A number of managerial issues have been identified as important to new business success. We have selected eight areas of management that have been examined in prior research: (1) coping with government regulations, (2) developing good relations with unions, (3) finding qualified people, (4) selecting lawyers and accountants, (5) coordinating, motivating, and compensating personnel, (6) minimizing startup team conflicts, (7) finding qualified executives, and (8) establishing goals and strategic plans. Prior research provides no guidance for predicting which of these are "strategic" assets of new ventures, or whether problem solving for some of them is more critical for developing strategic competencies than others. Thus, our examination of their implication for the success and survival for a new firm is exploratory.
Coping with Government Regulations. The intricacies of government regulations at the federal, state, and local levels proves challenging for all firms. For new firms, greater difficulties are posed because in many cases on prior knowledge base has been developed. Regulatory matters as well as deregulation have been identified as important to firm success (Bird, 1989; Park, 1983).
Developing Good Relations with Unions. Though union membership has diminished sharply in the US, certain sectors continue to be dominated by union labor. Miles (1989) foresees regional unions which provide portable benefits to employees in geographical regions. Such union "pools" may be important to entrepreneurial success. Further, collective bargaining contracts shape employee relations and possess the ability to disrupt business (Hannan, 1995).
Finding Qualified People. Attracting qualified employees was found to be directly related to better market response (Mullins, 1996). Sexton et al (1997) noted that entrepreneurs reported hiring skills were among those most highly desired by fast growing firms. In discussing pitfalls of entrepreneurial firms, Hogarty (1993) suggests that too many entrepreneurs were quick to hire and slow to fire. Selecting Lawyers and Accountants. Substantial advice and guidance is needed to successfully handle the myriad of legal requirements necessary for establishing a business. Key among those who provide such advice are lawyers and accountants. Park (1983) found that as businesses grow, legal matters increase in importance for the new firm.
Coordinating, Motivating, and Compensating Personnel. Compensation for associates and motivation for growth were among the top ten entrepreneurial learning needs reported in a survey conducted by Sexton et al (1997). Jones, Morris, and Rockmore (1995) examined entrepreneurial companies and found that an entrepreneurial orientation encouraged higher levels of employee involvement, set salary level through market comparisons, and relied more on external sources for job candidates.
Minimizing Startup Team Conflicts. Carter, Gartner, and Reynolds (1996) found that nascent entrepreneurs who actually started businesses were aggressive in organizing a startup team and forming a legal entity. To begin a business, entrepreneurs took on more of the day-to-day activities. This action orientation suggests that teamwork was valued. Conflicts did not block forming a legal entity.
Finding Qualified Executives. Leadership is needed from executives who enhance the organization's core competencies (Lawler, 1996). Finding qualified individuals, especially when succession is a consideration, becomes important for fast growing firms (Sexton et al, 1997).
Establishing Goals and Strategic Plans. Tellis and Golder (1996) found that pioneering firms that fail in the early stage, fail as a result of poor strategic planning. Careful planning to examine the direction of the business, the issues and foreseeable problems as well as the financial needs are critical factors to firm success (Chittipeddi and Wallett, 1991).
© 1997 Babson College All Rights Reserved
Last Updated 03/30/98