Definition Of Small Business Growth: 6 The Role Of Intentions And Expansion Plans 1.2.1-A Series Of Approaches Towards Entrepreneurial 6 Small Business Growth 1.2.2-Need To Develop A Better Understanding Of Growth 7 1.3-The Study’s Central Objectives 8 1.3.1-Entrepreneurship And Small Business Growth In The 9 Transforming Economies Of The Former Soviet Bloc 1.3.2-Romanian Transition: The Rebirth Of Entrepreneurship 10 And Small Business Development 1.3.3-Natural And Unique Field Study Site 11 iv 1.4-Major Research Question 12 1.4.1-A Series Of Related Research Questions 13 1.4.2-What Are The Levels And Types Of Expansion Plans 13 Entrepreneurs Have? (The Individual) 1.4.3-How Does The Family Network Impact Growth Intentions 13 And Expansion Plans? (The Group) 1.4.4-How Does The Socio-Economic Environment Impact 14 Expansion Plans And Growth Intentions? (The Environment) 1.4.5-What Are The Predictors Of Expansion Plans? 15 (Multidimensional Predictors) 1.5-Need For The Development Of A Multidimensional 15 Approach To Investigate Entrepreneurial Small Business Growth 1.5.1-Significance Of The Research 17 1.5.2-The Composition Of Growth Intentions and Expansion 19 Plans Can Be Delineated On The Basis Of Empirical Findings 1.5.3-Investigation Of Transition From A Centrally Planned 20 Communist Socio-Economic System To A Socialist Market System 1.5.4-Further The Understanding Of How Societal Elements 21 Shape New Venture Formation, Entrepreneurial Growth Intentions And Enterprise Development 1.5.5-Organization Of The Dissertation 21 2-CONTEXTUAL FRAMEWORKS 23 2.1-Historical Elements Impacting Culture And Entrepreneurship 23 2.1.1-Culture, Entrepreneurship And Socio-Economic Development 23 2.1.2-Historical Influences And Cultural Orientations 24 2.1.3-The Balkan Peninsula: The Cusp Of Europe And Asia 25 A Unique Combination Of Cultural Forces v 2.1.4-Romanian Political Orientations: Long Tradition Of Foreign 26 Domination And Turmoil 2.2-Four Central Political Orientations 26 2.2.1-Feudalism And Foreign Domination 27 2.2.2-Political Regrouping And The Fascist Movement 28 2.2.3-Romanian Communist Movement And Popular Mobilization 28 2.2.4-Mixed Socialism: Political Turmoil And Uncertainty 29 2.3-Romanian Economic Orientations: Long Tradition Of State 29 Dominated Underdeveloped Economic Base 2.3.1-Strong Agrarian Economic Tradition 30 2.3.2-Nationalization Of Industry 30 2.3.3-Lagging And Inadequate Infrastructure 31 2.3.4-Centralized Agro-Industral Focus 32 2.3.5-Mixed Socialist Transition 33 2.3.6-Limited Privatization And Agricultural Reform 33 2.4-Romanian Cultural Orientations: Four Central Themes 35 2.4.1-Tradition Of Small And Undeveloped Middle Class 35 2.4.2-Clan Based Socio-Economic Orientation 36 2.4.3-Systematic Centralization And Urbanization 37 2.4.4-Rapid Industrialization And Collectivization 37 2.4.5-Scientific Socialism 38 2.4.6-Systemization And Chaos 39 2.4.7-Family Based Extended Networks 40 2.4.8-Romanian Cultural Orientations And Entrepreneurship 41 2.5-The General Environment Of Post-Communist Transition 42 vi And The Rebirth Of Private Enterprise 2.5.1-Limited Entrepreneurial Enterprise Development 43 2.5.2-The Romanian Macroeconomic Environment 43 2.5.3-Continued Political And Fiscal Uncertainty 44 2.5.4-Critical Need For Financial Intermediaries 45 2.5.5-Limited Hard Currency And Foreign Direct Investment 46 2.5.6-Continued Path Of Economic Uncertainty 47 2.5.7-Overview Of The Societal Elements Impacting 48 Entrepreneurship And Enterprise Development During Transition 2.5.8-Visual Depiction Of The Environmental Forces Impacting 50 Family Dynamics, Entrepreneurship, And Enterprise Development During Transition 3-FAMILY DYNAMICS AND 52 SOCIO-ECONOMIC DEVELOPMNET 3.1-Introduction: The Family As A System 52 3.1.1-Family Structure Varies Across Different Cultures 52 3.1.2-The Family And Economic Development 53 3.1.3-Socio-Economic Assimilation Via Transactional Experiences 54 3.2-Special Role Of Family Controlled Enterprises 56 3.2.1-Similarities Among Family Enterprises In Western Europe 56 3.2.2-Some Significant Differences Between Family Businesses 57 By Country 3.2.3-Culture Based Patterns Of Behavior In Family Businesses 58 3.2.4-Family Systems And Their Influence 59 On Entrepreneurship And Enterprise Development 3.3-Soviet Imposed Communism And The Family 60 vii 3.3.1-The Rebirth Of East Central European Family Business 61 3.3.2-Family Resources Are Critical To Entrepreneurial 62 Creation And Development 3.3.3-Critical Challenges Facing East Central European 62 Family Firms 3.3.4-The Impact Of Communism On The Romanian 63 Family System 3.3.5-Contrasting Traits Between East And West 63 European Families 3.4-Time Of Great Uncertainty And Change 64 3.4.1-Unity Around The Family 65 3.4.2-Traditional Cultural Orientations 65 3.4.3-The Modern Romanian Family 66 3.4.4-Central Themes Of Family And Personal Networks 66 During Transition 3.4.5-Special Role Of Women In Romanian Society 67 3.4.6-Central Role Of Women Entrepreneurs In 68 Family Business 3.5-Romanian Entrepreneurship Family Network System 68 3.5.1-The Household 69 3.5.2-The Kinship Group 71 3.5.3-The Alliance Network 72 3.5.4-The Family, Entrepreneurship, And Enterprise Development 73 In Romania: A Call For Further Investigation 4-THEORETICAL FRAMEWORKS 75 4.1-Economic Theories 75 viii 4.1.1-An Economic Approach To The Topic Of Entrepreneurship 75 4.1.2-Early Theories Of Entrepreneurship 76 And Economic Development 4.1.3-Agriculture, Entrepreneurship And Private Enterprise 77 Theory Development 4.1.4-General Themes Associated With Early Economic Theories 79 4.2-The “Austrian School” Of Economic Thought 80 4.2.1-Economic Growth Not An Autonomous Phenomenon 82 4.2.2-General Themes Associated With The “Austrian School” 83 4.2.3-Entrepreneurial Discovery And Perpetual Innovation 83 4.2.4-Disequilibrium In A marketplace Of Constant Change 85 4.2.5-Heterogeneity Of Unique And Complex Events 85 4.2.6-Unobservable Factors And Invisible Assets 86 4.2.7-The “Austrian School” And Entrepreneurial 87 Growth Intentions And Expansion Plans 4.3-Recent Economic Theory Development 88 4.3.1-The Role Of Environmental Alertness 89 4.3.2-Dimensional Components Associated With Entrepreneurship 89 4.3.3-The