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Technology resources, alliances, and sustained growth in new, technology-based firms

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2 Author(s)
D. J. Kelley ; Dept. of Entrepreneurship, Babson Coll., Babson Park, MA, USA ; R. A. Nakosteen

This research examines the relationship between technology resources, alliance formation, and sustained growth in new technology-based firms. We employ a three-dimensional measure of technology resources that includes the development and commercialization of technologies, and represents both a firm's initial resource foundation and its early actions to build on this foundation. Our analysis of 67 computer and telecommunications firms reveals that innovative first products are not associated with sustained growth, while patenting and product development activities are. This indicates that new firms cannot rely on their initial innovations for longer term advantage, but need to undertake follow up actions to build their technology resource foundations. In addition, while all three of the technology resource variables are positively associated with alliance formation, alliances, in turn, are weakly and negatively associated with sustained growth. The advantage of forming alliances has long been extolled, and it was assumed these benefits extended to new firms and those in technology-intensive environments. These findings suggest, however, that building, rather than accessing, technology resources is more critical to long-term growth for these firms. Our research provides convincing evidence that new firms should not be complacent about their initial success derived from innovative beginnings. They must turn their attention, early on, to building their technology resources internally, while exercising caution with respect to alliances.

Published in:

IEEE Transactions on Engineering Management  (Volume:52 ,  Issue: 3 )