academy of management presentation on new venture knowledge appropriation and sustainability of...

New venture knowledge appropriation and sustainability of regional entrepreneurial activity

Mike Provance, Ph.D. Old Dominion University

Elias Carayannis, Ph.D. George Washington University

9 August 2010 · AoM · Montreal

© Mike Provance and Elias Carayannis, 2010

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How does knowledge appropriation influence the level of sustained new venture formation in a region?

Knowledge perspective on entrepreneurship

·∙  Knowledge spillover : agglomeration economies –  Klepper and Sleeper, 2005; Krugman, 1991; Ács and

Varga, 2005 ·∙  Overcoming localized spillover : social capital

–  Almeida and Kogut, 1999; Rosenkopf and Almeida, 2003, Saxenian, 1994

·∙  Absorptive capacity in new venture formation –  McKelvie, Wiklund, and Short, 2007; Todorova and

Durisin, 2008 ·∙  Heterogeneous systems of knowledge flow

–  Carayannis and Campbell, 2007; Santarelli and Vivarelli, 2004

·∙  Leads to regional sustainability of entrepreneurial activity –  Carayannis, 2009

INTRODUCTION

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Focus on the sustainability of entrepreneurship in regions

·∙  Entrepreneurship historically a vehicle for economic recovery in down markets

·∙  Permanent shift in labor base of many cities in U.S. and abroad (Canada, Europe, Japan)

– Santarelli and Vivarelli, 2004 ·∙  Entrepreneurial system of activity

– Carayannis, 2009; Krueger, Reilly, and Carsrud, 2000

FORMATION THRESHOLD

A   B  

INTRODUCTION

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(0) Founder commitment and new venture creation

(1) Capability generation

(2) New venture transition to incumbent firm

(3) Incumbent firm product innovation

(4) Product innovation adoption

(5) Buyer resolution

(6) Institutional knowledge mediation

SIMULATION DESIGN

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Design specification of Stage 1 ·∙  Six configurations of 20x20 LP torus landscape ·∙  Four runs of each configuration – >1,000,000 observations ·∙  ANOVA with Bonferroni procedure identified two focal configurations

for further analysis

SIMULATION STAGE 1

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STAGE 1 !

STAGE 2 !

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STAGE 1 RESULTS

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 0 0 0 0 0 0 1 0 0 0 1 0 0 0 0 0 0 1 0 1 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 1 1 1 0 0 3 1 0 0 1 0 0 0 0 0 0 0 0 0 1 1 0 0 0 0 0 4 1 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 5 1 1 1 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 6 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 1 0 1 0 7 0 1 0 0 0 1 0 0 0 0 1 0 0 0 0 0 1 0 0 0 8 0 0 1 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 1 9 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 1 0

10 1 0 0 1 0 0 0 0 0 0 1 0 0 0 1 0 0 0 0 0 11 0 1 0 1 0 0 1 0 0 0 0 0 1 0 0 1 0 0 0 0 12 0 0 0 0 0 0 0 0 1 0 0 0 0 0 1 0 0 0 0 0 13 0 0 0 1 0 0 0 0 0 0 1 0 0 0 1 1 0 0 1 0 14 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 0 15 0 0 0 0 0 0 0 0 1 0 0 0 1 0 0 1 1 0 0 0 16 0 0 0 0 0 0 0 1 0 0 1 0 0 1 0 0 0 0 1 0 17 1 0 0 0 1 0 0 1 0 1 0 0 1 0 1 0 1 1 0 0 18 1 0 0 0 1 0 0 0 0 0 0 0 1 0 0 0 1 1 0 0 19 0 0 0 1 0 0 1 0 1 0 1 0 1 0 1 0 0 0 0 0

Spatial distribution of new ventures in Configuration B

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STAGE 1 RESULTS

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STAGE 1 RESULTS

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STAGE 1 RESULTS

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STAGE 1 RESULTS

Results of Tobit Regression Analysis for Conditional Probability of New Venture Formation

CONFIGURATION A CONFIGURATION B

Variable 1 2 3 4 5 6

P [serendipity for knowledge transformation] 0.018** 0.013** 0.010 0.010 0.011* 0.008

Network size -0.127*** -0.265*** -0.125*** -0.268***

Network density 0.081*** -0.288* 0.051** -0.107

Network size2 0.023*** 0.023***

Network density2 0.311** 0.128

Netw. size of new ventures normalized for age -0.207*** -0.235***

Netw. size of new ventures, normalized for age2 0.024*** 0.031***

Number of left-censored observations 664 664 664 667 667 667

Number of uncensored observation 936 936 936 933 933 933

Number of right-censored observations 0 0 0 0 0 0

Pseudo R2 19.970 26.308 14.760 17.445 23.748 13.527

LR Chi2 1,488.19 1,960.36 1,100.19 1,460.36 1,987.96 1,132.35

* p < 0.10, ** p<0.05, *** p < 0.005

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Design specification of Stage 2 ·∙  Introduces institutional knowledge mediation ·∙  Three configurations of 20x20 LP torus landscape ·∙  Three runs of each configuration – >150,000 observations ·∙  Stability of results across location and configuration

SIMULATION STAGE 2

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STAGE 2 RESULTS

Cumulative # of!New Ventures!

Prob [New!Venture !Formation]!

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STAGE 2 RESULTS

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Initial conclusions

·∙  Formal knowledge acquisition more influential (in unexpected ways) –  Smaller, denser networks –  Network building is a cost before it generates returns

·∙  Knowledge diversity leads to localization

·∙  Regional entrepreneurial support can’t build networks for entrepreneurs – other way around

·∙  Institutions may aid or constrain regional sustainability – depending on mission

–  Knowledge variation inducing increases probability of formation –  Know. standardizing and producing decreases probability

WHAT DID WE LEARN?

THANK YOU.

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