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Determinants of Graduates' Start-Ups Creation across a Multi-Campus Entrepreneurial University: The Case of Monterrey Institute of Technology and Higher Education

2017; Wiley; Volume: 56; Issue: 1 Linguagem: Inglês

10.1111/jsbm.12366

0047-2778

Maribel Guerrero, David Urbano, James A. Cunningham, Eduardo Gajón,

Innovation and Socioeconomic Development

Journal of Small Business ManagementVolume 56, Issue 1 p. 150-178 Special Issue ArticleOpen Access Determinants of Graduates' Start-Ups Creation across a Multi-Campus Entrepreneurial University: The Case of Monterrey Institute of Technology and Higher Education† Maribel Guerrero, Corresponding Author Maribel Guerrero maribel.guerrero@northumbria.ac.uk Maribel Guerrero is Associate Professor in Newcastle Business School at the Northumbria University.Address correspondence to: M. Guerrero, Newcastle Business School at the Northumbria University, City Campus, 2 Ellison Pl, Newcastle upon Tyne, NE1 8ST, UK. E-mail: maribel.guerrero@northumbria.ac.uk.Search for more papers by this authorDavid Urbano, David Urbano David Urbano is Professor in the Department of Business at the Universitat Autónoma de Barcelona.Search for more papers by this authorJames A. Cunningham, James A. Cunningham orcid.org/0000-0002-2708-166X James A. Cunningham is Professor of Strategic Management in Newcastle Business School at the Northumbria University.Search for more papers by this authorEduardo Gajón, Eduardo Gajón Eduardo Gajón is Academic Director in Instituto Tecnológico de Estudios Superiores de Monterrey, Campus Laguna.Search for more papers by this author Maribel Guerrero, Corresponding Author Maribel Guerrero maribel.guerrero@northumbria.ac.uk Maribel Guerrero is Associate Professor in Newcastle Business School at the Northumbria University.Address correspondence to: M. Guerrero, Newcastle Business School at the Northumbria University, City Campus, 2 Ellison Pl, Newcastle upon Tyne, NE1 8ST, UK. E-mail: maribel.guerrero@northumbria.ac.uk.Search for more papers by this authorDavid Urbano, David Urbano David Urbano is Professor in the Department of Business at the Universitat Autónoma de Barcelona.Search for more papers by this authorJames A. Cunningham, James A. Cunningham orcid.org/0000-0002-2708-166X James A. Cunningham is Professor of Strategic Management in Newcastle Business School at the Northumbria University.Search for more papers by this authorEduardo Gajón, Eduardo Gajón Eduardo Gajón is Academic Director in Instituto Tecnológico de Estudios Superiores de Monterrey, Campus Laguna.Search for more papers by this author First published: 04 October 2017 https://doi.org/10.1111/jsbm.12366Citations: 53 † David Urbano acknowledges the financial support from projects ECO2013-44027-P (Spanish Ministry of Economy & Competitiveness) and 2014-SGR-1626 (Economy & Knowledge Department–Catalan Government). AboutSectionsPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Abstract Individual and organizational entrepreneurial activity varies across regions/countries. Universities have increasingly become knowledge-intensive environments that support entrepreneurship. Extant studies demonstrate the need to explore graduate start-ups using different levels of analysis an across economies. This paper explores individual and university determinants of graduates' start-ups creation from a multi-campus entrepreneurial university in a transition economy. A proposed model was tested with 11,569 graduates from 30 campuses across 21 Mexican cities. Results show that specific individual determinants are the most relevant determinant of graduate entrepreneurship as well as that some university mechanisms (incubators and research parks) have limited impact on graduates' entrepreneurship. Introduction The literature on entrepreneurship recognizes that environmental factors influence individuals' decisions and help to explain variations in entrepreneurial activity rates across regions and countries (Audretsch et al. 2002; Baker, Gedajlovic, and Lubatkin, 2005; Fritsch 2004; Fritsch and Mueller 2004; Klapper et al. 2010, 2011; Rocha and Sternberg 2005; Wennekers et al. 2010; Zahra 1993). Every region and country has entrepreneurially oriented individuals and organizations characterized by innovativeness, proactiveness, and risk-taking behavior (Antoncic and Hisrich 2001; Armington and Acs 2002; Parker 2011). Noteworthy among existing organizations that have changed into fertile, knowledge-intensive environments oriented toward entrepreneurship are universities (Audretsch 2014), which provide graduates with various employment alternatives such as becoming self-employed (entrepreneurs) or entrepreneurial employees (intrapreneurs) (Guerrero and Urbano 2012). In this regard, entrepreneurial universities invest resources and develop capabilities to generate the necessary infrastructures, mechanisms, and programs to support the exploration and/or exploitation of entrepreneurial ideas by the university community1 (Grimaldi and Grandi 2005; Guerrero, Cunningham, and Urbano 2015; Wright 2007). Incubation, research parks, and accelerator infrastructures have been identified as effective university supports for the creation and survival of new ventures (Barbero et al. 2014; Guerrero, Urbano, and Gajón 2014; McAdam and McAdam 2008). Extant studies have explored why some universities in developed countries create more start-ups than others (Di Gregorio and Shane 2003; O'Shea, Chugh, and Allen 2008; Shane 2004; Wright, Birley, and Mosey 2004), but only a few studies have analyzed entrepreneurial universities in transitional economies and of the majority of them have not examined graduate entrepreneurship (Guerrero and Urbano 2015; Guerrero, Urbano, and Gajón 2014). In this regard, if we compare developed economies and transitional economies, we observed some similarities and differences. For instance, improving the performance of youth in the labor market, the productive potential of the economy, and social cohesion are common objectives in most developed and transitional economies (Quintini and Martin 2014, p. 9). Despite these common goals, previous studies (Berryman 2000; Dlouhá, Peter, and Barton 2017; Du, Kim, and Aldrich 2016; Estrin and Mickiewicz 2010; Kim, Aldrich, and Keister 2006; Quintini and Martin 2014; Souto-Otero and Whitworth, 2017) have highlighted how the challenges faced by both types of economies are somewhat different in terms of demographic trends (e.g., for transitional economies the challenge is generating many more productive and rewarding jobs while for most developed economies the smaller youth cohorts require more opportunities and skills); labor market (e.g., in developed economies, the quality of entry jobs for youth is a major issue; while informal employment is the key challenge in transitional countries); educational enrollment (e.g., transitional economies often facing low enrollment rates in education compared to developed economies); formal institutions supporting youth entrepreneurship (e.g., developed economies focused on sustainability and efficiency in the development of policies and use of public resources to enhance youth entrepreneurship and reduce the young unemployment rates, while transitional economies are more oriented to reinforce their weak institutions with continuous changes under uncertainty scenarios); informal institutions supporting youth entrepreneurship (e.g., social attitudes are notably oriented to reinforce entrepreneurship such a good professional choice in developed economies, while culture and social attitudes are notably rebuilding in transitional economies); and the quality vs. the quantity of entrepreneurship rates (e.g., developed economies are characterized by higher rates of entrepreneurship by opportunity, while in transitional economies are characterized by higher rates of entrepreneurship necessity such as self-employment mixed with higher levels of informality). In sum, the conditions for graduate entrepreneurship differ significantly between developed and transitional economies. These arguments further highlight and affirm the need to examine the creation of start-ups by graduates across countries at different socio-economic stages and in particular in transitional economies. First, previous studies that have been undertaken in developed economy contexts have only focused on the university as a whole unit of analysis and have not considered its entrepreneurial activities across campuses or departments (Philpott et al. 2011). This is due to the complexity and difficulty of obtaining the necessary data and the challenge with choice of variables with limited data availability. Moreover, they have not analyzed the simultaneous effect of certain individual/university characteristics on individuals' entrepreneurial decisions (Hessels, Van Gelderen, and Thurik 2008; McMullen and Shepherd 2006). Furthermore, no empirical studies have been undertaken across regions in transition economies using multiple campuses as the unit of analysis of graduate entrepreneurship. Therefore, this research gap represents an opportunity to contribute to the academic debate about the emerging models of multi-campus entrepreneurial universities in the new social and economic landscape of transitional economies (Guerrero et al. 2017). Second, this type of study helps to better understand the role of education in the development of skills and competences that are required during the employment choices of young people such as start-up creation in transitional countries. In particular, the individual values, motivations and aspirations also help to explain their entrepreneurial preferences and the adequate support measures that they require, as well as the influence of certain environmental conditions on their behavior (Mueller 2006). It is relevant taking into account that informal factors such as attitudes, values, and perceptions about entrepreneurship in transitional economies are weak (Berryman 2000; Estrin and Mickiewicz 2010), therefore, those attitudes, values, and perceptions could be reinforced and supported via entrepreneurship educational programs. Therefore, exploring the creation of start-ups by graduates using different levels of analysis in a transition economy contributes to the academic debate about the role of entrepreneurship education on start-up creation (Bae et al. 2014) as well as the emergence of opportunities across the interaction of individual and organizational dimensions (Busenitz et al. 2014). Therefore, this exploratory study aims to provide a better understanding of the individual and university determinants of the number of start-ups created by graduates from a multi-campus university located in a transition economy. Using data from 11,569 graduates from the 30 campuses of the Monterrey Institute of Technology and Higher Education (ITESM), located across 21 cities in Mexico,2 this paper makes two main contributions. Our first contribution is we confirm the roles of a combination of individual conditions—prior experiences, skill/knowledge, and aspiration—on the number of start-up created by graduates in a transition economy across regions. Our second contribution is that university support mechanisms—incubators and research parks—have only a modest effect on graduate start-ups across regions in transitional economy. Finally, from a practice perspective this paper raises implications for student and graduates and university managers in how to support and encourage graduate entrepreneurship in transitional economies. The paper is organized as follows: The second section develops the conceptual framework, particularly the determinant factors involved in graduates' entrepreneurial decisions. The third section presents the methodology used in the study. The fourth section presents the results obtained in this exploration of the ITESM. Finally, the fifth section presents the main conclusions of the study, the discussion, the implications for decision makers, and future lines of research. Understanding the Individual and University Determinants of Graduates' Start-up Decisions Entrepreneurship is essentially an individual behavior aimed at pursuing and exploiting opportunities (Shane and Venkataraman 2000). From this perspective, any entrepreneurial action demands feasibility (what can be achieved in the way it is envisioned) and desirability (whether its achievement will accomplish the reason for seeking it) (McMullen and Shepherd 2006). Extant studies have revealed that most university students consider it desirable to create new firms even when they do not have a positive perception of the feasibility (Guerrero, Rialp, and Urbano 2008; Guerrero, Urbano, and Gajón 2014; Shinnar, Pruett, and Toney 2009). Universities give priority attention to strategies that may be useful to create an entrepreneurial environment and reinforce the students' ability to succeed (Gately and Cunningham 2014a; Heriot and Simpson 2007; Pittaway and Hannon 2008; Shane 2004; Wright, Birley, and Mosey 2004) and, in this environment, the graduates' involvement in start-up actions will depend on their risk aversion and their expectations (Arenius and Minniti 2005); their education, experience and skills (Bates 1990; Becker 1964); and their access to the necessary resources/capabilities to develop entrepreneurial initiatives (Audretsch et al. 2002; Audretsch, Lehmann and Warning 2005; Baker, Gedajlovic, and Lubatkin 2005; Cunningham and Harney 2006; Klapper, Amit, and Guillén 2010; Philpott et al. 2011). The combination of these individual and university characteristics helps to explain why some graduates make the decision to become entrepreneurs and others do not (Di Gregorio and Shane 2003; O'Shea, Chugh, and Allen 2008; Shane 2004; Wright, Birley, and Mosey 2004). Individual Level Determinants of Graduates' Start-Up Decisions In the case of graduates, the decision to become entrepreneurs is influenced by their personal abilities to organize/execute the activities required to create/manage entrepreneurial initiatives and by their personal economic aspirations (Bandura 1991). Human capital theory distinguishes between the generic and specific dimensions of human capital (Becker 1964) that seem to influence entrepreneurial action (Pennings, Lee, and van Witteloostuijn 1998). Human capital is “embodied in the skills and knowledge acquired by individual” (Coleman 1988) and in essence, human capital theory argues that individuals who have higher levels of knowledge, skills, and other characteristics will realize better performance outcomes (Ployhart and Moliterno 2011). Human capital theory has been the focus of studies across different fields such as education (Becker 1964), foreign direct investment (Noorbakhsh, Paloni, and Youssef 2001) and human resources (Hayton 2003). The interest in human capital in the entrepreneurship field has led to a large body of studies and variables focusing on human capital and predications of entrepreneurial success (Unger et al. 2011). For example, studies of human capital in the entrepreneurship field have found that human capital has an effect on nascent technology entrepreneurship (Davidsson and Honig 2003), is vital to innovation radicalness for technology entrepreneurs in a university setting (Marvel and Lumpkin 2007) and can influence the survival and growth of new businesses (Cooper, Gimeno-Gascon, and Woo 1994) particularly technology-based firms (Colombo and Grilli 2005). Generic human capital is primarily associated with the general knowledge/skills acquired through education, while specific human capital refers to more specialized knowledge/skills acquired through training/experience (Parker 2011). Dickson, Solomon, and Weaver (2008) found positive and supporting evidence between education and decisions to become an entrepreneur in their meta-analysis of entrepreneurship education outcomes and human capital in entrepreneurship. Martin, McNally, and Kay (2013) also found positive relationships, particularly with entrepreneurial related human capital assets. The managers of entrepreneurial universities develop strategies to build a strong graduate human capital and reinforce the desirability/feasibility of entrepreneurial activity (Hornsby et al. 2013). Various studies have demonstrated the positive effect of certain individual experiences (entrepreneurial, managerial, investment, and job experiences) on start-up creation and, according to their perspective, a good combination of prior experiences has a positive impact on the number of enterprises created by individuals (Autio and Acs 2007; Arenius and De Clercq 2005; Arenius and Minniti 2005; Maula, Autio, and Arenius 2005). Regarding graduates' entrepreneurs, extant studies have evidenced diverse effects of prior experiences and entrepreneurship. For example, Kolvereid and Moen (1997) found a positive relationship between prior work experience and start-up created by graduates. Peterman and Kennedy (2003) found that graduates that not having previous experience (regarding entrepreneurship) increased their perceived feasibility and desirability more. Previous studies also recognized that networks are important resources for business development, particularly in transition economies (Smallbone and Welter 2001). In these scenarios, previous experiences (labor, entrepreneurial, managerial) could contribute that individual be able to use her/his contacts/networks to help to develop their businesses (Arenius and De Clercq 2005). Thereby, a combination of prior individuals' experiences has implications in the individual's attitudes/motivations toward starting, running, or investing in new businesses, management training, and use external assistance (Maula et al. 2005). Based on these arguments, we hypothesize that: H1a: A combination of various prior individual experiences (entrepreneurial, managerial, and job experiences) has a positive effect on the number of start-ups created by graduates. Conversely, various authors have examined the positive influence of higher education and entrepreneurship training on the creation (Davidsson and Honig 2003; Gately and Cunningham 2014a) and development of entrepreneurial initiatives (Galloway and Brown 2002). Specifically, they have studied the significant role that educational programs play in the development of certain individuals skills/knowledge required for these initiatives, such as teamwork, leadership, innovation/creativity, the ability to work under pressure, self-directed learning, and ethics, among others (Kirby 2004; Peterman and Kennedy 2003; Pittaway and Hannon 2008). Participation and exposure to entrepreneurial education also increases the desirability and feasibility of entrepreneurship post education (Peterman and Kennedy 2003). For instance, Galloway and Brown (2002) have shown that entrepreneurship training programs help not only to improve the quality and growth of graduate businesses, but also to expand the range of industry sectors covered. Phan et al. (2005) in their large study of university students in Singapore results showed that introducing students early to entrepreneurship had a positive effective with respect to attitudes and beliefs. In such cases, it also means that students acquire the necessary knowledge early to start-up their own venture. In their study of Irish graduate entrepreneurs Fenton and Barry (2011) conclude graduate levels do benefit from entrepreneurial education and this can be enhanced through experiential learning. In some transition economies, a lack of previous experiences combined with the labor demands in the market, encourages individuals with higher educational attainment to seek other job alternatives instead of creating their own start-up (Smallbone and Welter 2001). According to Guerrero and Urbano (2014), the conversion process of an entrepreneurial idea into a market' value generation have several individual, organizational and environmental filters. Following these ideas, transition economies are characterized by certain informal and formal environmental conditions that defined the actions/behaviors among the several agents (government, market, investors, universities, etc.) involved in the entrepreneurial ecosystem (Wright et al. 2005). In transitional economic context, it is required more than the individuals' skills/knowledge/education (Koellinger 2008); therefore, having previous experiences allow individuals have information about the market and connections with several agents involved in the entrepreneurial ecosystem (Arenius and De Clercq 2005; Smallbone and Welter 2001). Based on these arguments, we hypothesize that: H1b: The individual skills/knowledge acquired at the university has less influence on the number of start-ups created by graduates than their prior experiences. A recent study has tried to explain the profile of individuals with substantial growth expectations (Autio and Acs 2010). In this context, predominantly, growth-oriented entrepreneurs tend to be relatively young, male, highly educated, and wealthy in terms of household income (Terjesen and Szerb 2008). Therefore, household income is linked with growth aspirations. Furthermore, growth aspirations go together with aspirations in terms of innovation and the estimated size of the start-up capital required for starting the firm. Not surprisingly, positive perceptions to entrepreneurship are also linked with aspirations in terms of job-growth expectations. Moreover, according to Douglas and Shepherd (2002), an individual's choice to become an entrepreneur can be represented as a utility-maximizing decision based on various employment characteristics, such as level of income, work effort, risk, independence, and other working conditions, and other studies have found a positive correlation between business creation and individual aspirations, such as the expectation of financial rewards and independence (Wiklund and Shepherd 2003; Wiklund, Davidsson, and Delmar 2003). The main reasoning is that higher aspirations are related to access to more resources with a certain level of risk, but that the existence of these resources allows for the development of more initiatives. Individuals, especially those, whose growth aspirations are high, must raise capital, bear risks, and enter new markets (Estrin, Korosteleva, and Mickiewicz 2013). Undoubtedly, the configuration of each entrepreneurial ecosystem affects the aspirations of individuals (Hessels, Van Gelderen, and Thurik 2008) as well as the entrepreneurship rates across universities (Di Gregorio and Shane 2003; Guerrero, Cunningham, and Urbano 2015; O'Shea, Chugh, and Allen 2008; Shane 2004). Based on these arguments, we hypothesize that: H1c: Higher individual economic aspirations increase the number of start-ups created by graduates. University-Level Determinants of Graduates' Start-Up Decisions Environmental factors influence individual decisions. Within the university context, entrepreneurial activity is affected by both formal (educational programs and support mechanisms, among others) and informal factors (favorable entrepreneurial attitudes and positive role models, among others) (Guerrero and Urbano 2012). In this section, we focus on the role of support mechanisms such as incubators, research parks, and accelerators in the creation of start-ups by graduates. Intuitively, with the establishment of campus-wide support programs, all university students have similar opportunities to access the same types of support. First, within the context of an entrepreneurial university, an incubator is a nonprofit organization that not only provides services—such as rent reductions, access to capital, shared office or laboratory space, technology transfer services, and faculty consultants—for students, faculty staff, and alumni, but also reinforces an entrepreneurial culture at all university levels (Urbano and Guerrero 2013). Effective incubator support can support the developed of an entrepreneurial culture (Aernoudt 2004). In transitional economies such as Brazil and Iran, universities have taken different approaches to support entrepreneurship and incubation (Almeida 2008; Karimi et al. 2010). Undoubtedly, the quality, effectiveness, and diversity of services and support provided by university incubators will be dependent on the availability of financial, physical, commercial, and social capital (Di Gregorio and Shane 2003; O'Shea, Chugh, and Allen 2008). Several authors have emphasized the positive and statistically significant relationship between support mechanisms and the level of universities' entrepreneurial activity (Powers and McDougall 2005). Van Rijnsoever et al. (2017) found that incubators do have positive effects with respect attracting the amount of funding start-up and the capacity to seek funding for banks and other formal investors. However, other studies of incubators have also found no effect or negative of incubators (Schwartz 2008, 2013). However, an undergraduate student can benefit from a pool of resources that can help him or her to evaluate ideas and develop them into innovative enterprises (Souitaris, Zerbinati, and Al-Laham 2007). For non-business graduates, participating in entrepreneurial programs supports their interest, belief, confidence and ambition, and openness to failure (Vij and Ball 2009). Additionally, an undergraduate student can use networking events to access practitioners for recruitment or advice. In addition, in the literature we observe that the number of graduates' start-ups constitutes the appropriate measure of performance for a business university incubator (Barbero et al. 2014; Phan, Siegel, and Wrigh 2005). Therefore, we posit that incubation mechanisms increases the probability of a student becoming an entrepreneur because those mechanisms help to reinforce entrepreneurial motivation, to identify business opportunities, and to exploit opportunities in the short term; particularly in transitional economies characterized by embryonic nature of the external entrepreneurship facilities (government, nonprofit agents, community, etc.). Based on these arguments, we hypothesize that: H2a: Prior access to the incubation support provided by the university increases the number of start-ups created by graduates. Second, many universities have established their own science parks to foster the creation of start-ups based on university technologies that are considered such as innovation-related infrastructures through which knowledge is exchanged, and a university is often the catalyst for that symbiosis (Hobbs et al. 2017). A university science park operates depending on the capabilities that sustain the creation of competitive advantages in certain technological sectors with strong linkages in the regional economies (Koh, Koh, and Tschang 2005). In this university environment, a graduate can get advice from researchers and have access to resources from science parks to test and improve their ideas (Phan, Siegel, and Wrigh 2005). According to the academic entrepreneurship literature, the effectiveness in the incumbent of innovative ideas and their transformation into economic value depends on certain individual, organizational, and environmental conditions (Guerrero and Urbano 2014). In this sense, the identification and the assessment of entrepreneurial opportunities represent a strong challenge to offer new value to society by introducing innovative and novel products/services (Lee and Venkataraman 2006). Nevertheless, extant studies also recognized that a lower percentage of graduates and students are involved in the creation of science-based ventures but that founders of such start-ups are drawn from faculty or graduates (Smilor, Gibson, and Dietrich 1990). A plausible explanation is associated to the university's nature (public/private) and scope (broad/technologic) that delimitate the identification and generation of innovative opportunities (Guerrero and Urbano 2012). Even those tendencies, authors such as Koh, Koh, and Tschang (2005) and McAdam and McAdam (2008) have identified several patterns of universities science parks located in very well-developed entrepreneurship/innovation ecosystems and that collaborate with external agents to fostering graduates' science based or technological initiatives (e.g., Cambridge, Hungry, Silicon Valley, Singapore, Sweden, Taiwan, Western Australia, etc.). Moreover, Hobbs et al. (2017) in their review of science park literature highlight that the empirical studies focus has been on the United Kingdom and the United States and they did not identify any studies of science parks in Mexico. Based on these arguments, we argue that the existence of research parks increases the probability that graduates will be involved in new start-up creation. Therefore, we hypothesize that: H2b: The existence of research parks provided by the university increases the number of start-ups created by graduates. Third, even though not all universities have implemented these mechanisms and empirical research is limited, another phenomenon which has received much attention has been the university accelerators. According to Cohen (2013), the accelerators help cohorts of ventures involved in their initial stages providing seed capital, networking, and mentorship (by successful entrepreneurs, program graduates, venture capitalists, angel investors, or even corporate executives) with the objective of accelerating their establishment in competitive market segments as well as training them for venture pitches to a large audienc