Reference no: EM131692976

Write 500 words on the following questions. What type of topics are covered? How is research conducted? What is the history of the major? How does the major fit into the work world? List the type of jobs that this major could offer.

The major is Business/Management.

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It has been estimated that at any one time over 500 million people globally are involved in the process of starting up a new venture (Reynolds, Bygrave, & Autio, 2003). This makes the study of emerging organizations one of the primary areas of research in the field of entrepreneurship (Aldrich, 1999). Organizational emergence is a dynamic process involving activities such as obtaining resources, developing products, hiring employees, and seeking funding. New ventures undertake these activities at different times (Lichtenstein, Dooley, & Lumpkin, 2006), and in different orders (Carter, Gartner, & Reynolds, 1996). Carrying out these activities lays the foundation for the new venture to develop unique capabilities and to gain the trust of stakeholders. Organizational emergence involves those activities and events that are undertaken before an organization becomes an organization. This is the “in creation” period in the life cycle of an organization. The individuals who undertake purposeful actions to construct an organization based on their vision are referred to as nascent entrepreneurs (Aldrich, 1999; Baron, 1998, 2000; Bird, 1988). During emergence, the nascent entrepreneurs bring together resources and engage in activities that will eventually distinguish the business as an entity that is separate from the individuals who began it (Carter et al., 1996; Reynolds, Storey, & Westhead, 1994). While start-up activities are an important component when trying to understand an emerging organization, it is also important to develop an understanding of the individuals involved in the start-up process. These nascent entrepreneurs may form an organization on their own, or work with others in a team (Aldrich, 1999). They have different motivations for starting a firm, from wanting greater independence to trying to gain wealth (Carter et al., 1996), and they tend to have different support systems and career mentors. While some nascent entrepreneurs have a high regard for themselves and their ability (Markman, Balkin, & Baron, 2002), others are more modest. In addition, individuals who are thinking about starting a business tend to look for start-up opportunities in different places, and have very different ideas about what the size and scope of the business should be once the new venture is established. In this chapter, we examine the scholarship around organizational emergence. To do so, we start by taking a look at the well-regarded conceptual model of organizational emergence developed by Katz and Gartner (1988). We then examine the empirical research with respect to who nascent entrepreneurs are and what nascent entrepreneurs do. Specifically, we review research on entrepreneurial cognition plus start-up activities and social capital. We then discuss the scholarship on indicators of emergence or start-up success. Finally, we present two sources of data on nascent firms that scholars can use when examining this phenomenon. We conclude with some possible areas of future research about emerging organizations. Conceptual Frameworks: The Katz and Gartner Model Katz and Gartner (1988) developed a well-regarded framework that explains organizational emergence by outlining four basic properties of emerging organizations. These properties are as follows: intentionality—the purposeful effort involved in organization emergence; resources —the tangible building blocks of an organization; boundary—the creation of protected or formalized areas in which emergence occurs; and exchange—the crossing of boundaries to SAGE SAGE Reference Copyright © 2008 by SAGE Publications, Inc. Page 2 of 15 21st Century Management: A Reference Handbook either secure inputs (e.g., resources) or outputs of the organization. While we will look at these four properties independently, it is important to remember that we are doing so for conceptual convenience and that these properties are interrelated and overlap substantially. Intentionality Intentionality is “an agent's seeking [of] information that can be applied toward achieving the goal of creating a new organization” (Katz & Gartner 1988, p. 431). Organizations are created by individuals acting purposefully, and therefore it is the entrepreneurs' intentions that lead to activities involved in organization creation (Bird, 1988; Shook, Priem, & McGee, 2003). In the Katz and Gartner model, intentionality is used to represent the individual cognitive characteristics of the nascent entrepreneur, thus addressing the question of who nascent entrepreneurs are. Resources Resources are the building blocks of an organization. They include human and financial capital, property, and equipment (Katz & Gartner 1988, p. 432), as well as personal funds, time, and experience (Brush, Greene, & Hart, 2001). Resources are used, combined, and coordinated into the production activities of the new organization (Penrose, 1957). Studies examining the role of resources in new ventures find that different resource configurations influence new firm success, firm resources interact with firm strategies, and entrepreneurs “make do” with the resources that they have (Baker & Nelson, 2004; Brush et al. 2001; Chandler & Hanks 1994; Edelman, Brush, & Manolova, 2005). Boundary Boundary is the “barrier condition between the organization and its environment” (Katz & Gartner 1988, p. 432). It is the “space” where the organization exerts some control over the resources in its environment. Boundaries can be determined by social relations, time, legal and formal contracts, and physical and spatial considerations (Scott 1987). As boundaries coalesce, routines and competencies are developed within the now defined firm, which allows it to compete and cooperate (Aldrich, 1999). Boundaries may be formal, as in legal form, or informal, as in the case when the entrepreneur makes a conscious decision to found the business (Learned, 1992). Early boundary-defining actions include deciding on which people to hire, how jobs are structured, and how new members interact with each other, including how they interact with people outside the organization (Aldrich, 1999). Empirical studies examining boundaries of new organizations find that in the early phases of organizational evolution, organizational structures, practices, and boundaries vary widely, but tend to be informal and fluid (Bhave 1994). Exchange Exchange refers to cycles of transactions that occur within an organization (Katz & Gartner, 1988). While exchange can occur within the boundaries of an organization (i.e., across different areas of the organization), for small fledgling firms, most exchanges occur across organizational boundaries or between firms. The pattern of exchange usually involves resources or inputs that are transformed into outputs (Katz & Kahn, 1978). Exchanges are inherent in the social contract: employees or participants in the organization agree to perform certain work in exchange for pay, rights, or privileges (Weick, 1979). Resources are acquired SAGE SAGE Reference Copyright © 2008 by SAGE Publications, Inc. Page 3 of 15 21st Century Management: A Reference Handbook through an exchange process while goods and services are produced and exchanged across boundaries of the organization (Scott, 1987). Limitations of the Katz and Gartner Model While the Katz and Gartner (1988) framework provides researchers with a solid foundation for examining the phenomenon of organizational emergence, as with all frameworks it has a number of limitations. Specifically, the framework was initially developed as a means for entrepreneurship researchers to identify new ventures in the greater population of firms, and so focuses on tangible dimensions of organizations that are considerably more easily identified. In doing so, it fails to adequately develop the theoretical framework for a number of less tangible dimensions that play an important and ongoing role in the development of new firms. Two such dimensions are behaviors that lead to enhanced organizational legitimacy and behaviors that lead to organizational knowledge creation, accumulation, and transfer. Empirical Research: The Nascent Entrepreneur Early research on entrepreneurial cognition looked at what is now known as “trait research.” Emerging from the early psychological research on needs (McClelland, 1961), entrepreneurial trait research focused on the search for a set of stable personality characteristics that distinguished entrepreneurs from nonbusiness owners. Trait factors included characteristics such as age, marital status, and family background. Typically these traits were easy to identify and readily measurable (they included items such as gender, education, family, and race). The objective behind this line of inquiry was to determine the individual's propensity to engage in entrepreneurial behavior based on the individual characteristics of an entrepreneur. While the best of these studies compared entrepreneurs to nonentrepreneurs (Collins & Moore, 1964) or compared groups of entrepreneurs (Smith, 1967), the general consensus is that research on entrepreneurial traits did little to advance our knowledge of entrepreneurship, and that entrepreneurship researchers would be better served focusing on what entrepreneurs did as opposed to who they were (Gartner, 1989; Shaver & Scott, 1991). While trait research has largely been undercut by more recent scholarship, work in this area still exists on specific key individual dimensions. For example, the level of education has been explored in international studies of nascent entrepreneurs, with the general finding that individuals with medium to high levels of education are more likely to engage in start-up behaviors (Arenius & De Clerck, 2005; Delmar & Davidsson, 2000). Also, previous experience in starting one's own firm has been found to correlate with start-up behavior (Cooper & Gimeno-Gascon, 1992). However, traits such as previous management experience, and amount of work experience have not been found to lead to new venture start-up (Aldrich & Kim, 2005; Delmar & Davidsson, 2000). More recent scholarship examines specific cognitive attributes of nascent entrepreneurs. For example, entrepreneurial intentions—individuals' beliefs influencing their intentions (Shapero, 1982)—has been explored in the theoretical work of Bird (1988), Katz (1992), and Krueger and Brazeal (1994). In addition, empirical work by Kolvereid (1997) provides support for the importance of entrepreneurial intentions to start-up success. Another extension of the work on intentions is a recent study on the reasons why nascent entrepreneurs chose entrepreneurship as a career (Carter, Gartner, Shaver, & Gatewood, 2003). The study examined the importance of (a) financial success, (b) innovation, (c) SAGE SAGE Reference Copyright © 2008 by SAGE Publications, Inc. Page 4 of 15 21st Century Management: A Reference Handbook recognition, (d) independence, and (e) self-realization by comparing nascent entrepreneurs to a control group of nonentrepreneurs. Counter to many of the common notions about entrepreneurship, the results found that financial success and innovation were not primary reasons why people started their own businesses. In fact, none of the variables studied were found to have a singular impact on the start-up motivations of nascent entrepreneurs, suggesting that motivations behind starting a new venture are complex and interrelated. Moving away from intentions, other scholars use the idea of entrepreneurial cognition in their work as well. McGrath and MacMillan (1992) found that the content of entrepreneurial beliefs is similar across international cultures. Cooper, Woo, and Dunkelburg (1988) discovered that entrepreneurs believe their own chances of success are very high—higher than the chances of success they perceive for other firms. Gatewood, Shaver, and Gartner (1995) found that the cognitive beliefs associated with entrepreneurial persistence vary by gender. Edelman, Friga, Mishina, and Yli-Renko (2004) examined the role of objective versus subjective environmental perception on the likelihood of a nascent firm becoming an operating business. They found that the nascent entrepreneur's perception of the environment was significantly more important when starting a new venture than an objective environmental measure. Finally, Forbes (1999) provided a comprehensive review of the literature on cognition and nascent entrepreneurs. Social Capital One important, boundary-spanning activity in which nascent firms are involved is the development of relationships, or social capital, with others who are outside the newly defined boundaries of the firm. Social capital is the set of resources that accrue to an individual or group by virtue of their social connections (Coleman, 1988). Social capital is different from other forms of capital in that it is not owned by an individual but instead is a function of the relationship between two or more individuals. Recently, a number of empirical studies have examined the role played by social capital in the process of starting a new venture. Kim, Aldrich, and Keister (2003) found a positive effect between the decision to become nascent entrepreneurs and the number of relatives who own their own businesses. This finding suggests that mentoring and family ties are important when starting a new firm, implying that it may be possible to transfer social capital among friends and family. International studies on nascent entrepreneurs indicate that those who know others who are self-employed, and hence have more extensive social networks, are more than twice as likely to start a new venture (Arenius & Minniti 2005). Finally, Davidsson and Honig (2003) found a general pattern of the increasing importance of social capital over the start-up period. Their findings indicate that social capital is less important at the beginning of the start-up process; however, as the firm moves toward increasingly greater financial performance, social capital takes on a more important role. This suggests that not only is the development and use of social capital a necessary component of growing a new venture, but also that as a resource, social capital becomes increasingly important as young firms move beyond the initial start-up phase and into growth. Start-Up Teams While it important to understand who nascent entrepreneurs are from an individual perspective, over 50% of new ventures in the United States are started not by individuals, but by teams (Aldrich, Carter, & Ruef, 2004). This suggests that the process of starting a new firm is a collective, not an individual, effort. Most new firms (74%) are started by a team of two, and SAGE SAGE Reference Copyright © 2008 by SAGE Publications, Inc. Page 5 of 15 21st Century Management: A Reference Handbook of these two-person teams, the majority (53%) are marital partners or family members (Aldrich, Carter, & Ruef 2004). Ruef, Aldrich, and Carter (2003) further examine new venture team composition. Moving beyond those firms started by marital partners, they found that start-up teams are comprised of individuals who are similar in gender, ethnicity, and occupational background. This suggests that, counter to the description portrayed by many entrepreneurship textbooks, new firms are not started by a large group of individuals who collectively bring a number of critical skills or competencies to the new firm, but instead they are started by a small number of people who are either family members, or who are very similar. Reuf, Aldrich, and Carter's (2003) findings have important implications for researchers interested in the development of organizational capabilities. Capabilities are the firm's ability to exploit a particular set of organizational resources. In young firms, capabilities are directly related to the skills of the start-up team. For nascent firms that are in the process of start-up, this finding implies that new firms are not only are likely to have a limited set of capabilities, but also that the set of capabilities inherent in the new firm is not likely to rapidly expand. If nascent firms are going to survive and then thrive beyond the initial start-up period, Reuf et al.'s findings argue for a well-defined initial strategy that matches the capabilities of the nascent firm with the market opportunity. Behaviors and Activities of Nascent Entrepreneurs While there has been a substantial body of work examining the question, Who are nascent entrepreneurs? an equally substantial number of scholars have looked at organizational emergence from the perspective of what nascent entrepreneurs do. These researchers are interested in the behaviors or activities surrounding the start-up process (Carter, Gartner, & Reynolds, 2004). Using a variety of theoretical frameworks to better understand the start-up process, these behavior-oriented scholars conduct research on topics such as the number of activities nascent entrepreneurs undertake (Carter et al., 1996), the grouping of those activities into a logical ordering (Manolova, Brush, & Edelman, 2002), the timing of start-up activities (Lichtenstein, Carter, Dooley, & Gartner 2004), and which activities precede other important start-up events (Delmar & Shane, 2004). In the mid-1990s there was a flurry of activity in the behavioral area of new venture start-up. For example, Reynolds and Miller (1992) examined a sample of nascent entrepreneurs and found that start-up activities did not have a logical progression. Following this research, Gatewood et al. (1995) explored whether cognitive factors and entrepreneurial activities led to the formation of a business, as measured by sales. They found that activities involving setting up business operations, such as purchasing raw materials and supplies, hiring and training employees, producing, distributing, and marketing a product or service were significantly correlated with the creation of a new firm. Carter et al. (1996) identified a random sample of adults who were in the process of starting a venture. They examined specific start-up activities such as personal commitment, financial support, hiring, and activities that developed the structure of the business. They found that it was the number of activities, and in particular those activities that are more tangible, (e.g., looking for facilities and equipment, forming a legal entity) that increased the likelihood of survival. While these early studies showed that the activities of nascent entrepreneurs who started a business are different from those of nascent entrepreneurs who did not, they suffered from problems of retrospective bias, lack of generalizability, and small sample size. These data SAGE SAGE Reference Copyright © 2008 by SAGE Publications, Inc. Page 6 of 15 21st Century Management: A Reference Handbook collection issues were part of the impetus for the creation of the Panel Study of Entrepreneurial Dynamics (PSED) datasets (a more complete discussion of the PSED dataset can be found later in the chapter), which specifically examine the start-up activities of nascent entrepreneurs. Building off of PSED data that was either collected in the United States or internationally, a number of more recent studies examine the connection between start-up activities and the probability of start-up. Shane and Delmar (2004) examined groups of planning, legitimacy, and market activities and their effect on the probability of starting a new venture (defined as not disbanding) of 223 Swedish new ventures. They found that planning and legitimacy were significantly correlated with the probability of starting a new venture but that market activities had no effect. Two additional studies examined the timing of business plans and found that new ventures that wrote business plans before talking to customers and/or before beginning marketing or promotion had a lower rate of termination than other firms (Delmar & Shane, 2003a; Shane & Delmar, 2004). An additional study showed that those firms engaging in legitimizing activities were less likely to disband (Delmar & Shane, 2004). Finally, Brush, Edelman, and Manolova (in press) examined the behaviors of nascent entrepreneurs using and then extending the Katz and Gartner (1988) properties of emerging organizations framework. They found that all of the four properties are important to the startup effort and that the more properties (behaviors) in which nascent entrepreneurs engaged, the greater the likelihood they were to start a new organization. However, counterintuitively, their findings also suggest that the intention to start a new firm (intentionality) does not necessarily precede nascent entrepreneurs engaging in other organizing activities and that the rapidity through which nascent entrepreneurs moved through the start-up process was not a determinant of startup success.