Early development of new technology-based firms: A longitudinal analysis on new technology-based firms’ development from population level and firm level perspectives

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Title: Early development of new technology-based firms: A longitudinal analysis on new technology-based firms’ development from population level and firm level perspectives
Author: Rannikko, Heikki
Contributor: Hanken School of Economics, Department of Management and Organisation, Entrepreneurship and Management
Belongs to series: Economics and Society – 240
ISSN: 0424-7256
ISBN: 978-952-232- 159-6
Abstract: This study participates in several discussions on new technology-based firms, both from a population-level viewpoint and a firm-level viewpoint. The overall objective of this study is to examine how new technology-based firms grow. For the population level research this study provides new knowledge by analysing growth, and high growth, in the context of new technology-based firms. As a firm level phenomenon the present study provides new knowledge, both for the behavioural orientation literature and the resource dependence literature, by examining the possible causes and implications of entrepreneurial orientation and external resource mobilisation. The results of the descriptive empirical analysis picture the group of technology-based firms as a distinct sector of the economy. The emphasis on technology is shown through the finding that new technology-based firms’ managers value the distinction of technology over other business goals. Concerning growth patterns it is found that only a minority of new firms experience high annual growth, that growth is erratic and that it may take a long time for a new technology-based firm to achieve growth. The testing of the theoretical model suggests that entrepreneurial orientation is positively associated with growth performance and that the experienced growth performance is positively associated with entrepreneurial orientation. In conclusion, it seems that positive experiences in the past reinforce entrepreneurial orientation, which further strengthens the development of a firm. Concerning moderating factors it is found that technological distinctiveness modifies the relationship between entrepreneurial orientation and growth. The finding hints that entrepreneurship (risk-taking, boldness and pro-activeness) is more beneficial with strategies in which technological excellence and sophistication are not the top priority. In support of the resource dependence argument, it was found that financial resource mobilisation is positively associated with growth. The findings further give support for the view that embeddedness in a firm community of practice is associated with a higher level of resource mobilisation in a firm level. Concerning financial resource mobilisation, the results suggest that there is a positive association, both between identification with a community of practice and financial resource mobilization and between nature of co-operation in a community of practice and financial resource mobilisation. Towards operational resource mobilisation similar associations were not found. Overall, these results contribute to the innovation policy discussion by suggesting that hands-on innovation policy interventions may have firm-level effects, in addition to those of technological and business learning. The results suggest indirectly that supporting firms to create and maintain close ties with their exchange partners within a community of practice may lead to improved resource mobilisation e.g. through increased awareness of firm participants. This discovery contributes both to the research on innovation policy interventions and to the research on a more nuanced view of the resource dependence perspective.
URI: http://hdl.handle.net/10138/29986
Date: 2012-02-27
Subject: new technology based firms
entrepreneurial orientation
resource dependence
innovation policy

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