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How a company is born

20.05.2009
Solitude is the entrepreneur's worst enemy. And the business plan is hardly used daily but gets dusted off once in a while.

With the help of unique electronic diaries, business studies researcher Jaqueline Bergendahl, Lund University in Sweden, has gleaned new knowledge of how the founders of a new company make decisions to further their business projects.

Jaqueline Bergendahl is a pioneer in her use of electronic diaries to follow the decision-making processes of entrepreneurs. It was a challenge to develop the diary and to get the founders of companies literally to keep a diary about their entrepreneurial journey.

The diaries started out as daily e-mails, but the researcher soon established a database that the founders could visit via the incubator's home page and fill out an electronic, user-friendly form. But it was not until the researcher had developed a concrete language that the entrepreneurs could understand, and when she got them to realize that the diary was about their decision-making processes, that the entrepreneurs really became interested in keeping their diaries. It was also important that the entrepreneurs developed great trust in the researcher.

"Together with the founders of the companies, I developed the questions to be addressed in the diary, questions for the day and questions for the week. The electronic form was also a way to ensure the confidentiality of the information. With time, the entrepreneurs became more and more interested in their diaries, and they stressed that it was so interesting also for them to go back and read," says Jaqueline Bergendahl.

She believes that electronic diaries can function well in health care, for example, where it would be possible to use them to continuously follow up patients and at the same time maintain confidentiality.

The diaries have contributed a great deal of knowledge about how companies are started. The entrepreneurs in the study are establishing companies at the Lund University business incubator Venture Lab. They work in teams, and many of them have been highly successful in putting their companies on the market. But the decisions that constitute their path to the market sometimes surprise Jaqueline Bergendahl:

"I thought that the founders would have an approach where they would be open to new business opportunities all the time.

Instead it turned out that, throughout the entire establishment process, the founders continually shifted between being open to new possibilities and being extremely single minded in pursuing their goals."

For example, the founders were highly goal-directed when it was time to produce a business plan.

"The plan was developed ahead of special situations, like the Venture Cup, which is a competition among business plans, and like financing occasions, such as bank visits. But the business plan was not used in daily work."

On the other hand, these young entrepreneurs were extremely open in their attitudes regarding other entrepreneurial projects.

"The entrepreneurs were extremely active. They work as consultants or have other projects, and many of them are pursuing studies at the same time as they are starting a company. Projects on the side are important: they contribute money and broader interfaces for the company project. Since the projects these entrepreneurs are running are difficult, it's relaxing to work with something else alongside the company project."

When starting a company, it is crucial to develop a prototype. The project cannot take off until there is something concrete to show prospective customers. In teams whose members have differing goals in establishing the company, little progress is made; the project stagnates. Also, members who are too similar to each other have a hard time finding their proper roles - more heterogeneous teams work better.

"For example, when an economist and an engineer work together, their roles are quite distinct. One can concentrate on developing the prototype while the other works on marketing and developing a business plan."

It is important for partners to enter a contract at the start of the project, so everyone is in agreement and has common goals to work toward. Taking the entire entrepreneurial journey on your own is not something she would recommend:

"It's important to have a team, to be able to bounce ideas off each other, and to have fun together. You need someone to talk to, and if you're on your own, you will be extremely vulnerable if you get sick, for example."

Support from family and friends is important, also financially, for people founding companies. But the life of the entrepreneur is tough. What drives them?

"They think it's so much fun. They are happy, incredibly dedicated, and they believe in their ideas."

The dissertation is titled: Entreprenörskapsresan genom beslutsprocesser i team - en elektronisk dagboksstudie i realtid (The Entrepreneurial Journey through Decision-making Processes in Teams - An Electronic Diary Study in Real Time)

Contact Jaqueline Bergendahl at cell phone: +46 (0)70-489 67 92 or jaqueline.bergendahl@fek.lu.se

Kristina Rörström | idw
Further information:
http://www.vr.se

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