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The Origin and Evolution of New Businesses
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From Library Journal
-A.J. Sobczak, Covina, CA
Copyright 1999 Reed Business Information, Inc.
Top Customer Reviews
The author gives us a new perspective on new business formation. He discusses five types:
1. marginal businesses. These are hair salons, lawn care services, and other businesses that are simple and small-scale.
2. promising businesses. These businesses also start out at a small scale, but they are much more complicated because they are launched in turbulent markets with high levels of uncertainty. You are going into a market before most people even realize that there is such a market.
3. VC funded firms. These firms require more capital and a more solid business plan than promising new businesses.
4. Revolutionary ventures. These are VC funded firms on steroids (the venture funding may have to come from large enterprises), who take large risks while aiming for large profits.
5. Large enterprise innovation. Here, established companies launch new projects, which require large investments but have a high probability of success (think of Intel maintaining its lead in microprocessors).
This is an excellent theoretical scaffolding, to which Bhide is able to attach many interesting insights. Some are statistical. For example, in a large sample of successful small businesses, only 12 percent thought that the originality of their idea was what produced success. The rest attributed their success to "exceptional execution of an ordinary idea." p.32
Other insights are anecdotal, such as the descriptions of how companies adapted to customer demands.Read more ›
Bhide committed a fundamental methodological error: he selected only successful firms and then tried to infer what differentiated them from the (non-selected) unsuccessful ones. He surveyed 100 founders of companies that appeared on the Inc. 500 list in 1989 and drew upon on several hundred case studies by his students at Harvard, plus cases of successful firms drawn from business periodicals and his own research. Although he shows some awareness of the methodological problem thus created, he nonetheless injudiciously draws strong inferences from empirical regularities among the successful firms.
Why is such selection bias problematic? Consider a hypothetical study, showing that 20 percent of the successful firms in the financial services industry were currently run by Harvard MBAs, compared to only 10 percent by Stanford MBAs. Would we be entitled to conclude Harvard MBAs were twice as successful as those from Stanford? What if we learned that Harvard MBAs started 80 percent of the firms in the financial services industry, compared to only 1 percent for Stanford? And, that most of the firms started by Harvard MBAs had failed?Read more ›
To help spread the word, some of us have formed the new, free Small Business Chamber of Commerce to cooperate with local chambers across Colorado and eventually beyond to offer an alternative to the unhelpful SBA venture capital approach to startup. For more see our website SmallBizChamber(dot)org or our Facebook Page Facebook.com/Small.Business.Chamber
Most Recent Customer Reviews
Good and clear view and snap shot what is the future with the trend the industryPublished 2 months ago by Patricio
I love Jack's book so much that I refer it to all my clients who need a little push to find their strengths ...very inspiring.
Dale Ferer, MFT
I chose it as a recommendation, and it came as expected. Looking forward to reading it fully and following its advice.
VERY FAST delivery!
An excelent buy, helps a lot to understand not how to be an entrepreneur, but how to avoid mistakes taken by new-entrepreneurs. Read morePublished on March 7, 2009 by Rodrigo Viana Silva
Entrepreneurship had long been neglected by academics and Bhide changed that with this classic book forever. Read morePublished on June 17, 2008 by Franco Arda
This book provides both valuable practical insights for someone considering a new business and concise conceptual frameworks for those with an academic bent on the subject. Read morePublished on June 18, 2001 by John Buckley
It is amazing how much information Bhide packed in to a reader friendly book. This book was uncomparably informative in uncovering the vast world of entrepreneurship.Published on September 18, 2000
When Bill Gates and Paul Allen started Microsoft, they had no business plan, only a brainstorm that they should write a program in the BASIC computer language. Read morePublished on August 29, 2000 by A. Petrotchenkov