Needs of Global Start-up companies (Deliverable 2) GlobalStart wp1 Studies Deliverable 2 Needs of Global Start-up Companies Table of contents p
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- Entrepreneurship-in-Networks Approach
IntroductionEarly stage high technology companies have a major role to play in the development and commercialisation new technologies (Hulsink & Elfring, 2004; Elfring & Hulsink, 2001), which in turn have a major impact on the development of nation economies. New business creation and entrepreneurial “churning” are increasingly recognised as being among the most important drivers of a country’s economic development and growth (During et al., 2001; Reynolds & White, 1996). Indeed, technology based ventures contribute disproportionately compared to non-tech based ventures with respect to job and wealth creation (Kirchhoff, 1994). Madsen et al. (2004) suggest a relationship between a countries ability to exploit opportunities created by technological advances (e.g. in information technology, telecom, bio/life sciences, Microsystems/nano technologies) and its wealth. The increased recognition of the importance of high technology companies is reflected in the various support mechanisms created by government, regional and local agencies to assist these companies in their development and growth. These support agencies and initiatives and easily identifiable in practice and in the literature (see e.g. Kirwan, van der Sijde and Klofsten, 2004). Early stage high tech firms and their entrepreneurs have to deal with the usual problems associated with the launching of a new venture, such as accumulating resources, building reputation, finding partners and attracting customers (Autio, Yli-Renko & Salonen, 1997; Brush et al., 2001; O’Farrell & Hitchens, 1988). Given that the market for the majority of these high tech firms is international these problems, although inherent in most newly established ventures, are possibly perceived even stronger by high tech start-ups. There are several reasons for this. First, their high tech nature often implies that significant investments have to be made in R&D, in order to create high quality, innovative applications that meet international market needs. These resources cannot be used for other purposes, like marketing or establishing a distribution channel. Furthermore, initiating global activities often means extensive travelling abroad to obtain information about specific markets. Such travels take up not only financial resources, but also time. Often the entrepreneur cannot dedicate sufficient time to this, as he has to take care of other issues. Also, setting up international activities requires knowledge of international markets and an international network that, usually, has not yet been established at this early stage in the firm’s development. These activities all require substantial resources (Diamantopoulos and Inglis, 1988) and high-tech start-up firms are notoriously resource-poor and may lack the necessary time, capital and capabilities to adequately prepare international markets (Doutriaux, 1992). These problems can be overcome through effective networking e.g. network provides the entrepreneur with support, contact and credibility (Ostgaard & Birley, 1996) and early stage high tech firms with limited resources employ “hybrid” structures in order to obtain leverage from external resources (Saarenketo, 2003). However, while problems associated with starting a new venture have been outlined in the literature, what is lacking is a study into the specific needs of these high tech start up firms. In a literature search only one limited study (14 interviews) Groen et al. (2004) was found, this paper aims to bridge that gap. Using a specifically created case protocol, some 22 case studies have been collected in 6 European countries by the consortium members of the European Union project GlobalStart¹. The subject of these case studies is high technology spin-off companies with global potential. These case studies will be analysed using an ‘entrepreneurship-in-networks’ approach to assess the needs of the high tech companies, especially those needs over the starting phase of the company, i.e. from opportunity recognition to opportunity exploration. This research has both theoretical and practical implications. From a theoretical perspective it deals with an area which has been relatively neglected in the past and from a practical viewpoint the findings of this research will be informative for organisations providing support to high tech academic spin-offs. Entrepreneurship-in-Networks ApproachEntrepreneurship can be seen as the process in which actors interact in such a way that opportunities are recognised, preparatory steps are taken in order to exploit the recognised opportunity, which subsequently lead to the creation of value (Shane & Venkataraman, 2000, 2001; Singh, 2001). Van der Veen and Wakkee (2004) used this process approach to structure their review of more than 100 articles. In the first stage of the entrepreneurial process, opportunity recognition, the discovery and evaluation of opportunities are the key elements. Initial ideas are developed into fully-fledged business opportunities. The second step is to match necessary resources and perceived market needs in order to enable exchange with the market. This preparation will lead to the translation of the business opportunity into a concrete business concept. The opportunity exploitation results in value creation when the concrete offering is absorbed by the market in the third stage of the process. The entrepreneurial process, as depicted in these three stages, is not a linear process. Changing circumstances may require entrepreneur to alter or come back to decisions made in an earlier stage. The course of action is influenced by the environment and sensitive to various variables. And although this model of the entrepreneurial process is opportunity-based, the entrepreneur is the driving force throughout the process. Yet, the entrepreneur is not an independent actor. Rather, we regard the entrepreneur as being embedded in a social context and needs to interact with other actors to exchange information and resources to exploit the opportunity and create value. Recognizing that the entrepreneurial process includes multiple-actors and multiple levels of aggregation, where actors interact and construct new technologies into new business, we use a multidimensional framework inspired by the work of Parsons on social systems theory (e.g. Groen, 1994; Groen et al., 2002; Parsons, 1951, 1977). A basic axiom is that entrepreneurs act purposeful in interaction with other actors (see also Granovetter, 1985, 1992). Originally, a social system was defined by Parsons as follows: “….a social system consists in a plurality of individual actors interacting with each other in a situation which has at least a physical or environmental aspect, actors who are motivated in terms of a tendency to the “optimisation of gratification” and whose relation to their situations, including each other, is defined and mediated in terms of culturally structured and shared symbols” (Parsons 1964, pp. 5-6). Four mechanisms are embedded in this definition: (1) interaction between actors; (2) striving for goal attainment; (3) optimisation of processes; and (4) maintaining patterns of culturally structured and shared symbols. Each of these mechanisms produces its own type of processes, with its own specific type of capital needed. Each mechanism can be related to a specific “capital.” Striving for goal attainment (mechanism 2) is associated with the scope dimension, and deals with strategic goals strived for and the strategic capital needed. Optimisation of processes (mechanism 3) refers to the efficient organisation of entrepreneurial processes and is in that sense related to the scale dimension with money as the basic resource, i.e. economic capital. Skills and values, related to pattern maintenance and institutionalisation of shared symbol (mechanism 4) are embodied in cultural and human capital, as they can be found in organisations, values, knowledge, skills, experience, and technology. Interactions between actors (mechanism 1), finally, is related to the social network capital. The central assumption in this theoretical framework is that enterprises will need sufficient ‘capital’ to be sustainable over time, implying that starting entrepreneurs need to have sufficient capital in all four areas to establish a viable enterprise. 
Proposition Development From the central assumption of the entrepreneurship-in-networks approach, it can be seen that starting entrepreneurs need to acquire a ‘certain’ level of capital to be sustainable over time, therefore it can also be said that starting enterprises need to cover these four dimensions in order to establish a viable enterprise. This concept is similar to Klofsten’s (1992, 1998) business platform, where starting enterprises need to reach the ‘highest’ level on eight core cornerstones to establish a viable enterprise. From previous research into the starting processes of early stage high tech firms and their networking activities (Kirwan et al., 2005; Wakkee, 2004), it can be seen that these firms often rely on a (multiple) strong partner(s)² who provide the firm with both desirable capitals and/or access to these capitals. This leads to the first hypothesis: Hypothesis 1: The initial capital contributions of the starting entrepreneur and the strong partner will provide a sufficient core base of capitals to establish the venture However, this is a dynamic process, so having reached a base level the firm continues to grow and as it does so new capitals are required to address the firm’s growth and development needs. The existing ‘base’ capital will continue to grow through everyday business activities; however, these are not always sufficient to cover the development of the company. This leads to the second hypothesis: Hypotheses 2: Post foundation companies have needs in those areas where specific capitals are lacking Directory: pub pub -> Project Scoring Template Pre-Construction Phase New Core/Branch Campus Projects pub -> Acm word Template for sig site pub -> The german unification, 1815-1870 pub -> Baltic Olympiads in Informatics: Challenges for Training Together pub -> Preparation of Papers for ieee transactions on medical imaging pub -> Forthcoming meetings and conferences pub -> Asilomar Conference on Circuits, Systems & Computers, Pacific Grove, ca, November 1978, pp. 55 58 pub -> Forthcoming meetings and conferences pub -> Harmonised compatibility and sharing conditions for video pmse in the 7 9 ghz frequency band, taking into account radar use Download 1.73 Mb. Share with your friends:
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