Organizational Emergence Research Paper

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It has been estimated that at any one time over 500 million people globally are involved in the process of starting up a new venture (Reynolds, Bygrave, & Autio, 2003). This makes the study of emerging organizations one of the primary areas of research in the field of entrepreneurship (Aldrich, 1999). Organizational emergence is a dynamic process involving activities such as obtaining resources, developing products, hiring employees, and seeking funding. New ventures undertake these activities at different times (Lichtenstein, Dooley, & Lumpkin, 2006), and in different orders (Carter, Gartner, & Reynolds, 1996). Carrying out these activities lays the foundation for the new venture to develop unique capabilities and to gain the trust of stakeholders.

Organizational emergence involves those activities and events that are undertaken before an organization becomes an organization. This is the “in creation” period in the life cycle of an organization. The individuals who undertake purposeful actions to construct an organization based on their vision are referred to as nascent entrepreneurs (Aldrich, 1999; Baron, 1998, 2000; Bird, 1988). During emergence, the nascent entrepreneurs bring together resources and engage in activities that will eventually distinguish the business as an entity that is separate from the individuals who began it (Carter et al., 1996; Reynolds, Storey, & Westhead, 1994).

While start-up activities are an important component when trying to understand an emerging organization, it is also important to develop an understanding of the individuals involved in the start-up process. These nascent entrepreneurs may form an organization on their own, or work with others in a team (Aldrich, 1999). They have different motivations for starting a firm, from wanting greater independence to trying to gain wealth (Carter et al., 1996), and they tend to have different support systems and career mentors. While some nascent entrepreneurs have a high regard for themselves and their ability (Markman, Balkin, & Baron, 2002), others are more modest. In addition, individuals who are thinking about starting a business tend to look for start-up opportunities in different places, and have very different ideas about what the size and scope of the business should be once the new venture is established.

In this research-paper, we examine the scholarship around organizational emergence. To do so, we start by taking a look at the well-regarded conceptual model of organizational emergence developed by Katz and Gartner (1988). We then examine the empirical research with respect to who nascent entrepreneurs are and what nascent entrepreneurs do. Specifically, we review research on entrepreneurial cognition plus start-up activities and social capital. We then discuss the scholarship on indicators of emergence or start-up success. Finally, we present two sources of data on nascent firms that scholars can use when examining this phenomenon. We conclude with some possible areas of future research about emerging organizations.

Conceptual Frameworks: The Katz And Gartner Model

Katz and Gartner (1988) developed a well-regarded framework that explains organizational emergence by outlining four basic properties of emerging organizations. These properties are as follows: intentionality—the purposeful effort involved in organization emergence; resources—the tangible building blocks of an organization; boundary—the creation of protected or formalized areas in which emergence occurs; and exchange—the crossing of boundaries to either secure inputs (e.g., resources) or outputs of the organization. While we will look at these four properties independently, it is important to remember that we are doing so for conceptual convenience and that these properties are interrelated and overlap substantially.

Intentionality

Intentionality is “an agent’s seeking [of] information that can be applied toward achieving the goal of creating a new organization” (Katz & Gartner 1988, p. 431). Organizations are created by individuals acting purposefully, and therefore it is the entrepreneurs’ intentions that lead to activities involved in organization creation (Bird, 1988; Shook, Priem, & McGee, 2003). In the Katz and Gartner model, intentionality is used to represent the individual cognitive characteristics of the nascent entrepreneur, thus addressing the question of who nascent entrepreneurs are.

Resources

Resources are the building blocks of an organization. They include human and financial capital, property, and equipment (Katz & Gartner 1988, p. 432), as well as personal funds, time, and experience (Brush, Greene, & Hart, 2001). Resources are used, combined, and coordinated into the production activities of the new organization (Penrose, 1957). Studies examining the role of resources in new ventures find that different resource configurations influence new firm success, firm resources interact with firm strategies, and entrepreneurs “make do” with the resources that they have (Baker & Nelson, 2004; Brush et al. 2001; Chandler & Hanks 1994; Edelman, Brush, & Manolova, 2005).

Boundary

Boundary is the “barrier condition between the organization and its environment” (Katz & Gartner 1988, p. 432). It is the “space” where the organization exerts some control over the resources in its environment. Boundaries can be determined by social relations, time, legal and formal contracts, and physical and spatial considerations (Scott 1987). As boundaries coalesce, routines and competencies are developed within the now defined firm, which allows it to compete and cooperate (Aldrich, 1999). Boundaries may be formal, as in legal form, or informal, as in the case when the entrepreneur makes a conscious decision to found the business (Learned, 1992). Early boundary-defining actions include deciding on which people to hire, how jobs are structured, and how new members interact with each other, including how they interact with people outside the organization (Aldrich, 1999). Empirical studies examining boundaries of new organizations find that in the early phases of organizational evolution, organizational structures, practices, and boundaries vary widely, but tend to be informal and fluid (Bhave 1994).

Exchange

Exchange refers to cycles of transactions that occur within an organization (Katz & Gartner, 1988). While exchange can occur within the boundaries of an organization (i.e., across different areas of the organization), for small fledgling firms, most exchanges occur across organizational boundaries or between firms. The pattern of exchange usually involves resources or inputs that are transformed into outputs (Katz & Kahn, 1978). Exchanges are inherent in the social contract: employees or participants in the organization agree to perform certain work in exchange for pay, rights, or privileges (Weick, 1979). Resources are acquired through an exchange process while goods and services are produced and exchanged across boundaries of the organization (Scott, 1987).

Limitations of the Katz and Gartner Model

While the Katz and Gartner (1988) framework provides researchers with a solid foundation for examining the phenomenon of organizational emergence, as with all frameworks it has a number of limitations. Specifically, the framework was initially developed as a means for entrepreneurship researchers to identify new ventures in the greater population of firms, and so focuses on tangible dimensions of organizations that are considerably more easily identified. In doing so, it fails to adequately develop the theoretical framework for a number of less tangible dimensions that play an important and ongoing role in the development of new firms. Two such dimensions are behaviors that lead to enhanced organizational legitimacy and behaviors that lead to organizational knowledge creation, accumulation, and transfer.

Empirical Research: The Nascent Entrepreneur

Early research on entrepreneurial cognition looked at what is now known as “trait research.” Emerging from the early psychological research on needs (McClelland, 1961), entrepreneurial trait research focused on the search for a set of stable personality characteristics that distinguished entrepreneurs from nonbusiness owners. Trait factors included characteristics such as age, marital status, and family background. Typically these traits were easy to identify and readily measurable (they included items such as gender, education, family, and race).

The objective behind this line of inquiry was to determine the individual’s propensity to engage in entrepreneurial behavior based on the individual characteristics of an entrepreneur. While the best of these studies compared entrepreneurs to nonentrepreneurs (Collins & Moore, 1964) or compared groups of entrepreneurs (Smith, 1967), the general consensus is that research on entrepreneurial traits did little to advance our knowledge of entrepreneurship, and that entrepreneurship researchers would be better served focusing on what entrepreneurs did as opposed to who they were (Gartner, 1989; Shaver & Scott, 1991).

While trait research has largely been undercut by more recent scholarship, work in this area still exists on specific key individual dimensions. For example, the level of education has been explored in international studies of nascent entrepreneurs, with the general finding that individuals with medium to high levels of education are more likely to engage in start-up behaviors (Arenius & De Clerck, 2005; Delmar & Davidsson, 2000). Also, previous experience in starting one’s own firm has been found to correlate with start-up behavior (Cooper & Gimeno-Gascon, 1992). However, traits such as previous management experience, and amount of work experience have not been found to lead to new venture start-up (Aldrich & Kim, 2005; Delmar & Davidsson, 2000).

More recent scholarship examines specific cognitive attributes of nascent entrepreneurs. For example, entrepreneurial intentions—individuals’ beliefs influencing their intentions (Shapero, 1982)—has been explored in the theoretical work of Bird (1988), Katz (1992), and Krueger and Brazeal (1994). In addition, empirical work by Kolvereid (1997) provides support for the importance of entrepreneurial intentions to start-up success.

Another extension of the work on intentions is a recent study on the reasons why nascent entrepreneurs chose entrepreneurship as a career (Carter, Gartner, Shaver, & Gatewood, 2003). The study examined the importance of (a) financial success, (b) innovation, (c) recognition, (d) independence, and (e) self-realization by comparing nascent entrepreneurs to a control group of nonentrepreneurs. Counter to many of the common notions about entrepreneurship, the results found that financial success and innovation were not primary reasons why people started their own businesses. In fact, none of the variables studied were found to have a singular impact on the start-up motivations of nascent entrepreneurs, suggesting that motivations behind starting a new venture are complex and interrelated.

Moving away from intentions, other scholars use the idea of entrepreneurial cognition in their work as well. McGrath and MacMillan (1992) found that the content of entrepreneurial beliefs is similar across international cultures. Cooper, Woo, and Dunkelburg (1988) discovered that entrepreneurs believe their own chances of success are very high—higher than the chances of success they perceive for other firms. Gatewood, Shaver, and Gartner (1995) found that the cognitive beliefs associated with entrepreneurial persistence vary by gender. Edelman, Friga, Mishina, and Yli-Renko (2004) examined the role of objective versus subjective environmental perception on the likelihood of a nascent firm becoming an operating business. They found that the nascent entrepreneur’s perception of the environment was significantly more important when starting a new venture than an objective environmental measure. Finally, Forbes (1999) provided a comprehensive review of the literature on cognition and nascent entrepreneurs.

Social Capital

One important, boundary-spanning activity in which nascent firms are involved is the development of relationships, or social capital, with others who are outside the newly defined boundaries of the firm. Social capital is the set of resources that accrue to an individual or group by virtue of their social connections (Coleman, 1988). Social capital is different from other forms of capital in that it is not owned by an individual but instead is a function of the relationship between two or more individuals.

Recently, a number of empirical studies have examined the role played by social capital in the process of starting a new venture. Kim, Aldrich, and Keister (2003) found a positive effect between the decision to become nascent entrepreneurs and the number of relatives who own their own businesses. This finding suggests that mentoring and family ties are important when starting a new firm, implying that it may be possible to transfer social capital among friends and family. International studies on nascent entrepreneurs indicate that those who know others who are self-employed, and hence have more extensive social networks, are more than twice as likely to start a new venture (Arenius & Minniti 2005). Finally, Davidsson and Honig (2003) found a general pattern of the increasing importance of social capital over the start-up period. Their findings indicate that social capital is less important at the beginning of the start-up process; however, as the firm moves toward increasingly greater financial performance, social capital takes on a more important role. This suggests that not only is the development and use of social capital a necessary component of growing a new venture, but also that as a resource, social capital becomes increasingly important as young firms move beyond the initial start-up phase and into growth.

Start-Up Teams

While it important to understand who nascent entrepreneurs are from an individual perspective, over 50% of new ventures in the United States are started not by individuals, but by teams (Aldrich, Carter, & Ruef, 2004). This suggests that the process of starting a new firm is a collective, not an individual, effort. Most new firms (74%) are started by a team of two, and of these two-person teams, the majority (53%) are marital partners or family members (Aldrich, Carter, & Ruef 2004).

Ruef, Aldrich, and Carter (2003) further examine new venture team composition. Moving beyond those firms started by marital partners, they found that start-up teams are comprised of individuals who are similar in gender, ethnicity, and occupational background. This suggests that, counter to the description portrayed by many entrepreneur-ship textbooks, new firms are not started by a large group of individuals who collectively bring a number of critical skills or competencies to the new firm, but instead they are started by a small number of people who are either family members, or who are very similar.

Reuf, Aldrich, and Carter’s (2003) findings have important implications for researchers interested in the development of organizational capabilities. Capabilities are the firm’s ability to exploit a particular set of organizational resources. In young firms, capabilities are directly related to the skills of the start-up team. For nascent firms that are in the process of start-up, this finding implies that new firms are not only are likely to have a limited set of capabilities, but also that the set of capabilities inherent in the new firm is not likely to rapidly expand. If nascent firms are going to survive and then thrive beyond the initial start-up period, Reuf et al. ‘s findings argue for a well-defined initial strategy that matches the capabilities of the nascent firm with the market opportunity.

Behaviors And Activities Of Nascent Entrepreneurs

While there has been a substantial body of work examining the question, Who are nascent entrepreneurs? an equally substantial number of scholars have looked at organizational emergence from the perspective of what nascent entrepreneurs do. These researchers are interested in the behaviors or activities surrounding the start-up process (Carter, Gartner, & Reynolds, 2004). Using a variety of theoretical frameworks to better understand the start-up process, these behavior-oriented scholars conduct research on topics such as the number of activities nascent entrepreneurs undertake (Carter et al., 1996), the grouping of those activities into a logical ordering (Manolova, Brush, & Edelman, 2002), the timing of start-up activities (Lichtenstein, Carter, Dooley, & Gartner 2004), and which activities precede other important start-up events (Delmar & Shane, 2004).

In the mid-1990s there was a flurry of activity in the behavioral area of new venture start-up. For example, Reynolds and Miller (1992) examined a sample of nascent entrepreneurs and found that start-up activities did not have a logical progression. Following this research, Gatewood et al. (1995) explored whether cognitive factors and entrepreneurial activities led to the formation of a business, as measured by sales. They found that activities involving setting up business operations, such as purchasing raw materials and supplies, hiring and training employees, producing, distributing, and marketing a product or service were significantly correlated with the creation of a new firm. Carter et al. (1996) identified a random sample of adults who were in the process of starting a venture. They examined specific start-up activities such as personal commitment, financial support, hiring, and activities that developed the structure of the business. They found that it was the number of activities, and in particular those activities that are more tangible, (e.g., looking for facilities and equipment, forming a legal entity) that increased the likelihood of survival.

While these early studies showed that the activities of nascent entrepreneurs who started a business are different from those of nascent entrepreneurs who did not, they suffered from problems of retrospective bias, lack of generalizability, and small sample size. These data collection issues were part of the impetus for the creation of the Panel Study of Entrepreneurial Dynamics (PSED) datasets (a more complete discussion of the PSED dataset can be found later in the research-paper), which specifically examine the start-up activities of nascent entrepreneurs. Building off of PSED data that was either collected in the United States or internationally, a number of more recent studies examine the connection between start-up activities and the probability of start-up.

Shane and Delmar (2004) examined groups of planning, legitimacy, and market activities and their effect on the probability of starting a new venture (defined as not disbanding) of 223 Swedish new ventures. They found that planning and legitimacy were significantly correlated with the probability of starting a new venture but that market activities had no effect. Two additional studies examined the timing of business plans and found that new ventures that wrote business plans before talking to customers and/or before beginning marketing or promotion had a lower rate of termination than other firms (Delmar & Shane, 2003a; Shane & Delmar, 2004). An additional study showed that those firms engaging in legitimizing activities were less likely to disband (Delmar & Shane, 2004).

Finally, Brush, Edelman, and Manolova (in press) examined the behaviors of nascent entrepreneurs using and then extending the Katz and Gartner (1988) properties of emerging organizations framework. They found that all of the four properties are important to the start-up effort and that the more properties (behaviors) in which nascent entrepreneurs engaged, the greater the likelihood they were to start a new organization. However, counter intuitively, their findings also suggest that the intention to start a new firm (intentionality) does not necessarily precede nascent entrepreneurs engaging in other organizing activities and that the rapidity through which nascent entrepreneurs moved through the start-up process was not a determinant of startup success.

Organizational Emergence Indicators

While conceptually simple, measuring organizational emergence presents scholars with a number of empirical challenges. One popular method of determining organizational emergence is to examine organizational exchange. However, even exchange is not straightforward in that there is not one agreed upon measure of exchange that determines emergence. In this section we will examine two popular methods of determining organizational emergence: first sales and operating success.

First Sale

One popular measure of exchange in the context of organizational emergence is first sale. First sale is a major milestone for a new firm. Not only does the first sale have the effect of generating early cash, which can lead to subsequent financial independence, the firm’s first sale helps it gain visibility, increase its organizational legitimacy in the eyes of its customers, begin to gain market share, and increase the likelihood of continued survival (Schoonhoven, Eisenhardt, & Lyman 1990). First sale signals the nascent firm’s market entry as an operational new venture, and thus marks the end of the discovery phase and the beginning of opportunity exploitation (Davidsson & Honig, 2003; Reynolds & Miller, 1992).

Many new firms engage in start-up activities and then, when they have developed a viable product or service, they have an exchange event, which is typically the first sale. However, using first sales as an indicator of emergence is problematic. Researchers using event history analysis methodology found that it is also common to see nascent entrepreneurs test their new idea by selling their new product or service before they engage in organization-building activities (Manolova, Brush, & Edelman, 2002). Indeed, it may be that starting a new business is predicated upon the nascent entrepreneur’s early first sales success. Therefore, it is important to determine when first sales occurred in the overall process of starting a new firm. Conservative scholars have concluded that this difference in the timing of first sales indicates that first sales should be used as an indicator of emergence in conjunction with other activities or indicators. For scholars this means that, by itself as a stand-alone measure, first sale is not a reliable indicator of organizational emergence.

Operating Business

While exchange, operationalized as first sale, is one popular way that scholars use to determine organizational emergence, another common measure they use to determine if the new venture has emerged is whether or not the firm is an operating business. While by definition less precise than first sales (because this operationalization of emergence relies on the exchange perceptions of the nascent entrepreneur), this perceptual determination of emergence overcomes many of the problematic issues involved with trying to use first sale as an emergence benchmark.

Operating business is typically used as an indicator of emergence when the researcher is interested in determining if the new venture has had short-term success. Again, while conceptually clear, this measure of emergence also has a number of difficulties associated with its usage. Principally, because it is based on the perceptions of the nascent entrepreneur, the researcher is less able to determine the precise stage of emergence of the new venture. Consider, for example, that one nascent entrepreneur may assert that her new venture is an operating business, while the same set of circumstances may be interpreted by another nascent entrepreneur as a new venture that is still trying but is not yet operational. This problem can be overcome with a broad definition of operating, but the cost of this definition is a lack of measurement precision.

As indicated by the above discussion, using exchange either alone, operationalized as first sales, or as a perceptual measure in operating business is problematic. Even the simple process of combining data that states the business is operating with data that states the nascent entrepreneur is still trying is problematic, given that recent data collection efforts have indicated that some nascent entrepreneurs have been trying to start a new venture for over 20 years (Gartner, Carter, & Reynolds, 2004). One additional interesting perspective on new venture performance splits success and failure into two distinct categories, with success operationalized as either an operating business or not, and failure defined as still trying. The logic in this approach is that success in starting a new venture is as much about finding out if an idea is viable, and those nascent entrepreneurs who are still trying have not determined the viability of their concept (Davidsson, 2006). While this approach has not been adopted in the empirical literature to date, the logic of this operationalization is compelling and deserves further consideration.

Clearly, no matter how exchange is used as an operationalization of performance, the determination of whether or not the new venture is successful is problematic. While this is not an issue for practicing entrepreneurs, for researchers trying to study emergence phenomena, this issue is cause for considerable concern. Young scholars, looking at emergence from a data-driven perspective, must be aware of the issues related to the measurement of emergence, and clearly state the definitions they are using as well as the limitations of their chosen operationalizations.

Organizational Emergence: Datasets For Future Research

To enhance the research on organizational emergence, there are a number of publicly available databases that contain specific data about new ventures. At the most basic level, U.S. census data and Dun and Bradstreet are two important sources of data available to researchers interested in a more statistical approach. Census data is drawn from the IRS tax-withholding records and very often lists new ventures faster than Dun and Bradstreet, a private database. The data contain information about the number of new firms, the number of employees, estimated number of receipts, and annual payroll (Phillips, 2000). While census data alone may not address a particular research question, it is a good source of contact information and when merged with other databases such as Dun and Bradstreet, can supply an accurate snapshot of entrepreneurial activity in a particular city or region.

Panel Study of Entrepreneurial Dynamics (PSED)

The Panel Study of Entrepreneurial Dynamics (PSED) is designed to investigate the earliest stage of the organizational life cycle. PSED looks at the process of new business creation, or “the number and characteristics of nascent entrepreneurs who attempt to start businesses and the likelihood that such attempts will result in the formation of new businesses” (Gartner, Shaver, Carter, & Reynolds, 2004, p. ix). Nascent entrepreneurs are defined as persons who have not received a positive cash flow from the new business for more than three months. This decision rule was established in order to differentiate new businesses “in the process of emergence” from already established new businesses.

PSED consists of one initial and three follow-up phone and mail surveys, which track a nationally representative sample of nascent entrepreneurs over the course of five years. The idea was to track the number and characteristics of individuals who attempt to start up a business, as well as the characteristics and outcomes of the entrepreneurial start-up process. The dataset combined respondents’ answers to survey questions from the four interview waves of the study. Thus, for each respondent the dataset contains information whether or not a specific start-up activity was undertaken over the course of the study, and if so, in what month and year it was undertaken. For example, at the time of the initial data collection (Wave 1 of the phone interviews) a respondent may have reported that she had not completed a business plan, but may have subsequently reported that a business plan had been completed (at the time of Waves 2, 3, or 4). Researchers would count that a business plan had been completed regardless of the timing of this start-up activity.

The PSED study identified individuals who reported that they were trying to start a new business within the 12 months preceding the initial wave of the study (Wave 1 of the phone survey), which took place in 1998-1999. The question regarding the perceived outcome of the entrepreneurial initiative (whether the nascent entrepreneur believed the new business was already operating, an active start-up, an inactive start-up, or no longer being worked on by anyone) was asked in the follow-up waves of data collection (e.g., in Waves 2, 3, and 4 of the phone survey), which took place, as follows: Wave 2—in 1999-2001, Wave 3—in 2001-2003, and Wave 4—in 2003. If a nascent entrepreneur reported that the new business was already operating or that it was no longer being worked by anyone, their case was not tracked from that point on. If, however, a nascent entrepreneur reported that the business was still a start-up (active or inactive), the case was tracked in subsequent data collection waves. Thus, for each initially identified nascent entrepreneur, the data set contains information on the outcome of the start-up process over the course of 5 years (1998-2003).

The phone and mail survey gathered different information from respondents. The phone survey was more focused on demographic characteristics of nascent entrepreneurs as well as on the start-up team and the start-up activities and behaviors. In contrast, the mail survey concentrated on the cognitive aspects of start-up and asked questions about the aspirations of individual entrepreneurs, their reference groups, and career reasons about why they choose to become an entrepreneur.

While the phone survey and mail survey complement each other in that they each provide valuable but different information about nascent entrepreneurs, a number of nascent entrepreneurs chose to participate in the phone survey only, hence there is less data for evaluation in the mail survey. Another broader issue with PSED data that affects both the phone and the mail survey is missing data. A number of important questions have low response rates and thus are problematic to include in a systematic study of new ventures.

The PSED dataset has produced a number of interesting findings. In the area of minority entrepreneurship for example, the PSED has shown that Blacks are 50% more likely to engage in start-up activities than Whites and that Hispanic men are slightly more likely than White men to be involved with start-up. In addition, education significantly predicts nascent entrepreneurship, particularly for Blacks and Hispanics. Specifically, approximately 26 of every 100 Black men and 20 of every 100 Hispanic men with graduate education experience report efforts to start a new business. This compares to 10 of every 100 White men with graduate education experience.

Given the widespread interest in the PSED dataset, a number of volumes specifically devoted to nascent entrepreneurs have been published. Gartner et al. (2004) edited a book titled The Handbook of Entrepreneurial Dynamics: The Process of Organization Creation that details the PSED data collection process. This book provides researchers with the theoretical background of many of the variables in the PSED dataset and is an indispensable guide to navigating the data. In addition, two recent monographs in the Foundations and Trends in Entrepreneurship series have been published about nascent entrepreneurs and the PSED data. The first titled Nascent Entrepreneurs by Davidsson (2006) has an extensive review of over 75 papers on nascent entrepreneurship, while the second titled New Firm Creation in the U.S.: A PSED I Overview by Reynolds (2007), provides detailed statistical analysis of the PSED variables across the four waves of data.

Finally, through the sponsorship of the Kaufmann foundation, efforts are underway to collect data for the PSED II. This second study is a focused attempt to study the start-up teams and organizing behaviors of nascent entrepreneurs.

While longitudinal in nature like the PSED I, PSED II does not include a mail survey and so is limited to data that can be collected over the phone. Data collection for PSED II is ongoing and results are currently not available.

Global Entrepreneurship Monitor (GEM)

The Global Entrepreneurship Monitor (GEM) program is an ongoing compilation of data about entrepreneurship start-up efforts globally. The program began in 1999 with data collection efforts in 10 countries, and by 2006 had grown to encompass entrepreneurial activity in 39 countries. The objectives of the GEM project are to (a) measure difference in the level of entrepreneurial activity between countries, (b) uncover factors determining the levels of entrepreneurial activity, and (c) identify policies that may enhance the level of entrepreneurial activity (Minniti, Bygrave, & Autio 2006). Key findings from the GEM reports indicate that there are systematic differences in rates of entrepreneurship across countries. However, contrary to popular belief, the relationship between high levels of entrepreneurship and economic growth is not consistent as GEM findings indicate that there are a few highly entrepreneurial countries with low economic growth. In addition, the reports highlight a number of national features and characteristics associated with entrepreneurial activity.

In addition to the global report, the GEM group also produces a number of smaller reports on subgroups of entrepreneurs that may be of interest to researchers and policy makers. In 2005 these included special reports on high-expectation entrepreneurs and on women entrepreneurs. Researchers interested in conducting a finer grained analysis can examine entrepreneurship in a particular country or regional cluster accessing the data through a country specific report. Traditionally GEM has limited its data collection efforts on early stage entrepreneurs, however, in 2005, the focus of GEM was expanded to include characteristics of established business owners as well as the degree of innovativeness, competitiveness, and growth expectations of both early-stage and established ventures (Minniti et al., 2006). Summary and full GEM reports are available on the Internet or though the two sponsoring institutions, Babson College and the London Business School.

Conclusion

There is a considerable amount of scholarship in the area of emerging organizations. Researchers have developed organizing frameworks, and have extensively explored what entrepreneurs do—their start-up behaviors and activities—as well as who entrepreneurs are—their traits and cognitive attributes. However, despite the work that has been done in this area, many research questions remain for new scholars to explore.

In the area of what entrepreneurs do, there are still a number of questions surrounding start-up activities. While most scholars agree that start-up is not a linear process, studies so far have primarily employed linear methodologies in their analysis. Different methodologies, such as ethnographic studies, would add much to the field of study but not only to explore what entrepreneurs do, why they do what they do in terms of competitive forces or legitimacy building, and how often they engage and then reengage in the same activities are equally compelling questions for study. For example, it seems quite reasonable to assume that the process of obtaining credit from suppliers, looking for start-up financing, or obtaining raw materials are all activities that must be undertaken multiple times. However, what is not clear is the temporal pattern or possible rhythm that successful entrepreneurs may develop when undertaking these activities. Ongoing ethnographic studies may uncover such patterns.

Who entrepreneurs are is also an area where alternative methodologies such as in-depth case studies or ethnography could greatly add to our understanding. While entrepreneurial traits are relatively easy to study, they have done little to further our understanding of what makes an individual a successful entrepreneur. Coupling what entrepreneurs do with who they are in terms of their cognitive abilities would be a valuable contribution.

Finally, more attention needs to be paid in the start-up process to who entrepreneurs know. Social capital is an area that currently receives a great deal of attention when firms are in the growth stage. Less attention, however, has been paid to social capital of firms at their inception. Additional studies showing the benefits of social capital, both from a competitive perspective as well as from a legitimacy building perspective would be of great interest.

While the study of young organizations is inherently an interesting one, adopting a particular focus on emerging organizations is especially so. Emerging organizations, unlike their small firm or growing organization counterparts face unique challenges that seem almost insurmountable to the casual observer. However, data indicates that not only are many people interested in starting their own firms, but that young organizations are the engines of growth for developing as well as developed economies. Therefore, engaging in the study of these dynamic new firms is not only in the best interest of the young scholar, but also is in the best interest of society in general.

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