Initial resources' influence on new venture survival: a longitudinal study of new technology-based firms

Abstract

The emergence of new technology-based firms broadly and positively effects economic development. However, new organizations in general and new technology-based firms in particular, suffer from a ‘liability of newness’, and most emerging technology firms struggle to survive the first years of operations. The purpose of this study is to investigate to what extent the resources controlled by the entrepreneurs at the firm's inception affect the new organization's ability to survive the first years. Based on longitudinal data from 80 Norwegian and Swedish technology-based start-ups we seek to investigate whether resources embedded in the entrepreneurial team and the technology they intend to take to the market, affect the new organization's ability to survive. The results support the study's main hypothesis that initial resources do indeed affect a firm's ability to survive its adolescence. A heterogeneity in the functional experience of the founding team, and technology with a degree of radicalness, are especially prone to reduce the likelihood of firm failure. The results emphasize the importance of properly managing internal resources in the commercialization process, and intimate a path dependency a propos resource development in new technology-based firms. Implications for managers, policy-makers and further research are discussed.