Commercial exploitation of new technologies arising from university research: start-ups and markets for technology

The creation of start-up firms is an important method of commercializing new technologies arising from R&D at universities and other research institutions. Most research into start-ups presumes that these firms develop products or services. However, start-ups may operate through markets for technology by selling or licensing rights to use their technology to other firms – typically established firms – who develop and sell new products or services based on the technology. In this study of 57 public start-up firms created to commercialize the results of university research, we find evidence that (1) operating through markets for technology is a common approach to commercialization, (2) start-ups that operate in markets for technology can be effectively distinguished in practice from start-ups operating through product markets, and (3) there are substantive differences in the business activities of firms depending on whether they operate through product markets or markets for technology.     

The spatial configuration of the entrepreneurial support network for the semiconductor industry

This study is the first to examine the spatial location of different actors in the entrepreneurial support network for high-technology start-up firms. The actors included in this study are lead venture capitalists, independent members of the board of directors, investment bankers, and law firms. Using data based on 44 semiconductor initial public offerings, the geographical location of these newly public firms and the actors in their support network is mapped, and the spatial relationships between these firms and their network are examined. It was found that the geographical proximity between these actors and the firms they support varied significantly, with a firm's legal counsel being the most proximate, followed by investment bankers, venture capitalists, and independent directors.     

On strategic networks

In parallel with a theoretical acceptance of the importance of the laws of competition to formulate strategy, the realization is growing that cooperative behavior among firms is at the root of many success stories in today's management. This situation calls for an effort to develop a theoretical framework to study both aspects of firm behavior (cooperative and competitive) as compatible, complementary aspects of a unique reality. Indeed, the cooperative relationships of a firm can be the source of its competitive strength. This paper develops the concept of strategic network, as a tool to understand those cooperative relationships and their role in the strategy of the firm. There are three main tasks of the paper: first, to show that strategic networks are but a ‘mode of organization’; second, to study the economic conditions of existence of a network; finally, to analyze the conditions of existence of a network from the point of view of its internal consistency. In a final section some of the most obvious strategic implications of the framework are outlined.     

Learning to collaborate through collaboration: How allying with expert firms influences collaborative innovation within novice firms

Research summary : Strategic alliances have been recognized as a means for firms to learn their partners' proprietary knowledge; such alliances are also valuable opportunities for partner firms to learn tacit organizational routines from their counterparts. We consider how relatively novice technology firms can learn intraorganizational collaborative routines from more experienced alliance partners and then deploy them independently for their own innovative pursuits. We examine the alliance relationships between Eli Lilly & Co. (Lilly), a recognized expert in collaborative innovation, and 55 small biotech partner firms. Using three levels of analysis (firm, patent, and inventor dyad), we find that greater social interaction between the partner firm and Lilly subsequently increases internal collaboration among the partner firm's inventors. Managerial summary : Can collaborating externally advance internal collaboration? Yes. Our research found that collaboration among scientists at small, early‐stage biotechnology firms significantly increased after these firms formed highly interactive R&D alliances with a large pharmaceutical company known for its expertise in such collaboration. It is well known that alliances help new firms learn specific new technologies and commercialize innovations. Our study broadens the scope of potential benefits of alliances. New firms can also learn collaboration techniques, deploying them internally to enhance their own abilities in collaborative innovation. Managers should take this additional benefit into consideration in developing their alliance strategies. Pursuing alliance partners with expertise in collaboration and keeping a high level of mutual interactions with partner firm personnel should be important considerations to extract this value. Copyright © 2015 John Wiley & Sons, Ltd.     

Supporting new product commercialization through managerial social ties and market knowledge development in an emerging economy

While it has been advocated that the generation and application of market knowledge shape marketing capabilities to commercialize new products, the weak institutional environment makes access to critical market knowledge challenging in emerging economies. Critically, managerial social ties with business and political institutions may complement the firm’s market orientation (MO) to obtain market knowledge that is not available in the open market in emerging economies. This study draws attention to the differential roles of business and political ties in complementing or inhibiting the effects of market orientation on exploratory and exploitative marketing capabilities in one of the “Next Eleven” emerging economies, Iran. The results help firms operating in emerging economies to identify the conditions under which business and political ties help to overcome institutional limitations, complement market-oriented efforts, and successfully commercialize new products.     

Small firm births and macroeconomic fluctuations

Using different definitions of what constitutes a small firm, this paper analyses the effect of business conditions on the start-up of small firms. It is found that small firm births exhibit a pro-cyclical behaviour, irrespective of the threshold used to define a small firm. The smallest new firms, however, seem to be less responsive to the opportunity cost of capital. Finally, no relationship was found between entry of small firms and industry growth and profiability.     

Customer value propositions as interorganizational management accounting to support customer collaboration

New technology-based firms aim to create commercially successful products and services based on new technology. For example a startup company may be founded to commercialize a particular technology developed by a university. One of the key challenges is to identify which products and services are valuable for customers. However, the relevant knowledge is typically dispersed across the technology firm and potential customers. This study explores how, in this context, interorganizational management accounting may support companies to collaborate and integrate knowledge. First, drawing on business marketing literature, a customer value proposition is conceptualized as a form of interorganizational management accounting. Second, several case studies demonstrate how calculations of customer value were made by new technology-based firms, and they show that these firms had implemented particular offering changes that were informed by specific insights obtained from their calculations of customer value. Third, the study offers a theoretical lens for understanding the potential role of customer value propositions as integrating devices for managing knowledge across boundaries.     

Non-linear pricing and conscious consumption

We consider a duopolistic market in which a green firm competes with a brown rival and each firm sells two quality-differentiated products. We study optimal non-linear contracts offered by the two firms when consumers: (i) Are privately informed about their willingness to pay for quality, and (ii) differ in their environmental consciousness. We characterize how consumers with different valuations for quality self-select into firms and show that the ranking of qualities, relative prices and profits all depend on the interplay between consumers’ valuations and firms’ cost heterogeneity. Interestingly, when consumers’ valuations for quality are relatively low, the brown firm does not offer a low-quality variety. This contrasts with the situation of full information, in which both firms commercialize a high- and a low-quality variety. Hence, the lack of information about consumers’ valuations may not only favor the green firm in terms of higher prices and profits, but also reduce the product range offered by the brown rival.     

A process-based model of network capability development by a start-up firm

Start-up firms are notoriously resource and time poor. One way of addressing these deficits is to develop strategic capability to access, activate and co-shape resources with other firms in the start-up's network. The capability literature assumes such a development is inevitable, provided a start-up survives. But developing network capability depends on the managers of other firms, the deepening managerial understanding of business relationships, and the ability of the start-up managers to adjust to and understand interdependence in networks. We present a processual model of how managerial understanding of network capability develops, comprising of three parts each building on the earlier: (i) in relationships, (ii) through relationships and (iii) in the network. The model was inductively developed from a longitudinal study of a start-up firm. Also, two sensemaking processes were found to predominate – problem solving and social-cognitive processes. Our model highlights the role of the start-up manager in sensemaking with managers across a number of firms to resolve commercial problems. Thus, the independence many start-up managers seek must turn towards interdependence. Second, managers' temporal horizons and the specific temporal profile of events and activities inside the involved business relationships are important in understanding and developing, with other firms, network capability.     

Cooperative strategy and new venture performance: The role of business strategy and management experience

This paper reports the results of a study of new ventures which examine the relationships between performance and the experience of a new venture's management team, its choice of competitive strategy, and its use of various cooperative arrangements. The findings of the moderated regression analysis indicate that cooperative arrangements are most beneficial to those new ventures whose management teams possess the most experience.     

A Causal Model of the Impact of Skills, Synergy, and Design Sensitivity on New Product Performance

Notwithstanding the best efforts of outstanding managers, project team members, researchers, and consultants, no product development plan can guarantee success. Every new products organization will experience its fair share of failures, but a firm can take steps to ensure that its failures do not outweigh its successes. By benchmarking the competition, a firm can gain insight into best practices–the factors that lead most directly to new product success. To help identify these best practices, X. Michael Song, William E. Souder, and Barbara Dyer develop and test a causal model of the relationships among the key variables leading to new product performance. The proposed model identifies five factors that lead to marketing and technical proficiency: process skills, project management skills, alignment of skills with needs, team skills, and design sensitivity. According to the model, marketing and technical proficiency directly determine product quality, and ultimately lead to new product success or failure. The causal model was tested using information on 65 completed projects–34 successes and 31 failures–from 17 large, multi-divisional Japanese firms. The study participants develop, manufacture, and market high-technology consumer and industrial products. These firms judged the success or failure of the projects in this study by using seven criteria: return on investment, profit, market share, sales, opportunities for technical leadership, market dominance, and customer satisfaction. These firms generally assigned the greatest importance to customer satisfaction, opportunity creation, and long-term growth. For the most part, the responses from these firms support the relationships presented in the causal model. According to the respondents, marketing proficiency and product quality have a strong, positive influence on their new product performance, as do process skills, project management skills, and alignment of skills and needs. The responses highlight the importance to these firms of responsiveness to customer wants and needs, as well as ensuring a close fit between project needs and the firm's skills in marketing, R&D, engineering, and manufacturing. Somewhat surprisingly, the responses do not support the model's suggested relationships between skills/needs alignment and technical proficiency or between technical proficiency and product quality.     

New Product Strategy, Structure, Process, and Performance in the Telecommunications Industry

A continuous flow of new products is the lifeblood for firms that hope to remain competitive in high-technology industries such as telecommunications. Faced with rapidly shrinking product life cycles, these firms must aggressively pursue the quest for more effective new product development (NPD). Ongoing success in such industries is dependent on choosing the right mix of new product strategy, organizational structure, and NPD processes. Rather than considering the interrelationships among these success factors, however, most previous studies of NPD have examined these issues individually. This shortcoming is compounded by the fact that past studies of NPD have typically cut across industry lines. Gloria Barczak addresses these problems by proposing that a firm's choice of new product strategy, structure, and process are interrelated, as are the effects of those choices on NPD performance. Because these choices and their effects also may be dependent on the unique characteristics of the industry in which a firm competes, her study focuses exclusively on firms in a specific, high-technology industry, telecommunications. The study finds that no single NPD strategy, in and of itself, stands out as being better than any other for the telecommunications industry. Instead, it appears that a company's focus should be on ensuring the best possible fit between its chosen NPD strategy and its corporate goals and capabilities. In keeping with the current focus on cross-functional teams, the study results indicate that project teams and R&D teams are the most effective means for organizing NPD efforts in the telecommunications industry. Perhaps not surprisingly, R&D teams are more important for first-to-market firms than they are for fast followers and late entrants. An R&D team provides the technical skills necessary for playing the role of pioneer. Regardless of the firm's NPD strategy and structure, the presence of a product champion is an important element in the success of new product efforts. In an era of rapid, technological advances, idea generation and screening efforts are essential to the success of telecommunications firms. To ensure that they do not fall into the trap of introducing technology for technology's sake, pioneering and fast-follower firms in particular must recognize the importance of staying in touch with their markets. Such market-oriented activities as customer prototype testing and concept definition and testing can help these firms ensure that their technological developments are in line with customer needs and requirements.     

The organizational adoption of high-technology products “for use”: Effects of size, preferences, and radicalness of impact

This research reports the results of a study on organizational adoption of high-technology products “for use” in contrast to “for manufacture.” Additionally, the study examines high-technology adoptions which often have different issues that are important to the decision process relative when compared to the adoption of less-technical products. For example, the level of compatibility or the availability of complementary products (e.g., network externality considerations) are often important issues for high-technology adoptions. As such, this study provides additional information in the relatively underresearched organizational adoption literature, particularly as it relates to high-technology products. In order to maintain connectivity with past work, we look at the firm size versus adoption issue. At the same time, we add new information by also examining how organizational preferences for products, and the degree of radicalness of the products affect organizational adoption. We use a proportional-hazards model to test our hypotheses using panel data on 400 firms that are drawn from 14 industries. As part of the research effort we developed an improved scale for judging the radicalness of a product than has been used in prior research. Furthermore, we extended the Booz, Allen, & Hamilton New Product Categories (1982) approach to incorporate innovation impact. As expected, the results show that size “does matter,” but that it is modified by degree of product radicalness and organizational preference. Interestingly, we found that for high-technology products “for use,” organizations prefer radical impact products but adopt incremental impact products. Hence, preferences and purchase behaviors do not match.     

Market Vision and the Front End of NPD for Radical Innovation: The Impact of Moderating Effects

“Market vision” is a mental model that helps focus the organization on a new market application for an advanced technology during the fuzzy front end of the new product development process. Previous research demonstrates that firms involved in the development of radically new, high‐tech products need to develop a market visioning competence (MVC) in order to develop an effective market vision (MV), and these capabilities, in turn, have been found to have a positive effect on key aspects of the early performance (EP) of these firms—specifically, the ability to attract capital and early success with customers. Based on a major empirical study of the nanotechnology sector, the research described in this paper takes an important step forward by focusing on factors in both the external and internal environment of the firm, and their moderating impact on the paths that link MVC, MV, and EP. External structural factors relevant to the firm's competitive environment as well as internal factors, including firm resources, size, incumbency, and technology, are shown to have significant moderating effects both on the way in which MV unfolds and on its capacity for affecting positive returns for the firm when undertaking radical innovation. Five of seven hypotheses were supported by the research. Both level of incumbency (the extent to which the firm has taken part in previous generations of a given technology) and resource availability are shown to positively impact the link between MVC and MV. Also, appropriability (i.e., protection for innovations) and reputation of the firm were found to positively impact the path to EP. Finally, a low level of industry concentration—that is, a large number of small firms—were found to have a positive effect on the path to EP. In sum, the findings support the structure of the model and the majority of the hypothesized moderating relationships, suggesting important implications for management.     

How New Product Introductions Affect Sales Management Strategy: The Impact of Type of "Newness" of the New Product

How do firms adjust sales management strategy for new product launch? Does sales management strategy change more radically for different types of new products such as new‐to‐the‐world products versus product revisions? Because firms introducing a new product rely considerably on their sales force in the product launch effort, the types and degree of changes made in managing the selling effort are important issues. Past studies have demonstrated that firms make substantial adjustments in their sales management strategy when they introduce a new product. This study expands on previous investigations by examining whether sales management strategy changes are conditioned by the type of newness of the new product to the market and to the firm. Australian sales managers were asked to respond to a mail questionnaire concerning pre‐ and post‐new product launch sales management activities. Three groups of firms were compared: (1) those with new‐to‐the‐market and new‐to‐the‐firm products (i.e., new‐to‐the‐world products); (2) those with products new to the firm but not new to the market; and (3) those with products that are revisions to the firm and not new to the market. The study finds that firms do not make the most adjustments for products with the greatest degree of market newness—the new‐to‐the‐world types of products—except in the sales management strategy categories of compensation and supervision. In the other sales management strategy categories defined for study—organization, training, quotas and goals, and sales support as well as for all categories in the aggregate—sales management strategy changes were greatest in incidence, as measured both by the percent of firms making changes and the average number of changes per firm, when the new product was new to the firm but not new to the market. These results suggest that, because different types of new products face different competitive environments, there may be greater incentive for a not‐new‐to‐the‐market new‐to‐the‐firm product to make changes in sales strategy. Uncertainties about market size and customer location with new‐to‐the‐world products may limit the understanding of what changes to make in the strategy categories of quotas and territories. Similarly, uncertainties about product use and customer acceptance of new‐to‐the‐world products may limit the development of training and sales support materials by these firms. Instead, these firms may rely more on compensation and supervision to direct sales efforts for new‐to‐the‐world products. However, observing the market experience and performance of the first‐to‐market product can benefit firms launching a not‐new‐to‐market and new‐to‐the‐firm product, allowing them to rely more on strategy changes in training, sales support materials, organizational adjustments such as redeployments, and quotas.     

Lessons in product innovation: A case study of biotechnology firms

Firms that are able more quickly than others to add value through product development will be the winners in technology-based industries. This paper examines value-added progress by contrasting four agricultural biotechnology firms that have managed to create value with one that failed to do so. Lessons were induced for new firms struggling to develop products in emerging industries such as biotechnology. The following findings emerged from manager interviews and secondary data. In contrast to the ‘progressive’ firms, the failed firm neglected to develop a clear product-market focus, complementary skills outside its core technology, and relationships with universities and government. These contrasts seemed to stem from differences in the financing arrangements and the level of organizational politics. The failed firm received a generous one-time funding and had a relatively high level of politics, whereas the funding of the progressive companies was tied to performance milestones and little politicking took place. The reasons for organizational politics are discussed.     

Ordered to Innovate: A Longitudinal Examination of the Early Periods of a New Product Development Process Implementation in a Manufacturing Firm

Firms can generate rather long‐lasting growth spurts through continuous innovation. Moreover, literature suggests that, when growing organically, firm performance is enhanced through a revenue expansion emphasis encompassing new‐to‐the‐world or new‐to‐the‐firm physical goods or service augmentations. This organic approach usually outperforms cost‐reduction programs, which often yield minor improvements to existing products; or an emphasis on simultaneous revenue expansion and cost reduction. While this finding has the major implication that firms should focus and generate more radical new products for long‐term success, there is need for research that investigates how firms should implement the strategy change to organic growth via innovation. The authors present a case study, which suggests that in the short run, it might be better to commence a revenue expansion strategy by focusing on incremental new product development (NPD) efforts, rather than focusing too much on new‐to‐the‐world or new‐to‐the‐firm products. Moreover, analyses of the rich, multimethod data, collected over a two‐and‐a‐half‐year interaction with the focal firm, illustrates that to increase success prospects of an organic innovation strategy, managers should not only engage incrementally innovative new product projects initially, but also ensure proficiency in commercializing the new product with cross‐functional NPD teams. Thus, in early stages of organization transformation, the merits of the organic growth strategy will be swiftly demonstrated, the cross‐functional teaming skills are learned and tested, and the new strategy becomes institutionalized. While somewhat contradictory to other studies on this topic, this more evolutionary exploration provides a new perspective for organizational change, especially when a firm is ordered to innovate. In conclusion, the insights gleaned in this study shed light on the journey from stagnating firm to a successful serial innovator via formalized NPD process implementation.     

Strategic orientations and new product commercialization: mediator,moderator, and interplay

Why are some firms more successful at commercializing new products than others in emerging economies? It is possible that the strategic orientations, which firms adopt as a type of business strategy, lead at least partially to the superior performance of the new products they introduce to the market. Strategic orientations facilitate a match between firm strategy and resource endowment, on the one hand, and the adaptation to market conditions, on the other. In this paper, we empirically test whether four major types of strategic orientations (market orientation, technology orientation, entrepreneurial orientation, and networking orientation) are simultaneously related to new product commercialization performance using data collected from China. We find that strategic orientations are positively related to three aspects of new product commercialization, namely new product advantage, new product newness, and number of new products introduced to the market. Interestingly, we find that pairs of strategic orientations support each other in exerting their impacts on new product commercialization performance. In addition, we find that organizational learning mediates the effects of strategic orientations on new product commercialization and that environmental dynamism moderates the effect of strategic orientations on new product commercialization. We obtain the valuable insight that a firm's successful commercialization of new products hinges upon the development of critical yet complementary sets of strategic orientations, especially in a dynamic business environment.     

Identifying Technology Commercialization Opportunities: The Importance of Integrating Product Development Knowledge

New product development (NPD) is a knowledge‐intensive activity, perhaps even more so in recent years given the shift toward more open innovation processes, which involve active inward and outward technology transfer. While the extant literature has established that knowledge is critical for NPD performance, knowledge generated through NPD can have an additional impact on external technology exploitation—as when firms go beyond pure internal application of knowledge to commercialize their technologies, for example, by means of technology outlicensing. Grounded in the knowledge‐based view of the firm, this paper examines how the integration of domain‐specific knowledge, procedural knowledge, and general knowledge generated through NPD affects a firm's proficiency in identifying technology commercialization opportunities. Additionally, analysis of how technology opportunity identification relates to technology commercialization performance is provided. Empirically, the paper draws on survey data from 193 Swedish medium‐sized manufacturing firms in four industries active with NPD, and regression analyses and structural equation modeling were used to test the hypotheses. The results highlight the importance of integrating domain‐specific and general NPD knowledge to proficiently identify technology licensing opportunities. The empirical findings also provide strong support for a subsequent link between technology opportunity identification and technology commercialization performance. Altogether, these results point to strong and previously unexplored complementarities between inward and outward technology exploitation, that is, between NPD and technology licensing. As such, the results provide important theoretical implications for research into the fields of knowledge integration, technology exploitation, opportunity identification, and technology markets. Moreover, the results have significant managerial implications concerning how knowledge generated through NPD can help firms to achieve both strategic and monetary benefits when trying to profit from technology. In particular, to set up proficient technology commercialization processes, it appears beneficial for firms to integrate knowledge that is gained through the ordinary activities of developing and commercializing products. Specifically, the integration of domain‐specific knowledge and general knowledge helps firms to match their technologies with new applications and markets, which is often the critical barrier to successful technology commercialization activities. Managers are thus encouraged to integrate domain‐specific knowledge and general knowledge from NPD to reap additional benefits in profiting from investments in innovation and technology.     

Product Growth Strategies in Young High-Technology Firms

This article presents an analysis of the strategies, business practices and growth patterns of 68 small, young, high-technology firms. These firms manufactured high-technology goods or produced advanced computer software products, had at most 100 employees and reported under $30 million in annual sales. In reporting the results of her study, Teresa Pavia writes that neither a technological growth path (new products to existing customers) nor a market-expansion growth path (existing products to new customers) is superior. Practices that minimize strategic dependencies and produce a high-quality product that suits the customer's needs directly (needing no further modifications after the sale) are associated with success. Firms that have used market expansion to grow demonstrate higher levels of systematic planning and describe their industry as rapidly changing. Furthermore, they describe themselves as technologically innovative and their customers as well informed about the products they buy.