Entrepreneurship: Key to Successful Startups
Author: Linda Knopp
February 2007
by Linda Knopp
Want to grow a successful start-up? Follow the lead of the big guys. That’s what a Harvard Business School professor concludes in a white paper, Great Oaks from Little Acorns Grow: Strategies for New Venture Growth. Mukti Khaire, assistant professor in the entrepreneurial management unit at HBS, says that new businesses, which often lack financial resources, increase their chances of surviving and growing if they acquire intangible social resources, such as legitimacy, status and reputation.
And how do they do that? By modeling he activities and organizational structures of already established players in an industry, Khaire says. Also important in helping new businesses establish legitimacy and grow, she notes, is being affiliated with high status customers and being located in “legitimate” locations (e.g., Silicon Valley, Calif., for high-tech companies and Paris for fashion designers).
Although most people equate entrepreneurship ith innovation, Khaire says new business owners shouldn’t stray too far from industry norms if they want to succeed. “Many entrepreneurs strike off on their own because they get tired of the way things work in their previous organizations and are determined to do things very differently,” she says in an interview in Harvard Business School’s newsletter, Working Knowledge. “My findings suggest that for new firms in established industries, there is value to doing some nontechnical, symbolic things in the manner that is widely accepted and to adhering to industry norms and culture.”
For example, having recognizable job titles and a professional work environment improves a new firm’s credibility, she says, because these structures are more familiar to customers, increasing the legitimacy of businesses without proven track records.
For her research, Khaire studied a cohort of advertising agencies founded in New York City and Chicago between 1977 and 1985. The Academy of Management, a professional scholarly association, published her paper in August 2005 as part of its Best Paper Proceedings. Read Great Oaks from Little Acorns Grow: Strategies for New Venture Growth at www.london.edu/assets/documents/Mukt i_Khaire_paper.pdf. This article is one of many being offered throughout the Dayton Region by members of the Entrepreneurial Development Network as part of the Region’s celebration of Entrepreneurship Week USA, a national effort sponsored by the Kauffman Foundation. The EDN is a network of regional organizations that provides education, advice and access to programs and events that will help local entrepreneurs launch and grow successful businesses. A complete listing of EDN members, the services they offer, and activities scheduled as part of Entrepreneuship Week, USA, visit www.daytonregion.com and click on the link to “Entrepreneurial Development”.
Copyright 2006, National Business Incubation Association. Reprinted with permission. For more information visit www.nbia.org.
