Articles

Question 1

Opportunities in factor markets (Shane & Venkatarn, 2000)

Answer 1

1. Creation of new information (new technologies)
2. Exploitation of market inefficiencies, information assymetry.
3. Reaction to the shift in relative costs and benefits

Question 2

Incorrect decision-making

Answer 2

Based on hunches, heuristics and (in)accurate information

Question 3

Information corridor

Answer 3

The information necessary to recognize any given opportunity is not widely distributed across the popoulation because of the specialization of information in society

Question 4

Skewed outcomes of opportunities/innovations

Answer 4

1. Skewed distribution of returns
2. Only small group will actually distribute the idea
3. Risk-seeking is one of the reasons why many will try to distrbute idea without success
4. Unrealistc optimism
5. Skeweness lovers (high value, only happens once in a lifetime)

Question 5

Pooled return

Answer 5

The return an investor pools which diversifies risk among inventions

Question 6

Prequisitive for VCs

Answer 6

Want large information acquisition (high costs) which are not affordable for small inventions

Question 7

Exogenous shocks

Answer 7

To preexisting market, discovered and exploited by entrepreneurs (discovery process)

• Competitive imperfection (e.g., changes in technology)

Question 8

Endogenous actions

Answer 8

Entrepreneurs that seek to exploit them (creation process)

Question 9

Evolution of creation process (3)

Answer 9

1. Social constructionism
2. Evolution theory
3. Evolution of the evolutionary realism

Question 10

Macro level (Kerr et al., 2014)

Answer 10

Underlies the Schumperian notion of creatie distruction

Question 11

Micro level (Kerr et al., 2014)

Answer 11

Continuous decisions, are not also made in competitive Darwinian contests.

Question 12

Two types of entrepreneurship experimentation (Kerr et al., 2014)

Answer 12

1. Exonomic experimentation (new ideas are continually tested and either displace existing technologies)
2. Process of bringing new ideas to the market (less popular)

Question 13

Darwinian sense

Answer 13

Ventures compete with existing products and technologies (survival of the fittest)

Question 14

VCs will only invest if: (3)

Answer 14

1. It is not too risky
2. Own a large share of the firm
3. Will try to make structure and contractual choices (staging approach)

Question 15

Staging process (VCs)

Answer 15

Describes phases over time, changes in the functions

Question 16

MVP-approach

Answer 16

Rapid rise of angel investors and crowd-funding platforms

Question 17

Cost-experimentation

Answer 17

1. Differences across industries in the ability and costs to learn about the final outcome of the experiment
2. Pace of the technological process

Question 18

Manner to feel less insecure in financial markets

Answer 18

1. Go less often to the capital market by asking a bigger amount of money each time
2. Not fund during hot markets (high failure rate)
3. Legal factors reduce downsides of failure

Question 19

Hot Market

Answer 19

Financing risk is low for all projects in that economy

Question 20

VCs interest in entrpreneurs is driven by (2)

Answer 20

1. Sourve of productive commersialisation of ideas and technologies
2. Providing angel investment is an important resource for future entrpreneurs

Question 21

Technology based ventures

Answer 21

Financial capital constraints are most visible here. Higher social capital will help to increase the chances of gaining VCs and improves the bargaining power

Question 22

New product success factors (NPS)

Answer 22

Are most determined by process and strategy characteritics
Dedicated human resources (especially in technology markets)
Culture (new product development, NPD)

Question 23

Idea-poor company

Answer 23

Lot of time and money in developing mediocre ideas (problem in idea generation, not execution)

Question 24

Conversion-poor company

Answer 24

Good ideas, but the managers do not screen and develop them properly (requires multichannel funding and safe havens)

Question 25

Diffusion poor company

Answer 25

Trouble with monetising the good idea in adequate networks (need an external network) --> idea evangelist

Question 26

Idea evangelist

Answer 26

Someone who preaches the good word about an emerging product or business

Question 27

Improve the weakest link in the innovation organisations

Answer 27

1. Develop a solution network 2. Build a descovery network 3. Management must keep the innovation value chain in mind

Question 28

Pay-for-performance (P4P)

Answer 28

Can undermine performance, not explore new approaches. | Depends on the performance of the first period

Question 29

Standard performance pay

Answer 29

Works well for certain tupes of tasks (physical), not for others (creativity) Should be willing to explore (no failing costs)

Question 30

Termination contract

Answer 30

Experiment will end after half of the periods have expired and income is below a certain threshold

Question 31

Golden parachute treatment

Answer 31

Similar rules as the termination contract, but the payment will still be received afterwards

Question 32

Agent-prinicpal theory

Answer 32

Agent minises costsly and time-consuming contemplation and deliberation efforts since payment does not depend on obtaining a better position in the experiment. Sufficient intrinsic motivation could move some subjects under the fixed-wage contract to exert effort

Question 33

Consequences of the threat of termination

Answer 33

Adverse effect on innovation success and exploration activities (can be alleviated by the golden parachute) --> risk aversion

Question 34

Four levels of social contexts of legitimacy (only for start-ups)

Answer 34

1. Organizational 2. Intraindustry 3. Interindustry 4. Institutional

Question 35

Result o flack of instiutional support for knowledge difussion

Answer 35

Will undercut the industry's efforts to secure socio-political approval

Question 36

External means of legitimacy

Answer 36

Association with successful and established external entities (gaining access to their internal legitimacy)

Question 37

Internal means of legitimacy

Answer 37

1. Historical 2. Scientific 3. Market 4. Location

Question 38

Consequences of alliances

Answer 38

- May result in a los of decision-making control and flexibility + access to resources and capabilities which are needed for success + May attract attention of bigger firms

Question 39

Internal and external legitimacy in new firms

Answer 39

New ventures that acquire external legitimacy gain more from their products than new ventures who do not form alliances (these should invest more in historical, scientific and market legitimacy to compensate this)

Question 40

Historic success on legitimacy

Answer 40

Has the biggest effect on the gains from product introduction, just as the presence of executive (market) and respective academics (scientific)

Question 41

Bounded rationality

Answer 41

Inability of economic actors to write contracts that cover all posible contingencies

Question 42

Opportunism

Answer 42

Rational pursuit of economic actors of their own advantage

Question 43

Strategic alliances

Answer 43

Combine strengths and overcome weaknesses in a collaboration that is much broader and deeper than the typical marketing joint ventures and technology licensing as previously used

Question 44

3 failures plaguing vertically integrated firms

Answer 44

1. Inability to respond quickly 2. Resistance to process innovations 3. System resistance to the introduction of new products

Question 45

Network

Answer 45

Should have a common background, which increases trust and sustain network-like arrangements.