High-tech Ventures Research Articles

Human and social capital and ethnically diverse founding teams in high-tech industries

AbstractThis paper investigates the impact of ethnicity within founding teams of high-tech ventures and asks whether such diversity confers advantages or disadvantages. Drawing on theories of human and social capital, we aim to illuminate the potential benefits of ethnic diversity in founding teams, with a particular focus on the roles played by ethnic and industry contexts. Our analysis encompasses data from 1,217 Israeli high-tech ventures operating between 1996 and 2015, spanning two key industries: life sciences (LS) and information technology (IT). We systematically evaluate the characteristics of these ventures across various dimensions of human and social capital, comparing those with ethnically diversity founding teams—including both Jewish and Arab members—with those characterized by ethnically homogeneous teams. Our findings indicate that ventures with diversity teams generally achieve higher values across most measured variables, particularly within the LS industry. However, ventures with exclusively Jewish founding teams maintain an edge in variables related to fundraising across both industries. Our study concludes that ethnically diverse founding teams benefit significantly from the bonding and bridging knowledge networks they establish, which are particularly enhanced by higher education within the life sciences sector. Additionally, founders’ human and social capital contribute to the development of expansive networks that foster knowledge, capabilities, and expertise across diverse domains. We discuss the implications of these findings and suggest directions for future research in this evolving field.

Extending behavioral theory of the firm to new ventures: Dispositional optimism as a moderating influence on new product introductions in high-tech ventures

Extant literature has typically drawn from the behavioral theory of the firm (BTOF) to examine new product introductions in the context of well-established companies. This paper extends the behavioral theory of the firm to entrepreneurial firms and argues that jointly considering founders' dispositional optimism together with the performance feedback promises to yield a better understanding of new product introductions in new ventures. We analyze a longitudinal dataset on the activities of 344 newly founded high technology ventures in the United States. The key insight of our study is that when BTOF is applied to the context of nascent, entrepreneurial ventures, the personality and dispositional characteristics of the entrepreneur must be considered. Specifically, we find that performance attainment discrepancy leads to new product introductions, but only when the entrepreneur's dispositional optimism level is high.

High-Tech Ventures and Industry Incumbents: Knowledge Partnerships, Technological Knowhow, and Acquisition Likelihood

High-Tech Ventures and Industry Incumbents: Knowledge Partnerships, Technological Knowhow, and Acquisition Likelihood

Kazakhstan’s Strategic Priorities in the Turkic World

With its unwavering focus on institutionalizing cooperation within the Turkic World, Kazakhstan has successfully achieved this critical objective. Looking ahead, Kazakhstan recognizes the strategic significance of its engagement with the Organization of Turkic States (OTS) member states, navigating the intricate balance of geopolitical challenges and opportunities. This commentary aims to provide an in-depth analysis of the evolving trends in cooperation and outline Kazakhstan’s strategic priorities in the short and medium term. The author suggests that Turkic nations are likely to collaborate in trade, transport, and high-tech ventures and tackle common issues, notably water resource management. This evidences the pivotal role of OTS in creating the essential geopolitical balance within Kazakhstan’s intricate web of institutional connections.

THE ANTECEDENT FACTOR AND OUTCOME OF MANAGEMENT INNOVATION IN SMALL- AND MEDIUM-SIZED ENTERPRISES: A CUSTOMER RELATION CONTEXT

As the major business environment changes, there is a growing need for management innovation to strengthen the organisation. Large enterprises such as GE, which promoted Six Sigma, and Toyota, which installed innovative production systems using the Kanban method, have rooted management innovation in their corporate cultures. However, although there are precedent cases limited to some high-tech ventures, the actual state of management innovation in low-tech small- and medium-sized enterprises (SMEs) is not well understood. Therefore, we investigated the SMEs in Japan’s relatively low-tech industrial areas using structural equation modelling. This study found that collaboration with customers is an important antecedent factor for management innovation. Moreover, management innovation mediates the relationship between the collaboration with customers and technological innovation activities and between the former and firm performance. The explanatory power of management innovation on firm performance is weak. This paper provides deep insights into the role of management innovation in SMEs.

How Does Policy Uncertainty Affect Venture Capital?

Abstract This paper examines the effect of policy uncertainty on venture capital (VC) investment. Relying on plausibly exogenous variation in policy uncertainty caused by closely contested U.S. gubernatorial elections, we find that policy uncertainty negatively affects VC investment. The effect is more pronounced if VC investment is subject to higher illiquidity. However, some distinctive features of VCs (strategic motives, intensive post-investment monitoring, and preferences for early-stage and high-tech ventures) mitigate the effect of policy uncertainty, distinguishing the effect of policy uncertainty on VC investments (in private markets) from that in public markets. Our findings shed new light on the real effects of policy uncertainty in private markets. (JEL G24, D81, M13) Received: June 17, 2020; Editorial decision: June 27, 2023 by Editor: Andrew Ellul

To learn or not to learn from new product development project failure: The roles of failure experience and error orientation

New product development (NPD) project leaders' learning varies after experiencing project failure, as not all failure experience equally promotes learning and not all project leaders equally learn from failure. Drawing on the sensemaking and error management perspectives, this study focuses on two research questions: to what extent does project failure experience (i.e., the percentage of project failures in the overall project portfolio managed by a project leader and the time elapsed since last project failure) affect NPD project leaders' learning from failure? To what extent does a project leader's error orientation (i.e., error competence and error strain) moderate the effect of project failure experience on NPD project leaders' learning from failure? Based on survey responses collected at two distinct time points from 237 NPD project leaders in high-tech ventures, our results show that the percentage of project failures negatively affects learning from failure, and their negative relationship is weakened as error competence increases. In contrast, the time since project failure positively affects learning from failure, and their positive relationship is weakened as error strain increases. Our findings emphasize that a simplistic approach to learning from failure fails to uncover the transformative mechanisms involved in turning failure into learning in the NPD process. Instead, we suggest a customized approach to comprehending how project leaders can capitalize on project failure considering their failure experience and error orientation to learn from NPD project failure.

An effectuation and causation perspective on the role of design thinking practices and digital capabilities in platform-based ventures

The evolution of digital platforms and related ecosystems has led to a new and essential context of entrepreneurship. Previous studies have revealed that although high-tech new ventures possess cutting-edge technology, they face significant challenges because of vital resource constraints and limited management capability. Design thinking practices have emerged as a prominent problem-solving approach offering innovation benefits during high uncertainties. However, in the context of high-tech ventures, more research is needed on linking the relationship between design thinking principles, innovation theories (effectuation and causation), and firm performance. The present study investigates how the design thinking principles influence innovation theories and whether it leads to improved high-tech venture performance. Based on a survey of 291 platform-based start-ups in India, the results show that design thinking ways are well integrated into the theories of effectuation and causation, facilitating the growth of platform-based ventures. However, the influence of effectuation and causation on platform-based venture performance is found to be mediated through the digital capabilities acquired by these ventures.

The Promise and Pitfalls of Government Guidance Funds in China

AbstractIn 2005, the Chinese government deployed a new financial instrument to accelerate technological catch-up: government guidance funds (GGFs). These are funds established by central and local governments partnering with private venture capital to invest in state-selected priority sectors. GGFs promise to significantly broaden capital access for high-tech ventures that normally struggle to secure funding. The aggregate numbers are impressive: by 2021, there were more than 1,800 GGFs, with an estimated target capital size of US$1.52 trillion. In practice, however, there are notable gaps between policy ambition and outcomes. Our analysis finds that realized capital fell significantly short of targets, particularly in non-coastal regions, and only 26 per cent of GGFs had met their target capital size by 2021. Several factors account for this policy implementation gap: the lack of quality private-sector partners and ventures, leadership turnover and the inherent difficulties in evaluating the performance of GGFs.

The different effects of venture capital and the trade-off between product innovation effectiveness and efficiency

PurposeWhich venture capital is more beneficial in the product innovation of entrepreneurial ventures? The authors study the drawbacks and different effects of corporate venture capital (CVC) and independent venture capital (IVC) on the effectiveness and efficiency of product innovation in entrepreneurial ventures to answer this question.Design/methodology/approachThis study uses a panel dataset of 502 high-tech ventures and runs the Heckman model to correct potential endogeneity issues.FindingsThe authors find that CVC increases the product innovation effectiveness of entrepreneurial ventures, but decreases their efficiency. IVC reduces innovation effectiveness and enhances efficiency. However, CVC performs less positively, while IVC performs more positively in terms of innovation effectiveness and efficiency in the B2B market than in the B2C market.Practical implicationsThis study provides insights into how to leverage venture capital to develop new products effectively and efficiently.Originality/valueThis study moves beyond the current understanding of the finance-marketing interface. It delineates the two faces of venture capital and reveals the joint effects of equity stakes and market stakes between different types of venture capital and transaction markets in product innovation.

Connection between Entrepreneurial Skills and Intelligences of High-Tech Entrepreneurs

The uncertainties and risks of high-tech ventures are well known, and, despite the increasing number of start-up companies founded annually, few survive. This study examines the correlation between the entrepreneurial skills and multiple intelligences of entrepreneurs, as well as their influence on success in high-tech ventures. The theoretical foundation of the study is based on Salamzadeh and Kirby’s (2017) venture-creation model and Gardner’s (1983) multiple-intelligences theory. A convenience sample of three hundred entrepreneurs (281 men, 19 women) in different stages of their ventures was evaluated via an online Qualtrics questionnaire. The results indicate that the most successful entrepreneurs have the highest levels of logical intelligence but also the lowest levels of linguistic, intrapersonal, and interpersonal intelligences. Entrepreneurial skills were found to be related to all types of intelligences, as well as to success in entrepreneurial ventures. The study adds to the limited literature on the connection between personal characteristics and the success of entrepreneurial startup companies, and may contribute to improving entrepreneurship education programs. Future research is needed to examine other characteristics of both successful and unsuccessful entrepreneurs across a wider range of venture stages.

Human and Social Capital and Ethnically Heterogeneous Founding Teams in High-tech Industries

This paper focuses on ethnic homogeneity/heterogeneity in founding teams. We ask whether ethnic heterogeneity of founding teams in high-tech firms is advantageous compared to founding teams with ethnic homogeneity. Based on a population of 1,217 high-tech ventures in two industries, life sciences and information technology, we examine the relationships between founding team ethnic heterogeneity and social and human capital proxies. The findings indicate that heterogeneous co-ethnic founding teams (e.g., ventures set up by entrepreneurs from different ethnic groups) have higher proxies of human and social capital than homogeneous Jewish or Arab founding teams, in general, and especially in life sciences, except for variables related to fundraising, where Jewish ventures retain an advantage in both industries. Therefore, co-ethnic founding teams are characterized by functional diversification and network mechanisms of human and social capital that are advantageous for high-tech ventures. We conclude with theoretical and policy implications.

When Does AI Pay Off? AI-Adoption Intensity, Complementary Investments, and R&D Strategy

This paper examines how high-tech venture performance varies with AI-adoption intensity. We find that firm revenue increases only after sufficient investment in AI, and the benefits of AI adoption are greater at firms that also invest in complementary technologies and pursue internal R&D strategy. Specifically, AI adoption at low levels does not suggest significant revenue growth, but, as the intensity of AI adoption increases revenue growth occurs. We find that such performance gains from adoption are larger among firms that invest in complementary technologies such as cloud computing and database systems. Moreover, the positive relationship between AI adoption intensity and revenue growth is stronger among firms that pursue a more exclusive R&D strategy specific to the venture.

When does AI pay off? AI-adoption intensity, complementary investments, and R&D strategy

This paper examines how high-tech venture performance varies with AI-adoption intensity. We find that firm revenue increases only after sufficient investment in AI, and the benefits of AI adoption are greater at firms that also invest in complementary technologies and pursue internal R&D strategy. Specifically, AI adoption at low levels does not suggest significant revenue growth, but, as the intensity of AI adoption increases revenue growth occurs. We find that such performance gains from adoption is larger among firms that invest in complementary technologies such as cloud computing and database systems. Moreover, the positive relationship between AI adoption intensity and revenue growth is stronger among firms that pursue a more exclusive R&D strategy specific to the venture.

Creating complementarities: How entrepreneurs mobilize crowdfunding and local ecosystems

Entrepreneurs increasingly tap into both spatial and digital resource environments to mobilize critical resources in support of new ventures. Yet, we know surprisingly little about how entrepreneurs make joint use of these environments. Linking the recent debate on spatial and digital affordances to the resource mobilization literature, this study examines how entrepreneurs mobilize critical resources from local ecosystems and the crowdfunding platform Kickstarter in complementary ways. We discuss two strategies of resource mobilization. (1) The circular strategy, which is mainly applied by social ventures, leverages community narratives and support for crowdfunding campaigns to strengthen and expand the very community support the campaigns are based on. (2) The cumulative strategy, which is mainly applied by commercial high-tech ventures, mobilizes the symbolic value of local institutional ties to attract crowdfunding backers and uses crowdfunding success to attract new resource-holders in local ecosystems. Our findings contribute to research on entrepreneurial resource mobilization and our understanding of the interplay of spatial and digital affordances.

Entrepreneurial decision-making logics during time-critical pivoting: empirical evidence from high-tech ventures

Entrepreneurial decision-making logics during time-critical pivoting: empirical evidence from high-tech ventures

New venture's product innovativeness strategy, institutional environment and new product performance

New ventures have to develop innovative new products with substantial advantages over existing products to gain a market foothold. Building on the institution-based view, we examine how institutional environments in emerging markets (legal inadequacy and environmental turbulence) differentially moderate the innovativeness-new product performance links in new ventures. Using a sample of 136 new high-tech ventures in China, we find that technological innovativeness and market innovativeness both are associated with perceived new product performance, and the effect of market innovativeness is significantly greater than that of technological innovativeness. The relationship between technological innovativeness and perceived new product performance is strengthened by high levels of environmental turbulence but weakened by high levels of legal inadequacy. On the contrary, the link between market innovativeness and perceived new product performance is enhanced when legal inadequacy is high but mitigated when environmental turbulence is high. As such, our research enriches the new product development literature by differentiating the effects of technological innovativeness and market innovativeness in new ventures, and specifying the distinctive roles played by external institutional factors in facilitating or hindering the efficacy of product innovativeness. Our study provides new venture managers with practical implications on how to choose and implement an appropriate product innovativeness strategy in the emerging Chinese market.

Growing up but still be entrepreneurial? The entrepreneurial orientation–performance relationship

The relationship between entrepreneurial orientation (EO) and performance has received significant attention within entrepreneurship research. Yet, the mechanisms that underpin the EO-performance relationship are not fully understood. Recent developments such as an improved theoretical understanding of the manifestation and pervasiveness of EO highlight the need for a more nuanced understanding of EO by investigating nonmanagerial employees’ behaviors and attitudes of EO. Via an in-depth case study of a high-tech venture in Germany, we examine a set of proactive, innovative, and risk-taking behavioral patterns that contribute to the proliferation of EO within firms as they grow. Our study reveals that the employee’s more inwardly focused orientation is directed towards coping with challenges the firm faces during growth-related organizational transformations, rather than introducing innovations in the business or experimenting with opportunities. We conclude that EO is an individual-level construct and a key element in the causal link between organizational performance.

Until the Fog of Uncertainty Lifts – Disruptive Founding Visions and New Venture Funding Success

Looking at today's startup landscape, it is easy to get the impression that today's founders are in a continuous race with their peers to develop the most disruptive vision. But does a disruptive vision actually help new ventures to succeed in the long run? We investigate if and how long disruptive founding visions are related to new venture funding success in the seed and post-seed funding stages. Drawing on a longitudinal, multi-source dataset of 318 US-based high-tech ventures, we use a new, time-conscious analysis method, the Aalen additive hazards model, to find that disruptive founding visions have a constant and positive effect on the time to seed funding. However, approximately two years after seed funding – when the initial fog of uncertainty lifts – the positive effect of a disruptive founding vision disappears in the post-seed funding stage. Our findings contribute to the theoretical and methodological advancement of the entrepreneurship discipline at the intersection of visionary leadership, disruptive innovation theory, and time-conscious entrepreneurship research. Further, we offer pragmatic managerial advice for founders who develop their founding vision.

Smart specialization: a spontaneous four-step process in the mixed Arab–Jewish region of Haifa and Nazareth

ABSTRACT Smart specialization is studied in the Arab–Jewish region of Haifa and Nazareth, with a focus on high-tech ventures created by Arab entrepreneurs. We find that not only did smart specialization occur under these complex conditions, but also it was spontaneous. It began with the sharing of entrepreneurial knowledge held by Jewish entrepreneurs through social networks set up by grassroots organizations. Policy initiatives in support of this process followed, helping to reshape the region’s socioeconomic structure. Therefore, we argue that smart specialization followed a four-phase process: a pre-phase of knowledge transfer between the two communities, followed by Foray’s three phases .