Articles
Markus C. Becker, Entrepreneurial Imprinting and Organizational Persistence: The Case of Carl Zeiss (2012), available at http://ssrn.com/abstract=1920678.
Abstract (adapted from author): Entrepreneurs found organizations and shape them. Yet, there is limited knowledge about how entrepreneurs imprint their organizations as they grow, and how they make imprinted characteristics persist. Drawing on archival material that covers 140 years, this article traces how an entrepreneur imprinted a habit for science-based product development on the Carl Zeiss firm and what he did to make it persist over time despite strong growth and extreme discontinuities. The entrepreneur forged a habit for product development, put in place different replication mechanisms as well as error correction mechanisms, and thus created the conditions for powerful replication of the habit. In identifying these mechanisms the entrepreneur created, the paper contributes to our understanding of entrepreneurship and organizational evolution.
Markus Beckmann & Anica Zeyen, Franchising as a Strategy for Combining Small and Large Group Advantages (Logics) in Social Entrepreneurship: A Hayekian Perspective, 43 Nonprofit & Voluntary Sector Q. 502 (2014).
Abstract (adapted from authors): This article develops a Hayekian perspective on social franchising that distinguishes between the end-connected logic of the small group and the rule-connected logic of the big group. The authors’ key claim is that mission-driven social entrepreneurs often draw on the small-group logic when starting their social ventures and then face difficulties when the process of scaling shifts their operations toward a big-group logic. In this situation, social franchising offers a strategy to replicate the small group despite system-wide scaling, to mobilize decentrally accessible social capital, and to reduce agency costs through mechanisms of self-selection and self-monitoring. By employing a Hayekian perspective, the authors are thus able to offer an explanation as to why social franchising is a suitable scaling strategy for some social entrepreneurship organizations and not for others.
Christiane S. Bode & Filipe M. Santos, The Organizational Foundations of Corporate Social Entrepreneurship (INSEAD Working Paper No. 2013/07/EFE/ST/ICE, 2013), available at http://ssrn.com/abstract=2202105.
Abstract (by authors): Large firms are increasingly incubating social business initiatives that aim at the creation of value for groups who are not current stakeholders. The authors argue that these initiatives, which we call corporate social entrepreneurship (CSE) initiatives, are the work of social intrapreneurs who are responding to perceived shortcomings in society and utilize the resources of the firm to provide market based solutions to address them. This paper analyzes the origins of CSE and, takes the perspective of the social intrapreneur, outlines the process through which a CSE initiative gains justification and access to resources inside a corporation, develops its business model, and grows. In contrast to received wisdom in the corporate entrepreneurship literature, the authors argue that CSE initiatives should not be hidden from view but instead quickly move to secure approval and mobilize resources. It is proposed that such outcome is favored by a process of ambiguity creation rather than reduction and that, ironically, social intrapreneurs should focus on financial sustainability ahead of growth. Our work is the first attempt at conceptualizing the process of corporate social entrepreneurship, an increasingly prevalent phenomenon that can have important consequences for both organization theory and economic prosperity.
Brian J. Broughman, Entrepreneur Wealth and the Value of Limited Liability(2011), available at http://ssrn.com/abstract=1761011.
Abstract (from author): This paper uses variation in entrepreneur wealth to test the importance of limited liability in choice of organizational form. Economic theory suggests that wealthy entrepreneurs demand liability protection to shield their personal assets. Yet, despite an extensive theoretical literature on limited liability there are no empirical studies which directly address this issue. Using restricted-access data from the Kauffman Firm Survey, I find that for every $100,000 of exposed personal wealth an entrepreneur is 2.1% to 2.6% more likely to form a corporation or LLC. I use state-level property exemptions to create exogenous variation in an entrepreneur’s liability exposure. This study provides support for the economic theory of limited liability and improves our understanding of an entrepreneur’s choice of organizational form.
Cheryl Carleton Asher et al., Towards a Property Rights Foundation for a Stakeholder Theory of the Firm, 9 J. Mgmt. & Governance 5 (2005).
René Díaz-Pichardo et al., From Farmers to Entrepreneurs: The Importance of Collaborative Behaviour, 21 J. Entrepren. 91 (2012).
Abstract (from journal): The purpose of this article is to discuss the problems associated with attempting to develop collaborative enterprise amongst farmers in Mexico. Sustainable development of agricultural land requires the development of entrepreneurial and organisational competency in farmers. However, the educational processes involved in such development have been insufficiently studied, especially in emerging economies. This research aims to explore the early stages of the process of transformation from farmers to entrepreneurs, through in-depth interviews with participants in a public pilot project in Mexico. Interviews were performed in the locations where the farmers meet. In total, 28 interviews were carried out: 18 farmers, seven promoters and representatives from three farm links agencies. Results suggest that associative behaviour of farmers is a key element in the process of improving entrepreneurial and organisational competency in the agricultural land. Little prior research into the entrepreneurial development of farmers in Mexico has been undertaken.
Joseph Karl Grant, When Making Money and Making a Sustainable and Societal Difference Collide: Will Benefit Corporations Succeed or Fail? 46 Ind. L. Rev. 581 (2013).
Abstract (by author): This article explores benefit corporations as a tool entrepreneurs can use to make money, foster environmental sustainability, and create societal improvement. Part I briefly examines who has been advocating for the creation and passage of benefit corporation legislation in the United States. Part II analyzes the statutory requirements to form a benefit corporation. Specifically, Part II discusses the issues of purpose, accountability, transparency, rights of action, and enforcement of those rights in connection with the creation and operation of a benefit corporation. Part III highlights the states that have passed benefit corporation statutes and highlights those considering similar legislation. Part IV examines the pre-existing use of benefit entities, in unincorporated form, through exploration of the benefit certification process. Finally, Part V offers a future prognosis and debates whether benefit corporations will succeed or fail.
Ramon Guillen, Jr. & Tasha M. de Miguel, Applauding the Entrepreneurial Spirit: Florida Welcomes Veteran-Owned Small Businesses, 37 Nova L. Rev. 579 (2013).
Abstract (adapted from authors): The goal of this article is to explore the benefits available to veterans in support of their entrepreneurial efforts. In order to provide veterans with enough information to get them started on the road to classification as a Veteran-Owned Small Business (VOSB) or Service-Disabled Veteran-Owned Small Business (SDVOSB) with the goal of preference in government contracting in mind, the authors begin with a discussion of the definition of disability and the role of PTSD. Then, the authors discuss the requirements for classification as a VOSB or SDVOSB and the benefits available for each. The authors explore the verification process and the potential pitfalls throughout that very critical phase. Next, the authors discuss the benefits that the State of Florida offers to veterans and the requirements for creating a business entity in Florida. Additionally, the authors address the definition of a “small business concern” and engage in an analysis of the critical components of that definition. Lastly, another issue for veterans to consider is the voluntary and involuntary transfer of shares once their enterprise is up and running, and how those transfers can impact their status as a VOSB or SDVOSB.
Christopher D. Hilton, Low-Profit Limited Liability Companies (L3cs): Many Traps for the Unwary Social Entrepreneur, 87 Tul. L. Rev. 169 (2012).
(Abstract by author): Amid a sluggish economy and fiscal challenges at every level of government, the low-profit limited liability company (L3C) has spread rapidly over the past four years, promising a way to spur investment in small businesses and achieve socially beneficial goals with minimal governmental expense or oversight. The L3C's calculated and focused marketing campaign has convinced eight states, including Louisiana, to adopt this new business structure, but the substance of this corporate form leaves much to be desired. Although the L3C is designed to combine investment capital from nonprofit foundations and private investors, the current L3C laws fail to deliver on that promise. The L3C business form, with its distortion of tax policy, inherently conflicting goals, and intractable governance problems, offers nothing but pitfalls and obstacles to the socially beneficial, hybrid enterprises that it purports to help.
Mark J. Loewenstein, Benefit Corporations: A Challenge in Corporate Governance, 68 Bus. Law. 1007 (2013).
Abstract (by author): Benefit corporations are a new form of business entity that is rapidly being adopted around the country. Though the legislation varies from jurisdiction to jurisdiction, most statutes are based on a model proposed and promoted by B Lab, itself a nonprofit corporation. The essence of these statutes is that, in making business judgments, the directors of a benefit corporation must consider the impact of their decisions on the environment and society. The model legislation, though, may create serious governance issues for the directors of benefit corporations that operate under these laws. This article analyzes the model legislation and identifies its weaknesses, particularly with respect to governance issues.
Danny Miller & Isabelle Le Breton-Miller, Governance, Social Identity, and Entrepreneurial Orientation in Closely Held Public Companies, 35 Entrepren. Theory & Prac. 1051 (2011).
Abstract (from journal): Based on notions from the identity theory, this study argues that in public firms in which ownership is concentrated, owner-chief executive officer (CEO) identities will influence entrepreneurial orientation (EO), and EO will relate to superior performance. Specifically, lone founder owners and CEOs will embrace entrepreneurial identities: their firms will exhibit high levels of EO and outperform. Post-founder family owners and CEOs, given their ties to family in the organization, will assume identities as family nurturers, thereby limiting EO and performance. Family firm founders will exhibit blended identities and demonstrate intermediate levels of EO and performance. This analysis of Fortune 1000 firms finds support for these arguments.
Peter Molk, The Puzzling Lack of Cooperatives, 88 Tul. L. Rev. 899 (2014).
Abstract (by author): Some of the most recognizable companies, including Land O’Lakes, REI, the Associated Press, Ace Hardware, and State Farm Insurance, are organized as cooperatives—firms owned by their suppliers, workers, or customers. Yet aside from isolated areas of the economy, cooperatives constitute only a small portion of American enterprise, which is otherwise dominated by investor-owned firms. Conventional wisdom assumes that firms either start as cooperatives or convert to cooperatives when cooperatives offer the highest ongoing benefits to owners, and it explains the lack of cooperatives by suggesting that cooperatives usually do not maximize ongoing benefits. This article looks at entrepreneurs’ and brokers’ actions when starting or converting firms. It finds that the conventional assumption is often violated. Starting a cooperative is similar to supplying a public good, and just as unsubsidized public goods are underprovided, so too are unsubsidized cooperative starts. Additionally, a lack of viable brokering institutions prevents most existing firms from converting to cooperatives even when cooperatives promise the highest ongoing benefits. These findings explain cooperatives’ low market share and several empirical observations that are inconsistent with the conventional wisdom. The results suggest social welfare could be improved if cooperatives were subsidized, through favorable tax treatment, grants, or regulatory intervention like ABA rules requiring law firms to be owned by lawyers. They also question the shareholder primacy model of corporate governance. The article closes by briefly considering the Affordable Care Act’s current $2 billion subsidization of health insurance cooperatives.
Susan C. Morse, Startup Ltd.: Tax Planning and Initial Incorporation Location, 14 Fla. Tax Rev. 319 (2013).
Abstract (adapted from author): This article analyzes the incorporation decisions of relatively new, US-based private business enterprises with global ambitions. Such startup firms generally organize as US corporations. The article identifies explanatory factors including limited tax benefits of non-US incorporation, legal benefits of US incorporation, startups’ liquidity and other resource constraints, and investor preferences.
Benjamin H. Nissim, Note, A Mutually Beneficial Relationship: How the Low-Profit Limited Liability Company Can Build a Brand and Grow America’s Wind Energy Infrastructure, 27 Notre Dame J.L. Ethics & Pub. Pol’y 247 (2013).
Abstract (adapted from author): This Note begins with a discussion of the L3C. This includes looking at the ethical impetus for the L3C and its place in the greater context of corporate and not-for-profit law. The examination of the L3C continues with a discussion of how the form serves as a vehicle for socially beneficial investment. This involves a discussion of typical L3C governing statutes, how the L3C is designed to leverage private foundation funds, and how the form may help encourage private investment. The author also addresses arguments against the adoption of the L3C and why the entity has been described as superfluous. The Note then turns to the application of the L3C to the development of the U.S.’s wind energy industry. This will include showing how the L3C may prove to be an important tool for leveraging private foundation investment, taking advantage of state and federal *248 incentives, and creating a “brand” synonymous with socially beneficial ends.
Christian Roessler & P. Koellinger, Firm Formation with Complementarities: The Role of the Entrepreneur (Tinbergen Institute, Discussion Paper 09-003/3, 2011),available at http://ssrn.com/abstract=1920643.
Abstract (from authors): The authors model entrepreneurship and the emergence of firms as a result of simultaneous bidding for labor services among heterogeneous agents. Unique to their approach is that occupational choices, job matching and organizational forms are determined simultaneously, so that the opportunity costs of entrepreneurs are accounted for. They find that individuals who are relatively unmanageable become entrepreneurs; entrepreneurs compete against each other and create value by building efficient organizations and offering potentially very well paid jobs for others; and entry of an additional entrepreneur typically reduces some individual wages, but always raises the average wage and depresses the average incomes of incumbent entrepreneurs - strictly so if the new firm partially imitates existing organizations. The results shed a new light on the role of entrepreneurs in the economy and may be applied to explain low returns to self-employment.