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Research Papers
The Automotive Aftermarket Industry
Chetan Singh -- University of Maryland
May 2008
On May 20th and 21st I attended the Global Automotive Aftermarket Symposium
in Chicago. Every layer of the industry from the technician to the manufacturer
was represented at the symposium in panel discussions and debates.
The Aftermarket on the retail/wholesale side of the business is a very
fragmented business. Most of the players in the industry are small family owned
businesses which have had it tough with the growth of the big players like NAPA,
Car Quest, Advance Auto Parts, and Autozone among others. To compete with these
large nationwide chains these was the formation of buying groups which allow
independent Warehouse Distributors to get volume discounts similar to their
competitors. However today, with the gas prices going up and people demanding
cars with better gas mileage and low maintenance, both big and small players in
the aftermarket in the United States are going through a rough phase. The
manufacturers have to compete with the prices offered by the emerging economies
of China and India. The economy moving into recession where people are watching
every dollar they spend and the sales of the big three of Detroit plummeting
down is impacting the aftermarket more than ever.
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The Practical Intelligence of High Potential Entrepreneurs:
Antecedents and Links to New Venture Growth
J. Robert Baum,
Barbara J. Bird and Sheetal Singh -- University of Maryland
February 2008
While the importance of Practical intelligence (PI) has been
established in the literature on theoretical grounds, researchers have called
for greater empirical evidence. In response, we provide evidence of the
importance of PI for success (new venture growth) in the high potential
entrepreneurship setting. We draw upon cognitive psychology, social
cognition, and social cognitive theories to develop a model of practical
intelligence, its antecedents, and its role in the exploitation phase of
entrepreneurship. The model was tested through interviews with 22 printing
industry CEOs and responses from 143 founders of early stage high potential
printing and graphics businesses. This is one of the first empirical
studies of entrepreneurs' intelligence.
All our hypotheses are supported, thus supporting our theory
that situationally specific venture as well as industry experience contributes
to development of entrepreneur’s PI. Related venture and industry experience and
two learning orientations interacted to predict practical intelligence.
While several learning orientations have been identified in the literature,
existing theory on entrepreneurial behavior leads us to believe in the value of
concrete experience and active experimentation for developing PI. We present
evidence in support of this argument. This finding extends our knowledge about
the development of PI beyond the role of experience and extends the literature
on how experience gets translated into PI. Additionally, PI
predicted higher venture growth across four years.
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Are Angels Preferred Venture Investors?
Brent Goldfarb, Gerard Hoberg, David Kirsch, Alexander Triantis
-- University of Maryland
October 2007
We examine the impact of business angels on 182 Series A
financings and subsequent company outcomes. Our studied rounds have a varied mix
of business angel and formal venture capital investors (VCs). We find that when
only angels participate in a financing round and VCs are absent, control rights
are more entrepreneur-friendly, legal expenses are lower and investors are more
geographically proximate to the company. Such angel-backed companies are less
likely to fail and are more likely to have a successful liquidity event. We find
that companies are financed exclusively by VC investors also perform well,
particularly when deals are large. Companies financed by both angels and VCs
experience inferior outcomes.
Our results suggest that entrepreneurs consider business angels
to be preferred investors and VCs investing in small deals face adverse
selection. For larger deals, where deeper-pocket VC participation is required,
these roles reverse and angels face adverse selection when investing alongside
powerful VC syndicates.
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remainder of the research proposal
Do Business Ethics Matter?
Why a Code of Conduct Is Important for the Entrepreneur
Michael D. Pfarrer -- University of Maryland
August 15, 2005
Ethics can be a messy business. Scholars and practitioners alike
have often argued over a definition of ethical behavior, as well as the
necessity for a code of ethics in organizations. Indeed, there appears to be no
clear moral compass to guide organizations (McNamara, 2005). But, if one
operates under the assumption that business has a moral responsibility to act
ethically (to which some would disagree [cf. Locke & Noel, 2004]), then a code
of ethics is a logical next step to help codify proper behavior in
organizations.
As an early stage entrepreneurial company it is never too early
to start thinking about and implementing a code of conduct to ensure ethical
standards are ingrained into the corporate DNA. This ensures that all the
process and procedures for a well-managed, investor-owned company are robust and
developed. Implementing a code of conduct is an important first step.
An effective code of ethics...
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Was There a Dot Com Bubble? Distinguishing Between
Technological and Market Phenomena
David Kirsch, Brent Goldfarb -- University of Maryland
December 17, 2004
The late 1990s saw a 10-fold increase and subsequent decline in
U.S. venture capital funding peaking at $30 billion per quarter in early 2000, a
boom and bust by any measure (Venture Economics, 2003). This project
examines the nature and character of entrepreneurial action during this period.
First, our preliminary findings suggest a significant under-counting of
investment in new venture creation during the so-called Dot Com era as data
sources under-report the amount of private, informal capital secured by nascent
internet technology startups by up to 50%. This finding tempts one to
conclude that the internet bust was more severe and pronounced than publicly
reported. Yet, framed within the theoretical setting of Schumpeterian
business cycles in which entrepreneurial opportunities are driven by secular
technological change, we develop and test two competing explanations of the
“boom” and “bust”. To test these theories we introduce a novel dataset
dataset consisting of more than 1,000 internet era business plans that were
submitted to a leading venture capitalist during the years of the internet
bubble.
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How Entrepreneurial Firms Overcome their Resource Deficit:
Network Status,
Knowledge Transfer, and Isolating Mechanisms
By Deepak Somaya
While entrepreneurial firms may possess unique advantages in
their agility and ability to address hitherto unmet needs, they also lack the
considerable internal capabilities that large firms have easy access to. In
fact, they are extremely constrained in firm-specific resources, and typically
do not have either the time or financing to build them up quickly. We argue that
entrepreneurial firms compensate for this "resource deficit" through a number of
different mechanisms. First, they build networks to gain access to critical
resources, and consciously seek alliances with high-status players in order to
enhance their own attractiveness as network partners. Second, they source
knowledge from their environment in ways that are consistent with their own weak
knowledge base or limited "absorptive capacity"; favoring knowledge transfer
through incentivized contracts over internal firm learning. Third,
entrepreneurial firms are especially dependent on isolating mechanisms barriers
to imitation that will enable them to appropriate returns and build a unique
market position. Lacking the complementary assets to compete head-to-head with
larger firms, entrepreneurial firms will seek opportunities and relationships
where the protection provided by strategic barriers like patents is high. We
test our hypotheses in a unique empirical setting university technology
licensing in which we can compare the behavior of start-ups and large firms
without the biases introduced when licensing partners (universities in this
case) can commercialize the technology on their own.
Evolution of Software Ecosystem Alliances Between Entrepreneurial ISVs and
Large Middleware Platform Companies
By Anil K. Gupta
This project is aimed at understanding the formation and evolution of
“ecosystem alliances” between independent software companies (also called
“independent software vendors” or ISVs) and large middleware platform companies
such as IBM.
The key research questions driving this study are: (a) Which young companies
are likely to join the ecosystem of a particular established company? In other
words, how do young companies choose whose ecosystem to join? (b) What factors
determine the effectiveness of the dyadic relationships in the ecosystem? (c)
What factors determine the evolutionary path of the alliance in the ecosystem
over time? And (d) What are the consequences of such alliances for each of the
parties (direct/indirect, short-term/long-term, positive/negative)?
I have already obtained sponsorship from IBM to get access to relevant people
for the collection of primary data. The overall data collection plan is as
follows: Phase 1 - Interview one person from each side (IBM and ISV) for about
20-24 alliances. Phase 2 - Conduct questionnaire survey of one key person from
each side in 150-200 alliances.
Entrepreneurs' Start-up Cognitions and Behaviors:
Dreams, Surprises, Shortages, and Fast Zigzags
J. Robert
Baum, assistant professor of entrepreneurship at the University of
Maryland's Robert H. Smith School of Business won the distinguished Babson
Entrepreneurship Research Conference (BKERC) Best Paper Award for a research
paper that identifies the key ingredients for achieving success as an
entrepreneur.
In the winning paper, "Entrepreneurs' Start-up Cognitions and Behaviors:
Dreams, Surprises, Shortages, and Fast Zigzags," Baum tested theories he had
formed as an entrepreneur himself. He studied the psychological profile,
knowledge and actions that an individual needs to convert a promising concept
into a successful new venture. The three-year research study involved repeated
interviews of more than 100 would-be entrepreneurs as they progressed (or
failed) along their path to business formation.
Baum's research revealed that those who are successful rarely have the luxury
of following a straight line to their goal. Rather, they must have the ability
to "zigzag around the obstacles that confront new enterprises."
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