Entrepreneurship in Emerging Regions Around the World

Entrepreneurship in Emerging Regions Around the World

Theory, Evidence and Implications

Batten Entrepreneurship series

Edited by Phillip H. Phan, Sankaran Venkataraman and S. Ramakrishna Velamuri

The contributors to this book look at the phenomenon of entrepreneurship in emerging regions in India, China, Ireland, Eastern Europe, North and South America, and North and South-East Asia. The organization is designed to take the reader from a general framework for understanding the relationship between economic development and entrepreneurship to more specific examples of how entrepreneurs and their firms respond to the opportunity and threats that are dynamically evolving in such places. The book represents the first serious attempt to suggest new theoretical frameworks for understanding the emergence of entrepreneurship in regions that do not have all of the classical prerequisites (such as financial and human capital, favorable geography, institutional infrastructures, and so on) predicted in extant development models.

Chapter 10: The Value of Social Capital to Family Enterprises in Indonesia

Michael Carney, Marleen Dieleman and Wladimir Sach

Subjects: business and management, entrepreneurship


Michael Carney, Marleen Dieleman and Wladimir Sachs INTRODUCTION We hypothesize that in poorly developed institutional environments family firms enjoy a competitive advantage over professionally managed ones, as family links and tacit business arrangements provide the means for coping with contextual hostility, lack of trust and imperfect information. Because family firms with simple organization structures may more readily respond to the exigencies of hostile environments they can outperform non-family firms that are endowed with greater resources and more sophisticated structures (Mintzberg, 1979). Family firm owner-managers have greater discretion than professional managers to make ‘risky deals’ (Miller and Breton-Miller, 2005), commit the firms assets ‘on a handshake’ (Blyler and Coff, 2003), exercise a ‘capacity to trust’ (Redding, 1990) and cultivate ‘guanxi’ (Xin and Pearce, 1996). These arguments suggest that social capital is a key resource and the basis of competitive advantage where formal contracts are otherwise difficult to enforce (Carney, 2005). Social capital may be especially advantageous in transitional and emerging economies due to uncertainties inherent in dynamic and sometimes hostile conditions. However many analysts predict that once that transitional/emergent phase has passed social capital will decrease in value and firm success will increasingly rely upon the creation of proprietary techno-organizational competencies (Kock and Guillen, 2001; Peng, 2003). Established firms who are immersed in previous stage conditions will become increasingly out of tune with more codified institutional contexts (Tan, 2005). Meanwhile newcomer firms are better attuned to emerging conditions and more willing to invest in competence destroying innovations that will...

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