On the Factors Influencing New Ventures&#39; Blended Values

Christina  Ungerer; Guido H Baltes

On the Factors Influencing New Ventures' Blended Values

What drives entrepreneurial action to create a lasting impact? The creation of new ventures that aim at having an impact beyond their financial performance face additional challenges: achieving economic sustainability and at the same time addressing social or environmental issues (Dean & McMullen 2007). These so-called hybrid organizations try to be congruent with their blended values, despite being under external pressure in the process of maturing the new venture (Mcmullen & Warnick 2016). This research explores not only the initial motivations of the entrepreneur as potential influence on the ventures' blended values, but also the source of finance....Read more

Summary Version – email authors for further details – this is work in progress 1 On the Factors Influencing New Ventures’ Blended Values Ferran Giones, Christina Ungerer, Guido Baltes University of Southern Denmark, Alsion 2, 6400 Sønderborg, Denmark fgiones@mci.sdu.dk HTWG Konstanz, Brauneggerstraße 55, 78462 Konstanz, Germany, Christina.Ungerer@htwg-konstanz.de HTWG Konstanz, Brauneggerstraße 55, 78462 Konstanz, Germany, guido.baltes@cetim.org Abstract What drives entrepreneurial action to create a lasting impact? The creation of new ventures that aim at having an impact beyond their financial performance face additional challenges: achieving economic sustainability and at the same time addressing social or environmental issues (Dean & McMullen 2007). These so-called hybrid organizations try to be congruent with their blended values, despite being under external pressure in the process of maturing the new venture (Mcmullen & Warnick 2016). This research explores not only the initial motivations of the entrepreneur as potential influence on the ventures’ blended values, but also the source of finance. A dataset of 4,125 early-stage ventures (Entrepreneurship Database Program; Emory University) has been explored to gain insights into how entrepreneurs' motives and external financing sources could influence on the impact dimensions being addressed. Social motives were found to go along with social impact targets. The results seem to support a resource dependence perspective (Drees & Heugens 2013): the more early- stage ventures rely on philanthropic support as an external funding source, the stronger they appear oriented towards social or environmental impact dimensions – thus they may have been willing to adapt their initial goals to match with different donors’ expectations. In the case of social impact ambitions, increasing profit margin targets and venture age have a negative effect on the prevalence of blended values. The research results hold implications for entrepreneurs and institutions interested in promoting new ventures with blended values. Keywords: venture creation, hybrid organizations, blended values, social impact, environmental impact, entrepreneurship.

Summary Version – email authors for further details – this is work in progress 2 References: Alsos, G.A. et al., 2016. Entrepreneurs’ social identity and the preference of causal and effectual behaviours in start-up processes. Entrepreneurship & Regional Development, (April), pp.1–25. Battilana, J. & Dorado, S., 2010. Building Sustainable Hybrid Organizations: The Case of Commercial Microfinance Organizations. Academy of Management Journal, 53(6), pp.1419–1440. Baum, J.R. & Locke, E.A., 2004. The relationship of entrepreneurial traits, skill, and motivation to subsequent venture growth. The Journal of Applied Psychology, 89(4), pp.587–98. de Bettignies, J.-E., 2008. Financing the Entrepreneurial Venture. Management Science, 54(1), pp.151–166. Brush, C.G., Manolova, T.S. & Edelman, L.F., 2008. Properties of emerging organizations: An empirical test. Journal of Business Venturing, 23(5), pp.547–566. Bryant, P.T., 2012. Imprinting by Design: The Microfoundations of Entrepreneurial Adaptation. Entrepreneurship: Theory and Practice, pp.1081–1103. Carr, J.C. et al., 2010. A study of the moderating effects of firm age at internationalization on firm survival and short-term growth. Strategic Entrepreneurship Journal, 4(2), pp.183–192. Clegg, S., 2010. The State, Power, and Agency: Missing in Action in Institutional Theory? Journal of Management Inquiry, 19(1), pp.4–13. De Clercq, D. et al., 2014. Unpacking the Goal Congruence–Organizational Deviance Relationship: The Roles of Work Engagement and Emotional Intelligence. Journal of Business Ethics, 124(4), pp.695–711. Davidsson, P. & Honig, B., 2003. The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18(3), pp.301–331. Dean, T.J. & McMullen, J.S., 2007. Toward a theory of sustainable entrepreneurship: Reducing environmental degradation through entrepreneurial action. Journal of Business Venturing, 22(1), pp.50–76. Drees, J.M. & Heugens, P.P.M.A.R., 2013. Synthesizing and Extending Resource Dependence Theory: A Meta-Analysis. Journal of Management, 39(February), pp.1666–1698. Fauchart, E. & Gruber, M., 2011. Darwinians, Communitarians, and Missionaries: The Role of Founder Identity in Entrepreneurship. Academy of Management Journal, 54(5), pp.935–957. Gielnik, M.M. et al., 2014. A temporal analysis of how entrepreneurial goal intentions, positive fantasies, and action planning affect starting a new venture and when the effects wear off. Journal of Business Venturing, 29(6), pp.755–772. Gielnik, M.M. et al., 2015. “I Put in Effort, Therefore I Am Passionate”: Investigating the Path from Effort to Passion in Entrepreneurship. Academy of Management Journal, 58(4), pp.1012–1031. Glynn, M.A., 2000. When Cymbals Become Symbols: Conflict Over Organizational Identity Within a Symphony Orchestra. Organization Science, 11(3), pp.285–298. Hechavarria, D.M., Renko, M. & Matthews, C.H., 2012. The nascent entrepreneurship hub: goals, entrepreneurial self-efficacy and start-up outcomes. Small Business Economics, 39(3), pp.685–

Summary Version – email authors for further details – this is work in progress On the Factors Influencing New Ventures’ Blended Values Ferran Giones, Christina Ungerer, Guido Baltes University of Southern Denmark, Alsion 2, 6400 Sønderborg, Denmark fgiones@mci.sdu.dk HTWG Konstanz, Brauneggerstraße 55, 78462 Konstanz, Germany, Christina.Ungerer@htwg-konstanz.de HTWG Konstanz, Brauneggerstraße 55, 78462 Konstanz, Germany, guido.baltes@cetim.org Abstract What drives entrepreneurial action to create a lasting impact? The creation of new ventures that aim at having an impact beyond their financial performance face additional challenges: achieving economic sustainability and at the same time addressing social or environmental issues (Dean & McMullen 2007). These so-called hybrid organizations try to be congruent with their blended values, despite being under external pressure in the process of maturing the new venture (Mcmullen & Warnick 2016). This research explores not only the initial motivations of the entrepreneur as potential influence on the ventures’ blended values, but also the source of finance. A dataset of 4,125 early-stage ventures (Entrepreneurship Database Program; Emory University) has been explored to gain insights into how entrepreneurs' motives and external financing sources could influence on the impact dimensions being addressed. Social motives were found to go along with social impact targets. The results seem to support a resource dependence perspective (Drees & Heugens 2013): the more earlystage ventures rely on philanthropic support as an external funding source, the stronger they appear oriented towards social or environmental impact dimensions – thus they may have been willing to adapt their initial goals to match with different donors’ expectations. In the case of social impact ambitions, increasing profit margin targets and venture age have a negative effect on the prevalence of blended values. The research results hold implications for entrepreneurs and institutions interested in promoting new ventures with blended values. Keywords: venture creation, hybrid organizations, blended values, social impact, environmental impact, entrepreneurship. 1 Summary Version – email authors for further details – this is work in progress References: Alsos, G.A. et al., 2016. Entrepreneurs’ social identity and the preference of causal and effectual behaviours in start-up processes. Entrepreneurship & Regional Development, (April), pp.1–25. Battilana, J. & Dorado, S., 2010. Building Sustainable Hybrid Organizations: The Case of Commercial Microfinance Organizations. Academy of Management Journal, 53(6), pp.1419–1440. Baum, J.R. & Locke, E.A., 2004. The relationship of entrepreneurial traits, skill, and motivation to subsequent venture growth. The Journal of Applied Psychology, 89(4), pp.587–98. de Bettignies, J.-E., 2008. Financing the Entrepreneurial Venture. Management Science, 54(1), pp.151–166. Brush, C.G., Manolova, T.S. & Edelman, L.F., 2008. Properties of emerging organizations: An empirical test. Journal of Business Venturing, 23(5), pp.547–566. Bryant, P.T., 2012. Imprinting by Design: The Microfoundations of Entrepreneurial Adaptation. Entrepreneurship: Theory and Practice, pp.1081–1103. Carr, J.C. et al., 2010. A study of the moderating effects of firm age at internationalization on firm survival and short-term growth. Strategic Entrepreneurship Journal, 4(2), pp.183–192. Clegg, S., 2010. The State, Power, and Agency: Missing in Action in Institutional Theory? Journal of Management Inquiry, 19(1), pp.4–13. De Clercq, D. et al., 2014. Unpacking the Goal Congruence–Organizational Deviance Relationship: The Roles of Work Engagement and Emotional Intelligence. Journal of Business Ethics, 124(4), pp.695–711. Davidsson, P. & Honig, B., 2003. The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18(3), pp.301–331. Dean, T.J. & McMullen, J.S., 2007. Toward a theory of sustainable entrepreneurship: Reducing environmental degradation through entrepreneurial action. Journal of Business Venturing, 22(1), pp.50–76. Drees, J.M. & Heugens, P.P.M.A.R., 2013. Synthesizing and Extending Resource Dependence Theory: A Meta-Analysis. Journal of Management, 39(February), pp.1666–1698. Fauchart, E. & Gruber, M., 2011. Darwinians, Communitarians, and Missionaries: The Role of Founder Identity in Entrepreneurship. Academy of Management Journal, 54(5), pp.935–957. Gielnik, M.M. et al., 2014. A temporal analysis of how entrepreneurial goal intentions, positive fantasies, and action planning affect starting a new venture and when the effects wear off. Journal of Business Venturing, 29(6), pp.755–772. Gielnik, M.M. et al., 2015. “I Put in Effort, Therefore I Am Passionate”: Investigating the Path from Effort to Passion in Entrepreneurship. Academy of Management Journal, 58(4), pp.1012–1031. Glynn, M.A., 2000. When Cymbals Become Symbols: Conflict Over Organizational Identity Within a Symphony Orchestra. Organization Science, 11(3), pp.285–298. Hechavarria, D.M., Renko, M. & Matthews, C.H., 2012. The nascent entrepreneurship hub: goals, entrepreneurial self-efficacy and start-up outcomes. Small Business Economics, 39(3), pp.685– 2 Summary Version – email authors for further details – this is work in progress 701. Hoetker, G., 2007. The use of logit and probit models in strategic management research: Critical issues. Strategic Management Journal, 28(4), pp.331–343. Jackson, E.T., 2013. Interrogating the theory of change: evaluating impact investing where it matters most. Journal of Sustainable Finance & Interrogating, 3(2), pp.95–110. Lawrence, T.B. & Suddaby, R., 2006. Institutions and Institutional Work 2nd Editio., London: Sage Publications Ltd. Mathias, B.D., Williams, D.W. & Smith, A.R., 2015. Entrepreneurial inception: The role of imprinting in entrepreneurial action. Journal of Business Venturing, 30(1), pp.11–28. Mcmullen, J.S. & Warnick, B.J., 2016. Should We Require Every New Venture to Be a Hybrid Organization? Journal of Management Studies, 53(4), pp.630–662. Naldi, L. & Davidsson, P., 2014. Entrepreneurial growth: The role of international knowledge acquisition as moderated by firm age. Journal of Business Venturing, 29(5), pp.687–703. Renko, M., Kroeck, K.G. & Bullough, A., 2012. Expectancy theory and nascent entrepreneurship. Small Business Economics, 39(3), pp.667–684. Shepherd, D. a., 2015. Party On! A call for entrepreneurship research that is more interactive, activity based, cognitively hot, compassionate, and prosocial. Journal of Business Venturing, 30(4), pp.489–507. Simsek, Z., Fox, B.C. & Heavey, C., 2015. “What’s Past Is Prologue”: A Framework, Review, and Future Directions for Organizational Research on Imprinting. Journal of Management, 41(1), pp.288– 317. SocialEnterpriseGoizueta, 2016. The Entrepreneurship Database Program at Emory University, Atlanta, US. Steffens, P., Davidsson, P. & Fitzsimmons, J., 2009. Performance Configurations Over Time: Implications for Growth- and Profit-Oriented Strategies. Entrepreneurship Theory and Practice, 33(1), pp.125–148. York, J.G. & Venkataraman, S., 2010. The entrepreneur-environment nexus: Uncertainty, innovation, and allocation. Journal of Business Venturing, 25(5), pp.449–463. Zahra, S.A. & Wright, M., 2016. Understanding the Social Role of Entrepreneurship. Journal of Management Studies, 53(4), pp.610–629. 3 View publication stats

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On the Factors Influencing New Ventures' Blended Values