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University Sunday, January 30, 2000

UNC sociologist to receive top entrepreneur research prize

By DAVID WILLIAMSON, UNC News Services

CHAPEL HILL -- The Swedish Foundation for Small Business Research announced Tuesday that it will present its International Award for Entrepreneurship and Small Business Research to Howard E. Aldrich, Kenan professor of sociology at the University of North Carolina at Chapel Hill.

Aldrich, also chair of the Management and Society Curriculum in UNC-CH's College of Arts and Sciences and adjunct professor of management at the Kenan-Flagler Business School, will receive a $50,000 prize. The Swedish Minister of Industry and Trade will present him with a special statue during a ceremony in Stockholm in May. The professor also will lecture for a week in Swedish cities.

The purpose of the recognition is to encourage research about entrepreneurship and small business to boost economic development for society and for individual entrepreneurs.

"I am delighted with this award, as I know the four researchers who preceded me and am proud to be in their company," Aldrich said. "The award represents for me the culmination of over 30 years of research into entrepreneurship and small business founding and growth. My father was a small business owner and so was my grandfather, and now one of my sons is carrying on the tradition, although his firm is not so small."

Since receiving a doctorate from the University of Michigan in sociology in 1969, Aldrich has been interested in entrepreneurship and small business.

He began by following hundreds of small and medium-sized businesses in Boston, Chicago and Washington, D.C., examining how owners coped with major changes in their markets, working conditions and economic conditions. In the 1980s, he conducted a six-year study of hundreds of businesses in three English cities.

In both projects, Aldrich showed how the business populations systematically changed in response to their changing environments. In both the U.S. and England, minority ethnic groups gained a larger share of business ownership as more minorities moved into neighborhoods, and other businesses closed. The new businesses came to resemble those that remained under the old ownership.

Besides those interests, Aldrich has studied the importance of social networks in starting and growing businesses. Studies he carried out with others in six countries showed that business owners' personal networks are similar the world over. For example, men tend to have few women in their networks, whereas women have mostly men in theirs. He also found that men and women tend to use networks similarly, particularly in obtaining professional help.

In a study of the Research Triangle, he and several students found that people with more diverse personal networks and smaller numbers of kin in the networks were more likely than others to start businesses. Another finding was that it was not the number of voluntary associations business owners belonged to that helped them most, but rather how active they were in their associations.

In another project, they found that entrepreneurs often pay little attention to human resource needs until it is too late. Firms tend to add new employees in unplanned ways, with consequences that come back to haunt them later.

Aldrich's son Steven started an e-commerce company in 1995, and that sparked the professor's interest in forces behind Internet commerce growth. He has studied strategies that e-commerce entrepreneurs use to gain legitimacy, especially in the late 1990s, when the Web was still open territory for new ventures. He now studies growth of the application service provider industry, a rapidly emerging business-to-business market that has outpaced the consumer market.

In all his work Aldrich takes an evolutionary approach to explaining social and organizational change. He credits early exposure to ideas from biological ecology with heightening his curiosity about the way human societies have evolved.

Last year, he presented a paper co-authored by Ted Baker at the Babson Conference on Entrepreneurship about how some high-tech firms can become overly dependent on key employees. The paper was selected as the best at the conference, and they will be given an award for it in June.

Sage, a British and American publishing company, issued his latest book, "Organizations Evolving," in August. The book uses an evolutionary approach to explain how organizations, industries and economies have changed and are continuing to change.

Aldrich's wife, Penny, is an adjunct professor at Durham Technical University, and their two sons, Steven and Daniel, were both Morehead scholars at UNC-CH.

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