New Technology-Based Firms in the New Millennium: Volume 9

The chapters in this volume have been derived from the best papers presented at the annual International High Technology Small Firms (HTSFs) Conference held at Enschede, The Netherlands, and organized by Nikos, the Dutch Institute for Knowledge Intensive Entrepreneurship in May 2008, with the collaboration of Manchester Business School. The present volume is the ninth in the present series of “new millennium” volumes from this conference and book series that began in 1993. As Oakey and Cook wrote in the introduction to Volume 8, government policies in developed Western economies remain focused on emphasizing innovation driven by entrepreneurship as a major vehicle for future economic success. In particular, many European governments support such entrepreneurship by emphasizing the key role of new firm “gazelles” in producing the disruptive innovations and inventions that will create future new industries. This approach in the Netherlands has led to the creation of special Chairs of International entrepreneurship at three technical universities, namely, The University of Twente, the Technical University of Delft, and the Technical University of Eindhoven. These chairs have now been filled and are held at the University of Twente by Shaker Zahra, the Technical University of Delft by Paul Trott, and the Technical University of Eindhoven by Anthony di Bennedetto. The objective of these appointments is the stimulation of technology-based entrepreneurship in the student populations of the Netherlands university sector, and to increase our detailed knowledge of technology-based enterprises, involving a strong focus on the research problems of internationalization, particularly among, university-derived HTSFs.

Enterprise education has been regularly cited as a tool which can be utilised to not only increase the level of entrepreneurship within an economy, but also the success of those enterprises created. This chapter explores the extent to which participation in enterprise education is associated with the adoption of new technology within new businesses since this is one way that businesses can remain competitive, not only within their own countries, but when competing internationally. Using data from the UK Global Entrepreneurship Monitor (GEM) survey, the study finds evidence that those firms undertaking enterprise education in the form of university-based schemes or government sponsored training programmes are more likely to be using newer technology. However, this relationship is relatively weak, and brings into question whether many enterprise courses offer effective value for money.

Encouraging technology-based entrepreneurship is central to the policy agendas of governmental and non-governmental economic development agencies in many industrialised and newly industrialising countries. Entrepreneurs are central to venture creation and evidence indicates that, following secondary and, typically, tertiary education, most work for one or more employers prior to establishing a technology-based venture on their own or with others. As a result of this ‘entrepreneurial apprenticeship’ many technology entrepreneurs establish businesses in their mid-to-late 30s. Developing a thorough understanding of product/service markets and devising strategies to access, serve and support customers are major challenges for founders of technology-based businesses. Ventures established by individuals or groups with relevant commercial experience benefit from the know-how and networks of their founders. This chapter explores the role of university business plan competitions in stimulating entrepreneurial activity and technology transfer from two universities in Northern Ireland by focusing on entrants in the 2007 £25k Enterprise Award Scheme business planning competition. Such initiatives tend to attract students/recent graduates and members of university staff and raise the question as to how such teams develop commercially robust ventures, given that, on the face of it, most have little or no commercial experience. Based on analysis of the business plans of the top 10 ventures from the 2007 competition this chapter explores characteristics of the entrepreneurial teams, their choice of product/service offerings and aspects of the markets they target.

This chapter focuses on two major concepts in entrepreneurship training, namely coaching and mentoring. A study of these concepts reveals at least two schools of thought, that coaching and mentoring are two parallel and distinct activities that can be used to support each other, and that coaching and mentoring are not separate activities — coaching is considered part of the mentoring activity or mentoring part of the coaching activity. Data from 36 university-based training programmes and 450 coaching and mentoring cases at 7 Swedish universities were analysed. We used a checklist to gather information on 21 items linked to these 4 distinctive groups: first structural issues (mission, form and task); second, process issues (i.e. connection to programme content, meeting environment, problem solving, assessing the opportunity or idea, operative role, confidentiality and networking); third relationship (i.e. extent, meeting, initiative, homework, documentation and follow-up) and fourth character of the coach and mentor (background and experience, engagement, integrity, social skills and role or ethics).

Coaching and mentoring differed markedly, for example in terms of mission, problem solving and use of generalist versus specialist competence. Similarities occurred in the areas of opportunity or idea assessment, and meeting environment, operative role and confidentiality agreements. The authors are convinced that the coach and the mentor have different roles in helping the young individual to become a better entrepreneur. Coaching and mentoring were found to be parallel activities that complement each other.

This chapter draws together three strands of literature on clustering, entrepreneurship and international business, and examines the relationships between these three phenomena in promoting firm formation and growth within clusters. The evidence drawn on includes econometric models based on the unique International Trade in Services Film and Television dataset, an indepth interview survey and other questionnaire survey data. The key conclusions are firstly that strong clusters promote entrepreneurship, which in turn promotes cluster strength in a self-reinforcing manner. Secondly, some firms are better able than others to benefit from cluster locations due to their superior firm competencies and absorptive capacity. Thirdly, cluster strength and internationalisation are mutually reinforcing. Cluster strength contributes to the ability of entrepreneurial firms to expand overseas via export sales, licensing and FDI. Evidence is presented that indicates firms have a greater intensity of export and import activity if they have resource strengths, some of which are derived from their membership of a strong cluster. Strong clusters also attract multinational firms and in the case of the London media cluster, although those multinationals appear somewhat less embedded than non-multinational enterprises (MNEs), they are nevertheless quite strongly embedded. This means that there is a second important cluster feedback loop as spillovers from MNEs to local firms enhance cluster strength, which attracts further multinationals. The acquisition of high performing firms by overseas MNEs does not appear to have reduced either their performance or their embeddedness in a cluster. Fourthly, the nature of internationalisation strategies is conditioned by firm and industry characteristics. In particular, the extent to which tacit knowledge is embodied in a product emerges as being influential in terms of decisions on which internationalisation mode to use. Finally, the resource-based view of the firm emerges as a useful integrative framework for understanding the interplay between clusters, entrepreneurship and internationalisation strategies.

The purpose of this chapter is to explore how Born Global (BG) firms seek to solve the resource scarcity problem typical for them. We discuss how these firms can increase their internationalization progress through the selection of appropriate resource strategies. Our underlying assumption is that with the selection of a suitable strategy, the BG firm can reduce the effects of the liability of foreignness and resource scarcity, and experience faster internationalization. We identified from the literature three categories of resource strategies: (1) externalization strategies, (2) entry strategies requiring minimal resources, and (3) strategies around the Internet and Internet technology. We use case material to explore how these are used by a sample of 10 BG firms.

This study examines the relationship between the competencies of the small business owners and their interest in international activities. Based on a review of the literature and a quantitative empirical survey among 803 newly founded Austrian companies, the chapter identifies the central explanatory variables of internationalization, thus contributing to a theoretically based conceptualization of this phenomenon. Previous conceptualizations of small firm internationalization are extended and specified. This reveals the necessity for a wider inclusion of utilized resources throughout the internationalization process. Moreover, the impact of the structure of social capital of a business owner on the decision to start international activities is examined. The findings elucidate differences between performance drivers with regard to the network, marketing, and technology competence of the small business manager. The study repudiates the Uppsala Model in favor of the “born global hypothesis.”

The idea that environmental scanning can be a key factor in sustained competitive advantage calls for the integration of business strategy and the environment. Not surprisingly, environmental scanning is widely viewed as the first step in the process that links strategy and the environment. The main debate over the roles of strategy and environment is nowadays concerned with the primary importance of environmental scanning to strategy formulation and implementation. More specially, effective scanning of the environment is seen as necessary to the successful alignment of competitive strategies with environmental requirements and the achievement of outstanding performance in small- and medium-sized enterprises (SMEs). This chapter explores the above relationship in the British electronic manufacturing industry. It is based on the empirical evidence and the findings of a survey of 132 Chief Executive Officers’ (CEO) views on environmental scanning and strategy in SMEs. It is concluded that there is a significant relationship between increasing the environmental scanning of the firm, and the success of small- and medium-sized manufacturing firms in electronic industry. Accordingly, because of the dynamic nature of the electronics industry, obtaining information on environmental factors facilitates alignment between business strategy and its environment.

Collaboration and acquisition have traditionally been observed as two alternative strategies when accessing external technologies. However, real option scholars have recently argued that firms can also engage in transitional technology sourcing trajectories where collaboration and acquisition are used as complementary strategies. While these real option scholars have identified factors that influence when partners are likely to shift from collaboration to acquisition, they remain silent on how such a transition can be effectively managed. Based on a multiple case study of four transitional technology sourcing trajectories between one new entrepreneurial and one established firm, this study therefore explores how the pre-acquisition collaboration stage and the post-acquisition integration are related to each other. Findings suggest that entrepreneurial companies may use the pre-acquisition collaboration stage as a period to evaluate the goodwill of the established partner. In addition, we point to the presence of pre-acquisition integration efforts and the extent of strategic convergence during the pre-acquisition collaboration stage as factors that substantially influence the success of the post-acquisition integration process in transitional governance trajectories.

In this chapter a typology is presented that typically describes strategic patent management practices in four development categories. The underlying framework integrates patent functions with strategic planning attitudes. Policy makers can apply it to survey the actual use of patents in order to identify the potential for improvement in SME-owned patent exploitation. Managers of these organisations can use it to evaluate the current patent management practice for taking the next step towards a more active use of patents. Operationalisation of the framework into a questionnaire is grounded in a pilot study of three biotechnology firms, differing in size and age. The result has consequently been applied in a case study consisting of 16 small-sized biopharmaceutical companies in the Netherlands. After presenting results from this sample of patent management practices, we present our findings and discuss the validity and use of the typology for the above-mentioned purposes.

In the UK as more and more traditional manufacturing is being outsourced to lower-cost countries, the development of manufacturing start-up companies is increasingly perceived as important in sustaining a competitive UK manufacturing base. However, start-up companies are often associated with a high failure rate, particularly during the early stages of operation. As they have yet to build up the strength and resources to sustain them through internal and external crises, start-ups operate under conditions that constantly challenge their survival. Developing the most appropriate manufacturing strategy is probably more critical in start-up companies than in established organisations, yet little research has addressed this area.

This paper reports the findings of an exploratory study involving six UK manufacturing start-up companies. A novel manufacturing strategy content framework is proposed. The chapter also examines the business orientation (technology-push or market-pull) adopted by the case companies, and investigates how business orientations influenced their manufacturing strategies. This leads to two business orientation mobility models. This chapter concludes by discussing the use of the frameworks and suggesting how they might be put into practice to provide assistance to operational managers in start-up companies.

This chapter studies ways of supporting sustainable growth in high technology small firms by managing innovation. The chapter examines technology-based and knowledge-intensive business service firms (KIBS) and their innovation management in Finland. The goal is to find at least one meaningful innovation process for a small KIBS firm that takes growth into consideration. In this chapter, incremental, radical, disruptive, open and systemic innovation are seen from a small KIBS firm perspective and a model that combines these types of innovation is presented. Two cases of high technology-based small KIBS firms are also selected for closer examination.

This chapter is an appreciation of and a critical reflection on Sarasvathy's work on the causation and effectuation models of entrepreneurship. While Sarasvathy has made significant contributions to the field, it is suggested that more fruitful results can be achieved if two modifications are made. First, it is argued that the six dimensions on which the two models differ are independent and therefore it is more fruitful to focus on the dimensions rather than on the two models. Second, it is argued that a pragmatic view of entrepreneurship is most fruitful when it is not applied at the level of the entrepreneurial process, but at the level of underlying human actions.