Inside or Outside: The Social Mechanisms of New Venture Formation. Evidence from the Mutual Fund Industry
Speaker
Abstract
In knowledge-intensive environments, mobile workers may develop new ventures either inside or outside established organizations. While past research has primarily focused on independently created ventures, the majority of new ventures are formed internally via entrepreneurial efforts of organizational members. Hence, in my dissertation, I examine two interrelated questions: (1) What affects the entrepreneur’s choice between internal and external venture formation?, and (2) How do organizations adjust their structures and incentives to retain new ventures inside? |
| Using the empirical context of the mutual fund industry between 1979 and 2006, I investigate when portfolio managers create internal funds, and when do they choose to leave in pursuit of new funds outside. I suggest that, in addition to standard incentive-based explanations related to manager’s compensation and discretion inside the organization, social mechanisms underline the choice between internal vs. external fund formation. In the first study, I explore how social networks, and more specifically school ties, influence whether new funds are created internally or externally. In the second study, I argue that early career experiences affect entrepreneurial choices by influencing manager’s beliefs about and attitudes towards risk-taking, autonomy, and entrepreneurial norms. In the third study, I investigate whether and how organizations respond to the loss of entrepreneurial talent by adjusting their structures and incentives. |
| Together, the three studies contribute to the literature on entrepreneurship by uncovering the social mechanisms behind the origins of new ventures. Moreover, my findings extend organization theory by enhancing the understanding of organizational emergence and the role of organizational members in reshaping organizational boundaries. |
| Contact information: |
| Prof.dr. H.G. Barkema |
