High-technology Firms Research Articles

Embeddedness, Milieu, and Innovation among High-Technology Firms: A Richardson, Texas, Case Study

The author seeks to contribute to the debate on embeddedness, milieu, and innovation in industrial districts through a case study of high-technology firms in Richardson, an inner-ring suburban city of the Dallas–Fort Worth Metropolitan area. Richardson is important because it can be clearly defined as an industrial district, with over 600 high-technology firms and 70 000 employees. The results suggest that the district is robust and highly innovative with considerable capacity for self-sustaining growth. The firms are well integrated, locally and nationally. Despite extensive formal connections, firms' relationships are not very embedded locally. The link between embeddedness and innovation is subtle at best, and is confined to a small set of the most highly innovative firms. Similarly, evidence of a well-established industrial milieu was not forthcoming, although it may be emerging. The relationship between milieu and innovation was vague and was confined to the most innovative firms. The long-term viability of the district is closely tied to the economic health of the metropolitan economy, suggesting that development strategies focused on the district per se are likely to meet with limited success.

Learning Behaviour and Co-operation of Small High Technology Firms in the ASEAN Region: Some Evidence from the Singapore-Johor Agglomeration

This article investigates at an empirical level the processes of collective learning and co operation in a dynamic cross-border cluster of innovative technology-intensive small and medium-sized enterprises (SMEs), namely the Singapore-Johor area in the ASEAN region. It draws upon a variety of qualitative and quantitative research methods, and assesses how the process of learning for innovation of locally based SMEs within the Singapore-Johor cross border agglomeration is shaped by specific factors. The area has developed a relatively high level of density of inter-firm interactions and exchanges of technological information, as well as collaboration in product development between firms and institutions in the regional agglomeration. Moreover, these firms exhibit high levels of interaction with companies situated outside their milieu, especially in Japan, Europe and the United States.

High-technology firms' perceptions of their international competitiveness

This paper reports empirical results from a research project investigating selected characteristics and perceptions of technologically oriented firms. Specifically, it examines data from a survey of winners of the Queen's Award for Technological Achievement, and from a sample of technologically oriented firms that did not apply for the award. This paper is especially concerned with firms' perceptions of factors contributing to their international competitiveness. Findings from a postal survey and subsequent interviews indicate that there are a number of differences between the two groups of firms. Implications are that some of the characteristics and practices that set winners of the Queen's Award apart from other technology-based firms in their domestic market contribute to their performance overseas. While the Queen's Award for Technological Achievement is not specifically awarded to firms for their internationalisation capabilities, these firms provide valuable advice to technology-based firms entering international markets.

The Provision of Finance to Innovation: A Survey Conducted among Italian Technology-based Small Firms

Financial constraints to the development of innovation are often considered one of the main impediments to high-technology firms seeking to expand and grow. In particular this is the case of small and medium size high-tech firms. In the U.S. and the U.K. a variety of sources of finance are available to the start-ups of innovative firms; in the other European countries, and particularly in Italy, these means are still uncommon so that the development of technology is often prevented. This paper, based on an empirical analysis on a survey of 46 small high-tech Italian firms, aims at exploring the problems experienced by small businesses in gaining access to debt and equity finance. The results highlight that traditional financial sources are inadequate to finance innovative projects. The questioned firms rely mainly on personal finance, and secondly on short term bank debt; they are truly involved in maintaining control over the firm activities and are willing to issue outside equity only if the new investors also provide non financial competencies. Among the 46 interviewed firms, only 10 are willing to be listed in the future on small firms' stock markets.

Split-Off IPOs: Market Returns and Efficiency

This paper investigates split-off initial public offerings (IPOs). Our objective is to investigate the returns prior and subsequent to the offering date of split-off IPOs for hightechnology firms in the most recent bull market. Such an investigation is warranted for at least two reasons. First, if both the parent’s and the subsidiary’s stock price increase significantly prior to the IPO, but the parent’s stock price declines but a greater, share-adjusted, basis than the subsidiary’s stock price increases following the IPO, arbitrage opportunities may result. Second, in light of the large, one-day returns observed during 1999 for high-technology companies, an observation of mispriced technology split-off IPOs may be possible. Using a sample of ten recent split-off IPOs, the market price of parent companies carving out a small percentage of a major subsidiary tends to rise one month prior to the filing date and continues to rise until the offering date. Furthermore, this increase is highly related to the success of the IPO on the first trading day subsequent to the IPO. Furthermore, the market appears to anticipate the extent of the success of the IPO correctly. Subsequent to the offering day, the subsidiaries perform well for about three months, while the parent company performs poorly, on average, giving up nearly all of its pre-offering gains. Further investigation of potential arbitrage opportunities indicates that, if both the parent and the subsidiary can be shorted, very large trading profits can be obtained. This result holds for pairs of stocks where the parent’s price includes at least 20 percent of the subsidiary’s price.

Dynamic capabilities and new product development in high technology ventures: An empirical analysis of new biotechnology firms

In industries populated by entrepreneurial high technology firms, the rapid development of new products is viewed as a key determinant of success. Developing a portfolio of new products is necessary to gain early cash flows, external visibility and legitimacy, early market share, and increase the likelihood of survival (Schoonhoven, Eisenhardt, and Lymman 1990). In addition, recent research has shown that new product development improves a firm's ability to raise money through an initial public offering (Deeds, DeCarolis, and Coombs 1997). This paper develops a model of new product development which is tested on a sample of 94 pharmaceutical biotechnology companies. We hypothesize that new product development capabilities are a function of a firm's scientific, technological, and managerial skills. To test this relationship, we develop several firm specific measures in an attempt to triangulate in on the core construct of firm specific new product development capabilities. Some important implications for entrepreneurs/managers of high technology firms flow from our results. First, entrepreneur/managers need to view the choice of geographic location as an important strategic decision which will impact their firm's access to the skilled technical personnel and the streams of knowledge. Our results indicate that a choice location has a significant concentration of similar firms, but the level has not yet reached a point where competition for resources in the local environment offsets any advantages of the location. In the case of biotechnology, this would seem to indicate that the prime locations would be expanding areas such as San Diego, Seattle, and Philadelphia rather then the established locations of Silicon Valley and Boston. Second, as scientific knowledge plays an ever more important role in a firm's success the quality of the firm's scientific team is a critical ingredient in a firm's new product development capability. But how do you evaluate the quality of scientific personnel? Our results indicate that there is a strong positive relationship between the impact—as measured by citations—of a team's prior research in the academic community and the productivity of that team in a commercial research laboratory. Therefore, the judgement of a scientific field, captured by citations or perhaps expert judgement, should prove to be a useful tool when evaluating personnel for a firm's research team. Third, the results from our measures of CEO experience and the percentage of the top management team with a Ph.D. are interesting. As expected the prior experience of CEO in managing a commercial research facility enhances a firm's new product development capabilities. However, results for our top management team variable appears to indicate that the over reliance on technical personnel in the management of the organization detracts from the product development process. Taken together these results seem to imply that it is important that the leadership of the organization have knowledge of and experience in managing the new product development process, but that diverting the firm's scientific personnel's energies away from the laboratory and into the management of the organization maybe counter-productive. Therefore, what a high technology venture appears to need is leadership that understands and has experience in the new product development process, but which is separate and distinct from the scientific team. This type of leadership keeps the scientific team focused on research and development, and out of the boardroom.

The Internationalization of Small High-Technology Firms

This study of 196 small high-technology firms embraces the areas of the internationalization of entrepreneurially led firms and the early stages of the international growth and development of high-technology firms. The author's conceptual stance is that the early internationalization of small firms should be viewed as an holistic process, that is, one in which interrrelated and even integrated decisions and processes combine to accomplish a firm's individual pattern of internationalization. The study explores firms’ patterns of international development through their establishment of cross-border activity in key value chains and associated service activities.

A structural perspective on organizational innovation

Sociologists contend that industries can be importantly characterized as sets of interlocking producer positions. This paper argues that this distinctively relational conception of a market represents a powerful framework for depicting and analyzing the process of technical change. The paper presents a method for using patent citation data to describe the positions of high-technology firms in a market-wide 'technological network'. It focuses on one property of a producer's position in this technological network - 'crowding' - which represents the extent to which the firm specializes in areas of technology that are densely populated with other organizations. Four propositions are developed linking technological crowding to two firm-level measures of innovation: (i) the annual level of R&D expenditures, and (ii) the continuous time rate of patenting. The findings demonstrate that the positions innovators occupy in the technological structure of the market strongly affects their level of investment in R&D and rate of innovation.

Rationality, rules of thumb, and R&D

A model of Schumpeterian growth is compared under rational expectations (RE) and under a simple rule of thumb (RT) in which firms invest a constant fraction of their current profits in R&D. The analysis generates a scenario in which the RE and RT equilibria are observationally equivalent, yet the interpretations of the two equilibria differ in ways which are critical for the appropriate design of technology policy. The RE model dictates that the largest government transfers for R&D support should be given to high-technology (high-R&D) firms. The observationally equivalent RT model indicates that low-R&D firms should receive the largest incentives to stimulate R&D. The paper also provides some new analytical results on the limiting distribution of firm size, and these may be of independent interest.

The Knowledge-Creating School

Moving into the knowledge society at a time when expectations of schools and teachers continue to rise creates an urgent need for better professional knowledge about the management of schools and effective teaching and learning. This demand arises in part because university-based researchers have not hitherto been very successful in either the creation or dissemination of such knowledge. It is argued that success in meeting this demand will continue to elude us as long as the conventional approaches to educational R&D persist. Patterns of knowledge creation and dissemination in high technology firms are suggestive of the conditions under which the creation of professional knowledge in education and its more rapid dissemination throughout the whole education service might flourish. The implications of this radical reconceptualization of knowledge creation and its dissemination in education are explored.

Reactive and Proactive Local Territory: Co-operation and Community in Grenoble

DE BERNARDY M. (1999) Reactive and proactive local territory: co-operation and community in Grenoble, Reg. Studies 33 , 343‐352 . Local again! Despite the pressures of globalization and hypercompetition, local embeddedness and proximity appear to be decisive factors in the competitive advantage of successful local economies. This paper reviews the recent evolution of high technology firms and industries in the Grenoble region, in considering why and how particular localities have over time been able successfully to renew and adapt their economies and competencies while others have collapsed. After examining the logic of firms' or individuals' appropriate space, it highlights the way in which particular agents have been able to renew knowledge and enhance co-operation through various learning processes depending on their personal network of relationships. DE BERNARDY M. (1999) Collectivité territoriale dynamique: les notions de coopération et de communauté à Grenoble, Reg. Studies 33 , 343-352 . Le local encore et toujours! En dépit des contraintes de la mondialisation et de la concurrence acharnée, les notions d'enracinement, de contingence et de proximité s'avèrent être des facteurs déterminants de l'avantage compétitif des économies locales qui réussissent. Cet article analyse les facteurs d'évolution des entreprises et des industries de pointe de la région de Grenoble en prenant en compte les dimensions spécifiques qui font que certains collectifs territorialisés ont su renouveler avec succès leur économie et leurs compétences alors que d'autres se sont effondrés. Après l'analyse du concept d'espace pertinent des individus et des entreprises, l'attention se porte sur la façon dont des agents (individus et organisations) ont pu renouveler leur connaissance et améliorer la coopération par le truchement de divers processus d'apprentissage en fonction de leurs réseaux de relation personnelle. DE BERNARDY M. (1999) Reaktive und scho ¨pferische Ortsgebiete: Zusammenarbeit und Gemeinschaft in Grenoble, Reg. Studies 33 , 343‐352 . Zuru ¨ck zurLokalebene! Trotz Druck durch Globalisation und u ¨berheizten Wettbewerb scheinen Eingebettetsein am Orte und Na ¨he entscheidende Faktoren im Wettbewerbsvorteil erfolgreicher Wirtschaften zu sein. Dieser Aufsatz bespricht die vor kurzem stattgefundene Entwicklung hoch technisierter Firmen und Industrien in der Umgebung Grenobles, indem er untersucht, warum und wie bestimmte Gegenden es im Laufe der Zeit geschafft haben, ihre Wirtschaften und Fa ¨higkeiten erfolgreich zu erneuern und anzupassen, wa ¨hrend andere gescheitert sind. Er untersucht die Logik des geeigneten Platzes einer Firma oder individuellen Person, um dann ein Schlaglicht auf die Art und Weise zu werfen, in der bestimmte Vertreter in der Lage waren, ihre Kenntnisse aufzufrischen, und je nach Netz ihrer perso ¨nlichen Verbindungen, Zusammenarbeit dank verschiedener Lernprozesse zu steigern.

Top management team diversity, group process, and strategic consensus

This study integrated concepts from upper echelons, group process and social cognition theories to investigate how demographic diversity and group processes influence strategic consensus within the top management team (TMT), where strategic consensus is defined as the degree to which individual mental models of strategy overlap. Data from 76 high-technology firms in the United States and Ireland were used to examine three alternative models. The results showed that while demographic diversity alone did have effects on strategic consensus the overall fit of the model was not strong. Adding two intervening group process variables, interpersonal conflict and agreement-seeking, to the model greatly improved the overall relationship with strategic consensus. For the most part, TMT diversity had negative effects on strategic consensus. The model with superior fit showed both direct and indirect effects of diversity on strategic consensus. Copyright © 1999 John Wiley & Sons, Ltd.

Engineering bureaucracy: the genesis of formal policies, positions, and structures in high-technology firms

This article examines the impact of organizational founding conditions on several facets of bureaucratization - managerial intensity, the proliferation of specialized managerial and administrative roles, and formalization of employment relations. Analyzing information on a sample of technology start-ups in California's Silicon Valley, we characterize the organizational models or blueprints espoused by founders in creating new enterprises. We find that those models and the social composition of the labor force at the time of founding had enduring effects on growth in managerial intensity (i.e., reliance on managerial and administrative specialists) over time. Our analysis thus provide compelling evidence of path dependence in the evolution of bureaucracy - even in a context in which firms face intense selection pressures - and underscore the importance of the 'logics of organizing' that founders bring to new enterprises. We find less evidence that founding models exert persistent effects on the formalization of employment relations or on the proliferation of specialized senior management titles. Rather, consistent with neo-institutional perspectives on organizations, those superficial facets of bureaucracy appear to be shaped by the need to satisfy external gatekeepers (venture capitalists and the constituents of public corporations), as well as by exigencies of organizational scale, growth, and aging. We discuss some implications of these results for efforts to understand the varieties, determinants, and consequences of bureaucracy.

Where do resources come from? a model of resource generation

Although the Resource-Based View of the firm (RBV) continues to gain centrality in the conversation of strategic management, several unanswered questions remain within the emerging paradigm. This article focuses on one of those questions. We propose a causal model of resource generation built around three central constructs: entrepreneurial ability, market context, and organizational context. Entrepreneurial ability generates new asset combinations that are valuable and unique, while market and organizational contexts preserve the value in these new asset combinations by providing barriers to imitation. We build a model and then consider three separate paths for generating idiosyncratic resources within a firm. Organizational values such as control and flexibility influence an organization's ability to develop resources along any given path. The issue of resource generation is particularly relevant for high technology firms, during the time that competition in these industries is driven by the need to continually develop and exploit new sources of competitive advantage.

Marketing's Influence and New Product Performance in Chinese Firms

This article explores the role of marketing in the new product development process from a sociopolitical influence perspective. It makes an explicit distinction between the participation and influence of marketing and empirically investigates their differential effects on new product performance. The results, based on data collected from 114 high-technology firms in China, suggest that marketing's influence is related positively to new product market performance and timeliness of development. They also support the argument that the positive effect of marketing's participation on new product performance is mediated completely by its influence. Furthermore, the study reveals that the effectiveness of marketing's influence on new product performance depends on product newness to the firm, project formalization, perceived power of marketing, and the strength of the influence attempt. Managerial and research implications of the findings are explored.

Towards a competence theory of the region

This paper argues the case for extending the competence theory of the firm, or more generally the competence perspective, to analysis of the region. The relevance of the perspective follows from the characterisation of productive systems such as firms and regions as ensembles of competences that emerge from, but are not reducible to, social interaction. Attention is drawn to an identifiable (although unacknowledged) convergence of ideas in the recent regional literature, arguing that these ideas are best re-conceptualised in terms of regional competences. The cluster of hightechnology firms in the Cambridge region of the UK is briefly referred to in order to illustrate the main ideas of the paper.

Future firms: how America's high technology companies work

1: Understanding High Technology Business. 2: History of High Technology. 3: The Days of Its Lives. 4: Financing Ventures. 5: High Technology Founders and Business Performance. 6: Origin of High Technology Species. 7: Strategy and the New Technology Venture. 8: Technology Ventures and Their Environment. 9: From the Venture to Established High Technology Company. 10: Human Resources. 11: High Technology and CEOs. 12: Strategies for Established Companies. 13: Organization and Environment. 14: Marketing Operations. 15: High Technology Firm Size Differences. 16: High Technology Business Concentrations. 17: State Support for High Technology Business. 18: Conclusions on High Technology Business

Firm Formation And Regional Spillovers - Evidence From Germany

This paper studies the effect of regional spillovers on the rate of firm formation in two major West German industries for the time period from 1989 to 1993. 1 exploit regional variations in firm formation at the county level to identify the effects of historically given industry structure and employment structure on thc emergence of new firms. The results point to the existence of strong localization and urbanization effects. The emergence of high technology firms seems to be contingent on a heterogeneous historical industry structure, the existence of service providers, and in particular on a high employment share of scientists in universities and extra-university research laboratories.

Network Positions and Propensities to Collaborate: An Investigation of Strategic Alliance Formation in a High-Technology Industry

I wish to acknowledge many helpful suggestions from Biil Barnett, Ron Burt, Glenn Carroll, Karel Cool, Mike Hannan, Jeff Pfeffer, Joel Podolny, and Jesper Sorensen, Comments from Mark Mizruchi and three anonymous reviewers greatiy improved this paper. Financial support for this research was provided by the FMC Scholar progfam at the University of Chicago, Graduate School of Business and from the State Farm Doctoral Dissertation Fellowship. The paper develops a net\/vork-based mapping of the technoiogicai positions of the firms in an industry and applies this model in a longitudinal study of the formation of alliances between organizations. In the analysis, the positions of high-technology firms in their competitive environment are stratified on two dimensions: crowding and prestige. Organizations in crowded positions are those that participate in technological segments in which many firms actively Innovate, and prestigious firms are those with a track record of developing seminal inventions. The study's principal empirical findings are that firms in crowded positions and those with high prestige form alliances at the highest rates. The statistical analyses, performed on a sample of semiconductor firms during a six-year period, demonstrate that crowding and prestige predict alliance formations at the firm level (which organizations establish the greatest number of alliances) and at the dyad level (which particular pairs of firms choose to collaborate).*

Technology diffusion and international income convergence

A macroeconomic model of international income convergence driven by differences in technology is presented. LDC firms adopt foreign technology by paying an upfront cost of adaptation, and early adopters create a positive externality for followers. In equilibrium, adoption is gradual and so is income convergence. Because of the externality, small differences in adoption costs across LDCs can lead to large differences in long-run income. During convergence, the LDC economy is dualistic with large high-technology firms operating alongside small, traditional establishments. The effects of trade policy and direct foreign investment are also examined.