The Entrepreneurial Group

The Entrepreneurial Group: Social Identities, Relations, and Collective Action

Martin Ruef
  • Cite this Item
  • Book Info
    The Entrepreneurial Group
    Book Description:

    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 Groupshatters 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 Groupreveals how studying the social structure of entrepreneurial action can shed light on the creation of new organizations.

    eISBN: 978-1-4008-3520-1
    Subjects: Business, Sociology

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. List of Illustrations
    (pp. vii-viii)
  4. List of Tables
    (pp. ix-x)
  5. Preface
    (pp. xi-xiv)
  6. Acknowledgments
    (pp. xv-xviii)
  7. Part One: Concepts, Theories, and Puzzles
    • CHAPTER ONE Who Is an Entrepreneur?
      (pp. 3-16)

      It was the fall of 1998 and Bob Moog was eager to jump on the Internet bandwagon. As the founder and president of University Games, Moog had been in the game business for well over a decade, producing mystery, trivia, and educational games for adults and children. The St. Louis native first gained media attention when he marketed a board game based on murder mystery parties, a social event conceived in Europe, replete with dramatized mysteries to intrigue guests. On April Fool’s Day 1985, Moog founded University Games together with his close friend Cris Lehman, a former accountant. From that...

    • CHAPTER TWO Images of Entrepreneurial Groups
      (pp. 17-37)

      Comparing the entrepreneurial efforts of Bob Moog with those of John and Emily Koslowski in the previous chapter, I suggested how their activities highlight very different definitions of entrepreneurship. Some of these definitions focus on innovation or the establishment of a viable organization; others emphasize risk-taking or a departure from bureaucratic constraints. Our images of entrepreneurs, however, are not molded by definitions alone. In addition to offering distinctive answers to the question of “who is an entrepreneur?” these images are based on different assumptions regarding the selection criteria that lead us to study some entrepreneurs rather than others, as well...

    • CHAPTER THREE Empirical Puzzles
      (pp. 38-54)

      The entrepreneurial group is a relatively novel unit of analysis. Studies of emergent organizations have traditionally relied either on samples of individuals who are trying to start new organizations or samples of startup ventures themselves.¹ The previous chapters have suggested two arguments about the analytical advantages of an emphasis on entrepreneurial groups. First, because the majority of individuals do not engage in entrepreneurship as a solitary activity (or do not intend to do so in the long run), analysts seeking accurate descriptive inferences should attend to the multiple participants that are involved in the startup process (chapter 1). Second, given...

  8. Part Two: Creating the Entrepreneurial Group
    • CHAPTER FOUR Group Formation
      (pp. 57-84)

      When Luis began considering a wholesale business for women’s and children’s clothing in Los Angeles, he wondered whether Diego and Bill would join him as partners in the venture. All three had been friends for over a decade and, while they had never worked together, each had a few years of experience in the clothing industry. At twenty-six, Luis Hernandez was the youngest, but he had already “settled down” and was married to Sophia, a twenty-five-year-old whom he had known since he was a teenager. He planned to run the new business on a day-to-day basis and manage the books....

    • CHAPTER FIVE Boundaries of the Startup Firm
      (pp. 85-110)

      Boundaries are an essential element of most definitions of organizations (Thompson 1967; Williamson 1975; Aldrich and Ruef 2006). As a condition of their existence, organizations maintain boundaries that distinguish them from their environments, though these boundaries may be incomplete and permeable (Meyer and Lu 2005; Scott and Davis 2006). The processes contributing to boundary formation have been examined from several major perspectives (Santos and Eisenhardt 2005).¹Transaction cost economics(TCE) emphasizes the efficiency of contractual governance and suggests that boundaries should be set at the point that minimizes the cost of governing activities for an organization (Coase 1937; Williamson 1975)....

  9. Part Three: Collective Action within the Group
    • CHAPTER SIX Allocation of Rewards and Control
      (pp. 113-137)

      During his dozen years as a custodian and building maintenance worker in Aurora, Illinois, Carl Whitaker noticed that many employees in small businesses and nonprofits went to great lengths to organize corporate social functions, taking on food preparation and planning activities that fell outside their area of expertise. Perplexed by the motley assortment of hors d’oeuvres and drinks offered at these occasions (and, more personally, the mess that was often left behind), he envisioned a hospitality enterprise that might address an unfilled market niche, introducing lowcost catering to small departments and work groups. In June 2004, he began to devote...

    • CHAPTER SEVEN Effort and Opportunism
      (pp. 138-160)

      At first glance, entrepreneurs may seem to be highly motivated workers, especially when compared with their salaried counterparts. The owners of startup businesses share directly in profits and often have the ability to exercise day-to-day control in the management of these ventures. Unlike the members and employees of larger organizations, entrepreneurs also have considerable discretion in setting the goals of their startups and in ensuring that those goals are in line with their personal interests. Cast in a positive light, the involvement of other business partners can serve as an additional catalyst to entrepreneurial effort, generating social benefits to startup...

  10. Part Four: Performance of the Group
    • CHAPTER EIGHT Innovation
      (pp. 163-184)

      When Wendy Finch was starting a business with her daughter and two friends in Houston, Texas, making money was not at the top of her list of priorities. Having spent seventeen years as a teacher in the Houston school system, Wendy was dismayed by the number of students she knew who were homeless. Inspired by local precedents, such as the “lighted schoolhouse” program, which used schools to provide temporary shelter for urban youth, she began to think about other facilities that were underutilized and could be rapidly furnished with comfortable bedding and living quarters. Her goals centered on developing the...

    • CHAPTER NINE Goals and Group Dynamics
      (pp. 185-205)

      Studies of group processes have long been bifurcated into those that emphasize the goals and interests that contribute to group formation versus those that emphasize the social interactions that produce groups apart from individual interests. In their text on theSocial Psychology of Groups, Thibaut and Kelley (1959) trace this division to the beginning of the twentieth century, when some social scientists, such as William McDougall (1908), sought to develop elaborate taxonomies of social motives, while others, such as the sociologist Edward A. Ross, focused more resolutely on the “uniformities in feeling, belief, or volition . . . which are...

    • CHAPTER TEN Implications and Extensions
      (pp. 206-226)

      An era of entrepreneurship ended in the fall of 2008, at least as perceived by the American popular press. The previous decade had witnessed a tremendous amount of rhetoric around the ideas of an “ownership society,” a “new economy,” the “dot-com” era, and, more generally, a culture of entrepreneurial capitalism.¹ Despite a lack of concrete evidence that rates of entrepreneurship—or even, self-employment—were actually on the rise (see critique in Shane 2008), many commentators had come to assume that business trends increasingly favored small startups and flexible work arrangements, rather than the corporate bureaucracies that had dominated the organizational...

  11. Appendixes
  12. Notes
    (pp. 239-258)
  13. References
    (pp. 259-280)
  14. Index
    (pp. 281-288)