High-tech Ventures Research Articles

Firm growth in an emerging market economy: the experience of a Chinese IT entrepreneur

Using a case-based approach to study firm growth in high-tech ventures in the PRC, this paper discusses some unique issues emerging from China's economic transition and presents insights from the study of a Chinese high-tech startup. Implications for research and practice are then discussed.

Stimulating high–tech venture creation

This paper explores whether policy makers can successfully encourage high–tech venture creation. We outline some of the policy interventions that have been used to stimulate new venture creation. We then present case evidence of how a new high–tech industrial district emerged in Dublin, focussing on the role of various policy interventions. We conclude by arguing that a range of appropriately timed policy interventions can be pivotal in the development of internationally competitive high–tech new ventures. However the case suggests that it was a combination of sector level and direct firm level interventions that stimulated and facilitated the emergence of a cohort of high–tech new ventures.

日本のベンチャー制度

「空白の10年」と言われてもうすでに3年が経つ。状況はますます不確実性を高めている。今後の日本経済復興において,ベンチャーに期待される役割は大きい。安易な考えでベンチャーを起すことなく,志を持ち用意周到な戦略・計画のもとダイナミックな展開が期待される。ここでは制度面の改革と失敗しないための事業開発の基礎を論じて見たい。

Globalization Strategies of Chinese Companies: Current Developments and Future Prospects

The object of this study is to examine the globalization strategies of Chinese companies which, it is contended, have been influenced by China's current stage of economic development. Since the initiation of its open-door policy in 1978, China has, in this respect, followed to a considerable extent the path of other Asian countries. Currently, China's foreign direct investment (FDI) is present in 139 states and territories but heavily concentrated in Australia, the United States, Hong Kong, Thailand, Russia, New Zealand, South Africa and Macao. Such ventures overseas are, however, small scale, with an average capitalization of US$ 3 million. This figure may nevertheless be set to rise, as Chinese companies move into more high-tech ventures; to date, China's firms have been more heavily involved in the service and processing sectors. In addition, China's FDI has been constrained both by government regulation of the economy and lack of experience on the part of China's companies in international competition. Accordingly, the role of both business and government in the promotion of managerial, financial and linguistic competence is assessed. In conclusion, the study summarizes the salient features of Chinese FDI to date and the future prospects for the globalization of China's companies.

Taiwan's Experience in Switching Its Engines of Growth

Taiwan became a leading worldwide manufacturer of computer hardware in the 1990s. The purpose of this paper is to review the process that led to the birth and growth of Taiwan's information-communication technology (ICT) industries. We further discuss such factors as research and development, high-tech human capital, venture capital, financial liberalization, and telecommunications liberalization, which have contributed to the success of the ICT industries and the shift in the economy from labor-intensive to capital-intensive and technology-intensive production.

The Role of the Venture Capitalist as Monitor of the Company: a corporate governance perspective

The monitoring and stewardship role of the owner is an important corporate governance issue that deserves far more attention. Our analysis focuses on the role of the venture capitalist (VC) as monitor of high–tech venture–backed companies. We provide evidence from the literature as well as a qualitative descriptive view of the experiences of Belgian VCs. The position of the VC sheds more light on the plenitude of roles an active owner can play. Furthermore, our findings highlight the need for a better understanding of the governance structure and processes of high–tech companies.

Success criteria in high-tech new ventures

This paper seeks to identify the criteria that influence the performance of high-tech new ventures. Twenty-seven venture capitalists who experienced both failure and success in high-tech ventures were asked to rate one of their most successful ventures and one of the least successful or failed ventures on 38 criteria identified under six groups: entrepreneur quality, resource-based capability, competitive strategy, product characteristics, market characteristics and financial criteria. The venture capitalists were subsequently interviewed to overcome biased or forced results and to know more about success criteria. The study reveals that entrepreneur quality, resource-based capability, and competitive strategy are the critical determinants of the firm’s viability and achievement. It is seen from cluster analysis that successful entrepreneurs develop multiple resource-based capabilities to backup multiple-strategies to push their products through market. Furthermore, it is concluded that it is not the unique products relative to competitors that brings success rather it is the firm’s ability to meet the unique requirements of customers that bring success.

Innovation, Networking and Proximity: Lessons from Small High Technology Firms in the UK

The article explores how the innovative performance of small high-tech firms relates to their external networking activities, and whether geographical proximity in their network relations matters. Data from a small sample of electronics firms and software developers in South East England are used to construct indicators of innovativeness, which are correlated with variables capturing intensity of external interactions and proximity benefits. The regional science base is found to have played a key role in nurturing new high-tech ventures, but science parks had not contributed to this. Interaction with parties with complementary capabilities such as suppliers and service providers is also associated with high innovative performance. However, the findings do not support the current policy fashion of encouraging regional networks revolving around firms in similar business activities and close customer relations.

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Technology-based regional development policy : case study of Taedok Science Town , Taejon Metropolitan City, Korea

This paper examines the roles that technopolis play in the promotion of city development through technology advancement with particular reference to the Taedok Science Town (TST). Systematic policies to raise collaboration between high-tech venture businesses and university-industry are also reviewed. In particular, the experience of the TST shows the impact Technology Transfer Infrastructure like Technology Business Incubators provided by universities and research institutes have on the expansion of high tech venture business. The systematic approach for nurtur ing the development of venture businesses from the initial stage to the mature stage is one of the crucial policies that enabled the successful development of high-tech venture firms in the TST.

Do Venture Capitalists Behave Differently When Investing in High-Tech Ventures?

Compared to the U.S. marketplace, high-tech investments have not been as popular among venture capital firms in the U.K. Although high-tech ventures have important economic significance, they continue to experience difficulties in securing funds for their growth. Using theoretically-based hypotheses and empirical data collected from U.K. venture capitalists (VCs) in 16 personal interviews and 111 questionnaire responses, this study sheds light on the various deterrents of technology-intensive investments in the U.K. market. Furthermore, it takes a unique look at how those VCs, who do support high-tech ventures, differ in their investment preferences and procedures from those who prefer to fund non-technology firms. Since investments in early-stage high-tech firms are especially rare, this is the special focus in this study. By illuminating the requirements for a successful high-tech VC market, this focus may also offer additional insights into the fundamentals supporting the prosperity of the high-tech VC market in the U.S.

The Roles Incubator Organizations in Hi-Tech Venture Creation in Korea

In order to examine the roles of incubator organizations (places where entrepreneurs work before they start their ventures), ten high-tech venture founders were interviewed. Based on these interviews, their experience at incubator organizations and subsequent performance were analyzed, and 11 hypotheses regarding the characteristics of incubator organizations were formulated. The hypotheses are: high-tech venture are more likely to succeed if their founders have had the opportunity to prepare a business plan, to develop the prototype of a new product, to be acquainted with other disciplines, to work together as a team, and to acquire various kind of capabilities such as market-specific know-how, entrepreneurial skills and financing know-how at incubator organizations. However, it is hypothesized that the opportunity to acquire technological know-how and ‘traditional’ managerial skills at incubator organizations are not positively correlated with venture success. The technological know-how and managerial skills could be regarded as a necessary but not sufficient condition for successful ventures. As the first study about Korean incubator organizations, the cases and the discussion of the hypotheses provide insights and implications for future studies.

Venture Capitalist-Entrepreneur Relationships in Technology-Based Ventures

This paper presents a brief synopsis of literature focusing on venture capital-backed high technology ventures. This literature highlights characteristics of and the rationale for venture capitalist-entrepreneur pairings as well as differences in the way venture capitalists approach high tech ventures in comparison to other ventures. Some of the implications for practice are discussed as well as future research at the intersection of technology-based new firms and venture capital.

French Strategy for Science Education

As we enter the 21st century, defining a clear strategy for education and research has become essential, at a time when the economic competitiveness of any country depends not only on scientific and technical knowledge, but also on culture. France has always placed great emphasis on its educational system, but with little appreciation for experimental disciplines. Mathematics has played a central role in scientific education and, more importantly, in the process by which our elites are selected. French scientific research ranks among the best, and our technological research successes include Ariane, the nuclear industry, fast trains, and “intelligent” banking cards. But we have not satisfactorily transferred our scientific results to create new high-tech ventures. Therefore, we are committed to a drastic program for renovation of education, research, and technology. In primary education, we will focus on key abilities (foremost, speaking, and reading, writing, and counting), teach at least one foreign language, emphasize a “hands-on” approach to the experimental sciences, and introduce new information technologies (all schools will be connected to the Internet by the year 2000). The challenge for secondary schools is to update the curriculum without extending the school week. Programs and contents are far too heavy and not always up to date. Our students know a lot about details, yet often fail to master the essentials. To remodel programs, we have organized a vast, national consultation to formulate and start answering the right questions: what kind of mathematics should be taught, given the expansion of calculators and PCs? Should biology begin with the cell, DNA, and genetics? Shouldn't we stress experiment and observation in physics rather than mathematical concepts? Higher education has evolved in the right direction in the last ten years; however, we are introducing two new concepts. The first is internationalization: as we are building Europe, our respective systems must adapt to an open world. So we have undertaken, at first with the United Kingdom, Germany, and Italy, to harmonize the architecture of our diplomas at the European scale: an undergraduate degree, a shorter master's, and a longer Ph.D. This will allow us to drop many obsolete diplomas, which were part of a system incomprehensible both from inside and outside. The Grandes Ecoles will also conform, with the “engineering diploma” at the master's level. These changes will allow for true mobility of students throughout Europe and the world. The second major reform will be continuing education that allows everyone to return to academic studies, to obtain new diplomas, or to update competencies throughout life. For the first time this year, 13 universities will remain open year-round to experiment with continuing education leading to diplomas. In research, our main goal will be restructuring our institutions and priorities. Research spending, about 2.3% of our GNP (an outlay similar to Germany's, a bit below U.S. funding), is not the issue. Rather, we need to bring in younger researchers and to improve institutional connections. French research organizations, most of which were founded after World War II, have their own permanent research personnel, whose mean age (above 46 years) is too high. Links with universities must be reinforced. Researchers cannot easily transfer into industry. To redress the age imbalance, we have offered jobs to thousands of young Ph.Ds. We are preparing measures to encourage autonomy and mobility and to grant responsibilities to young scientists. We are devising a new law to facilitate new start-ups, to provide fiscal encouragement to those who invest in innovative firms, and to promote risk capital within each research organization. At the same time, we want to boost funding for basic research and to let it thrive in a free and creative environment. Proposals from scientists will be encouraged, rather than state-controlled programs, which tend to be too numerous and not innovative enough. Remaining programs will be better coordinated and more rigorously evaluated. We will make bold scientific choices and not sprinkle funds or maintain obsolete directions. Foremost in our priorities will be the life, environmental, and material sciences and the new information technologies.

The Stages Model of High-Tech Venture Founding: Tried but True?

Recent large sample studies of start-up event sequences reported more stochasticity at a population level of analysis than the stages model would have predicted. This study examined a random sample of 18 technology-intensive start-ups in manufacturing and business service industries and found examples of both the stages model and an alternative. Stages model start-ups significantly outperformed the others.

Cooperative Strategies in Non-High-Tech New Ventures: An Exploratory Study

Cooperative strategies are of growing interest in entrepreneurship. Current research focuses on high-tech companies, but less is known about cooperative activities in non-high-tech businesses. Differences in distinct competencies based on technology suggest that lessons from high-tech companies may not fully apply to non-high-tech companies. This research explores the nature, extent, and approaches to cooperative strategies in non-high-tech new ventures, utilizing quantitative and qualitative methods. Survey data is analyzed to assess usage and characteristics of cooperative strategies. Results show that few companies used cooperative strategies and these were not central to core operations. Field interviews comparing three non-high-tech and three high-tech new ventures examine motives and approaches to cooperative strategies. For all six cases, resource constraints motivated usage of cooperative strategies and all had cooperative arrangements with competitors. However, goals and approaches to cooperative strategies differed between non-high-tech and high-tech businesses. Findings suggest future research directions.

Fast growing small entrepreneurial firms and their venture capital backers: An applied principal-agent analysis

First the empirical background of the U.K. venture capital industry is developed using a panel of major U.K. venture capital funds over the period 1988–92. Then a framework for applied principal agent analysis is developed, focusing on risk management and information. Under risk management it explores attitude to risk, risk sharing and bearing, and the effects of risk bearing on effort. Under information handling, it explores information systems, information asymmetries between investor (venture capitalist) and investee (entrepreneur), and ways of attenuating them, and information variance and costs. Finally, the contract between investor and investee is seen as a device for “trading” risk and information. The implications of this “trading” for risk bearing, effort and efficiency are explored. The whole analysis is supported by a detailed case study which reflects current practice in the U.K. venture capital industry. The evidence provides striking confirmation of the applicability of the principal-agent model to the venture capital financing of hightech ventures.

Criteria distinguishing successful from unsuccessful ventures in the venture screening process

Venture Capitalists responded to a questionnaire in which they rated a highly successful and a highly unsuccessful venture on 25 screening criteria and on several performance criteria. In all, 150 ventures were rated by 67 venture capital firms. Cluster analysis revealed three broad classes of unsuccessful ventures. The first type is the bane of all venture capitalists—the venture in which the venture team is lacking in experience or staying power, the product has no prototype, and there is no clear market demand for the product, yet the venture somehow slips through the screens and gets funded. The second type is one in which the venture team is very well credentialed, but the venture faces early competition and the team has no staying power and runs out of steam. The third major class of venture is one in which the team has exceptional staying power, so much so that by perserverance it demonstrates that a market exists, only to lose that market to competition because of a lack of protection for the product. Cluster analysis also showed that there are four broad classes of successful ventures. First is the high-tech venture with a well-qualified venture team that has the staying power needed to face competitive attack. Second is the class of venture where the venture team does not have much in the way of credentials, but the product has a very high level of protection and turns out to be highly successful. Third is a class of “market makers”—a venture team with exceptional perseverance that demonstrates that there is in fact a market for the product, but also has some form of product protection once that market has been demonstrated. It can be seen that each of these classes of successes has a look-alike class of failures that is very similar except for some flaw in the venture team. A final class of successful venture is a small group of low-tech products in which distribution skills are critical. We suspect that these ventures tend to be for consumer goods. An important finding is the identification of two major criteria that are predictors of venture success. These are 1) the extent to which the venture is initially insulated from competition and 2) the degree to which there is demonstrated market acceptance of the product. Regression analyses indicate that only these two screening criteria correlate pervasively across several performance criteria. Interestingly, neither of these criteria were rated as essential in an earlier study. Much more importance needs to be attached to these criteria in screening venture proposals. The final analysis was a factor analysis, which indicates that the 150 ventures were screened according to five major classes of criteria, each class corresponding to some facet of risk management of the venture. These were as follows: 1. 1. Criteria that screen out ventures where there is a risk of failure due to unqualified management; 2. 2. Criteria that screen out management that may well be qualified but lack experience; 3. 3. Criteria that screen out ventures where basic viability of the project is in doubt; 4. 4. Criteria that screen out ventures where there is high exposure to competitive attack and profit erosion before the investment can be recouped; 5. 5. Finally, criteria that avoid ventures that lock up the investment so that it cannot be cashed out for long periods of time.