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Entrepreneurial activity is a critical issue in the transition of economies attempting to reduce, or abolish state-owned monopoly enterprises. In many Central and Eastern European countries, privatization, restructuring, and failure of state-owned enterprises as consequences of the reforms typically led to a reduction of the size of the workplace. For example, in Poland, about 3.5 million employees lost their jobs in the period 1991–1996 (PEAD, 2003). After the collapse of communism in Europe, post-communist countries have undertaken reforms to liberalize their economies. These reforms stimulated the development in the private sector of small and medium-sized enterprises. New ventures provide a counterbalance to the loss of jobs at state-owned companies. In the period 1991–1996, new enterprises in the private sector in Poland created more than 1.8 million jobs. By the end of 2002, they provided work for 68% of the total employed persons (PEAD, 2003). Further, new ventures can play a critical role in stimulating economic growth. As a result of market reforms, the contribution of the private sector to Gross Domestic Product, e.g., in Hungary, went from 7% in 1988 to 85% in 1999 (World Bank, 2000). However, many new ventures do not survive the first year of operation. For example, in Poland, about 40–45% enterprises established in the period 1995–2000 failed after the first year of their existence (PEAD, 2003).

While extant entry theory has long prescribed a niche approach for new ventures, a preponderance of empirical research has found that broad strategies may be the key to new venture success. This study examines the difference between entry theory and empirical evidence by considering the moderating impact of initial financial resources on the effectiveness of venture strategy. Examining new, independent firms at the point of inception, we find that initial financial resources moderate the relationship between strategic breadth and performance, implying that the returns to a broad initial strategy increase with the level of initial capital. Contrary to popular niche prescriptions for new ventures, we did not find support for the belief that firms with low initial financial resources should pursue niche strategies and suggest that it may be time to re-examine theory on the nature of the relationship between entry strategies and performance.

Past entrepreneurship research has emphasized the importance of the context of the entrepreneur (e.g., personality) along with environmental characteristics as predictors of the success of new ventures. Additional literature has expanded our understanding of how implementation processes such as business planning, social networking, and external financing may be key to new venture performance. This paper offers 12 propositions that link these two literatures. Specifically, we argue that the personality and goals of the entrepreneur, as well as the dynamism and munificence of the environment, may affect how well implementation processes enhance new venture performance.

Research on strategy in new ventures has increasingly drawn upon resource-based theory, and thus has emphasized intangible factors that confer sustainable competitive advantage. These include dynamic and combinative capabilities, networks, routines, and knowledge as resources of new ventures. Yet antecedent to every one of these intangible resources is the management of the venture. But research has seldom considered management and the human resources of new ventures as a critical dimension of strategy content. This paper develops such an argument, and explores the performance contribution of human resources as strategy content in a longitudinal study of technology new ventures.

In this chapter, we examine two theorized approaches to entrepreneurial activity: experiential versus prediction based strategies. We empirically assess the comparative performance of several commonly recommended approaches – researching customer needs, researching the competitive landscape, writing a business plan, conceptually adapting the business plan or experimentally adapting the primary business activity. We found that the majority of nascent entrepreneurs began with a business plan, but only about a third adapted their plan in later stages. We also found that talking with customers and examining the competitive landscape were normative activities. Those who started a plan were more likely to create a venture, although the effects much stronger for those who changed their plan later on, as well as for those who researched customer needs.

Our results show that the selection of these activities is both ubiquitous and driven by pre-start-up experience and new venture characteristics. The activities themselves do not robustly link with successful new venture foundation. Hence, pre-start-up experiences, venture characteristics, and the institutional environment are more important in explaining successful performance than recommended activities. Implications for research, practice, and pedagogy are discussed.

The entrepreneurs’ ability to identify opportunities can lead to wealth creation and competitive advantage. Often, however, opportunities that are innovative may defy up-front analysis suggesting that the entrepreneurs may have had somewhat inaccurate perceptions and need to refine their ideas after the ventures are started. This paper therefore focuses on mitigating the negative impact of early misperceptions through the use of learning-oriented information processing systems to refine opportunities post starting a venture. Specifically, it suggests that an experienced and heterogeneous top management team and a decentralized, organic structure enhance the system's ability to gain knowledge from acting on early misperceptions and may even form the basis for a distinctive capability that leads to competitive advantage.

To maintain and enhance innovation performance, many firms nowadays look for resources from external sources such as strategic alliances and regional network embeddedness. While considering the important interdependencies among different alliances, research has established an alliance portfolio perspective. From an alliance portfolio perspective, firms can consciously configure the dimensions of their alliance portfolios such as partner characteristics, relational properties, or structural properties. However, within the context of alliance portfolio configuration, the role of regional networks has been largely overlooked. As most high-tech firms are regionally clustered, this is an important research gap. In addressing this gap, this study explores the link between regional network density, alliance portfolio configuration, and its contribution to firm innovation performance. We examine how regional network density and alliance partner diversity influences firm level innovation output. We also investigate the moderating effect of overall network partner status and partner diversity on the link between regional network density and innovation performance. Our empirical evidence is derived from a longitudinal quantitative study of 1,233 German biotechnology firms. We find that regional network density and alliance partner diversity has an inverted U-shape effect on firm level innovation performance. However, overall network status as well as alliance partner diversity negatively moderates the link between regional network density and innovation output. Thus, our study contributes to a better understanding of the link between regional networks, alliance portfolio configuration, and firm level innovation performance.

Entrepreneurial orientation (EO) has emerged as a core concept in the field of entrepreneurship. Yet, there continue to be questions about the nature of EO and how best to conceptualize and measure it. This chapter makes the case that EO has grown beyond its roots as a firm-level unidimensional strategy construct and that a new multidimensional version of EO is needed to capture the diverse manifestations and venues for entrepreneurial activity that are now evident around the world – global entrepreneurial orientation (GEO). Building on the five-dimension multidimensional view of EO set forth when Lumpkin and Dess (1996) extended the work of Miller (1983) and Covin and Slevin (1989, 1991), the chapter offers an updated definition of EO and a fresh interpretation of why EO matters theoretically. Despite earnest efforts to reconcile the different approaches to EO, in order to move the study of EO and the theoretical conversation about it forward, we maintain that as a group of scholars and a field, we need to acknowledge that two different versions of EO have emerged. Given that, we consider original approaches to measuring EO, evaluate formative measurement models, consider multiple levels of analysis, call for renewed attention to EO configurations, and discuss whether there is a theory of EO.

Why do some ventures grow to become dominant market players while most new ventures that do not fail limp along more modest trajectories? In comparison with our knowledge regarding determinants of venture creation or survival, the phenomenon of venture growth has been relatively neglected, both theoretically and empirically. Venture growth is a multi-level phenomenon co-occurring at different analytical and temporal levels. In this chapter we develop a theoretical model that accounts for venture growth as a process, drawing upon the mechanism-based theorizing approach. We offer nine social mechanisms that lead to venture growth, providing a foundation for empirical exploration and further theory building.