Entrepreneur7 TIPS FROM NEW START-UPS

Danish

Graduates

can grow

Start-ups!- But can they start one?

+Boost your

Marketing 2.0

Editor In Chief: Flemming

Bahner

Journal of Economics and

Business Administration

Volume 2,

Roskilde University,

Spring Issue of 2013

Executive Editors:

Kirsten Dickow: 40578,

Jasmine Løgager: 45634,

& Agnieszka Beierholm

Madsen: 48627

Breaking News! UNEMPLOYED

GRADUATE

VS. SELF-EMPLOYED

GRADUATE

...............................

The

Guide to

Networking

 

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Abstract  Danish Graduates can Grow Start-ups! – But can they start one?

Entrepreneurship is widely recognised as an important part of stimulating economic growth,

and following the economic downturn, which is pushing graduates into unemployment, high-

growth entrepreneurs are highly sought after. Therefore, this project will seek to answer the

problem formulation;

HOW CAN DANISH GRADUATES SUCCESSFULLY GROW THEIR START-UP COMPANIES?

Based on seven interviews with graduates, who have all started their own company, and a

critical examination of theoretical literature, four themes were identified: entrepreneurship,

organisational life cycle, marketing, and networking. The analysis uncovered that graduates

can use entrepreneurial spirit, marketing, and networking in growing the start-up company,

and need to overcome different challenges depending on the organisational life cycle stage.

Moreover, the discussion highlights how the educational system trains graduates to follow a

specific mindset, which inhibits the entrepreneurial process. The project concludes that the

graduates’ qualifications to grow a start-up company increases, as the company progresses.

Key Words: Graduates, Start-up Companies, Entrepreneurship, Organisational Life Cycle,

Networking

 

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List  of  Content  1.  INTRODUCTION  ..........................................................................................................................................  6  1.1  PROBLEM  AREA  ...........................................................................................................................................................  6  1.1.1  Problem  Formulation  ........................................................................................................................................  9  1.1.2  Research  Questions  ..........................................................................................................................................  10  

1.2  DEFINITIONS  ..............................................................................................................................................................  10  1.3  DELIMITATION  ..........................................................................................................................................................  10  1.4  STRUCTURE  AND  DESIGN  ........................................................................................................................................  11  

2.  CASE  STUDY  ..............................................................................................................................................  13  3.  METHODOLOGY  .......................................................................................................................................  17  3.1  RESEARCH  PHILOSOPHY  ..........................................................................................................................................  17  3.2  APPROACH  TO  RESEARCH  .......................................................................................................................................  19  3.2.1  Abduction  .............................................................................................................................................................  19  3.2.2  Case  Study  ............................................................................................................................................................  20  

3.3  APPROACH  TO  DATA  ................................................................................................................................................  20  3.3.1  Semi-­‐Structured  Interviews  .........................................................................................................................  21  

3.3.1.1  Selection  of  Interviewees  ........................................................................................................................................................  21  3.3.1.2  Interview  Guides  .........................................................................................................................................................................  22  3.3.1.3  Execution  of  Interviews  ...........................................................................................................................................................  22  

3.4  APPROACH  TO  DATA  ANALYSIS  .............................................................................................................................  24  3.4.1  Qualitative  Data  Analysis  .............................................................................................................................  24  

3.5  LIMITATION  ...............................................................................................................................................................  25  3.6  RELIABILITY  AND  VALIDITY  ...................................................................................................................................  26  

4.  OPERATIONALISATION  OF  THEORY  ................................................................................................  28  4.1  THEORY  OF  ENTREPRENEURSHIP  ..........................................................................................................................  28  4.1.1  The  Entrepreneur  .............................................................................................................................................  28  4.1.2  The  Entrepreneurial  Spirit  ...........................................................................................................................  29  4.1.3  The  Entrepreneurial  Motivation  ................................................................................................................  31  

4.2  ANALYSIS  OF  ENTREPRENEURSHIP  .......................................................................................................................  31  4.2.1  Entrepreneurial  Opportunities  ...................................................................................................................  32  4.2.2  Entrepreneurial  Success  ................................................................................................................................  33  

4.2.2.1  Entrepreneurial  Spirit  ..............................................................................................................................................................  34  4.2.2.2  Entrepreneurial  Motivation  ...................................................................................................................................................  38  

4.3  SUB  CONCLUSION  OF  ENTREPRENEURSHIP  .........................................................................................................  40  4.4  THEORY  OF  ORGANISATIONAL  LIFE  CYCLE  .........................................................................................................  42  4.4.1  Characteristics  of  the  Organisational  Life  Cycle  .................................................................................  42  

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4.4.2  Early  Stage  Finance  .........................................................................................................................................  43  4.4.3  Critique  of  Organisational  Life  Cycle  Theory  .......................................................................................  46  4.4.4  The  Stages  in  the  Organisational  Life  Cycle  .........................................................................................  47  

4.4.4.1  The  Courtship  Stage  ...................................................................................................................................................................  48  4.4.4.2  The  Infancy  Stage  ........................................................................................................................................................................  49  4.4.4.3  The  Go-­‐Go  Stage  ..........................................................................................................................................................................  51  

4.5  ANALYSIS  OF  ORGANISATIONAL  LIFE  CYCLE  .......................................................................................................  53  4.5.1  Infancy  Stage  ......................................................................................................................................................  55  

4.5.1.1  Commitment  .................................................................................................................................................................................  55  4.5.1.2  Early  Stage  Financing  ................................................................................................................................................................  56  4.5.1.3  Product  Orientation  ...................................................................................................................................................................  59  

4.5.2  Go-­‐Go  Stage  .........................................................................................................................................................  61  4.5.3  Sum  Up  of  Development  Phases  .................................................................................................................  66  4.5.4  Stagnation  Stage  ..............................................................................................................................................  67  

4.6  SUB  CONCLUSION  OF  ORGANISATIONAL  LIFE  CYCLE  .........................................................................................  70  4.7  MARKETING  ...............................................................................................................................................................  72  4.8  THEORY  OF  SOCIAL  NETWORK  AND  NETWORKING  ...........................................................................................  78  4.8.1  Entrepreneurial  Network  Theory  .............................................................................................................  78  4.8.2  Social  Capital  and  Network  .........................................................................................................................  78  4.8.3  Advantages  and  Disadvantages  of  Networking  ..................................................................................  80  

4.9  ANALYSIS  OF  SOCIAL  NETWORK  AND  NETWORKING  .........................................................................................  80  4.9.1  Social  Capital  and  Networks  .......................................................................................................................  81  4.9.2  ‘Strong’  and  ‘Weak’  Ties  ................................................................................................................................  82  

4.10  SUB-­‐CONCLUSION  OF  SOCIAL  NETWORK  AND  NETWORKING  .......................................................................  85  5.  DISCUSSION  ..............................................................................................................................................  87  6.  CONCLUSION  .............................................................................................................................................  94  7.  PERSPECTIVES  .........................................................................................................................................  97  8.  BIBLIOGRAPHY  ........................................................................................................................................  99  8.1  ARTICLES  ....................................................................................................................................................................  99  8.2  BOOKS  ......................................................................................................................................................................  101  8.3  JOURNALS  ................................................................................................................................................................  103  8.4  REPORTS  ..................................................................................................................................................................  106  8.5  WEBSITES  ...............................................................................................................................................................  106  

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List  of  Figures  and  Tables   FIGURE 1.4.1 STRUCTURE OF PROJECT  ..................................................................................................................  12  

FIGURE 3.1 OUTLINE OF THE METHODOLOGY  ....................................................................................................  17  TABLE 3.3.1.3.1 EXECUTION OF INTERVIEWS  .....................................................................................................  24  FIGURE 4.2.2.2.1 VARIABLES AFFECTING THE ENTREPRENEURIAL PROCESS  ..........................................  39  FIGURE 4.4.2.1 FIRM CONTINUUM AND SOURCES OF FINANCE  ....................................................................  44  FIGURE 4.4.4.1 ADIZES’ ORGANISATIONAL LIFE CYCLE  ................................................................................  47  TABLE 4.4.4.1.1 MAIN CHARACTERISTICS OF THE COURTSHIP STAGE  ......................................................  49  TABLE 4.4.4.2.1 MAIN CHARACTERISTICS OF THE INFANCY STAGE  ...........................................................  51  TABLE 4.4.4.3.1 MAIN CHARACTERISTICS OF THE GO-GO STAGE  ..............................................................  53  

   

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1.  Introduction  

Prior to the current financial crisis, Denmark experienced great optimism in the financial

market (Kureer, 2010). This was partly evidenced by the very low unemployment rate, which,

in the beginning of 2008, measured 1.9% (A11). However, in September 2008, the global

financial crisis hit the Danish market, and consequently the low unemployment rate nearly

doubled and rose to 3.7% in early 2009 (A1). Four years later, the unemployment rate has

now increased to 6.6% (Danmarksstatistik, 2013), and the upsetting development is now also

reflected in the unemployment of recent graduates2, which constitutes nearly 30%

(Akademikernes Centralorganisation, 2013). As the unemployment tightens, the ongoing

debate is now focused on how to enter a sustainable period of economic growth and ensuring

employment for the Danish graduates (Rytgaard, 2010). This is of high importance, as it

currently is a waste of resources for the Danish society that well educated young people enter

straight into unemployment after completing their studies (Støjbjerg in Rytgaard, 2010).

1.1  Problem  Area  

Denmark, along with the rest of Europe, has seen a rise in people obtaining a higher

education3 and the financial crisis along with the growing unemployment are the most evident

explanations for this trend. Other measures, such as the current educational policy, the

business community, and the students themselves are also implicating the situation (Albrecht,

2012). Niels Rosendahl Jensen, project coordinator for ‘Volunteers for European

Employment’4, explained the educational inflation in the following manner;

“Parents want their children to have a better education than what they achieved

themselves, and the business community demands employees with higher

education. Combined, it creates inflation, which means that the highly educated

                                                                                                               1 Reference to the files in the appendices: the number A1 indicates, which appendix is referred to. 2 Recent graduates: those who graduated within the last year (Akademikernes Centralorganisation, 2013). 3 Within this project, a higher education is defined as being a two-year graduate program to be commenced after three years of undergraduate studies. By having completed this two-year graduate program, a student will receive a Master degree that can provide one with a job in line with one’s education (Encyclopedia, 2011). 4‘Volunteers for European Employment’ is a project, funded by the European Regional Development Fund, INTERREG IVC, which seeks to improve the quality of life of people across Europe by means of learning and sharing best practice experiences with voluntary work to improve European employment (VERSO, 2012).

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pushes out the employees, who were previously considered qualified”5 (cited in

Albrecht, 2012)

Even if an academic degree is highly sought after, holding such is no longer a guarantee

against unemployment, i.e. ever since the financial crisis unfolded; the unemployment rate,

amongst graduates, has increased in all EU countries (European Commission, 2011:13). At

the same time, a growing amount of graduates is beginning to take jobs below their

qualifications in order to gain presence on the Danish labour market, which means that they

are making it much more difficult for the people who do not have a higher education

(Flensburg & Madsen, 2012). As an incentive to try and reduce this development and

stimulate economic growth, the current Danish government, i.e. The Social Democrats, The

Socialist People’s Party and The Social-Liberal Party, has proposed a political reform, which

aims to reduce the fact that around every third graduate is left for unemployment. One of the

initiatives that the political reform focuses on is the ‘entrepreneur pilot-scheme’6, which has

the aim of helping more graduates in starting their own businesses (Damgaard, 2012).

Especially counselling and financing are highly prioritised according to the Social Democratic

Innovation Spokesman Trine Bramsen;

“We know that the desire to be an entrepreneur is there and it is great. What they

lack is especially advice. We will provide students that are budding entrepreneurs

with advice and financing, in connection with the start-up businesses, up to one

year after graduation, so that the company becomes profitable”7(cited in

Damgaard, 2012)

As shown in the quote, the desire to be an entrepreneur exists, yet an increased focus on

counselling and financing is now needed to increase the favourability of becoming one,

because when it comes to recognising entrepreneurship, Denmark is excellent, still the Danish

citizens prefer having a permanent job opposed to becoming entrepreneurs themselves

(European Commission, 2010:33). In fact, 83% of the Danish population finds

entrepreneurship to be a rather favourable profession (Ibid), in spite of that only 32% would

                                                                                                               5 Free translation of: ”Forældre har ønsket, at deres børn skulle have en bedre uddannelse end dem selv, og erhvervslivet har efterspurgt medarbejdere med højere uddannelser. Til sammen skaber det en inflation, der betyder, at de højtuddannede skubber medarbejdere ud, som tidligere blev anset for kvalificerede.” 6 Free translation of: En iværksætterpilot-ordning. 7 Free translation of: ”Vi ved, at lysten til at blive selvstændig er der, og den er stor. Det, man mangler, er især rådgivning. Vi vil give studerende med en iværksætter i maven rådgivning og finansiering i op til et år i forbindelse med opstart af egen virksomhed efter endt uddannelse, sådan at virksomheden bliver rentabel.”

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prefer to be self-employed (European Commission, 2010:13), and only 9% has actually

engaged in entrepreneurial activities (European Commission, 2010:49). Some of the

arguments toward having an employee status in contrast to being self-employed include

having a regular, fixed income as well as working hours, and stability of employment

(European Commission, 2010:18). Furthermore, some of the fears involved in starting a

business consist of going bankrupt or losing one’s property, the uncertainty of income, and

the need to devote too much energy or time to it (European Commission, 2010:72). Thus,

Denmark can appreciate the beauty of entrepreneurship – but only from a distance.

The lack of entrepreneurship in Denmark is apparent; in 2012 a meagre 17,720 new

businesses were established, which is a 7% decrease compared to 2011, and also the lowest

number of start-ups since 2003 (Sandberg, 2013). The entrepreneurial spirit in Denmark is

declining, which is a worrying development; seeing that the jobs that many need to live off in

the future will largely come from new businesses (Møller, 2012). According to Michael Dahl,

professor in entrepreneurship at Aalborg University, the worrying development is the result of

too few entrepreneurs being able to borrow the initial capital to create a business (in Møller,

2012). This is a problem, when particularly access to finance is a prerequisite to provide good

seed- and growth conditions for entrepreneurs (Erhvervsstyrelsen, 2012:6).

Another challenge also includes the ambitions of the Danish entrepreneurs. As it is now, only

a small amount of entrepreneurs is actually able to provide jobs for more than just a few

employees, which does not create the needed growth in Denmark (Møller, 2012). Essentially,

start-up companies need to create value and job positions, because only in this way can new

businesses contribute to the dynamics, enhanced competitiveness, and higher productivity

(Erhvervsstyrelsen, 2012:35). Additionally, the latest figures show that the percentage of

high-growth entrepreneurs in Denmark is at a mere 0.3%, which is among the lowest in all

OECD countries; only the United States and France have lower proportions (Ibid).

The development of entrepreneurship has important benefits, both economically as well as

socially. Entrepreneurship is not only a driving force for job creation, competitiveness, and

growth; it also contributes to personal fulfilment and the accomplishment of social objectives.

Furthermore, a variety of factors play an important role in the decision to start a business, e.g.

the existence of an opportunity or a market, financial obstacles, or the need to acquire new

skills, among others. As a result, the Danish government has had an intense focus on how to

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increase the number of entrepreneurs. The government encourages a variety of entrepreneurial

initiatives throughout the country, as a way to unlock the growth potential of both start-ups

and individuals. Thus, among the political parties in Denmark, there is a clear consensus

regarding an increased level of entrepreneurship (Hansen, 2009 & Nielsen, 2012), as being

one of the catalysts in stimulating the overall economic growth and ensuring employment for

the numerous graduates that enter straight into unemployment. Even if current statistics are

showing that an increasing amount of the younger generation, below 30, has started their own

businesses in recent years (Bloch, 2012), there is still a large need for high-growth

entrepreneurs that can create value and jobs for the Danish society.

Outlined in the problem area is a section, which shows how the current Danish labour market

impacts the number of unemployed graduates in a negative manner. Additionally,

entrepreneurship has been recognised, as being an important part of stimulating the overall

economic growth, whilst ensuring employment for the unemployed graduates. However, in

order to provide jobs for these graduates, the start-ups need to reassess their growth

ambitions, as there currently is a very low proportion of high-growth entrepreneurs in

Denmark. Thus, within this project, the authors wish to investigate what it takes for Danish

graduates to successfully grow start-up companies for themselves, and thereby implicitly

contribute to the Danish society.

Even though, the authors acknowledge that this situation, which has been explained within the

problem area, is a phenomenon that is currently happening in most parts of Europe, the

authors will only be treating the Danish conditions within this project.

1.1.1  Problem  Formulation  

Within this project, the authors aim to investigate the entrepreneurial path that graduates

undertake after formally establishing their start-up companies. More specifically, the project

will look into the steps needed to successfully grow a company in terms of securing market

share, creating value for society, and personal fulfilment. Therefore, this project seeks to

answer;

HOW CAN DANISH GRADUATES SUCCESSFULLY GROW THEIR START-UP COMPANIES?

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1.1.2  Research  Questions  

In order to answer the problem formulation, the authors have created the following research

questions. The steps needed to grow a start-up company in terms of securing market share,

creating value for society, and personal fulfilment are considered, by the authors, to be

common steps required for all entrepreneurs. Thus, the first three research questions will not

distinguish between graduates and entrepreneurs. The following research question will then

discuss the advantages and disadvantages arising from the entrepreneurs having a higher

educational degree;

1) WHICH MOTIVATIONS AND PERSONAL ABILITIES ARE NEEDED TO GROW A START-UP

COMPANY?

2) WHICH CHALLENGES DO ENTREPRENEURS FACE IN THE DIFFERENT STAGES OF GROWING

THE START-UP COMPANY?

3) HOW DOES ENTREPRENEURS CREATE AND MANAGE THEIR NETWORKS TO GROW THEIR

START-UP COMPANY?

4) WHAT ARE THE ADVANTAGES AND DISADVANTAGES FOR DANISH GRADUATES IN

GROWING THEIR START-UP COMPANY?

1.2  Definitions  Graduate: Within this project, a graduate is defined as a student that attends a higher

educational institution, which is a two-year graduate program to be commenced after three

years of undergraduate studies. Furthermore, a graduate is recognised as such up to no more

than two years after getting his/her Master degree.

Start-up Company: The authors recognise a start-up company as being a newly created

business with a scalable business model. Furthermore, these companies are in a phase of

development; moving from the idea phase to securing financing while initiating operations or

trading. The authors agree with the entrepreneur and venture capitalist Paul Graham’s

definition of a start-up, which reads: “The only essential thing is growth. Everything else we

associate with startups follows from growth” (Graham, 2012).

1.3  Delimitation  The focal point of this project is Danish graduates, and how they successfully can grow their

start-up companies. With this in mind, the focus is on graduates, who have started their own

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company, and the project will therefore not call attention to graduates without a start-up.

Budget and time constraints prevent collection of data outside of the geographical proximity

of Copenhagen8, thus the Danish graduates have been delimited to this geographical location.

Therefore, the sample used in this project, cannot be considered a representative sample of

Danish graduates, however the chosen strategy allows for a more detailed mapping of the

selected graduates. Considering the above mentioned, this project is treated as a pilot project.

1.4  Structure  and  Design  Within this section, an overview of the project’s content is provided in order to help better the

understanding of what to keep in mind while reading this project. The structure of the project

is in the form of an Introduction, Case Study, Methodology, Operationalisation of Theory,

Discussion, Conclusion, and lastly Perspectives.

This project takes its point of departure in the problem area identified in the Introduction,

which will steer the direction of this project, as the purpose of this project is to answer the

stated problem formulation. The Case Study chapter follows the Introduction, and the content

of the chapter will consist of several sections that each aim to describe the state of the seven

start-ups that the authors have chosen.

The methodological concerns for this project will be presented in the Methodology chapter;

this includes the ontological stance along with an account of how the empirical data, i.e. the

interviews, have been collected and processed.

The Operationalisation of Theory introduces the Theoretical Framework, which will provide

the reader with a theoretical understanding and portrays the various ‘working tools’ that

entrepreneurs may apply to successfully grow their start-ups. Furthermore, the challenges for

entrepreneurs are introduced. The aim is to provide a sufficient understanding of the

theoretical base intended for the investigation. Following the various theoretical frameworks

the Analysis will, guided by the problem formulation and the research questions, analyse the

empirical data in reference to the theory in order to gain a greater understanding of how

entrepreneurs can successfully grow their start-ups.

Following the analysis, the Discussion will critically evaluate the advantages and

disadvantages of holding an academic degree when growing a start-up company.

                                                                                                               8 With the exception of one graduate from Aarhus, this is further described in the chapter on data collection.

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In the overall Conclusion the authors will summarise the findings from the analyses and

discussion to portray the reflections made in relation to the stated problem formulation.

Following the project, within the Perspectives chapter, the authors will reflect upon the

choices taken throughout the research and the effects they have had on the investigation.

Other choices that could have been implemented will be discussed along with how the

investigation could be carried out further.

Figure 1.4.1 Structure of Project

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2.  Case  Study  The case study of Danish graduates growing their own start-up companies, based on the

outline presented in the problem area, consists of seven selected case units. Each of them will

be elaborated briefly.

Shabenaa  (Limited  Liability  Company)  

Back in 2010, Nana Rytter Nielsen and her business partner Kamilla Ellerbek Shailla founded

the company Shabenaa Ltd. Both founders hold a Master degree from Roskilde University in

Business Studies and Communication, which they finished in the summer of 201l. The idea

behind Shabenaa arose from the founders’ own nuisance with razor bumps and ingrown hairs

when shaving (A3, Nana 3:389). In March 2011, Shabenaa launched its first product,

ShaveSafe, a shaving cream that effectively removes razor bumps, prevents ingrown hairs,

and beard plague (ShaveSafe, 2013a). Later, in the summer of 2012, Shabenaa launched yet

another shaving cream for sensitive skin – and more products are in the pipeline (Ibid).

Currently, ShaveSafe is only distributed in Denmark through a variety of retailers; online and

in physical stores (ShaveSafe, 2013b).

Furthermore, Shabenaa has no investors; instead they have taken a bank loan to finance their

business venture (A3, Nana 25:30), similarly loans from the families have helped to establish

a limited liability company (A3, Nana 9:58).

Health  Equipment  Denmark  (Limited  Liability  Company)  

In 2003, Kristian Rye Veedfald and Mads Hemdorff Petersen founded Health Equipment

Denmark (HED), a company, which is committed to creating and propagating helpful

solutions with special focus on fixating medical lines (HED, 2010a). The business came into

being when Kristian’s father, a dialysis patient, made it clear that a safer fixation of

bloodlines was needed (HED, 2010b). That same summer Østjysk Innovation became HED’s

main investor with a 25% ownership of the company (A8, Mads 5:32; FFE-YE, n.d.). In

2005, HED achieved a third place in Venture Cup and in 2006, HEDclip was launched on the

                                                                                                               9 Reference to the audio files in the appendices: the first number A3 indicates, which appendix is referred to; the two other numbers (3:38) refer to the time where the quote is taken from.

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Danish market and soon the international market followed with distribution in 20 countries

worldwide (HED, 2010b).

While running their business, Kristian and Mads commenced their Bachelor degrees, and five

years later, in 2011, Kristian finished his Master degree in Marketing from Aarhus Business

School, whereas Mads finished his Master degree in Corporate Communication from Aarhus

University in 2012.

Currently, both founders are involved in two other start-up companies whilst running HED

(Linkedin, 2013a).

EMP  Group  (Private  Limited  Company)  

EMP Group originated from a Bachelor thesis, and was founded in 2008 by four students

from Copenhagen University: Dennis Kayser, Niels Frederiksen, Jens Duelund Pallesen, and

Danny Larsen. The founders developed a web-based platform, ‘Estimation & Management

Platform’ (EMP), which can estimate the costs of IT projects (Jørgensen, 2009).

In 2009, EMP Group came in second in the Venture Cup competition and won a monetary

prize of DKK 130,000 as well as free consultancy hours (A6, Niels 48:30).

Today, all of the founders have graduated with a Master degree in the Computer Science area

while simultaneously running the business. Two of the initial founders work full time with

EMP Group, while the others have taken jobs on the side in order to stay self-propelled (A6,

Dennis 9:50), this means that EMP Group currently has no investors.

MPSOFTWARE  (Limited  Liability  Company)  

MPSOFTWARE creates programs such as phpDesigner and htmlGate, which help people to

design websites (MPSOFTWARE, 2013). MPSOFTWARE began in 1998 as a hobby project,

when Michael Pham was only 15 years old (Ibid). The company was officially founded in

2007, when Michael attended Copenhagen Business School (CBS) and it had an annual

turnover of DKK 1,000,000 (A7, Michael 13:11). Additionally, MPSOFTWARE won a third

place in the Venture Cup final in 2008 and a monetary prize of DKK 75,000, which was used

to further develop the product (CBS, 2008).

Michael later graduated with a Master degree in Business Administration and Computer

Science from CBS, and today he runs the company on the side while working full time in

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Symantec, an American software company (A7, Michael 43:45). Michael has run

MPSOFTWARE on his own since 1998 and is now very much interested in a partnership to

grow the business to its true potential (Ibid).

IconFinder  (Limited  Liability  Company)  

IconFinder is the first search engine focused on icons, and was founded by Martin LeBlanc

Eigtved in 2007 (IconFinder, 2013). In 2011, IconFinder won the Venture Cup ‘Start Up

Competition’ and Steffen Thilsted joined the company as a co-founder (A4, Martin 3:37).

Martin and Steffen have both graduated from CBS, and Martin hold a Master degree in

Business Administration and Computer Science, while Steffen graduated in Economics and

Marketing.

In 2012, Vækstfonden became an investor with a 20% ownership and invested DKK

9,000,000 (A4, Martin 8:10; 29:45). Shortly after the first investment from Vækstfonden, an

American investor also got on board, and Nick Bruun, a self-taught developer, joined the

team and became the third co-founder of IconFinder (Casper, 2012 & Bruun, 2012).

Company  X  (Limited  Liability  Company)  &  Company  Y  (Private  Limited  

Company)  

In 2009, Daniel Nielsen established Company Y after selling his first start-up company (X)

(Linkedin, 2013b). Company X was established in 2001 along with three of Daniel’s friends

and focused on online marketing; it was later sold to Company Z in 2007 (Ibid). Daniel has a

Masters degree from CBS (Ibid).

Company Y was launched in 2010, and more than 100,000 Danish customers have signed up

to become members of the web-shop (Ibid). Another web-shop was launched in 2011, which

has been established as the leading web shop in Denmark within its field (Ibid). Daniel’s

holding company owns the majority of the shares, whereas the last of the shares belongs to

two other partners (A5a, Daniel 12:45).

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Art  District  (Limited  Liability  Company)  

In 2011, Louise Fredbo-Nielsen and Tina Moe cofounded Art District; a company that is

committed to ensure that talented Danish artists can sell their art and make a living from it.

Artdistrict.dk is the online platform from which they market and sell selected artists’ creations

(Art District, 2013a).

Louise graduated from CBS in 2010 with a Master degree in International Business and

Politics (Linkedin, 2013c), whereas her experienced business partner Tina has a PhD in

chemical engineering (Art District, 2013b). Louise is the main driver behind Art District (A2,

Louise 3:50), however she just made the decision to scale down on the time she spends on the

company (A2, Louise 3:25), as she currently is involved in a variety of projects.

Furthermore, both Louise and Tina have agreed not to take any investors on, as it has been

their desire all along to be self-financed (A2, Louise 24:06).

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3.  Methodology  This chapter will present the methodological considerations for gathering the empirical

material. First, the research philosophy will be presented, where it addresses how the authors

understand the acquisition of knowledge and how it is treated in the analysis. Subsequently,

the authors will explain how these views affect the final conclusions. Finally, the reliability

and validity with regard to the methodological choices will be assessed. Figure 3.1 illustrates

the outline of the chapter.

Figure 3.1 Outline of the Methodology

Research Philosophy

↓

Approach to Research

↓

Approach to Data

↓

Interviews

↓

Limitation/Reliability & Validity

3.1  Research  Philosophy  The authors address their ontological stance towards the premises of critical realism, which is

based on primarily three reasons; these will be explained shortly. First, the problem

formulation is rooted in the context that is observable, namely the worrying development that

has taken place on the Danish labour market and the need for high-growth entrepreneurs (see

section 1.1). Secondly, the authors agree with the basic idea of critical realism, which centres

on the notion that this situation can be explained by some deeper and hidden mechanisms.

Thirdly, the authors believe – in line with critical realism – that there is a reality independent

of immediate empirical insights and knowledge surrounding it (Delanty, 2005:145). As a final

note, the choice of critical realism is related to the ability of being critical to the world and the

surrounding knowledge. Thus, a basic element of critical realism is the underlying philosophy

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that scientific work must be critical to the existing in order to contribute to an even better

society (Ibid:146).

According to Roy Bhaskar, critical realism is about the “(…) concern with discovering

generative mechanisms within an objectively existing social reality” (cited in Tan, 2010).

Further, critical realism sees that there are different layers of reality, which can be divided

into: the ‘real’, the ‘actual’, and the ‘empirical’. The ‘real’ level consists of hidden

mechanisms and structures, the ‘actual’ level consists of events produced by the hidden

mechanisms, and the ‘empirical’ level consists of observable events (Tan, 2010).

Within the project’s framework, the authors identify the current need for high-growth

entrepreneurs in Denmark, as being within the empirical level, and therefore it is the

underlying mechanisms that positively can affect the relations of this that the authors wish to

highlight. Thus, the main task of this project is an attempt to uncover some of the underlying

structures and mechanisms that can help to explain what it takes to successfully grow a start-

up company in Denmark.

As critical realism accepts the notion of hermeneutics (Delanty, 2005:146), it is within this

perspective that the authors base their findings and interpretation of knowledge. It is

important to emphasise that this choice should not be seen as a fixated outlook on

methodology, but as a choice of relevance in relation to the project’s purpose of investigation.

The decision to base the project within a critical realist and hermeneutic horizon of

understanding influences the analytical deductions and conclusions. As the analysis and

conclusion will be based on qualitative data, collected via interviews, the data will be

subjectively interpreted thereby resulting in a more hermeneutic approach. The project applies

Lars Fuglsang & Poul Bitsch Olsen’s (2009) definition of hermeneutics, as quoted below;

“(...) understanding and interpretation come before explanation, and social

phenomena and actors examined carry and contribute with their own opinions,

and therefore they must be interpreted and construed in the scientific practice”10

(2009:309)

                                                                                                               10 Free translation of: ”(…) forståelse og fortolkning kommer før forklaring, samt at de sociale fænomener og aktører, der studeres, er bærere af betydnings- og meningssammenhæng, og at det derfor er disse, som skal fortolkes og udlægges i en videnskabelig praksis.”

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This means that the authors do not consider themselves as an objective analytical tool and will

provide a certain amount of subjectivism when analysing the empirical data.

Hermeneutics work according to the assumption that the reality is fundamentally directed by

human conceptions and actions, and meaning is formed through an interpretation of human

expressions and behavioural patterns (Vestergaard et al., 2010:165). A hermeneutic approach

means a circular and constant interpretive approach, where the interpreters are constantly

challenged and updated in their acquisition of knowledge, and it is this methodological

understanding that represents the phenomenon known as the hermeneutic circle (Fuglsang &

Olsen, 2009:312).

As a result of the methodological choices, the concluding findings should not be seen as final

truths, as they will represent the authors’ own interpretation of the empirical data (Ibid:331).

Still, the aim with this project is to contribute to a deeper and potentially more nuanced

understanding of the stated research area.

3.2  Approach  to  Research  In the following section, the approach towards the research will be accounted for. The chosen

strategy of abduction, as well as the reasons for conducting a case study, will be elaborated.

3.2.1  Abduction  

This project undertakes the abductive research strategy, which “(…) constantly varies

between empirical and theoretical work in an ongoing process in which they inform one

another in a quest for empirically based and theoretically informed analytic knowledge”

(Halkier, 2001:44). The abductive strategy is chosen, as the authors, on the one hand, are

theoretically informed before entering into the field, and on the other hand are open to learn

something new from the empirical evidence. During an investigation, one can, as a researcher;

experience that one’s own knowledge and ideas are changing the closer one gets to the root of

the research problem. It means that one may have to extend, revise, or maybe even discard

some of the concepts and ideas one has worked on so far. By doing so, one truly allows

oneself to learn something new from the empirical evidence (Ibid); this approach also fits well

with the choice to work with the hermeneutic circle.

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3.2.2  Case  Study  

As briefly mentioned, this project applies a case study, as it is an empirical inquiry that

“investigates a contemporary phenomenon within its real life context especially when the

boundaries between phenomenon and contexts are not clearly evident” (Yin, 2003:13). The

real life context of this project was outlined in the problem area (see section 1.1), and thus the

case has its focus on Danish graduates growing their start-up companies. For the purpose of

investigating the case, seven case units have been selected, which were introduced in chapter

2.

The case study is a research strategy where the researcher must enter the field and be in touch

with the reality that is present here and now, and, according to Jennifer Rowley, by examining

the context, the researcher will gain a deeper and more detailed insight into the phenomenon

and its surrounding context (2001:17). Thus, this case study will provide an understanding of

how Danish graduates can successfully grow their start-up companies.

For the purpose of this study, a single case study is applied, as the seven case units contribute

to enlighten the same phenomenon. Thus, an embedded case study design (Yin, 2003:45) is

selected. The dangers of using an embedded design can be that the project will lose overall

focus, as too much focus can be given to the sub-units, however to prevent this, the

Discussion in chapter 5, will elevate the analysis to a more general level.

The case study will be based on the narratives, obtained from the interviews (see section 3.3),

and seeks to find causal relations that combined demonstrate a more broad view of the case.

So, instead of observing, the interviews allow for a more detailed approach in order to obtain

closeness to the field and get an understanding of the reasons that underlie the behaviour of

the Danish graduates and subsequently the characteristics of the start-up companies.

3.3  Approach  to  Data  In the following section, the methodical considerations, concerning the individual interviews

will be outlined, as well as the execution. Please note that the collected empirical material was

conducted in Danish or English, as to avoid any language barriers with the interviewees.

Therefore, interviewees were allowed to choose between these two languages, so the

interview would be conducted in the language they felt most comfortable with.

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Alongside conducting semi-structured interviews, secondary data analysis will be utilised,

such as the inclusion of various theoretical papers, to help corroborate the findings in the

analysis.

3.3.1  Semi-­‐Structured  Interviews  

A semi-structured interview technique is applied within this project. This is a deliberate

choice, based on the authors preceding knowledge about the studied phenomenon, i.e. the

authors are theoretically as well as practically informed prior to the research, which will, to

some extent, guide the gathering of information. This will be further elaborated within the

section of Interview Guides. A semi-structured interview allows the interviewers to be

receptive to new emergent perspectives and information that may come forth in the interview

setting, which is in keeping with the project’s research philosophy. Hence, the authors assume

that through the method of semi-structured interviews they will be able to uncover the hidden

mechanisms present in the ‘real’ level. This means that the interview process is kept flexible,

and the interviewers are able to pick up on significant issues touched upon by the

interviewees (Bryman, 2008:473). Thus, a semi-structured interview technique offers rich

detailed information about the studied phenomenon that goes beyond the prepared interview

guide.

In the following sections, the actual procedure of how the empirical data was gathered will be

presented.

3.3.1.1  Selection  of  Interviewees  

Seven interviews are conducted for this study; all with Danish graduates who have founded

start-up companies. The purpose of the interviews is to observe, understand, and examine the

growth of different start-ups among graduates and, more specifically, understand the process

of how new business ideas can turn into successfully thriving and profitable businesses.

The seven companies are selected via two criteria: (1) at least one of the founders had to be a

graduate when starting up the company (see how the authors defined ‘graduate’ in section 1.2

on Definitions), or has studied simultaneously while running the business, and (2) the start-up

company has had to be established on the market for no less than five years, with the

exception of companies that have managed to create strong brand awareness within a shorter

time period.

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3.3.1.2  Interview  Guides  

Interview guides (see A2-8) are developed to ensure that topics of the interview are related to

the research area, still keeping in mind that the interviewees have leeway to come with inputs

not mentioned in the interview guide (Bryman, 2008:438). Though the authors wish to stay

open towards the field, and not led their theoretical knowledge guide the interviews, there is a

need for some focus, otherwise, according to Mark Saunders et al. (2007:321), the work will

“(...) lack a sense of direction and purpose”.

The questions in the interview guides consist of open and probing questions, and they are

phrased clearly to avoid misunderstandings. If the questions are too specific, the interviews

will be limited to the theoretical knowledge already known by the interviewers. Thus, the

questions are kept open to allow the interviewees to come forth with new inputs, and more

extensive and explanatory answers (Bryman, 2008:442). The use of open questions will

furthermore reduce the interviewer bias, as the focus is on the interviewees and their

responses. The use of probing questions (Saunders et al., 2007:315) is applied to seek a

deeper explanation of an answer, or for the interviewees to extend further on their responses;

this may lead the interview into areas not previously considered.

The interview guides are treated as a basis for the interview, but dependent on the

conversation and discussion occurring, during the interview; it may not necessarily be used in

its full capacity. As mentioned earlier, some of the interviews are conducted in Danish and

some in English, and therefore the interview guides are prepared in both languages.

3.3.1.3  Execution  of  Interviews  

In the following, the execution of the interviews will be described. In total 12 companies were

contacted, and seven replied back that they wished to participate in the project (see chapter 2).

As a result, the interviewees’ statements can be considered reliable, as they were never forced

to partake in the interview.

For the interviews, the same template of the interview guide was used, varying only on

company specific questions. Moreover, the interviewees were informed of the interview

agenda from the beginning. All of the interviews were recorded, with the permission of the

interviewees, and the audio recordings are available on a CD at the end of the project.

During the interviews, one person was the moderator of the interview guide, and ensured that

the questions were phrased clearly to avoid misunderstandings, while the others took notes.

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The notes are important, as they can serve as a ‘back up’ in case of problems with the audio

recording (Saunders et al., 2007:326). In the interview with Daniel, parts of the audio

recording failed, and as a result the notes from that interview are attached in the appendices,

to serve as a replacement of the audio recording. Additionally, the note takers supplemented

with questions, in case the interviewer had missed a needed question.

All of the interviews were conducted separately from each other, and six of them were

conducted face-to-face. With the seventh company, HED, the interview was conducted over

the phone, due to a considerable distance, as the company is located in Aarhus. A limitation

of executing an interview over the phone is that one loses the opportunity to witness non-

verbal behaviour of the interviewee. This could have limited the interpretation of how far to

pursue a particular line of questioning during the interview (Ibid:342).

The interviews conducted face-to-face took place in either the interviewees’ offices or cafés

familiar to them. As the time and place of the interviews were selected by the interviewees,

meaning the interview took place according to their schedule; it created a more comfortable

atmosphere and, as a consequence, made the interviewees more open towards the questions

(Ibid:321). Prior to the interview, all interviewees were given the opportunity to remain

anonymous, and it was also made clear that they were within their right not to answer a

question they felt uncomfortable with. As mentioned previously, they were informed of the

research agenda, as this, according to Saunders et al. (Ibid:323), establishes credibility of the

interviewers. All interviewees were given a small gift bag as a token of appreciation for their

time in a busy schedule. The following table depicts the execution of the interviews;

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Table 3.3.1.3.1 Execution of Interviews

Company Date & Time Place Interviewee Participants Interview Guide Language

EMP Group 03-04-13,

10:00 – 11:30 Café Dennis Kayser &

Niels Frederiksen 1 day prior English

Company Y 03-04-13, 17:15 – 18:30

Meeting Room Daniel Nielsen 1 day prior English

HED 03-04-13,

20:00 –21:00 Over Phone Mads Petersen 1 day prior English

MP SOFTWARE

04-04-13, 8:00 – 9:30

Meeting Room Michael Pham 1 day prior Danish

IconFinder 05-04-13, 9.00 –10:00

Meeting Room

Martin LeBlanc Eigtved 1 day prior Danish

Shabenaa 05-04-13, 13:00 –14:00 Cafeteria Nana Rytter Nielsen 2 days prior English

Art District 05-04-13,

15:00 – 16:00 Café Louise Fredbo-

Nielsen 1 week prior English

3.4  Approach  to  Data  Analysis  Within this section, it will be shown how the authors treated the approach to the collected

qualitative data.

3.4.1  Qualitative  Data  Analysis  

Due to time constraint, the interviews are not transcribed in full length, as this is extremely

time consuming, instead those sections from each audio recording, that are relevant to the

research, are transcribed, which is also known as data sampling (Saunders et al., 2007:475).

When using this approach, the authors will carefully listen to the entire audio recording twice,

in order to comprehend as much as possible. Furthermore, as some of the interviews will be

carried out in Danish, ‘free translation’ will be utilised when quoting in the analysis. In

continuation hereof, the authors will carefully evaluate the translation from Danish to English

as not to reduce and avoid any lost meaning.

The data will be approached with a combination of an open, axial and selective-coding

process (Bryman, 2008:543). Adapting such an approach will allow the authors to acquire

new emergent perspectives, which otherwise may not be recognised. The first stage consists

of listening to the entire audio recording taking into consideration, and without making any

notes, the overall assumptions that will be portrayed. This will then be followed up, within the

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second stage, by re-listening to the audio file, while making notes and indicating relevant

aspects. The third and last stage will consist of going through the observed codes, ensuring

that elements that will provide new perspectives are not left out.

The codes that will be processed from these three stages will then be organised into themes

that are consistent with the theoretical concepts (entrepreneurship, investors, networking etc.).

By dividing the codes into various themes, it allows the authors to elaborate the theoretical

framework into the contextual framework of the investigation.

Following the coding of the data, themes not covered extensively in the interviews with the

entrepreneurs, were the subjects of sales growth and profits, therefore a follow up e-mail was

sent to all of the entrepreneurs (see A9).

3.5  Limitation  During the investigation, the authors encountered some difficulties in gathering the necessary

information needed. These difficulties will be accounted for shortly.

As mentioned earlier, 12 entrepreneurs were invited to participate in the study, where only

seven replied back. The seven start-ups are seemingly similar in terms of growth, employees,

and overall success. What would have aided the analysis, and consequently the conclusion,

would be the inclusion of a more successful entrepreneur, meaning a company with a more

stable position on the market, a profitable growth, and a group of employees. This would have

illustrated how a start-up company can overcome the obstacles related to starting and growing

a company. However, as can be expected, these companies are more time-stressed and

therefore do not have time to participate in studies, which the authors experienced firsthand.

Additionally, a graduate who has experience with a failed start-up would have further aided

the analysis, as it could have shed light on some of the obstacles that could be considered

‘deal breakers’. This, especially, could have aided in answering research question number

two, as it revolves around the challenges of being an entrepreneur. Though the authors

searched for ‘failed’ entrepreneurs, no interviews with such were conducted. The reason for

this could be the entrepreneurs’ reluctance with advertising or speaking about their failed

ventures (Hamrouni & Akkari, 2012:194).

A further limitation, which prevailed during the analysis, derives from the bottom-up

approach to the collection of data. Not enough questions were asked concerning the

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entrepreneurs’ financial situation, which limited the analysis in section 4.5.2. However, the

subject of finance is sensitive, and in order for the authors to get this type of sensitive

information, a more trustful relationship needs to be established between the authors and the

entrepreneurs.

A further limitation of the project is the use of only one data collection method, though this,

to some extent, is a delimitation, the authors would have liked to conduct a focus group with

the seven entrepreneurs, as this could have reduced the interviewer bias. Focus groups often

bring out the participants’ spontaneous reactions and lets one observe the group dynamics

revolving the theme presented. It shows how individuals may utilise the stream of

argumentation, forwarded within the group, and also enables to challenge or build upon the

already made argument (Marshall, 1999:115). Unfortunately, due to time constraints, and

considering the entrepreneurs’ busy schedule, the focus group could not be arranged.

Lastly, a limitation of the data collection is visible in the unequal representation of males and

females as well as the fact that not all industries are represented in the study. Thus, the sample

collected for the study cannot be considered a true representation of the Danish society.

However, seeing that this is a qualitative study, the aim is not to create universal truths, but

rather to contribute to a deeper and potentially more nuanced understanding of the

phenomenon.

3.6  Reliability  and  Validity  When applying a qualitative method of collecting empirical data, difficulties arise concerning

reliability and validity. Therefore this chapter will provide insight into, which precautions that

have been taken in the course of the project’s development.

While approaching the field’s empirical data with the ideal to acquire it with openness, the

authors neither discard nor neglect that obtaining such is complex, as going into the field

being fully objective, is hardly achievable. The ambition has been to go into the interviews

openly, and try not to be biased, which will be elaborated below.

Reliability is concerned with the repeatability of the study (Bryman, 2008:31), more

specifically other researchers should be able to repeat the study and get the same results.

However, several factors minimise this plausibility. The data has been collected through semi-

structured interviews, and accordingly the value of using this method is “(...) derived from the

flexibility that you may use to explore the complexity of the topic” (Saunders et al., 2007:319).

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By ensuring this flexibility in the data collection, the authors, according to Steinar Kvale &

Sven Brinkmann (2009:245), allow for creative innovations and variability, meaning the

authors allow the interviewees to follow their own line of thoughts. This will guide the

research in a direction, which may not have been intended; nevertheless it allows one to stay

in line with the open approach to the field.

Moreover, the role of the researcher is important to consider, both during the data collection

and in the coding process. To ensure validity, or more specifically conformability, concerned

with objectivity in qualitative research (Bryman, 2008:379), the researchers must act in good

faith, meaning not to allow personal values or preferences influence the course of the project.

The authors have attempted to reduce the risk of interviewer bias by e.g. asking open

questions during interviews. Furthermore, the authors have stayed open towards the field, an

approach, which has been applied during the analysing of the data, as they have entered the

process with an open mind, i.e. the authors have reduced their presupposed mind-set through

the coding process.

To further ensure validity, one must, according to Alan Bryman (2008:377), execute research

according to ‘good practice’. To ensure this, the process of data collection and coding, has

been carefully described in the on-going chapter. In the same sense the chapter has

established the preconditions for a replication. Lastly, please keep in mind that due to the

chosen research philosophy, the goal is to present justifiable perceptions.

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4.  Operationalisation  of  Theory  This chapter will consist of three separate sections, all of which will follow the sequence of

theory, analysis, and sub conclusion. The theory will provide a theoretical understanding

needed to answer the research questions. Guided by the theoretical framework established, the

analysis will examine the empirical evidence to gain a greater understanding of how

entrepreneurs successfully grow their start-ups. The sections will be finalised with a sub

conclusion. Each section will be guided by one of the research questions, where the first

section on entrepreneurship will seek to answer the first research question. The second section

will deal with the organisational life cycle, and thus seeks to answer the second research

question. Finally, the last section, on social networking, aims to answer the third research

question. The research questions read as follows;

1. WHICH MOTIVATIONS AND PERSONAL ABILITIES ARE NEEDED TO GROW A START-UP

COMPANY?

2. WHICH CHALLENGES DO ENTREPRENEURS FACE IN THE DIFFERENT STAGES OF GROWING

THE START-UP COMPANY?

3. HOW DOES ENTREPRENEURS CREATE AND MANAGE THEIR NETWORKS TO GROW THEIR

START-UP COMPANY?

4.1  Theory  of  Entrepreneurship  It is commonly known that there is a high mortality rate among start-up companies in

Denmark (Erhvervs- og Byggestyrelsen, 2011), which could also explain the small number of

start-ups in the country. Within this chapter, common denominators of entrepreneurship will

be identified in order to get a clearer picture of what it takes to achieve entrepreneurial

success.

4.1.1  The  Entrepreneur  

There is a large collection of literature concerning the entrepreneurial personality, which

focuses on the entrepreneur from a more psychological perspective. In the attempt to describe

the entrepreneur’s successful properties, several researchers found that the entrepreneur, from

a psychological standpoint, was best described in negative terms. Thus, the literature is full of

data describing the entrepreneur in general negative terms such as calculative, a strong need

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for control, opposition to authority figures, short-term thinking, and unstructured (Mintzberg

et al., 2009:137).

In contrast, the cognitive school describes the entrepreneur in more positive terms; this school

attaches the entrepreneur confidence and a positive attitude (Ibid:139). The entrepreneur is

characterised by properties that allow for some lead to analytic and rational approaches, and

as a consequence the entrepreneur is much more accustomed to change. The entrepreneur is

able to act quickly to opportunities and information that otherwise would be lost in the time

consuming, analytical, and rational considerations (Ibid). Furthermore, studies have shown

that entrepreneurs are relatively skilled in identifying entrepreneurial opportunities compared

to larger, well-established firms (see Ireland et al., 2003). In continuation of this, the

entrepreneur is also described as an individual with a positive outlook, i.e. the entrepreneur

perceives more strengths than weaknesses, more opportunities than threats, and finally

perceives the potential for personal improvement as greater than stagnation and deterioration

(Mintzberg et al., 2009:139).

Whichever way you choose to describe the entrepreneur’s personality, it will be coloured by

one’s theoretical outlook, e.g. what the psychological school views as a palette of negative

characteristics, will, from another point of view, be considered positive attributes. As a final

remark, the cognitive school teaches an important lesson, which is, that as an entrepreneur, it

is important to be positive and innovative to the encountering conditions. Therefore, it will be

more beneficial to draw on and articulate positive entrepreneurial qualities rather than

focusing on the negative. As a result, these positive qualities will be elaborated in the

following section.

4.1.2  The  Entrepreneurial  Spirit  

Even though, there is little agreement among researchers, as to the nature of entrepreneurs

(Swedberg, 2000:33), various studies have shown that entrepreneurs are likely to possess a

particular set of qualities, which will be explained in the following.

HIGH WORK ETHIC: Having a commercially viable business idea is an important prerequisite

for success, but it is equally important to possess determination, as “(…) running your own

business really is a 24/7 activity” (Burns, 2007:105). As Paul Burns puts forth, being an

entrepreneur requires that one is able to sustain long working hours and put in a lot of hard

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work, and in order to motivate oneself, to put in all of that hard work, an entrepreneur needs

to be committed and enthusiastic about the work he does (Ibid).

ABILITY TO BOUNCE BACK: Entrepreneurs face a great deal of adversity, which can be very

discouraging, and as a result they need to develop a ‘thick skin’ (Ibid). ‘No’ is often said to be

the most common word in business (Ibid), which is extremely dispiriting, and even more so,

if you are self-employed. Thus, persistency is an important quality to have to be able to

bounce back from a constant ‘no’.

ABILITY TO NETWORK: An entrepreneur needs to have the desire and the willingness to

establish contacts, and this should be reflected in those he communicates with. Engaging in

various networks can e.g. open doors to parts of the industry that otherwise would not be

accessible, (this will be further examined in section 4.9).

ABILITY TO INNOVATE: Entrepreneurs do not sit around and wait until “(…) the Muse kisses

them and gives them a bright idea” they are proactive and opportunity seeking (Drucker,

1985:34), and change provides the opportunity for the new and the different (Ibid:35). Thus,

entrepreneurs are receptive to innovation and are willing to perceive change as an opportunity

rather than a threat.

TOLERANCE OF RISK AND UNCERTAINTY: Every strategic change involves a new experience,

a step into the unknown, and the taking of some kind of risk. Hence, an entrepreneur should

be willing to take a risk, which, at worst, can put strain on economic aspects and personal

relationships. If one longs for certainty, routine, and clear job specifications, one should not

be self-employed (Burns, 2007:105).

In line with this, Rita G. McGrath and Ian C. MacMillan (2000) view the entrepreneurial

mindset as a way of thinking about business that focuses on, and captures the benefits of,

uncertainty, as there are opportunities in uncertainty; “(...) even under the cloak of

uncertainty, the entrepreneurially minded can identify and exploit new opportunities because

they have cognitive abilities that allow them to impart meaning to ambiguous and fragmented

situations” (cited in Ireland et al., 2003:968). Thus, uncertainty can be used to your benefit, if

you develop and employ an entrepreneurial mindset.

In the following section, the main motivations of an entrepreneur will be outlined, i.e. the

primary reasons for starting a business.

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4.1.3  The  Entrepreneurial  Motivation  

Popular theories of entrepreneurship feature the role of risk taking, managerial ability, wealth,

preferences for control, flexibility, and other job attributes that come with being one’s own

boss, as the primary motivations for entrepreneurship. In line with this, Joseph Schumpeter

presents three motivational factors of an entrepreneur;

1. ‘The dream and the will to found a private kingdom’

2. ‘The will to conquer’

3. ‘The joy of creating’ (in Swedberg, 2000:16).

In modern language, the three motivational factors can be translated into the desire for power

and independence, the will to succeed, and the satisfaction of getting things done. These

motivational factors are also known as pull factors. The decision to start up a company can be

triggered by various factors, and these triggers can take the shape of ‘pull’ or ‘push’ factors

(Burns, 2007:99). Pull factors are positive motivational factors (Ibid:100), as those just

presented above, whereas push factors are negative motivational factors that push

entrepreneurs into self-employment (Ibid:99). Examples of push factors can be

unemployment, disagreement with the boss, or simply not feeling comfortable in an

organisation (Ibid). The theory suggests that pull factors are preferred over strong push

factors, as strong push factors “(…) indicate a higher probability that the business will have a

short life span” (Ibid:100). However, it is common that the start-up decision usually is a

combination of both ‘push and pull’ factors (Ibid). An example of this could be an employee

in an organisation, who has wanted to start a company for a longer period of time, but never

had the guts to go ahead with it. The employee gets fired, and sees it as the perfect

opportunity and timing to take the plunge and start up the company.

The theoretical framework has outlined the entrepreneurial spirit and motivation, and these

will now be applied within the analysis.

4.2  Analysis  of  Entrepreneurship  Many theories surrounding entrepreneurship agree that entrepreneurs are likely to identify

more strengths than weaknesses and perceive more opportunities than threats. This is a central

element of entrepreneurship, as possessing the ability to identify unexploited opportunities

becomes crucial in relation to successfully growing a start-up company. An entrepreneur’s

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opportunity seeking behaviour, spirit and motivational drive will be analysed in the following

chapter, and it will be demonstrated how these can contribute to growing a start-up.

4.2.1  Entrepreneurial  Opportunities  

Entrepreneurship is an activity that involves the discovery, evaluation, and exploitation of

opportunities to create value through innovation (Churchill in Antoncic & Hisrich, 2003:8).

The authors find this definition of entrepreneurship compelling, as it clearly suggests that the

entrepreneurial process is anchored to the concept of opportunities. Subsequently, if

opportunities have such an integral role in entrepreneurship, then where do they come from

and what are their characteristics? Scott Shane describes an entrepreneurial opportunity as;

“(…) a situation in which a person can create a new means-end framework for recombining

resources that the entrepreneur believes will yield a profit” (2003:16). In the interviews with

the entrepreneurs, it quickly became apparent that all of them started their companies as a

result of eyeing an opportunity. The prerequisite for this type of entrepreneurship is alertness

on the individual’s part, and in the case of Daniel, he explained how a paradigm shift within

marketing represented a new and unexploited opportunity to found Company X;

“(…) around that time in 2001 (…) there was a paradigm shift, so instead of we

[companies] are marketing us to the consumers, the consumers are now

searching for the offers that they would like to have (…) and that just made the

last small piece of the puzzle for what we wanted to do (A5a, Daniel 8:10)

Furthermore, Niels from EMP Group elaborated on how their Bachelor thesis made them

aware of a business opportunity;

“(…) during the whole process, we found out that there is (…) a hole in the

market, so to speak, because if a big company like Nordea can have such an

unstructured and lack of estimating IT projects, then maybe more companies have

the same problem (…)” (A6, Niels 5:25)

Personal experiences and advocating novel solutions to particular problems may also drive

innovation and hence create an entrepreneurial opportunity. Within the empirical data, this

was shown when Shabenaa, IconFinder, and HED expressed that their core products all are

the result of a problem that lacked an innovative solution;

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“(…) we both had a problem with shaving razor bumps and ingrown hair, and the

product was helping both of us (…) so we knew that it worked and we knew that a

lot of women and men have this problem, which we could help (…)” (A3, Nana

3:35)

“(...) [IconFinder] actually started because I worked as a freelance web designer

(...) and I used icons a lot (...) during the course of my work, I thought, why don’t

I just build a database where I can find these icons much easier (...) back then it

was the first search engine for icons, so it received a lot of attention (...)”11 (A4,

Martin 0:06)

“(…) [HED] was mainly built on his [Kristian] father’s idea, because his father

was a dialysis patient, and what he lacked during his (…) treatment was a good

fixation of bloodlines, so what we did (…) was to create a product, which could

fixate the bloodlines (…)” (A8, Mads 4:42)

The existence and exploitation of entrepreneurial opportunities are pivotal when it comes to

entrepreneurship and successfully growing a start-up. However, in order to really exploit

these opportunities, and yield a profit, a growth phase has to occur. In the following section,

the authors will present some common denominators that, in reference to the theoretical

framework and empirical data, are needed to achieve entrepreneurial success.

4.2.2  Entrepreneurial  Success  

This section will outline the entrepreneurial spirit as well as the motivation behind a start-up,

as these have been illustrated, within the theory, to contribute positively in growing a start-up.

                                                                                                               11 Free translation of: “(…) den [virksomheden] startede egentlig fordi jeg arbejdede som freelance web designer (…) og der brugte jeg ikoner rigtig meget (…) så tænkte jeg i løbet af mit arbejde, hvorfor bygger jeg ikke bare sådan en database, hvor jeg kan finde de her ikoner meget nemmere (…), der var det den første søgemaskine til ikoner, så det fik ret meget opmærksomhed (…)”

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4.2.2.1  Entrepreneurial  Spirit  

HIGH WORK ETHIC

The theory, previously outlined, focused on the entrepreneur’s ability to sustain long working

hours as well as putting in a lot of hard work, as preconditions to become successful.

Likewise, many of the entrepreneurs, who were involved in the study, expressed the same

attitude to being an entrepreneur;

“(...) I think, many who try to start their own business do not know what it

actually takes, sometimes the hard work can be extremely tedious and manual

(...), but there’s just no way around it, if you want it to succeed (...)”12 (A4,

Martin 16:00)

A high work ethic also requires that the entrepreneur holds a strong persona, as the many

hours spent on the business can result in a weakened enjoyment of life. However, if one is

able to endure the ‘hard times’, the entrepreneur will be better prepared for the upturn, as

expressed below;

“(...) I worked 70 hours with my own company, I had to focus on just one area,

because otherwise I would’ve had a break down (...)”13 (A7, Michael 34:04)

“Because we were willing to do that [work for three years without earning any

money], then we were prepared for the upturn (…)” (A5a, Daniel 29:30)

A high work ethic can be considered to be an intrinsic part of a person, but often it cannot be

achieved if the person has no inner desire to accomplish it. Thus, the entrepreneur needs a

sense of purpose, why Burns argues that commitment and enthusiasm, about the work one

does, are essential (Burns, 2007:105), which Michael also emphasises;

“(...) to build a piece of software and watch others get pleasure from it, it was far

more rewarding for me and a way to become self-fulfilled (…)”14 (A7, Michael

30:12)

                                                                                                               12 Free translation of: “(…) jeg tror der er mange, som prøver at starte egen virksomhed som ikke ved, hvad der skal til, altså nogle gange skal der rigtig meget arbejde til, som kan være ekstremt kedeligt og manuelt (…), men der er bare ikke nogen vej udenom, hvis man vil have det til at fungere (…)” 13 Free translation of: “(…) der arbejdede jeg 70 timer med min egen virksomhed, der blev jeg nødt til at fokusere på et område, for ellers knækkede jeg sgu (…)” 14 Free translation of: “(…) at bygge et stykke software og se andre få glæder af det, det synes jeg var langt mere givende for mig og en måde at selvrealisere sig selv på (…)”

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ABILITY TO BOUNCE BACK

Another quality that is of high importance, according to the theoretical framework as well as

the empirical evidence, is the ability to bounce back. Getting entrepreneurial success does not

happen over night, and the entrepreneur will most likely encounter difficulties, which can be

hard to overcome, therefore self-confidence is an important asset to possess when building a

business.

EMP Group encountered multiple rejections when they first started out, as illustrated in the

quote below;

“(…) enterprise sales were just so hard, so incredibly hard, and calling and

calling companies, ‘looks good call me when you have more customers’ and if

everybody says that then how are you going to get your first customer?” (A6,

Dennis 28:06)

As a result of the continuous hardship, EMP Group almost decided to close the business (A6,

Niels 28:39). However, in the end, determination made them pull through, which can be said

to exemplify true entrepreneurial spirit.

Similarly, Martin from IconFinder expressed how attracting investors was a difficult task. In

total, 60 confrontations, with the same investor, were needed before the investment of DKK

9,000,000 came through (A4, Martin 5:17). Furthermore, Martin made it clear that being self-

employed can have its highs and lows;

“(…) at times, it [being self-employed] definitely has been uncomfortable, and if

you look at how your mood is during such a month or week,(…) it's a

rollercoaster, one day you think that it’s the worst, and the next day you believe

that we’re going to take over the world, and it’s really tough mentally. Somehow,

I think that you shouldn’t open the champagne bottles when you get the first

investment, and also you shouldn’t get completely depressed, when things go bad,

you just have to try and keep a positive mind, but also not have too large

fluctuations, because if you celebrate something in advance, that can backfire

(…)”15 (A4, Martin 38:47)

                                                                                                               15 Free translation of: (…) til tider har det været decideret ubehageligt og hvis man kigger på hvordan ens humør er i løbet af sådan en måned eller uge (…), det er en roller coaster, den ene dag der tror man, at der går det helt galt og så den næste dag, der tror man, at der overtager vi verden, og det er virkelig psykisk hårdt, et eller andet

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When asked why they never gave up on their vision, despite adversity, Louise replied that a

strong proof of concept early in the process (A2, Louise 19:28) helped to verify that the

business had potential. Additionally, according to Nana, having an upbeat personality that

continues to move forward, even when things get tough, is also a necessity. It will ensure that

the entrepreneur does not ‘break’ due to obstacles and problems, but is able to move beyond

these when faced with them (A3, Nana 13:52).

ABILITY TO NETWORK

Networking is an essential skill for most business people, but especially for entrepreneurs

(Burt, 2000). Additionally, extroverts compared to introverts are more likely to exploit

opportunities, as they are better to assemble resources (Shane, 2003:97). Within the empirical

research, it was universally acknowledged within the study that having an outgoing

personality is key, for instance this was highlighted both by Nana from Shabenaa and Mads

from HED;

“(…) I think (…) more than anything it is my personality, that I’m not afraid to

just call people, ask them questions, go to them and say ‘Hi I’m Nana’ (…)” (A3,

Nana 14:50)

“(...) it’s more how we’ve been able to create a network (…) that is to do with

personality, if you’re not outgoing, if you’re not willing to pick up the phone and

call people, and stand in front of a lot of people and say ‘okay, do you like this

product, how can we do business?’ you have to have that in you” (A8, Mads

34:50)

The network, you gain as an entrepreneur, can be extremely helpful, and according to Louise,

entrepreneurs are really good in sharing their network and helping each other out (A2, Louise

11:36). Howard E. Aldrich & Phillip H. Kim further support this finding, as they claim that

entrepreneurs are excellent in promoting their existing networks to fellow entrepreneurs

(2007:149). Networking and its entrepreneurial advantages will be further explored in section

4.8 and 4.9.

                                                                                                                                                                                                                                                                                                                                                         sted så tror jeg, at man ikke skal åbne champagne flaskerne når man får investeringen og lade være med at gå fuldstændig i depression, når tingene går dårligt, man skal ligesom prøve at være sådan lidt positive-mind, men også lade være med at have for store udsving, fordi hvis man ligesom fejrer noget på forhånd, så kan det give bagslag (…)”

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ABILITY TO INNOVATE

The authors view the concept of innovativeness, as the propensity to represent a proactive

willingness to change and venture beyond the current state, thereby pursuing new

opportunities (Lumpkin & Dess, 1996:142). This can be seen in the empirical evidence when

the entrepreneurs state that they have a desire to create something new and furthermore find

the process appealing;

“(…) I wanted to be creative within business and computing, so it made sense that

I started a company, but it’s about creating something new, I think that's really

fun and it’s also (…) making many decisions where there is no right answer

(…)”16 (A4, Martin 17:06)

“(...) I always ponder on some new ideas, what to start, and I’ve been in dialogue

with friends on how we could start something new, (…) so I have the drive in me,

the gene in me, to say ‘how do we create something’ (...)”17 (A7, Michael 34:43)

Moreover, innovativeness is related to how one views and feels about change. According to

Peter Drucker, entrepreneurs see change as the norm and as healthy, because change is

ultimately inevitable (1985:35). Consequently, entrepreneurs seek change and embrace it as

opportunities;

“(…) I have only been looking forward, and seeing not what the risks would be

but where the opportunities lie, I would always search those instead of thinking

about the risk, not that I am blind and completely stupid about there not being any

risks, but that is how I choose to see it” (A8, Mads 47:30)

Within this quote, Mads clearly illustrates the fine line that exists between opportunities and

risks. Additionally, he argues that you are able to decide on your own whether or not you

want to perceive change as a risk or an opportunity. However, in reference to the theory,

entrepreneurs are likely to view change as an opportunity, why Mads’ attitude toward change

can be said to demonstrate true entrepreneurial spirit. The subject surrounding risk will be

elaborated in more detail within the next section.                                                                                                                16 Free translation of: “(…) jeg har ønsket at være kreativ indenfor forretning og datalogi, så giver det mening at man gerne vil starte et firma, men det der med at lave noget nyt, det synes jeg er rigtig sjovt, og (…) man tager rigtig mange beslutninger, hvor der ikke er en facit liste (…)” 17 Free translation of: “(…) jeg grubler da altid over nogle nye ideer hvad man kan starte på, og har været i dialog med venner, hvordan vi kunne starte noget nyt op, (…) så jeg har det drive i mig, det gen i mig til at sige, ‘hvordan skaber vi noget’ (…)”

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TOLERANCE OF RISK AND UNCERTAINTY

The entrepreneur as a concept has become widespread in models relating to risk, thus

suggesting that the two concepts are closely interrelated somehow. Within this study, this

connection is also seen, and what is common to all of the entrepreneurs is their attitude

toward risk – or rather the lack of risk involved, when starting a business;

“It’s not that risky to start your own company, when you’re young, when you

don’t have a family, mortgage (…)” (A2, Louise 34:30)

The point to be emphasised in Louise’s quote – and all the entrepreneurs share this belief – is

that starting a business is not risky as long as you do not have any regular bills to cover.

Consequently, the general attitude toward entrepreneurship and risk is perceived to be

positive, and the majority never experienced strain on economic aspects or personal

relationships, which the theory otherwise implied (see section 4.1.2). Additionally, the

tolerance of uncertainty is also easier managed if the entrepreneurs have low monthly

expenditures, as Dennis mentions (A6, Dennis 1:10:11).

Finally, Martin also points out that the generational shift has had an impact on how

entrepreneurship is viewed in today’s society. He argues that it is now much easier – hence

less risky – to start a business compared to our parents’ generation (A4, Martin 37:06). This

assumption is based on his own experience with the use of various tools that are available and

free of charge for entrepreneurs (A4, Martin 37:16).

4.2.2.2  Entrepreneurial  Motivation  

The survival and success rate of a start-up can, to some extent, also be predetermined by the

underlying motivations to create the start-up in the first place; here the authors are referring to

the aforementioned ‘push and pull’ factors (Burns, 2007:100).

The majority of the entrepreneurs stated that their entrepreneurial activities are the result of

being pulled into it. Thus, the entrepreneurs experienced positive motivational factors when

deciding to embark on their business ventures. Some of these motivations include the desire

to create18 (A7, Michael 29:45 & A4, Martin 16:45 & A2, Louise 28:46), the preference for

flexibility and freedom19 (A7, Michael 51:55; 59:58), and the drive to see the vision

                                                                                                               18 Equivalent to Schumpeter’s ‘the joy of creating’ 19 Equivalent to Schumpeter’s ‘the dream and the will to found a private kingdom’

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implemented to life20 (A2, Louise 9:53). Gifford Pinchot also highlights this latter

motivational factor, arguing that entrepreneurs are the “dreamers who do” (Pinchot, 1987).

As discussed earlier, in section 4.2.1, an entrepreneur goes through the process of discovering

opportunities and then exploiting those opportunities. This is illustrated in Pinchot’s saying,

as it implies that a true entrepreneur needs to have the ability of actually going through with

the course of action, opposed to just staying put. Accordingly, during this course of action, the

aforementioned entrepreneurial spirit and motivation are of significance, as these ‘variables’,

in reference to the theory and empirical evidence, have a positive effect on the initial phase of

starting the company as well as successfully growing it. This is shown in figure 4.2.2.2.1

below.

Figure 4.2.2.2.1 Variables Affecting the Entrepreneurial Process

Source: (Authors’ Creation)

As a final note to this chapter, Pinchot insists “I would rather have a class A entrepreneur

with a class B idea than a class A idea with a class B entrepreneur” (Pinchot, 1987). With

this statement, Pinchot claims that the skill-set of the entrepreneur will always be favoured

over the business idea. This outlook is also shared by some of the entrepreneurs (A7, Michael

55:03), Mads from HED elaborates on this;

“I believe to this day that we actually are the main reason as to why we’ve

reached this point (…) it comes down to Kristian and I, we are the people, we are

the instrument that have helped this company grow (…) because we got the skills

to do it, and that has been our biggest instrument and our biggest asset” (A8,

Mads 32:14)

                                                                                                               20 Equivalent to Schumpeter’s ‘the will to conquer’

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4.3  Sub  Conclusion  of  Entrepreneurship  The theoretical chapter and analysis have sought to answer the first research question, which

reads;

WHICH MOTIVATIONS AND PERSONAL ABILITIES ARE NEEDED TO GROW A START-UP COMPANY?

First off, the theoretical chapter introduces the concepts of entrepreneurial spirit and

motivation, and demonstrates the importance of possessing these qualities in relation to

starting and growing a start-up company.

Additionally, in reference to the theory, the analysis has shown that the entrepreneurs’ ability

to discover and exploit opportunities, along with their vigilance, resulted in the actual

founding of the companies. After the official establishment of the company, qualities such as

having a high work ethic, ability to bounce back, network, and innovate, as well as a tolerance

of risk and uncertainty are important to have in order to move forward with the company.

High work ethic is, by the entrepreneurs, considered to be a precondition for success, as one

will have to put in a lot of hours in the initial phase, and usually for a small or no pay check at

all. The ability to bounce back is another important aspect, highlighted by the entrepreneurs,

as many will experience several naysayers, why it is important to have a strong personality

that is able to move beyond the hardship. Networking is also key when growing a start-up,

which requires that the entrepreneurs are willing to engage in such. The analysis demonstrates

that, in the case of networking, having an outgoing and extroverted personality is ideal,

opposed to being quiet and introverted. Innovativeness is viewed as entrepreneurs’

enthusiasm to change and creating something new. The ability to perceive change as an

opportunity, rather than a risk, is what characterises a true entrepreneur, according to the

theory and empirical evidence. Lastly, a tolerance of risk and uncertainty is needed as an

entrepreneur, if entrepreneurs do not accept this, they might just as well not start their own

business.

Furthermore, the underlying motivation, concerning the start-up, was outlined within the

theory, and the importance of distinguishing between positive motivational factors (pull

factors) and negative motivational factors (push factors). Strong push factors tend to lead to a

shorter life span, why pull factors typically are considered to be a more sustainable argument

for starting a company. In all of the cases, the entrepreneurs experienced pull factors when

deciding to found the companies.

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The entrepreneurs’ opportunity seeking behaviour, spirit, and motivational drive are important

assets that can be of importance when growing a start-up company. Thus, the authors confirm

the theoretical concepts surrounding the entrepreneurial spirit and motivation as contributing

positively to the initial phase of founding the start-ups as well as in growing them.

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4.4  Theory  of  Organisational  Life  Cycle  In the literature, the difference between the entrepreneurial organisation and the more

bureaucratic organisation is well distinguished. However, at one point in time, the

bureaucratic organisation was an entrepreneurial one. The organisation can be viewed over

the long run, through the organisation’s life cycle, where each stage in the life cycle has its

own unique characteristics (Gupta & Chin, 1994:269). The importance of identifying the

organisation’s stage in the life cycle is explained by Yash P. Gupta & David C. W. Chin;

“Since organizations are in a continuing process of adaptation, and organizations

exhibit a unique set of characteristics in each developmental stage; having the

ability to recognize an organization’s particular stage of development would help

the formulation of its strategies, identification of risk and opportunities and

management of organizational change” (1994:270)

As there are different challenges at the different stages of the organisational life cycle (OLC),

it is important to be able to identify, in which stage the organisation is, to be able to tackle

such challenges. Thus, the present chapter will outline the OLC theory, with a specific focus

on the more ‘entrepreneurial’ stages of the life cycle.

4.4.1  Characteristics  of  the  Organisational  Life  Cycle  

The OLC has been described as the historical evolution of an organisation, as the theory

depicts the development of the organisation from a small entrepreneurial organisation to

become a more mature, large, and complex organisation (Miller & Friesen, 1984:1161). The

different stages, which the organisation goes through, have their own unique characteristics,

and to “(...) provide meaningful explanations for the patterns of relationship observed”

(Gupta & Chin, 1994:277), the different stages, of the organisation, need to be identified.

The OLC is defined as a “Unique configuration of variables related to organizational context,

strategy, and structure” (Hanks cited in Lester et al., 2008:38). There are many different

theories and models of the OLC, but many are rather vague and not well defined (Hamrouni

& Akkari, 2012:191). However, what they can all, more or less, agree on is that the “(...)

organizations are at some point born (...), have the opportunity to grow and develop (...), and

later die or renew themselves” (Lester et al., 2008:38).

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At the different stages of the OLC, different structures, strategies and activities are present,

and as such different reasons for organisational success is present. Previous studies have

shown that an organisation is more prone to failure in the first stages of the life cycle, more

specifically within the first four years (Hamrouni & Akkari, 2012:192). For instance, for an

entrepreneurial company it can be a challenge to gain financial resources, where for a large

company it can be a challenge to successfully manage the financial resources (Ibid).

Depending on which stage, in the OLC, the company is located; there are different challenges

for survival. The reason as to why it is important for companies to know their location is to

manage the company successfully. For new companies, the challenges, besides gaining

financial resources, include lack of experience, conflicts with defining roles, and difficulties

in establishing customer relationships (Ibid). For larger companies it is often the lack of

flexibility that causes trouble.

Other authors (Gupta & Chin, 1992:278) claim that the different stages require different types

of managers. The reasoning derives from the idea that a good entrepreneur may be successful

in a smaller company, but not always successful at managing a large, bureaucratic company.

They distinguish between two kinds of entrepreneurs, the craftsman entrepreneur and the

opportunistic entrepreneur – only the latter is able to take the company to the next level. The

craftsman entrepreneur is narrowly educated and is not comfortable in social settings, whereas

the opportunistic entrepreneur often has a more wide educational background, is comfortable

in social situations, and has a more futuristic mindset (Ibid). Therefore, if an entrepreneurial

company strives towards greater success, then a consideration of managers must be included,

according to Gupta & Chin.

4.4.2  Early  Stage  Finance  

Getting financial grounds, in the early stages of the company, can be somewhat of a challenge

for the entrepreneurs. The difficulties in acquiring finance can limit the company in growing,

surviving, and the prospects of value creation (Atherton, 2012:28). Moreover, as the company

moves from one cycle to another, i.e. growing, more financing is needed to sustain the

growth, or the company will be severely restrained (Oliver, 2011). Figure 4.4.2.121 below

                                                                                                               21 Note, not all of the financing options will be covered in this chapter, as the focus is on the first stages of the organisational life cycle.

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attempts to illustrate, which sources of finance are important at the different stages of the

company.

Figure 4.4.2.1 Firm Continuum and Sources of Finance

Source: (Berger & Udell, 1998:623)

Allen N. Berger & Gregory F. Udell define initial insider finance, as the funds provided by

the founders, the family, or friends during the start up period (1998:622). Young companies

often rely on personal investments, as the company does not yet have any value to its name.

Furthermore, by using personal funds, the entrepreneur is able to demonstrate his skills

(Haislip, 2011:89) and commitment to the company, this can become an advantage for the

entrepreneur in terms of acquiring bank loans and attracting investors, as Andrew Atherton

explains;

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“(...) the use of own funds in a start-up is a “signal” of commitment to and

confidence in the new venture. Money invested by the founder in the new venture

provides external funders with a degree of reassurance that the starter is

committed to, and confident about, the prospects of, the business (...) [this] helps

to convince funders that the new venture is a viable prospect for financing, in part

because the risk is shared with the founder who is committing their own capital”

(2012:39)

Atherton found in his study that the entrepreneurs, who had invested their own money, were

able to acquire a bank loan later on (2012:40); their personal investment, so to say, secured

them the loan. This is corroborated by Berger & Udell, who argue that a bank loan is based on

“(...) having sufficient equity” (1998:627) from e.g. investors or personal funds.

One problem that new companies often face is that they do not have a sufficient trading

history. Meaning, new companies often do not generate a profit, which could be re-invested

back into the company. The re-investment of the profit is a preferred financing option

amongst the founders; however, it is often not an option (Atherton, 2012:42). The new

organisations also have to cover various establishment costs and thus some entrepreneurs turn

to alternative means of financing, e.g. bootstrap financing. This is defined as funding from

non-formal sources, e.g. “(...) personal loans applied to the venture; credit card debt;

delaying payments; minimising accounts receivable; sharing resources” (Ibid:31). By

utilising bootstrap financing, the entrepreneur is able to secure “(...) resources at little or no

costs” (Ibid).

Another alternative financing method, which entrepreneurs can try to obtain, is grants. In this

definition, the authors also include considerations to the Danish welfare system, as students in

Denmark receive a small grant, SU, while being allowed to start a company simultaneously

(SU, 2013). Also the privately funded unemployment benefit, dagpenge, supports

entrepreneurs for a time period of maximum 78 weeks22 (Ivækst, 2012). Other than the

Danish welfare system, grants are defined as “non-repayable provisions of, typically public,

finance to new venture that does not result in an equity stake or other claims over the

business and its profits” (Atherton, 2012:37). Atherton found in his study that grants were not

merely reserved for those start-ups having difficulties in acquiring finances, but for a wide

                                                                                                               22 Part-time only.

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spectrum of companies (Ibid). In Denmark, graduates have the opportunity to enter into start-

up competitions, where the finalists receive a money prize (Venture Cup, 2013), i.e. a grant.

Depicted in figure 4.4.2.1, a company uses more than one kind of financing, especially new

companies acquire ‘bundles’ of different financial means (Atherton, 2012:36). One type of

financing, not yet covered, is investments from angel investors23 or venture capitalists24.

Though there is a difference between an angel and a venture capitalist, they will, for the sake

of simplicity, be treated as one and the same in this study. For example the Danish state

investment fund, Vækstfonden (n.d.), shares the characteristics of both an angel and a venture

capitalist.

An entrepreneur can demonstrate commitment to the company by investing personal money,

but often more is required to sustain the company in the forthcoming life cycles. Therefore,

entrepreneurs must attract investors, and for this a due diligence report or a formal business

plan is required; “This is a detailed disclosure of company and market information that is

required for the investor to make go/no-go decisions on proceedings” (Oliver, 2011 & Berger

& Udell, 1998:622-23).

Another thing, that investors also consider, is the people behind the start-up, Alexander

Haislip explains that they “also want to see some sort of proof that the team is robust”

(2011:89), why signalling commitment can be important for the entrepreneur.

4.4.3  Critique  of  Organisational  Life  Cycle  Theory  

The environment, in which the firm operates, can have an immense effect on the way the

business is run, as not all industries have the same complications. Robert K. Kazanjian

critiques the OLC theory, explaining that;

“(…) there is no life cycle or phased sequence applicable to all organizations and

that the recurrent cycles and patterns in organizations that can be observed are

all products of specific environments” (1988:261)                                                                                                                23 An angel investor is a very necessary component in the business finance environment, as they provide financial backing for small entrepreneurs in the start-up stage. They invest in entrepreneurs or start-ups, which are considered too risky for bank loans or by venture capitalists. Often it is a single person, and the focus is more on helping the business succeed rather than reaping a large profit (Oliver, 2011 & Investopedia, 2013a). 24 A venture capitalist typically invests in start-ups, or small businesses, with the potential for long-term growth. Venture capital often consists of a group of investors, e.g. investment banks and financial institutions. “Venture capital would typically come later [than angel finance], after the product has been successfully market-tested, to finance full-scale marketing and production” (Berger & Udell, 1998:623 & Investopedia, 2013b).

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Amel D. Hamrouni & Imen Akkari also touch on this subject, as they introduce the theory of

organisational ecology in their study, seeing as “organizations are widely open to their

environment and must achieve an appropriate relationship with this environment, if they want

to survive” (2012:190). Conflicting, is the resource-based view of the firm, claiming that

pivotal for the organisations’ survival is the control over resources, regardless of the

environment. Both theories present valid arguments, however they do not consider the

different stages of the company, and what Hamrouni & Akkari found in their study, was that

companies in the first stages failed due to lack of resources and experience, where older

companies failed due to financial mismanagement (2012:197).

4.4.4  The  Stages  in  the  Organisational  Life  Cycle  

Over the years, many scholars and professionals, in the organisational development and life

cycle field, have studied highly effective and successful, yet mature, organisations to find the

common characteristics in the different stages at various points in their evolution. The two

models, which are widely accepted, within the business community, are Robert E. Quinn &

Kim Cameron’s four-stage model and Danny Miller & Peter H. Friesen’s five-stage model

(Lester et al., 2008:38). Both models are developed from a literature review of previous

models, including Ichak Adizes’ ten-stage model from 1979.

The four or five stage models may be beneficiary for many companies to use, however, seeing

as this project focuses on start-up companies a more specified description is needed.

Especially as;

“Each stage of the organizational development process exhibits certain unique

characteristics” (Gupta & Chin, 1994:269)

The authors are focusing on the ‘entrepreneurial’ stages occurring in the beginning of the

development phase. Further, Adizes’ model has served as an inspiration for the two most

acknowledged models25. Therefore, it is the model that will best elaborate on the company’s

growth throughout the development stages, and is thus considered to be the most accurate

model to use for this project. The model is presented in figure 4.4.4.1 below.

Figure 4.4.4.1 Adizes’ Organisational Life Cycle

                                                                                                               25 Quinn & Cameron and Miller & Friesen

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Source: (Based on Adizes, n.d.)

4.4.4.1  The  Courtship  Stage  

Courtship is the first stage of an organisation's development. At this stage, the company is not

yet born; it exists as an idea. The focus of Courtship is on dreams and possibilities in the

future (Adizes, 2004:21).

The founder is at the stage of building his enthusiasm and commitment to his dream. The

higher the risk, the deeper the commitment needed. The founders and the investors build

commitment to undertake risk and bring the organisation to life (Ibid:23). At this stage the

good idea is not enough, what is more important is a committed leader, who can bring the

idea, the market, and the money together (Ibid:24).

Within the Courtship stage, the founder will experience fear, uncertainty, and doubt (Ibid:28).

The goal should be to add value and satisfy market needs – rather than only focusing on

making profit (Ibid:24). To overcome the difficulties of starting a business the founder can

use incubators26 to nurture the innovation and further develop the company (Ibid:29-30).

Kazanjian defines the first stage of the OLC as the Conception and Development Stage that

can be seen as a ‘bridge’ between Adizes’ Courtship and Infancy stage. There is a clear

relation between Adizes and Kazanjian’s first stage, namely arguing that there is a stage

before the actual birth of the company;

                                                                                                               26 Within this project, the authors view incubators as being programs aimed at helping entrepreneurial companies via e.g. networking and guidance. Examples of incubators include Venture Cup, Væksthuset, Katapult etc.

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“Before their formal creation, as signified by incorporation or by gaining a major

source of financial backing that goes beyond initial seed grants, virtually all

ventures go through a period during which the primary focus of the entrepreneur

(…) is on the invention and development of a product or technology” (Kazanjian,

1988:262)

Further the Conception and Development Stage emphasises the importance of a product

prototype as well as lack of structure;

“Structures and formalities are nonexistent during this stage, with almost all

activity focused on the technical issues as defined and directed by the founding

entrepreneur(s) (...) Major problems of organizations at this point include

construction of a product prototype (...) and selling the product and business idea

to financial backers” (Ibid:263)  

This part is in clear reference to what Adizes describes in the second phase namely the

Infancy stage. The take away from Adizes’ Courtship stage is a list of the main characteristics

from this stage, see table below.

Table 4.4.4.1.1 Main Characteristics of the Courtship Stage

Main Characteristics

Excitement, possibly unwarranted

Details thought through

Fear, uncertainty, and doubts

Focus on changing the world and making money

Commitment to the risk Source: (Adizes, 2004:31)

4.4.4.2  The  Infancy  Stage  

This stage requires constant work and dedication, especially from the founder. According to

Adizes the Infancy stage begins when financial risk has been undertaken and the founder is

fully dedicated to the company, and decides to leave current pay job, and commit to the

customers via a stable ‘lead time’ for the product (Ibid:31).

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Adizes argues that the infant organisation is product- not sale-orientated. Sales are useful for

cash generation purposes, but the real value, to the infant organisation, is the market's

validation of its new product or service. This stage focuses on completing the development of

the innovative and new products or services, where the product has to be tested in the

marketplace (Ibid:33-34). The product of the infant company needs to sell, otherwise this will

lead to cash starvation, lack of continued interest from financial backers, and the emotional

collapse of the founder (Ibid:35). Miller & Friesen called this stage the Birth Stage, describing

it as;

“(…) the period, in which a new firm is attempting to become a viable entity (...)

The prime distinguishing features of the firms in this phase are that they are

young, dominated by their owners, and have a simple and informal structures”

(Miller & Friesen, 1984:1162)

The lack of strong procedures and structure, as well as dominance by the owner, is also

pointed out by Adizes and will be discussed later.

In addition, Quinn & Cameron named this stage The Entrepreneurial Stage: where they stress

the focus on flexibility, readiness, resource acquisition, and development of external support

(Quinn & Cameron, 1983:43), and for the organisation to be successful they need to meet

these criteria on the market (Ibid:43-44).

The main characteristics for infant organisations, according to Adizes, are being action-

oriented and opportunity-driven. Moreover, the ideas are changing into real action; however,

the performance in this stage is inconsistent.

Seeing that infant organisations lack strong systems and policies, conflicts or problems can

escalate into a crisis in a short notice. Adizes argues that in order to survive, infant

organisations need two things: consistent infusion of working capital and unconditional

commitment (Ibid:37). The commitment of the founder and the employees is constantly

questioned. It is important to highlight that employees are often attracted to infant

organisations, not for financial benefits, as their commitment to the company often extends

beyond the company’s ability to pay them (Ibid:36-37; 40). Most founders, in this stage, have

an autocratic leadership style, meaning that they are not able to delegate and spread the work

effort of critical tasks (Ibid:44). An explanation for this one-person show is the constant fight

for survival, and this is the only way founders can control many outcomes (Ibid:46).

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The company will transform from the Infancy stage to the Go-Go stage, when its cash flow

and activities get stable, meaning that the company has a positive cash flow, growing

customer base, developing brand loyalty, and no crises on the production side (Ibid:47). The

take away from Adizes’ Infancy stage is a list of the main characteristics that appear during

this stage.

Table 4.4.4.2.1 Main Characteristics of the Infancy Stage

Main Characteristics

Customers experience problems with the product

or service

Few procedures, rules, policies, or

systems

Questioning investors Negative cash flow

Commitment not threatened by risk Sustained commitment

Lack of managerial depth 1-person show. No delegation

Initial product or service concept fails and is

replaced by another

Work life puts stress on family and home

life

Founder and others make mistakes Benevolent dictatorship

Management by crisis Founder's commitment tested Source: (Adizes, 2004:47-48)

4.4.4.3  The  Go-­‐Go  Stage  

An organisation moves to this stage when it has had its first taste of success. In the Go-Go

stage a company has a successful product or service, good cash flow, and growing sales. What

is even more exciting is that the company has moved on from a constant struggle, and thus

survived the infancy phase, to become a well prospering business (Ibid:52). In some cases, a

continued success can quickly transform the founder’s confidence into arrogance, with a

capital A (Ibid).

Driven by their initial success, Go-Go's feel that they can succeed in almost anything that

comes their way, and everything is seen as an opportunity (Ibid:53). The self-confidence is a

major asset of the Go-Go stage, and the founder starts to be engaged in many diversified

businesses; however, the lack of knowledge about the businesses they enter can get them into

trouble. They make decisions and commitments they should never have made (Ibid:53-54).

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The Go-Go company is sales driven, but not marketing-oriented, and has an insatiable hunger

for growth. Every opportunity discovered in the marketplace must be pursued. This sales

orientation is addictive (Ibid:54-55) and, according to Adizes, “The organization is

opportunity-driven rather than opportunity-driving” (Ibid:55). In other words, an

organisation reacts rather than proacts to opportunities. The Go-Go rushes to close new deals,

as more means better, and this mindset causes that the business is unprofitable despite

increased sales (Ibid). By focusing only on sales orientation and having uncontrolled growth,

it can threaten the development of the company, while too early focus on profitability can

inhibit the long-term potential of the company (Ibid:56).

Yong-Sik Hwang & Seung Park corroborate Adizes’ statement that sales is considered to be

the ‘king’ of the stage. They describe their Commercialisation stage as being “(…) focused on

emphasizing sales, and gaining consumer acceptance in the market (…)” (Hwang & Park,

2007:429).  

Additionally Miller & Friesen, in their definition of The Growth Phase, stress similar

characteristics after having gained product-market success; “The emphasis is upon achieving

rapid sales growth and amassing resources in an attempt to realize advantages accruing to

larger scale (…)” (Miller & Friesen, 1984:1162).

The company is organised around people and projects. People share responsibilities and tasks

are assigned based on the employees’ availability rather than their competence. Moreover,

there is not really any organisational structure or chart (Adizes, 2004:62). Management is

often ineffective, and as a result of their personal involvement, the founders have little time to

manage (Ibid:57).

When a major crisis happens and things go wrong, no one takes responsibility. The team

blames it on unclear communication and lack of authority. This frustrates the Go-Go leader

and he feels let down and betrayed by the team, as nobody warned him about the danger

(Ibid:59). The paradox of the situation is that the founder causes the chaos due to his single-

mindedness, which was mentioned earlier.

A love/hate relationship exists between the company and the founder (Ibid:70). When crises

appear, a Go-Go company loses more money in a week than it made in the previous year

(Ibid:65), and the typical reaction to such catastrophes is to implement control and get

organised. The company creates rules and policies, however the founder is the first to violate

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them (Ibid:65-66). In continuation of the love/hate relationship, the entrepreneurial leader is

often a bit paranoid due to his loss of authority via delegation of work tasks. Even if there is a

capable replacement, the founder may fear that a new leader will hijack the company and steal

the founder’s dream (Ibid:70). The main take aways from Adizes’ Go-Go stage is listed

below.

Table 4.4.4.3.1 Main Characteristics of the Go-Go Stage

Main Characteristics

Self-confidence and eagerness Everything is a priority?

Sales drive the ship Sales more important than profits

Some sales accepted that we cannot deliver Unclear communication

Unannounced, unruly and unproductive meetings Founder indispensable

Insufficient cost controls, ad hoc budgeting Leadership is frustrated

Ineffective management from key leaders Confusion in roles and responsibilities

No consistent human resources management Employees are frustrated

Company subject to criticism Infrastructure is a house of cards

Hope for miracles A major crisis occurs Source: (Adizes, 2004:73)

4.5  Analysis  of  Organisational  Life  Cycle  In this chapter, the challenges the entrepreneurs are facing, at the different stages of the life

cycle, will be analysed. It is important to note that the analysis will identify the challenges

occurring for each entrepreneur, as opposed to comparing the entrepreneurs with each other.

This is because each start-up and entrepreneur have their own unique characteristics, and is

influenced by the environment and industry they are operating in. Furthermore, the authors

would like to stress that the OLC theory (see section 4.4) has not been widely tested in

practice. Meaning that most of the theory on OLC is based on“(...) statistic assessments of

mature organizations” (Cameron & Whetten, 1981:527). As Robert H. Miles explains;

“We know almost nothing about either the evolution of structures and processes

or the patterns of learning and decision-making that occur as organizations

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attempt to move from creation to maturity” (cited in Cameron & Whetten,

1981:527)

Also, Adizes’ theory is based mainly on the history of mature American organisations

(Adizes, 2004:XVIII). A further difficulty encountered with the theory is the development

from one stage to another. Not all organisations follow the same progression; some can be in

the Go-Go stage for years, while for others, it can be a matter of months.

This has posed a challenge for the authors, to place the seven start-ups in their appropriate life

cycle stage, seeing that neither of them can be considered a ‘mature’ organisation. Therefore,

based on the empirical evidence, the authors have placed the companies in the stage, where

the most common denominators are similar, i.e. where the characteristics of the stage match

the qualities of the entrepreneurial start-up. This grouping of the entrepreneurs is not definite,

as the authors take into consideration that some of the characteristics occurring in one stage

are likely for a start-up to experience even when placed in a different stage.

None of the start-ups seemed to fit in the Courtship stage, seeing that they are all formally

established and have a product on the market. Nevertheless, the Courtship stage is important,

as it serves as the foundation for the start-up. Four start-ups are deemed appropriate for the

Infancy stage; Shabenaa, Art District, EMP Group, and Company Y. The challenges for these

companies will be analysed in the following section (see section 4.5.1). IconFinder, HED, and

Company X share more characteristics with the Go-Go stage, analysed in section 4.5.2.

Lastly, the start-up, MPSOFTWARE, is considered to be the ‘black swan’ of the study, based

on his unique situation. This will be analysed further in section 4.5.4.

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4.5.1  Infancy  Stage  

The following will embark on an analysis of the Infancy stage.

4.5.1.1  Commitment  

“An unequivocal commitment to their vision” (McMorrow, 2013), this is what the finalists of

the ‘entrepreneurs of the year’ award all have in common, accordingly, to be a successful

entrepreneur you need to have unwavering commitment to your start-up (Ibid). Although not

all entrepreneurs need to win an award to be considered successful, it is vital for their success

that they are committed to the start-up in the Infancy stage. Nana had this experience when

she entered the Venture Cup competition; “(…) even though you don’t get [to participate in]

Venture Cup it is not an indication that you don’t have a good idea and [that] it isn’t possible

for you to start up” (A3, Nana 20:45). She demonstrates her commitment to the idea, even if

others do not share her viewpoint.

Three of the characteristics in this stage, as established in the theory, are sustained

commitment, commitment not threatened by risk and founders’ commitment tested. Adizes

explains that the entrepreneurs “(...) cannot let their dream die” (Adizes, 1999:40); otherwise

the start-up would die along with the dream. Nana expresses this kind of unwavering

commitment to her dream;

“(…) the company is driven by our personality, that we really wanna do this and

that we believe in the product. And you have to do that if you want to start your

own company because many people are gonna say that it’s never gonna work”

(A3, Nana 3:15)

Commitment can also be expressed in a more exaggerated manner, as Adizes explains that

entrepreneurs sometimes view their start-up as the “(…) ticket to immortality” (Ibid:40),

meaning they wish to leave a legacy behind, as the late Steve Jobs did. Louise reveals her

commitment to Art District through her creative side: “I just (…) love the possibility of

creating little miracles every day, everything can happen and all types of people and projects

can come your way” (A2, Louise 28:46). She also quit her stable job to fully commit to the

start-up (A2, Louise 33:58). Daniel made a similar choice, when he quit his job at Company

X, after it had been sold, so he could engage himself in his new start-up, Company Y (A5a,

Daniel 12:45). Experts disagree on the matter of quitting your job too early, however one

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group claims that you cannot start a successful business if you have a foot in both doors; you

need to be committed from the beginning (Klein, 2012).

Entrepreneurship is easily associated with hard work (see section 4.1.2), but with hard work

and the risk of starting your own business, the doubts can start creeping up. Like Nana

explains in the quote above, many people are going to be critical towards the idea, and

naysayers are common in this environment. What is important is that the entrepreneurs stay

faithful to their commitment. EMP group clearly demonstrates their commitment during hard

times;

“We were very close to [shutting down], there was basically nothing going on in

the company for months (…) [the] company was kind of closed down” (A6, Niels

27:40)

“The problem with the enterprise model is that you do the sale, it takes a long

time, months and months, just to get the first meeting, and then you have to go

through all these people making decisions, and in the last second you spend

numerous hours on this and they just say ‘nah, I’m not interested’ (…)” (A6,

Dennis 21:55)

However, even though they almost closed, they still had a sense of commitment to the

company, they identified their problems, and changed the product to become a more self-

service model, and today they are happy that they did not close, as they believe they are on

the verge of explosive growth (A6, Niels 1:16:18).

Louise also expressed moments of doubt, as she was “(…) staring at the ceiling for a month

every night [thinking] ‘what the FUCK am I doing’ – so scary” (A2, Louise 19:05), she

continues to explain “(…) of course there are doubts, speculations and worries” (A2, Louise

40:02). But she did not give up on her dream, as she got reassurance and proof of concept

from both customers and artists (A2, Louise 19:28). Also Nana saw a proof of concept early

on, which made her promptly reply “No!” when asked if she had had any doubts (A3, Nana

33:43).

4.5.1.2  Early  Stage  Financing  

Financing in the early stages is somewhat of an endless circle, as the entrepreneurs need cash,

this cash is acquired from sales, which is predetermined on resources. Thus, in order for sales

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to grow the need for resources becomes greater, and vice versa (Adizes, 1999:42 & Oliver,

2011). In the beginning of the start-up, personal resources can prove to be more than just a

cash advantage. As the theory highlighted, when an entrepreneur invests personal funds it

sends a signal of commitment and dedication to the start-up.

Art District is founded by Louise’s partner, who invested the starting capital (A2, Louise

24:06), and Company Y is partly founded by the money Daniel gained from the sale of

Company X (A5a, Daniel 12:45). Nana explains, in another interview, that her partner

borrowed money from the family, and Nana took a bank loan with her parents’ house as

security (Start op, 2012:49). Later in the process Nana was able to get a bank loan to further

grow her company; however she described this as being “pretty lucky” (A3, Nana 25:30).

Securing more finances, than just the initial start-up capital, can prove to be a challenge as

well. As a means to secure finances, the entrepreneur can engage in bootstrapping (Atherton,

2012:31). EMP Group utilises bootstrapping extensively, and they explain both the upsides

and downsides to bootstrapping;

“We are having consultancy jobs on the side, it has been very important for

bootstrapping, because it gives a lot of cash quickly and you’re not really tied into

anything. For every hour we sell, we can pay three internal hours” (A6, Dennis

36:51)

“(...) since we are bootstrapping it takes a lot longer to get to where we want to

be at” (A6, Dennis 12:35)

“(...) it’s harder [Dennis: it takes longer], it’s more painful (...)” (A6, Niels &

Dennis 34:14)

They are happy that they decided to do bootstrapping because they now can reap the benefits

of not having any investors to share the company with, or any interest to pay off. Further,

Niels explains that they will stop bootstrapping when they have enough customers and

income to pay everyone to work fulltime in the company (A6, Niels 37:57). Daniel also

explains how they used bootstrapping in the very early stages of Company X27 by offering

side-products (A5a, Daniel 25:57) and acquiring personal bank loans (A5a, Daniel 31:43).

                                                                                                               27 Company X is considered by the authors to be in the Go-Go stage, however before they were in the Go-Go stage they utilised bootstrapping within the Infancy stage.

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Bootstrapping can therefore be considered as an important tool for entrepreneurs to gain

access to finances, when not being eligible for investments or loans (Atherton, 2012:38).

For Art District it is all about cutting costs, which helps release the pressure of the forecasted

growth rate (A2, Louise 5:28). An example of how they keep costs low is by hiring interns

and having volunteers (A6, Louise 2:12), who generally have a lower, or no, pay rate. Daniel

also keeps his costs low at Company Y by having interns; he argues that in return they get a

high level of responsibility that they would not otherwise get in a big firm (A5c, Daniel). This

statement is contrary to what the theory stresses, that leaders in this stage cannot delegate

work and practice autocratic leadership. Again this comes back to the limitations of the OLC,

namely it being based on larger corporations.

Another type of financing, which can be acquired by entrepreneurs, is grants. As EMP Group

placed 2nd in Venture Cup in 2009 they won a money prize, however Dennis explained that;

“(…) a 130,000 [DKK] really doesn’t go a long way, it sounds like a lot of money, but it’s

really not” (A6, Dennis 56:08). They used the money to buy IT equipment infrastructure.

IconFinder won a similar money prize from Venture Cup in 2011; he, as well, expressed the

same lack of enthusiasm regarding the prize (A4, Martin 6:52). Daniel was also close to

receiving a grant of 750,000 DKK to go to Company X, even though they had the pre-

approval, the grant was eventually subtracted due to a new government (A5a, Daniel 29:52).

Another type of grant utilised by the entrepreneurs is the student support in Denmark, SU,

especially Daniel would not have been able to carry on working in Company X without it. He

explains that he prolonged his studies in order to stay eligible for SU (A5b, Daniel 12:46).

Nana received unemployment benefits, i.e. dagpenge, after she had finished her degree (Start

op, 2012:47), something, which allowed her to work on the company without the pressure of

expected sales growth. Her pay from Shabenaa continues to be at the level of unemployment

benefits (A3, Nana 29:10), a strategy that Louise also has chosen. In the beginning she was

paid at SU levels, however to cut costs and stress, she decided not to receive a pay check

anymore (A2, Louise 5:28; 33:14). What is important to note in this connection is that

entrepreneurs often do not start up a business for the money, but for the realisation of the

dream (Burns, 2007:98-99), thus the low pay is a way to cut costs in the beginning.

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Investors are a third kind of financing, entrepreneurs can attempt to gain, however difficulties

often arise in the early stages of the start-up. Both EMP Group and Shabenaa had considered

attracting investors, but eventually decided against it, even when offered;

“(...) in the beginning investors want a lot of shares for very little money” (A3,

Nana 25:30)

“(...) a lot of investors came after [an article in Børsen], and wanted to buy the

company and give us a lot of money, but it wasn’t right. Not because we didn’t

want to give it up, but just because we didn’t want to give it up for nothing” (A3,

Nana 36:06)

“I don’t think we would have ever taken it, because usually they get 30 or 40% of

the company” (A6, Dennis 31:27)

“We had an offer, but that was a small amount of money, and they still wanted a

big cut of the company” (A6, Dennis 33:50)

According to Adizes, it may have been beneficial for the two start-ups to reject the investment

offers, as he argues that you lose the commitment to the start-up, if a too big share of the

company is ‘given away’ (1999:43). From the beginning, Art District decided against the use

of investors, as they wanted to “(...) do it on their own, we wanna decide (...)” (A2, Louise

24:06). To return to EMP Group, their current focus is to get more customers, and as they

argue, “(...) money won’t really help that” (A6, Niels 1:16:03), and Nana is more interested in

gaining a partner who can aid in distribution (A3, Nana 10:20; 11:18).

4.5.1.3  Product  Orientation  

In the Infancy stage the start-up is mainly focused on validating the product on the market,

and one of Adizes’ stage characteristics, in this relation, is ‘Initial product or service concept

fails and is replaced by another’. This problem occurred for EMP Group, as they, in the

beginning, focused on selling their product to larger companies; they then discovered the

difficulties in this and decided to change the format to focus on smaller companies. As they

explain;

“(...) before it was a concept of doing enterprise sales (...) it is very hard, because

big corporations only do business with big corporations (...) it takes years and

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years to do one sale. So, we kinda wanted to switch to a more self-service model”

(A6, Dennis 19:30)

“(...) [when doing enterprise sales] one person is fulltime managing that

customer, and we wanna get out of that, because that is not really a scalable

business model” (A6, Dennis 21:55)

“We wanted to make something that was easy to sign up for, so that small

companies could go in, and just [Dennis: use it without assistance] and for a

small fee use it, instead of relying on this big enterprise sale” (A6, Niels &

Dennis 20:07)

Therefore, EMP Group is remodelling their products’ platform and webpage etc. to create this

self-service model (A6, Dennis 18:49). However, until they have a more stable customer base

and validation of their new product, they cannot enter the Go-Go stage. They do explain that

customer recommendations and testing the product on the market are their priorities (A6,

Niels 1:00:24), and their fast response time and flexibility are their greatest assets, making

them fairly successful in the Infancy stage. Nana is experiencing somewhat of a similar

problem with her product;

“(...) we want to make a newer version of ShaveSafe, and that is because

ShaveSafe is a biocide (...) which is a classification of the product (...) that is quite

hard to get in other countries (...) mainly very expensive. But if you can make it a

cosmetic product then it is free to bring to the market” (A3, Nana 7:59)

Nana also highlights other difficulties, she has experienced in her growing phase, such as

having a terrible accountant, and she needed a great deal of help when applying for a patent

(A3, Nana 23:48; 26:12). She now hopes to make a deal with a bigger distribution company,

as among other things they “(...) know everything about regulations [and] laws” (A3, Nana

7:11). Louise also explains that as an entrepreneur you have to learn how to do everything

yourself, such as VAT regulations and creating a web shop (A2, Louise 4:24; 15:18). The

same situation is occurring in EMP Group, when Dennis explains you have to be flexible in

your work tasks (A6, Dennis 15:42). This indicates, that in this early stage of growing, no

structure has emerged yet.

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4.5.2  Go-­‐Go  Stage

As can be read in the theory chapter, the organisation transforms from the Infancy stage to the

Go-Go, when it manages to establish a successful product or service, rapidly growing sales,

and strong cash flow (see section 4.4.4.3.). This stage is driven by sales, and not profit.

IconFinder is the first search engine focused on icons, and was established in 2007. The

authors perceive IconFinder to be a company located in the advanced part of the Go–Go

stage. The company has its marketplace online and has been strongly recognised on the global

market with almost 2.5 million visits per month and a download of 100 millions icons

(Bryant, 2013). As stated by Martin, IconFinder has a rapidly growing sale, where the focus is

on growth and not on profit (A9, IconFinder).

HED, with its innovative product, has successfully managed to enter the market in twenty

different countries all over the world (see chapter 2), and furthermore sign a contract with one

of the largest companies within the dialysis field (A8, Mads 08:25). Additionally, Mads states

that HED has a relatively slow growth, however they did have an increase in sales of 55%

compared to 2011 (A9, HED). Furthermore, Mads stresses that the industry, in which HED

operates (dialysis clinics and hospitals), was significantly affected by the economic crisis (A8,

Mads 38:50), and that is why the growth of HED is stable considering the industry. At this

stage, HED has its focus on growth rather than on profit (A9, HED).

Furthermore, Company X, after seven-eight years of prospering on the market (A5a, Daniel

22:47), was experiencing a very fast growth and was considered amongst the fastest growing

IT companies in Denmark (A5a, Daniel 21:15; 22:21), just before the sale to Company Z in

2007. The focal point of Company X was growth and sales, which is currently the strategy of

HED and IconFinder.

Both HED and IconFinder found investors – Østjysk Innovation and Vækstfonden – who

made it possible for them to keep a positive cash flow and keep the centre of attention on the

companies’ growth process and selling the product on the global market (A4, Martin 08:10;

29:45; 30:17 & A8, Mads 05:20; 14:43). When Company X transitioned to the Go-Go stage,

it became profitable and had its focus on reaching more customers (A5a, Daniel 21:12;

31:43). The investors’ trust in IconFinder and HED can be explained by research done by

Bengt Johannisson & Mette Mønsted, on the Scandinavian market, which shows that male

entrepreneurs are more recognised than females. Meaning that males have greater access to

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institutional support (e.g. Vækstfonden and Katapult) (1997:116). Further, the right

connections can be necessary for securing funding, as seen in the case with HED, but it is not

sufficient in order to succeed as an entrepreneur. Thus, the authors presume that gaining the

necessary funding does not secure sustainable growth, unless the founders have the ability to

successfully develop their business ideas.

According to Adizes, the company in the Go-Go stage moves quickly and is powered by its

initial success. The founders start to feel that they can succeed in almost anything and start to

get involved in diversified businesses, without having the needed knowledge. The company

rushes to close new deals, and therefore the business may become unprofitable despite

growing sales. HED does to some degree correspond to the description of the Go-Go

characteristics. They are very confident in relation to how the company is developing and

planning its expansion;

“ (…) we had the biggest turnover last year (…) [we] grew 55% compared to

2011, and this year it is going to grow something like 15 maybe 14% (…) we

signed the deal with the Swedish company Gambro, which meant that we could

expand to further markets, then we also signed a deal with a Japanese company

who are now distributing in Australia [and] New Zealand (...) they represent a

huge potential, (...) [it is] the greatest success that we could’ve ever hoped for.

(…) so our goal is to span the globe with this product. There’s no doubt that we

want to be on all continents, (…) so we are growing (…)” (A8, Mads 19:31)

“(…) we want to just start a small business empire, in the sense that we really

want to be making a lot of business, not in terms of HED but also with

Hemdorff/Veedfald and just joining really (...) good companies that have the

possibility to grow” (A8, Mads 52:27)

IconFinder also expresses this confidence inspired by their initial success, and describes their

future ambitions;

“We want to challenge the already established players, such as Google, by

focusing on a niche where Google’s approach is too broad and therefore cannot

compete effectively. The market for graphical computer icons is experiencing

significant growth – especially due to the increase in touch screens that use icons

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both in the programmes and as a form of logo - such as Apple’s App Store”28

(Kanberg, 2012)

“I have a feeling that in 10 years, there is someone who has bought us (...)”29

(A4, Martin 31:23)

The theory emphasises that the company, by continued success, can transform founder’s

confidence into arrogance quickly if not prevented. However, neither Mads nor Martin, by

being confident in what they do and how they direct their companies, show an arrogance that

could lead them to a crisis situation caused by hasty decisions or not thought through

investments. On the contrary, both of them demonstrate a very well understanding of the

industry, in which they operate, and are of the belief that ‘Rome was not built in a day’ and

know from experience that it takes time to develop a business (A4, Martin 30:17 & A8, Mads

23:15). Moreover, neither of them is currently involved in businesses outside their scope.

Mads, together with Kristian, is involved in two more start-up companies:

Hemdorff/Veedfald; a consultancy company with focus on helping other start-ups, and

ABseal, a company where both of them were headhunted for CEO positions, to develop a new

medical device (A8, Mads 09:00). The skills and knowledge to run and lead these new start-

ups were acquired during the process of running HED (A8, Mads 17:17).

Taking into account everything stated above, it is clear to notice the correlation between the

theory, surrounding the Go-Go stage, which stresses the focus on sale, and what is occurring

in practice. HED and IconFinder have their main focus on growth, and what will

automatically follow is an increase in sales. Neither of them have been fanatically

concentrated on increasing sales, meaning they have not been pushing the product to the

market, which is contrary to what Adizes predicts in the Go-Go stage.

According to the theory, the Go-Go organisation is very much opportunity-driven, rather than

opportunity-driving, and this causes the business to be unprofitable. Although, the authors

were never introduced to any of the yearly financial results, from any of the companies, the

general impression, from the interviews and press articles, is that the growth strategy is not

                                                                                                               28 Free translation of: “Vi vil udfordre de etablerede spillere som Google ved at fokusere på en niche, hvor Google er for bred og derfor ikke kan konkurrere effektivt. Markedet for grafiske computer ikoner er i kraftig vækst ‒ særligt på grund af det øgede antal touchscreens, der benytter ikoner både inde i programmerne og som en form for logo i fx Apples App Store.” 29 Free translation of: ”Jeg har på fornemmelsen at om 10 år, så er der nogen, der har købt os (…)”

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based on chaotic and uncontrolled actions. Both HED and IconFinder are realistic in their

outlook on their companies’ future development, as they see both the risks and opportunities.

What is more, it is them who drive the opportunity, not vice versa. For instance, Mads

describes his attitude towards risk by choosing to perceive it as an opportunity;

“(…) I didn’t feel that there is a risk [of failure]; it is much more an opportunity

(...) that is sort of my general idea about it, an opportunity rather than a risk”

(A8, Mads 46:56)

Martin shares a similar attitude, as he describes how an unexploited business opportunity was

seen as a chance;

“(…) there are not really that many who have been serious about icons yet, and I

think that we have been the first to really take a chance on it”30 (A4, Martin

10:40)

Normal characteristics in the Go-Go stage are unclear communication and unclear

responsibilities, which can spiral out of control if a crisis occurs. However, these normal

characteristics are counter argued by the empirical evidence, especially when looking into

IconFinder’s organisational structure. Martin and his partner Steffen have clear

responsibilities when it comes to managing the company, as well as Nick, who is employed as

a designer (A4, Martin 25:54). It is lucid that everybody have their own tasks and take

responsibility for their own actions;

“(…) we also have a risk of being sued if we make some mistakes, so both Nick,

Steffen and I are not employed as regular employees but as managers, meaning,

we take responsibility for the things we do, we have a board, in principle, but it is

me who gets fired first because I am the CEO, so if Steffen does not do his job

                                                                                                               30 Free translation of: ”(…) der er ikke rigtig så mange, der har været seriøse omkring ikoner endnu, og der tror jeg at vi har været de første, der ligesom har satset på det.”

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properly, I should take action, if I won’t, the board will fire me for not firing

Steffen, (…)”31 (A4, Martin 26:33)

Also, Mads and Kristian seem to have control on all three start-ups, and now they are taking

two interns under their ‘wings’, who will help them in assisting in the daily operations of their

companies (A8, Mads 17:17).

The decision to sell Company X, in the moment of significant growth, was taken due to:

premature profit orientation, unclear communication, ineffective management, frustrations

and feeling of betrayal by the team. Even though, no major crisis struck the company, the lack

of communication and the different focuses of the four founders made them take the decision

to sell the very promising business. Daniel was one of the four founders, who were most

involved in the company (A5a, Daniel 25:00), as two of the four partners became inactive

within the first six years of running the business. Back in 2002, the founders created a

shareholders’ agreement, in the case of a situation, where one of the partners decides to leave

the company. The agreement stated that the three active members would make final decisions,

in regards to the company, and decide wages of the active members. The agreement did not

take into account a situation, where two shareholders would become passive;

“(…) now we had a situation that two shareholders were active and two

shareholders were outside, and those two outside would like to sell the company

(…) and those two inside, me and another guy, we would like to stay (…) ‘why

should I work for you [passive shareholders], when you don’t do anything?’”

(A5a, Daniel 20:51)

This situation obviously caused most of the problems, and as a consequence it led to the sale

of Company X, in its most favourable position (A5a, Daniel 18:50).

To some extent, the case of Company X shows that the management was ineffective, as only

two out of the four founders were actively involved. This can be the result of the founders’

personal involvement in other activities, and consequently having no time or desire to manage

                                                                                                               31 Free translation of: ”(…) så har vi også en risiko for at blive sagsøgt, hvis vi laver nogle fejl, altså både Nick, Steffen og mig vi er ansat som direktører og ikke som ansatte dvs. at vi skal stå til ansvar for de ting vi gør, vi har en bestyrelse i princippet og så er det jo mig, der bliver fyret først, fordi jeg sidder på CEO så dvs. hvis Steffen ikke laver sit arbejde ordentligt, og jeg burde have grebet ind så fyrer boardet mig, hvis jeg ikke har fyret Steffen, (…)”  

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the company. This case exemplifies the paradox mentioned earlier in the Go-Go stage, that

the founder himself causes the chaos (i.e. the two inactive members), when the company’s

situation on the market is otherwise healthy. As Daniel admitted, he would have bought the

shares from the other co-founders, if he had had the money (A5a, Daniel 23:54).

Daniel followed Company X to its new owner, Company Z, and continued to work with

Company X for another one and a half years (Linkedin, 2013b). All along, it was a known

agreement that the intention, with the switchover, was to eventually buy back his share of the

company with the promised stay-on bonus, yet, when the time came, this arrangement was

denied (A5c, Daniel).

The theory states that within the Go-Go stage, the founder may turn a bit paranoid, and is

terrified of a new leader hijacking the company and thereby stealing the founder’s dream. The

authors argue that Daniel’s behaviour is fairly in keeping with the theory, as it is clear that

Daniel only decided to come and work at Company Z, because he was promised that he

would be able to buy back ‘his baby’.

Furthermore, as a result of joining a new and already established organisation (Company Z),

Daniel had to comply with new company rules and policies, something he was not used to.

According to the theory, a complex company structure can lead to a love/hate relationship

between the company and its founder. Daniel most likely experienced a love/hate relationship

due to his loss of influence and authority. This combined with the rejection to buy back his

part of the company ultimately led to his termination and loss of the promised stay-on bonus.

Within a short time period, Daniel started his new company, Company Y.

4.5.3  Sum  Up  of  Development  Phases  

The analysis of the Infancy and Go-Go stage has shed light on another weak point of the

theory; the theory covers the changes in the organisation, but neglects to take into account the

product life cycle. Using IconFinder and HED as examples: they are in the same

organisational stage, however their products, and subsequently industry, are very different. It

can take several years in the medical industry to get a product approved, where it only takes a

couple of minutes for Martin to upload another icon to his website. It would therefore be

easier for IconFinder to grow into another stage, where HED are experiencing larger barriers

that could strand them in the Go-Go stage for years.

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The OLC theories are developed at a time where companies were following the traditional

manufacturing strategies, but since then the IT development has created new types of

businesses not selling tangible products. Even current research papers on OLC are using the

models from the original papers, which could help to explain why the authors find it difficult

to place MPSOFTWARE in a stage, as the stages do not take IT companies into account.

4.5.4  Stagnation  Stage

It was mentioned in the introduction that MPSOFTWARE is considered, in this study, to be a

‘black swan’, as the company does not match, with its characteristics, to any of the five stages

within the development phase presented in Adizes’ model. The company has progressed to a

stage beyond the other entrepreneurs. Despite this, the authors have managed to find some

similarities with one of the stages in Adizes’ model, namely the Stable stage. This stage is the

first step into the aging process, and is dubbed by the authors the Stagnation stage (cf. the title

of this section).

One of the symptoms occurring, as a company is entering the Stagnation phase, is that they

start to lose their energy and thus begin to age (Adizes, 1999:115). The forthcoming quote

from Michael indicates that running MPSOFTWARE is not as exciting, as it was previously;

“(...) [I run the company] one hour a day, it can also be zero, it depends on my

mood (...) it is not the classical 70-80 hours, I did this in the beginning (...)”32

(A7, Michael 28:10)

When an organisation first begins to age, the signs will not show up on its financial reports.

As Michael said “(...) last year I made the best result ever, by virtually not doing anything”33

(A7, Michael 20:45).

Later, Adizes explains that very often companies, in the Stable stage, are cash rich and have

strong financial statements (1999:115). He elaborates further by saying that an organisation,

which wants to grow, will consume more cash than is actually available. However, when a

company is in the advance aging stage it has more money in the bank, than it can use, and no

                                                                                                               32 Free translation of: “(...) en time om dagen, det kan også være nul, det kommer lidt an på, hvad jeg har lyst til (…) det er ikke de der klassiske 70-80 timer, det brugte jeg i starten.” 33 Free translation of: “ (...) sidste år lavede jeg det bedste resultat nogensinde, ved stort set ikke at røre ved min organisation.”

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plan on how to use them (Ibid:123). Michael explains that during his studies MPSOFTWARE

was cash rich;

“(…) it has always been a sole proprietorship for many years, so it was running

fine alongside my studies, that is I had a turnover of about 1 million [DKK], so

that is okay SU money”34 (A7, Michael 13:11)

When an organisation starts to age, the first problems appear in the attitudes, outlook, and

behaviours of the leaders, as “Aging starts in the mind with changes in attitude and goals”

(Adizes, 1999:116). It is lucid that Michael’s attitude, towards starting up a company and

growing it, has changed over the years;

“(...) one thing's for sure, I’m not going to start up alone again (...) been there

done that, it’s not worth it, there are so many other prevailing factors. ‘But there

is money in it’ - fine, but that is not what I need, I need other things; the social

values (…)”35 (A7, Michael 35:10)

“(...) it [the company] has always been sort of side-tracked, it does not mean that

I’ve not focused on it, because I have been 100% focused on it, but there’s

something missing in terms of being self-employed, some partnership or someone

to spar with”36 (A7, Michael 19:49)

According to Charles Gow, the aging starts within a company culture; “When things stop

growing, they begin to die” (cited in Adizes, 1999:119). Michael is experiencing something

similar;

“(...) I was more frustrated as to ‘why does it not grow more after 5 to 6 years’, I

still make the same 60 to 100,000 [DKK] a month, which is a nice income to have

                                                                                                               34 Free translation of: “Men det har været en enkeltmandsvirksomhed i rigtig mange år, og det kørte jo fint ved siden af studiet, altså jeg omsatte jo vel for 1 million om året cirka, så det er ok SU penge.” 35 Free translation of: “(…) for en ting er sikker, jeg ville ikke starte op alene, det gider jeg ikke, been there done that, det er ikke det værd, så er der så mange andre faktorer, der gør sig gældende, jamen der er jo penge i det, det er fint, men det er ikke det jeg har behov for, jeg har brug for nogle andre ting, de blødere værdier.” 36 Free translation of: “(…) så har det altid kørt på et sidespor, og det har ikke betydet, at jeg ikke har været fokuseret på det, for jeg har været 100% fokuseret på det, men der mangle den og et i forhold til at være selvstændig, noget partnerskab, nogen at sparre med.”

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(...) so financially speaking I’m not complaining, but it has just been too static”37

(A7, Michael 48:50)

Adizes explains, when there is success within a company, for a longer period of time, people

become satisfied, and they are content to depend on the momentum created in the past. The

position in the marketplace gives a sense of security and the company starts to avoid taking a

risk, as the risk is perceived as being too high. All this develop an attitude within the

company; “If it ain’t broken, don’t fix it” (Adizes, 1999:119).

Michael expresses his worries and reservations towards risks, and clearly avoids taking a risk,

in order to move forward from the Stagnation stage, where he is trapped;

“(...) I miss some partnership, to dare to take the next steps (...) you build up this

comfort zone, which is difficult to get out of, this has restrained me”38 (A7,

Michael 38:18)

Michael’s full time job (‘on the side’) for a large American corporation, Symantec, gives him

an even greater ‘safety blanket’ and keeps him in this Stagnation stage;

“(...) I am paid quite well in this business, Symantec, this is also creating this

extra comfort zone, and it obviously means that my focus is not always on my own

company”39 (A7, Michael 40:15)

Another aspect visible within MPSOFTWARE is the lack of urgency, which is also one of

the characteristics in the Stable stage; “Managers (…) spend increasing amount of time in the

office, reducing the time they spend in the marketplace or on the firing line” (Adizes, 2004),

meaning that things, around the company, start to be less important than it used to be. In the

case of MPSOFTWARE the increasing amount of time in the office can be interpreted as his

full time job in Symantec, and the reduced time spent in the marketplace is basically his

company as well as the products he develops and sells;

                                                                                                               37 Free translation of: “jeg var mere frustreret over, hvorfor vækster det ikke mere for altså 5-6 år efter, så laver jeg stadig det samme altså 60 og 100 tusind om måneden, det er jo en fin indtægt at have (…) så økonomisk der klager jeg jo heller ikke på hvordan tingene ser ud, men det har bare været alt for statisk.” 38 Free translation of: “(…) som sagt jeg savner noget partnerskab til at turde tage de næste skridt (...) men du har fået opbygget en vis comfort zone, som du ikke kan bevæge dig ud af, så det har hæmmet mig.” 39 Free translation of: “(...) også er jeg (…) rimelig godt betalt i den her forretning Symantec, det er jo også med til at skabe den ekstra comfort zone og det gør jo, at mit fokus ikke altid er på min egen virksomhed.”

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“(...) in the past I made (…) software releases and product releases about every

other month. Today I make it every six month, you know when I find a weekend,

where I can sit down and code a little bit”40 (A7, Michael 40:47)

“(...) my product is a mature product, so I feel comfortable enough with only

developing it once in awhile, and not everyday as I did before”41 (A7, Michael

41:08)

4.6  Sub  Conclusion  of  Organisational  Life  Cycle  The theoretical chapter and the subsequent analysis have endeavoured to answer the second

research question, which reads;

WHICH CHALLENGES DO ENTREPRENEURS FACE IN THE DIFFERENT STAGES OF GROWING THE

START-UP COMPANY?

The theoretical chapter illustrates that entrepreneurs face different challenges; depending on

which stages of the OLC they are situated in, especially as the different stages have their own

sets of characteristics.

In the Courtship stage the idea is formalised, and in the Infancy stage the challenges start to

accumulate. The theory identifies challenges such as resource acquisition, developing and

testing the product, flexibility, and founders’ commitment. The analysis shows that acquiring

resources can be a challenge for the entrepreneurs, as they attempt to gain financial resources

through grants, investments, bootstrapping, and personal funds. All of the entrepreneurs claim

that the lack of resources is keeping them from growing. The development of the product can

also put a damper on the growth, as two of the entrepreneurs discovered that the product

needed to be adjusted to sustain growth. Commitment cannot be identified as a challenge, as it

is needed to endure all other challenges. However, if the entrepreneurs lack commitment, it is

questionable, if they will grow at all.

The challenges and concerns, identified in the theoretical chapter, for the Go-Go stage, are

those of an overly confident founder, sales-over-profit orientation, unclear communication,

and unclear responsibilities. However, what the analysis shows is that the companies do not

                                                                                                               40 Free translation of: “(…) før i tiden, der lavede jeg jo (…) software releases, produkt releases hver anden måned cirka, i dag der laver jeg det hver halve år, når jeg lige finder en weekend hvor jeg kan sidde ned og kode lidt.” 41 Free translation of: “(...) mit produkt er jo også et modent produkt, og derfor har jeg det ok i maven jeg udvikler kun på det i ny og næ, og ikke hver dag som jeg gjorde førhen.”

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share these characteristics, as they have clear communication and responsibilities.

Furthermore, the focus on sale, as opposed to focusing on profit, does not pose a challenge for

them, as they have a modest approach to their success, as well as financial backers. A

challenge, which prevailed, is in the case of Company X, as miss-communication and

different priorities of the four founders resulted in the forced sale of the company. This

indicates that, in this stage, the problems derive from the founder, as the theory identified.

The Stable phase identifies the passiveness, as the biggest challenge, which the analysis also

alludes to. Nevertheless, the theory falls short in some areas; especially it neglects to take into

account that every company develops at its own pace, have its own characteristics, and that

companies operate in different industries and environments. As the OLC theories do not take

into account the technological development, and how it affects business structures, it poses a

struggle for adequately analysing the challenges of start-up companies.

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4.7  Marketing  Seeing that the authors apply an abductive research strategy, which “(…) constantly varies

between empirical and theoretical work in an ongoing process (…)” (Halkier, 2001:44), the

authors have chosen to extend the current investigation by including the marketing tools that

may be of help when growing a start-up. This choice is based on ‘emergent perspectives’ that

was recognised during the empirical research, as the entrepreneurs commonly use similar

marketing tools to facilitate growth in their start-ups. Therefore, this will be taken up within

this chapter, as the marketing subject was not covered within the OLC theories.

The term entrepreneurial marketing describes the marketing activities of smaller enterprises,

and it has an emphasis on adjusting the traditional marketing models to those appropriate to

smaller enterprises, as attempts in the past have failed to adapt and apply traditional

marketing models to small enterprises (Jones & Rowley, 2011:26).

It is known that often entrepreneurs have no marketing-money due to limited resources, which

was also mentioned within the investigation by e.g. Art District and Shabenaa (A2, Louise

21:35 & A3, Nana 6:60). Consequently, entrepreneurs tend to have different approaches to

marketing; these will be highlighted shortly.

Entrepreneurs regard word of mouth (WOM) as one of the most important ways of

transmitting marketing messages, and David Stokes & Wendy Lomax define WOM as “all

interpersonal communication regarding products or services where the receiver regards the

communicator as impartial” (Stokes & Lomax, 2002:350). The success of WOM is explained

by the trustworthiness of the recommender (Alpert & Roberts, 2010:199), which is closely

connected to the impartiality of the recommender. The investigation shows that WOM is

widely used by the entrepreneurs, as a way to spread their business message;

“(…) people are sharing, I’ve had many customers saying that ‘I just have to tell

my friends’, because they had a good experience, and that means the world (…)”

(A2, Louise 23:13)

“We didn’t have any marketing money (…) so it was a lot of word of mouth (…)”

(A3, Nana 6:40)

In relation to EMP Group, the WOM approach is especially relevant, as the commodity that

they are selling can be defined as a service, and according to Stokes & Lomax services are

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more dependent on referrals, as it is extra difficult for customers to assess the quality of a

service (2002:35). Thus, it can be said that EMP Group are heavily reliant on the WOM

marketing method, seeing that the quality of their commodity cannot be explained in detail

through traditional media outlets;

“Everybody want (…) something they can relate to, ‘can I call up this guy, and

ask him how they are using the product?’ ‘What are the benefits for other people

who have used the product’, (...) [Dennis: (…) so you need to say, ‘okay we did it

for this company, it saved them x amount of percent, or money, or time or

whatever (…)]” (A6, Niels & Dennis 1:03:52)

Furthermore, EMP Group’s website also incorporates WOM aspects, as they include

customers’ testimonials (FORECAST.IT, 2013). These testimonials are more reliable than

traditional marketing (Stokes & Lomax, 2002:35), and therefore it is highly beneficial for

them to include them on their website. ShaveSafe also features customers’ reviews, written as

well as in short videos, on their website (ShaveSafe, 2013c). This is important for a product

like ShaveSafe, as customers may not trust the product by just seeing it on the website.

Digital marketing in the shape of e.g. social media, online reviews, blogs, company websites,

among others, is a powerful marketing tool, as it can lead to driving sales, profitability, and

loyalty (Edelman et al., 2012:2). The many advantages of digital marketing is gradually

recognised by more and more entrepreneurs (McKinsey, 2011), and as many of the online

marketing tools are free of charge, they automatically attract entrepreneurs with limited

resources. In the subsequent sections, the authors will demonstrate how the entrepreneurs,

included in the study, use various social media sites to their advantage.

Firstly, the entrepreneurs make sure to have a strong Internet presence by joining not one but

several social media sites;

“(…) a lot of traffic is coming from Facebook, Pinterest as well (…) we’re trying

out Instagram, and trying to see how it can be valuable for our business, Twitter

of course, Linkedin. So, we are there, but mainly Facebook (…)” (A2, Louise

23:35)

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Secondly, the entrepreneurs use these sites, as a way to “(…) get a really good dialogue [with

customers] (…)”42 (A4, Martin 24:20), and thereby manage their relationship with customers.

This is in keeping with the theory surrounding entrepreneurial marketing, as many

entrepreneurs view customer orientation as the “pillar of marketing” (Jones & Rowley,

2011:28).

Thirdly, social media also allows the entrepreneurs to involve existing and future customers in

product development, by including them to have influence on the process, as co-creators;

“(…) I spent a lot of time on it [social media], making sure that the user got a

sense of ownership in the development of the product, I had some small

development cycles, (...) and then the user could see that the functionality that

[the user] had requested, it was also being implemented (…), and it gives a sense

of ownership, a feeling that you have a part in this, and that it’s not just a big

corporation, who completely ignores these requests”43 (A7, Michael 23:04)

In addition to giving the customers a sense of ownership, social media is also used to generate

a ‘buzz’ around or before the actual launch date of a new product and/or feature, as was

expressed by Martin (A4, Martin 23:53).

The marketing advantage of start-ups is strongly linked to the close relationship existing

between the entrepreneur and his customers. This is in contrast to larger corporations, where it

is much more difficult to maintain the same close relationship to customers (Jones & Rowley,

2011:28). Consequently, the direct interchanges and the building of personal relationships are

a preferred marketing method amongst entrepreneurs (Stokes, 2000:51) compared to e.g.

impersonal marketing through mass promotions. Therefore, they seek conversational

relationships in which they listen and respond to customers’ inquiries (cf. the abovementioned

quote). Martin elaborates on this;

“(...) we do think a lot about how we can compete with Google, and we do that by

being a little more personal (...), they have thousands of employees, so they

cannot explain that here is the team, because there are so many people (…) what

                                                                                                               42 Free translation of: “(…) på den måde kan man få en rigtig god dialog [med kunderne] (…)” 43 Free translation of: “(…) der brugte jeg rigtig meget tid på at sørge for, at brugeren får et ejerskab i udviklingen af produktet, så dengang havde jeg nogle små udviklings cyklusser, (...) og så kunne brugeren se, at den funktionalitet, som jeg [brugeren] har requestet, den var også implementeret (…), og det giver et ejerskab, det giver en følelse af, at man har del i det her, og at det ikke bare er en kæmpe stor virksomhed, som er fuldstændig ligeglad med de her requests.”

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we can do is that we’re a team of four people, so we can show pictures of people

who sit and work and have fun doing it, so if you’re a user, you can compare big

evil Google to little funny IconFinder, and in one way or another we get (…) fans

on a more personal level, we’re really trying to work on this, that is to get the

users to know who we are”44 (A4, Martin 24:35)

It is not only IconFinder that find it important to be personal with their customers; Art District

is also practising this approach, as they believe that the story behind the products, they sell, is

important;

“(…) we focus and differentiate [ourselves] by writing these articles about the

artists and products (…) so really, the stories are important to us, we really want

to show people that there is a (…) story, heart, and feelings [involved] (…)” (A2,

Louise 31:23)

In the same way that EMP Group have customer testimonials on their website, Art District

has something similar on their web shop. On the web shop45 Art District is promoting their

artists by uploading written descriptions and short aesthetic videos, where each artist is

portrayed (A2, Louise 31:31); the portrayals have the aim of giving the customers a personal

attachment to the artists as well as the products.

By creating pages on e.g. Twitter, Facebook, or Linkedin, entrepreneurs can use the high page

ranks and relevance of social media to increase the traffic around their own websites, and

thereby increase their own company’s page rank on e.g. Google (A7, Michael 24:22; 25:30 &

A6, Dennis 1:13:34 & A4, Martin 23:17). However, in order for this to happen, the social

media sites need to engage with the company’s own website. This means that it is necessary

to have all the important settings when creating the website, which can be a technical, but

definitely worthwhile process, as the visibility of the brand is improved immensely. While,

social media sites have its advantages, it is still important to consider if it is meaningful to the

company to join these sites, as Nana explains;

                                                                                                               44 Free translation of: “(…) og så tænker vi meget over, hvordan kan vi konkurrere med Google, og det gør vi jo så ved at være lidt mere personlige (…), de har jo flere tusind ansatte, så de kan ikke forklare, at her er teamet, fordi der er så mange mennesker (…) det som vi så kan gøre, det er, at vi er et team på fire mennesker, så vi kan vise billeder af folk, der sidder og arbejder og har det sjovt, så hvis man sidder som en bruger, så kan man se store onde Google, og lille sjove IconFinder, så på en eller anden måde får vi (…) fans på et mere personligt plan, det prøver vi virkelig at arbejde bevidst med, at folk skal lære os at kende og vide hvem vi er.” 45 http://www.artdistrict.dk

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“(…) and then we also have a Facebook page (…) but [we’re] not [using it] so

much (…) we (…) found out that people (…) won’t commercialise their shaving

problems, so it’s not like ‘yeah, just bought this new cool product’ they wouldn’t

write about that on the social media, so it has been a little difficult to share it

(…)” (A3, Nana 37:50)

Instead of focusing on social media, Nana uses Public Relations in other ways. She explains

how she, in the very beginning of starting Shabenaa, went to the different magazines asking

them to “(…) please just try the product, if you wanna write about it it’s cool” (A3, Nana

34:13) as well as sending out free samples to beauty blogs (ShaveSafe, 2013c). Subsequently,

most of the magazines and blogs wrote positively about the product, which she says, “(…)

also proved that we actually have something here” (A3, Nana 34:45). In relation to this,

findings show that a high proportion of people find information posted on blogs as more

trustworthy information, opposed to traditional mainstream media (Naveed, 2012:908), which

is why blog-posts are really influential. However, in the case of Nana, it can be argued that

because the magazines are impartial in their recommendations, this can be viewed as trusted

information, even though magazines are considered mainstream media. Additionally, Art

District applied Public Relations in other ways than social media by e.g. appearing in blogs

(A2, Louise 21:15).

In addition to appearing in various magazines and blogs, some of the entrepreneurs also got

free publicity by doing interviews in the television, which can be said to be more of a

coincidence than a planned strategy – marketing wise. However, the free publicity did

contribute to an increased awareness (A2, Louise 7:10 & A4, Martin 34:44 & A5b, Daniel

7:53).

The chapter has outlined various marketing tools, which entrepreneurs may use to facilitate

growth in their start-ups. All of the aforementioned aspects have focused on a ‘one-to-many’

approach, meaning that entrepreneurs are able to reach many customers using only one

channel, e.g. Facebook. This helps to create a pull-effect from customers opposed to “(…) just

pushing all this crap (…)” (A2, Louise 23:06). What is meant from this, is that customers can

seek knowledge and information at their own request, as it is readily available online. Thus,

all of the abovementioned help to create an increased awareness and getting the word ‘out

there’, at a low cost, which is highly needed when bringing something new to the market.

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The authors want to point out that certain industries may require other ways to market their

products, than the ones presented in this chapter. For instance, HED, which operates in the

medical industry, does not apply the ‘one-to-many’ method, such as word of mouth, social

media, or blogs to promote their product. They rely on ‘one-to-one’, meaning that they brand

themselves in person at e.g. medical conferences or by trying to get meetings with distributors

(A8, Mads 49:35; 50:37).

As a closing argument, presence on the Internet is vital, as means of advertising and

marketing. Even though, social media may not be right for all entrepreneurs, having a website

should at least be a requisite, in order to successfully operate in today’s marketplace.

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4.8  Theory  of  Social  Network  and  Networking  The crucial element in establishing a business is the relationship between entrepreneurs and

those who provide the resources (Johannisson in Greve & Salaff, 2003:1). Networks help

entrepreneurs to acquire human, financial, and social capital, which they need to achieve their

goals (Hansen in Greve & Salaff, 2003:5). Though they hold some of these resources

themselves, in order to engage in business activities, they often complement their resources

by accessing their contacts in their network (Klyver et al., 2008:332).

To understand the entrepreneurial network, the following chapter will embark on a portrayal

on the importance of social networks and networking.

4.8.1  Entrepreneurial  Network  Theory

There has been a shift in the entrepreneurship literature from viewing entrepreneurs as

independent and rational decision makers, towards viewing them as embedded in social

networks (Hoang & Antoncic in Klyver, 2011:334).

Per Davidsson & Benson Honing found, in their study, that people embedded in networks

containing entrepreneurs, namely people who have parents, close family members, or friends

in entrepreneurial business, have a tendency to be entrepreneurial orientated (Davidson &

Honing, 2003:314-315; 317). Based on this, Kim Klyver et al. developed the assumption that

individuals, whose social networks include entrepreneurs, have access to valuable resources

e.g. useful business contacts, instrumental social support, and specialised knowledge about

the entrepreneurship process (2008:335).

4.8.2  Social  Capital  and  Network  

As mentioned earlier, entrepreneurs need information, skills, financial-, social-, and human-

capital to start business activities (Greve & Salaff, 2003:5). In economic terms, the financial

and human capitals are what define a company’s capabilities of production, or the backbone

of a company. However, the social capital is equally important, as it concerns the “relations

within and beyond the firm” (Burt, 2000:282). The social capital is the contacts one possesses

in one’s network and are a key component of entrepreneurial networks, therefore, social

capital is described by Ronald S. Burt, as the opportunities for the company to use its

capabilities (Ibid). Entrepreneurs’ social networks may include advisors, buyers, business

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partners, investors, customers, friends/relatives, mentors, shareholders, and suppliers (Klyver,

2011:338).

According to Burt, entrepreneurs’ networks have numerous properties, i.e. size, positioning,

and relationship structure (in Greve & Salaff, 2003:3). By size, Burt means that entrepreneurs

can augment their network in order to gain important information and other sources from the

experiences of others. Entrepreneurs position themselves within a social network to get access

to knowledgeable people, who possess the essential information, needed by the entrepreneur.

Finally, the relationship structure centres on the social contacts that may be related through

different types of relations and interactions (Ibid). In its simplest form a network is based on

the relationship or ties between social actors, and relationships which can be either ‘single’ or

‘multiplex’46 (Scott in Greve & Salaff, 2003:3).

According to research developed by Ed Boxman et al. (in Burt, 2000:285) the larger one’s

network is the more prone one is to obtain a higher position, as one has greater opportunities

to take ‘advantage’ of one’s network, i.e. the more contacts one has, the more possibilities,

and therefore a larger theoretical foundation for success. Accordingly, this is one way to

measure the social capital, by the size of the network. Another way to measure social capital

is by assessing the resources in ones network, more specifically;

“(...) this approach describes the manner in which resources available to any one

person in a population are contingent on the resources available to individuals

socially proximate to that person” (Burt, 2000:285)

In this approach, one’s success is not contingent on the size of the network, but rather on who

you know. Research, within this approach, is developed on the sociological claim that people

tie bonds with people similar to themselves (Ibid). Other researchers within this field, such as

Mark S. Granovetter (1973:1372) has made an interesting observation, that ‘weak’ ties (e.g.

old classmates) “(...) generally provide greater access to new information” (in Smith-Doerr,

2005:471), whereas ‘strong’ ties provide resources or support (Greve & Salaff, 2003:6).

                                                                                                               46 In the single relationship “(…) each person performs only one activity with the entrepreneur, and is related to that person trough only one type of relation. And multiplex ties (…) have several layers of different content or types of relationships” (Scott in Greve & Salaff, 2003:3).

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4.8.3  Advantages  and  Disadvantages  of  Networking  

Within a network, opportunities can arise via referrals, meaning getting your name mentioned

‘at the right time, at the right place’ might present an opportunity for the company (Burt,

2000: 287). Other benefits and valuable resources deriving from social networks are those of;

• Access to information and resources

• More rapid product development

• Enhanced innovation

• Access to finance

• Access to skills, knowledge and advice

• Social legitimacy

• Reputation and credibility (Klyver et al., 2008:332 & Powell & Smith-Doerr,

2005:379 & 389).

The dissemination of information, within a network, allows entrepreneurs to access

information better and at a lower cost, seeing that exchanges of information are facilitated

within a network. In continuation hereof, the network can bring about easier access to

resources that otherwise would be available for much larger companies (Human & Provan,

1999:185). Studies have shown that especially smaller companies and start-up companies

invest in networking where there is potential to share resources, tangible and intangible,

needed for succeeding in a competitive market (Miller et al., 2007:636).

Entrepreneurs, who enter into networks, are able to bring products to the market quicker and

more cost-effectively than they would be able to singlehandedly. While many good things can

be said of networking, less favourable things can as well be pointed out. For instance

networks have the risk of becoming too interwoven, where information only passes among a

selected few, and information that travels back and forth among the same selected few “can

lead to lock in, group think, and redundancy” (Powell & Smith-Doerr, 2005:391).

4.9  Analysis  of  Social  Network  and  Networking  In this chapter, the networking opportunities of the seven start-ups will be presented and

analysed based on the theory established in the previous section.

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4.9.1  Social  Capital  and  Networks  

Access to networks provides information and knowledge, which complement the

entrepreneurs and help them establish a start-up. As mentioned in the theory, social capital

refers to the ability of actors to extract benefits from their social structures, networks, and

memberships.

The authors found that social capital is important in predicting successful exploitation and

networking. Having parents, close friends and/or neighbours in entrepreneurial businesses are

strongly associated with the probability of becoming an entrepreneur, as stated in chapter 4.8.

Furthermore, entrepreneurs are likely to take advantage of this pool of knowledge when they

create a business of their own. Three of the seven entrepreneurs were inspired by friends or

neighbours (A5a, Daniel 05:00 & A3, Nana 31:43 & A7, Michael 7:47), while two others

were inspired by family members (A6, Dennis 16:36 & A8, Mads 54:34). Having previous

experience with a start-up has significant effect on the successful development of the

company. This was clear in Mads’ statement, when he said how previous experience with

starting a company had contributed positively in creating new start-up businesses;

“(…) first of all we have learned about doing business with both big companies

and small companies and we know how people react in a business environment,

we know how [to] handle money, we know how to write contracts, we know a lot

of things, but we have also established a network of people who can help us in

almost every situation we find ourselves in (…) and that is why you are above

making the same mistakes twice, hopefully (…) this is experience basically” (A8,

Mads 17:17)

Additionally, Daniel shares a similar opinion, based on his own experience with Company X,

and how this positively affected his new company (Y) (A5a, Daniel 11:59).

Encouragement, as well, seems to play an important role in the start-ups’ development and

consequently in developing networks. Encouragement by fellow entrepreneurs, friends,

family, and even potential customers is quite strongly associated with the motivation to move

forward. Louise, from Art District, stated that a huge dose of encouragement came from

fellow entrepreneurs whom she encountered by chance (A2, Louise 11:29), further

encouragement came from mentors;  

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“(…) it’s really important to find these cool people who wanna help you and

support you and all these people they do it for free (…) I’m so grateful, because it

has changed everything that I’ve had these cool people cheering me on and

supporting me (…) it would be so hard without them, because you don’t know

anything when you’re young and starting up, everything is just new and so many

days I just felt like such a moron” (A2, Louise 37:35)

Moreover, EMP Group got a big support from the incubator Katapult that helped them to

establish a network with fellow entrepreneurs in San Francisco;

“We got a trip sponsored there (...), we got to pitch for a lot of American

investors, which is interesting, [Niels: and basically just got a taste of the whole

culture over there (...) very different from Danish entrepreneurs, everything over

there was just networking (…)]” (A6, Dennis & Niels 32:20)

Nana, on the other hand, got her emotional, as well as financial backing, from family and

friends (A3, Nana 9:48; 31:43). In the case of HED, the early approval of the product from

potential customers gave them reassurance (A8, Mads 11:46).

4.9.2  ‘Strong’  and  ‘Weak’  Ties  

Starting up a business requires a certain blend of relations and time to establish and maintain

these. The relations can take the shape of either weak or strong ties, where “(…) those to

whom we are weakly tied are more likely to move in circles different from our own and will

thus have access to information different from that which we receive” (Granovetter,

1973:1371). Therefore, weak ties become increasingly important when the process

progresses. Multiplex ties (see section 4.8.2) may play numerous roles in the entrepreneur’s

network. Burt puts forth that members of a social network can contact and communicate with

one another, thus expanding the opportunities available to the entrepreneur (Burt, 1992). As

the selected entrepreneurs presented, accumulating social capital is crucial when starting and

moving forward with a new business. This was for instance illustrated in the interview with

HED, who was able to create a close network of weak ties outside of Denmark, in order to

reach the right market;

“(…) networking (…), for the company it’s really the global contact that we have

managed to get ourselves, by travelling to the US, by being in conferences in

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Germany or [Czech and Slovakia] or wherever we have been (…) it is more how

we have been able to create a network outside the Danish borders (…)” (A8,

Mads 33:50)

Mads’ statement can be supported by P.R. Christensen’s research, in which he shows that in a

small market, like Scandinavia, international networking is adopted as an export-marketing

strategy for gaining entry to new markets. In order to overcome the barriers of entering new

and international markets, entrepreneurs need to create new groups of companies, or get the

access via personal ties (in Johannisson & Mønsted 1997:123).

Louise rented an office space in SOHO (A2, Louise 09:04), an office space within an

entrepreneurial network, where she quickly gained contacts with different types of

entrepreneurs and general members of a business network, who helped her company to

complete tasks that normally could not have happened so fast. As most entrepreneurs, Louise

was missing a particular knowledge and therefore networking with weak ties made it possible

for Art District to move forward with e.g. producing a short, 300,000 DKK, movie for free

(A2, Louise 09:04), having people to help with Public Relations and press releases, and

getting contact to the ‘right’ people who could be of further assistance (A2, Louise 20:57). In

addition to Art District, Shabenaa had a similar experience in the same office space (A3, Nana

21:17).

Both Louise and Dennis dedicate their time to build and develop their business network by

taking a part in judging the Venture Cup competition (A6, Dennis 54:28 & A2, Louise 11:52).

Dennis admitted that this is partly to keep in contact with a specific network of people, as well

as being able to take a part in different networking events that are not available to the public.

The efforts put into building this particular business network should benefit to the growth of

EMP Group (A6, Dennis 54:28).

According to the theory, strong ties provide support and resources (see section 4.8.2), which

make it easier for new start-ups to get information without spending too much time searching

for it. This use of strong ties can benefit the company, as is illustrated by EMP Group;

“Niels’ parents are doing all the graphic design for us, so they are doing that for

free, so it’s also about (…) networking, taking advantage of those. My dad does a

lot of stuff in the company, business wise, he has helped us a lot with the whole

start-up (…)” (A6, Dennis 43:55)

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Based on the empirical data it can be assumed that entrepreneurs will use a larger proportion

of strong ties in the beginning of the growth phase, compared to the later phases of the start-

up.

Surprisingly, the contact with Venture Cup, and other incubators in Denmark, appeared not

always to provide the kind of assistance, or access to resources and network, as expected.

Both Martin and Michael commented on this by saying;

“(…) I think we would be roughly at the same place (…) if you look purely traffic

wise, I think we'd be at the same place because getting the investment and being

a part of Venture Cup have not affected how the company has grown in that

sense, but we probably wouldn’t have launched such a good business plan as we

have done now (…)”47 (A4, Martin 33:55)

“(…) I got a coach, who was probably a bit too alternative for me (...) I didn’t

really get anything out of it, if I have to be completely honest”48 (A7, Michael

12:25)

Furthermore, Mads admitted that Venture Cup had no impact on the company’s development

(35:37), as their market is beyond the Danish borders;

“We would like (…) to talk positively about Venture Cup, because it is a really

good competition (...) it is quite tough to describe when your market’s really

outside Denmark, how much the Danish people [Danish network] really have

helped us” (A8, Mads 37:05)

However, Venture Cup can also serve as a good ‘kick’ of encouragement to those who have

been nominated to the final three. This is strongly associated with the motivation to move

forward, as some of the entrepreneurs agree;

“Venture Cup (...) it was something that really made the company go from being a

hobby project to something serious”49 (A4, Martin 34:39)

                                                                                                               47 Free translation of:”(…) jeg tror vi ville være nogenlunde samme hvis man kigger rent trafikmæssigt, så tror jeg vi ville være samme sted fordi det at vi har fået investeringer og været med i Venture Cup har ikke påvirket hvordan virksomheden har vækstet på det punkt, men vi havde nok ikke lanceret så god en markedsplan som vi har gjort nu (…)” 48 Free translation of: ”(…) jeg fik en coach, det var nok lidt for alternativt for mig, (…) jeg fik sgu ikke rigtig noget ud af det, hvis jeg skal være helt ærligt.” 49 Free translation of: ”(…) Venture Cup som jeg sagde før, (…) det var noget der virkelig gjorde, at virksomheden gik fra at være et hobby projekt til at være noget seriøst.”

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“(…) it helps you to keep going, it pads you on the back [Dennis: that’s really

needed sometimes] it enforces [you], ‘it’s a good idea!’, ‘you guys can do it, go

for it!’ (...) I think networking and also winning the competition gave us a huge

boost” (A6, Niels & Dennis 52:55)

Additionally, Venture Cup gave IconFinder and EMP Group publicity, which most likely

contributed to an increased word-of-mouth (see chapter 4.7).

“(...) it's really cool that we have something called Venture Cup and that there’s

so much focus on it, we were on TV2 News, (...) it was a pad on the back in a way,

it motivates you”50 (A4, Martin 34:44)

“Venture Cup gave us a lot of publicity, but it kind of fades down quickly, it’s

hard to keep the momentum. Katapult helped us a lot, but that is more of an

internal help (…)” (A6, Dennis 46:05)

Also other incubators are considered, by some of the interviewed entrepreneurs, as a ‘helping

hand’ during the first phase of the start-up process, and are seen as a good network tool.

“Right after Bachelors we got to work there, started up, they had a little growth

house (…) incubator called Katapult at Copenhagen University, we enrolled in

that, and they started helping us a lot (…)” (A6, Niels 06:46)

Further, they continue that Katapult helped them in networking, providing free office space,

covering the costs of some of their legal fees, and in the drafting of contracts (A6, Dennis &

Niels 47:12). Similarly, Nana also received legal support and accounting assistance from

Væksthuset and Erhvervscentret (A3, Nana 18:33).

The only exception is Art District, who never used any network or other benefits from

incubators, however still managed to grow the company, and this, according to her, is based

on her personal skills (A2, Louise 9:04; 10:30).

4.10  Sub-­‐Conclusion  of  Social  Network  and  Networking  The theoretical chapter and the analysis have examined the third research question, which

reads;

                                                                                                               50 Free translation of : ”(…) det er rigtig fedt, at vi har noget der hedder Venture Cup og at der kommer så meget fokus på det, vi blev dækket af TV2 News, (…) det var et skulderklap på en måde, der var meget motiverende.”

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HOW DOES ENTREPRENEURS CREATE AND MANAGE THEIR NETWORKS TO GROW THEIR START-UP

COMPANY?

As the theory establishes, social relations, or social networks, play an important role in

establishing a firm. Entrepreneurs use their social capital to access resources and information

in each stage of the development process. Furthermore, social networks provide a way to

collaborate and share ideas with peers, search for partners, locate service providers, get the

necessary information to run a business, join a community of fellow entrepreneurs, etc. The

theory also established that ‘weak’ ties provide access to new information, where ‘strong’ ties

provide support. The advantage, the entrepreneur can have from his network, depends on

‘who he knows’ through the weak ties.

The analysis corroborates the theoretical framework, as it shows that knowing someone who

started a business in the past significantly increases entrepreneurial participation.

Entrepreneurs need to build social networks in order to move faster forward, and the focus is

more likely to be on the strong ties during the very beginning of the start-up phase, whereas

the emphasis on weak ties is further progressed and significant within the stage of growing

the business (Birley & Muzyka, 2000:178). Though further research is needed in the use of

networking in the different stages of growing a start-up, all of the entrepreneurs agreed that

networking is one of the most important tools in managing and growing a company.

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5.  Discussion  Since the aim of this project is to answer the stated problem formulation, the discussion will

introduce the concept of Danish graduates into the context of growing a start-up company,

and thus explore their role as entrepreneurs. As has been illustrated earlier, Denmark is in a

time of economic crisis, which undeniably has had its toll on the Danish labour market.

Additionally, within recent years, the universities have educated an increasing number of

academics (Albrecht, 2012), which is a paradox considering the current labour market

conditions. Consequently, Denmark has been very focused on growth, over the past few

years, and there has also been considerable focus on how academics may contribute to the

growth of society. In relation to the abovementioned, this chapter will embrace the findings of

the empirical data and critically discuss the fourth research question;

WHAT ARE THE ADVANTAGES AND DISADVANTAGES FOR DANISH GRADUATES IN GROWING

THEIR START-UP COMPANY?

Academics are likely to have the ability to know where to search for information and people

with knowledge, as a result of larger and more diverse networks compared to less educated

people (Marsden, 1987:129). Given that education is associated with a diversified network,

the authors are then able to argue that these types of networks provide greater access to varied

others, or what Granovetter recognises as ‘weak ties’.

As established in the theory chapter (see 4.8), social networks and networking are an integral

part of entrepreneurship, as they, especially through weak ties, provide information and the

specific knowledge needed in establishing and growing a start-up. Further, the findings from

the analysis (see chapter 4.9) strongly point to the fact that the entrepreneurs view networking

as a way to speed up the growing process of their start-up companies, as they, through social

relations, are able to mobilise essential resources. This is an important discovery, as

networking can be advocated to help to overcome the problem that many small firms lack,

which is resources to implement a growth strategy. Therefore, by the exploitation of the larger

and diverse network, the graduate is able to grow his business, which is an advantage. Louise

did mention something similar, when asked why a higher education can be advantageous in

regards to entrepreneurship;

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“(…) there are so many people who want to help you, and there are, like,

incubators and stuff when you are studying and you want to start your company

(…)” (A2, Louise 18:15)

Another possible advantage of having an academic degree, in relation to starting and growing

a business, could be that those who have graduated with a business degree are better equipped

to write a business plan of high-quality, as writing such is often part of the course. Business

plans or due diligence reports are required when applying for loans or funding from banks

and/or investors (Oliver, 2011:52). With this in mind, the authors believe that graduates, who

hold a business degree of some sort, technically should have a better chance of getting loans

and funding, which are important for most start-ups in order to set growth into motion

(Damgaard, 2012).

As has been noted in previous chapters (see 4.1 & 4.2) certain abilities are important to

entrepreneurs and business developers. Generally speaking, these abilities do not only require

knowledge but also a certain skill-set, which according to Drucker, can be taught:

“The entrepreneurial mystique? It’s not magic. It’s not mysterious, and it has

nothing to do with the genes. It’s a discipline. And, like any discipline, it can be

learned” (Drucker, 1985)

In close relation to this, there are some people who all together doubt that entrepreneurship

can be taught within the educational system. The well-known entrepreneur, Martin Thorborg,

belongs to these sceptics, as he raises the question: “why is education often inhibitory to

become an entrepreneur?” (Thorborg, 2007). Here, he refers to the fact that academic

learning (explicit knowledge) is not sufficient, and that experience-based learning (tacit

knowledge) is key when it comes to the entrepreneurial process. Thorborg believes that

traditional classroom learning can be directly inhibiting to the development of the

entrepreneurial skills, because the current kind of education reduces the individuals’ capacity

to act, which is such a central aspect of being an entrepreneur. This is, to some extent,

highlighted by Martin from IconFinder, who experienced that his educational institution was

not really encouraging entrepreneurial behaviour;

“(…) one is not really encouraged to start his own company alongside the studies,

they [the educational institution] say repeatedly that the education is a full-time

job (...) you will not be told that you have to start a company before you’ve

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finished studying, (…) they just want you to sit on your butt and do your school

tasks (…)”51 (A4, Martin 12:42)

Over the years, there has been a growing interest in integrating the subject of entrepreneurship

within the Danish educational system. In early 2004, the Ministry of Education together with

the Ministry of Science, Technology and Innovation emphasised that a strategy was put into

place. The strategy had the aim of getting Denmark into the European elite in regards to

entrepreneurship, and the educational system played a key role in this development

(Undervisningsministeriet, 2004). Nine years later, this topic is still on the political agenda,

and the political message from 2004 still holds: the Danish welfare is dependent on the

collective ability to think creatively and innovatively. Therefore, children and young people,

as early as possible, have to learn to see opportunities in life and turn them into viable

businesses.

However, in order for the political vision to come true, a change in the educational culture is

required, which the authors see as being strongly influenced by the wage-earner culture. With

this the authors mean that students who want to start their own businesses are currently not

sufficiently stimulated to see the attractiveness of being a business owner, and those who find

it attractive are not being encouraged to go after their dream, as seen with e.g. Martin. Hanne

Leth Andersen, pro-rector at Roskilde University, explains how universities do not promote

entrepreneurship in the following way;

“There has been a paradigm shift in our education, where we have made the

students to be pupils. We are trying to reach some clear goals for the educations

on employability, and everything must be of use to the labour market”52 (cited in

Rottbøll, 2012)

Moreover, it is expected of the students to employ a certain mindset when studying at the

universities – a mindset, which typically does not allow for creative and innovative thinking.

The authors find this interesting, as it is in clear breach with what the political agenda is

                                                                                                               51 Free translation of: “(…) man bliver ikke så meget opfordret til at starte eget firma sideløbende med studiet, de siger gentagende gange at studiet det er et fuldtidsarbejde, (…) du bliver ikke skubbet ud og får fortalt at du skal starte firma inden du er færdig med at studere, (…) de vil bare gerne have at du sidder på din numse og at du laver dine opgaver (…)” 52 Free translation of: “Der er sket et kæmpe paradigmeskift i vores uddannelser, hvor vi har gjort de studerende til elever. Vi løber i øjeblikket efter nogle klare mål for uddannelserne om employability, og det hele skal kunne bruges på arbejdsmarkedet.”

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aiming for with their strategy on getting Denmark amongst the European elite in

entrepreneurship;

“I have the last six months followed electives from a variety of Master degree

programs, and it has repeatedly struck me how students are taught to solve the

same types of tasks and use standard formulas, without questioning whether it

really is realistic assumptions that form the background for the analyses. (…) The

Universities are simply educating the students to ask: ‘where can I find the

answer to the previous year's exam papers?’ rather than think for themselves”53

(Jørgensen, 2013)

As a result of the abovementioned, it can be argued that the students are becoming more

uncertain and start to question themselves on how to solve tasks, which explains why ‘The

Good Project’ is a best seller amongst students54 (Rottbøll, 2012). They are simply relying on

previous formulas and predetermined templates to help guide them. Further, Louise from Art

District substantiates this behaviour, as she expresses how her education contributed to

insecurity;

“(…) it [the education] has been an obstacle because I’m used to (…) over

thinking everything, and, like, finding an argument for why I’m doing this and

why I’m doing that, often I had to stop myself and say ‘ok, you fucking have to do

it now and stop thinking [you] can’t find the solution (…) thinking just to think’

(…) My friend calls it ‘abe-kademisk’55 (…)” (A2, Louise 16:56)

Thus, the mindset that one acquires from the universities can in some cases inhibit creativity

and proactiveness, which have been established as critical factors in the entrepreneurial

process (Drucker, 1985:34-35).

Although, the authors have tried to present strong arguments as to how educational learning

may work as a disadvantage, in regards to certain entrepreneurial abilities, there will always                                                                                                                53 Free translation of: “Jeg har det seneste halve år fulgt valgfag fra en række store kandidatuddannelser, og det har gang på gang slået mig, hvordan de studerende undervises til at løse typeopgaver og bruge standardformler, uden at stille spørgsmålstegn ved, om det virkelig er realistiske forudsætninger, der danner baggrund for analyserne. (…) Universiteterne uddanner ganske enkelt de studerende til at spørge: »Hvor finder man svaret på de tidligere års eksamensopgaver?«, frem for at tænke selv.” 54 In Danish: ’Den gode opgave’, and is a book widely used by freshmen attending university. The book offers the recipe for the ‘perfect project’. 55 ‘Abe-kademisk’ would in English mean: monkey-academic, which relates negatively to the skills of a monkey. However, the authors have decided to keep the Danish word within the text, as the word in Danish underlines Louise’s point better.

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be an exception to the rule. In this study, some entrepreneurs expressed another opinion than

the authors’ view stressed above;

“I think actually it [the education] has helped us, because what we are doing, I’d

say it’s a mathematical and statistical challenge, it’s not something I just sit down

and do, so I think in that sense the degree has definitely helped (…)” (A6, Dennis

1:07:47)

“(…) to compete in (…) the medical business, you have to have a certain amount

of academic level of skills, (…) you have to be on a certain level, academically, to

make all these different things, because it is quite heavy stuff (…) you have to be

able to cope with hard stuff. I’m not saying that it’s rocket science and I’m not a

doctor or anything, but still you have to be able to cope with a lot of information

at the same time” (A8, Mads 29:49)

From these two quotes, the authors are willing to re-consider their strong points made above,

as both Dennis and Mads are of the belief that an academic degree in fact can be an advantage

in growing a start-up. Further, what can be deduced from these findings is that the industry, in

which the start-ups are operating, ultimately determines the needed level of tacit versus

explicit knowledge. For instance, in the cases of HED and EMP Group, what they were taught

during their degrees, i.e. explicit knowledge, made them better in what they do. The industries

they operate in are the software and the medical, which are not to be taken lightly, as both

have a highly competitive environment, where a specific skill-set and knowledge are required

to stay ahead of the competition.

Additionally, the software and medical industries can be argued to be dynamic industries with

a rapid progression. In such industries, knowledge is treated as a highly sought-after

commodity, which quickly becomes obsolete, as a result of an ever-changing market, and

therefore requires constant renewal. What remains, is then the individuals’ ability to adapt to

this development by acquiring new knowledge;

“(…) [software] is such a rapidly evolving changing subject so you have to

educate yourself in a way as well, and have to keep up to date (…)” (A6, Niels

1:07:10)

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Thus, it is necessary to take the entire context into account when making assumptions, as to

whether or not an academic degree can be treated as an advantage or a disadvantage in terms

of growing a start-up company.

From the discussion that has taken place above, a picture starts to emerge. The picture clearly

illustrates that there are certain advantages and disadvantages of holding a higher educational

degree in terms of establishing, or more importantly growing, a business. The advantages

include a larger and more diversified network of people and possibly easier access to loans

and funding. Furthermore, the Danish educational culture can work as a great disadvantage, as

it impedes creativity and innovative thinking, as well as an advantage in certain industries,

where explicit knowledge, which is taught at the universities, is needed, as seen with HED

and EMP Group. In addition to the authors’ findings, several studies have shown that

graduates, regardless of study branch; help to increase the overall productivity in businesses

(see Junge & Skaksen, 2010). It is not just the individual graduate, who is more productive;

he also increases his colleagues’ productivity.

Martin Junge & Jan Rose Skaksen estimate that “(…) a person who has completed a higher

education contributes just as much to value creation, as does two people who have not

completed an education”56 (2010:3). Thus, academics can be said to impact productivity in

businesses, but also the national wealth is moved in a positive direction with an increase in

the gross domestic product of approximately 1% (Ibid:4). Taking Junge & Skaksen’s research

into consideration, the authors put forth that graduates may be of better use as ‘birthing

coaches’ opposed to entrepreneurs.

The authors’ findings support Junge & Skaksen’s statement, which will be elaborated in the

following. Both IconFinder and HED, placed in the advanced Go-Go stage, have a great

understanding of the industry, in which they operate, and run their companies successfully.

They are structured in their management and are consistent in growing their company, even

though the theory suggests that a company, in this stage, is not under control, and what is

more the management causes the crises (see 4.5.2). What can be deduced from these findings

is that great management skills and consistency in reaching goals, in the growing stage of a

company’s development, is the result of having highly-educated people on the management

                                                                                                               56 Free translation of: “(...) at en person med en lang videregående uddannelse bidrager lige så meget til værdiskabelsen som ca. 2 personer uden uddannelse.”

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positions of a start-up. Thus, the line of reasoning is that graduates are better suited for

managing a company, than starting an entrepreneurial company.  

This assumption is built on the finding that academics may not have the best creativity or

ability to ‘think out of the box’, but they do have the needed skills to grow a start-up. Thus, as

part of a growth strategy, it could be a proposal to put academic skills into play in already

existing start-ups.

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6.  Conclusion  Entrepreneurship is widely recognised as an important part of stimulating economic growth,

and as the European economy is still recovering from the financial crisis, it poses an

opportunity. The economic downturn has also taken its toll on the graduates, as a high

unemployment rate is prevailing. The same struggles are apparent in Denmark, but what is

lacking is high-growth entrepreneurs to stimulate the economy. Therefore, this study has

critically examined seven start-up companies founded by Danish graduates, and their ability

to grow a start-up. The study has uncovered the following findings, based on the problem

formulation, which reads;

HOW CAN DANISH GRADUATES SUCCESSFULLY GROW THEIR START-UP COMPANIES?

The study has identified the following motivations and abilities needed to successfully grow a

start-up. First, the graduate needs to have the ability to perceive change as an opportunity

rather than a risk, as well as a high tolerance of risk and uncertainties; otherwise the start-up is

not likely to succeed. Secondly, the findings show that having high work ethics is a

precondition for success, seeing that graduates have to put in long hours in the initial phase of

the start-up, for little or no pay. Thirdly, the ability to bounce back proved to be important, as

graduates will experience several naysayers, why it is important for the graduate to surpass

adversity, if they wish to be successful entrepreneurs. Lastly, for graduates to be successful

with their start-up, they need to have a positive underlying motivation.

Moreover, for a graduate to actually start their own company, they need to have the ability to

discover and exploit opportunities, as well as an enthusiasm about creating something new.

What can be deduced from these findings is that the graduates are no different from all other

entrepreneurs, in terms of personal abilities and motivational drive, when it comes to

successfully growing a start-up.

Several challenges, at the different stages of the start-up, were recognised in the study, where

graduates seemed more adapt for challenges in the later stages of the start-up. In the very

early stages of the start up, i.e. Infancy stage, challenges such as lack of resource and testing

and developing the product were found to restrain the growth of the start-up. Commitment to

the start-up proved to be needed by the graduates, in order to overcome these challenges,

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referring back to the graduate’s personal abilities to bounce back, and to perceive

opportunities rather than risks.

The graduates appeared to be more equipped in managing challenges in the growing stages,

i.e. Go-Go, as the challenges of unclear responsibilities, unclear communication, sales-over-

profit orientation, and founders’ over-confidence were not prevalent in the analysis. However,

in the later stages of the company’s development, i.e. Stagnation stage, passiveness and

indifference can prove to be a challenge in sustaining a successful company. The research

also elucidates the deficiencies of the organisational life cycle theories, as they neglect to take

into consideration the unique characteristics of the start-ups, the environment in which they

operate, and the technological development. Therefore, further research in this area is needed,

to shed light on the entrepreneurial opportunities and challenges in the start-up’s life cycle.

To further facilitate growth, graduates can use various marketing tools. The study found that

graduates generally lack funds for marketing, and therefore rely on word-of-mouth, digital

marketing, personal customer contact, and PR.

The study has identified networking as a requirement in growing a start-up. It is beneficiary

for graduates if they have an outgoing and extroverted personality, as this aid the

establishment of networks. Networks provide access to new information, resources, and idea-

sharing, and for graduates, it can be advantageous to ‘know the right people’ in terms of

successfully growing their start-ups. Additionally, the study recognises that graduates in

entrepreneurial environments are more prone to participate in entrepreneurial activities. The

study also reveals that graduates in the early stage of the start-up rely more on ‘strong’ ties,

e.g. family and friends, and as the start-up progresses become more reliant on ‘weak’ ties, as

these generally provide greater access to new information.

All of the graduates recognised networking to be an important tool in growing a start-up,

however, what can be deduced from these findings is that the graduates are no different from

all other entrepreneurs in terms of the need for networking.

Taking the abovementioned findings into consideration various ‘tools’ for growing a

successful start-up have been identified. Still, these findings can also apply to non-graduates,

thus other parameters must be what differentiate graduates from non-graduates, in relation to

entrepreneurship.

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The discussion uncovered that graduates are likely to have access to larger and more diverse

networks compared to less educated people. These networks originate from the educational

community and grant the graduate access to ‘weak’ ties, which is an advantage as these

generally provide greater access to new information.

The study detected that the educational institutions do not encourage entrepreneurial

activities; one argument is that academic learning is explicit knowledge, and that tacit

knowledge is needed for entrepreneurial success. It is further identified that graduates, at

universities, are trained in a specific mindset, which does not allow for creative and

innovative thinking, and thus inhibits critical factors in the entrepreneurial process. Other

scholars argue that entrepreneurship is a discipline, which can be taught, and the study does

include examples, where an academic education is an advantage in growing a start-up,

depending on the competitive environment. What is drawn from these findings is that the

industry, in which the start-ups are operating, ultimately determines the needed level of tacit

versus explicit knowledge.

Furthermore, the study ascertain that the context – study branch and/or industry – needs to be

taken into consideration when making assumptions as to whether or not an academic degree

aids the growing of a start-up. Lastly, graduates increase the overall productivity in

businesses, meaning they do possess the skills needed to grow a start-up. Based on the

findings in the analysis, and aided by the discussion, the main assumption is that; as the start-

up company progresses, so does the graduates’ qualifications in growing it.

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7.  Perspectives  Within the project, the authors have focused on how Danish graduates successfully can grow

their start-up companies; this deliberate choice has limited the project in certain aspects,

which will be reflected upon in the following, together with new areas of further research.

A limitation, which emerged during the analysis, originated from the bottom-up approach to

the collection of data, resulting in certain research areas not being covered sufficiently. For

instance, it was recognised by the authors that questions, concerning the type of network ties

that are important for the entrepreneurs in the various stages of growing the company, needed

deeper investigation. This can be seen as a limitation of this study, as the data set only

contains general questions associated with using networks during the entire process of

development. Thus, seen in retrospect, the study could have been further strengthened by

doing follow-up interviews with the entrepreneurs and asking more theoretically charged

questions. However, this was not possible due to time constraints.

Moreover, the project has investigated Danish graduates – generally speaking – meaning that

the authors have not distinguished between the different study branches as such. Looking

back, the findings of the project could have been strengthened if the authors had made a

greater distinction, or maybe even compared graduates from different study branches’ ability

to grow a start-up company. However, the authors did not have the time to carry out such an

extensive investigation, if this had been done; then it is important to stress that the authors

potentially had arrived at different conclusions on how Danish graduates successfully can

grow start-up companies.

While the focus of the investigation has been on the graduates, the authors find the whole

discussion around ‘graduate versus non-graduate’ interesting in relation to entrepreneurship.

Thus, it would have been noteworthy if the authors had included non-graduate entrepreneurs

in the study and compared these to graduates.

As the authors consider this study to be a pilot project, it should be viewed as the preliminary

work to possibly larger and more in-depth studies; possible areas of further research will be

highlighted below;

A chosen delimitation of the study has been to focus on Denmark, or more specifically the

geographical proximity of Copenhagen. In relation to this, it would be interesting to include

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the rest of Denmark into the study, or broadening it to include e.g. Sweden and/or Norway. If

this was to be done, similar methods could be applied together with quantitative methods, but

would have to be recreated in each country, as graduates in different parts of the world most

likely have different preconditions to successfully grow a start-up.

Closely connected to the aforementioned is the subject of culture, and how this impacts

entrepreneurship. During the investigation, it was pointed out by a few of the entrepreneurs

that the Danish culture actually could hamper the growth ambitions of start-ups. This was

usually as a result of the Danish mentality, i.e. the law of Jante, which stresses that “you shall

not think that you are special” (Janteloven, n.d.). The law of Jante can already be argued to

be present within the current investigation, as both IconFinder and HED referred to their

success in a very modest way. Thus, it would be interesting to validate this finding in future

research.

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Pinchot, Gifford (1987) Innovation through Intrapreneuring, Pinchot & Company [online]

available at;

http://company.pinchot.com/MainPages/BooksArticles/InnovationIntraprenuring/Innov

ThruIntrapreneuring.html [retrieved the 15th of May 2013]

Rottbøll, Emil (2012) De studerende gør bare, hvad de får besked på, Information [online]

available at; http://www.information.dk/316725 [retrieved the 20th of May 2013]

101 of 108

Rytgaard, Nikolaj (2010) Støjbjerg: Vi er alt så i en international finanskrise, Berlingske

Business [online] available at; http://www.business.dk/forside/stoejberg-vi-er-altsaa-i-

en-international-finanskrise [retrieved the 16th of April2013]

Sandberg, Bo (2013) Fald i antal nystartede virksomheder koster vækst, Dansk Erhverv

[online] available at; http://www.danskerhverv.dk/Nyheder/Sider/Fald-i-antal-

nystartede-virksomheder-skader-vaeksten.aspx [retrieved the 22nd of April 2013]

Start op (2012) Portræt af Nana Nilesen, Start op – Oktober 2012, available at;

http://startopmagasinet.dk/category/2012/ [retrieved the 10th of May 2013]

Tan Sherman (2010) An outline and defense of social ontology and epistemology in “critical

realism” Academia Edu, January, pp. 1-5.

8.2  Books  Adizes, Ichak (1999) Managing Corporate Lifecycles, Prentice Hall Press, New Jersey

Adizes, Ichak (2004) Managing Corporate Lifecycles, The Adizes Institute Publishing, Santa

Barbra

Birley, Sue & Dan Muzyka (2000) Mastering Entrepreneurship – Your Single-Source Guide

to Becoming a Master of Entrepreneurship, Pearson Education, Edinburgh

Burns, Paul (2007) Entrepreneurship and Small Business, 2nd Edition, Palgrave Macmillan

Burt, Ronald S. (1992) Structural Holes: The Social Structure of Competition. Cambridge,

MA: Harvard University Press

Burt, Ronald S. (2000) The Network Entrepreneur in Swedberg, Richard edt (2000)

Entrepreneurship – the Social Science View, Oxford University Press, pp. 281-307

Bryman, Alan (2008) Social Research Methods, 3rd Edition, Oxford University Press, New

York

Delanty, Gerard (2005) Social Science, 2nd Edition, Open University Press, England

Drucker, Peter Ferdinand (1985) Innovation and Entrepreneurship, 1st Edition, Harper &

Row Publishers, New York

Fuglsang, Lars & Poul Bitsch Olsen (2009)Videnskabsteori i samfundsvidenskaberne, 2.

udgave 4. oplag, Roskilde Universitetsforlag, Frederiksberg C

102 of 108

Haislip, Alexander (2011) Essentials of Venture Capital, John Wiley & Sons, Hobroken

Halkier, Bente (2001) ”Kan pragmatisme være analytisk?” In: Kvalitative metoder – fra

metateori til markarbejde, Roskilde Universitetsforlag

Human, Sherrie E. and Keith G. Provan (1999) Organizational learning and the role of the

network broker in small-firm manufacturing networks in Grandori, Anna (1999)

Interfirm Networks - Organization and industrial competitiveness. Routledge, London

Kureer, Henrik (2010) International Økonomi A1, Systime [e-book] available at;

http://ioa1.systime.dk/index.php?id=frontpage&cmd=toc [retrieved April 22, 2013]

Kvale, Steiner & Svend Brinkmann (2009) Interviews: Learning the Craft of Qualitative

Research Interviews, 2nd Edition, SAGE Publications, California

Marshall, Catherine (1999) Designing Qualitative Research, SAGE Publications, London

Mintzberg, Henry, Bruce Ahlstrand & Joseph Lampel (2009) Strategy Safari: A guided tour

through the wilds of strategic management, 2nd Edition, Prentice Hall, Harlow.

Powell, Walter W. & Laurel Smith-Doerr (2005) Networks and Economic Life, in Smelser,

Niel J. & Richard Swedberg (2005) The Handbook of Economic Sociology, 2nd Edition,

Princeton University Press, pp. 379-402

Saunders, Mark, Philip Lewis & Adrian Thornhill (2007) Research Methods for Business

Students, 4th Edition. Prentice Hall, Essex

Shane, Scott (2003) A General Theory of Entrepreneurship: The Individual-opportunity

Nexus, Edward Elgar Publishing, Cheltenham

Smith-Doerr, Laurel (2005) Network Analysis in Beckert, J. and M. Zafirovskiedts (2005)

International Encyclopedia of Economic Sociology¸ Routledge, pp. 469-475

Swedberg, Richard edt. (2000) Entrepreneurship – the Social Science View, Oxford

University Press

Thorborg, Martin (2007) Iværksætter til jeg dør, One2Speak, København

Vestergaard, Anne T., Natasja Kingod & Julie H. Jeppesen (2010), “At bygge bro – et

eksempel på en fusion mellem kvalitativ og kvantitativmetode – Når 1 + 1 giver 3.” In:

Den oplevede virkelighed: 11 eksempler på kvalitativ metode i praksis. Thomas Bjørner.

Aalborg Universitetsforlag, Aalborg

103 of 108

Yin, Robert K. (2003) Case Study Research – Design and Methods 3rd Edition, Sage

Publications

8.3  Journals  Aldrich, Howard E. & Phillip H. Kim (2007) Small worlds, infinite possibilities? How social

networks affect entrepreneurial team formation and search, Strategic Entrepreneurship

Journal, Vol. 1, pp. 147-165

Alpert, Frank and Christopher Roberts (2010) Total customer engagement: designing and

aligning key strategic elements to achieve growth, Journal of Product and Brand

Management, Vol. 19 (3), pp. 198-209

Antoncic, Bostjan & Robert D. Hisrich (2003) Clarifying the intrapreneurship concept,

Journal of Small Business and Enterprise Development, Vol. 10 (1), pp. 7-24

Atherton, Andrew (2012) Cases of Start-up Financing – an analysis of new venture

capitalisation structures and patterns, International Journal of Entrepreneurial

behaviour & Research, Vol. 18 (1), pp. 28-47

Berger, Allen N. & Gregory F. Udell (1998) The economics of small business finance: The

roles of private equity and debt markets in the financial growth cycle, Journal of

Banking and Finance, Vol. 22, pp. 613-673

Cameron, Kim S. & David A. Whetten (1981) Perceptions of Organizational Effectiveness

Over Organizational Life Cycles, Administrative Science Quarterly, Vol. 26 (4), pp.

525-544

Davidsson, Per & Benson Honig (2003) The role of social and human capital among nascent

entrepreneurs, Journal of Business Venturing, Vol. 18 (3), pp. 301-331

Edelman, David C., Roxane Divol & Hugo Sarrazin (2012) Demystifying social media,

McKinsey & Company, April, Boston, pp. 1-11

Granovetter, Mark S. (1973) The Strength of Weak Ties, American Journal of Sociology,

Vol. 78 (6) May 1773, pp. 1360-1380

Greve, Arent & Janet W. Salaff (2003) Social Networks and Entrepreneurship,

Entrepreneurship Theory & Practice, Baylor University, Vol. 2 (1), pp. 1-22

104 of 108

Gupta, Yash P. & David C. W. Chin (1994) Organizational Life Cycle: A Review and

Proposed Directions, The Mid-Atlantic Journal of Business, Vol. 30 (3), pp. 269-294

Hamrouni, Amel D. & Imen Akkari (2012) The Entrepreneurial Failure: Exploring Links

between the Main Causes of Failure and the Company Life Cycle, International Journal

of Business and Social Sciences, Vol. 3 (4), pp. 189-205

Hwang, Yong-Sik & Seung Ho Park (2007) The Organizational Life Cycle as a Determinant

of Strategic Alliances Tactics: Research Proposition, International Journal of

Management, Vol. 24 (3), pp. 427-619

Ireland, R. Duane, Michael A. Hitt & David G. Sirmon (2003) A Model of Strategic

Entrepreneurship: The construct and its Dimensions, Journal of Management, Vol. 29

(6) pp. 963-989

Johannisson, Bengt  & Mette  Mønsted (1997), Contextualizing entrepreneurial networking.

The case of Scandinavia, International Studies of Management & Organization, Vol. 27

(3), pp. 109-136

Jones, Rosalind & Jennifer Rowley (2011) Entrepreneurial Marketing in small businesses: A

conceptual exploration, International Small Business Journal, Vol. 29 (1), pp. 25-36

Junge, Martin & Jan Rose Skaksen (2010) Produktivitet og videregående uddannelse [online]

Ph.D. Copenhagen Business School, available at;

http://dea.nu/sites/default/files/Produktivtet%20og%20videregående%20uddannelse.pdf

[retrieved 18th of May 2013]

Kazanjian, Robert K. (1988) Relations of Dominant Problems to Stages of Growth in

Technology-Based New Ventures, The Academy of Management Journal, Vol. 31 (2),

pp. 257-279

Klyver, Kim, Kevin Hindle & Denny Meyer (2008) Influence of social network structure on

entrepreneurship participation - A study of 20 national cultures, International

Entrepreneurship Management Journal, Vol. 4, pp. 331-347

Klyver, Kim (2011) Gender differences in entrepreneurial networks: adding an alter

perspective, Emerald Group, Vol. 26 (5), pp. 332-350

105 of 108

Lester, Donald L., John A. Parnell & Michael L. Menefee (2008) Organizational Life Cycle

and Innovation among Entrepreneurial Enterprises, Journal of Small Business Strategy,

Vol. 2 (2), pp. 37-49

Lumpkin, G. T. & Gregory G. Dess (1996) Clarifying the entrepreneurial orientation

construct and linking it to performance, Academy of Management Review, Vol. 21 (1),

pp. 135-172

Marsden, Peter V. (1987) Core Discussion Networks of Americans, American Sociological

Review, Vol. 52 (1) February 1987, pp. 122-131

McKinsey, Global Survey Result (2011) What marketers say about working online:

McKinsey Global Survey results, McKinsey & Company, November, Boston

Miller, Danny & Peter H. Friesen (1984) A Longitudinal Study of Corporate Life Cycle,

Management Science, Vol. 30 (10), pp. 1161-1183

Miller, Nancy J., Terry Besser & Avinash Malshe (2007) Strategic Networking among Small

Businesses in Small US Communities, International Small Business Journal, Vol. 25

(6) pp. 631-665

Naveed, Noor-e Hira (2012) Role of Social Media on Public Relation, Brand Involvement

and Brand Commitment, Interdisciplinary Journal of Contemporary Research in

Business, Vol. 3 (9) pp. 904-913

Quinn, Robert E. & Kim Cameron (1983) Organizational Life Cycles and Shifting Criteria of

Effectiveness: Some Preliminary Evidence, Management Science, Vol. 29 (1), pp. 33-51

Rowley, Jennifer (2002) Using Case Studies in Research, Management Research News, Vol.

25 (1) pp. 16-27

Stokes, David (2000) Entrepreneurial marketing: a conceptualisation from qualitative

research, Qualitative Market Research: An International Journal, Vol. 3 (1), pp. 47- 54

Stokes, David & Wendy Lomax (2002) Taking control of word of mouth marketing: the case

on an entrepreneurial hotelier, Journal of Small Business and Enterprise Development,

Vol. 9 (4), pp. 349 – 357

106 of 108

8.4  Reports  Erhvervs- og Byggestyrelsen (2011) Virksomheder i krise – Gode råd til en ny start [online]

available at; http://www.erhvervsstyrelsen.dk/file/188859/virksomheder_i_krise.pdf

[retrieved the 4th of May 2013]

Erhvervsstyrelsen (2012) Iværksætterindeks 2012 – vilkår for iværksættere i Danmark

[online] available at; http://www.erhvervsstyrelsen.dk/file/291799/Ivaerksaetterindeks-

2012-endelig-version.pdf [retrieved the 23rd of April 2013]

European Commission (2010) Entrepreneurship in the EU and beyond [online] available at;

http://ec.europa.eu/public_opinion/flash/fl_283_en.pdf [retrieved the 22nd of April

2013]

European Commission (2011) Recent developments in European higher education systems

[online] available at; http://ec.europa.eu/education/higher-

education/doc/wp0911_en.pdf [retrieved the 16th of April 2013]

8.5  Websites  Adizes (2013) The Corporate Lifecycle: Stable, 2004, available at;

http://www.adizes.com/corporate_lifecycle_stable.html [retrieved the 22nd of April

2013]

Akademikerne (2013) Ledigheds statistic februar, 2013, available at;

http://www.ac.dk/media/273928/ledighed-februar-2013.pdf [retrieved the 15th of April

2013]

Art District (2013a) Hvad er Art District?, available at; http://www.artdistrict.dk/om-os.html

[retrieved the 3rd of May 2013]

Art District (2013b) Teamet bag, available at; http://www.artdistrict.dk/om-os/teamet-

bag.html [retrieved the 3rd of May 2013]

Bruun (2012) About, available at; http://bruun.co/about [retrieved the 2nd of May 2013]

CBS (2008) Bronze til CBS-studerende i Venture Cup, 6th of June 2008, available at;

http://www.cbs.dk/en/node/209029 [retrieved the 2nd of May2013]

Danmarksstatistik (2013) Arbejdsløsheden februar 2013, 2nd of April 2013, available at;

http://www.dst.dk/pukora/epub/Nyt/2013/NR167.pdf [retrieved the 15th of April 2013]

107 of 108

Encyclopedia (2011) Master's degree, available at;

http://encycl.opentopia.com/term/Master's_degree [retrieved the 16th of April 2013]

FFE-YE (n.d.) Tidligere elevvirksomhed hjælperdialysepatienter, available at;

http://www.ffe-ye.dk/ungdomsuddannelser/company-

programme/successhistorier/health-equipment-denmark.aspx [retrieved the 28th of April

2013]

FORECAST.IT (2013) Customer Testimonials, available at;

http://www.forecast.it/#testimonials [retrieved the 21st of May 2013]

Graham, Peter (2012) Startup=Growth [blog] available at;

http://www.paulgraham.com/growth.html [retrieved the 6th of May 2013]

HED (2010a) Smart thinking, available at; http://www.he-dk.com/home [retrieved the 28th of

April 2013]

HED (2010b) History, available at; http://www.he-dk.com/about-us/history [retrieved the 28th

of April 2013]

IconFinder (2013) About IconFinder, available at; http://www.iconfinder.com/about/about

[retrieved the 2nd of May 2013]

Investopedia (2013a) Angel Investor, available at;

http://www.investopedia.com/terms/a/angelinvestor.asp [retrieved 20th of May 2013]

Investopedia (2013b) Venture Capital, available at;

http://www.investopedia.com/terms/v/venturecapital.asp[retrieved 21st of May 2013]

Ivækst (2012)Opstart på deltid – en kortere vej til selvstændig virksomhed, available at;

http://ivaekst.dk/vaekst/0/4/1/0/opstart-paa-deltid--en-kortere-vej-til-selvstaendig-

virksomhed [retrieved the 15th of May 2013]

Janteloven (n.d.) The law of Jante, available at; http://www.janteloven.dk [retrieved the 23rd

of May 2013]

Linkedin (2013a) Mads Petersen, available at; http://dk.linkedin.com/pub/mads-

petersen/1b/83/604 [retrieved the 29th of April 2013]

Linkedin (2013b) Reference Not Disclosed

108 of 108

Linkedin (2013c) Louise Fredbo-Nielsen, available at;

http://dk.linkedin.com/in/louisefredbonielsen [retrieved the 3rd of May 2013]

MPSOFTWARE (2013) How it all started, available at;

http://www.mpsoftware.dk/about.php#.UYFQj78rzzI [retrieved the 1st of May 2013]

ShaveSafe (2013a) About us, available at; http://www.shavesafe.net/about-us/ [retrieved the

28th of April 2013]

ShaveSafe (2013b) Find a retailer near you, available at; http://www.shavesafe.net/find-

distributor/ [retrieved the 28th of April 2013]

ShaveSafe (2013c) Customers Reviews, available at; http://www.shavesafe.net/custormer-

reviews/ [retrieved the 22nd of May 2013]

SU (2013) Din indkomst, Styrelsen for videregående uddannelse og uddannelsesstøtte,

available at; http://www.su.dk/SU/betingelser/maadutjene/indkomst/Sider/default.aspx

[retrieved the 15th of May 2013]

Undervisningsministeriet (2004) Innovation, iværksætterlyst og selvstændighedskultur i

uddannelsessystemet, available at; http://pub.uvm.dk/2004/innovation/ [retrieved the

19th of May 2013]

Venture Cup (2013) Make your idea happen – with Venture Cup, available at;

http://www.venturecup.dk/competitions/ [retrieved 20th of May 2013]

Verso (2012) Project description, 12thof December 2012, available at;

http://verso.au.dk/project-description/ [retrieved the 16th of April 2013]

Vækstfonden (n.d.) Welcome to Vækstfonden, available at; http://www.vf.dk/?sc_lang=en

[retrieved the 21st of May 2013]