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Problem-solving and competence creation in the early development of new firms

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  • Oliver Hugo

    (Institute for Manufacturing, University of Cambridge, Mill Lane, UK)

  • Elizabeth Garnsey

    (Institute for Manufacturing, University of Cambridge, Mill Lane, UK)

Abstract

This paper aims to identify how entrepreneurial responses to 'barriers' can give rise to opportunities for new firms. The poor predictive record of studies analysing success attributes and favourable initial factors as determinants of new firm growth reflects the diversity of entrepreneurial responses to problems of growth, as illustrated by three case studies of new companies which were able to overcome adverse initial conditions despite the lack of early 'success attributes'. They did so by finding alternative opportunities and by achieving resource economy, resource leverage and resource creation, aided by strategic relationships formed with other players. Spurred by the problems they encounter, entrepreneurial firms revise their business conjecture and engage in innovative activities, their business model evolving through trial and error. Creative responses to unexpected developments by entrepreneurial decision makers have implications for research methodology and business support. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Oliver Hugo & Elizabeth Garnsey, 2005. "Problem-solving and competence creation in the early development of new firms," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 139-148.
    • Handle: RePEc:wly:mgtdec:v:26:y:2005:i:2:p:139-148
    DOI: 10.1002/mde.1208
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    References listed on IDEAS

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    3. Baldwin,John R. & Gorecki,Paul With contributions by-Name:Caves,Richard E. With contributions by-Name:Dunne,Tim With contributions by-Name:Haltiwanger,John, 1998. "The Dynamics of Industrial Competition," Cambridge Books, Cambridge University Press, number 9780521633574.
      • Baldwin,John R. & Gorecki,Paul With contributions by-Name:Caves,Richard E. With contributions by-Name:Dunne,Tim With contributions by-Name:Haltiwanger,John, 1995. "The Dynamics of Industrial Competition," Cambridge Books, Cambridge University Press, number 9780521465618.
    4. A. Heirman & B.T Clarysse & V. Van Den Haute, 2003. "How and Why Do Firms Differ at Start-Up? A Resource-Based Configurational Perspective," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/198, Ghent University, Faculty of Economics and Business Administration.
    5. Pitelis, Christos (ed.), 2002. "The Growth of the Firm: The Legacy of Edith Penrose," OUP Catalogue, Oxford University Press, number 9780199248520.
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    Cited by:

    1. Urban Pauli, 2016. "Enhancing SMEs’ Growth by Investing in Organizational Capital," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 4(3), pages 103-116.
    2. Gomes, Leonardo Augusto de Vasconcelos & Facin, Ana Lucia Figueiredo & Salerno, Mario Sergio, 2021. "Managing uncertainty propagation in innovation ecosystems," Technological Forecasting and Social Change, Elsevier, vol. 171(C).

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