The Road to Entrepreneurial Success: Business Plans, Lean Startup, or Both?

Purpose – The goal of this research is to investigate the relationship between two different sets of practices, lean startup and business planning, and their relation to entrepreneurial performance. Design/methodology/approach – The authors collected data from 120 entrepreneurs across the US about a variety of new venture formation activities within the categories of lean startup or business planning. They use hierarchical regression to examine the relationship between these activities and new venture performance using both a subjective and objective measure of performance. Findings – The results show that talking to customers, collecting preorders and pivoting based on customer feedback are lean startup activities correlated with performance; writing a business plan is the sole business planning activity correlated with performance. Research limitations/implications – This research lays the foundation for understanding the components of both lean startup and business planning. Moreover, these results demonstrate that the separation of lean startup and business planning represents a false dichotomy. Practical implications – These findings suggest that entrepreneurs should engage in some lean startup activities and still write a business plan. Originality/value – This article offers the first quantitative, empirical comparison of lean startup activities and business planning. Furthermore, it provides support for the relationship between specific lean startup activities and firm performanc

Essays on Law, Finance, and Venture Capitalists' Asset Allocation Decisions

This dissertation consists of three essays. The first essay finds that small firms in poor quality legal environments (poor quality contract enforcement and property rights environments) are more financially constrained relative to small firms in better quality legal environments. Consequently, financial development, that is, the emergence of venture capitalists, has a greater effect on small firms' access to external financing in poor quality legal environments. The second essay finds that the quality of contract enforcement is a risk factor, while the quality of property rights protection is not. The results indicate that poor quality property rights protection hinders the development of informal capital markets; hence, there exists a greater need for financial intermediation in such environments. These results indicate that venture capital financing should be encouraged in poor quality legal environments and provide one rationale for why capital markets in poor quality legal environment countries tend to be bank-based. The third essay finds that the demand for growth financing is lower in poor quality legal environments relative to better quality legal environments. The existing literature has focused on the effect that limited supply of external financing has on firm growth rates in poor quality legal environments. This paper indicates that lower firm growth rates in poor quality legal environments may also result from lower demand for growth financing. The empirical results in all three essays indicate that poor quality legal environments primarily affect the development of informal capital markets. Hence, financial intermediation is of greater importance in poor quality legal environments during the early stages of a firm's growth cycle. This indicates that encouraging the growth of venture capital financing, which is better suited to ameliorating moral hazard problems (investments in small firms and technology intensive ventures) relative to debt or bank financing, will facilitate faster economic growth in poor quality legal environments. Evidence that venture capitalists' asset allocations are significantly and positively associated with long-run country growth rates is provided in the second essay

Should rational socioeconomic agents attempt to exert ‘control’ over the evolution of their preference or behavioral parameters?

Let a ‘heuristic’ be any preference or behavior that is anticipated to facilitate the achievement of some long-term objective, to wit, an objective which comprises of, at the very least, two sequential sub-objectives. The choice of any specific heuristic (an ‘adopted heuristic’) implies, necessarily the existence of some alternate heuristic that is an antithesis (an ‘antithesis heuristic’) of the adopted heuristic. Whereas the conventional wisdom posits that it is efforts for the maintenance of an adopted heuristic that approximate rationality, modeling in discrete time, which is the ideal, and modeling the generic mathematical space that is occupied by any two antithetical preferences or behaviors, this study's formal theory turns the conventional wisdom on it's head. For concreteness, the formal theory explicitly establishes that a socioeconomic agent maintains the capacity for first-best rationality ‘if and only if’ consequent on the choice of an adopted heuristic (e.g. prudence, respectively risk aversion), simultaneously the agent remains willing, whenever necessary to tatonne to an antithesis heuristic (e.g. adventuresomeness, respectively risk seeking preferences). In stated respect, feasibly a restriction of the self to an adopted heuristic induces an agent to deviate from first-best rationality. In presence of study findings, if socioeconomic agents are to maintain first-best rationality, all heuristics - preferences, behaviors etc. - that are adopted for decision making have characterization as ‘default (anchor) heuristics’, not ‘defining (immovable) heuristics’. In essence, all heuristics are to be regarded to be no more than tools which, engaged with, decrease the risk of engagement with irrational actions. It is then rationality that is to be maintained ad infinitum, not any specific behavior or preference

Exploring the Role of Workplace Spirituality for Managers in Financial Institutions in Nigeria: A Case Study

Managers play a major role in ensuring the practice of ethical behavior in organizations. The problem addressed in this study was that bank failures in Nigeria have been associated with fraud, unethical behavior, and malpractices. The purpose of this descriptive multiple qualitative case study was to explore the perceptions of managers regarding the role of spirituality of managers in banks in the Nigerian financial sector and its perceived influence on ethical behavior. The sample study consisted of managers in three Banks in Nigeria, subordinates working under these managers, and executives supervising the managers. A total of 39 participants were interviewed comprising of 18 managers, 18 subordinates, and three executive directors. Purposive sampling was used in the selection of participants in each organization. The findings from the study indicated that workplace spirituality is essential to preventing organizational malpractice, unethical behavior and fraud in banks, in Nigeria. Managers, subordinates, and executives indicated that integrity, honesty, fairness, and professionalism were necessary for ethical practices in the banking sector. The findings were consistent with claims of other researchers, and also achieved the study purpose, which was to highlight the role of workplace spirituality in preventing fraud, unethical behavior and malpractice in banks. The implications are that bank managers in Nigeria should practice the aforementioned spiritual values, and encourage their subordinates to do likewise. This is considered possible through training or inclusion of ethics curricula in professional development programs for managers. The recruitment of bank managers with a strong propensity towards spirituality and ethical values is also recommended to enhance workplace spirituality. Building organizational culture on principles of ethics so that newly hired managers are put in the ethical environment is also recommended. Future similar studies on the role of employee spirituality in preventing fraud, unethical behavior and malpractice in settings other than banks, other African countries, as well as non-African countries is recommended. Quantitative studies such as the need to assess the existence, strength, and direction of potential relationship between the level of spirituality of managers in banks and the level of fraud, unethical behavior, and malpractice is also recommended