Firm growth and the illusion of randomness

This paper shows that randomness can be an artefact of the methods used to examine firm performance. It questions the recent equating of entrepreneurship with gambling based on the assumption of random firm performance. It shows that complexity science provides a useful alternative perspective on randomness in relation to firm performance

New Firm Growth: Exploring Processes and Paths

This paper provides a new methodology for the diachronic study of new firm growth, theoretically grounded in the work of Penrose (1995). We show that a model of firm growth as an unfolding process makes possible draw simple, measurable inferences from firm level to aggregate evidence on growth paths of new firms, expressed as propositions. Metrics on growth paths of new firms in three longitudinal samples of new firms are examined for evidence at the aggregate level consistent with the dynamic model. Dynamic processes in the early development of young firms result in variations in the timing, magnitude, duration and rate of change of growth as between firms and in the same firm over time. The conceptual and methodological framework in this paper provides a basis for future research aimed at explaining the development of new firms.entrepreneurship;Penrose;growth paths;new firm growth;resource-based perspective

Speciation through entrepreneurial spin-off: The Acorn-ARM story

Can the concept of speciation explain evidence on how technologies branch and advance? Can evidence on innovation through spin-off usefully inform the concept of speciation? These questions are addressed through a case study of detailed processes enabling the shift of technology to new domains of application. An innovative IT firm developed its own semiconductor technology to remedy supplier deficiencies but it required a joint venture with a completely new business model to adapt and move the technology into new market domains. We propose the concept of techno-organizational speciation to delineate this phenomenon. Competing perspectives on speciation (compatibility, niche and lineage approaches) are found to illuminate the evidence, while complementarities between these conceptual dimensions are revealed by the case. Causal processes uncovered include the following: (1) Techno-organizational speciation through spin-off may be needed to launch a dominant technical standard, compatible with multiple applications. (2) This can be achieved through niche creation from which develops a new business ecosystem. (3) Inherited knowledge together with organizationally based learning foster the branching and renewal of technological lineage

Continuity and change in a spin-off venture: the process of reimprinting

Because new entrants very often spin off from established firms, their learning and capabilities are closely linked to their organizational and technological heritage. While this may provide an initial advantage, parental influence can generate inertia and resistance to change, unless the new company is able to unlearn inappropriate practices and create its unique competitive identity. The tension between inheritance and search for novelty is the subject of the article. Building on an in-depth case study of Acorn Computers and ARM semiconductors, we present a model of intergenerational learning and spin-off performance. Early parental influence is followed by intense learning, improvisation and response to feedback from the market. This we term reimprinting, to emphasize the enduring competitive and organizational identity established early on by the spin-off, which in this case provided the basis for disruptive innovation. Focus on the parent–progeny dyad as the unit of analysis can reveal micro-processes that reconstitute past experience to make possible both continuity and innovation in the spin-off ventur

New Firm Growth: Exploring Processes and Paths

This paper provides a new methodology for the diachronic study of new firm growth, theoretically grounded in the work of Penrose (1995). We show that a model of firm growth as an unfolding process makes possible draw simple, measurable inferences from firm level to aggregate evidence on growth paths of new firms, expressed as propositions. Metrics on growth paths of new firms in three longitudinal samples of new firms are examined for evidence at the aggregate level consistent with the dynamic model. Dynamic processes in the early development of young firms result in variations in the timing, magnitude, duration and rate of change of growth as between firms and in the same firm over time. The conceptual and methodological framework in this paper provides a basis for future research aimed at explaining the development of new firms

Entrepreneurship in the knowledge economy

This paper reviews the literature on knowledge as a source of entrepreneurial opportunities, with evidence at both the regional and organizational levels. In addition the causal mechanisms of new firm growth are explored, discussing longitudinal case study research on problem-solving and competence creation in such firms

The Cambridge high tech cluster: resilience and response to cyclical trends

This paper explores trends shown by technology based companies in the Cambridge area over the cycles of the past two decades. Influences from the macro-economy include the impact of the information revolution on the area, the recession of the early 1990s and the technology crash of 2000. The expansion of the cluster of Cambridge tech firms over time reflects the extent to which firm entries have exceeded exits since the 1960s and the high survival rates of new firms. There has been sector-specific volatility in the current decade, pre-figuring economic difficulties since evident elsewhere. In order to reveal the dynamics behind trends at the cluster level, data are examined by sector, size and cohort. This shows that the decline in firm numbers between 2002 and 2006 reflects the founding of large numbers of short-lived IT software firms during the technology boom. Branches of corporations headquartered elsewhere have increasingly been attracted to the area but the larger tech based businesses in the Cambridge area are found to be those long-standing to Cambridge. Branch firms were more prone to closure and relocation than the larger indigenous firms with their accumulated local competence. Biotech and R&D experienced steady growth through the 1990s and 2000s with an increase in firm and job numbers. The biotechnology sector contracted along with the recent reduction in venture capital but the R&D sector continued to grow. Cambridge technology firms have been attractive targets for acquisition by corporations seeking to improve their innovation performance by buying promising technology. The number of acquisitions rose during the boom years, particularly in Biotech and IT, with associated cutbacks in employment in acquired units. The boom in venture capital investment and the incidence of acquisition during the boom period may be related. VCs seek early exit from their investments and acquisition rates fell along with the fall in local venture capital funding. After 2004, the fall in the number of tech start-ups (as compared with county VAT registrations for all new firms) and increasing numbers of exits, indicate that Cambridge tech-based firms were experiencing pressures specific to high tech. Long term effects of lower firm entries will depend on survival rates and the growth of surviving firms. During the recession of the early 1990s, a smaller cohort of tech start-ups achieved higher survival rates than those started in boom years. The number of new firms active in emerging technology sectors points to continuing innovation and diversity among firms in the Cambridge technology cluster despite a contraction in numbers of start-ups which anticipated the economic downturn. In the current financial situation, knowledge based firms engaged in technological and creative activity are more important than ever as providers of exports and of the skills of the future

Investigating the growth paths of young technology-based firms: a process approach

Young technology-based firms are widely recognised as important drivers of economic renewal and growth. Many statistical studies have been carried out to ascertain the attributes of the more successful ventures. Most studies are based associations between measures of firms’ growth and other firms’ attributes, taken out of context. The internal developmental processes of these new ventures, viewed holistically, have not received attention in the research literature. Cross-sectional analyses of variance cannot reveal cumulative dynamic processes at work within firms, while case studies on new firms have lacked a generic conceptual framework capable of providing a systematic basis for comparison. This report aims to complement findings from the dominant research approach by explicitly addressing new firms' internal development processes. To summarise unfolding growth experience over time in new firms, a quantitative analysis has been conducted on an exploratory basis. A new data set was created tracing over a period of eight years, the growth of a cohort of 136 German technology-based firms incorporated in 1991/9 . New compression techniques were devised that preserve information on internal change over time within firms. This analysis provides a quantitative background to an in-depth examination of 15 case studies undertaken to identify internal firm development processes. The analytic framework, inspired by the work of Penrose, provides a systematic way of comparing firms' growth experience. An exemplar is provided here together with an exposition of the conceptual framework. It is shown that the typical growth paths of even a relatively successful cohort of survivor firms feature growth spurts, growth interruptions and temporary stagnation, evidence of which is concealed in standard studies of aggregate growth rates. The report explores the reasons for these patterns, using detailed case evidence. The ‘new venture development framework’ explains the prevalence of these growth patterns with reference to the entrepreneurs' evolving business concept and the firms' resource base and market opportunities. This pilot study shows that it is possible to understand and compare new firm growth by using contextual observations at the level of the firm. This provides rich material to inform support agencies and entrepreneurs facing growth problems of new firms in the field

Molecular Characterization of \u3ci\u3eCitrus tatter leaf virus\u3c/i\u3e Historically Associated with Meyer Lemon Trees: Complete Genome Sequence and Development of Biologically Active In Vitro Transcripts

Citrus tatter leaf virus isolated from Meyer lemon trees (CTLV-ML) from California and Florida induces bud union incompatibility of citrus trees grafted on the widely used trifoliate and trifoliate hybrid rootstocks. The complete genome sequence of CTLV-ML was determined to be 6,495 nucleotides (nts), with two overlapping open reading frames (ORFs) and a poly (A) tail at the 3′ end. The genome organization is similar to other capilloviruses, with ORF1 (nts 37 to 6,354) encoding a putative 242-kDa polyprotein which contains replication-associated domains plus a coat protein (CP), and ORF2 (nts 4,788 to 5,750), which is located within ORF1 in a different reading frame and encodes a putative movement protein. Although the proteins encoded by CTLV-ML possesses 84 to 96% amino acid sequence identity with strains of Apple stem grooving virus (ASGV), we observed two strikingly different regions in ORF1: variable region I (amino acids 532 to 570) and variable region II (amino acids 1,583 to 1,868), with only 15 to 18 and 56 to 62% identities, respectively, with the corresponding regions of ASGV strains. Conditions for a herbaceous systemic assay host were optimized in which the wildtype virus induced systemic infection in Phaseolus vulgaris cv. Light Red Kidney (LRK) bean plants at 19 or 22°C but not at higher temperatures. In vitro transcripts generated from full-length cDNA clones induced systemic symptoms on LRK bean plants similar to that of the wild-type virus. Replication of the recombinant virus was confirmed by hybridization of a 5′ positive-stranded RNA-specific probe to a genome-sized RNA and by reverse-transcription polymerase chain reaction