Firm Resources, Complementary Assets & Survival: Lessons from the Solar Energy Venture Capital Boom

Abstract

This study develops and tests a set of novel theoretical predictions about the conditions under which key resources undermine new venture success. To do this, we revisit the presumption of investment in core technology innovation and complementary assets in a nascent and rapidly growing industry. Drawing on insights from control of complementary assets and innovative business models, we suggest that key resources for the boom period of industry emergence do not necessarily lead to greater rewards during the industry shakeout. Our empirical analysis of exit of new ventures in the solar energy sector supports our approach: startups with core domain positioning, venture capital investment, and technological innovation are less likely to survive and to exit successfully during the period of industry shakeout. Highlighting an understudied paradox in practical settings, this study offers several contributions to knowledge of firm resources and complementary assets, and motivates new lines of inquiry in technology and business model innovation.