Academic journal article Journal of Small Business Management

Member Experience, Use of External Assistance and Evaluation of Business Ideas

Academic journal article Journal of Small Business Management

Member Experience, Use of External Assistance and Evaluation of Business Ideas

Article excerpt

How do members' experience and external interactions shape evaluation of the. team's business idea? With a sample of 74 teams that participated in a business idea competition, we showed that experience as defined by size, mean work experience, and assistance from individuals with business founding experience related positively to the teams' business idea evaluations. The benefits of external founders are more pronounced for smaller than for larger teams. Hiving a. founder in the team did not relate to idea evaluation but interaction effects showed smaller sized teams bad worse evaluations if they did not have a founder in the team.


"Take up one idea. Make that one idea your life--think of it, dream of it, live on that idea. Let the brain, muscles, nerves, every part of your body, be full of that idea, and just leave every other idea alone. This is the way to success." Swami Vivekananda (1863-1902)

The entrepreneurship literature probably agrees with the quote just given. Entrepreneurs can have multiple business ideas but at any one time, the entrepreneur may only have the time and energy to develop a limited number of ideas into viable businesses. Ideas are by themselves cheap and how favorably the ideas are evaluated determine whether they are commercially exploited. Especially crucial for nascent ventures are how people outside the team evaluate the ventures' ideas. In nascent ventures, which are ventures at the early stages prior to firm formation, entrepreneurs often lack resources and rely on external sources to provide these resources (Stevenson and Cruikshank 1997). For example, the entrepreneurs in Shane's (2000) case studies needed to secure licenses for the three-dimensional printing technology before they could implement the opportunities discovered. Similarly, Birley's (1986) entrepreneurs sought support from external resources in the form of equipment, space, and money. But for these external persons to provide resources, they may need to be convinced that the business idea is commercially viable.

But what leads to the business idea in the first place? Information from the entrepreneur's personal experiences and work contacts leads to unique information corridors enabling some people to recognize business opportunities (Shane and Venkatarman 2000). The business idea first generated can be crude and require refinement before it can be presented to external parties. And although one person may recognize the business idea, given the complexity of the marketplace, often a team collectively develops the idea into a marketable product or service. In fact, many high-growth ventures are started by several founders rather than by a single individual (Roberts 1991)- Teams can access resources provided by team members and from member interactions with others outside of the team (Ancona and Caldwell 1998).

As information forms the cornerstone in the pursuit of entrepreneurial ideas (Shane 2000; Shane and Venkatarman 2000), we investigated how (1) information embedded in the experiences of team members and (2) the extent members use assistance from social contacts influence how people external to the team evaluate the teams' business ideas. The findings suggest that the experiences each member brings to the team (in terms of team size), and/or mean work experiences predict business idea evaluation. The findings also suggest founding experience matters but how this experience matters depends on team size. Small teams coupled with access to external assistance associated positively to business idea evaluation. The sample for this study is teams participating in a business plan competition. Such a sample examines teams at the early venturing stages, where external evaluations can be particularly critical; teams receiving positive evaluations may attract external resources, such as funding and assistance, that can help the team move to the next stage of venture development. …

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