Success and Failure of Innovative Company Start-ups

Description

The research project focuses on new firm foundations as an important vehicle for commercializing new technological knowledge. The main research question we attempt to answer refers to the conditions and determinants for success and failure of newly founded firms. Broadly categorizing, we want to distinguish individual characteristics of the firm founder(s) such as motivation, risk attitude, flexibility etc. and technological as well as economic determinants, such as technological opportunities, resource availability and competitive situation. Furthermore, the influence and impact of the political and institutional framework in general will be considered. Consequently, we pursue an interdisciplinary approach involving both psychology and economics.

The research project is further specified along the following lines:

(1) Explicit focus on failure: As about 52% of newly founded firms fail, not only are the factors and determinants for success of interest but also are those for failure. With this focus, our study will provide an important contribution to the literature and ongoing political discussion, where investigations into the success of newly founded firms deal nearly entirely with the successful (and therefore easy to access) cases.

(2) Process perspective: to explain both success and failure of newly founded firms, a process perspective will be taken in the sense that in principle, it is the complete history—from first considerations on starting a new firm, the decision to found it and the further development—that is taken into account to explain success or failure. The transformation process is divided into three steps. First, there is a population of potential founders, i.e. all current and former research associates at universities and research institutes. Among all potential founders, interested founders may begin to consider founding an own enterprise, while others do not consider those endeavors at all. Second, among the interested founders, some may pursue their idea and seek economic advice; finally, some, the founders, proceed with the entrepreneurial process, while others give up. Third, spin-offs or start-ups are founded, and when confronted with market competition, they are met with either success or with a final failure. From such kinds of path analysis, we expect to gain deeper insights into the psychological and economic determinants of start-up decisions and of new firm performance.

(3) Focus on university spin-offs: The project aims at following the process of transformation of knowledge, from public research into market value, via academic spin-offs as the transfer channel. This has the additional advantage of easier application to the process mentioned above. Contrary to start-ups in general, with spin-offs from universities and other public research institutes, the basic population of founders is accessible. Hence, beginning with a pool of potential founders and non-founders, we can track their respective paths as they become either successful or failing entrepreneurs, where innovative start-ups are used as a comparison group to control for the institutional conditions at the time of business foundation.

Therefore, the project will provide specific insights into:

• the efficiency of soft business support and government assistance during the process of venture creation
• the effects on employment and the quality of necessary human capital for setting up a business
• the integration of start-ups into the innovation system and social network of the founder/team of founders

By taking a process perspective, by considering the interaction of psychological and economic factors and by including explicitly determinants of failure, the project will contribute to the theoretical and empirical literature on start-ups in general and on academic spin-offs.

Partners

Prof. Dr. Rainer Silbereisen (FSU Jena, Lehrstuhl für Entwicklungspsychologie), Prof. Dr. Gabriele Beibst (FH Jena, Fachbereich Betriebswirtschaft)

Team (Chair of Microeconomics – FSU Jena)

Prof. Dr. Uwe Cantner, Dr. Maximilian Göthner, Sarah Kösters, Michael Stützer

Duration

2006-2011

Funding

Thüringer Kultusministerium, Hans-Böckler-Stiftung

Publications

• Obschonka, M., Silbereisen, R. K., Cantner, U., Goethner, M. (in press). Entrepreneurial self-identity: Predictors and effects within the theory of planned behavior framework, Journal of Business and Psychology.
• Wilfling, S. (2014). Essays on entrepreneurial entry and exit, PhD Thesis, University of Jena, Germany.
• Cantner, U., Goethner, M., Stuetzer, M. (2013). Does new venture teams’ functional heterogeneity help or hinder start-up performance?, Homo Oeconomicus, 30(2), 163-182.
• Stuetzer, M., Obschonka, M., & Schmitt-Rodermund, E. (2013). Balanced skills among nascent entrepreneurs, Small Business Economics, 41(1), 93-114.
• Stuetzer, M., Obschonka, M., Davidsson, P., & Schmitt-Rodermund, E. (2013). Where do entrepreneurial skills come from? Applied Economics Letters, 20(2), 1183-1186.
• Wolf, T. (2013). Innovative start-up patenting: A new approach towards identification and determinants, Jena Economic Research Papers, 2013-23.
• Cantner, U., & Kösters, S. (2012). Picking winners?–Empirical evidence on the targeting of R&D subsidies to start-ups, Small Business Economics, 39, 921–936.
• Goethner, M. (2012). From lab to market place: An empirical investigation of the emergence and early performance of academic spin-off companies, PhD Thesis, University of Jena, Germany.
• Goethner, M., Obschonka, M., Silbereisen, R. K., Cantner, U. (2012). Scientists’ transition to academic entrepreneurship: Economic and psychological determinants, Journal of Economic Psychology, 33(3), 628-641.
• Obschonka, M., Duckworth, K., Silbereisen, R. K., & Schoon, I. (2012). Social competencies in childhood and adolescence and entrepreneurship in young adulthood: A two-study analysis. International Journal of Developmental Science, 6(3-4), 137-150.
• Obschonka, M., Goethner, M., Silbereisen, R. K., Cantner, U. (2012). Social identity and the transition to entrepreneurship: The role of group identification with workplace peers, Journal of Vocational Behavior, 80(1), 137-147.
• Obschonka, M., Silbereisen, R. K., & Schmitt-Rodermund, E. (2012). Explaining entrepreneurial behavior: Dispositional personality traits, growth of personal entrepreneurial resources, and business idea generation. The Career Development Quarterly, 60(2), 178-190.
• Stuetzer, M., Goethner, M., Cantner, U. (2012). Do balanced skills help nascent entrepreneurs to make progress in the venture creation process?, Economics Letters, 117(1), 186-188.
• Kösters, S. & Obschonka, M. (2011). Public business advice in the founding process: An empirical evaluation of subjective and economic effects. Environment and Planning C: Government and Policy, 29, 577-604.
• Lautenschläger, A. (2011). Personal happiness and employment growth in new technology-based firms. International Journal of Entrepreneurial Venturing, 3(4), 359-374.
• Obschonka, M. (2011). Entrepreneurship and the life span perspective of human development. Unpublished PhD Thesis, University of Jena, Germany.
• Obschonka, M., Silbereisen R. K., & Schmitt-Rodermund, E. (2011). Successful entrepreneurship as developmental outcome: A path model from a lifespan perspective of human development. European Psychologist, 16(3), 174-186.
• Obschonka, M., Silbereisen, R. K., Schmitt-Rodermund, E., & Stuetzer, M. (2011). Nascent entrepreneurship and the developing individual: Early entrepreneurial competence in adolescence and venture creation success during the career. Journal of Vocational Behavior, 79(1), 121-133.
• Stützer, M. (2011). Human capital and social capital in the entrepreneurial process. PhD Thesis, University of Jena, Germany.
• Cantner, U., Goethner, M., Stuetzer, M. (2010). Disentangling the effects of new venture team functional heterogeneity on new venture performance, Jena Economic Research Papers, 2010-29.
• Kösters, S. (2010). Subsidizing start-ups: Policy targeting and policy effectiveness. Journal of Industry Competition and Trade, 10(3-4), 199-225.
• Obschonka, M., Silbereisen, R. K., & Schmitt-Rodermund, E. (2010). Entrepreneurial intention as developmental outcome. Journal of Vocational Behavior, 77(1), 63-72.
• Goethner, M., Obschonka, M., Silbereisen, R. K. (2009). Approaching the Agora–Determinants of scientists’ intentions to pursue academic entrepreneurship, Jena Economic Research Papers, 2009-079.
• Cantner, U., & Kösters, S. (2009). R&D subsidies to start-ups–Effective drivers of patenting activity and employment growth, Jena Economic Research Papers, 2009-27.
• Kösters, S. (2009). Policy support for innovative entrepreneurship–An empirical evaluation, PhD Thesis, University of Jena, Germany.