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THE ENTREPRENEURSHIP DYNAMIC

STANFORD UNIVERSITY PRESS

Contents

PREFACE...............................................................................................................................................................................................xiCONTRIBUTORS..........................................................................................................................................................................................xv1 Introduction: Premises of the Entrepreneurship Dynamic CLAUDIA BIRD SCHOONHOVEN and ELAINE ROMANELLI...............................................................................................1PART I The Origins of Entrepreneurial Activity and New Organizations2 The Company They Keep: Founders' Models for Organizing New Firms M. DIANE BURTON...................................................................................................................133 The Local Origins of New Firms ELAINE ROMANELLI and CLAUDIA BIRD SCHOONHOVEN.......................................................................................................................404 The Role of Immigrant Entrepreneurs in New Venture Creation ANNALEE SAXENIAN.......................................................................................................................685 The Magic Beanstalk Vision: Commercializing University Inventions and Research ANNE S. MINER, DALE T. EESLEY, MICHAEL DEVAUGHN, and THEKLA RURA-POLLEY.............................................1096 Knowledge Industries and Idea Entrepreneurs: New Dimensions of Innovative Products, Services, and Organizations ERIC ABRAHAMSON and GREGORY FAIRCHILD..............................................1477 From the Technology Cycle to the Entrepreneurship Dynamic: The Social Context of Entrepreneurial Innovation JOHANN PETER MURMANN and MICHAEL L. TUSHMAN............................................178PART II Entrepreneurship in the Evolution of Industries8 Learning and Legitimacy: Entrepreneurial Responses to Constraints on the Emergence of New Populations and Organizations HOWARD E. ALDRICH and TED BAKER...........................................2079 Entrepreneurial Action in the Creation of the Specialty Coffee Niche VIOLINA P. RINDOVA and CHARLES J. FOMBRUN.....................................................................................23610 The Power of Public Competition: Promoting Cognitive Legitimacy Through Certification Contests HAYAGREEVA RAO.....................................................................................26211 Social Movement Theory and the Evolution of New Organizational Forms ANAND SWAMINATHAN and JAMES B. WADE..........................................................................................28612 Entrepreneurship in Context: Strategic Interaction and the Emergence of Regional Economies ARI GINSBERG, ERIK R. LARSEN, and ALESSANDRO LOMI......................................................31413 The Legal Environment of Entrepreneurship: Observations on the Legitimation of Venture Finance in Silicon Valley MARK C. SUCHMAN, DANIEL J. STEWARD, and CLIFFORD A. WESTFALL.....................34914 Emergent Themes and the Next Wave of Entrepreneurship Research CLAUDIA BIRD SCHOONHOVEN and ELAINE ROMANELLI......................................................................................383REFERENCES............................................................................................................................................................................................409INDEX.................................................................................................................................................................................................441

Chapter One

CLAUDIA BIRD SCHOONHOVEN AND ELAINE ROMANELLI

This book developed from the basic idea that it is both necessary and the right time to focus theoretical and empirical attention on the key questions of entrepreneurship research rather than on the differing assumptions and emphases of the disciplines. We think there are two major questions that cut across the disciplines and animate the abiding fascination of entrepreneurship research.

First, what are the conditions, including economic, cultural, and even personal situations and proclivities, that prompt the founding of new organizations? In other words, what are the origins of new organizations? Especially, what are the conditions in industries, economies, and societies that generate large numbers of new organizations being founded in particular times and places? This question, while motivating the majority of entrepreneurship studies, has rarely been asked objectively or systematically. Instead, disparate theories of origins-that is, the personal, the cultural, and the economic-have been posited and tested for their influence in isolation from one another. The unsurprising result is that we find evidence in the literature of a myriad of factors that, sometimes, for some industries, in some nations or regions, and in certain periods of history, appear to promote the rise of new organizations, especially in large numbers. Still, no one today can predict when and where large numbers of new organizations will emerge. We still don't know which factors to emphasize or when different factors will be important. And, of course, the factors themselves may be changing over time. Research needs to be directed to the study of organizational origins in a way that is independent of disciplinary biases. Organization theory, which cuts across the various disciplines, seems a good scholarly venue for approaching this research.

Second, what are the real and important outcomes of entrepreneurial activity? Somewhat surprisingly, since outcomes, including the economic and social transformation of whole societies, are the only reasonable motivation for research into origins, little research has directly explored outcomes. Birley (1986) verified the general and seemingly indisputable observation that new organizations produce new jobs and economic wealth in greater proportion than established organizations. Popular statistics, like those from the U.S. Small Business Administration and Department of Commerce, seem to confirm the idea that new organizations produce innovation, and reap profits from major innovations, to a much greater extent than established organizations. Organizational ecologists (e.g., Hannan and Freeman 1989) have explored organizational foundings as a key dynamic in the development of organizational populations. Aldrich (1979; 1999), echoing Schumpeter's (1934) arguments about the business cycle, has maintained that the effects of organizational foundings, especially in large numbers, on the competitive conditions of industry is one of the most important questions in all of the social sciences. Nonetheless, outcomes themselves have been little examined.

At the nexus of these two fundamental questions, we believe, lies a still more basic understanding, or perhaps only belief, about entrepreneurship as a root dynamic of change in industries, economies, and societies. New organizations do not emerge de novo from the idiosyncratic and isolated invention of individual entrepreneurs. Their ideas for...