New Firm Formation: A Dynamic Capability Perspective*

Entrepreneur Hubris, Organizational Ambidexterity, and Dynamic Capability Construction

This paper demonstrated the influences of initiation, development, turn-down, and reinitiation of the dynamic capability of an entrepreneurial firm in the solar energy industry. The focus is on the impact of entrepreneurial hubris, which may affect the decision of ambidexterity that can vitalize dynamic capability. The findings indicate that, when the major decision maker (the founder entrepreneur) has the trait of hubris, the decision-making process may be overly arbitrary, and a decision of being exploratory or exploitative alone is likely to be made. On the contrary, when the founder entrepreneur is aware of the hubris and shares decisive power, the decision of being ambidextrous as a dynamic capability is more freely achieved. This paper contributes by discovery of the cognitive-based microfoundation of entrepreneurial ventures and linkage of such microfoundation to organizational ambidexterity.

Paradoxical nature of dynamic capabilities research: a content analysis of literature

Purpose

The purpose of the current study is to identify the nature, scope and locus of and to systematize, the conceptual contradictions existing in dynamic capabilities research.

Design/methodology/approach

This paper employs a content analysis literature review of 86 papers on dynamic capabilities published between 1997 and 2019, using two databases – EBSCO and Web of Science/Knowledge databases. To structure the review, Smith and Lewis's (2011) categorization of organizational tensions is adopted.

Findings

First, the findings of this study suggest that DCs not only are shaped by a tension between efficiency and flexibility but also are built upon a large number of contradictory aspects, represented by organizing, performing, belonging and learning paradoxes. Second, the analysis identifies defensive and active responses to these tensions, with the former prevailing in the dynamic capabilities view literature. Both kinds of responses may facilitate or hinder organizational change. Third, it was found that while the literature has focused predominantly on organizing and learning paradoxes, the linkage between these categories remains under-researched.

Originality/value

This study makes three contributions. First, it identifies the scope (i.e. number), locus (analytical level) and nature (paradox categories and sub-categories) of DC-related paradoxes and responses to paradoxical tensions. Second, it shows that the nature and locus of conceptual contradictions are more complex than conceptualized in prior studies, going beyond the contingency and ambidexterity argument of how to deal with DC-related paradoxes. Third, it seeks to extend Di Stefano et al.'s (2014) proposition of integrating paradoxical views on different DC-related aspects. The idea of “audio console” introduced in this study highlights the interrelation of paradoxes between the categories and across analytical levels.

Relationship between Entrepreneurial Team Characteristics and Venture Performance in China: From the Aspects of Cognition and Behaviors

Entrepreneurial and innovative activities are becoming a global economic and social phenomenon, especially in emerging economies. This study focuses on a typical emerging economy, China, and its entrepreneurial and innovative activities. On the basis of current research, the literature review and the chain of “cognition–behavior–outcome” are used for constructing the theoretical model for the relationship among entrepreneurial team cognition characteristics, behavior characteristics, and venture performance. A total of 101 valid copies of questionnaire are collected from entrepreneurial team members, as the research objects, and the structural equation modeling (SEM) method is applied to test the theoretical hypotheses. The research results reveal (1) significant effects of entrepreneurial team cognition characteristics and behavior characteristics on venture performance and (2) partial mediating effects of entrepreneurial team behavior characteristics on the relationship between cognition characteristics and venture performance. The research results are the expansion of research on entrepreneurial teams as well as the important reference for entrepreneurial team management and behavioral practice.

Entrepreneurial knowledge and start-up behavior in a turbulent environment

Purpose

The purpose of this paper is to refine the relationship between environmental turbulence and start-up behavior by considering entrepreneurial-related antecedents (alertness to business ideas, entrepreneurial opportunities, and intention toward entrepreneurship) and moderating roles of entrepreneurial knowledge.

Design/methodology/approach

The study was conducted through a self-administered survey of owner/managers of SMEs in Pakistan. Correlation, moderated hierarchical regression, and structural equation modeling approach were used for the analysis.

Findings

The results revealed that environmental turbulence positively affects the alertness to business ideas and entrepreneurial opportunities which, in turn, affect intention toward entrepreneurship. The results also suggested that entrepreneurial knowledge significantly moderates the relationship between intention toward entrepreneurship and start-up behavior.

Research limitations/implications

The changes in the market and technologies which shape the entrepreneurial behavior toward start-up activities should be longitudinally observed. The research data came from the owner/managers of SMEs industries; therefore, the findings may not be generalized to other sectors due to industry-specific difference.

Practical implications

The positive impact of environmental turbulence suggests that turbulence is a presentiment signal, calling upon the entrepreneurs to collect meaningful information as well as identify new opportunities and adjust their capabilities for any challenges and changes ahead.

Originality/value

The study confirmed the positive impact of environmental turbulence toward the creation of new ventures in the context of developing economies as well as the moderating role of entrepreneurial knowledge on the relationship between intention toward entrepreneurship and start-up behavior in small and medium enterprises.

Measuring organizational cultural intelligence

This study presents a five-factor, 21-item measure of cultural intelligence (CQ), at the organizational level of analysis. This instrument builds on the conceptual model espoused by Ang and Inkpen (2008). The scale included items elicited through a literature review, the use of the Delphi technique with a panel of experts, and tested on 234 full-time employees of 10 North American nonprofit organizations. The five factors are: (a) leadership behavior, (b) adaptability, (c) training and development, (d) organizational intentionality, and (e) organizational inclusion. The findings of this study contribute to a small, but growing body of literature on organizational CQ not based on aggregate individual-level data or referent-shift data. The findings provide insights for both researchers and practitioners, and they have implications for leadership appointments and leadership development in organizations seeking to develop organizational CQ.

TOWARD A RESEARCH MODEL OF MARKET ORIENTATION AND DYNAMIC CAPABILITIES

In the majority of studies on market orientation it is claimed that compelling evidence exists that market orientation has a positive effect on firm performance. It is important to investigate the mediating effect of market orientation on firm performance. Drawing on the dynamic capabilities perspective, in this paper, the view is taken that market orientation is a rare, valuable, and inimitable firm resource; and furthermore is a set of dynamic capabilities. In light of conceptual and empirical advancement, a research model about the impact of market orientation and dynamic capabilities on firm performance is proposed and delineated. With the conceptual model that is developed, the author shows how market orientation can be transformed into dynamic capabilities and it is argued that the competitive value of market orientation is positively mediated by dynamic capabilities. Finally, some research hypotheses for future research are discussed.

Assessing the changing role, attitudes and knowledge of UK business advisors to the benefits of benchmarking and benchmarking tools

Purpose

This paper aims to examine the changing attitudes to diagnostic benchmarking tools of UK business advisors over the last five years, during a period of considerable restructuring in business support, aimed at focusing support on small business and start‐ups.

Design/methodology/approach

The authors reviewed business support from the advisor's and client's perspective prior and during this restructuring and conducted a follow up study to that carried out in 2000, allowing direct comparisons to be made with the earlier results. Quantitative advisor demographic data was also collected for comparison.

Findings

The authors conclude that though business link has been restructured towards start‐ups and small businesses and that advisors knowledge of the benchmarking has improved, the tools available to advisors have not changed to reflect this and cannot be used by the majority of the advisors' clients. As a result the use of diagnostic benchmarking tools, as a proportion of total business support, has dropped over the previous five years.

Originality/value

In order to give some structured best practice support to immature businesses and pre‐start‐ups new business support tools need to be developed that recognise the change in client maturity that has taken place.