Publications

Although overconfidence is acknowledged as one of the most common managerial decision-making biases, much uncertainty remains about its implications for firm performance. To resolve this uncertainty, we investigate how and why CEO overconfidence is related to firm performance using meta-analytic techniques on a sample of 199 studies. In particular, relying on behavioral decision theory, we develop alternative hypotheses regarding the impact of CEO overconfidence on firm performance. Contrary to the conventional belief that CEO overconfidence is detrimental, this study reveals that CEO overconfidence is, on average, beneficial for firm performance. Drawing on recent refinements of upper echelons theory and theoretical insights from the psychology literature, we then dive deeper into this positive relationship and hypothesize that overconfident CEOs engage in strategic risk taking through cognitive, motivational, and social mechanisms. This risk taking is positively related to firm performance. Our results confirm that the positive relationship between CEO overconfidence and firm performance is partially mediated through strategic risk taking. Thus, although CEO overconfidence is a cognitive bias, it does not automatically lead to inferior performance but can create value for firms by impelling CEOs to take actions that involve risk. We also test whether this relationship is stronger under conditions of high managerial discretion. Our results generally validate these predictions. Finally, based on our findings, we discuss implications and directions for future CEO overconfidence research, including determining the limits of CEO overconfidence, exploring new moderators and mediators, and investigating the implications of different CEO overconfidence operationalizations as well as implications for practice.

There is growing evidence that negative media coverage leads to positive resource outcomes in entrepreneurial ventures, which contradicts established organizational reputation theory. Drawing on reputational prominence, the reputational Matthew Effect, as well as the extensive literature on CEO power dynamics, we first examine the extent to which negative media coverage is positively related to entrepreneurial venture resource access. We then assess how CEO power moderates entrepreneurial venture resource outcomes through reputational prominence accruement, reputation transfer, and media platform dynamics. We test our theoretical arguments with a dataset of 4.3 million traditional media articles on 301 entrepreneurial ventures and venture CEOs, along with 400 thousand venture CEO tweets, retweets, and related digital trace metadata. Our results clarify the reputational resource effects of organization-level reputational prominence accruement through the lens of CEO power dynamics, extend the Matthew Effect to entrepreneurial ventures, and outline a reputational “forgiveness effect”.

This core text and practical handbook presents a dynamic start-up framework with building blocks and steps to help readers to increase the success rate of their new venture. Taking a data-driven, iterative, and evidential approach, it guides readers to collect their own data at every stage, helping them to make strong business decisions based on empirical facts and develop their venture in a systematic way. Throughout the learning and venture creation process users will be supported by a multitude of handy tools and techniques. Cutting edge research is applied to practice to help users maximise their chances of entrepreneurial success and gain a critical understanding of the issues at hand.Drawing on the latest industry trends and tools, Start Up Navigator offers a state-of-the-art guide to new venture creation. It will be the ideal text for aspiring entrepreneurs keen to boost the success of their venture. It is also highly suitable for university students studying courses on entrepreneurship, new venture creation and start-up management at undergraduate, postgraduate and MBA level.   

Most startup investors, however, do not have access to Google-esque resources and still do things the old-fashioned way. Angel investors, for instance, rely heavily on gut feeling to make investments. But as technology advances and the cost of building powerful algorithms through machine learning decreases, these investors will need to decide whether to incorporate AI. Can it outperform human judgment in making early stage investment decisions? And how should angel investors use it?

Investors increasingly use machine learning algorithms to support their early stage investment decisions. However, it remains unclear if algorithms can make better investment decisions and if so, why. Building on behavioral decision theory, our study compares the investment returns of an algorithm with those of 255 business angels investing via an angel investment platform. We explore the influence of human biases and experience on business angels’ returns and find that investors only outperformed the algorithm when they had extensive investment experience and managed to suppress their cognitive biases. These results offer novel insights into the role of cognitive limitations, experience, and the use of algorithms in early stage investing.

In recent years, there has been an increase of business angel (BA) investing via structured angel investment platforms—both online and offline. This development of the angel market has changed the way BAs approach their investment strategies. By syndicating their deals with other investors, BAs can make more deals and diversify their portfolios into a variety of industries. Thus, limited funds and knowledge no longer prevent BAs from building diversified investment portfolios. This paper investigates the performance effects of portfolio industry diversification of BAs who invest via an angel investment platform. This approach is different from prior studies in the venture capital (VC) field that have highlighted the costs and benefits of specialized or diversified knowledge through industry-specific investment funds. When BAs choose to diversify, their decision making relies on their own knowledge, which is often distant from knowledge that is necessary to make investments in unknown industries. Therefore, the results from VC fund portfolio diversification may not directly reflect the performance effects of individual BA portfolios. In our study, we theorize a nonlinear (S-shaped) relationship between portfolio industry diversification and performance for individual BAs that highlights the long-tail limitations of building largely diversified investment portfolios. As angel group members build co-investment networks through syndication, we further examine the moderating role of industry knowledge access and how it may alleviate the costs of generating distant knowledge at higher levels of portfolio industry diversification. Our sample originates from one of the largest European angel investment platforms and contains detailed information at the individual and deal level, including cash flow data for each of the 2,600 investment tickets between 2013 and 2017. We study a bi-annual panel dataset of 142 BAs who invested in 65 portfolio companies within 34 industry sectors. We employ two measures of portfolio performance: internal rate of return (IRR) and capital gains multiple (CGM). We find support for our theoretical predictions of a nonlinear (S-shaped) relationship between portfolio industry diversification and performance. Specifically, we demonstrate that although information-processing limitations associated with distant search are a challenge, BAs can successfully engage in moderate levels of portfolio industry diversification. Furthermore, we find evidence that BAs' access to industry knowledge through a central position in their co-investment network moderates the main relationship. High access to specialized industry knowledge within a co-investment network allows BAs to mitigate the proposed overdiversification effect. This study makes several contributions to both research and practice. First, our results provide insights into BA portfolio industry diversification and investment returns, thereby adding to the ongoing discussion on the diversification-performance linkage in venture finance. Our study pays specific attention to the overdiversification effect in BA investing by showing that diversifying into distant knowledge domains (i.e., unknown industries) may have countervailing influences on BAs' investment returns. Second, our study contributes to the literature about the emerging phenomenon of angel investment platforms in entrepreneurial finance. Third, we elaborate on how these platforms help BAs access distant industry knowledge through their co-investment networks. We find support for the argument that access to complementary industry knowledge through a co-investment network helps BAs alleviate the negative performance consequences of an overdiversification effect that otherwise becomes evident at high levels of BA portfolio industry diversification.

A comparison of nighttime light emissions across China during the early months of COVID-19 shows how satellite sensing data can provide early detection of trouble.

The companies and employees at ground zero of the COVID-19 outbreak provide insight into what works in a time of crisis — and what doesn’t.

This study advances a theory of how different aspects of emotion regulation influence individual leader emergence in the intensely emotional context of nascent venture teams. Despite the growing amount of research on the role of leadership in the entrepreneurial process, the emergence of leaders in nascent venture teams has rarely been explored. Drawing on theories and research on leadership emergence and emotion regulation, we argue that the two aspects of emotion regulation (i.e., reappraisal and suppression) exert opposite effects on the degree to which nascent venture team members come to perceive an individual as a leader. We also theorize that team emotions arising from affective events moderate the relationship between reappraisal and leader emergence in such teams. Data from 103 nascent venture teams without prior leaders show a negative relationship between individuals’ trait disposition to suppress emotions and their emergence as leaders, and a positive relationship between their trait disposition to reappraise emotions and their emergence as leaders. Moreover, we find that negative team emotions magnify the positive association between reappraisal and leader emergence, while positive team emotions mitigate it. We discuss the implications of our findings for the literature on entrepreneurial leadership, entrepreneurial emotions, and leadership in general.

"When was the last time you heard about Mark Zuckerberg, Elon Musk or Richard Branson? If you are like most people, you are told about the heroes of entrepreneurship every day. While this focus on the superstars makes entrepreneurship seem glamorous, it can also seem intimidating and an unrealistic career choice. This is entirely unnecessary – research clearly shows that anyone can learn to successfully launch and run a business. Entrepreneurial Living is a hands-on guide that demystifies entrepreneurship as something that can be measured and understood. Using the analogy of a board game and illustrative examples, the book teaches you the fundamentals of entrepreneurial life."

Especially new firms need to be strategic flexible to proactively or reactively adjust to the market and internal demands as they aim to establish themselves. However, new firms vary in their degree of strategic flexibility. In this paper we analyze resource management practices founders can use to increase the strategic flexibility of their firms. We depict how specific resource management practices can augment the strategic flexibility of a new firm in addition to the strategic flexibility resulting from their actual resource base. Scrutinizing innovative resource management practices in various domains, our findings especially underline the importance of specific innovative resource management practices in the financial domain to increase the strategic flexibility.

Research indicates that interactions on social media can reveal remarkably valid predictions about future events. In this study, we show that online legitimacy as a measure of social appreciation based on Twitter content can be used to accurately predict new venture survival. Specifically, we analyze more than 187,000 tweets from 253 new ventures’ Twitter accounts using context-specific machine learning approaches. Our findings suggest that we can correctly discriminate failed ventures from surviving ventures in up to 76% of cases. With this study, we contribute to the ongoing discussion on the importance of building legitimacy online and provide an account of how to use machine learning methodologies in entrepreneurship research.

Recent research suggests that effectuation principles such as flexibility, precommitments, and affordable loss may differ substantially from one another. Responding to the call to clarify the effectuation concept, our study introduces the distinction between promotion‐ and prevention‐focused effectuation principles. It argues that promotion‐focused (prevention‐focused) principles are positively (negatively) associated with a firm's entrepreneurial orientation (EO). It further argues that causation is also promotion‐focused and positively associated with EO. An analysis of 151 Swiss energy small and medium‐sized enterprises supports this account. Thus, our study suggests that some effectuation principles are more similar to causation in their underlying regulatory focus and their relationship with EO than they are to other effectuation principles. We offer several paths for future research on effectuation, causation, and EO that emerge from these findings.

Full Article

Business planning is a popular managerial practice, especially in the SME context. Yet, literature presents diverging perspectives regarding business planning and the role it fulfills for the individuals leading these organizations. To advance research, we focus on evidence regarding factors that determine whether and how individuals engage in business planning. Drawing on human capital concepts and the theory of planned behavior, we scrutinize how education and different prominent work experience types influence business planning behaviors. We use meta-analysis to aggregate data on 8095 observations leading SMEs from 31 independent data sets. We find critical differences in planning behaviors relating to human capital types, as well as to whether individuals engage in substantive planning processes or the specific preparation of a formal business plan. Implications of our findings for research on business planning are discussed.

Heute schon gegründet? So geht Startup!

Startup Navigator – das Erfolgstool nachvollziehbar und systematisch erläutert, mit einem großen Fundus an Bildmaterial aus realen Anwendungsprojekten und Fallstudien. Für alle Gründerinnen und Gründer! Mit praktischem Poster zum Herausnehmen.

Geschäftsideen gibt es wie Sand am Meer. Oft zerbröseln diese aber, wenn man sie an den Markt bringt und sie sich schlicht nicht rechnen. Was unterscheidet aber gute von schlechten Ideen? Erfolgreiche Startups sind keine Magie! Jeder kann mit dem „Startup Navigator“ lernen, wie man erste Konzepte erfolgreich in die Tat umsetzt. Dieses Tool wurde über Jahre an der Universität St.Gallen mit erfahrenen Unternehmerinnen und Unternehmern entwickelt. Bei der Anwendung des Navigators entsteht ein einzigartiges Startup aus den persönlichen Stärken jedes einzelnen Entrepreneurs heraus, der sich das Wissen unternehmerischer Methoden zu eigen macht und seine Idee systematisch wie die Profis entwickelt.

Das Autorenteam aus erfahrenen Praktikern und Forschern hat ein Handbuch für den direkten Einsatz des Startup Navigators geschrieben. Gründerinnen und Gründer, die Methoden des Navigators erfolgreich angewendet haben, führen den Leser anschaulich und unterhaltsam durch die einzelnen Schritte des Startup-Prozesses.

Despite the possibility of burnout resulting from dynamics in firms' upper echelons, little if any work has focused on chief executive officer's (CEO's) burnout and firm performance. Drawing on managerial discretion theory, this article analyzes the influence of CEO burnout on firm performance and the moderating roles of the individual (CEO locus of control), structural power (CEO duality and CEO tenure), and organizational characteristics (size, age, and resource availability) related to managerial discretion. Using a sample of 156 CEOs in Swedish firms, we find a negative association between CEOs who report higher burnout and firm performance. Our results confirm that CEO duality and resource availability ameliorate and firm size exacerbates the negative association between CEO burnout and firm performance. Contrary to our expectations, CEO locus of control, CEO tenure, and firm age do not influence this relationship. We discuss the implications of our research for upper echelons theory and strategic leadership theory.

While failure urges entrepreneurs to learn, it also generates strong emotions that may hinder learning behaviors. Drawing on affective events theory, we develop a model reconciling the countervailing effects of failure. In particular, we focus on failure velocity—rate at which failure events are experienced—to understand entrepreneurs’ learning from failure. Survey data from entrepreneurs in the information technology industry reveals an inverted U‐shaped relationship between failure velocity and learning behaviors. Emotion regulation moderates this relationship. When failure velocity rises beyond an inflection point, its relationship with learning behaviors is more positive for entrepreneurs with higher emotion regulation.

Drawing upon prior research suggesting inertia prevents organizations from learning, we suggest that the relationship between entrepreneurial orientation (EO) and strategic learning (SL) is not as straightforward and linear as has been suggested. The size and age of an organization, considered indicators of inertia, are important factors affecting how EO contributes to the components of SL. Data from 182 software companies confirm the non-linear relationships between EO and the dissemination, interpretation, and implementation components of SL. The results also indicate that the U-shaped association between EO and specific components of SL is more pronounced for larger and established companies than for younger and smaller ones. These findings depart from previous work based on strategic learning from mistakes, and offer a specific understanding of the relationship between EO and the four distinct components of SL. These results suggest that companies should opt to facilitate the individual components of SL as they are affected differently depending on the level of EO, and the age and size of the organization.

Das Lehrbuch präsentiert den aktuellen Stand der internationalen Entrepreneurshipforschung. Von der Geschäftsidee über die Frühphase bis zur Markteinführung und Etablierung zeigen die Autoren, wie neue Geschäftsmodelle entdeckt und entwickelt werden. Außerdem im Fokus: Entrepreneurship im sozialen und wissenschaftlichen Bereich. Geeignet sowohl für die Gründung von Unternehmen und junge, wachsende Unternehmen als auch für etablierte Unternehmen und NPOs.

In der 2. Auflage ergänzt um aktuelle Themen wie Lean-Start-up-Ansatz, Crowdfunding und -sourcing, unternehmerische Ökosysteme, Digitalisierung und Vernetzung wie in der Sharing Economy.

We analyse corporate venture capital (CVC) as a characteristic form of coopetition. In doing so, we apply the network perspective and examine the influence of three important network attributes - namely centrality, subgroups, and structural holes - on a coopetitor's innovativeness and subsequent financial performance. We test our hypotheses with the data from CVC investments of 162 corporations operating in a variety of industries over the course of six years. Our results show that a coopetitor's centrality in the respective CVC network positively affects corporate innovativeness, whereas belonging to a restricted subgroup suppresses innovativeness. In turn, innovativeness is positively related to subsequent financial performance. Thus, by strategically managing its position in a CVC network, coopetitors increase their own innovativeness that lead to superior financial outcomes.

Experience is a critical factor in the success of nascent venture teams. However, homogeneous experience levels within teams may have drawbacks. This study focuses upon the performance effects of heterogeneities in experience type – management, industry, and start-up experience – for nascent venture teams. Using the representative US-based PSED II dataset including 519 nascent venture teams, we find that balanced experience types (heterogeneities in management and start-up experience) among nascent venture team members led to increased early-stage performance (measured as the expected revenue after the first operational year and the progress in terms of entrepreneurial activities pursued within the first five years of operation).

Entrepreneurs who run venture startups parallel to wage employment engage in so-called hybrid entrepreneurship. Not all hybrid entrepreneurs, however, eventually leave the wage employment to become a full-time entrepreneur (second-step entrepreneurship). Significant research has focused on first-step entrepreneurial choice (to engage in a business start-up), but much less has focused on a second-step entrepreneurial choice, which captures the transition to full-time entrepreneurship. The present study, which examines the second-step entrepreneurial choice, reveals a U-shaped relationship between age and the intention to enter full-time entrepreneurship. Interestingly, this contrasts with prior studies on the effects from age in the first-step entrepreneurship choice, demonstrating an inverted U-relationship between age and venture startup.

This paper reviews and integrates research from both within and outside the entrepreneurship field under the label of ‘situated cognition’. Situated cognition is the notion that cognitive activity inherently involves perception and action in the context of a human body situated in a real‐world environment. The review concentrates on three areas of the situated cognition literature that have significant implications for research in entrepreneurial cognition: embedded, grounded and distributed cognition. While these three aspects of cognition differ in terms of foci and core theses, they share the common emphasis of viewing and investigating cognitive processes by going beyond the individual mind and paying attention to the human body, (material) objects and other people. Using the theoretical lens of situated cognition provides new insights into current entrepreneurship phenomena such as co‐creation and interaction in a shared economy based on new technologies.

Although entrepreneurship scholars highlight bootstrapping as a key resource acquisition approach to respond to the inherent resource constraints that nascent ventures face, little is known about what causes nascent ventures to engage in bootstrapping. Theory highlights the environment as an important determinant of bootstrapping activity. Analyzing bootstrapping behavior of 298 nascent ventures, we find that beyond perceived environmental factors, individual characteristics of the nascent entrepreneurs and factors relating to the embeddedness of the entrepreneurs in the environment determine their venture's bootstrapping behavior. In a more fine-grained analysis we gain insights into how these antecedents shape the use of particular bootstrapping strategies. Findings contribute to our understanding of factors driving resource management approaches in nascent ventures.

As the broad link between small and medium-sized firm activity and key policy goals such as employment or economic growth has become generally accepted, the conversation has focused on a more nuanced understanding of the entrepreneurial engines of economic activity. A significant body of research looking at antecedents to venture performance has identified that entrepreneurial talent variables account for meaningful differences in venture performance and that significant heterogeneity exists across performance measures. These are important issues for institutions and policy makers seeking to achieve specific economic goals (e.g., survival or growth of ventures, employment or revenue). Using meta-analysis, we integrate this work to view connections between aspects of entrepreneurial talent and different performance outcomes. Our investigation includes 50,045 firms (K of 183 studies) and summarizes 1002 observations of small and medium-sized firms. Analysis of these data yields an unexpectedly weak connection between education and performance. Furthermore, growth, scale (number of employees) and sales outcomes are significantly related to planning skills, while profit and other financial and qualitative measures are strongly connected with the network surrounding the firm founders. Moreover, we observe that entrepreneurial talent is more relevant in developing economies.