Emergence, Newness and Growth
Edited by Candida G. Brush, Lars Kolvereid, L. Øystein Widding and Roger Sørheim
Chapter 13: Advice to New Business Founders and Subsequent Venture Performance
Lars Kolvereid, Espen J. Isaksen and Hannes Ottósson INTRODUCTION This chapter investigates the association between the number of advisers providing valuable advice to founders during the new business start-up process and subsequent new business performance in terms of invested capital, sales turnover and employment. The chapter also examines if there are diminishing returns to scale between the advice obtained and subsequent business performance. A number of studies have investigated the influence of advice on entrepreneurial or business performance, but research on diminishing returns to scale with regard to advice remains scarce. The idea of diminishing return implies that an excessive number of sources of advice may be counterproductive (Watson, 2007). The aim is to specifically address this issue. Further, one of the goals of our investigation is to expand this field of research, attempting to identify an optimal number of sources of advice. In this chapter hypotheses are derived from the emerging theory of outsider assistance (Chrisman, 1999). The application of a sample of representative new businesses in a different context than previous studies implies a rigid test of theory and an examination of the extent to which previous findings can be generalized to other settings. This chapter contributes to the entrepreneurship literature by using longitudinal research design and a robust measure for valuable advice. Within the entrepreneurship field general recommendations for research design have been common. Recommendations include applying approaches that acknowledge the complexity of the business start-up process by using multi-level studies (Low and Macmillan, 1988; Bouchikhi,...
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