New Venture Knowledge Appropriation and Regional Sustainability of Entrepreneurship

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This presentation delivers initial results from an agent-based computer simulation of new venture formation. We examine the effects of knowledge flows and institutional mediation of these flows on the …

This presentation delivers initial results from an agent-based computer simulation of new venture formation. We examine the effects of knowledge flows and institutional mediation of these flows on the regional level of new venture formation and survival.

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  • 1. new venture knowledgeappropriation and sustainabilityof regional entrepreneurialactivityMike ProvanceOld Dominion University17 Feb 2011 © Mike Provance and Elias Carayannis, 2010-2011
  • 2. New ventures and regional sustainability INTRODUCTION 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 2
  • 3. New ventures and regional sustainability INTRODUCTION Focus on the sustainability of entrepreneurship in regions FORMATION THRESHOLD A   B   ·∙  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 3
  • 4. New ventures and regional sustainability SIMULATION DESIGN (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 4
  • 5. New ventures and regional sustainability SIMULATION DESIGN S TA G E 1 ! S TA G E 2 ! 5
  • 6. STAGE 1 RESULTS 6
  • 7. New ventures and regional sustainability SIMULATION STAGE 1 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 7
  • 8. New ventures and regional sustainability 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 8
  • 9. New ventures and regional sustainability STAGE 1 RESULTS 9
  • 10. New ventures and regional sustainability STAGE 1 RESULTS 10
  • 11. New ventures and regional sustainability STAGE 1 RESULTS 11
  • 12. New ventures and regional sustainability 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 12
  • 13. STAGE 2 RESULTS 13
  • 14. New ventures and regional sustainability SIMULATION STAGE 2 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 14
  • 15. New ventures and regional sustainability STAGE 2 RESULTS Prob [New Venture Formation] Cum. New Venture Formation Level 15
  • 16. New ventures and regional sustainability STAGE 2 RESULTSCumulative # of!New Ventures! Prob [New! Venture ! Formation]! 16
  • 17. New ventures and regional sustainability STAGE 2 RESULTS 17
  • 18. New ventures and regional sustainability WHAT DID WE LEARN? 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 18
  • 19. THANK YOU. 19