Description
During this brief illustration in relation to a conceptual framework for describing the phenomenon of new venture creation.
A Conceptual Framework for Describing the Phenomenon of New Venture Creation
Author(s): William B. Gartner
Source: The Academy of Management Review, Vol. 10, No. 4 (Oct., 1985), pp. 696-706
Published by: Academy of Management
Stable URL:http://www.jstor.org/stable/258039 .
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' Academy of Management Review, 1985, Vol. 10, No. 4, 696-706.
A Conceptual Framework for Describing
th e Ph enomenon of New Venture Creation
WILLIAM B. GARTNER
Georgetown University
A review of th e entrepreneursh ip literature suggests th at differences
among entrepreneurs and among th eir ventures are as great as th e
variation between entrepreneurs and nonentrepreneurs and between
new firms and establish ed firms. A frameworkfor describing new
venture creation integrates four major perspectives in entrepre-
neursh ip: ch aracteristics of th e individuals) wh o start th e venture,
th e organization wh ich th ey create, th e environment surrounding th e
new venture, and th e process by wh ich th e new venture is started.
Th e major th rust of most entrepreneursh ip
research h as been to prove th at entrepreneurs are
different from nonentrepreneurs (Brockh aus,
1980a, 1980b; Carland, Hoy, Boulton, & Carland,
1984; Collins & Moore, 1964; DeCarlo & Lyons,
1979; Hornaday & Aboud, 1971; Howell, 1972;
Komives, 1972; Litzinger, 1965; McClelland,
1961; McClelland & Winter, 1969; Palmer, 1971;
Sch rier, 1975; Sh apero, 1975) and th at entrepre-
neurial firms are different from nonentrepre-
neurial firms (Collins & Moore, 1970; Cooper,
1979; Smith , 1967; Th orne & Ball, 1981). Th e
basic assumption underlying th is research is th at
all entrepreneurs and th eir new ventures are
much th e same. Th e present paper suggests th at
th e differences among entrepreneurs and among
th eir ventures are much greater th an one migh t
expect; in fact, th e diversity may be larger th an
th e differences between entrepreneurs and non-
entrepreneurs and between entrepreneurial firms
and nonentrepreneurial firms. Once th e diver-
sity among entrepreneurs and th eir ventures is
recognized, th e necessity for finding a way to
classify th em becomes apparent. Groups sh aring
similar ch aracteristics must exist with in th e uni-
verse of entrepreneurs and th eir ventures. How
are th ese groups revealed? Many different ch arac-
teristics h ave been employed in past research to
describe entrepreneurs and th eir ventures. Do th e
ch aracteristics th emselves fall into groups? In
oth er words, does one subset of ch aracteristics
describe a single aspect of new venture creation,
such as th e environment surrounding th e new
venture, or th e features of th e organization th at
results?
Th is paper attempts to organize th e many vari-
ables th at h ave been used in past research to
describe entrepreneurs and th eir ventures into a
compreh ensive framework. Far from being reduc-
tive, th is new view of th e entrepreneursh ip litera-
ture sh ould provide valuable insigh ts into th e
process of new venture creation by sh owing it to
be a complex and multidimensional ph e-
nomenon. Once a clear retrospective analysis of
th e literature is provided, future research can pro-
ceed on more solid footing. Instead of many dif-
ferent research ers palpating different parts of th e
eleph ant and reach ing reductive conclusions, at
least all will know th e name, if not th e nature, of
th e beast with wh ich th ey are dealing.
Much past research h as been unidimensional,
focusing on a single aspect of new venture crea-
tion, and its main purpose h as been to sh ow h ow
entrepreneurs or th eir firms differ from nonen-
trepreneurs or nonentrepreneurial firms. (In fact,
it migh t be said th at unidimensional research goes
Th e research leading to th is paper was supported in part by
a grant from th e National Science Foundation and is based
on th e auth or's doctoral dissertation. Additional support was
provided by th e Center for Entrepreneurial Studies, Univer-
sity of Virginia.
Requests forreprints sh ould be sent to William B. Gartner,
Center forEntrepreneursh ip Studies, Sch ool of Business Ad-
ministration, Georgetown University, Wash ington, D.C. 20057.
696
h and in h and with th e attitude th at all entrepre-
neurs and th eir firms are alike, th e task of th e
unidimensional research being to prove h ow all
th ings entrepreneurial differ from all th ings
nonentrepreneurial.) It h as been consistently
pointed out, h owever, in reviews of literature on
entrepreneurs, for example, (Brockh aus, 1982;
Glueck & Mescon, 1980; McCain & Smith , 1981)
th at variables th at are assumed to differentiate
entrepreneurs from nonentrepreneurs (managers,
for instance) frequently do not bear up under
close scrutiny. Yet th e search for th ese elusive
variables continues, and entrepreneurs and pro-
spective entrepreneurs are subjected to batteries
of psych ological tests in attempts to isolate th e
single spring th at makes th em tick differently
from oth ers. As with oth er aspects of new ven-
ture creation, attempts are made to isolate key
variables th at separate entrepreneurial situations
from nonentrepreneurial ones. Pennings (1980,
1982a, 1982b) h as explored environments th at
support new venture creation; Van de Ven (1980)
and Kimberly (1979) h ave focused on th e pro-
cess of venture creation.
Th is search for key variables is a motivation
for research only if th e task of entrepreneurial
research is taken to be th e distinction of entrepre-
neurs and th ings entrepreneurial from nonentre-
preneurs and nonentrepreneurial situations. If a
much different perspective is taken, th e perspec-
tive th at th ere are many different kinds of entre-
preneur and many ways to be one and th at th e
firms th ey create vary enormously as do th e envi-
ronments th ey create th em in, th en th e burden
sh ifts. How is each new venture creation differ-
ent from anoth er? Research ers need to th ink in
terms of a combination of variables th at make up
each new venture creation (Van de Ven, Hudson,
& Sch roeder, 1984). Th e creation of a new ven-
ture is a multidimensional ph enomenon; each
variable describes only a single dimension of th e
ph enomenon and cannot be taken alone. Th ere
is a growing awareness th at th e process of start-
ing a business is not a single well-worn route
march ed along again and again by identical entre-
preneurs (Hartman, 1983). New venture creation
is a complex ph enomenon: entrepreneurs and
th eir firms vary widely; th e actions th ey take or
do not take and th e environments th ey operate in
and respond to are equally diverse
-
and all th ese
elements form complex and unique combinations
in th e creation of each new venture. It is not
enough for research ers to seek out and focus on
some concept of th e "average" entrepreneur and
th e "typical" venture creation. New organiza-
tional forms evolve th rough variation, and th is
variation in new venture creation needs to be
studied (Aldrich , 1979; Hannan & Freeman, 1977;
Pfeffer & Salancik, 1978; Weick, 1979). Th is insis-
tence on variation can be seen, for example, in
Vesper (1979), wh o posits 11 different kinds of
entrepreneur, and in a recent study by Cooper
and Dunkelberg (1981), wh ich reveals th at entre-
preneurs in certain industries can be very differ-
ent from th ose in oth er industries.
Once th e variation and complexity in new ven-
ture creation is recognized, it th en is necessary
to find a framework for systematically discover-
ing and evaluating th e similarities and differences
among new ventures (McKelvey, 1982). Once it
is no longer assumed th at all entrepreneurs and
th eir ventures present a h omogeneous population,
th en oth er h omogeneous subsets with in th e entre-
preneurial universe must be sough t out in order
th at entrepreneurial research can produce mean-
ingful results. A primary value of th e framework
for describing new venture creation presented
h ere is th at it provides a systematic means of
comparing and contrasting complex ventures; it
provides a way to conceptualize variation and
complexity.
A Framework for Describing
New Venture Creation
Definitions of key words such as entrepreneur
are often various and always a problem in th e
study of entrepreneursh ip (Brockh aus, 1980b;
Komives, 1969; Long, 1983). Because th e entre-
preneur is only one dimension of th is framework,
it seems more important in th is paper to define
th e term "new venture creation." Such a defini-
tion can be outlined h ere with less trepidation, if
only because th ere is less precedent.
New venture creation is th e organizing (in th e
Weickian sense) of new organizations. "To orga-
nize is to assemble ongoing interdependent ac-
tions into sensible sequences th at generate sensi-
ble outcomes" (Weick, 1979, p. 3). Th e defini-
tion of new venture creation is synonymous with
697
th e definition of th e new organization developed
by th e Strategic Planning Institute (1978, p. 1-2):
a new business venture launch ed as one of th e
following:
1. an independent entity
2. a new profit center with in a company wh ich
h as oth er establish ed businesses, or
3. a joint venture wh ich satisfies th e following
criteria:
1. Its founders must acquire expertise in pro-
ducts, process, market and/or tech nology.
2. Results are expected beyond th e year in
wh ich th e investment is made.
3. It is considered a new market entrant by its
competitors.
4. It is regarded as a new source of supply by its
potential customers.
Th e importance of th is definition sh ould not be
overlooked, because it recognizes th e multidi-
mensional aspects of new venture creation. First,
it emph asizes th at individuals with expertise are
a key element of th e new venture. At th e same
time th at it recognizes th e new venture as an
organizational entity, it stresses th at th e new ven-
ture is not instantaneously produced, but evolves
over time (beyond a year). Th e new venture is
seen furth er with in th e context of its environ-
ment: it is forced to seek out resources, and it
competes in th e market place. All th ese aspects
of th e new venture must be kept in mind if it is to
be adequately described and classified.
Figure 1 presents a framework for describing
th e creation of a new venture across four dimen-
sions: (a) individual(s)-th e person(s) involved in
starting a new organization; (b) organization-th e
kind of firm th at is started; (c) environment-th e
situation surrounding and influencing th e new
organization; and (d) new venture process-th e
actions undertaken by th e individuals) to start
th e venture.
Any new venture is a gestalt (Miller, 1981) of
variables from th e four dimensions. No new ven-
ture creation can be compreh ensively described,
nor can its complexity be adequately accounted
for, unless all of its four dimensions are investi-
gated and an attempt is made to discover h ow
variables from each dimension interact with vari-
ables from oth er dimensions.
Th is framework is th e first to combine th e four
dimensions of venture creation, th ough oth er
research ers h ave sough t to combine two or more
of th e dimensions. Th is "th inking across dimen-
sions" is especially apparent in th e workof th ose
th eorists and research ers wh o h ave developed
entrepreneurial classification sch emes. Classifi-
cations of entrepreneurs th emselves are often
based on two dimensions: individual ch aracteris-
tics plus new venture process considerations
th e word often used is "style." Danh off (1949)
based h is sch eme on th e entrepreneur's open-
ness to innovation; Cole (1959) on th e soph istica-
tion of th e entrepreneur's decision making tools;
and Dailey (1971) according to bureaucratic or
entrepreneurial style. Smith (1967) divided entre-
preneurs by a stylistic orientation
-
craftsman or
opportunistic. Filley and Aldag (1980) used
management orientation. Vesper (1979, 1980) in
two similar classifications differentiated among
entrepreneurs by th e activities involved in busi-
ness formation and operation, and in anoth er
sch eme (1980) by competitive strategy. In Coo-
per (1979) entrepreneurs are linked to particular
environments, and, as cited previously, Cooper
and Dunkelberg's (1981) study match es different
entrepreneurs and th eir ch aracteristics to th e
types of firms th ey are likely to start. In Vesper's
(1979) classification th e entrepreneur's type of
firm is also a factor, as it is in several oth er
classification studies (Braden, 1977; Filley &
Aldag, 1980; Smith , 1967). Recently, Van de Ven
et al.'s (1984) empirical study examined educa-
tional software firms on th e basis of th ree dimen-
INDIVIDUAL(S)
ENVIRONMENT
_ ORGANIZATION
PROCESS
Figure 1. A framework for describing new venture creation.
698
sions: entrepreneurial-background ch aracter-
istics and psych ological attributes of th e found-
ing entrepreneurs; organizational-planning and
organizational activities undertaken before and
after company startup; and ecological-support
and resources made available to influence th e
development of th e industry. Th ese classifica-
tion sch emes and frameworks are ways of step-
ping backto get an overall picture, a process like
model-building, wh ich involves integration and
synth esis.
Individual(s)
Wh eth er an entrepreneur is viewed as a "cap-
tain of industry," a h ard-h eaded riskbearer (Mill,
1848), risk taker (Palmer, 1971) or a "rapacious
riskavoider" (Webster, 1976); wh eth er h e merely
metamorph oses into an entrepreneur at certain
moments and is someth ing else th e rest of th e
time (Danh off, 1949), or wh eth er h is need for
ach ievement (McClelland, 1961) and capacity for
innovation (Sch umpeter, 1934) are always tick-
ing away; wh eth er h e is a "displaced person"
(Sh apero, 1975), someth ing close to a juvenile
delinquent (Gould, 1969), or a "man apart" (Liles,
1974) with an absolutely clear-h eaded (veridical)
perception of reality (Sch rage, 1965), an aberrant
"artist" with an "innate sense of impending
ch ange" (Hill, 1982); or wh eth er h e is, indeed,
th at completely political animal, a community
builder (Sch ell & Davig, 1981), th e entrepreneur
is overwh elmingly perceived to be different in
important ways from th e nonentrepreneur, and
many research ers h ave believed th ese differences
to lie in th e background and personality of th e
entrepreneur.
One often pursued avenue h as been th e attempt
to develop a psych ological profile of th e entrepre-
neur and to measure such psych ological ch arac-
teristics as need for ach ievement (DeCarlo &
Lyons, 1979; Hornaday & Aboud, 1971; McCle-
lland, 1961; McClelland & Winter, 1969;
Sch wartz, 1976). However, oth er research ers h ave
not found need for ach ievement useful in describ-
ing entrepreneurs (Brockh aus, 1980b; Litzinger,
1965; Sch rage, 1965); still oth ers h ave questioned
th e value and validity of using psych ological
ch aracteristics of any kind to describe entre-
preneurs (Brockh aus, 1982; Glueck& Mescon,
1980; Jenks, 1965; Kilby, 1971; McCain & Smith ,
1981; Van de Ven, 1980). However, th e following
psych ological ch aracteristics h ave been used in
many studies and may h ave some validity in dif-
ferentiating among types of entrepreneurs (Brock-
h aus, 1982):
1. Need for ach ievement
2. Locus of control
3. Risktaking propensity
Some research ers h ave found it fruitful to look
at th e entrepreneur's background, experience, and
attitudes. Some individual ch aracteristics th at
may be of value in describing entrepreneurs are:
1. Job satisfaction (Collins & Moore, 1970; Kom-
ives, 1972)
2. Previous workexperience (Cooper, 1970; La-
mont, 1972; Susbauer, 1972)
3. Entrepreneurial parents (Collins & Moore, 1970;
Roberts & Wainer, 1968; Sch rier, 1975; Secrest,
1975; Sh apero, 1972; Susbauer, 1972)
4. Age (Komives, 1972; Liles, 1974; Roberts &
Wainer, 1968; Secrest, 1975; Th orne & Ball,
1981)
5. Education (Brockh aus & Nord, 1979; Collins &
Moore, 1964; Howell, 1972; Roberts, 1969;
Susbauer, 1969)
Process
In 1949 Danh off wrote, "Entrepreneursh ip is
an activity or function and not a specific individ-
ual or occupation . .. th e specific personal entre-
preneur is an unrealistic abstraction" (p. 21).
Oth er th eorists h ave pursued th is idea of func-
tion and h ave tried to differentiate th e entre-
preneurial function from oth er more routine
functions such as th e managerial function (Bau-
mol, 1968; Cole, 1965; Hartmann, 1959; Leiben-
stein, 1968; Sch umpeter, 1934). Th is "dynamic"
aspect of th e entrepreneur h as been acknowl-
edged in th e work of eigh t research ers wh o h ave
enumerated certain actions th at an entrepreneur
performs in order to create a new venture. Except
for Peterson and Berger (1971), wh o described
th e entrepreneurial activities of record producers,
th ese studies were th eoretical, th at is, based on
general observation rath er th an systematic re-
search . Th e similarities in th eir views are sum-
marized h ere; six common beh aviors are listed
(th e order does not imply a sequence of actions):
1. Th e entrepreneur locates a business opportu-
nity (Cole, 1965; Kilby, 1971; Maidique, 1980;
Sch umpeter, 1934; Vesper, 1980).
2. Th e entrepreneur accumulates resources (Cole,
1965; Kilby, 1971; Leibenstein, 1968; Peterson &
Berger, 1971; Sch umpeter, 1934; Vesper, 1980).
699
3. Th e entrepreneur markets products and ser-
vices (Cole, 1965; Kilby, 1971; Leibenstein,
1968; Maidique, 1980; Peterson & Berger,
1971; Sch umpeter, 1934; Vesper, 1980).
4. Th e entrepreneur produces th e product (Kilby,
1971; Maidique, 1980; Peterson & Berger,
1971; Sch umpeter, 1934; Vesper, 1980).
5. Th e entrepreneur builds an organization (Cole,
1965; Kilby, 1971; Leibenstein, 1968; Sch um-
peter, 1934).
6. Th e entrepreneur responds to government and
society (Cole, 1965; Kilby, 1971).
Environment
Much of th e current concern (Peters & Water-
man, 1982) over h ow to design organizations th at
keep and encourage innovative individuals is an
indirect acknowledgment th at entrepreneurs do
not operate in vacuums
-
th ey respond to th eir
environments. Th e existence of h igh ly support-
ive regional entrepreneurial environments
(Cooper, 1970; Drah eim, 1972; Pennings, 1982b;
Susbauer, 1972)
-
including "incubator organi-
zations" -can, from one perspective, be said actu-
ally to create entrepreneurs. Th e idea of "push es"
and "pulls" from th e environment h as found its
way into many studies of entrepreneursh ip
(Sh apero & Sokol, 1982).
In organization th eory literature, two different
views of th e environment h ave been developed.
One perspective, environmental determinism,
sees th e environment as an outside set of condi-
tions to wh ich th e organization must adapt
(Aldrich , 1979; Aldrich & Pfeffer, 1976; Hannan
& Freeman, 1977). Th e oth er perspective, strate-
gic ch oice, sees th e environment as a "reality"
th at organizations create via th e selectivity of th eir
own perceptions (Ch ild, 1972; Starbuck, 1976;
Weick, 1979). In th e entrepreneursh ip literature,
both perspectives on th e environment h ave been
taken, In th e present paper th ose ch aracteristics
th at are viewed as relatively fixed conditions
imposed on th e new venture from with out are
called environmental variables. Variables over
wh ich th e organization h as more control (strategic
ch oice variables) are more readily viewed as ch ar-
acteristics of th e organization itself and are treated
as such .
In an overview of 17 research papers on envi-
ronmental variables th at influenced new venture
creation, Bruno and Tyebjee (1982) found 12 fac-
tors th at th ey judged stimulated entrepreneur-
sh ip:
1. Venture capital availability
2. Presence of experienced entrepreneurs
3. Tech nically skilled labor force
4. Accessibility of suppliers
5. Accessibility of customers or new markets
6. Governmental influences
7. Proximity of universities
8. Availability of land or facilities
9. Accessiblity of transportation
10. Attitude of th e area population
11. Availability of supporting services
12. Living conditions
Anoth er study of environmental influences on
new venture creation was Pennings' studies of
organization birth frequencies (1980, 1982a,
1982b). Pennings found th at organization birth
rates were h igh in areas with : h igh occupational
and industrial differentiation; h igh percentages
of recent immigrants in th e population; a large
industrial base; larger size urban areas; and avail-
ability of financial resources.
Anoth er field of research h as taken th e deter-
ministic perspective regarding th e environment
and new ventures: industrial economics. Oliver
Williamson (1975) explored th e process by wh ich
th e failure of markets to coordinate efficiently
th e production and distribution of goods and ser-
vices often resulted in th e start-up of organiza-
tions to coordinate th e production function
th rough administration. Porter (1980) focused on
th e competitive environment th at confronts firms
in a particular industry. Porter's work provides
five environmental influences on organizations:
barriers to entry, rivalry among existing com-
petitors, pressure from substitute products, bar-
gaining power of buyers, and bargaining power
of suppliers.
Organization
Despite a bold early attempt by Stauss (1944)
to direct th e focus away from th e entrepreneur
and toward h is created organization (by claiming,
somewh at tortuously, th at th e firm is th e en-
trepreneur), most subsequent studies of new ven-
ture creation h ave neglected to comment on or
even communicate certain ch aracteristics of th e
organizations on wh ich th ey focused. Th e as-
sumption beh ind th is seems to derive from two
oth er assumptions: (a) if all entrepreneurs are
virtually alike and (b) th ey all go th rough th e
same process to create th eir ventures, th en (c)
th e organizations th ey create must, like widgets,
not be of any interest in th emselves.
700
Many research samples in entrepreneursh ip
studies are selected, for example, with out regard
to type of firm (i.e., manufacturing, service, retail,
wh olesale). Of th e studies th at h ave indicated
th e type of firm, Smith (1967), Cooper (1970),
Collins and Moore (1970), Susbauer (1972), and
Braden (1977) studied manufacturing firms, and
most focused on h igh tech nology manufacturing
firms. Litzinger (1965) studied motel firms, and
Mescon and Montanari (1981) studied real estate
firms. However, research ers in th ese studies made
no attempts to compare th e type of firm studied
to oth er types of firm to determine wh at differ-
ence type of firm migh t make in th e process of
new venture creation. Cooper and Dunkelberg
(1981), Gartner (1982), and Van de Ven et al.
(1984) h ave begun to link type of firm across
oth er dimensions, such as entrepreneurial back-
ground and response to environment.
Th e presence of partners is anoth er firm ch ar-
acteristic suggested by Timmons, Smollen, and
Dingee (1977) as a vital factor in starting certain
types of firm, and some research h as mentioned
partners as a ch aracteristic of th e firms studied
(Cooper, 1970; DeCarlo & Lyons, 1979).
Strategic ch oice variables are treated h ere as
ch aracteristics of th e organization. Porter (1980)
identified th ree generic competitive strategies th at
firms may "ch oose": (a) overall cost leadersh ip,
(b) differentiation, and (c) focus. Vesper (1980)
identified 14 competitive entry wedges: th e new
product or service, parallel competition, franch ise
entry, geograph ical transfer, supply sh ortage, tap-
ping unutilized resources, customer contract,
becoming a second source, joint ventures, li-
censing, market relinquish ment, sell off of di-
vision, favored purch asing by government, and
governmental rule ch anges.
Conclusion
Listing each variable of new venture creation
under th e appropriate dimension of th e frame-
workillustrates th e potential for a h igh degree of
complexity in th e interaction of th ese variables
with in th e multidimensional ph enomenon of
venture creation (Figure 2).
Th e four dimensional conceptual framework
can be seen as a kaleidoscope, as an instrument
th rough wh ich to view th e enormously varying
patterns of new venture creation. Past attempts
to differentiate th e typical entrepreneur and h is/
h er typical creation from all nonentrepreneurs
and all nonnew ventures h ave, wh eth er inten-
tionally or not, advanced th e notion th at all entre-
preneurs are alike and all new venture creation
is th e same. However, th ere clearly is a wide varia-
tion in th e kinds of new ventures th at are started.
For example, are th ere similarities between th e
creation of a waterbed store by a 20-year old col-
lege student and th e creation of a personal com-
puter company by th ree engineers? Are th e differ-
ences between th em more important th an th e
similarities? Wh at is th e value of comparing th e
creation of a pet store by two unemployed ph ysi-
cal th erapists to th e creation of a 5,000-acre busi-
ness parkby four real estate developers? Th e goal
is not to smooth over any differences th at migh t
exist among th ese new ventures or to th row th ese
very different individuals into th e same pot in
order to extract th e typical qualities of th e typi-
cal entrepreneur. Th e goal is to identify th e spe-
cific variables th at describe h ow each new ven-
ture was created, in order th at meaningful con-
trasts and comparisons among new ventures can
be made.
First must come careful description with an
eye to variation. Th e search for key variables, for
general principles, for universally applicable laws
of entrepreneursh ip th at h as ch aracterized much
of th e entrepreneursh ip literature betrays an
impatience with th e slow meth odical process of
description. Attention to careful observation and
description is th e basis of good scientific research
(McKelvey, 1982). In wh at does all th is careful
description of new ventures result? A collection
of uniquely described ventures, each different
from all th e oth ers? Once good description is
ach ieved, th en good comparisons and contrasts
can be made, and subsets of similar ventures can
be establish ed. Th ese h omogeneous populations
are needed before any general rules or th eories of
new venture creation can be postulated. Th e lack
of such h omogeneous samples in th e past h as led
to conflicts in th e results of research studies.
Th e conceptual framework presented h ere pro-
vides a way of analyzing past research studies.
Each study can be broken down into th e types of
individuals, organizations, environments, and
processes th at were investigated. One way in
wh ich th e frameworkcan be useful is in identify-
701
INDIVIDUAL(S)
Need for
ach ievement
Locus of control
Risktaking propensity
Job satisfaction
Previous work
experience
Entrepreneurial parents
Age
Education
ENVIRONMENT - ORGANIZATION
Venture capital availability Overall cost leadersh ip
Presence of experienced entrepreneurs Differentiation
Tech nically skilled labor force Focus
Accessibility of suppliers Th e new product or service
Accessibility of customers or new markets Parallel competition
Governmental influences Franch ise entry
Proximity of universities Geograph ical transfer
Availability of land or facilities Supply sh ortage
Accessibility of transportation Tapping unutilized resources
Attitude of th e area population Customer contract
Availability of supporting services Becoming a second source
Living conditions Joint ventures
High occupational and industrial Licensing
differentiation Market relinquish ment
High percentages of recent Sell off of division
immigrants in th e population Favored purch asing by government
Large industrial base Governmental rule ch anges
Largersize urban areas
Availability of financial resources
Barriers to entry
Rivalry among existing competitors
Pressure from substitute products
Bargaining power of buyers
Bargaining power of suppliers
PROCESS
Th e entrepreneur locates a business opportunity
Th e entrepreneur accumulates resources
Th e entrepreneur markets products and services
Th e entrepreneur produces th e product
Th e entrepreneur builds an organization
Th e entrepreneur responds to government and society
Figure 2. Variables in new venture creation.
702
ing th ose aspects of new venture creation neg-
lected by a particular study. New research may
th en be designed to account for th ese lacunae.
For example, Brockh aus defines h is sample of
entrepreneurs as:
Individuals wh o with in th ree month s prior to th e
study h ad ceased working for th eir employers and
at th e time of th e study owned as well as managed
business ventures.... Th e businesses wh ose own-
ers served as participants were selected from th e
listing of businesses licensed by St. Louis County,
Missouri during th e month s of August and Sep-
tember, 1975 (1980a, p. 39).
Alth ough Brockh aus, unlike oth er research ers,
attempts to close in on th e actual entrepreneurial
function by interviewing h is entrepreneurs
with in a few month s of th e creation of th eir
ventures, useful and necessary distinctions
among th e individuals and th eir new ventures
are not made. One is not sure wh at types of firms
were studied (retail, service, manufacturing, etc.)
or wh eth er th e St. Louis environment was likely
to influence certain types of individuals to create
certain types of firms. Is th e process of starting a
venture in St. Louis different, or is th e process
different for certain types of businesses or cer-
tain kinds of individuals? Accounting for type of
firm, environment, and process in th is study
would enh ance comparison among th e individu-
als in th e study and individuals in oth er studies.
In analyzing results of research studies, a focus
on differences in one of th e four dimensions
migh t explain conflicting results. For example,
studies such as Collins and Moore (1970) suggest
th at individuals wh o start firms are social misfits
wh o do not fit into most organizations. Yet oth er
studies such as Cooper (1970) suggest th at indi-
viduals wh o start successful firms are good team
players. On closer examination it is seen th at
Collins and Moore studied manufacturing firms
th at were more like job sh ops in th e 1950s, and
Cooper studied h igh tech nology firms in th e
1960s. High tech nology industries migh t require
more skills th an one individual would be likely
to h ave, necessitating th at individuals combine
th eir abilities in teams in order to start an organi-
zation successfully.
In addition to providing a means by wh ich past
research can be analyzed, th e framework outlines
a format for future research meth odologies and
for reporting such research . More careful atten-
tion must be paid to th e research sample. For
example, women entrepreneurs are a popular
research topic. If similarities are discovered
among women wh o start firms, are th ese similari-
ties a result of similar environments? Can dif-
ferences be attributed solely to psych ological or
background ch aracteristics? Wh at is th e value of
research results th at are based on such unex-
amined and possibly h eterogeneous sample pop-
ulations?
Even in a narrowly selected research sample,
th e framework migh t be useful in drawing th e
research er's attention to considerations inh erent
in each of th e four dimensions, in order th at con-
clusions regarding th e virtual sameness of all th e
members of th e sample may not be made too
h astily. For example, in a sample of new organi-
zations in th e micro-computer industry, a num-
ber of considerations migh t be made. Wh at is th e
variation among th e entrepreneurs in th eir work
backgrounds, education, age? How do competi-
tive strategies used by th ese new organizations
vary? Are th ere regional or oth er subenvironments
in th e industry th at cause variations in firms and
strategies? Wh at is th e variation in th e venture
creation process: do all individuals devote equal
time to financing th e organization, h iring per-
sonnel, marketing? Wh at differences exist be-
tween "new" and "old" firms in th is industry?
Th e brief review of th e literature provided ear-
lier is only a running start at a compreh ensive
analysis and evaluation of th e entrepreneursh ip
literature. For example, in a study of individuals
wh o start firms, wh o are th e individuals? Are th e
individuals in McClelland's samples (McCelland,
1961; McCelland & Winter, 1969) similar to th ose
in Brockh aus (1980a) or Sch rage (1965)? More
about th e similarities and differences with in and
among past research samples needs to be known.
Th ere are many dimensions and variables across
wh ich th ese samples may be compared.
Th e framework also points up th e importance
of interactions of variables among dimensions in
understanding new venture creation. How does
an individual's background influence th e type of
activities undertaken to start an organization?
Does th e marketing individual devote h is time to
marketing instead of manufacturing, and are th ere
some environments or firms th at require more
marketing? Is th e process of starting a retail store
703
similar to th at of starting a steel mill? Are entry
strategies used by new organizations in th e robot-
ics industry similar to th ose used in th e brewery
industry?
Th e frameworkfor describing new venture cre-
ation provides th e possibility of describing sub-
sets with in th e unwieldy set of all entrepreneurs
and all new ventures. Newly created ventures
th at display meaningful similarities across th e
four dimensions could be described and classi-
fied togeth er (Gartner, 1982). Significant general-
izations regarding some or all new venture cre-
ations migh t emerge, generalizations th at do not,
h owever, attempt to maskth e variation in new
venture creation.
Th is paper does not purport to answer specific
questions about h ow new ventures are started or
provide specific developmental models for new
venture creation. No claim is made th at th e frame-
workor th e list of variables is compreh ensive;
th e claim is only th at th e description of new ven-
tures needs to be more compreh ensive th an it is
at present. A great many more questions are asked
h ere th an are answered. However, th e paper pro-
vides a means of making a fundamental sh ift in
th e perspective on entrepreneursh ip: away from
viewing entrepreneurs and th eir ventures as an
unvarying, h omogeneous population, and to-
wards a recognition and appreciation of th e com-
plexity and variation th at abounds in th e ph e-
nomenon of new venture creation.
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706
doc_672111295.pdf
During this brief illustration in relation to a conceptual framework for describing the phenomenon of new venture creation.
A Conceptual Framework for Describing the Phenomenon of New Venture Creation
Author(s): William B. Gartner
Source: The Academy of Management Review, Vol. 10, No. 4 (Oct., 1985), pp. 696-706
Published by: Academy of Management
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' Academy of Management Review, 1985, Vol. 10, No. 4, 696-706.
A Conceptual Framework for Describing
th e Ph enomenon of New Venture Creation
WILLIAM B. GARTNER
Georgetown University
A review of th e entrepreneursh ip literature suggests th at differences
among entrepreneurs and among th eir ventures are as great as th e
variation between entrepreneurs and nonentrepreneurs and between
new firms and establish ed firms. A frameworkfor describing new
venture creation integrates four major perspectives in entrepre-
neursh ip: ch aracteristics of th e individuals) wh o start th e venture,
th e organization wh ich th ey create, th e environment surrounding th e
new venture, and th e process by wh ich th e new venture is started.
Th e major th rust of most entrepreneursh ip
research h as been to prove th at entrepreneurs are
different from nonentrepreneurs (Brockh aus,
1980a, 1980b; Carland, Hoy, Boulton, & Carland,
1984; Collins & Moore, 1964; DeCarlo & Lyons,
1979; Hornaday & Aboud, 1971; Howell, 1972;
Komives, 1972; Litzinger, 1965; McClelland,
1961; McClelland & Winter, 1969; Palmer, 1971;
Sch rier, 1975; Sh apero, 1975) and th at entrepre-
neurial firms are different from nonentrepre-
neurial firms (Collins & Moore, 1970; Cooper,
1979; Smith , 1967; Th orne & Ball, 1981). Th e
basic assumption underlying th is research is th at
all entrepreneurs and th eir new ventures are
much th e same. Th e present paper suggests th at
th e differences among entrepreneurs and among
th eir ventures are much greater th an one migh t
expect; in fact, th e diversity may be larger th an
th e differences between entrepreneurs and non-
entrepreneurs and between entrepreneurial firms
and nonentrepreneurial firms. Once th e diver-
sity among entrepreneurs and th eir ventures is
recognized, th e necessity for finding a way to
classify th em becomes apparent. Groups sh aring
similar ch aracteristics must exist with in th e uni-
verse of entrepreneurs and th eir ventures. How
are th ese groups revealed? Many different ch arac-
teristics h ave been employed in past research to
describe entrepreneurs and th eir ventures. Do th e
ch aracteristics th emselves fall into groups? In
oth er words, does one subset of ch aracteristics
describe a single aspect of new venture creation,
such as th e environment surrounding th e new
venture, or th e features of th e organization th at
results?
Th is paper attempts to organize th e many vari-
ables th at h ave been used in past research to
describe entrepreneurs and th eir ventures into a
compreh ensive framework. Far from being reduc-
tive, th is new view of th e entrepreneursh ip litera-
ture sh ould provide valuable insigh ts into th e
process of new venture creation by sh owing it to
be a complex and multidimensional ph e-
nomenon. Once a clear retrospective analysis of
th e literature is provided, future research can pro-
ceed on more solid footing. Instead of many dif-
ferent research ers palpating different parts of th e
eleph ant and reach ing reductive conclusions, at
least all will know th e name, if not th e nature, of
th e beast with wh ich th ey are dealing.
Much past research h as been unidimensional,
focusing on a single aspect of new venture crea-
tion, and its main purpose h as been to sh ow h ow
entrepreneurs or th eir firms differ from nonen-
trepreneurs or nonentrepreneurial firms. (In fact,
it migh t be said th at unidimensional research goes
Th e research leading to th is paper was supported in part by
a grant from th e National Science Foundation and is based
on th e auth or's doctoral dissertation. Additional support was
provided by th e Center for Entrepreneurial Studies, Univer-
sity of Virginia.
Requests forreprints sh ould be sent to William B. Gartner,
Center forEntrepreneursh ip Studies, Sch ool of Business Ad-
ministration, Georgetown University, Wash ington, D.C. 20057.
696
h and in h and with th e attitude th at all entrepre-
neurs and th eir firms are alike, th e task of th e
unidimensional research being to prove h ow all
th ings entrepreneurial differ from all th ings
nonentrepreneurial.) It h as been consistently
pointed out, h owever, in reviews of literature on
entrepreneurs, for example, (Brockh aus, 1982;
Glueck & Mescon, 1980; McCain & Smith , 1981)
th at variables th at are assumed to differentiate
entrepreneurs from nonentrepreneurs (managers,
for instance) frequently do not bear up under
close scrutiny. Yet th e search for th ese elusive
variables continues, and entrepreneurs and pro-
spective entrepreneurs are subjected to batteries
of psych ological tests in attempts to isolate th e
single spring th at makes th em tick differently
from oth ers. As with oth er aspects of new ven-
ture creation, attempts are made to isolate key
variables th at separate entrepreneurial situations
from nonentrepreneurial ones. Pennings (1980,
1982a, 1982b) h as explored environments th at
support new venture creation; Van de Ven (1980)
and Kimberly (1979) h ave focused on th e pro-
cess of venture creation.
Th is search for key variables is a motivation
for research only if th e task of entrepreneurial
research is taken to be th e distinction of entrepre-
neurs and th ings entrepreneurial from nonentre-
preneurs and nonentrepreneurial situations. If a
much different perspective is taken, th e perspec-
tive th at th ere are many different kinds of entre-
preneur and many ways to be one and th at th e
firms th ey create vary enormously as do th e envi-
ronments th ey create th em in, th en th e burden
sh ifts. How is each new venture creation differ-
ent from anoth er? Research ers need to th ink in
terms of a combination of variables th at make up
each new venture creation (Van de Ven, Hudson,
& Sch roeder, 1984). Th e creation of a new ven-
ture is a multidimensional ph enomenon; each
variable describes only a single dimension of th e
ph enomenon and cannot be taken alone. Th ere
is a growing awareness th at th e process of start-
ing a business is not a single well-worn route
march ed along again and again by identical entre-
preneurs (Hartman, 1983). New venture creation
is a complex ph enomenon: entrepreneurs and
th eir firms vary widely; th e actions th ey take or
do not take and th e environments th ey operate in
and respond to are equally diverse
-
and all th ese
elements form complex and unique combinations
in th e creation of each new venture. It is not
enough for research ers to seek out and focus on
some concept of th e "average" entrepreneur and
th e "typical" venture creation. New organiza-
tional forms evolve th rough variation, and th is
variation in new venture creation needs to be
studied (Aldrich , 1979; Hannan & Freeman, 1977;
Pfeffer & Salancik, 1978; Weick, 1979). Th is insis-
tence on variation can be seen, for example, in
Vesper (1979), wh o posits 11 different kinds of
entrepreneur, and in a recent study by Cooper
and Dunkelberg (1981), wh ich reveals th at entre-
preneurs in certain industries can be very differ-
ent from th ose in oth er industries.
Once th e variation and complexity in new ven-
ture creation is recognized, it th en is necessary
to find a framework for systematically discover-
ing and evaluating th e similarities and differences
among new ventures (McKelvey, 1982). Once it
is no longer assumed th at all entrepreneurs and
th eir ventures present a h omogeneous population,
th en oth er h omogeneous subsets with in th e entre-
preneurial universe must be sough t out in order
th at entrepreneurial research can produce mean-
ingful results. A primary value of th e framework
for describing new venture creation presented
h ere is th at it provides a systematic means of
comparing and contrasting complex ventures; it
provides a way to conceptualize variation and
complexity.
A Framework for Describing
New Venture Creation
Definitions of key words such as entrepreneur
are often various and always a problem in th e
study of entrepreneursh ip (Brockh aus, 1980b;
Komives, 1969; Long, 1983). Because th e entre-
preneur is only one dimension of th is framework,
it seems more important in th is paper to define
th e term "new venture creation." Such a defini-
tion can be outlined h ere with less trepidation, if
only because th ere is less precedent.
New venture creation is th e organizing (in th e
Weickian sense) of new organizations. "To orga-
nize is to assemble ongoing interdependent ac-
tions into sensible sequences th at generate sensi-
ble outcomes" (Weick, 1979, p. 3). Th e defini-
tion of new venture creation is synonymous with
697
th e definition of th e new organization developed
by th e Strategic Planning Institute (1978, p. 1-2):
a new business venture launch ed as one of th e
following:
1. an independent entity
2. a new profit center with in a company wh ich
h as oth er establish ed businesses, or
3. a joint venture wh ich satisfies th e following
criteria:
1. Its founders must acquire expertise in pro-
ducts, process, market and/or tech nology.
2. Results are expected beyond th e year in
wh ich th e investment is made.
3. It is considered a new market entrant by its
competitors.
4. It is regarded as a new source of supply by its
potential customers.
Th e importance of th is definition sh ould not be
overlooked, because it recognizes th e multidi-
mensional aspects of new venture creation. First,
it emph asizes th at individuals with expertise are
a key element of th e new venture. At th e same
time th at it recognizes th e new venture as an
organizational entity, it stresses th at th e new ven-
ture is not instantaneously produced, but evolves
over time (beyond a year). Th e new venture is
seen furth er with in th e context of its environ-
ment: it is forced to seek out resources, and it
competes in th e market place. All th ese aspects
of th e new venture must be kept in mind if it is to
be adequately described and classified.
Figure 1 presents a framework for describing
th e creation of a new venture across four dimen-
sions: (a) individual(s)-th e person(s) involved in
starting a new organization; (b) organization-th e
kind of firm th at is started; (c) environment-th e
situation surrounding and influencing th e new
organization; and (d) new venture process-th e
actions undertaken by th e individuals) to start
th e venture.
Any new venture is a gestalt (Miller, 1981) of
variables from th e four dimensions. No new ven-
ture creation can be compreh ensively described,
nor can its complexity be adequately accounted
for, unless all of its four dimensions are investi-
gated and an attempt is made to discover h ow
variables from each dimension interact with vari-
ables from oth er dimensions.
Th is framework is th e first to combine th e four
dimensions of venture creation, th ough oth er
research ers h ave sough t to combine two or more
of th e dimensions. Th is "th inking across dimen-
sions" is especially apparent in th e workof th ose
th eorists and research ers wh o h ave developed
entrepreneurial classification sch emes. Classifi-
cations of entrepreneurs th emselves are often
based on two dimensions: individual ch aracteris-
tics plus new venture process considerations
th e word often used is "style." Danh off (1949)
based h is sch eme on th e entrepreneur's open-
ness to innovation; Cole (1959) on th e soph istica-
tion of th e entrepreneur's decision making tools;
and Dailey (1971) according to bureaucratic or
entrepreneurial style. Smith (1967) divided entre-
preneurs by a stylistic orientation
-
craftsman or
opportunistic. Filley and Aldag (1980) used
management orientation. Vesper (1979, 1980) in
two similar classifications differentiated among
entrepreneurs by th e activities involved in busi-
ness formation and operation, and in anoth er
sch eme (1980) by competitive strategy. In Coo-
per (1979) entrepreneurs are linked to particular
environments, and, as cited previously, Cooper
and Dunkelberg's (1981) study match es different
entrepreneurs and th eir ch aracteristics to th e
types of firms th ey are likely to start. In Vesper's
(1979) classification th e entrepreneur's type of
firm is also a factor, as it is in several oth er
classification studies (Braden, 1977; Filley &
Aldag, 1980; Smith , 1967). Recently, Van de Ven
et al.'s (1984) empirical study examined educa-
tional software firms on th e basis of th ree dimen-
INDIVIDUAL(S)
ENVIRONMENT
_ ORGANIZATION
PROCESS
Figure 1. A framework for describing new venture creation.
698
sions: entrepreneurial-background ch aracter-
istics and psych ological attributes of th e found-
ing entrepreneurs; organizational-planning and
organizational activities undertaken before and
after company startup; and ecological-support
and resources made available to influence th e
development of th e industry. Th ese classifica-
tion sch emes and frameworks are ways of step-
ping backto get an overall picture, a process like
model-building, wh ich involves integration and
synth esis.
Individual(s)
Wh eth er an entrepreneur is viewed as a "cap-
tain of industry," a h ard-h eaded riskbearer (Mill,
1848), risk taker (Palmer, 1971) or a "rapacious
riskavoider" (Webster, 1976); wh eth er h e merely
metamorph oses into an entrepreneur at certain
moments and is someth ing else th e rest of th e
time (Danh off, 1949), or wh eth er h is need for
ach ievement (McClelland, 1961) and capacity for
innovation (Sch umpeter, 1934) are always tick-
ing away; wh eth er h e is a "displaced person"
(Sh apero, 1975), someth ing close to a juvenile
delinquent (Gould, 1969), or a "man apart" (Liles,
1974) with an absolutely clear-h eaded (veridical)
perception of reality (Sch rage, 1965), an aberrant
"artist" with an "innate sense of impending
ch ange" (Hill, 1982); or wh eth er h e is, indeed,
th at completely political animal, a community
builder (Sch ell & Davig, 1981), th e entrepreneur
is overwh elmingly perceived to be different in
important ways from th e nonentrepreneur, and
many research ers h ave believed th ese differences
to lie in th e background and personality of th e
entrepreneur.
One often pursued avenue h as been th e attempt
to develop a psych ological profile of th e entrepre-
neur and to measure such psych ological ch arac-
teristics as need for ach ievement (DeCarlo &
Lyons, 1979; Hornaday & Aboud, 1971; McCle-
lland, 1961; McClelland & Winter, 1969;
Sch wartz, 1976). However, oth er research ers h ave
not found need for ach ievement useful in describ-
ing entrepreneurs (Brockh aus, 1980b; Litzinger,
1965; Sch rage, 1965); still oth ers h ave questioned
th e value and validity of using psych ological
ch aracteristics of any kind to describe entre-
preneurs (Brockh aus, 1982; Glueck& Mescon,
1980; Jenks, 1965; Kilby, 1971; McCain & Smith ,
1981; Van de Ven, 1980). However, th e following
psych ological ch aracteristics h ave been used in
many studies and may h ave some validity in dif-
ferentiating among types of entrepreneurs (Brock-
h aus, 1982):
1. Need for ach ievement
2. Locus of control
3. Risktaking propensity
Some research ers h ave found it fruitful to look
at th e entrepreneur's background, experience, and
attitudes. Some individual ch aracteristics th at
may be of value in describing entrepreneurs are:
1. Job satisfaction (Collins & Moore, 1970; Kom-
ives, 1972)
2. Previous workexperience (Cooper, 1970; La-
mont, 1972; Susbauer, 1972)
3. Entrepreneurial parents (Collins & Moore, 1970;
Roberts & Wainer, 1968; Sch rier, 1975; Secrest,
1975; Sh apero, 1972; Susbauer, 1972)
4. Age (Komives, 1972; Liles, 1974; Roberts &
Wainer, 1968; Secrest, 1975; Th orne & Ball,
1981)
5. Education (Brockh aus & Nord, 1979; Collins &
Moore, 1964; Howell, 1972; Roberts, 1969;
Susbauer, 1969)
Process
In 1949 Danh off wrote, "Entrepreneursh ip is
an activity or function and not a specific individ-
ual or occupation . .. th e specific personal entre-
preneur is an unrealistic abstraction" (p. 21).
Oth er th eorists h ave pursued th is idea of func-
tion and h ave tried to differentiate th e entre-
preneurial function from oth er more routine
functions such as th e managerial function (Bau-
mol, 1968; Cole, 1965; Hartmann, 1959; Leiben-
stein, 1968; Sch umpeter, 1934). Th is "dynamic"
aspect of th e entrepreneur h as been acknowl-
edged in th e work of eigh t research ers wh o h ave
enumerated certain actions th at an entrepreneur
performs in order to create a new venture. Except
for Peterson and Berger (1971), wh o described
th e entrepreneurial activities of record producers,
th ese studies were th eoretical, th at is, based on
general observation rath er th an systematic re-
search . Th e similarities in th eir views are sum-
marized h ere; six common beh aviors are listed
(th e order does not imply a sequence of actions):
1. Th e entrepreneur locates a business opportu-
nity (Cole, 1965; Kilby, 1971; Maidique, 1980;
Sch umpeter, 1934; Vesper, 1980).
2. Th e entrepreneur accumulates resources (Cole,
1965; Kilby, 1971; Leibenstein, 1968; Peterson &
Berger, 1971; Sch umpeter, 1934; Vesper, 1980).
699
3. Th e entrepreneur markets products and ser-
vices (Cole, 1965; Kilby, 1971; Leibenstein,
1968; Maidique, 1980; Peterson & Berger,
1971; Sch umpeter, 1934; Vesper, 1980).
4. Th e entrepreneur produces th e product (Kilby,
1971; Maidique, 1980; Peterson & Berger,
1971; Sch umpeter, 1934; Vesper, 1980).
5. Th e entrepreneur builds an organization (Cole,
1965; Kilby, 1971; Leibenstein, 1968; Sch um-
peter, 1934).
6. Th e entrepreneur responds to government and
society (Cole, 1965; Kilby, 1971).
Environment
Much of th e current concern (Peters & Water-
man, 1982) over h ow to design organizations th at
keep and encourage innovative individuals is an
indirect acknowledgment th at entrepreneurs do
not operate in vacuums
-
th ey respond to th eir
environments. Th e existence of h igh ly support-
ive regional entrepreneurial environments
(Cooper, 1970; Drah eim, 1972; Pennings, 1982b;
Susbauer, 1972)
-
including "incubator organi-
zations" -can, from one perspective, be said actu-
ally to create entrepreneurs. Th e idea of "push es"
and "pulls" from th e environment h as found its
way into many studies of entrepreneursh ip
(Sh apero & Sokol, 1982).
In organization th eory literature, two different
views of th e environment h ave been developed.
One perspective, environmental determinism,
sees th e environment as an outside set of condi-
tions to wh ich th e organization must adapt
(Aldrich , 1979; Aldrich & Pfeffer, 1976; Hannan
& Freeman, 1977). Th e oth er perspective, strate-
gic ch oice, sees th e environment as a "reality"
th at organizations create via th e selectivity of th eir
own perceptions (Ch ild, 1972; Starbuck, 1976;
Weick, 1979). In th e entrepreneursh ip literature,
both perspectives on th e environment h ave been
taken, In th e present paper th ose ch aracteristics
th at are viewed as relatively fixed conditions
imposed on th e new venture from with out are
called environmental variables. Variables over
wh ich th e organization h as more control (strategic
ch oice variables) are more readily viewed as ch ar-
acteristics of th e organization itself and are treated
as such .
In an overview of 17 research papers on envi-
ronmental variables th at influenced new venture
creation, Bruno and Tyebjee (1982) found 12 fac-
tors th at th ey judged stimulated entrepreneur-
sh ip:
1. Venture capital availability
2. Presence of experienced entrepreneurs
3. Tech nically skilled labor force
4. Accessibility of suppliers
5. Accessibility of customers or new markets
6. Governmental influences
7. Proximity of universities
8. Availability of land or facilities
9. Accessiblity of transportation
10. Attitude of th e area population
11. Availability of supporting services
12. Living conditions
Anoth er study of environmental influences on
new venture creation was Pennings' studies of
organization birth frequencies (1980, 1982a,
1982b). Pennings found th at organization birth
rates were h igh in areas with : h igh occupational
and industrial differentiation; h igh percentages
of recent immigrants in th e population; a large
industrial base; larger size urban areas; and avail-
ability of financial resources.
Anoth er field of research h as taken th e deter-
ministic perspective regarding th e environment
and new ventures: industrial economics. Oliver
Williamson (1975) explored th e process by wh ich
th e failure of markets to coordinate efficiently
th e production and distribution of goods and ser-
vices often resulted in th e start-up of organiza-
tions to coordinate th e production function
th rough administration. Porter (1980) focused on
th e competitive environment th at confronts firms
in a particular industry. Porter's work provides
five environmental influences on organizations:
barriers to entry, rivalry among existing com-
petitors, pressure from substitute products, bar-
gaining power of buyers, and bargaining power
of suppliers.
Organization
Despite a bold early attempt by Stauss (1944)
to direct th e focus away from th e entrepreneur
and toward h is created organization (by claiming,
somewh at tortuously, th at th e firm is th e en-
trepreneur), most subsequent studies of new ven-
ture creation h ave neglected to comment on or
even communicate certain ch aracteristics of th e
organizations on wh ich th ey focused. Th e as-
sumption beh ind th is seems to derive from two
oth er assumptions: (a) if all entrepreneurs are
virtually alike and (b) th ey all go th rough th e
same process to create th eir ventures, th en (c)
th e organizations th ey create must, like widgets,
not be of any interest in th emselves.
700
Many research samples in entrepreneursh ip
studies are selected, for example, with out regard
to type of firm (i.e., manufacturing, service, retail,
wh olesale). Of th e studies th at h ave indicated
th e type of firm, Smith (1967), Cooper (1970),
Collins and Moore (1970), Susbauer (1972), and
Braden (1977) studied manufacturing firms, and
most focused on h igh tech nology manufacturing
firms. Litzinger (1965) studied motel firms, and
Mescon and Montanari (1981) studied real estate
firms. However, research ers in th ese studies made
no attempts to compare th e type of firm studied
to oth er types of firm to determine wh at differ-
ence type of firm migh t make in th e process of
new venture creation. Cooper and Dunkelberg
(1981), Gartner (1982), and Van de Ven et al.
(1984) h ave begun to link type of firm across
oth er dimensions, such as entrepreneurial back-
ground and response to environment.
Th e presence of partners is anoth er firm ch ar-
acteristic suggested by Timmons, Smollen, and
Dingee (1977) as a vital factor in starting certain
types of firm, and some research h as mentioned
partners as a ch aracteristic of th e firms studied
(Cooper, 1970; DeCarlo & Lyons, 1979).
Strategic ch oice variables are treated h ere as
ch aracteristics of th e organization. Porter (1980)
identified th ree generic competitive strategies th at
firms may "ch oose": (a) overall cost leadersh ip,
(b) differentiation, and (c) focus. Vesper (1980)
identified 14 competitive entry wedges: th e new
product or service, parallel competition, franch ise
entry, geograph ical transfer, supply sh ortage, tap-
ping unutilized resources, customer contract,
becoming a second source, joint ventures, li-
censing, market relinquish ment, sell off of di-
vision, favored purch asing by government, and
governmental rule ch anges.
Conclusion
Listing each variable of new venture creation
under th e appropriate dimension of th e frame-
workillustrates th e potential for a h igh degree of
complexity in th e interaction of th ese variables
with in th e multidimensional ph enomenon of
venture creation (Figure 2).
Th e four dimensional conceptual framework
can be seen as a kaleidoscope, as an instrument
th rough wh ich to view th e enormously varying
patterns of new venture creation. Past attempts
to differentiate th e typical entrepreneur and h is/
h er typical creation from all nonentrepreneurs
and all nonnew ventures h ave, wh eth er inten-
tionally or not, advanced th e notion th at all entre-
preneurs are alike and all new venture creation
is th e same. However, th ere clearly is a wide varia-
tion in th e kinds of new ventures th at are started.
For example, are th ere similarities between th e
creation of a waterbed store by a 20-year old col-
lege student and th e creation of a personal com-
puter company by th ree engineers? Are th e differ-
ences between th em more important th an th e
similarities? Wh at is th e value of comparing th e
creation of a pet store by two unemployed ph ysi-
cal th erapists to th e creation of a 5,000-acre busi-
ness parkby four real estate developers? Th e goal
is not to smooth over any differences th at migh t
exist among th ese new ventures or to th row th ese
very different individuals into th e same pot in
order to extract th e typical qualities of th e typi-
cal entrepreneur. Th e goal is to identify th e spe-
cific variables th at describe h ow each new ven-
ture was created, in order th at meaningful con-
trasts and comparisons among new ventures can
be made.
First must come careful description with an
eye to variation. Th e search for key variables, for
general principles, for universally applicable laws
of entrepreneursh ip th at h as ch aracterized much
of th e entrepreneursh ip literature betrays an
impatience with th e slow meth odical process of
description. Attention to careful observation and
description is th e basis of good scientific research
(McKelvey, 1982). In wh at does all th is careful
description of new ventures result? A collection
of uniquely described ventures, each different
from all th e oth ers? Once good description is
ach ieved, th en good comparisons and contrasts
can be made, and subsets of similar ventures can
be establish ed. Th ese h omogeneous populations
are needed before any general rules or th eories of
new venture creation can be postulated. Th e lack
of such h omogeneous samples in th e past h as led
to conflicts in th e results of research studies.
Th e conceptual framework presented h ere pro-
vides a way of analyzing past research studies.
Each study can be broken down into th e types of
individuals, organizations, environments, and
processes th at were investigated. One way in
wh ich th e frameworkcan be useful is in identify-
701
INDIVIDUAL(S)
Need for
ach ievement
Locus of control
Risktaking propensity
Job satisfaction
Previous work
experience
Entrepreneurial parents
Age
Education
ENVIRONMENT - ORGANIZATION
Venture capital availability Overall cost leadersh ip
Presence of experienced entrepreneurs Differentiation
Tech nically skilled labor force Focus
Accessibility of suppliers Th e new product or service
Accessibility of customers or new markets Parallel competition
Governmental influences Franch ise entry
Proximity of universities Geograph ical transfer
Availability of land or facilities Supply sh ortage
Accessibility of transportation Tapping unutilized resources
Attitude of th e area population Customer contract
Availability of supporting services Becoming a second source
Living conditions Joint ventures
High occupational and industrial Licensing
differentiation Market relinquish ment
High percentages of recent Sell off of division
immigrants in th e population Favored purch asing by government
Large industrial base Governmental rule ch anges
Largersize urban areas
Availability of financial resources
Barriers to entry
Rivalry among existing competitors
Pressure from substitute products
Bargaining power of buyers
Bargaining power of suppliers
PROCESS
Th e entrepreneur locates a business opportunity
Th e entrepreneur accumulates resources
Th e entrepreneur markets products and services
Th e entrepreneur produces th e product
Th e entrepreneur builds an organization
Th e entrepreneur responds to government and society
Figure 2. Variables in new venture creation.
702
ing th ose aspects of new venture creation neg-
lected by a particular study. New research may
th en be designed to account for th ese lacunae.
For example, Brockh aus defines h is sample of
entrepreneurs as:
Individuals wh o with in th ree month s prior to th e
study h ad ceased working for th eir employers and
at th e time of th e study owned as well as managed
business ventures.... Th e businesses wh ose own-
ers served as participants were selected from th e
listing of businesses licensed by St. Louis County,
Missouri during th e month s of August and Sep-
tember, 1975 (1980a, p. 39).
Alth ough Brockh aus, unlike oth er research ers,
attempts to close in on th e actual entrepreneurial
function by interviewing h is entrepreneurs
with in a few month s of th e creation of th eir
ventures, useful and necessary distinctions
among th e individuals and th eir new ventures
are not made. One is not sure wh at types of firms
were studied (retail, service, manufacturing, etc.)
or wh eth er th e St. Louis environment was likely
to influence certain types of individuals to create
certain types of firms. Is th e process of starting a
venture in St. Louis different, or is th e process
different for certain types of businesses or cer-
tain kinds of individuals? Accounting for type of
firm, environment, and process in th is study
would enh ance comparison among th e individu-
als in th e study and individuals in oth er studies.
In analyzing results of research studies, a focus
on differences in one of th e four dimensions
migh t explain conflicting results. For example,
studies such as Collins and Moore (1970) suggest
th at individuals wh o start firms are social misfits
wh o do not fit into most organizations. Yet oth er
studies such as Cooper (1970) suggest th at indi-
viduals wh o start successful firms are good team
players. On closer examination it is seen th at
Collins and Moore studied manufacturing firms
th at were more like job sh ops in th e 1950s, and
Cooper studied h igh tech nology firms in th e
1960s. High tech nology industries migh t require
more skills th an one individual would be likely
to h ave, necessitating th at individuals combine
th eir abilities in teams in order to start an organi-
zation successfully.
In addition to providing a means by wh ich past
research can be analyzed, th e framework outlines
a format for future research meth odologies and
for reporting such research . More careful atten-
tion must be paid to th e research sample. For
example, women entrepreneurs are a popular
research topic. If similarities are discovered
among women wh o start firms, are th ese similari-
ties a result of similar environments? Can dif-
ferences be attributed solely to psych ological or
background ch aracteristics? Wh at is th e value of
research results th at are based on such unex-
amined and possibly h eterogeneous sample pop-
ulations?
Even in a narrowly selected research sample,
th e framework migh t be useful in drawing th e
research er's attention to considerations inh erent
in each of th e four dimensions, in order th at con-
clusions regarding th e virtual sameness of all th e
members of th e sample may not be made too
h astily. For example, in a sample of new organi-
zations in th e micro-computer industry, a num-
ber of considerations migh t be made. Wh at is th e
variation among th e entrepreneurs in th eir work
backgrounds, education, age? How do competi-
tive strategies used by th ese new organizations
vary? Are th ere regional or oth er subenvironments
in th e industry th at cause variations in firms and
strategies? Wh at is th e variation in th e venture
creation process: do all individuals devote equal
time to financing th e organization, h iring per-
sonnel, marketing? Wh at differences exist be-
tween "new" and "old" firms in th is industry?
Th e brief review of th e literature provided ear-
lier is only a running start at a compreh ensive
analysis and evaluation of th e entrepreneursh ip
literature. For example, in a study of individuals
wh o start firms, wh o are th e individuals? Are th e
individuals in McClelland's samples (McCelland,
1961; McCelland & Winter, 1969) similar to th ose
in Brockh aus (1980a) or Sch rage (1965)? More
about th e similarities and differences with in and
among past research samples needs to be known.
Th ere are many dimensions and variables across
wh ich th ese samples may be compared.
Th e framework also points up th e importance
of interactions of variables among dimensions in
understanding new venture creation. How does
an individual's background influence th e type of
activities undertaken to start an organization?
Does th e marketing individual devote h is time to
marketing instead of manufacturing, and are th ere
some environments or firms th at require more
marketing? Is th e process of starting a retail store
703
similar to th at of starting a steel mill? Are entry
strategies used by new organizations in th e robot-
ics industry similar to th ose used in th e brewery
industry?
Th e frameworkfor describing new venture cre-
ation provides th e possibility of describing sub-
sets with in th e unwieldy set of all entrepreneurs
and all new ventures. Newly created ventures
th at display meaningful similarities across th e
four dimensions could be described and classi-
fied togeth er (Gartner, 1982). Significant general-
izations regarding some or all new venture cre-
ations migh t emerge, generalizations th at do not,
h owever, attempt to maskth e variation in new
venture creation.
Th is paper does not purport to answer specific
questions about h ow new ventures are started or
provide specific developmental models for new
venture creation. No claim is made th at th e frame-
workor th e list of variables is compreh ensive;
th e claim is only th at th e description of new ven-
tures needs to be more compreh ensive th an it is
at present. A great many more questions are asked
h ere th an are answered. However, th e paper pro-
vides a means of making a fundamental sh ift in
th e perspective on entrepreneursh ip: away from
viewing entrepreneurs and th eir ventures as an
unvarying, h omogeneous population, and to-
wards a recognition and appreciation of th e com-
plexity and variation th at abounds in th e ph e-
nomenon of new venture creation.
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William B. Gartner is Assistant Professor of Business
and Directorof th e CenterforEntrepreneursh ip Studies
in th e Sch ool of Business Administration, Georgetown
University.
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