Employment growth of new firms

This paper analyses the association between dynamic capabilities and new firm growth, controlling for measures of firm resources, characteristics of the entrepreneur, and aspects of the environment. The central research question is: How strong is the relationship between dynamic capabilities and the growth of new firms? The paper opens with a review of empirical studies on employment growth in new firms and then moves on to a discussion on the role of dynamic capabilities in the explanation of new firm growth. After a description of the data and variables the results and implications of this study are discussed

Realizing the Potential of Advance Material Innovations

Advanced material technologies have received considerable attention from the media as potential engines of economic growth in an increasingly knowledge based economy. However, the extensive contributions of novel materials are not yet fully appreciated. Advanced materials have potential to enable other technologies and hence make a substantial and transformative impact on other industries and markets, including green technologies, healthcare, sustainable energy, construction, communications and defense. Like IT and biotech before them, advanced materials face many of the commercialization challenges of radical, generic technologies. Unlike their predecessor technologies, the value creation to which they could give rise is not readily demonstrated to their co-producers, customers or end consumers because of the complexity of their value chains and entrenched competition from incumbent products. This study investigates the market-oriented challenges facing AM University Spin-Outs (USO) and in particular, the evolution of their business models firm in response to other players. The choice of market and business model affects what value needs to be demonstrated to partners and can ultimately determine how much of a material’s potential value to society is realized. We build on the concept of innovation ecosystems to address these upstream innovations. A case study approach is used to elucidate the challenges that these ventures face. The findings highlight the way relationships between organizations can unlock the potential of entrepreneurial AM innovations. Partners are shown to be critical to a venture’s market selection and value chain positioning, determining not only what resources the venture can access but also the resource-base it needs to build to attract such partners. While current wisdom is that innovative ventures with radical technologies centre their activity on market niches, our cases show that potential partners, often large incumbent firms, may not be drawn by niche markets. Where substitute products already exist, ventures must adapt their business models to secure partner cooperation and clearly demonstrate the value they can offe

Commercializing Generic Technology: The Case of Advanced Materials Ventures

Generic, radical technology is of interest because of its potential for value creation across a broad range of industries and applications. Advanced materials ventures are attracted by this opportunity yet face intensified challenges in commercializing technology of this kind as upstream entrants into distinct established value chains. In this paper, we build on Freeman’s concept of technological innovation as a technological and market matching process to develop a new model of the variables influencing value creation by advanced materials ventures. We then demonstrate the model using evidence from a sample of 10 US advanced materials ventures, including an in-depth case study exemplar. From the literature, our model, and our case study observation, we construct four propositions concerning the success of advanced materials ventures in commercializing radical technology

From obstacle to opportunity: Problem-solving and competence creation in new firms

This paper aims to identify how entrepreneurial responses to ‘barriers’ can give rise to opportunities for new firms. The poor predictive record of studies analysing success attributes and favourable initial factors as determinants of new firm growth reflects the diversity of entrepreneurial responses to problems of growth, as illustrated by three case studies of new companies which were able to overcome adverse initial conditions despite the lack of early ‘success attributes’. They did so by finding alternative opportunities and by achieving resource economy, resource leverage and resource creation, aided by strategic relationships formed with other players. Spurred by the problems they encounter, entrepreneurial firms revise their business conjecture and engage in innovative activities, their business model evolving through trial and error. Creative responses to unexpected developments by entrepreneurial decision makers have implications for research methodology and business support

Stockmarket Listing and Cleantech Business Development; Evidence from AiM

Investors have been showing interest in prospects for new environmental technologies launched by innovative enterprises. We analyse the experience of young environmental technology firms going public on London’s alternative stock market, AiM. While firms that launched in the boom attracted needed funds, shareholder expectations and the controls used to promote shareholder value were not well aligned with the realities of business development of these emerging technology firms. These face challenging market and technology risks and require funding for business development that is more flexible and longer term than that provided by AiM investors. We suggest that a wider portfolio of investment alternatives is neede

Wielding scissors skilfully: The matching process of advanced materials ventures

This paper examines the industrial incentives for commercialising advanced materials and, in particular, nanomaterials with reference to issues raised in the technology strategy and technology entrepreneurship literature. We draw on longitudinal empirical data to show that smaller and newer firms are playing an increasing role in the commercialisation of advanced materials innovations. However, new technology based firms face substantial barriers to commercialisation, including access to the complementary assets of large firms and institutions. To illustrate these challenges, we examine a case study of a start-up firm commercialising carbon nanotubes. Through use of an open systems model, we characterize their alliances and interactions in attempting to commercialise their products in several markets. This analysis illustrates the daunting challenges facing start-up firms as they attempt to commercialise advanced materials innovations. The most difficult challenge appears to be one of prioritisation of development objectives and, subsequently, of alliance building. Proposed policy recommendations focus on supporting the entrepreneurial process of matching technology resources and alliance-building with market opportunities

Exploring the Constituents of Growth in a Technology Cluster: Evidence from Cambridge, UK

High-growth firms appear to be key drivers of new industries and technologies. Here we investigate the contribution of these and other types of firm to a technology cluster, in the context of ‘creative destruction’ shaping the evolution of the cluster. Evidence on the reallocation of scarce resources through processes of creative destruction is scarce. But in a cluster the effects of creative destruction can be traced through such developments as (1) firm exits and entries (2) change in firm size distribution and (3) acquisition of firms. We apply churn analysis, firm size transition analysis and analysis of acquisition to the technology cluster in Cambridge UK over twenty years. Firm growth contributed two-thirds of all new job creation, while entry-exit turbulence accounted for one third of job creation. High-growth firms accounted for a quarter of jobs created in the Cambridge cluster during this period, without ever making up more than 3% of all tech firms. There has been an increase in average firm size and profitability. A fall in entry rates and fewer firms moving up into larger size categories in recent years point to adverse conditions for innovative new firms even before the financial crash

Growth Setbacks in New Firms

This paper examines setbacks in the early growth of new firms. Growth interruptions mark the unfolding, cumulative processes of firm growth overlooked in standard studies that use cross sectional methods. To probe for possible patterns in growth setbacks, we examined a cohort of 200 high technology firms founded in about 1990 and analysed the growth paths of survivors. Simple compression techniques yielded seven types of growth turning points. Growth setbacks are the norm even among firms with better growth records. Growth crises can be represented as a shift in phase state. To understand what such a shift implies, we focus on the micro-evidence relevant to processes of firm growth and illustrate growth crises from case studies. Growth crises represent both limits to knowledge and the means by which knowledge is revised and learning accelerated in the firm

Social Ventures as Innovators at the Base of the Pyramid

This paper investigates the unaddressed potential of social ventures to implement social and technological innovations. The innovative activities of social ventures serving populations at the base of the pyramid (BOP) provide relevant evidence. Resource based theory and the concept of business ecosystems provided constructs to be operationalized through case evidence, while case studies helped integrate and adapt these theories to illuminate social entrepreneurship. The framework provides a basis for comparing two different social ventures creating value at the BOP: a technology-based social venture and another undertaking health delivery. These ventures enabled user interaction and feedback and enlisted public-private partnerships. The cases show how social ventures can develop innovative business models that combine internal resources with external resources from their ecosystem in order to build shared value. The conceptual framework can be used to identify key features of other cases of entrepreneurial value creation in conditions of povert

Entrepreneurship and Global Health: Catalyzing the Ecosystem

Innovative financing for global health may stimulate new waves of entrepreneurial activity. Global policies have created new sources of financing to accelerate knowledge generation for healthcare in resource-poor settings. This article outlines the emerging research concerned with the entrepreneurial response to opportunities and incentives at the bottom of the pyramid for healthcare. Questions arise to what kind of business models can be used to provide affordable healthcare on a viable basis. We examine public-private partnerships as one mechanism to catalyze the ecosystem and draw in stakeholders to contribute to the innovation value chain. We integrate entrepreneurship, innovation and ecosystem theories to discuss how the entrepreneurial firm builds resources and creates value in the healthcare ecosystem