New Technology-Based Firms in the New Millennium: Volume 10

As observed above, the problems of HTSF financing have been a major development issue for HTSFs and the HTSF conference since its inception in 1993, and have often provided a subject for substantial sub-sections in the book series. However, in this instance, a single offering is provided in Chapter 2 by Xia and Minshall. This work gives a very detailed and comprehensive review of the problems that have existed for many years with the funding of new high-technology firms. There is a very well-balanced view presented on the roles of public and private sector capital and, in particular, on how these two types of investment funding might be best combined to provide the better future support of HTSFs.

A key element in the development of a technology, a company or an industry is the availability of finance. While much effort has been directed at understanding the roles of venture capital, angel investment and public investment, there does not appear to be much analysis of the industry-level effects as a new industry is emerging. In this chapter, we investigate the patterns of public and private investments and the role of government in support of financing the emergence of science and technology industries. We also examine the criteria used by venture capitalists in their assessment of investment opportunities regarding new technology-based ventures. We focus on the analysis of investment at stage between prototyping and commercialisation of a new technology. This stage has been labelled as the ‘valley of death’ from an investor perspective, which reflects greater risks for investors due to the high level of both technology and market uncertainty.

Using data from a survey of a stratified random sample of 900 internationalising firms carried out in 2008, this chapter examines the barriers to internationalisation faced by young innovative SMEs. The results indicate that young technology-intensive firms are more likely than non-technologically intensive firms to report barriers to internationalisation. When compared with the whole sample, young technology-intensive SMEs are significantly more likely to experience difficulties in obtaining basic information about doing business in an overseas country, and with the costs of doing business overseas. Factor analysis suggests that young technology-intensive SMEs which internationalise through non-traditional modes differ with regard to their perceptions of barriers to internationalisation from those who sell directly to customers overseas.

The “born global” phenomenon of hi-tech small and medium size enterprises (HSMEs) has been explored over the past 15 years. Until today, too little attention has been paid to intellectual property (IP) in knowledge-related processes, and the business models of HSMEs in their market globalization processes. This chapter aims partly to fulfill this gap by exploring the role of IP in the “knowledge-market” development trajectories involved in becoming global. To present a theoretical background for this topic, this chapter maps the main processes involved in global breakthroughs, as well as a “knowledge-market” framework for the globalization of HSMEs. An empirical study is based on four case-studies representing ICT and biotech companies of Estonian origin: Regio, Icosagen, Skype, and Asper Biotech). Results demonstrate four very different globalization trajectories named Regio, Icosagen, Skype, and Asper Biotech (see Figure 3). All cases are characterized by different types of knowledge accumulation preceding their globalization, and the selection of various business models. The results of the study provide for a better understanding of the strategic options that can be followed during the internationalization process.

The ability to develop and manage effective networks is a crucial entrepreneurial competence, allowing entrepreneurs to share experiences, ideas and knowledge to improve business performance. Despite growing recognition of the value of networks and networking, there has been little comparative research performed to explore ways in which male and female entrepreneurs develop and utilise networks. This chapter considers the development and use of networks in technology-based sectors, seen as important for wealth and employment creation, where women represent an underutilised source of entrepreneurial potential. An enhanced understanding of the issues surrounding male and female venturing, particularly within this sector, could offer opportunities to identify how levels of both genders’ entrepreneurial engagement might be increased. Also, if, for example, research identified that men and/or women network in ways which could limit enterprise development, this is of importance at both the micro and wider macro-policy levels. A qualitative methodology is used to explore the nature and dynamics of male and female entrepreneurial networks. Discussion of the findings focuses on the aspects of network quality where it has the potential to impact upon its value to the entrepreneur and his/her business. Patterns identified in the networks developed by male and female entrepreneurs are explored, and implications for policy and practice are considered.

This chapter considers the processes supporting dynamic agglomeration in the British broadcasting industry. It compares and contrasts the insights offered by cultural geography and more conventionally economic approaches. It finds that culture and institutions are fundamental to the constitution of production and exchange relationships and also that they solve fundamental economic problems of coordinating resources under conditions of uncertainty and limited information. Processes at a range of spatial scales are important, from highly local to global, and conventional economics casts some light on which firms are most active and successful in both domestic and international activities.

This chapter places previous incubator-incubation literature within a relevant geographic and policy context, and extracts the reasons for the wide-scale adoption of the incubator model as a new venture creation mechanism. Arguments developed highlight that in the flurry of political lobbying during the 1990s–2000s leading to the rapid expansion of incubators-incubation across the European Union (EU), policy makers, practitioners and researchers alike failed to focus on what is key to understanding incubators’ true impact — internal incubation processes. A review of incubator development and impact at the level of two EU member states, Germany and Italy, is presented. This allows for a clearer context-bound sense of the state-of-art in incubator-incubation research to emerge. In turn it becomes possible to clearly highlight the direction of further research in the area where there is a stalemate between two opposing camps — one which has produced evidence to suggest that incubators make a significant difference in reducing start-up risk, and the other, which believes incubators do not give tax payers value-for-money. Structured in this way, this chapter is able to draw attention to the essential ‘missing ingredient’ in previous research which is key to understanding the impact incubators can have. This ingredient is the dynamics of the internal process of incubation.

Recent developments in the competitive landscape of the management support software industry sub-sector — characterised by saturation, consolidation and defragmentation — have also attracted attention to the phenomenon of cluster formation. Layers of SMEs forming satellite systems centred on large players in this industry fill in structural holes in the competitive fabric of the market which are left open — at least temporarily — by the large ‘incubator’ company, while at the same time also acting as a type of capacity buffer or technology spearhead for the larger player which does not need to invest its own capacities into certain niches. This paper discusses the significance of clustering in the management support software sector and aims to offer explanations predicated on intangible constructs which may retrofit traditional agglomeration economies approaches. The findings of a pilot study corroborate the implications of clustering in relation to knowledge spillover effects, labour mobility, network formation, the generation of social capital, reputation building and effects of the urban ambience as factors potentially moderating the competitive environment within clusters vis-à-vis outside. Moreover, effects of the density of cluster labour pools and spin-off are considered. Simultaneously, the unique efficacy of these effects by means of mitigation of the idiosyncratic growth constraints affecting SMEs in this industry context — such as high levels of customer dependence, lack of legitimacy and the importance of reputation as well as customer references — is proposed.

Business incubators (BI) have been established worldwide as tools for company creation and small businesses support. BIs claim to help their tenants by providing them with the optimal conditions for increasing early stage survival and long-term performance. Practitioners and researchers agree that business support is a crucial feature of incubating businesses. Yet this is seldom researched. In this study we theoretically relate business support to help in solving problems and further investigate to what extent business incubators support their tenants overcome their developmental problems. Results show that tenants do not experience many problems and when they do business support is not necessarily sought. Furthermore, our data suggests that business support is not preferentially sought within incubator environments. When this happens, support provided by the BI does not contribute to problem solving. Finally, we discuss the impact of the type of BI on helping their tenants.

The focus of this chapter is assessment of effectiveness of support infrastructure for technology-based businesses. The chapter aims to examine the effects of physical infrastructure including incubators and science parks on the level of innovation activity and performance of new technology-based firms. It reviews evidence from Western countries comparing various assessments of the impact of science parks on the firms. The chapter is set to examine the development of the science park movement in Russia; it explores the empirical evidence from a case-study university in an attempt to analyse the shortcomings in present state of the support infrastructure in Russia from point of view of technology-based companies.

Today's academic literature on new technology-based firms is rather growth and success-oriented, despite the fact that many valuable lessons can be learned from failures. This study aims at contributing to our understanding of failure processes by documenting five case studies of spin-offs that originated from European universities. Within the framework of the resource-based view of the firm and social capital theory, the venture's resource base is used as a central element in explaining the failures through the presence or absence of certain resources or by inappropriate application. The analysis mainly illustrated the negative influence of the lack of a champion, poor market development, the absence of market(ing) experience in the venture team and an unbalanced shareholder structure. The relatively small financial base seems rarely to be the main issues in the failure process.

Valorization of research results is becoming increasingly important today. Since academic research should not only contribute to our “quest for fundamental understanding,” but it also needs to “consider use” (Stokes, 1997); these dual goals give rise to tension in academic institutes that need to carefully balance research and its exploitation (Ambos, Mäkelä, Birkenshaw, & D’ Este, 2008). Nevertheless, valorization, commercialization, technology transfer, knowledge exploitation or exploitation of research are different labels for a similar activity and have become part and parcel of academic life. Most universities own the intellectual property rights of their research, meaning they have the legal rights (in some countries the legal obligation) to exploit it in a way they see fit. Research (e.g., Van der Heide, S., Van der Sijde, P. & Terlouw, C. (2010). Exploring ‘transnational’ university cooperation in technology transfer: A European perspective. Industry & Higher Education, 24(1), 17–27) shows that universities have different objectives (e.g. regional development, spin-off creation) for engaging in this process and every university has developed its own approach to deal with this in the sense of funding and support. On an abstract level, there are two scenarios for commercialization (Derksen, J. T. P. (2000). De Ondernemende Onderzoeker: Paradox of Pleonasme [The entrepreneurial researcher: Paradox or pleonasm]. Nijmegen: UBC). In the first scenario the university takes the role of “entrepreneur” and in the second scenario it is the researcher (or the research group) who is involved in research that takes this role with the university being the context in which entrepreneurship takes place. In this contribution our focus is on the university as entrepreneur and we regard valorization as an entrepreneurial process. In order to visualize how the activities of different actors associated with the university contribute to the entrepreneurial process of a university, we will build on ideas postulated by Wakkee and Van der Sijde (2010) regarding the fluid and moldable nature of opportunities. We conceptually elaborate the consequences of their approach for bringing knowledge (and technology) from university to the market.

In this chapter we show how consultancy activities are essential in the learning processes of academic start-ups. Drawing on opportunity identification literature, prior experience and experiential learning, we develop a better understanding of the contribution of consultancy activities to manufacturing-oriented academic spin-offs. Two cases are investigated which show that, often undervalued, consultancy activities were central to the learning process of academic spin-offs and directly contributed to the identification of the entrepreneurial opportunity. We conclude with a consideration of the theoretical and managerial implications.