Essays on institutions and pre-founding experience : effects for technology-based entrepreneurs in the US and China

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 2009.Vita. Cataloged from PDF version of thesis.Includes bibliographical references.This dissertation is composed of three essays. I look at the role of two different but critical factors in shaping entrepreneurial outcomes: individual level career history and the institutional context. My work spans two outcomes in particular: individual decisions to choose high-tech entrepreneurial activities and the strategies and outcomes of the entrepreneurial firms that are established. Following an introductory chapter that overviews the entire dissertation, Chapter Two discusses the use of alumni surveys as a methodology. The first of my three empirical essays is Chapter Three, entitled "Cutting Your Teeth: Building on the Micro-Foundations for Dynamic Capabilities with Edward Roberts, and investigates whether prior founding experience improves subsequent start-up firm performance. We draw on two strands of psychological theory - availability and partition dependence - and tie them together with the idea that variation in managers' cognitive representations of the competitive landscape drives differences in firm outcomes. The results of the study are consistent with an account where improved cognitive representations form dynamic capabilities and competitive advantage but appear less consistent with passive inheritance of search routines as a source of dynamic capabilities. We examine performance produced by variation in career experience driving differences in psychological biases. The second essay, "Who has 'The Right Stuff'? Human Capital, Entrepreneurship and Institutional Change in China", examines a model distinguishing barriers to entry from barriers to growth.(cont.) It exploits a natural experiment to identify effects on individuals at different locations on a talent distribution. The paper asks whether the 1999 Chinese Constitutional amendment increased entrepreneurship among those individuals with higher (or lower) levels of human capital. The type of institutional environment that results in higher quality entrepreneurs is a question that has not been systematically explored previously. I find that the greatest increase in entrepreneurship in the post-2000 institutional development was among individuals at the top of the talent distribution. The findings suggest that entrepreneurship among high quality individuals is driven less by the relaxation of constraints to entry (which are relatively easy to overcome) and more by constraints to firm growth. The final essay chapter is a cross-country comparison of the MIT and Tsinghua datasets. There are some relatively subtle differences that in combination with the differences in the environment for entrepreneurial firms and the institutional history of China have led to vastly different outcomes for the entrepreneurial firms from MIT and Tsinghua. The shorter time frame in which entrepreneurial activity has been occurring in China resulted in a younger, smaller set of entrepreneurial firms throughout the country. Similarly, the younger age of Tsinghua entrepreneurs contributes to a different mix of idea and team sources (fewer from work experience) that might also partially explain the differences in firm outcomes.(cont.) While firm size in terms of employees is roughly similar, the MIT firms are much larger in revenues than the Tsinghua firms. It is clear that the broader environment exerts a strong impact on the outcomes of entrepreneurs, their processes, and their firm outcomes.by Charles E. Eesley.Ph.D

Innovative Strategies and Performance: What Makes Institutional Entrepreneurs so Distinctive?

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