The Origin and Evolution of New Businesses

by Amar V. Bhide

Overview

What is this mysterious activity we call entrepreneurship? Does success require special traits and skills or just luck? Can large companies follow their example? What role does venture capital play? In a field dominated by anecdote and folklore, this landmark study integrates more than ten years of intensive research and modern theories of business and economics. The result is a comprehensive framework for understanding entrepreneurship that provides new and penetrating insights. Examining hundreds of successful ventures, the author finds that the typical business has humble, improvised origins. Well-planned start-ups, backed by substantial venture capital, are exceptional. Entrepreneurs like Bill Gates and Sam Walton initially pursue small, uncertain opportunities, without much capital, market research, or breakthrough technologies. Coping with ambiguity and surprises, face-to-face selling, and making do with second-tier employees is more important than foresight, deal-making, or recruiting top-notch teams. Transforming improvised start-ups into noteworthy enterprises requires a radical shift, from "opportunistic adaptation" in niche markets to the pursuit of ambitious strategies. This requires traits such as ambition and risk-taking that are initially unimportant. Mature corporations have to pursue entrepreneurial activity in a much more disciplined way. Companies like Intel and Merck focus their resources on large-scale initiatives that scrappy entrepreneurs cannot undertake. Their success requires carefully chosen bets, meticulous planning, and the smooth coordination of many employees rather than the talents of a driven few. This clearly and concisely written book is essential for anyone who wants to start a business, for the entrepreneur or executive who wants to grow a company, and for the scholar who wants to understand this crucial economic activity.

Product Details

ISBN-13:	9780199883578
Publisher:	Oxford University Press
Publication date:	10/16/2003
Sold by:	Barnes & Noble
Format:	eBook
File size:	6 MB

About the Author

Amar Bhide, an associate professor on leave from Harvard Business School, is teaching at the University of Chicago. A former consultant at McKinsey & Company and proprietary trader at E.F. Hutton, Bhide received a doctorate and an M.B.A. from the Harvard Business School, where he was a Baker Scholar, and a B.Tech. from the Indian Institute of Technology. He has written eight Harvard Business Review articles, papers on corporate governance in the Journal of Financial Economics and the Journal of Applied Corporate Finance, and the book Of Politics and Economic Reality.

Table of Contents

 Preface                                                                                    ix

 Acknowledgments                                                                           xix
 
 I. The Nature of Promising Start-ups                                                       25   
	 Endowments and Opportunities                                                         29   
	 Planning vs. Opportunistic Adaptation                                                53   
	 Securing Resources                                                                   69   
	 Distinctive Qualities                                                                90   
	 Corporate Initiatives                                                               114   
	 VC-Backed Start-ups                                                                 141   
	 Revolutionary Ventures                                                              166   
	 Summary and Generalizations                                                         196
 
 II. The Evolution of Fledgling Businesses                                                 207   
	 Missing Attributes                                                                  213   
	 Existing Theories of Models                                                         238   
	 Critical Tasks                                                                      260   
	 Exceptional Qualities                                                               290
 
 III. Societal Implications                                                                317   
	 Reexamining Schumpeter                                                              319   
	 Facilitating Conditions                                                             338
 
 Appendix 1: Background Information: 1989 Inc. 500 Study                                   371 
 
 Appendix 2: Partial List of Student Papers Written on Successful Entrepreneurs            376  

 Notes                                                                                     381 

 References                                                                                387 

 Index                                                                                     397 

Editorial Reviews

The entrepreneurial function has long been overlooked both by economists and business theorists, though courses in entrepreneurship are increasingly popular in business schools. Bhid (Harvard Business Sch.) draws on both of those disciplines for theory, which he then extends through the analysis of data from 100 interviews with leaders of high-growth companies. This groundbreaking work shows the complementary roles held by innovative startup companies in areas with high uncertainty and little financial investment and by more established companies, which focus on large-scale projects with more certain payoffs. The characteristics of promising startups and their founders are carefully outlined and contrasted with those of more established firms, and Bhid explains why so few firms make the transition from successful startup to ongoing large enterprise. Offering a wealth of avenues for future research as well as insights for potential entrepreneurs, this book is sure to be cited for years to come.--A.J. Sobczak, Covina, CA Copyright 1999 Cahners Business Information.

Library Journal

"After this impressive study reviews the difficulties and risks involved in starting new businesses, it provides well selected examples of both successes and failures. Bhide's description and analyses of the continuing evolution of growth is placed in a broader historical setting, one that is related to more general economic and sociological analyses and theories. The book should be required reading for entrepreneurs at all stages in the development of their enterprises."— Alfred D. Chandler, Jr., Isador Straus Professor of Business History, Emeritus Harvard Business School "Required reading for entrepreneurs at all stages in the development of their enterprises."—Alfred Chandler, Harvard Business School

"With the analytic rigor of a scholar and the practical insight of a savvy investor, Amar Bhide explores the most important aspects of entrepreneurship: how and why some businesses prosper and evolve while others atrophy. And unlike most research on entrepreneurs, Bhide explains how what's good for small business is good for big business and good for America."—Richard F. Cavanagh, President and CEO, The Conference Board

"Anyone who wants to start or grow a business should read this book. It combines rigorous analysis with data and field research on hundreds of new ventures. As a third generation entrepreneur, I found Bhide has accurately captured the challenges entrepreneurs face and their free-wheeling strategies for success."— Dan Bricklin, Co-creator of VisiCalc, Co-founder of Software Arts, Software Garden and Trellix

"I cannot say enough about The Origin and Evolution of New Businesses. It is, in my estimation, the single most significant contribution to our understanding of entrepreneurship to date. It illuminates what lies at the very heart of capitalism itself—the process by which men and women transform human capital (daring, imagination, resourcefulness) into financial capital (wealth). The only negative thing I have to say about this remarkable book is, 'damn, I wish I had written it myself.'—George Gendron, Editor in Chief, Inc. Magazine

"A good deal of what Mr. Bhide says is contentious. But the strength of his book is that it hands us large quantities of empirical and awkward fact. Any future theorizing about the role and nature of the entrepreneur must take it into account."—Financial Times

"This groundbreaking work shows the complementary roles held by innovative startup companies in areas with high uncertainty and little financial investment and by more established companies, which focus on large-scale projects with more certain payoffs....Offering a wealth of avenues for future research as well as insights for potential entrepreneurs, this book is sure to be cited for years to come."—Library Journal

From the Publisher