AND BEYONDInstitutions and Entrepreneurship
Institutions and Entrepreneurship• Cognitive, normative, and regulative environment. – Cognitive: shared perceptions abo...
Opportunity creationInstitutional Opportunity exploitationEnvironment New venture structure & ...
Nascent Entrepreneurship• Liability of newness (cognitive) – Legitimacy – Networks – Reputation• Liability of size ...
My Focus• How does the relative capacity of political institutions to enforce policy enable or constrain entrepren...
Alfonso Cotes(2011) & Blockbuster (2009)
Miguel Barrios & Michael Cobb
New Power StructuresThe Tunisian Revolutionaries
Institutional Failure• Political institutions can have profound impact on fledgling organizations (Weber, 1978)• ...
Institutional Failure• Stichcombe’s call to take into account impact of political stability and conflict on organi...
Institutional Failure• Increases risk• Decreases trust• Decreases risk taking & exploration• 1 standard deviation increas...
Regime Change• Increases uncertainty and risk• Changing regulatory regimes• Reduces benefit of old regime ties• ...
Corruption• Increases uncertainty & risk• Increases the cost of doing business• Increases failure by 120%
How do these environments affectEntrepreneurial processes & strategies• Planning• Networking
Networking• Network building activity & venture survival• Political turmoil influences entrepreneur’s sense of unce...
planning, network building, and political turmoil• Network building venture survival• Political ...
Percentage of Firms that Fail80%70%60%50%40%30%20%10%0% With military ties Without military ties
Percentage of Firms Expropriated10%9%8%7%6%5%4%3%2%1%0% With military ties Without military ties
Military ties and venture survival• Military ties offers new ventures benefits: – Governmental...
Synd. Condor VARIG• Fritz Hammer, July  Otto Ernst Meyer, 1927 April 1927• German investors  Ge...
Contingency of military ties: Military resources• Military resources may improve benefits of military ties (Pf...
Contingency of military ties: Political instability• Political instability may increase military autonomy & bene...
Contingency of military ties: Foreign ownership• Ventures with foreign ownership experience negative impacts ...
Contingency of military ties: Competitive markets• Military ties can provide access to scarce resources and inf...
Expropriation Military Tie reduces the rate of expropriation by 86% Foreign ownership increases the rate of expropriatio...
Results: Failure Analysis Military ties reduces the rate of failure by approx. 53% Regime change increases the impact of...
Conclusion• Institutional environments shape – Founding – Growth – Entrepreneurial processes• We nee...
Nascent Entrepreneurship• Liability of newness (cognitive) – Legitimacy – Networks – Reputation• Liability of size ...
Key Question: How does one obtainsuch affiliations
Affiliations are now a central topic in my international courses.
Nascent entrepreneurship & china 2012
Nascent entrepreneurship & china 2012
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Nascent entrepreneurship & china 2012

Published on: Mar 3, 2016
Published in: Business      Economy & Finance      
Source: www.slideshare.net


Transcripts - Nascent entrepreneurship & china 2012

  • 1. AND BEYONDInstitutions and Entrepreneurship
  • 2. Institutions and Entrepreneurship• Cognitive, normative, and regulative environment. – Cognitive: shared perceptions about the boundaries and viability of new kinds of economic activity. – Normative: normative actors-explicitly shape social norms and values (social movement organizations, professions, industry associations, certification organizations, status hierarchies). – Regulative/coercive: laws and administrative guidelines that constitute basic rules governing market transactions/Coercive actors. Rule of law, corruption,
  • 3. Opportunity creationInstitutional Opportunity exploitationEnvironment New venture structure & processes
  • 4. Nascent Entrepreneurship• Liability of newness (cognitive) – Legitimacy – Networks – Reputation• Liability of size – Limited resources• May lack normative support (industry associations)• Powerful incumbents• Institutional inertia (existing structures favor incumbents)
  • 5. My Focus• How does the relative capacity of political institutions to enforce policy enable or constrain entrepreneurial processes and outcomes? Cocaine processing lab under attack
  • 6. Alfonso Cotes(2011) & Blockbuster (2009)
  • 7. Miguel Barrios & Michael Cobb
  • 8. New Power StructuresThe Tunisian Revolutionaries
  • 9. Institutional Failure• Political institutions can have profound impact on fledgling organizations (Weber, 1978)• The ―most remarkable features of institutions‖ is that ―they enable newly organized actors to act‖ (Fligstein, 2001)• Political turmoil—local confrontations inspired by or oriented to the wider national political scene—is a salient phenomenon (Carroll, Delacroix, Goodstein, 1988) Colombian entrepreneur
  • 10. Institutional Failure• Stichcombe’s call to take into account impact of political stability and conflict on organizations (1965:169)• New firms benefit from strong, stable, supportive state infrastructure (Aldrich, 1979; Pearce, 2001)• Political turmoil favors agile and innovative firms• Individual and organization rigidifying effects Bogotá• In contexts of high uncertainty, 1947 entrepreneurs face greater challenges in garnering the necessary support, such as labor, capital, and customers, needed to survive the first few years after founding (Sine, Haveman, & Tolbert, 2005)
  • 11. Institutional Failure• Increases risk• Decreases trust• Decreases risk taking & exploration• 1 standard deviation increase in violence – Failure of 120,000 new Bogotá ventures 1947 – Loss of 250,000 jobs – Increases the probability of failure by 150%
  • 12. Regime Change• Increases uncertainty and risk• Changing regulatory regimes• Reduces benefit of old regime ties• Bogotá 1947• Increases failure by 620%
  • 13. Corruption• Increases uncertainty & risk• Increases the cost of doing business• Increases failure by 120%
  • 14. How do these environments affectEntrepreneurial processes & strategies• Planning• Networking
  • 15. Networking• Network building activity & venture survival• Political turmoil influences entrepreneur’s sense of uncertainty• Most research on networks focus on benefits of ties without looking at costs and risks of engaging in network-building activities• Trust required to reach out to non- redundant ties• Network-building activities are likely to be perceived as more risky when PT is high Colombian bootlegger entrepreneur: Licor de panela producer and retailer
  • 16. planning, network building, and political turmoil• Network building venture survival• Political turmoil venture survival• Political turmoil moderates business planning• Political turmoil reduces networking, thereby increasing failure
  • 17. Percentage of Firms that Fail80%70%60%50%40%30%20%10%0% With military ties Without military ties
  • 18. Percentage of Firms Expropriated10%9%8%7%6%5%4%3%2%1%0% With military ties Without military ties
  • 19. Military ties and venture survival• Military ties offers new ventures benefits: – Governmental support, exports – Protection – Business contracts Egypt’s Higher Military – Credibility Council, 2011 General Than Shwe, Burma
  • 20. Synd. Condor VARIG• Fritz Hammer, July  Otto Ernst Meyer, 1927 April 1927• German investors  German investors• German  German technologists technologists• Brazil’s largest  Brazil’s 2nd largest airline by 1935 airline by 1935• Expropriated 1943  Major Alberto Bins  Audience w/state assembly-state tax subsidy
  • 21. Contingency of military ties: Military resources• Military resources may improve benefits of military ties (Pfeffer & Salancik, 1978)• Indicator of its influence over civilian government• Indicator of coercive power
  • 22. Contingency of military ties: Political instability• Political instability may increase military autonomy & benefit of ties• Special protection from criminal networks, violence, heavy handed government responses.
  • 23. Contingency of military ties: Foreign ownership• Ventures with foreign ownership experience negative impacts of national sentiment• Popular way for civilian governments to build political support: Evo Morales in 2006• Government treatment to domestic vs. foreign
  • 24. Contingency of military ties: Competitive markets• Military ties can provide access to scarce resources and information.• Access to limited credit (Faccio, Masulis, & McConnell, 2006)
  • 25. Expropriation Military Tie reduces the rate of expropriation by 86% Foreign ownership increases the rate of expropriation by 10x Having a military tie mitigates the negative effects of foreign ownership
  • 26. Results: Failure Analysis Military ties reduces the rate of failure by approx. 53% Regime change increases the impact of military ties Military ties are more effective in countries in which the military is more powerful Military ties mitigates the negative effect of foreign ownership Military ties reduces the negative effect of domestic conflict Military ties reduces the negative effect of inter and intra industry competition
  • 27. Conclusion• Institutional environments shape – Founding – Growth – Entrepreneurial processes• We need more research that examines how institutional environments shape nascent entrepreneurs• Institutional theory in sociology – Power is a missing component – In complex environments with weak political institutions, we need to take coercive actors seriously General Augusto Pinochet
  • 28. Nascent Entrepreneurship• Liability of newness (cognitive) – Legitimacy – Networks – Reputation• Liability of size – Limited resources• May lack normative support (industry associations)• Powerful incumbents• Institutional inertia (existing structures favor incumbents)
  • 29. Key Question: How does one obtainsuch affiliations
  • 30. Affiliations are now a central topic in my international courses.

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