Annaleena Parhankangas

Indigenous entrepreneurship is a process of drawing value from community-based resources (people, land, capabilities, culture, etc.) and contributing value back that is responsive to a community’s particular set of socioeconomic conditions (Colbourne, 2017a; Jack & Anderson, 2002; Kenney & Goe, 2004: 699). The advent of crowdfunding pointed to the potential of digital platforms to facilitate socioeconomic change through ameliorating disparities in access to entrepreneurial financing for marginalized communities. Thus, crowdfunding represents an opportunity for Indigenous peoples to access capital; showcase their ventures; and assert their right to design, develop, and maintain Indigenous-centric institutions. To investigate the emancipatory potential of Indigenous crowdfunding campaigns, we conducted a non-participatory netnographic explorative study that analyses over 1300 Indigenous campaigns launched between 2010 and 2020. Based on our findings, we develop a typology of Indigenou...

We followed the development of three new-to-the world technologies as they emerged over several decades. In our analysis, we wanted to distance ourselves from the received diversification and governance theories, and observe how technologies evolve in a complex, paradoxical, systemic, even messy, real-life context. The results tend to refute the assumed rational nature of corporate management, diversification and development. More of the direction of successful technology-based diversification was found to be dependent on co-incidence and luck, rather than strategic (rational) intentions. Stated differently, the success in pursuing certain applications of a novel technology accrues more from being “in the right place at the right time” than in predicting the rightness of future places and times. Personal, informal contacts were seen to play a significant role in helping venture managers “get lucky” and connect into new constellations of resources, including first customers. The resu...

This study investigates the accuracy of thin slice predictions in the context of entrepreneurial finance. First, I demonstrate that even very short exposures (30 seconds or less) to a video clip portraying an entrepreneur pitching her venture on a crowd funding portal may lead to relatively accurate estimates of her actual fundraising success. Second, I explore the role of stereotypes in the formation of accurate thin slice judgments, a research topic largely unexplored and called for by the prior literature.

This study explores the interactions between task, process and affective conflict in entrepreneurial teams of venture-backed firms. Our results show that task conflict is positively related to affective conflict and that this relationship is partially mediated by process conflict. Furthermore, we find that team size moderates the relationship between task and process conflict. Our results provide a potential explanation for the previously reported inconsistent results on the outcomes of different types of conflict and suggests that especially nascent entrepreneurs with small management teams should be wary of all types of conflict – also those labeled as “functional” by the prior literature.

Previous research has maintained that the capacity to manage alliances is a distinct capability, defined as the ability to identify, negotiate, manage, monitor and terminate collaborations. This paper focuses on an important but hitherto neglected aspect of alliance capability by investigating how partnering firms may learn how to better manage their dyadic R&D collaborations. In particular, we seek to test the Nonaka and Takeuchi (1995) model of dynamic knowledge creation by establishing a link between the facilitation of four knowledge conversion processes – socialization, externalization, combination and internalization – and an improved capability to manage inter-organizational R&D processes. We specify and extend the model by identifying and testing several critical interactions between these knowledge conversion processes. Relying on data from 105 R&D partnerships in the global telecommunications industry, we suggest that the failure to support one of these knowledge conversio...

ABSTRACT Entrepreneurship in general and technology-based entrepreneurship in particular is a process of experimentation and learning. Entrepreneurs start their venturing process by exploring a newly “theorized” opportunity in a highly uncertain situation with only limited knowledge on the technical and market aspects of their business. Given this high degree of uncertainty faced by new ventures, an entrepreneur faces a major dilemma when communicating his or her expectations on the future performance of the company to potential investors. This paper develops and tests a set of hypotheses on how entrepreneurs’ projections of the future performance of their firm affect their attempts to raise external funding. First, building on the met expectations theory and the disconfirmed expectations theory of (customer) satisfaction, we expect those firms who avoid falling into the traps of inflated expectations and understated aspirations be best positioned to secure business angel funding. Second, recent research in communications and the models of persuasion has demonstrated that it is not only the content of the message that influences investors and financial analysts. It also matters how the message is conveyed. In this paper, we analyze the impact of cautiousness, innovativeness, communality and complexity of entrepreneurs’ written disclosures of information on their success in securing external funding.

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Annaleena Parhankangas, David Ing*, David L. Hawk, Gosia Dane and Marianne Kosits Department of Industrial Engineering and Management, Helsinki University of Technology, Espoo, Finland IBM Business Consulting Services, Markham, Ontario, Canada New Jersey Institute of Technology, School of Management, University Heights, Newark, New Jersey, USA University of Iowa, Fairfield, Iowa, USA IBM Relationship Alignment Solutions, Allendale, New Jersey, USA

The expectation of reciprocal obligations lays a foundation for the venture capitalist-entrepreneur relationship. These expectations, or perceived promises, constitute a psychological contract between the venture capitalist and the entrepreneur. In this paper, we are concerned with four forms of psychological contract violations in this relationship: i) disagreements over the strategy of the portfolio firm; ii) incompetence; iii) shirking; and iv) opportunism. We use the institutional theory as our frame of reference when explaining venture capitalists' behavior in situations where psychological contract violations occur. Our study is based on a survey conducted among 78 venture capitalists in Finland and Sweden. Our results show that the choice of the behavioral response is dependent on the institutional pressures exerted by the venture capital and the business community. It seems that venture capitalists with strong ties to their colleagues and entrepreneurs use more active an...

This paper examines transport modes that have employed Data Envelopment Analysis (DEA). It ascertains whether key DEA specifications necessary for estimating valid efficiency scores are present, the impact on the scores when they are not, and methods for correcting the errors. One critical specification is that for the sample data being used, each output must have been produced by various proportions of the inputs, with the substitutions between each pair of inputs shown on an isoquant. And, for the sample data, each input must have produced various proportions of the outputs, with the transformations between each pair of outputs shown on a production frontier. It is essential that these specifications are met by the data sample being used. DEA estimates input weights based solely on the Marginal Rate of Substitutions (MRS) between inputs on the sample data’s efficient frontier (isoquant). And DEA estimates output weights based solely on the Marginal Rate of Transformations (MRT) between outputs on the sample data’s production frontier. If there are no substitutions or transformations for the sample at hand, then there are no valid MRSs and MRTs, so DEA will utilize false weights and thereby produce false efficiency scores. In this paper, we analyze inputs and outputs that have often been used in DEA articles involving airline, urban transit, and freight rail data. Our data samples show that input substitution and output transformation are often not present. And, for our sample data, these misspecifications result in badly biased estimates of both technical efficiencies and second-stage regression parameters. We suggest methods for identifying and correcting for these specification errors, so future transportation DEA articles can avoid these problems.

Abstract Building on the insights from observational learning and other social influence research, this study challenges the existing literature that proposes a linear relationship between prior funding and subsequent contributions in the crowdfunding setting. Instead, we propose a U-shaped relationship, illustrating a negative relationship between prior funding and subsequent contributions when funding amounts are small and this relationship becomes positive when prior funding amounts are large. Consistent with the rational herding perspective, we assume that individuals do not mindlessly mimic one others' behaviors, but incorporate quality signals into their decision-making. Signals indicating a high quality project such as video quality, as well as the preparedness and passion of the entrepreneur enhance this U-shaped relationship whereas indicators of situational urgency weaken this relationship. Based on a sample of 11,019 daily observations of 333 Kickstarter projects, we find general support for our hypotheses. Our post hoc experiment further supports the mechanisms underlying the U-shaped relationship. This paper extends our understanding of the relationship between past actions and subsequent behavior, and contributes to the literatures of observational learning, crowdfunding, and visual information. Executive summary We challenge the extant literature that has proposed, but inconsistently documented, a positive effect of prior funding on subsequent crowdfunding contributions. We argue that such inconsistency is due to the lack of integration of insights from other social influence research, such as observational learning, threshold models, and bystander effects. This research has been limited when postulating that crowdfunding backers simply imitate others' actions in order to mitigate uncertainty producing a linear effect, yet such an effect depends on the intensity of others' actions and may be curvilinear. This research overlooks the fact that backers do not merely passively imitate others' behaviors, but incorporate quality signals sent by entrepreneurs to make such decisions. Thus, it is important to account for potential moderators that may influence the complex relationship between prior funding and subsequent contributions. Based on observational learning research and related models, accrued prior funding may be perceived differently by potential backers: individuals may view accrued funding as a sign of a decreased funding need on the part of a campaign's creators, because others are already backing the campaign or, alternatively, they may see it as a cue of high product quality. These conflicting effects may lead to a U-shaped relationship between prior funding and subsequent contributions at a collective level. At low funding levels, prior funding may be negatively associated with subsequent contributions because such levels indicate there is already support, but that the campaign may not be of high quality. At medium levels, prior funding may have no effect on contributions, aside from halfhearted interest of other backers. At high levels, prior funding may be positively related to subsequent contributions as this sends a robust cue of project quality and convinces prospective donors to contribute. Further, we derive a U-shaped relationship which may be moderated by visual media-based quality signals and situational urgency. To test these hypotheses, we conducted two studies. One was a field study of 333 Kickstarter projects, with 11,019 daily observations of crowdfunding activities from mid-February 2013 through mid-April 2013. We used the Kicktraq website to track Kickstarter projects and recruited 390 participants via Amazon Mechanical Turk (MTurk) to evaluate the video pitches on Kickstarter. Our results suggest a negative relationship between prior funding and subsequent contributions when funding amounts are small. This relationship becomes positive when prior funding amounts are large. Thus, we find a U-shaped relationship between prior funding and subsequent contributions, with an inflection point when prior funding amounts reach between 72% and 80% of the funding goal. This is strengthened in the presence of visual media-based quality signals, such as video quality, as well as the preparedness and passion of the entrepreneur. However, indicators of situational urgency may weaken this U-shaped relationship. We followed up with a post hoc experiment to document the two mechanisms by which prior funding influence subsequent contributions. We found that increases in the prior funding amount increased perceived product quality but decreased perceived urgency. These perceptions were found to jointly influence participants' proposed pledged amounts, supporting an explanation of a complex relationship between prior funding and subsequent contributions. This study is among the first to offer a more complete picture of the relationship between past actions and subsequent behavior under…

In this paper, we analyse changes in the business model components of firms commercialising product innovations. We distinguish between three different types of business model changes based on their learning vs. unlearning content. Drawing on a study of 61 product innovation commercialisation projects, we suggest that business model expansion has positive short-term performance implications, while business model substitution is likely to hurt short-term performance. No statistically significant relationship between business model contraction and short-term performance was found.

This article presents a conceptual discussion and a theoretical framework explaining how the liabilities of newness, which are traditionally thought of as disadvantages that young companies face, contribute to early firm internationalization. Through a systematic analysis of the liabilities that international new ventures face, as well as the liabilities and the advantages that a young age provides, we are able to integrate findings from the existing body of diffuse research on newness and internationalization, and develop propositions for future empirical research. Based on previous liabilities of newness and foreignness research, our study provides a novel theoretical model that explains early internationalization over and beyond existing internationalization models.

We investigate the effect of innovativeness on crowdfunding outcomes. Because crowdfunding campaigns characterized by greater incremental innovativeness are more comprehensible and generate more user value for typical crowdfunders, incremental innovativeness may result in more favorable funding outcomes. By comparison, campaigns that feature greater radical innovativeness are riskier to develop, harder for crowdfunders to understand and result in less favorable funding outcomes. This negative effect of radical innovativeness may be mitigated by incremental innovativeness, which may help crowdfunders to understand and appreciate radical innovativeness more. A sample of 334 Kickstarter campaigns provides support for our hypotheses.

Business folklore often describes venture capitalists as “risk taking specialists”, as risk lies at the heart of the entrepreneurial process and the investments surrounding new ventures. Prior research dealing with risk in the venture capital setting has separately focused on investors’ investment criteria and post-investment procedures to manage risk. However, the question of whether differences in risk perceptions, risk preferences and experience prompt differing investment and risk reduction strategies remains a largely unexplored territory. This study sets out to explore this unanswered question by taking the Sitkin & Pablo (1992) model of risky decision-making behavior as its point of departure. This model suggests that differences in risk taking may be driven by differences in experience, risk perceptions and risk preferences. The Sitkin and Pablo model is based on the assumption that venture capitalists deal with risks by first calculating and then choosing among the alternat...

This study addresses a hitherto underexplored, but potentially very central issue in venture capital research by investigating whether differences in risk perceptions and professional experience of venture capitalists prompt differing investment and risk reduction strategies. The study is based on a survey sent to 142 Swedish and Finnish venture capitalists, with a response rate of 63% (90 responses). Our results