Dynamic capabilities and the Growth of Technology based

New Ventures (2006)

Florin Thomas Strehle
Leiden University.

Contribution to Theory
This dissertation contributes to theory in two different forms. First, I
contribute to the concept of dynamic capabilities. Although accepted
as important, the framework has been subject to various points of
critique. Different scholars (e.g., Henderson and Cockburn 1994; Foss
1999; Williamson 1999; Priem and Butler 2001) argue that the
framework is tautological, non-operational, theoretically vague, and
lacks empirical grounding (Eisenhardt and Martin 2000; Barney 2001;
Blum 2004). Although many scholars refer to the concept for
empirical research, most of them use it rather to establish the context
than to underpin the concept directly. However, some empirical work
(e.g., Henderson and Cockburn 1994; Makadok 1999) constitutes very
concrete tests of the framework (Barney 2001).
In this dissertation, I operationalise the concept of dynamic
capabilities to apply it to the growth processes of entrepreneurial
firms. First, I identify the different capabilities that are required in a
start-up company and thus address the criticism that the concept is
non-operational. In addition, I contribute to the theory by describing
the evolution of dynamic capabilities in entrepreneurial ventures.
Finally, I enrich the strategic management framework by providing
empirical grounding through the multi-method, multi-case field
research described in the previous chapter.
The second major contribution to theory focuses on the field of
entrepreneurship research. By applying the concept of dynamic
capabilities, I develop a framework that allows the tracking of the
growth processes of technology-based new ventures over time. I
identify differences in the growth processes of start-up companies
and link these characteristics to performance.

Contribution to Practice

The practical contribution of this dissertation addresses entrepreneurs

as well as investors, universities, incubators, venture coaches, and
consultants. By identifying the different capabilities that are needed
to grow a technology-based new venture, business founders realise
which capabilities they have to develop to be successful as
entrepreneurs. Management teams could either invest in learning to
develop the required knowledge or hire additional managers to
complete the team and thus close the skill gaps. In addition, training
could be another means of skill development.
The contribution to entrepreneurial education at universities goes in
the same direction. The curriculum and the teaching material could
be adapted to the respective needs of business founders and
management teams. The advantages of this study for investors,
consultants, coaches, and incubators are similar. All these entities
support entrepreneurs with their start-up companies and could
benefit from this dissertation because they could

Summary:

Theory
What Why How

To operationalize the To address the issue By identifying the

concept of Dynamic that the concept is different capabilities
capabilities and apply non-operational that are required in a
it to the growth start-up company
process of
Entrepreneurial firms

Describe the To understand the Multi-case field study

evolution of Dynamic process better in a
capabilities in an Start-up
Entrepreneurial Firm
Provide an empirical Testing the theory Multi-method , Multi-
basis for case study
understanding
Dynamic capabilities

Practice

What For whom

How Why
The different Entreprene
identifying the For business
dynamic urs, different success
capabilities Business
capabilities that
required to grow Founders,
are needed to
a technology Investors
grow a
based start-up technology-based
new venture
How type of Venture By acquiring new Performance
actions are Coaches, skills or closing
needed to help Consultants the skill gaps
start-up to take
advantage of
Dynamic
capabilities
Entrepreneurshi Universities Dissemination of Increasing start-
p Education new knowledge up rate.

Entrepreneurial strategy-making mode and performance: A

study of the newspaper industry (2009)
Aldo Van Weezal
Jonkoping International Business school, 2007

Contributions to theory

This study makes several contributions to the fields of strategic

management, corporate entrepreneurship, and media management.
First, the relationship between an entrepreneurial strategy-making
mode and performance is still being explored to better understand
how they relate to each other under different circumstances. This
research will test the relationship in the context of a mature industry
undergoing profound changes to its business model, as it is the case
of the newspaper industry. The context considers environmental and
organisational dimensions, which together will provide a richer
understanding of the phenomenon. Second, the entrepreneurial
strategy-making mode is understood in this study as a series of
dimensions that guide decision-making at the strategic level of the
firm. This study will rely on several measures of managers’ attitudes,
some of them not tested yet according to the extant literature. This
addition allows to better model a firm’s entrepreneurial behaviour.
Third, the testing of the relationship between entrepreneurial strategy
making and performance has been done mainly through contingency
models, i.e. two-way interactions. Guth and Ginsberg (1990) suggest
that empirical research is needed on the combined effects of
strategy, organisational structure, processes and core values/beliefs
on corporate entrepreneurship. In the same vein, Short, Payne and
Ketchen (2008) claim that configurational research still has much to
contribute to entrepreneurship, and in particular the concepts of
entrepreneurial orientation. This study will contribute to the stream of
research that uses a configurational model by means of the analysis
of three-way interactions. Dess, Lumpkin, and Covin (1997) and
Wiklund and Shepherd (2005) are among them. While the former
centres its analysis on the interplay among entrepreneurial strategy
making, strategies and environment, the latter focuses on
entrepreneurial orientation, access to capital and environmental
dynamism in a sample of small businesses. Fourth, this study
explores the dimensions of an entrepreneurial strategymaking mode
and how they are shaped in the context of newspapers by analysing
three case studies that deepen our understanding of the complexities
of the interrelations among these dimensions, the changes in the
structure of the organisation, the competitive environment, and the
firm’s leaders. Fifth, the focus of this study is the entrepreneurial
behaviour that enables strategic renewal. Although the literature
recognises strategic renewal as an important form of corporate
entrepreneurship (Covin and Miles, 1999; Kuratko and Audretsch,
2009), empirical studies examining their impact on performance are
scarce. This piece of research helps reaching a better understanding
of the phenomenon by drawing on quantitative and qualitative data.
Finally, the literature on media management has barely developed an
understanding of the nature of entrepreneurship in media companies.
This study will help to bring the discussion forward, highlighting the
importance of entrepreneurial behaviour on a changing media
landscape. In particular, this study will deepen our understanding of
the organisational changes taking place in newspapers and their
impact on performance. Given these reasons, some aspects of the
results of this study may also be relevant to other mature industries
facing uncertain future because of technological and market changes
which the industry’s traditional strategy modes cannot handle.

Contributions to methodology

The mixed method approach employed in this study is unusual in

management research. While most published works adhere to either
the quantitative or qualitative method, I combine both in a sequential
design. Although this type of research method usually requires more
resources to be completed – not only in financial terms but also in
time – it offers the possibility to address the research questions from
a different angle thus contributing to strength conclusions. The
weaknesses of each method may to a certain extent be overcome by
using two distinct methods in one research. Thus, once hypotheses
have been tested in the quantitative part, the case studies may be
particularly useful to create knowledge that is relevant for managers
(Gibbert, Ruigrok and Wicki, 2008). Furthermore, case studies have
been advised for inquiring on corporate entrepreneurial activities in
order to avoid researchers to make overly simplistic assumptions
(Dess, Lumpkin and McGee, 1999).

Contributions to practitioners

Management research should also be of interest to practitioners. This

study may help newspaper managers who want to understand how an
entrepreneurial attitude in strategy-making is beneficial to them and
under what circumstances. Traditionally, managers see
entrepreneurship as a concept related to nascent ventures and self-
employment. However, corporate entrepreneurship is being
developed to connect the ideas of entrepreneurship with the
particularities of larger companies. On the one hand, this study will
identify those characteristics of an entrepreneurial behaviour that
better serve to improve the performance of established firms. On the
other hand, the models that will be explored in this study –the
configurational models- will shed light on the particularities of
different contexts revealing the impact of environmental and
structural variables on the relationship between strategy and
performance. Because this study focuses on the newspaper industry,
the structural variables are tailored to measure some of the main
transformations that newspapers are suffering from nowadays. The
results, thus, will be of interest to those who are responsible for
change because these changes are often guided only by intuition and
the experience of others. In particular, the qualitative analysis of
three case studies will shed light on the practicalities of
entrepreneurial behaviour in different contexts.

Theory

What Why How

The relationship To explore new By testing the

between an relationship in a new relationship in the
entrepreneurial context( the context of a mature
strategy-making newspaper industry) industry undergoing
mode and profound changes to
performance its business model

The process of To identify measures Using measures of

entrepreneurial which has not been managers’ attitudes,
decision making. explored in the some of them not
literature tested yet according
to the extant
literature
A new perspective to Extant research uses Using three additional
strategy making mainly Contingency constructs
using a three way approach ( Entrepreneurial
configurational Orientation, access to
model. capital and
environmental
dynamism)

Methodology
What Why How

Using multi-method Most research uses First using

research only one method- quantatitive methods
methodology either quantitative or followed by
Qualitative qualitative case
studies to understand
the richness and
uniqueness of the
phenomenon

Practice

What For whom How Why

The importance Managers By informing To increase
of in the about the best performance
Entrepreneurial Newspaper practices, which
attitude in Industry are not based on
strategy intuition or
making. experience.
 Innovations in New Firms: Examining the role of knowledge
and growth willingness
Alexander Mckalvie
Jonkoping International Business school , 2007

Intended contributions

With the purpose of the research clarified, I now turn to the specific
intended ontributions of my work. As for any academic research
study, there should be a number of contributions made to the salient
literature. In addition, for research within Business Administration, it
is also important to have implications for practitioners; this provides
some benefit to the managers who take their time to participate in
the research, but also implies that there are lessons learned that can
increase the performance of firms.

Contribution to theory

This dissertation contributes to the academic literature in two main

ways. The first is that I investigate the role of knowledge-based
capabilities, growth willingness and innovation in new firms. This is
important for two reasons. To begin with, this area is generally
understudied, despite the fact that the underlying issues are of prime
interest to scholars from a variety of fields and to practitioners.
Research has shown that innovation is a precondition for new firm
growth (e.g. Brüderl & Preisendorfer, 2000). Yet there are only a few
studies that examine these issues. Lynskey (2004) studied the
characteristics of Japanese start-ups and their innovative activity.
Heirman and Clarysse (2004) looked at intangible resources and
innovation speed in new firms, while Deeds, DeCarolis and Coombs
(1999) considered the geographic location and publishing records as
links to innovation. Lee, Lee and Pennings (2001) remain the main
study that I have found where the focus was on capabilities. However,
they looked at new venture performance, not innovation. Therefore,
we have limited knowledge of these issues in new firms. Trying to
understand the internal factors and behaviours of new firms and their
subsequent outcomes on innovation are important for comprehending
new firms growth and performance. Studying new firms also provides
the opportunity to test the boundary conditions of existing theory. As I
noted earlier, the vast majority of studies looking at knowledge,
capabilities and innovation have focused on large, established firms.
These studies subsequently exclude many of most relevant
characteristics of new firms. Of prime interest is the effect of growth
willingness on capabilities and innovation. However, other internal
issues, such as age, size, ownership, and perceived external task
environments (i.e. market and technological dynamism), also
fluctuate greatly among new firms. Covin and Covin (1990) observe
that, “the simple fact that researchers study new ventures implies
that age effects can be significant” (p. 39). As a whole, taking into
consideration the distinctive issues of new firms, which I do, allows for
increased testing of the viability of our existing theories of
entrepreneurial behaviour, especially in dynamic markets. The second
contribution that I make is that I empirically unpack the appropriate
concepts involved in the literature on knowledge-based capabilities
and innovation. This contribution is based upon three foundational
contributions. Firstly, I define and empirically measure knowledge
acquisition, knowledge assimilation, knowledge transformation, and
knowledge exploitation and their effects on innovation. Hereto few
empirical studies capture these firm-level actions and their effect on
innovation in a manner that allows for probability analysis. This study
may therefore be seen as attempting to open the “black box” of
capabilities and innovation with a large-scale quantitative study. This
implies testing how well our existing theories work. Secondly, I
examine the inter-relationships between knowledge-based
capabilities. Instead of assuming that the knowledge capabilities
merely have direct impacts on innovation, I try to embrace the fact
that there may be a sequential ordering to this. Zahra and George’s
(2002) conceptual article provides input into the notion that there is a
process involved. I test this. Thirdly, I make a distinction between
market and technological knowledge within this process. These are
conceptually different. There has been a tendency to prioritise one of
the approaches depending on the research traditions of researchers
(e.g. Marketing researchers on market knowledge, technology
management researchers on technological knowledge). By
(consciously or unconsciously) looking at only one type of knowledge,
the inherent differences between the two types are ignored. The few
studies that do take both of these into empirical consideration are
frequently qualitative in nature (e.g. Danneels, 2002) and therefore
are devoid of statistical estimations. My contribution to the literature
on knowledge-based capabilities and innovation is aided by my choice
of studying new firms. A number of researchers have suggested
studying capabilities in new ventures as they often provide the
opportunity to gather information from someone with full knowledge
of the firm, and it is therefore easier to assess relationships between
variables within these firms (Sorensen & Stuart, 2000; Autio, Sapienza
& Almeida, 2000). For instance, the inherent size and complexity of
established firms is removed; new firms are much simpler to study,
relatively speaking (Kazanjian & Rao, 1999). This should allow for a
closer understanding and observation of the capabilities at work.
Spender and Grant (1996) note that the “variables which are most
theoretically interesting are those which are least identifiable and
measurable” (p. 8) Studying new firms simplifies part of this difficulty.
Furthermore, some researchers have argued that innovation in new
firms should be studied as new firms are less hindered by such
restrictive issues as incumbent inertia, core rigidities, and
competence-destroying innovation (e.g. Katila & Shane, 2005,
Leonard-Barton, 1992). In sum, this study contributes both increased
theoretical understanding of new firms but also a different lens
through which to examine important but difficult to capture empirical
issues.

Contribution to practice

There are naturally implications of this research to managers and

other practitioners. The first and primary contribution is the value in
clarifying the differential effects of the various knowledge-based
capabilities on innovation. Of particular interest for managers is the
effect of the different types of knowledge acquisition and
transformation practices that take place within the firm. Often,
managers are not familiar with the varying outcomes of certain firm-
level activities and benefits of diverse sources of knowledge. The
findings that I present provide managers with help in deciding where
and how they can invest their time and effort, assuming that they
want to innovate. Ethiraj, Kale, Krishnan and Singh (2005) argue that
all firms must invest in the increased usage of capabilities if the firm
is going to survive. Thus knowing what types of capabilities facilitate
innovation is worthwhile. It is important to bring these effects to light
for firms whose intention is to innovate and grow. I also tailor these
implications to managers of new firms. This is an important distinction
as much normative advice is dedicated to managers of large,
established firms. I have already argued that new and primarily small
firms may not be subject to many of the same issues as their more
established counterparts. This contribution may also be extended to
venture capitalists, parent companies and others who would be
interested in seeing new firms continue to flourish and be innovative.
For owners, identifying factors that can lead to the increased
capability of the firm to innovative may allow the firm to deliberately
acquire or develop these capabilities. That is, the findings may help
owners with a description of activities that the firm should engage in
order to increase their internal capabilities and external output. For
policy makers, the appropriate support mechanisms and opportunities
can be put into place within society to help new firms refine the
necessary capabilities. To note is that I am chiefly and foremost
interested in the internal activities of the firm. Therefore, I do not
necessarily intend or aspire to provide a contribution as to how
specific policy makers can develop legislation or regulations for how
society can increase the ability of firms to innovate.

RESOURCES, INDUSTRY MEMBERSHIP, AND FIRM

PERFORMANCE: THE ROLE OF CAPABILITY
 CONFIGURATIONS IN VALUE CREATION FOR IPO-STAGE
NEW VENTURES
Tim R Holcomb
Mays School of Business
Texas A & M University , United States

Abstract

A widely held belief is that resource constraints and industry conditions can threaten the
performance of entrepreneurial ventures. While previous research links resources to different
performance outcomes, no research has explored the performance implications of resource use,
especially for new ventures. Building from resource-based theory and contingency theory, we
examine indirect (through capability formation/use) effects that occur within the ‘black box’
between resources and performance for a sample of entrepreneurial firms undertaking an IPO.
Further, we extend theory in an entrepreneurial context to explain how underlying routines
allow resources to be managed for greater value across different industries—conditions that
make resources valuable in some contexts and not in others.

Expected Contribution.

1. Why resources alone may not be valuable for performance.

2. How routines can be used to enhance the value of organizational resources .

Innovation in New Firms: Examining the role of knowledge and

growth willingness

By
ALEXANDER McKELVIE
Jonkoping International Business School, 2007

Executive Summary
Innovation is an important means of competition and growth for new
firms, especially in industries where customer demands and
technology are fast changing. Surprisingly, little is known about how
new firms acquire and use knowledge in the pursuit of innovation.
Previous research has prioritised large, established firms, and
therefore overlooked many central issues for new firms, such as their
willingness to grow. In addition, the methods employed in previous
research (e.g. case studies or proxy measures for key concepts) do
not truly capture the in-depth behaviours underlying how firms
acquire, assimilate, transform, and exploit their knowledge. This
dissertation attempts to fill these research gaps by examining the role
of knowledge and growth willingness on innovation using a
longitudinal study of over 300 new firms in the Swedish TIME sector
(Telecom, IT, Media, and Entertainment). The results indicate that the
innovation of new firms is largely explained by the firms’ knowledge-
based capabilities and growth willingness. The detailed empirical
findings also help to open up the “black box” relationships among
different capabilities and types of knowledge (e.g. market and
technological) in order to understand how these factors work together
to increase innovation. Furthermore, the results show that growth
willingness and the technological dynamism of the industry work as
causal factors in the deployment of capabilities. This has implications
as to intentionality in the development of capabilities and absorptive
capacity in new firms. In sum, this dissertation provides novel insights
into the value creation activities of new firms and to research
concerning knowledge, capabilities, absorptive capacity and
Entrepreneurship.

Intended Contribution

To fill a research gap in the area of the role of knowledge and

knowledge acquisition on Growth of New Firms.