The role of clustering in the growth of new technology-based firms

This study analyses the relationship between clusters and the growth performance of new U.S. technology-based firms. It is argued that firms benefit because clustering provides access to specialized resources that cannot be developed internally. The empirical results indicate that distance from a cluster is negatively related to growth, but clustering has a greater positive impact on biotech firms. Proximity to a cluster within a diverse metropolitan area is associated with superior growth performance only for firms that rely heavily on broad, downstream supply chain effects (that is, for information and communications technology firms).     

Radical innovation through internal corporate venturing: Degussa's commercialization of nanomaterials

Internal corporate venturing enables radical innovation within established firms in mature markets. Without effectively designed and managed internal corporate ventures, the organizational constraints of established firms will strongly favour incremental innovation over radical innovation. This paper investigates the evolution of a successful internal corporate venture within a large, incumbent chemical firm, now known as Evonik Degussa, to reveal the challenges, organizational design, and management strategies of their commercialization of radical nanomaterials technology. The commercialization of nanomaterials technology is of great interest to incumbent materials and chemical firms and to independent ventures, but the radical, generic, and capital intensive nature of nanomaterials technology requires organizational and managerial innovation. This case study demonstrates a model to enable growth through radical innovation in nanomaterials, while taking advantage of an incumbent firm's capabilities and complementary assets. Organizational strategies include incubation from a risk-adverse culture, relatively long timelines for evaluation, and a high-level steering committee. Managerial strategies focus on product development, risk reduction, and active risk management.     

Operational risk management and regulatory investment constraints on portfolio allocation: evidence from property and casualty insurers

Journal of Regulatory Economics - We examine an insurer’s portfolio allocation choice in the context of a regulatory environment where investment in specific asset classes is constrained. We...     

Process-based vs. product-based innovation: Value creation by nanotech ventures

Nanotechnology is frequently heralded as the next wave of technological advance, poised to enable radical innovation across many industries. But as yet little is known about how firms will ultimately create that value. We do know that nanotechnology is based on process innovation, a category of innovation less well understood than product innovation. And we know that new ventures are an important vehicle for commercializing radical technology. As new ventures seek to commercialize nanotechnology, they evolve value creation strategies to better link fundamental scientific advance with the creation of value for users and investors. This paper asks “How do the successful value creation strategies of technology ventures differ in process vs. product-based innovation?”An investigation of 12 ventures representing the extremes of value creation through process-based (nanotech) and product-based (fuel cell) innovation reveals significant differences in their value creation challenges, in the mechanisms of technology–market matching and alliance building, and in their levels of experimentation. Ventures exploiting process innovation faced greater uncertainty in their value chain positioning, market breadth, customization, and the changes required of their customers in contrast to product-based ventures. Our evidence shows that nanotechnology ventures benefit from prioritizing technology–market matching, alliance building and experimenting with technologies in new value networks.