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Mid-level managers may have absolutely no clue where to begin in the quest for growth; or they may have some ideas but not a shred of data to prove that any of them will move the revenue needle. And these managers face not only stretch goals but also, paradoxically, the many obstacles to achieving them-such as inflexible processes and a passion for data and analysis-that are common in large organizations. The most valuable lessons for these managers come straight from their peers: the managers within mature, established corporations who have the talent and skill for driving organic growth. Like chemical catalysts, they make things happen quickly that wouldn't without them, mostly by virtue of their ability to navigate between two worlds: the corporate world, designed for stability and control, and the entrepreneurial world, which is defined by uncertainty. It is the stories of these growth leaders that the authors tell in The Catalyst.

A key metric for the assessment of innovative activity at the firm level is R&D intensity. R&D intensity is the ratio of a firm's R&D investment to its revenue (the percentage of revenue that is reinvested in R&D). Empirical and anecdotal evidence suggests that R&D intensity within an industry is remarkably consistent. Despite this consistency in R&D spending, firms tend to be differentiated with respect to their NPD portfolio strategy and overall performance. This study aims to explain the observed consistency in R&D intensity for firms within an industry, despite the varying choices in terms of how much the firm invests in R&D and how resources are allocated among projects in a portfolio. We consider the implications of firm level factors, such as NPD portfolio composition, as well as industry level factors, such as competition intensity and environmental stability. We find that R&D intensity alone does not explain firm performance. Rather, it is the proper alignment between R&D intensity (how much the firm invests) and NPD portfolio strategy (how the firm invests the money) that drives profitability. More importantly, the proper alignment critically depends on two industry factors - competition intensity and environmental stability.

In support of theory, this study demonstrates that entrepreneurial experts frame decisions using an "effectual" logic (identify more potential markets, focus more on building the venture as a whole, pay less attention to predictive information, worry more about making do with resources on hand to invest only what they could afford to lose, and emphasize stitching together networks of partnerships); while novices use a "predictive frame" and tend to "go by the textbook." We asked 27 expert entrepreneurs and 37 MBA students to think aloud continuously as they solved typical decision-making problems in creating a new venture. Transcriptions were analyzed using methods from cognitive science. Results showed that expert entrepreneurs framed problems in a dramatically different way than MBA students.

Geographic and environmental influences on economic action have a long history in managerial research. This paper develops and estimates a model of the potential of a broad set of U.S. racial minority groups to enter self-employment based on individual, household, and metropolitan area level factors. The model allows for an analysis of two distinct residential segregation processes on self-employment likelihood. Results indicate that clustering by race has group-specific influences, increasing the likelihood of self-employment for some groups and diminishing for others. Higher levels of racial exposure raise the likelihood of entrepreneurial careers for all groups, but especially for blacks.

This article outlines why highly confident entrepreneurs of focal ventures are better positioned to start and succeed with another venture; and therefore why overconfidence in one's capabilities functionally persists and pervades amongst entrepreneurs. By combining cognitive perspectives on confidence in decision making with Fredrickson's [Fredrickson, B.L. 1998. What good are positive emotions?. Review of General Psychology, 2, 300-319.; Fredrickson, B.L. 2001. The role of positive emotions in positive psychology: the broaden-and-build theory of positive emotions. American Psychologist, 56, 218-226.; Fredrickson, B.L. 2003. The value of positive emotions. American Scientist, 91: 330-335] 'broaden-and-build' theory of positive emotions, this paper elaborates the manner in which such entrepreneurs can develop emotional, cognitive, social and financial resilience that can be marshaled and mobilized for a subsequent venture.

Venture investing plays an important role in entrepreneurship not only because financial resources are important to new ventures, but also because early investors help shape the ventures' managerial and strategic destiny. In this study of 121 angel investors who had made 1038 new venture investments, we empirically investigate angel investors' differential use of predictive versus non-predictive control strategies. We show how the use of these strategies affects the outcomes of angel investors. Results show that angels who emphasize prediction make significantly larger venture investments, while those who emphasize non-predictive control experience a reduction in investment failures without a reduction in their number of successes.

Part of the Batten Entrepreneurship Series, this edited volume explores the theoretical implications of entrepreneurship cases from varied emerging market settings across the globe, from the Western Balkans to Brazil, from the border traders of Laos and Thailand to venture capital formation in Ireland, to family enterprises in Indonesia. Seen as evidence for developing a theory of entrepreneurship for emerging markets, the region-specific cases are grouped thematically into four main areas of inquiry: (1) institutional determinants of entrepreneurship in emerging regions ; (2) government and non-governmental organization influences on entrepreneurship in emerging regions; (3) emergence of venture capital in entrepreneurial economies in emerging regions; and (4) firm-level responses to entrepreneurial opportunities in emerging regions.

"Most start-ups face the same challenges," finds Edward Hess, Batten Executive-in-Residence and Professor of Business Administration at the Darden School of Business. In his latest book, So, You Want to Start a Business? 8 Steps to Take Before Making the Leap, Professor Hess offers highly practical advice that will apply to anyone considering starting their own business. The book (in paperback) is co-authored with Charles Goetz, a serial entrepreneur who lectures in entrepreneurship at Emory University. In So, You Want to Start a Business? the authors outline helpful do's and dont's of running a start-up; they give how-to advice for "penciling" a business and for steering clear of the eight mistakes that most often cause new business owners to fail.

In Effectuation, Saras Sarasvathy demonstrates how effectual logic [in contrast to causal reasoning] can be found in stories of the founding of such businesses as CarMax and RealNetworks. She also explores the implications of effectuation for current scholarship in strategic management, how the philosophy of pragmatism relates to effectuation, methods for teaching effectuation, and how other researchers are building on her work. Perhaps most compelling, she writes of the potential for applying effectual logic to markets for social goods and services, which could address human suffering. Entrepreneurs who create such "markets in human hope" could eliminate the artificial divide between for-profit and nonprofit ventures and unleash entrepreneurial creativity to help solve social problems.

Developing the "right" new products is critical to firm success and is often cited as a key competitive dimension. This paper explores new product development (NPD) portfolio strategy and the balance between incremental and radical innovation. We characterize innovative effort through a normative theoretical framework that addresses a popular practice in NPD portfolio management: the use of strategic buckets. Strategic buckets encourage the division of the overall NPD resource budget into smaller, more focused budgets that are defined by the type of innovative effort (incremental or radical). We show that time commitment determines the balance between incremental and radical innovation. When managers execute this balance, they are often confounded by: (i) environmental complexity, defined as the number of unknown interdependencies among technology and market parameters that determine product performance; and (ii) environmental instability, the probability of changes to the underlying performance functions. Although both of these factors confound managers, we find that they have completely opposite effects on the NPD portfolio balance. Environmental complexity shifts the balance toward radical innovation. Conversely, environmental instability shifts the balance toward incremental innovation. Risk considerations and implications for theory and practice are also discussed.

The first step in transforming strategy from a hopeful statement about the future to an operational reality is to allocate resources to innovation and new product development (NPD) programs. We explore how funding authority affects a manager's allocation of resources between multiple programs in a portfolio. Funding may be either fixed or variable depending on the extent to which the manager is free to use revenue derived from existing product sales to fund NPD efforts. Our results indicate that the allocation of resources between existing product improvement (relatively incremental projects) and new product development (more radical projects) depends critically on the funding authority. We find that the use of variable funding drives higher effort toward improving existing products and developing new products. However, variable funding induces the manager to focus on existing product improvement to a greater degree than new product development, and leads to an incremental balance in the NPD portfolio. In addition, we highlight a substitution effect between explicit incentives (compensation parameters) and implicit incentives (career concerns). Explicit incentives are reduced as career concerns become more salient.

In A Behavioral Theory of the Firm (BTF), Cyert and March [Cyert, R.M., March, J.G., 1963. A Behavioral Theory of the Firm. Prentice-Hall, Englewood Cliffs, NJ] present a clutch of ideas for explaining the behavior of established firms within an environment of well-defined markets, stakeholder relationships, technologies, and so on. In this paper, we outline a behavioral theory of the entrepreneurial firm that emphasizes transforming environments rather than acting within extant ones. In particular, we explicate three ideas that parallel key concepts in BTF: (1) accumulating stakeholder commitments under goal ambiguity (in line with a political conception of goals), (2) achieving control (as opposed to managing expectations) through non-predictive strategies, and (3) predominately exaptive (rather than adaptive) orientation.

This paper develops and estimates a model of potential to enter self-employment based on individual and community-level factors. Of particular interest is the influence of racial residential segregation processes and segregation's tendency to concentrate people with similar demographic profiles in geographical space. It has been argued that segregation processes can also concentrate poverty and its associated social dislocations. An analysis of a database of 8,917 households in four U.S. metropolitan areas revealed that two residential segregation processes (clustering and exposure) limit and enhance potential entry into self-employment for blacks, and provides a partial explanation for the long-standing gaps in white and black self-employment rates.