Volume 1, Issue 2 - Expanding Our Perspectives on Entrepreneurship Research

Entrepreneurship is a crucial yet disorderly and complicated social process. Scholars in this issue call on us to broaden our theories and expand our methodologies in our search for an enhanced understanding of entrepreneurship. In the lead piece, Nobel Laureate Ronald Coase and his co-author Ning Wang conclude that price theory is primarily concerned with resource allocation but says a little about innovation. In another thought-provoking editorial „Heroes, Villains, and Fools...“, Howard Aldrich suggests that the application of institutional theory to entrepreneurship must focus on institutional constraints to the process of organizational emergence. Robert Strom, in „Seeing Opportunities in Entrepreneurship Research...“, squarely confronts the data quality and availability in advancing entrepreneurship research. The three competitive research articles expand our research perspectives by: 1) comparing the barriers to startup creation in thirty-six countries and finding evidence that China and the U.S., while ranked the highest in terms of nascent entrepreneurial activities, have the toughest regulatory environments for entrepreneurs; 2) examining state bankruptcy laws and finding that more generous laws are associated with increased levels of replicative entrepreneurship but lower levels of innovative entrepreneurship; and 3) examining how and when corporate and banking ties can help venture-backed firms with initial public offerings.

This paper compares (former) transition and non-transition economies in Europe and Asia with respect to the opportunities available to achieve entrepreneurial progress. In addition, the differential impacts of three perceived environmental barriers to new venture creation are investigated. Entrepreneurial progress is measured using five levels of incremental entrepreneurial involvement. Data from the 2009 “Flash Eurobarometer Survey on Entrepreneurship, No. 283” by the European Commission, which covers all 27 EU Member States, five other European countries, China, Japan, South Korea, and the U.S., are used. China is found to have a forward position during the early stages of entrepreneurial progress, which contrasts with a lack of early-stage entrepreneurial potential in Japan and South Korea. However, converting nascent activities into a business start-up seems to be the most difficult in China and the U.S. Furthermore, we find that perceived environmental constraints hinder entrepreneurial progress most in (former) European transition countries.

We explore the link between bankruptcy laws and entrepreneurship in the U.S states. Using two measures of entrepreneurship capturing alternative conceptions of this phenomenon, we find that bankruptcy laws more favorable to debtors lead to increased levels of self-employment in some cases, though the effect is non-monotonic in the level of assets protected by the law. Counter to the conventional wisdom, however, more generous laws are linked to lower levels of “innovative” entrepreneurship. The paper concludes by suggesting why developing more refined measures of entrepreneurship is necessary to better understand the impact of public policies on this most vital of human activities.

We examine how ties to different kinds of corporate venture capital (CVC) investors help new ventures overcome the liabilities of market newness they encounter when seeking to undergo an initial public offering (IPO). We analyze a sample of 315 IPO firms with ties to CVC investors and find that the offering price is less discounted when these CVC investors are part of a commercial bank, or in a company that is a member of a major stock exchange. We also find that the effect of an affiliation with a CVC investor in a company that is a member of a major stock exchange is stronger in hot markets than in cold markets, while an affiliation with a CVC investor in a commercial bank is not. Our results suggest that the IPO market recognizes that know-how and prominence based signals conveyed by CVC investor affiliations provide additive reductions of price discounting, and that the certification value that prominence based signals provide also depends on the market conditions in which the IPO takes place.