Recent surveys show that more than half of American entrepreneurs share ownership in their business startups rather than going it alone, and experts in international entrepreneurship have likewise noted the importance of groups in securing microcredit and advancing entrepreneurial initiatives in the developing world. Yet the media and many scholars continue to perpetuate the myth of the lone visionary who single-handedly revolutionizes the marketplace. The Entrepreneurial Group shatters this myth, demonstrating that teams, not individuals, are the leading force behind entrepreneurial startups.
This is the first book to provide an in-depth sociological analysis of entrepreneurial groups, and to put forward a theoretical framework--called relational demography--for understanding activities and outcomes within them. Martin Ruef looks at entrepreneurial teams in the United States during the boom years of the late 1990s and the recent recessionary bust. He identifies four mechanisms for explaining the dynamics of entrepreneurial groups: in-group biases on salient demographic dimensions; intimate relationships to spouses, cohabiting partners, and kin; a tendency to organize activities in residential or "virtual" spaces; and entrepreneurial goals that prioritize social and psychological fulfillment over material well-being. Ruef provides evidence showing when favorable outcomes--with respect to group formalization, equality, effort, innovation, and survival--follow from these mechanisms.
The Entrepreneurial Group reveals how studying the social structure of entrepreneurial action can shed light on the creation of new organizations.
Martin Ruef is professor of sociology at Princeton University. His books includeThe Sociology of Entrepreneurship and Organizations Evolving.
"Ruef explodes the myth of the lone entrepreneur, showing how those who start businesses assemble productive groups around themselves. He explains in a brilliant, original way how groups evolve into viable organizations and why some succeed while others fail. This is a must-read for anyone who wants to understand how entrepreneurs build businesses and why growing an enterprise is a team sport."--Philip Anderson, INSEAD, director of the Rudolf and Valeria Maag International Centre for Entrepreneurship
"The Entrepreneurial Group systematically looks at theories that guide the explanation of the entrepreneurial process. In an interesting way, Ruef grounds these theories in the real-life experiences of entrepreneurs. He takes on some important issues. This book also brings together all of the research in the sociology of entrepreneurship."--John Sibley Butler, University of Texas, Austin
"Even many of those well read in the research on entrepreneurship believe that Ayn Rand best captured the character of the typical entrepreneur: an individualistic, heroic, modern-day cowboy transforming the economic landscape against all odds. In The Entrepreneurial Group, Ruef effectively dispels this myth. The typical entrepreneur is not an individual but a team. This insight has important implications for academics and legislators."--Olav Sorenson, Yale University
"For millennia, economic progress was driven by small migrant groups introducing innovations to fit new places. Ruef shows how today's entrepreneurs are a lot like those early families and tribes in movement, adapting social organization to localities and opportunities. The Entrepreneurial Group is a drop of sanity in an ocean of fraud about entrepreneurship, especially in teaching positions financed by corporations."--Arthur L. Stinchcombe, professor emeritus, Northwestern University
Table of Contents:
List of Illustrations vii
List of Tables ix
Part One: Concepts, Theories, and Puzzles
Chapter One: Who Is an Entrepreneur? 3
Chapter Two: Images of Entrepreneurial Groups 17
Chapter Three: Empirical Puzzles 38
Part Two: Creating the Entrepreneurial Group
Chapter Four: Group Formation 57
Chapter Five: Boundaries of the Startup Firm 85
Part Three: Collective Action within the Group
Chapter Six: Allocation of Rewards and Control 113
Chapter Seven: Effort and Opportunism 138
Part Four: Performance of the Group
Chapter Eight: Innovation 163
Chapter Nine: Goals and Group Dynamics 185
Chapter Ten: Implications and Extensions 206
Appendixes: A. Data Sources 227
B. Sampling of Groups 233
C. Analysis of Groups 236