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In this study, we examine the link between new venture innovativeness and legitimacy. While legitimacy research often assumes that all new ventures suffer in the same way from the liability of newness, entrepreneurial ventures may differ substantially in their degree of innovativeness, introducing either highly new or relying on established technologies. We argue that radically innovative new ventures face severe liability of newness and therefore are less successful when raising early stage equity financing. Further, we argue that this negative effect should turn positive if the new ventures are able to showcase legitimacy. An observational and a complementary experimental study support our arguments. Surprisingly, for non-innovative or incremental innovative ventures establishing legitimacy seems to provide little gains.
Individual-level effects of foreign language use on decision making are often related to shifts between more intuitive/heuristic and more deliberate/rational decision making. Intuitive behavior is substantially influenced by socialization and context. Consistently, meta-studies on the relationships between the use of intuition and specific behaviors in cooperation dilemmas reveal cross-country variation, suggesting that how foreign language use affects decision making might as well be highly dependent on the specific country context. This creates challenges to single-country studies. We, therefore, replicate in Germany a single-country study conducted in the Netherlands. While Germany and the Netherlands are quite similar on general cultural criteria, a recent meta-study on the use of heuristics in cooperation dilemmas suggests important differences regarding default social heuristics. This study thus aims at testing whether the cooperation-reducing effect of using English as a foreign language as found for the Netherlands generalizes across other country/mother tongue settings, which potentially differ considerably in terms of default social heuristics. An empirical comparison between Germany and the Netherlands replicates related effects from different types of experiments and supports the basic mechanism that supposedly underlies foreign language effects–i.e. a tendency towards more reflective decision making, independent of any specific heuristics–, but also suggests significant differences in ultimate outcomes, presumably due to cross-country differences in social heuristics.
Referring to Isreal M. Kirzner (1973) and Joseph A. Schumpeter (1934), who emphasized the competitive nature of entrepreneurship, this study investigates whether entrepreneurs are more competitive than non-entrepreneurs. We provide a conceptual framework that links entrepreneurship to three facets of individual competitiveness drawn from economic, entrepreneurship, and psychological research: a desire to win, striving for personal development, and an enjoyment of competition. Following recent economic research linking competitive behavior in experiments to career choices, we conduct a lab-in-the-field study and demonstrate that entrepreneurs are more likely to enter competitions than non-entrepreneurs. Accounting for individual desires to win and mastery-related achievement motivations, our results indicate that entrepreneurs tend to enter competition for the sake of competition itself rather than for the prospect of winning a competition or personal development in competition. Our results suggest that enjoyment of competition might be an additional factor driving entrepreneurs’ market entry decisions beyond well-known factors like overconfidence and risk taking.
Extant literature has largely assumed that firms providing research services to other firms as an inventor-for-hire will do so at the expense of developing their own product innovations. Given this assumption, it is surprising that many firms provide research services to other firms without compromising their own flow of product innovations. In this study, we provide a systematic logic that connects the inventor-for-hire services that firms provide to others with the firms’ own product innovation performance. We hypothesize that opportunistic gains from providing contract research eventually enable firms to increase their product innovation performance. Furthermore, we suggest that this increase will be stronger for technology leaders and will be weaker for firms with a strong engagement in basic research. We test our hypotheses on a panel of 1,006 firms over 2005 to 2013 and find support for our hypotheses.
Connecting People and Knowledge: Knowledge Spillovers, Cognitive Biases, and Entrepreneurship
(2019)
Having served under David at the Max Planck Institute in Jena, the authors witnessed first hand as he worked to build up entrepreneurship as an academic discipline. While he was building this community in the field writ-large, he was also building a strong network of entrepreneurship scholars within the team itself. While reflecting upon the benefits of cognitive biases such as optimism for entrepreneurial knowledge spillovers and demonstrating context-dependency of the benefits and drawbacks of cognitive biases, the authors also connect this to how they have experienced David’s way of developing a research network.
Can radicals get a seat on the negotiation table? A Dynamic Perspective on Legitimation Processes
(2021)
The growing body of the cultural entrepreneurship literature seeks to understand how actors facing the liability of newness gain legitimacy in the eyes of resource holding audiences. However, less is known about how dynamics play out overtime when an actor with a lack of legitimacy seeks to regain it. In this paper, we conduct a qualitative, in-depth case study of a radical soccer fan community facing an identity-threatening political decision (i.e., relocating their fan zone within their stadium). Realizing that they lack a seat on the negotiation table and their traditional forms of protest bore no fruits, they launched a crowdfunding campaign to promote their cause (i.e., keeping the fan zone). The radicals successfully raised money and - even more important - convinced several national and international audiences, ultimately resulting in a legitimacy gain in the critical local political audience's eyes. This paper demonstrates how digital artifacts such as crowdfunding serve as a mechanism for dissociating with illegitimate elements while reconfiguring the links with the environment to gain legitimacy. Moreover, we demonstrate that actors with a lack of legitimacy first need to gain endorsements from other actors before turning to the actor holding the most critical resource.
Many entrepreneurs start their businesses while staying employed. Although such businesses are theorized to have positive and negative effects on employers’ businesses, employers’ perceptions and reactions to subordinates’ entrepreneurial side businesses are mostly unexplored. Based on a vignette study of 988 managers, we find that employers acknowledge both opportunities related to increased job performance and job attitudes as well as threats emerging from enterprising employees. Employers’ prior experiences with enterprising employees make them perceive positive consequences as more likely. Situational factors affect the outcome expectancies and moderate the relationships between these outcome expectancies and employer behavior. We discuss implications of our findings for fostering entrepreneurial mindsets in established organizations and for the emergence of entrepreneurship.
Emerging market multinational enterprises (EMNEs) increasingly access foreign technology and knowledge by internationalizing their R&D activities. Since technological laggardness hinders efficient knowledge transfer, a successful catch-up with advanced-economy multinational enterprises
(AMNEs) requires EMNEs to transfer foreign knowledge across national boundaries more effectively. However, we lack a clear understanding of how EMNEs manage this knowledge transfer and integration and to what extent the employment and effectiveness of corresponding facilitation mechanisms may differ from AMNEs. Adopting a sender-recipient model and drawing on arguments from learning theory and transaction costs economics, we suggest that EMNEs benefit more from and, consequently, are more likely to engage in mechanisms to increase
recipient capabilities and sender motivation. In a comparative analysis of Chinese, Indian, German, and U.S. MNEs and focusing on frequent international exchange of R&D personnel regarding recipient capabilities and the governance of foreign R&D activities regarding sender motivation, we observe positive relationships with home-market innovation for EMNEs, but not for AMNEs. Moreover, we observe that EMNEs exploit this positive effect and are more likely to use these mechanisms when focusing on technology- than on market-seeking.
We examined firm-level and country-level antecedents of R&D internationalization strategies, focusing on differences between enterprises in emerging and advanced economies. Previous research often focuses on the relative importance of home-base-exploiting versus home-base-augmenting knowledge transfer strategies. We suggest that country-level and firm-level effects differ for the two strategies, and hence, we examined each strategy independently. Collecting data in China, India, the United States, and Germany, we demonstrated that firms' relative technological position as a firm-level characteristic can explain differences in home-base-exploiting strategies between emerging and advanced economies. In contrast, home-base-augmenting is more closely related to exploratory institutional environments, a country-level factor. Thus, either firm- or country-level antecedents can gain a dominant role, depending on the strategy implemented.
Existing research focuses on hope as a motivational driver for personal effort. We argue that hope can facilitate individuals’ decisions for and against effort, depending on specific conditions. Based on a vignette study with 350 subjects, we test this suggestion with a scenario where a person decides for or against an effortful training that experts consider appropriate for that person, presuming that one could hope for success based on training but also for success without training. We find that hope can leverage individuals’ decisions to engage in and avoid effortful behavior. Moreover, ambiguity in a behavioral outcome strengthens the effect of hope on the likelihood of choosing the corresponding behavior. Separating internal from a more general kind of hope, we find that hope for success by training is mainly driven by internal hope but hope without training relates less to internal hope. Carefully separating the effects of hope from the effects of optimism, our study highlights the relevance of hope beyond optimism.
We examine how external endorsements help new ventures with varying degrees of innovativeness to attract funding. According to optimal distinctiveness theory, new ventures should be as different from competitors as legitimately possible. However, initial research suggests that new ventures can also buffer their legitimacy through external endorsements. We clarify that effects of such legitimacy buffers depend critically on an audience's unique legitimacy-distinctiveness relationship. Specifically, external endorsements lead to different predictions about shifts in optimal distinctiveness for return-seeking audiences compared to novelty-seeking audiences as relevant new venture funders. For return-seeking audiences, new ventures are perceived as less legitimate when they are non-innovative or radically innovative so that incrementally innovative new ventures are most attractive without endorsements. External endorsements can thus buffer the legitimacy of non-innovative and radically innovative new ventures, but they lead to different performance implications for a return-seeking audience. While non-innovative new ventures increase their attractiveness, only radically innovative new ventures can become optimally distinctive and outperform other distinctiveness configurations. In contrast, novelty-seeking audiences already have a higher tolerance for radically innovative new ventures, so the effects of external endorsements are less pronounced. Four empirical studies, using observational data and experiments in equity and reward-based crowdfunding, provide strong support for this theory and account for alternative explanations such as risk perceptions. In turn, we shed new light on the crucial, audience-specific function of external endorsements, namely, as a means to alter optimal distinctiveness levels.
Many entrepreneurs start their businesses while being employed. We analyze managers’ perceptions of and reactions to subordinates’ entrepreneurial side businesses. Expecting improved personal skills, higher innovativeness, higher efficiency, and a better employer image leads to more positive employer reactions. Previous experiences with enterprising employees make managers perceive such positive consequences as more likely. Expectations of employees using employer resources for own businesses, lower resilience and flexibility, and a lowered fit of employees with the employing organization lead to more discouraging behaviors. Situational factors such as employee importance and proximity of employee’s and employer’s businesses affect these outcome expectancies and moderate the relationships between outcome expectancies and employers’ behaviors.
Theoretischer Hintergrund: Dispositionale Hoffnung wirkt als motivationaler Mechanismus in unsicheren und krisenbehafteten Situationen, wie bei der Bewältigung beruflicher Herausforderungen und der Anpassung an das „New Normal“ der heutigen Arbeitswelt. Obwohl positive Zusammenhänge zwischen Hoffnung und Karriereplanung (Hirschi et al., 2017), beruflicher Identität (Diemer & Blustein, 2007) und beruflicher Anpassungsfähigkeit (Niles, 2011) berichtet werden, ist unklar, welchen Einfluss Hoffnung auf die Richtung einer Karriere nimmt.
Fragestellung/Hypothesen. Diese Studie untersucht den Zusammenhang von dispositionaler Hoffnung und fundamentalen Karrierezielen. Hoffnung wird als kontextunspezifisches, mehrdimensionales Konstrukt betrachtet (Bernardo, 2010), bestehend aus internaler (selbstbezogener) und externaler (auf externe Faktoren wie andere Menschen und Zufall bezogene) Hoffnung. Wir hypothetisieren, dass internale Hoffnung positiv auf die allgemeine Stärke von Karrieremotiven wirkt. Darüber hinaus werden verschiedene grundlegende Karrieremotive nach typischen Mustern des Zusammenhangs mit internaler und externaler Hoffnung unterschieden.
Methodik/Ergebnisse: Die Hypothesen wurden anhand einer Stichprobe von N=1201 Teilnehmenden geprüft. Die Mehrdimensionalität und entscheidungsleitende Wirkung der Karrieremotive werden durch mehrdimensionale Mehrebenen-Modelle abgebildet. Es zeigt sich, dass internale Hoffnung die generelle Stärke von Karrierezielen positiv beeinflusst und die Wahl herausfordernder Berufstätigkeiten fördert. Personen mit externaler Hoffnung auf andere streben nach Expertenstatus, Jobsicherheit und berücksichtigen soziale Faktoren im Beruf. Externale Hoffnung auf Zufall wirkt positiv auf das Streben nach Kreativität und unternehmerischer Selbstständigkeit. Die Effekte sind unabhängig von dispositionalem Optimismus.
Diskussion/Implikationen: Diese Studie trägt zur Hoffnungs- und Karriereforschung bei und unterstreicht die Bedeutung von Hoffnung im beruflichen Kontext. Hoffnung sollte demnach als mehrdimensionaler Einflussfaktor in Karriereentscheidungen sowie in Weiterbildungs- und Entwicklungsmaßnahmen verstärkt berücksichtigt werden.
Legitimizing non-innovative and radically innovative products and services on crowdfunding platforms
(2024)
Whether reward crowdfunding backers perceive a product or service as legitimate depends on many factors, including its innovativeness. However, studies offer conflicting results on how different levels of innovativeness influence perceived legitimacy. Some report that less innovative and only incrementally innovative products and services suffer from legitimacy challenges. Other research indicates that incrementally innovative products or services might be the most legitimate cases, at least as long as they are not receiving additional endorsements. Endorsements, such as strategic alliance partners, professional investors, or media coverage, may change whether or not lower levels of innovativeness threaten legitimacy in the eyes of the crowd. Using a vignette study approach with a sample of people experienced with crowdfunding investments, this study tests, first, how innovativeness affects legitimacy and, second, how external endorsements influence what level of innovativeness is most legitimate. The analyses reveal that without additional external endorsements, incrementally innovative products and services are most legitimate, while radically innovative ones just slightly outperform non-innovative ones. Results also reveal that threats to legitimacy posed by non-innovativeness and radical innovativeness can be buffered. However, not all three external endorsements display the same effects. Media coverage seems to help everyone, but it helps those who are already legitimate the most. The slightly negative effect of additional legitimacy through alliances and investors for incrementally innovative products is surprising but might be explained by redundant legitimacy.
The Behavioral Inhibition and Behavioral Approach Systems (BIS/BAS) have been conceptualized as fundamental motivational drivers deeply rooted in human neurophysiology. Recently, BIS/BAS have been linked to the emergence of entrepreneurship. This raises a question: Are BIS/BAS merely alternative reflections of underlying personality traits? Could their effects be similarly explained by a basic personality framework such as the Big Five or HEXACO, which have also been linked to neurobiological roots, or do they make a unique contribution to entrepreneurship research? Using regression and commonality analyses for a relatively large sample (N=790), this study shows that BIS/BAS influence entrepreneurial intentions beyond what is explained by the HEXACO model. This is true even when personality measures are used at the level of personality factors, facets, or even individual items. Notably, the four dimensions of BIS/BAS account for more variance than the six dimensions of personality traits. Thus, the BIS/BAS captures more than just general personality effects. Additionally, in a subsample (N=470), we examined the relationship between BIS/BAS and prior entrepreneurial involvement. While potentially subject to the threat of reverse causality, we also examine the relationship between BIS/BAS and past entrepreneurial involvement in a subsample (N=470). Although at a weaker level, we observe the same pattern. Moreover, our results suggest that the observed effects of personality on entrepreneurial intentions are largely mediated by associations with entrepreneurial self-efficacy, the belief in being able to start and run one's own business. In contrast, the influence of BIS/BAS is largely independent of self-efficacy. These findings suggest that BIS/BAS is more related to basic motivations and less related to cognitive efficacy beliefs than HEXACO. In light of these findings, future entrepreneurship research should consider incorporating the basic motivational constructs of BIS/BAS as a complementary perspective to basic personality traits.
In recent years, there has been increasing use of experimentally validated self-reported items to measure individuals' risk preferences, specifically risk aversion. While previous research supports their convergent validity, we argue that self-reported risk preference measures capture a broad spectrum of additional constructs involved in risky decision-making, notably including loss aversion as a potential confound. In broader applications, such as observational studies, associations with other constructs enhance a measurement's ability to predict risk-taking behaviors across diverse natural environments, often arising from the interplay of different constructs better captured by comprehensive self-reported measures than by narrower, construct-specific incentivized measures. Conversely, in focused tests where each construct has unique behavioral implications, using broad self-reported measures as a replacement for construct-specific incentivized measurements can result in significant endogeneity issues. By analyzing three samples from two independent studies, we demonstrate that even after accounting for incentivized risk preference measures that remove latent construct associations and focus on measurement-related confounds, self-reported risk preferences maintain a substantial association with incentivized loss aversion measures, indicating that the measurement captures a mixture of both risk and loss aversion. We also observe that the strength of associations depends on whether individuals interpret risk-taking as accepting higher variances or higher losses. Based on this finding, we propose a simple procedure that utilizes this individual heterogeneity in the confounding effect's strength to enhance the robustness of conclusions drawn from analyses of self-reported risk preference measures
Not my business! The role of organizational culture in supporting employees with side businesses
(2023)
Organizations can benefit from their employees doing entrepreneurial side hustles through, e.g., empowerment or innovativeness, but do employers, as the most critical stakeholder for hybrid entrepreneurs, perceive and positively react to entrepreneurial side hustles? Research on the active role of the parental organization in the emergence and operation of entrepreneurial side activities is currently missing. Drawing on a large dataset with 855 managers, we explore the heterogeneity of organizations in responding to such employees. We place the organizational culture of the employers in the spotlight and examine its impact on managerial perceptions and their behavior in this context. We show that organizational characteristics such as flexibility or an internal focus lead to positive expectations of side hustles and claim that recognition is a relevant prerequisite to exploit arising opportunities or mitigate threats effectively. We fur-thermore show that next to indirect effects through outcome expectations, cultural characteris-tics also drive behavioral responses directly. For instance, focusing on flexibility leads to sup-portive behavior, while a strong focus on internal or external factors of an organization impedes supportive organizational behavior. We contribute to research on the emerging phenomenon of side hustles and push theory by revealing employer characteristics that lead to a more or less conducive environment for this type of entrepreneurs.
Ambidexterity is a wide-established and popular construct that promises to combine two seemingly opposing strategic actions—exploration and exploitation—for higher firm performance. Nevertheless, the (apparently peaceful) coexistence of two different conceptions of ambidexterity hampers a unified theoretical and empirical understanding in the field. This study introduces a new conceptual framework to study ambidexterity and its effects on firm performance. We propose that firms need to overcome two distinct types of trade-off—a trade-off in effects and a trade-off in implementing exploration and exploitation. If firms manage to be ambidextrous in effects and ambidextrous in implementing, they will achieve what we consider a higher-order synergetic ambidexterity. In addition to our theoretical framework, we provide an empirical illustration based on a commonality analysis. Our findings demonstrate how (a) independent effects of exploration and exploitation, (b) interaction effects of exploration and exploitation (representing ambidexterity in effects), and (c) shared effects of exploration and exploitation (representing ambidexterity in implementing) separately and jointly contribute to higher firm performance. We find that the highest effect on firm performance can be observed when firms are both ambidextrous in effects and ambidextrous in implementing.
Entrepreneurs misdiagnosing their ventures’ innovativeness: The roles of causation and effectuation
(2023)
This text discusses the concept of misdiagnosis in entrepreneurial ventures, where managers' unrealistic optimism can lead to misaligned strategies and late pivots. The study explores the connection between misdiagnosis and decision logics (effectuation and causation) through motivated reasoning and beliefs. The researchers conducted a study with 266 ventures from innovative industries and measured misdiagnosis by comparing managers' judgments with external experts' assessments of venture innovativeness. The results show that causation logic positively influences misdiagnosis, but this effect is reduced when coupled with flexibility. The study highlights the importance of objective performance measures and suggests that motivated reasoning and beliefs explain the link between causation logic and misdiagnosis. Additionally, older and larger ventures with a prevalence of causation logic may experience more misdiagnosis and potential delays in innovation efforts. Flexibility is crucial for older ventures to remain innovative.
Previous research examining the link between individuals’ preferences for competition and occupational choice has not taken explicitly into account how the level of competition in various occupations is perceived by individuals. In contrast, we argue that individuals’ perception of intensity of competition is of key importance for linking theoretically and empirically individual competitiveness to occupational choice, particularly entrepreneurial entry. Using two datasets, one obtained from a student sample and the other from a general population sample, we provide empirical evidence that the relationship between individual competitiveness and occupational choice is moderated by perceived intensity of competition. Moreover, entrepreneurship is, on average, perceived as more competitively intense than paid employment in both samples implying that individuals shying away from competition and at the same time perceive particularly entrepreneurship as competitively intense are more likely to select into paid employment than into entrepreneurship.