Turning Lead Into Gold: How do Entrepreneurs Mobilize Resources to Exploit Opportunities?

Research Summary This study focuses on a salient challenge for entrepreneurs in emerging economies: government expropriation. Drawing on signaling arguments, we propose that an owner's high socioeconomic status (SES) attracts government attention to her start‐up by conveying information about its resource endowments. The empirical tests based on start‐ups in China support that an owner's high SES increases government expropriation. The effect is stronger for start‐ups in regions with greater income inequality or in those where the legal system is less developed. High‐SES entrepreneurs can mitigate the risk of government expropriation by building political connections. Managerial Summary Institutional voids in emerging economies pose a major threat to start‐ups in the form of government expropriation. This research finds that the threat is more severe for start‐ups with high‐SES entrepreneurs because they have strong resource‐mobilization capabilities and easily become expropriation targets. Further, this research suggests that two measures help protect high‐SES entrepreneurs from government expropriation: locating their start‐ups in regions with low income inequality or a well‐developed legal system, and building connections with the government in order to exchange favors with government officials.

Section: Robustness Checksupporting

confidence: 72%

Section: Robustness Checkmentioning

confidence: 99%

Entrepreneurs' socioeconomic status and government expropriation in an emerging economy

Chandrashekar

2020

“…Our framework, inspired by Clough et al (2019), utilizes two key dimensions that underpin resource mobilization during the entrepreneurship process. The first dimension comprises the underlying action logics, or actors' cognitions and behaviors during resource mobilization.…”

Section: The Entrepreneurship Processmentioning

confidence: 99%

Entrepreneurship in emerging economies

Foo

Vissa

2020

Self Cite

Research Summary The economic center of gravity is shifting from mature markets to emerging regions. This shift provides a good opportunity to broaden and deepen our theoretical base of concepts and frameworks because emerging and mature regions differ significantly in their institutional regimes. Hence entrepreneurial resource mobilization in emerging regions could differ significantly because of theoretical differences in actors' action logics and resource governance. The eight papers in this special issue provide new empirical evidence on antecedents and consequences of entrepreneurial resource mobilization efforts in emerging regions. Here, we briefly summarize the state of the field, introduce the articles by situating them in a novel theoretical framework on entrepreneurial resource mobilization, and finally using our framework, we suggest opportunities for future research on entrepreneurship in emerging regions. Managerial Summary Entrepreneurship research has advanced mainly using empirical data from the developed economies of North America and Western Europe. Because emerging economies differ markedly in their institutional development from developed economies, this prior research is less likely to be useful to understand entrepreneurship in emerging regions ‐ which are increasingly crucial components of the global economy. This special issue contains eight articles addressing different aspects of the entrepreneurial resource mobilization process using diverse research methods on empirical data drawn from a broad range of emerging economies. This introduction describes the state of the field prior to the special issue, introduces the special issue articles and identifies topics that still need further investigation. We distill the current state of knowledge and offer a roadmap for future scholarship.

“…In line with the growing awareness that opportunities exist on the demand side-that is, customer desire or unmet market demand is the core and defining feature of opportunities whereas product provision and resource use are meant to materialize the opportunities into profit (Clough, Fang, Vissa, & Wu, 2019;McMullen & Dimov, 2013;Priem et al, 2012;Ramoglou & Tsang, 2016, 2018)-we advocate shifting the focus of discussion from the abstract definition of opportunities to the real substance of opportunities that manifest themselves in the characteristics of latent customer needs. Doing so can open up new possibilities to resolve the debate and unify the different theories on the origin of entrepreneurial opportunities.…”

Section: Contributions To the Debate On The Origin Of Entrepreneurimentioning

confidence: 99%

“…Our study indicates with empirical evidence that when opportunities are conceived from the perspective of latent customer needs, they can be observed without the condition of being actualized into profits. Indeed, the discovery of latent needs does not presuppose the success of making profits, since profitability hinges on the efficiency of mobilizing resources to fulfill their needs (Clough et al, 2019).…”

Section: Contributions To the Debate On The Origin Of Entrepreneurimentioning

confidence: 99%

Identifying the tacit entrepreneurial opportunity of latent customer needs in an emerging economy: The effects of experiential market learning versus vicarious market learning

Bao

Wei

Benedetto³

2020

Research Summary Focusing on latent customer needs as the essential substance of entrepreneurial opportunities, this study examines the determinants of the identification of such opportunities. Based on organizational learning theory, we explore the effects of experiential market learning (EML) and vicarious market learning (VML), and the contingency of such effects on different dimensions of environmental uncertainty in an emerging economy: demand uncertainty of the task environment and legal inefficiency of the institutional environment. The model was tested through survey among 238 firms in China. We find that both EML and VML facilitate the identification of latent customer needs, while they interact with environmental uncertainty in different ways. This study makes substantial contributions to the extant literature on opportunity identification, strategic entrepreneurship, and the origin of entrepreneurial opportunities. Managerial Summary Latent customer needs, which customers are not aware of or unable to articulate, serve as a catalyst for firm growth and are integral to the business model design. How can firms identify such essential entrepreneurial opportunities? We investigate this question in an emerging economy in which latent needs are more frequently encountered and find that both learning from direct market experience (EML) and learning from other firms' market experience (VML) increase the likelihood of identifying latent needs, while VML is more influential than EML. Facing high demand uncertainty, firms should rely more on VML than EML to identify latent needs, whereas in an uncertain institutional environment with a weak legal system, firms should place less emphasis on VML and more on EML in the identification of latent needs.