Latest Research

Environmental jolts, institutional change, and the creation of entrepreneurial opportunity in the US electric power industry

Wesley D. Sine R.H. Smith School of Business, University of Maryland, 3314 Van Munching Hall, College Park, MD 20742, USA
Robert J. David Faculty of Management, McGill University, 1001 Sherbrooke Street West, Montreal, Que., Canada H3A 1G5

Abstract

The relationship between institutional change and entrepreneurship is poorly understood. We build the theory in this area by tracing institutional change in the US electric power industry over a 40-year period. Our analysis shows that environmental jolts mobilize actors to reformulate institutions, resulting in increased entrepreneurial opportunity. When the institutional environment is stable, we find that incumbent organizational forms and embedded logics present formidable obstacles to entrepreneurial activity. Environmental jolts, however, catalyze search processes and motivate the evaluation of current institutional logics. Specifically, in the case of the electric power industry, environments of abundance and regulation resulted in homogeneity of organizational structures and strategies, and few entrepreneurial opportunities. Environments marked by scarcity and crisis, however, witnessed heavy scrutiny of existing institutional arrangements that eroded their taken-for-grantedness and symbolic value, resulting in opportunities for entrepreneurial action.

© 2002 Elsevier Science B.V. All rights reserved.

Keywords: Environmental jolts; Institutional change; US electric power industry

Download PDF

The Halo Effect and Technology Licensing: The Influence of Institutional Prestige on the Licensing of University Inventions

Wesley David Sine Robert H. Smith School of Business, University of Maryland, 3314 Van Munching Hall, College Park, Maryland 20742, wsine@rhsmith.umd.edu
Scott Shane Robert H. Smith School of Business, University of Maryland, 3321 Van Munching Hall, College Park, Maryland 20742, sshane@rhsmith.umd.edu
Dante Di Gregorio Robert H. Smith School of Business, University of Maryland, 3321 Van Munching Hall, College Park, Maryland, and Anderson School of Management, University of New Mexico, Albuquerque, New Mexico 87131, ddigrego@rhsmith.umd.edu

Abstract

Sociologists and organizational theorists have long claimed that the processes of knowledge creation and distribution are fundamentally social. Following in this tradition, we explore the effect of institutional prestige on university technology licensing. Empirically, we examine the influence of university prestige on the annual rate of technology licensing by 102 universities from 1991-1998. We show that institutional prestige increases a university's licensing rate over and above the rate that is explained by the university's past licensing performance. Because licensing success positively impacts future invention production, we argue that institutional prestige leads to stratification in the creation and distribution of university-generated knowledge.

(Prestige; Status; Licensing; Technology)

Download PDF

From Plan to Plant: Effects of Certification on Operational Start-up in the Emergent Independent Power Sector

WESLEY D. SINE Cornell University Johnson Graduate School of Management, Sage Hall Ithaca, NY 14853, Tel: (607) 254-1336 e-mail: wds4@cornell.edu
ROBERT J. DAVID McGill University Desautels Faculty of Management, 1001 Sherbrooke Street West, Montreal, Quebec, Canada H3A 1G5, Tel: (514) 398-7463 Fax: (514) 398-3876 email: robert.david@mcgill.ca
HITOSHI MITSUHASHI University of Tsukuba Graduate School of Social Systems and Management, Tennoudai 1-1-1 3F1100, Tsukuba, Ibaraki 305-8537 JAPAN, Tel: +81-298-53-5169 e-mail: hitoshi@sk.tsukuba.ac.jp

Abstract

In this paper, we study the transition from planned venture to operational start-up in the emergent independent power sector. While planned ventures face tremendous obstacles in assembling the resources necessary to begin operations, we hypothesize and show that formal certification from authorized actors increases the likelihood of making this transition. Moreover, we find that the effects of certification are contingent on the legitimacy of the sector as a whole: certifications have a stronger effect on reaching start-up when sector legitimacy is low than when it is high. This research helps us understand a rarely studied organizational transition - from entrepreneurial intention to actual operations - within nascent sectors. It directs attention to the legitimating effects of formal certification, highlights the importance of a multi-level approach to legitimacy, and contributes to the growing rapprochement between entrepreneurial studies and institutional theory.

Download PDF

Risky Business? Entrepreneurship in the New Independent- Power Sector

Wesley D. Sine Cornell University
Heather A. Haveman Columbia University
Pamela S. Tolbert Cornell University

Abstract

Building on sociological research on institutions and organizations and psychological research on risk and decision making, we propose that the development of institutions that reduce the risks of entering new sectors has a stronger effect on the founding rates of firms using novel technologies than on firms using established technologies. In an analysis of the independent-power sector of the electricity industry from 1980 to 1992, we found that the development of regulative and cognitive institutions legitimated the entire sector and provided incentives for all sector entrants; thus, foundings of all kinds of firms multiplied rapidly but had a stronger impact on those using risky novel technologies. In contrast, the central normative institutions that developed in this sector, state-level trade associations, provided greater support for particular forms (those using established technologies) and thus increased foundings of those favored forms more than foundings of less favored forms (those using novel technologies). Our study demonstrates how institutional forces can alter the mix of organizations entering a new industry and thus contribute to diversity, as well as similarity, among organizations.

We thank Howard Aldrich, Robert David, Michael Lounsbury, Hitoshi Mitsuhashi, Peter Roberts, Scott Shane, David Strang, Anand Swaminathan, Elke Weber, Geraldine Wu, and the ASQeditor and three anonymous reviewers for their comments. We also thank seminar participants at Cornell, MIT, the London Business School, Washington University, Harvard, INSEAD, University of California at Berkeley, UCLA, and University of California at Santa Barbara for their helpful criticism of earlier versions of this paper. Finally, we thank Roberto Silva for his research assistance. This research was funded in part by National Science Foundation Grant #SES-9906960.

Download PDF

Revisiting Burns and Stalker: Formal Structure and New Venture Performance in Emerging Economic Sectors

WESLEY D. SINE Cornell University
HITOSHI MITSUHASHI University of Tsukuba
DAVID A. KIRSCH University of Maryland

Abstract

This study examines the effects of formal structure on the performance of new ventures in the emergent Internet sector during the years 1996-2001. Burns and Stalker (1961) argued that in dynamic economic sectors, firms with organic structures are more effective than those with more mechanistic structures. We suggest this proposition does not hold for new ventures in turbulent, emergent economic sectors. Building on Stinchombe's (1965) arguments concerning new ventures' liability of newness, we hypothesize that new ventures with higher founding team formalization, specialization, and administrative intensity outperform those with more organic organizational structures. Results support these hypotheses.

Download PDF