Sociology 161/261: Introduction to Social Science Theories of Entrepreneurship Professor Patricia H. Thornton Stanford University Spring 2008 Table of Contents 1. Syllabus. 2. “The Case Method.” 3. Robert Brockhaus and Pamela Horwitz, “The Psychology of the Entrepreneur,” The Art and Science of Entrepreneurship, Donald Sexton and Raymond Smilor, eds., Ballinger Publishing, 1986. Pp. 25 – 48. 4. George Gilder, “A Patch of Sand” The Spirit of Enterprise, Simon and Schuster, 1984. Pp. 23 – 41. 5. Scott Shane, “Prior Knowledge and the Discovery of Entrepreneurial Opportunities,” Organization Science, 11(4), July – August 2000. Pp. 448 – 469. 6. Scott Shane. “Three Dimensional Printing,” Darden Business Publishing Case No. UVA-ENT-0006, 1999. 7. Ronald Burt, “The Social Structure of Competition.” Structural Holes: The Social Structure of Competition, Harvard University Press, 1992. Pp. 8 – 49. 8. Scott Shane, “Alex Laats and NBX Corporation,” Darden Graduate School of Business Administration Case No. UVA-ENT-0005, 1999. 9. Sascha Becker and Ludger Woessmann “Was Weber Wrong? A Human Capital Theory of Protestant Economic History,” CESifo Working Paper No. 1987, May 2007. 10. Michael Roberts and Howard Stevenson, “New Venture Financing,” Harvard Business School Note No. N9-802-131, January 8, 2002. 11. Patricia Thornton, “Typology of Forms Competing for Venturing Space,” 2002. 12. Paul Gompers, Paul and Josh Lerner, “Venture Capital Glossary,” The Venture Capital Cycle, MIT Press, 2000. Pp. 343 – 349. 13. Michael Roberts and Lauren Barley, “How Venture Capitalists Evaluate Potential Venture Opportunities,” Harvard Business School Case No. 9-805-019, December 1, 2004. 14. Alfred Chandler, “The Emergence of Managerial Capitalism,” The Sociology of Economic Life, Mark Granovetter and Richard Swedberg, eds., 1992. Pp. 131 – 158. Page 1 25 27 41 51 73 93 115 141 207 221 223 231 251
Transcript
Sociology 161/261: Introduction to Social Science Theories of Entrepreneurship
Professor Patricia H. Thornton Stanford University
Spring 2008
Table of Contents
1. Syllabus.
2. “The Case Method.”
3. Robert Brockhaus and Pamela Horwitz, “The Psychology of the Entrepreneur,” The Art and Science of Entrepreneurship, Donald Sexton and Raymond Smilor, eds., Ballinger Publishing, 1986. Pp. 25 – 48.
4. George Gilder, “A Patch of Sand” The Spirit of Enterprise, Simon and Schuster, 1984. Pp. 23 – 41.
5. Scott Shane, “Prior Knowledge and the Discovery of Entrepreneurial Opportunities,” Organization Science, 11(4), July – August 2000. Pp. 448 – 469.
6. Scott Shane. “Three Dimensional Printing,” Darden Business Publishing Case No. UVA-ENT-0006, 1999.
7. Ronald Burt, “The Social Structure of Competition.” Structural Holes: The Social Structure of Competition, Harvard University Press, 1992. Pp. 8 – 49.
8. Scott Shane, “Alex Laats and NBX Corporation,” Darden Graduate School of Business Administration Case No. UVA-ENT-0005, 1999.
9. Sascha Becker and Ludger Woessmann “Was Weber Wrong? A Human Capital Theory of Protestant Economic History,” CESifo Working Paper No. 1987, May 2007.
10. Michael Roberts and Howard Stevenson, “New Venture Financing,” Harvard Business School Note No. N9-802-131, January 8, 2002.
11. Patricia Thornton, “Typology of Forms Competing for Venturing Space,” 2002.
12. Paul Gompers, Paul and Josh Lerner, “Venture Capital Glossary,” The Venture Capital Cycle, MIT Press, 2000. Pp. 343 – 349.
13. Michael Roberts and Lauren Barley, “How Venture Capitalists Evaluate Potential Venture Opportunities,” Harvard Business School Case No. 9-805-019, December 1, 2004.
14. Alfred Chandler, “The Emergence of Managerial Capitalism,” The Sociology of Economic Life, Mark Granovetter and Richard Swedberg, eds., 1992. Pp. 131 – 158.
15. Oliver Williamson, “The Multidivisional Structure,” Markets and Hierarchies: Analysis and Anti-trust Implications, The Free Press, 1975. Pp. 132 – 154.
16. Linda Stearns and Kenneth Allan, “Economic Behavior in Institutional Environments: The Corporate Merger Wave of the 1980s,” American Sociological Review, vol. 61, August 1996. Pp. 699 – 718.
17. Paul Gompers, “Corporations and the Financing of Innovation: The Corporate Venturing Experience,” Economic Review, fourth quarter 2002. Pp. 1 – 17.
18. Alan Meyer and Vibha Gaba, “Major Findings: NSF Grant #0120188” National Science Foundation, 2004.
19. Lynne Zucker, Michael Darby, and Marilynn Brewer, “Intellectual Human Capital and the Birth of U.S. Biotechnology Enterprises,” The American Economic Review, March 1998. Pp. 290 – 306.
20. Howard Aldrich, “Reproducing Populations: Foundings and Disbandings,” Organizations Evolving, SAGE Publications. Pp. 259 – 297.
21. Michael Porter, “How Competitive Forces Shape Strategy,” Harvard Business Review, reprint no. 79208, July-August 1997. Pp. 2 – 10.
22. David Yoffie and Michael Slind, “Apple Computer, 2006,” Harvard Business School Case No. 9-706-496, December 20, 2006.
23. W. Brain Arthur, “Increasing returns and the New World of Business.” Harvard Business Review, reprint no. 96401, July-August 1996. Pp. 100 – 109.
24. Henry Chesbrough and David Teece, “When is Virtual Virtuous? Organizing for Innovation,” Harvard Business Review, reprint no. 96103, January-February 1996. Pp. 65 – 73.
25. Michael Tushman and Philip Anderson, “Technological Discontinuities and Organizational Environments,” Administrative Science Quarterly, vol. 31, September 1986. Pp. 439 – 465.
26. Joseph Bower and Clayton Christensen “Disruptive Technologies: Catching the Wave,” Harvard Business Review, Reprint 95103, January-February 1995. Pp 43 – 53.
27. John Campbell and Leon Lindberg, “Property Rights and the Organization of Economic Activity by the State,” American Sociological Review, vol. 55, October 1990. Pp. 634 – 647.
28. Arie de Geus, “The Living Company,” Harvard Business Review, reprint no. 97203, March-April 1997. Pp. 51 – 59.
29. William Fulmer, “Creating an Adaptive Culture,” Shaping the Adaptive Organization: Landscapes, Learning, and Leadership in Volatile Times, AMACOM, 2000. Pp. 152 – 73.
30. Joanne Martin, “Seeing Cultures from Different Points of View,” Cultures in Organizations: Three Perspectives, Oxford University Press, 1992. Pp . 3 – 21.
31. John van Maanen, “The Smile Factory: Work at Disneyland,” Reframing Organizational Culture, Peter Frost, et al., eds., SAGE Publications, 1991. Pp. 58 – 76.
Permission to reprint has been granted by the publisher.
One-time permission to reprint all selections granted by Harvard Business School Publishing.
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The Social Science of Entrepreneurship Sociology 161, 261, Spring 2008
Professor Patricia Thornton Teaching Assistant Office Hours: M W 6:30-7:15 Office Hours: and by appointment and by appointment Telephone: 650.380.5011 Telephone: Email: [email protected] Email: Course Description Who is likely to become an entrepreneur? How do you discover entrepreneurial opportunities? What are the factors that affect the success of entrepreneurial ventures? We will examine these questions in light of classic and contemporary theory and empirical research in the social sciences. We use action learning as a method of instruction—which integrates theory and research with interaction with expert practitioners in the venturing community. Readings underscore universal principles; action learning teaches current practices and market cycles. Entrepreneurship is the endeavor to commercialize innovation. We examine how individuals discover and create innovations, as well as how innovations are brought to market by building a start-up venture, either independently or as a part of an existing organization. We focus on the levels of both person and place— persons with the ability to recognize and create innovations, and places where innovations and resources to develop innovation are highly concentrated. Students conduct interviews in places that are rich sources of entrepreneurial innovations, such as technology licensing offices, venture capital and corporate venturing firms, and entrepreneurial development organizations. The first part of the course focuses on how human, social, and cultural capital influences the discovery of innovations. The second part examines how markets and organizations are drivers of innovation and entrepreneurship. The model below summarizes these relationships. PERSON ----------------- PLACE ------------------ ENTREPRENEURSHIP *Social Capital *Networks *Prior Experience
*Discover Innovations *Develop Innovations *Finance/Human Capital
t1, t2, ……..
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The last part of the course we apply theories of competition, cooperation, technological change, and leadership to understand how to anticipate windows of entrepreneurial opportunity and how to manage the challenges of new venture development. Who should take this course? Undergraduate and co-term students who would like to have the analytical skills to found their own companies and create innovation in existing companies. What are the course prerequisites? There are no prerequisites. The course recruits across majors. It is helpful if you have courses in psychology, sociology, and economics and have taken sociology 160. What are the course objectives? Knowledge of:
1. social science theories for discovering and developing innovations 2. how to use theory to recognize & solve problems & predict future outcomes 3. the organization of environments that are rich sources of innovations 4. the resources for founding new ventures 5. theories and strategies for leading the stages of growth in nascent companies
Why should I care about this course? Entrepreneurship is a central determinant of innovation in societies, the accumulation and distribution of wealth, and the social and economic status of individuals and organizations. Course format Class sessions make use of lectures, discussions, film, and student and guest speaker presentations. The study questions on the syllabus are designed to focus your attention on the points to be discussed in class and are useful to prepare the case study and interview assignments. To shorten the length of case study assignments use attachments. Attachments are information in diagram, graph, and numeric form. I have paired a theoretical reading with each case study. The theoretical reading will help you to interpret the facts in the case and address the questions on the syllabus. The best grades go to students who use the theory reading to construct an argument that guides insightful statements about the meaning and implications of the facts in the case study. Logon on to the CourseWork website to view the power point slides presented in class and an annotated syllabus which motivates and summarizes key points of the readings and how the readings as a whole fit together. Teams It is your responsibility to form a team and if you select to complete the innovation environment interview assignment you will need to schedule a presentation date by the second or third class. Also I emphasize that it takes considerable lead time to schedule interviews with expert practitioners to complete this assignment. Please see me or the teaching assistant if you are having any difficulties.
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Caveats All forms of entrepreneurship cannot be adequately covered in one course. We will focus on business innovations with the ability for high growth, not on non-profit social entrepreneurship and “lifestyle” companies. However, with prior approval students have the flexibility to craft assignments around these other forms of entrepreneurship. Students do not develop a business plan in this course. Due Dates and Relative Values of Course Assignments ASSIGNMENT DUE DATE
DESCRIPTION % OF FINAL GRADE
INDIVIDUAL Class Participation 12 4/9 3 D Printing Case 12 4/14 Alex Laats Case 12 5/12 Apple Case 12 6/2 Mission Evaluation 12 6/4 Smile Factory Case 12 TEAM (select 1 of 2)
Innovation Environment interview & presentation
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6/4 Case Study of Entrepreneur Managing New Venture Growth
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Co-term Students In addition to the above assignments, co-term students will need to update the innovation website addresses at the end of the syllabus. This update should identify any sites that may have become inactive and add new sites. Please email this assignment to me no later than the last day of finals. Ph.D. Students Class participation is required. The above assignments are optional. A 25 page paper exploring new research questions in entrepreneurship is due the last day of class. Students may make prior arrangements to study a phenomenon of interest in the field of entrepreneurship. Team Assignments (select 1 of 2) Innovation Environments Interview Write-up OR Presentation It may be easier to found new ventures in places that have more infrastructure, for example regions with technology licensing offices, venture capital firms, angel organizations, corporate venturing programs, incubators and other entrepreneurial development organizations. An inherent part of the mission of these organizations is to influence individuals on how to discover and exploit entrepreneurial opportunities. Your assignment is to conduct an interview with an individual(s) with line responsibility in an environment rich in entrepreneurial ideas and resources. The websites at the end of the
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syllabus may spark possible ideas. Your interview experience should allow you to become familiar with one of these “places” and it should focus on how such environments provide training, socialization, mentoring, and resources for individuals who want to become entrepreneurs and develop innovative companies. Your report should cover both the pros and the cons of discovering and developing innovations in such environments from the perspective of the entrepreneur. To learn from your interview experiences, student teams will present a 30 minute report of their interview in the beginning of class. To organize your interview and to frame your analysis you should draw on one or two of the theories covered in a prior class. Your class presentation should use a combination of media, including video if possible. A written report that summarizes your main findings is due one week after your class presentation and should approximate 8 double spaced pages, plus attachments. Attachments are information in diagram, graph, and numeric form. Please include a word count at the end of the report and submit your presentation slides in hard and electronic copy so that they can be placed on the course website. While a combination of secondary research methods may be used, you are required to take part in actual face-to-face conversations with at least one human being who is knowledgeable about the organization/environment you are studying. Email chats and phone conversations are not substitutes, but may be used in addition to face-to-face and on-site conversations. Case Study of Entrepreneur Managing New Venture Growth Conduct a case study of an entrepreneur who is currently facing the challenges of managing new venture growth. For guidance see the below articles at the end of the syllabus. 1. Hamermesh, Heskett, and Roberts (2005). “A Note on Managing the Growing Venture,” Harvard Business School Case 9-805-092. 2. Churchill, Neil C. and Virginia L. Lewis (1983). “The Five Stages of Small Business Growth,” Harvard Business Review reprint 83301. Select an individual on the founding team who is in a line management position of a company that has grown beyond the initial start-up stage, but is not a mature business. Your case should not focus on the individual’s personal characteristics, but instead on the entrepreneur’s management style and strategies to overcome start-up challenges. You should interview this person about growth-related stumbling blocks and alternative strategies that may have been used to address these problems. Please do not interview a friend or a family member. This assignment should be an opportunity to build your social capital. This assignment should be informed by the readings and be approximately 20 pages double-spaced plus attachments. Secondary data sources are very useful for the necessary background information. This assignment requires a face-to-face interview unless the entrepreneur is located outside the geographic area. Please seek prior approval for such cases.
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Specifically, your case study should demonstrate an understanding of: Background—industry structure and dynamics, review barriers to growth
common in the industry, overview of company history, including information on founding date, founders, entry strategy, and performance to date. Also note patterns of growth, previous hurdles, and enabling strategies that were developed.
Leadership Style—how does he or she motivate employees to accomplish strategic goals?
Strategic Assessment—describe the company’s current position and strategy, pinpoint areas of competitive advantage and weakness. Highlight growth-related challenges currently facing the company.
Recommendations—recommend strategies for overcoming challenges identified in your assessment.
Format for Submitting Assignments Please submit assignments in hard copy at the beginning of class on the date designated on p. 3 of the syllabus. Do not email assignments to me unless requested. Class Participation Your participation in class on teaching cases and guest speaker presentations is essential. This course format is based on action learning and therefore you can not borrow notes from people who attend and still develop a deep understanding of the material. Moreover, speakers rely on interaction with their audience to make effective presentations so if you do not attend this affects the class dynamics for speakers and all students. Class participation is an opportunity for you to try on for size the careers of expert practitioners and to understand how they promote innovation and make entrepreneurship happen. Your class participation score is based on the quality of your verbal in-class contribution in relation to others in the class, i.e., whether it constructively extends or challenges information and arguments in the readings and presentations. While we make extensive use of CourseWorks to aid learning, the course is not Internet based and class attendance in excess of 2 excused absences may decrement your overall course grade as it is a sign that you are not engaging in the course format. Grading The best grades are given to students who synthesize course material to develop a line of reasoning that is supported by knowledge of course theories, research findings, interview findings, and guest speaker presentations. Assignments should show your ability for evaluative thinking, why your insights are not obvious, and support for your assertions with logical reasoning and/or empirical evidence. Assignments should emphasize an analytical, not a descriptive format. A descriptive format describes what the readings and others have said. An analytical style presents your interpretive insights and conclusions about the descriptive material.
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In grading your assignments I compare the analytical quality of written submissions among all of you, selecting the best and the worst submissions to anchor the following scale: 95-100 A 90-94 A- 87-89 B+ 84-86 B 80-83 B- 75-79 C+ 70-74 C, and so on To determine your final grade your scores are weighted per the relative values in the chart on p. 3. All members of a team receive the same grade. If for any reason you believe that team members are not contributing equitably, please do not wait until the end of the course to discuss this problem with me. In such rare cases I reserve the right to survey team members and adjust individual grades based on a survey of student feedback. Late Assignments and Emergencies The five case analysis assignments cannot be late because they form the basis for class discussion and feedback on the CourseWork website. Because emergencies tend to happen, you have the option to drop 1 case assignment or if you complete all case assignments to drop the one with the lowest score. Assignments other than discussion cases will be down graded 10% of the earned grade for each week they are late. Reading You will have the opportunity to read the original theoretical arguments that are tested in contemporary empirical research. There is one classic book, Leadership in Administration by Philip Selznick and a course pack. All materials are available through University Readers at www.universityreaders.com/students. You should be able to download the first 20% of the course pack prior to purchase. An asterisk* identifies the recommended reading. To reduce costs, recommended readings are not included in the course pack and can be found on reserve in Green library or via the University Internet journal stores. W 4.2 Class Introduction and Overview M 4.7 Persons—Who Becomes an Entrepreneur—Psychology of Entrepreneurship Reading:
1. Brockhaus and Horwitz (1986) "The Psychology of the Entrepreneur" in The Art and Science of Entrepreneurship 25-44
2. Case: Guilder (1984) "A Patch of Sand" The Spirit of Enterprise 23-41.
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Case Preparation Questions: 1. In what ways are entrepreneurs psychologically distinct from other types of
individuals? 2. Is there an entrepreneurial personality? 3. What type of risk takers are entrepreneurs? 4. What do you think of the psychological research on entrepreneurs? 5. What questions are left unanswered in this research? 6. Which attribution(s) best explain Simplot’s entrepreneurial behavior?
a. Nature—Hard wired—IQ, Personality b. Nuture—Socialization—Schooling, Parenting c. Luck—Environmental Events, right place, right time
7. Is there attribution bias? If so, in what direction and why? 8. How would you rank Simplot on the psychological characteristics identified by
Brockhaus and Horwitz? Class Activities:
1. Discuss reading and Simplot case 2. Pretend the world is simpler than it is and that you can select only one explanation
for Simplot’s entrepreneurial behavior. What is it—6a, 6b, or 6c? Why? Come to class prepared to vote on the question and argue for your choice.
W 4.9 Persons—Innovation Discovery Distribution of Information and Prior Experience—Human Capital Theory Reading:
1. Shane, Scott 2000. “Prior Knowledge and the Discovery of Entrepreneurial Opportunities,” Organization Science, 11 (4) 448-469.
2. Case: Shane, Scott 1999. “Three Dimensional Printing,” pp. 1-20 (Darden UVA-ENT-0006)
Case Preparation Questions:
1. Why does the innovation of the 3DPTM process create a number of opportunities to start new companies?
2. Why did the different entrepreneurs in the case discover and exploit such different business opportunities for the 3DPTM Process?
3. Why did so few people discover these opportunities? 4. Based on the implications of the readings and the case, where should potential
entrepreneurs look to discover opportunities? Class Activity and Assignment: 1. We will review the case preparation questions in class as we discuss the case. 2. Write a 1-2 page essay addressing the case preparation questions. In our discussion we will explore two central teaching points, why certain types of innovations have the potential to spawn multiple entrepreneurial opportunities, and how the prior experiences of individuals determine the discovery process.
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M 4.14 Networks—Structural Holes vs. Cohesion—Social Capital Theory Reading:
1. Burt, Ronald (1992). “The Social Structure of Competition.” In Structural Holes: The Social Structure of Competition. Cambridge, MA: Harvard University Press, pp. 8-49.
2. Case: Shane, Scott (1999). Alex Laats and NBX Corporation (Darden UVA-ENT-0005), pp. 1-25.
Case Preparation Questions: 1. Why did Alex Laats leave his law firm? Do you agree with his motivation? If yes,
why? If not, why? 2. Using your knowledge of Burt’s concept of “structural holes,” evaluate the
structure of Alex’s network. Is Alex’s network organized to produce high entrepreneurial returns? If yes, why? If not, how should his network be structured?
3. Do you agree or disagree with how Alex raised venture capital? Be prepared to support your position.
4. Based on your evaluation of Alex’s network, what advice would you give Alex about his ability to use social capital to raise venture capital?
5. Should Alex have given MIT equity in NBX Corporation. 6. Should Alex have shopped the NBX deal around to more venture capitalists?
Class Activity and Assignment: 1. We will review the case preparation questions in class as we discuss the case. 2. Bring to class a diagram of Alex’s network and be prepared to present and discuss your analysis of Alex’s network in light of the readings. Write a 1-2 page essay explaining the benefits and detriments (with respect to discovering entrepreneurial opportunities and the resources to develop them) for Alex of having a network high in cohesion versus high in structural holes. 3. What is missing from Burt’s argument on structural holes in light of Alex’s situation?
W 4.16 Culture—Institutional Theory—Cultural Capital Reading:
1. Becker, Sascha and Ludger Woessmann (2007). “Was Weber Wrong? A Human Capital Theory of Protestant Economic History,” CESifo Working Paper No. 1987.
Questions:
1. Weber’s argument in his classic 1904 book The Protestant Ethic and the Spirit of Capitalism concerns the cultural legitimation of individualism. Based on Weber’s argument what are the key differences between Catholicism and reformed Protestantism that laid the groundwork of Weber’s thesis?
2. How can Weber’s theory be interpreted as a human capital theory? 3. Is religion a good measure of the concept of culture?
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4. Based on the implications of the institutional logics case, where would you look for innovative ideas with the potential for commercialization? Why?
5. Give an example of an innovation and entrepreneurial opportunity that comes from bridging the cultures of different societal sectors.
6. Can you predict a future innovation based on the theoretical arguments of the institutional logics case?
Class Activity and Assignment: 1. We will review the case preparation questions in class as we discuss the case. 2. Write a 1-2 page essay addressing the case preparation questions.
M 4.21 Place—Innovation Discovery Markets—An Engine of Entrepreneurship Reading:
1. Roberts, Michael J. and Howard Stevenson (2002). “New Venture Financing,” Harvard Business School Note (N-9-802-131).
2. Thornton, Patricia (2002). “Typology of Forms Competing for Venturing Space.” 3. Gompers, Paul and Joshua Lerner (2000). “Venture Capital Glossary,” Venture
Capital Cycle, MIT Press.
Questions: 1. Can you associate the different types of funding with different types and stages of
development of start-ups? 2. What are the benefits and detriments for the entrepreneur of founding a company
with debt versus equity financing? Class Activity:
1. Guest speaker: Angel Investor
W 4.23 Professor out of town, this class will be a session with the TA on your team projects Reading:
1. Roberts, Michael J. (2004). “How Venture Capitalists Evaluate Potential Venture Opportunities,” Harvard Business School Case, 9-805-019.
Questions:
1. What is the number one determinant of the value of a start-up by a venture capitalist?
2. What is the most important factor in determining whether or not a venture capitalist funds an entrepreneur?
Class Activity:
1. Guest speaker: Venture Capital Investor
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M 4.28 Hierarchies—An Engine of Entrepreneurship Entrepreneur as Aggregator; Entrepreneur as Broker of Companies Contingency, Transaction Cost, and Institutional Theories
Reading:
1. Chandler, Alfred D. (1992). “The Emergence of Managerial Capitalism,” in Mark Granovetter and Richard Swedberg (eds.) The Sociology of Economic Life.
2. Williamson, Oliver E. (1975). “The Multidivisional Structure,” chapter 8 in Markets and Hierarchies: Analysis and Anti-trust Implications, Free Press.
3. Stearns, Linda B. and K. Allan (1996). “Economic Behavior in an Institutional Setting: The merger Wave of the 1980s,” American Sociological Review, 61 (4) 699-718.
Questions:
1. Can you distinguish the differences between the unitary form (U-form) and multi-divisional form (M-form) organization structures?
a. Which organization structure is more likely to facilitate innovation? Why? b. Which organization structure is appropriate for an independent start-up
company? Why? c. Which organization structure is appropriate for an internal corporate
venture? Why? 2. How does an M-form corporation function as an internal capital market for
founding new ventures? 3. What entrepreneurial advantages can be provided by organizational structure? 4. How does organization structure enable developing an M&A and capital markets
culture?
Class Activities: 1. Discuss reading and questions
W 4.30 Hierarchies as an Engine of Entrepreneurship Corporate Venturing as a Founding Strategy Reading:
1. Gompers, Paul A. (2002). “Corporations and the Financing of Innovation: The Corporate Venturing Experience.” Federal Reserve Bank of Atlanta, Economic Review, 4th Quarter.
2. Meyer, Alan and Vibha Gaba (2004). “Major Findings on Corporate Venturing” National Science Foundation grant 0120188.
Questions:
1. What are the advantages and disadvantages of starting a new venture within an M-form corporation (intrapreneurship) compared to the outside capital markets (e.g., banks, venture capital, private placement)?
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a. How do the control mechanisms and incentive structures differ? 2. Can you describe the various models for organizing corporate venturing? 3. How do the models differ in terms of their degree of centralization? Speculate on
what are the implications of these differences for the entrepreneur and the start-up?
4. If you were the CEO of the perfect Intrapreneurial firm—how would you describe it?
Class Activity:
1. Guest speaker: Corporate Capital Investor M 5.5 Regions—Engines of Entrepreneurship Reading: 1. Zucker, Lynne, Michael Darby, and M. Brewer (1997). “Intellectual Capital and the Birth of U.S. Biotechnology Enterprises,” American Economic Review, March. Questions: 1. How would you explain regional high technology development using human capital theory? 2. What role do star scientists and engineers play in high technology entrepreneurship and company formation? 3. Based on Zucker and Darby’s research, what is the most important factor in building a business—the person, the technology, or the patent? 4. Why do star scientists tend to cluster over time in a few communities? Class Activity: 1. Entrepreneur Guest speaker W 5.7 Theories of Market Creation and Change Legitimacy & Competition Shape Windows of Opportunity to Found Population Ecology and Resource Partitioning Theories Reading:
1. Aldrich, Howard and Martin Ruef (2006). Organizations Evolving, chapter10, Sage.
Questions:
1. Define the basic concepts of ecological theories that predict founding rates. a. For example, density, legitimacy, density dependence, carrying capacity,
resource partitioning, specialist and generalist organizations. 2. What kinds of organizations prosper at different points in the life cycle of an
industry?
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3. According to population ecology theory, describe the characteristics of a market or an industry that represent the best window of opportunity for an entrepreneur to found a start-up?
4. According to resource partitioning theory, is there a second window of opportunity for the entrepreneur? If so, Why?
Class Activities: 1. Discuss reading and questions M 5.12 Competition and Market Structure Shapes Window of Opportunity to Found Industrial Economic Theory Reading:
1. Porter, Michael E. (1979). “How Competitive Forces Shape Strategy.” Harvard Business Review, reprint 79208.
2. Apple Computer, 2006 Harvard Business School Case 9-706-496. Questions:
1. Historically, what were Apple’s competitive advantages? 2. Who were the buyers and suppliers and how have they changed?
a. What were they like, what did they want? 3. Why did the buyers change so dramatically?
a. How is industry structure related to these changes? i. What happened to the competitive forces, e.g., threat of substitutes,
the use of complements, rivalry, and barriers to entry within the industry?
1. Why is rivalry so vicious despite high growth industry wide?
2. Are there products that could replace PCs in the future that are a threat?
4. Where does the balance of bargaining power lie between manufacturers and suppliers?
5. How has the change in industry structure challenged Apple’s ability to sustain competitive advantage?
6. Has Jobs finally solved Apple’s long-standing problems? Is the iPod different? Class Activity and Assignment: 1. We will review the case preparation questions in class as we discuss the case. 2. Write a 3 page essay addressing the case preparation questions in light of Porter’s model of the 5 competitive forces to analyze the market structure of the personal computer industry and Apple’s position in that market. Trace Apples’ strategies in the historical context of changes in the structure of the market place over the last 25 years.
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W 5.14 Cooperation and Market Structure Shapes Windows of Opportunity for Developing
Products and Partners Increasing Returns Theory Reading:
1. Arthur, W. Brian. (1996). “Increasing returns and the new world of business.” Harvard Business Review July-August 74: 100-109.
2. Chesbrough, Henry W. and David J. Teece (1996). “When is Virtual Virtuous? Organizing for Innovation.” pp. 65-73, Harvard Business Review (96103).
Questions:
1. Why do some markets “tip” to a dominant design, a single standard? What are the implications of this market process for the start-up?
2. Are there instances of markets that do not tip? Why? What are the implications for market entry strategy and product development for the start-up?
3. Knowing Arthur’s theory of positive feedbacks, how can an entrepreneur improve on their strategy to align with the right technology?
4. Can you define the concepts of Chesbrough and Teece’s theory? a. For example types of innovation, autonomous and systemic, and types of
knowledge, codified and tacit. 5. Given that knowledge sharing is essential to innovation, how do Chesbrough and
Teece solve the conundrum of knowledge exchange among firms in competitive markets. What is their argument?
6. Knowing Chesbrough and Teece’s theory, how can an entrepreneur improve on knowing when to partner with other companies?
Class Activities: 1. Discuss reading and questions M 5.19 Technological Innovation Changes the Structure of Markets and Windows of
Opportunity to Found Punctuated Equilibrium Theory Reading:
1. Tushman, Michael L. and Philip Anderson. (1986). “Technological Discontinuities and Organizational Environments.” Administrative Science Quarterly 31: 439-465.
2. Bower, Joseph L. and Clayton M. Christensen (1995). “Disruptive Technologies: Catching the Wave,” Harvard Business Review, 43-53, 95103.
Questions:
1. Define the following concepts: dominant design, environmental munificence, technological discontinuities, technological ferment.
2. How can technology innovations fundamentally change the structure of markets and industries?
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3. What type of technology discontinuity is likely to lower market entry barriers for start-up firms? Why?
4. Apply Tushman and Anderson’s theory to the dot.com companies. Would you classify them as competence enhancing or destroying? How are the dot.com companies different or similar from the distribution companies at the turn of the century—that were in many cases became vertically integrated?
5. Given Tushman and Anderson’s theory, what is wrong with the commonplace statement, “it is important to stay close to the customer”?
Class Activites:
W 5.21 The Role of the State in Creating Windows of Opportunity to Found Reading:
1. Campbell, John L. and Leon N. Lindberg. (1990). “Property Rights and the Organization of Economic Activity by the State.” American Sociological Review 55: 634-647.Timmons, Jeffrey (1999).
Questions:
1. How do changes in property rights laws create entrepreneurial opportunities? 2. With respect to the structure of government, why is the U.S. a rich source of
entrepreneurial opportunities? 3. Can you think of counterpart examples from the recent business press of
Campbell and Lindberg’s arguments? 4. Can you think of an international application of Campbell and Lindberg’s theory? 5. What are the implications of Campbell and Lindberg’s theory for globalization
entrepreneurship? Class Activities: 1. Entrepreneur Guest speaker W 5.28 Theories of Organizational Creation and Change The Role of Leadership in Institutionalizing Meaning and Purpose Institutional Theory and Organizational Culture Reading:
1. De Geus, Arie (1997). “The Living Company.” Harvard Business Review, March-April
Questions:
1. According to Selzinick, what is the difference between a manager and a leader? 2. How is a leader an agent of institutionalization?
a. What does a leader need to know to understand how organizations become institutionalized?
3. Why is the goal of the leader to embody the identity and culture of an organization with institutions? Why is this important for a start-up organization?
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4. How might the alignment of a start-up’s identity with institutions (i.e.,symbols, rituals, codes of behavior) hinder or help the development of a nascent company as it matures in the context of socio-political and market change?
a. Can you give examples of this? Class Activities:
1. Short film segment of St. Crispen’s Day Speech by Henry VI 2. How does film illustrate the concept of the leader as an agent of
institutionalization? M 6.2 Designing the Organization’s Mission Statement—Built to Last Reading:
1. Fulmer, William E. (2000). “Creating an Adaptive Culture,” Shaping the Adaptive Organization: Landscapes, Learning, and Leadership in Volatile Times, American Management Association.
Questions:
1. Can you explain the role of the mission statement in creating organizational culture and building an enduring organization?
2. What are the elements of an effective mission statement? 3. Why is the concept of “learning” a useful value for institutionalizing an
organization’s culture? 4. How does a leader begin to make changes in an organization?
Class Activity and Assignment: 1. Discuss elements of an effective mission statement. 2. Bring to class a company mission statement that is either a good or a poor example of Selznick’s arguments on the institutional leader’s role in defining the mission of an organization. Please make your selection original and not an example from a textbook, such as Starbucks. Why is the statement strong; why is it weak? Write a 1-2 page essay using Selznick’s arguments to evaluate the mission statement. Will the mission statement endure over time so as to keep pace with changes in product markets and management styles? If not, why? Bring a power point slide to class of the mission statement you have selected and be prepared to present the statement to the class and discuss its intended and symbolic meaning to employees and the general public. Company websites are a good source of mission statements. W 6.4 Elements of Social Organization that Affect Conformity and Conflict in Organization Culture Reading:
1. Martin, Joanne M. (1992). Cultures in Organizations. 3-21. (focus on p. 13) 2. Van Maanen, John. (1991). “The Smile Factory: Work at Disneyland.” Pp. 59-76
in Reframing Organizational Culture edited by Peter J. Frost, Larry F. Moore, Craig C. Lundberg, and Meryl Reis Louis. Newbury Park, CA: Sage.
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Questions:
1. According to Selznick what elements of the social structure of an organization affect adherence to organizational culture?
2. What does Selznick mean when he argues that effective organizations have high consensus between informal and formal organizational culture?
3. What characteristics of Disneyland presented in the “Smile Factory” case create informal organizational culture?
4. How does Martin’s 3 analytic views of organization culture on p. 13 explain conflict and conformity between the informal and formal aspects of organizational culture?
5. How does Martin’s argument explain the culture of the workers and management at Disneyland?
6. Is the organizational culture presented in the Smile Factory case constructive or destructive to the mission of Disneyland?
7. If Disneyland were a start-up, what would be the consequences of its culture, as portrayed by Van Maanen, on its probability of success? To help? To hinder? If hinder—what would you do to remedy?
Class Activity and Assignment: 1. We will review the case preparation questions in class as we discuss the case. 2. Write a 1-2 page essay addressing the case preparation questions. Course Wrap-up SOCIOLOGY 161/261 SUMMARY DATE TOPIC LEARNING TOOLS INTRODUCTION W 4-2 Course Overview WHO BECOMES AN ENTREPRENEUR M 4-7 Unique Personalities?
Psychological Theories; Practice—Simplot Case
INNOVATION DISCOVERY—Person W 4-9 Distribution of Information—Prior Experience Human Capital Theory
Practice—3 DP Printing Case
M 4-14 Networks—Structural holes vs. Cohesion Social Capital Theory Practice—Alex Laats Case
W 4-16 Culture—Institutional Theory Cultural Capital Theory
INNOVATION DISCOVERY—Place M 4-21 Markets—Engines of Entrepreneurship, The
Organization of Angel Investors Practice—Angel Investor Group Speaker
W 4-23 Markets—Engines of Entrepreneurship, The Session with TA on
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Organization of Venture Capital Investors
projects: Professor out of town
M 4-28 Hierarchies—Engines of Entrepreneurship, Entrepreneur as Aggregator; Entrepreneur as Broker of Companies
W 4-30 Hierarchies—Engines of Entrepreneurship, The Organization of Corporate Venturing
Practice—Corporate Venture Capitalist Speaker
M 5-5 Regions—Engines of Entrepreneurship
MARKET CREATION/CHANGE W 5-7 Legitimacy & Competition Shape Windows of
Opportunity to Found Population Ecology, Resource Partitioning Theories
M 5-12 Competition & Market Structure Shapes Window of Opportunity to Found
Industrial Economic Theory; Practice—Apple Case
W 5-14 Cooperation & Market Structure Shapes Windows of Opportunity for Developing Products and Partners
Increasing Returns Theory; Open Source Movement, Practice—
M 5-19 Technology Innovation Changes the Structure of Markets, Window of Opportunity to Found
Punctuated Equilibrium Theory; Practice—Disk Drive Industry Case
W 5-21 State Creates Windows of Opportunity to Found M 5-26 No Classes Memorial Day Holiday ORGANIZATION CREATION/CHANGE W 5-28 Establishing Leadership Institutional Theory;
Practice—film Henry V M 6-2 Designing the Mission Institutional Theory;
Practice—Critique mission statements
W 6-4 Guiding the Mission with Organization Culture Course Wrap-up
Institutional Theory; Practice—Smile Factory Case
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Websites for Ideas for Innovation Environments Interviews National Dialogue on Entrepreneurship www.publicforuminstitute.org/nde Subscribe to the National Dialogue on Entrepreneurship for a useful weekly newsletter [email protected] Corporate Venturing Large companies rely on start-ups to drive innovation. Larger corporations invest in researching technologies that they do not themselves develop. Large companies invest in start-ups in multiple ways that represent varying degrees of centralization—from internal corporate ventures to passive investors in venture funds and mergers and acquisitions designed to capture and exploit new technological innovations. Price Waterhouse Coopers/National Venture Capital Association MoneyTree Report on Corporate Venture Capital Activity on the Rise in 2006, http://www.nvca.org/pdf/CorporateVCReleasefinaldraft.pdf NVCA Corporate Venture Group http://www.nvca.org/cvg/corporate.html Nokia Venturing Organization http://www.nokia.com/nokia/0,8764,54203,00.html Intel Capital, http://www.intel.com/capital/ Sharp Technology Ventures http://www.sharptechnologyventures.com/ Pfizer Strategic Investments Group http://www.pfizer.com/pfizer/subsites/psig/index.jsp Steamboat Ventures (Steamboat and Disney media venturing) http://steamboatvc.com/ Motorola Ventures http://www.motorola.com/ventures.jsp Lilly Ventures (capital arm of Eli Lilly) http://www.lillyventures.com/ Cargill Ventures http://www.cargillventures.com/ Venture Capital Firms and Industry The National Venture Capital Association regularly reports the latest data on venture capital and has a directory of all member venture capital firms www.nvca.org For regional differences in venture capital deal flow see www.pwcmoneytree.com Mid-Atlantic Venture Association www.mava.org The European Private Equity and Venture Capital Association www.evca.com The Intersouth Partners, www.intersouth.com
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Benchmark Capital, www.benchmark.com Kleiner, Perkins, Caufield & Byers, http://www.kpcb.com/ Sequoia Capital, http://www.sequoiacap.com/ The Venture Capital Institute www.vcinstitute.org Google Directory of Venture Capitalists http://directory.google.com/Top/Business/Financial_Services/Venture_Capital/Industry_Focus British Venture Captial Association, http://www.bvca.co.uk African Venture Capital Association, http://www.avcanet.com/ Canada’s Venture Capital and Private Equity Association http://www.cvca.ca/ Hong Kong Venture Capital and Private Equity Association http://www.hkvca.com.hk/2004/index.html Japan Venture Capital Association, http://www.jvca.jp/en/ The Latin American Venture Capital Association, http://www.lavca.org/ Venture One Annual Industry Report http://www.ventureone.com/pubs/ireport.html Directory of Venture Capital Firms—Finding funding http://www.vfinance.com/ Yahoo! Directory of Venture Capital http://dir.yahoo.com/Business_and_Economy/Business_to_Business/Financial_Services/Finance_and_Receivables/Financing/Corporate_Finance/Venture_Capital/Industry_Specific Investor Home—Venture Capital http://www.investorhome.com/vc.htm Incubators The proliferation of incubators in the late 1990s to rapidly scale up organizational experience for new ventures declined when the internet bubble burst, begging the question of under what conditions incubators a viable business model. The Entrepreneur Center in San Jose, http://www.ecenteronline.org/home.htm
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The National Business Incubation Association, www.nbia.org First Flight Venture Capital Center, www.nctda.org Yahoo! Directory Business Incubators http://dir.yahoo.com/Business_and_Economy/Business_to_Business/Corporate_Services/Business_Development/Incubators Google Directory Incubators http://www.google.com/Top/Business/Small_Business/Start_Up/Incubators/ CORDIS: Incubators provides information on business incubators in Europe http://cordis.europa.eu/incubators/ The Entrepreneur’s Library http://www.caycon.com/resources.php Angel Investment Groups The U.S. trade association for angel groups produces a directory of angel networks broken down by geographical area and information about their performance. http://www.angelcapitalassociation.org The Angels Forum http://www.angelsforum.com/ Angel Capital Association, www.angelsummit.org Washington Technology Center Angel Investors http://www.watechcenter.org/angels Silicon Valley Angel Group http://www.bandangels.com Life Science Angels www.lifescienceangels.com Alliance of Angels, http://www.allianceofangels.com Keiretsu Forum www.keiretsuforum.com Angel Investor News, http://www.angel-investor-news.com/ 2005 Rankings of Most Active Angel Investors and Largest Incubators in the Bay Area http://www.wtc-sf.org/news_2005bookoflists.pdf Technology Licensing Offices The Association of University Technology Managers AUTM produces an annual survey of university technology transfer, www.autm.net. See AUTM data on spinout success rates with respect to the UK, US, and Canada http://www.unico.org.uk/prelease.htm
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MIT: http://web.mit.edu/tlo/www/ Berkeley: http://otl.Berkeley.edu Stanford http://otl.stanford.edu/flash.html Harvard http://www.techtransfer.harvard.edu/ Caltech http://www.ott.caltech.edu/ National Institutes of Health Office of Technology Transfer monitors and handles transfer of NIH inventions and also manages the patent and licensing activities for the Food and Drug Administration http://ott.od.nih.gov/about_nih/about.html Linking Ideas and Innovation in Technology Transfer, http://www.ibridgenetwork.org National University of Singapore Entrepreneurship Center: http://www.nus.edu.sg/nec/ Industry Associations and Entrepreneurship Policy The Semiconductor Research Corporation, www.src.org. This organization signals unmet growth areas of innovation from the perspective of industry. The Research Triangle Council for Entrepreneurial Development, www.cednc.org. Young Entrepreneurs Association http://www.yea.ca/ Entrepreneur online magazine http://www.entrepreneur.com/mag/0,4430,,00.html The North Carolina Biotechnology Center, www.ncbiotech.org. North Carolina Electronics and Information Technologies Association www.nceita.org Artists as Entrepreneurs, creative artists are often an under-appreciated asset for the entrepreneurial economy, and smart regions are findings ways to nurture and support local creative talent, http://store.yahoo.com/americans4thearts/builcreatec.html Silicon Valley Association of Software Entrepreneurs, http://www.svase.org Ewing Marion Kauffman Foundation www.kauffman.org American Entrepreneurs for Economic Growth www.aeeg.org SCORE, counselors to America’s small Business, http://www.score.org/
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Small Business and Technology Development Center www.sbtdc.org Women and Venture Capital, see the Diana project. A research program to study women entrepreneurs and equity finance, www.esbri.se/diana.asp National Women’s Business Council, www.nwbc.gov Immigrant Women Entrepreneurs, http://www.ailf.org/ipc/ipf011705.asp New Venture Fund for Native Americans, www.nativeamericancapital.com Cox Family Enterprise Center http://www.kennesaw.edu/fec/ Entrepreneur Magazine’s 2005 listing of the top 100 colleges and universities for entrepreneurship, www.entrepreneur.com/topcolleges Consortium for Entrepreneurship Education, http://www.entre-ed.org/Standards_Toolkit/ US Association for Small Business and Entrepreneurship http://www.usasbe.org/ Forum for Women Entrepreneurs http://www.fwe.org/ ASTIA: Where Women Innovators Succeed www.astia.org, formerly the Women’s Technology Cluster (wtc.org) Center for Entrepreneurship Education and Development http://www.ceed.info/ Entrepreneur Magazine’s 2006 listing of Hot Cities for Entrepreneurs http://www.entrepreneur.com/listings/vc100/0,5946,,00.html International and Emerging Markets Entrepreneurship Initiatives in Iraq, exiled Iraqis are returning to rebuild their country. There are plans to create venture capital funds to invest in businesses focused on Arab firms and the Iraq market. www.privateequityonline.com Entrepreneurship in U.K., UK Department of Trade and Industry-Small Business, http://www.dti.gov.uk/bbf/small-business/index.html Global Entrepreneurship Monitor, www.gemconsortium.org World to Start and Grow a Business, http://www.sbs.gov.uk/content/7-strategies/ActionPlan.pdf Australian Venture Capital Journal http://www.vcjournal.com.au/
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Center for International Private Enterprise www.cipe.org International Entrepreneurship Forum www.essex.ac.uk/conferences/ief/ Hispanic Business Fastest Growing 100 www.hispanicbusiness.com E-Entrepreneur a new voice for young Arab entrepreneurs http://www.ameinfo.com/news/E-Entrepreneur/ Irish Enterprise Strategy Group http://www.forfas.ie/esg/ Contact Singapore Website: The Best Place to Set Up Business (Opportunities for Entrepreneurship): http://www.contactsingapore.org.sg/oppor_forEnt.shtml Singapore Economic Development Board: http://www.edb.gov.sg International Entrepreneurship – Resources for Entrepreneurs http://www.internationalentrepreneurship.com/ Global Entrepreneurship Institute, http://www.gcase.org/ Social Entrepreneurship Describes social entrepreneurship and what this organization does to promote social entrepreneurship, http://www.ashoka.org/fellows/social_entrepreneur.cfm This site describes the different facets of social entrepreneurship with links to various organizations illustrating different perspectives on social entrepreneurship. http://www.managementhelp.org/soc_entr/soc_entr.htm 25 Best Social Entrepreneurship Organizations according to Monitor Group: http://www.fastcompany.com/social/ Social Venture Partners, www.svpseattle.org Springboard Forward (social entrepreneur in Mountain View) www.springboardforward.org Stanford Center for Social Innovation http://www.gsb.stanford.edu/csi/ The Institute for Social Entrepreneurs http://www.socialent.org./ Social Venture Network http://www.svn.org/ Community Development Venture Capital Association www.cdvca.org
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Business for Social Responsibility, www.bsr.org The national foundation for teaching youth to build businesses, http://www.nfte.com/ Schwab Foundation for Social Entrepreneurship http://www.schwabfound.org/ Research Initiative on Social Entrepreneurs (RISE) http://www.riseproject.org/ Skoll World Forum on Social Entrepreneurship http://www.skollfoundation.org/skollcentre/skoll_forum.asp Social Edge http://www.socialedge.org/ Social Enterprise Alliance http://www.se-alliance.org/ Social Entrepreneurship, http://www.pbs.org/opb/thenewheroes/ The 2008 Social Capitalist Awards: http://www.fastcompany.com/social/2008/ Columbia Research Initiative on Social Entrepreneurship http://www.riseproject.org/index.html Center for the Advancement of Social Entrepreneurs (Fuqua) http://www.fuqua.duke.edu/centers/case/ ChangeMakers : Open source social solutions http://www.changemakers.net/
