Innovation In New Ventures Research Articles

Venture team membership dynamics and new venture innovation

AbstractResearch SummaryAlthough pre‐entry startup experience is widely recognized as a driver of innovation in new ventures, a core feature of new venture teams is that their membership is fluid. In this article, we theorize and test whether venture team membership fluidity incrementally explains new venture innovation. We also investigate and demonstrate that team fluidity conditions the impact of pre‐entry startup experience present at founding. Testing our hypotheses with a cohort of 440 new ventures tracked for 8 years, we find support for the model across a wide range of specifications. Our study advances current understanding of the relationship between pre‐entry experience and new venture innovation, as well as novel insights into the central but often overlooked role of team fluidity.Managerial SummaryNew ventures rely on innovations to establish a market presence and compete against established firms. Even though team members are an essential source of inspiration, ideas, and resources to foster innovation, teams often change substantially as the venture evolves. We ask the question—does modifying the make‐up of the team make it more likely that the venture can innovate? We contend that such change significantly shapes the cognitive and interpersonal processes by which team members contribute to innovations. Our results suggest that new ventures undergoing member change can boost innovation in three ways: adding new members to the team with relevant experiences, taking advantage of opportunities to pause and reflect upon team processes in the wake of change, and mitigating the disruptive effects of change.

The fitting effects between strategic flexibility and managerial ties on green innovation in new ventures

Green innovation is a key variable in coordinating economic growth and ecological protection, and also the fundamental driving force for future economic development. Green innovation plays a crucial role in creating competitive advantages for companies. This paper investigates the impact of the interaction between strategic flexibility and managerial ties on green innovation in new firms, and explores ways to match strategic flexibility and managerial ties that are more appropriate for conducting green innovation practices. The results of the empirical study by using survey data from Chinese new firms indicate that different types of strategic flexibility and managerial ties can generate different synergies and thus have different impacts on green innovation. Specifically, for a new venture, it is more likely to use its ties with government to develop green innovation when it has greater resource flexibility. Conversely, a new venture with greater coordination flexibility is more capable of implementing green innovation through close ties with other firms. Our theoretical constructs and empirical results can better explain how different types of strategic flexibility use different kinds of managerial relationships to promote green innovation in new ventures.

How do Founders’ Imprinting of Being Only-Children Impact Product Innovation in New Ventures?

The differences between only-children and children with siblings have been discussed for centuries and has captured the attention of the general public and researchers alike. However, limited knowledge is available about the imprinting effect only-children background has on individual’s strategic decision in business context. This study endeavors to fill this research gap by examining how founders’ background of being only-children impact product innovation in new ventures. By drawing on insight of imprinting theory, we theories that only-children founders have higher risk-aversion and less self-efficacy generating from interaction pattern with parents and the lack of peer competition in early family life, which contribute to lower motivation to pursue product innovation. We test our hypothesis using a sample of 422 Chinese new ventures. The empirical result support the negative relationship between founders’ only-children imprint, and product innovation. We also find that the negative relationship is strengthened when founders secure financial support from their families and is attenuated when they obtain strong faith in effort through experience outside family. From imprinting perspective, this study extends our understanding about the non-ignorable effect of early life family environment on individual’s strategic decision in business context and has implications for family science and entrepreneurship.

Effects of Human-Social Capital Congruence and Environmental Dynamism on Dynamic of Encouragement and Organizational Innovation in New Ventures.

Although human capital and social capital can provide knowledge and social network for organizations, existing studies are inadequate to explore how the interaction between the two types of capital shapes organizational behaviors or organizational outcomes. The present study investigates whether the linkage of human capital to social capital was compensatory or complementary, and how they impact organizational innovation in consideration of the dynamic of encouragement. Using data from more than 200 technological new ventures in China, we analyze the associations among all the parameters through bootstrapping and response surface methods. The findings suggest that organizational innovation is stronger when human and social capital are congruent and that the dynamic of encouragement fully mediates the relationship between capital congruence and organizational innovation performance. Furthermore, environmental dynamism positively moderates the relationship between capital congruence and the dynamic of the environment, that is, the relationship is stronger for new ventures in high rather than low dynamic environments. Finally, the theoretical and managerial implications of this study are discussed.

How to Realize Business Model Innovation for New Ventures? Psychological Capital and Social Capital Perspective.

Business model innovation has become a necessary means for enterprises to break through path constraints, achieve sustainable development, and obtain sustainable competitiveness, which has been paid more and more attention by entrepreneurs and scholars. Based on the resource conversation theory and signal theory, this study constructs a research model with psychological capital (PC) and social capital (SC) as independent variables and business model innovation as dependent variables along the logical path of “resource acquisition-resource utilization.” By dividing business model innovation into pioneering business model innovation and perfect business model innovation, we use fuzzy-set qualitative comparative analysis (fsQCA) to explore the impact of dual capital on business model innovation of new ventures. This study takes entrepreneurs from the eastern part of China's seven entrepreneurship active provinces as investigation objects, based on the analysis of the collected 242 valid questionnaire results, emphasizing that any single antecedent can not be a sufficient and necessary condition for pioneering and perfect business model innovation. In this case, we carried out research with a certain antecedent variable as the core and supplemented with other antecedent variables to form seven different configurations. The results showed that the combination of the antecedent variables could effectively achieve the pioneering and perfect business model innovation. The theoretical contributions of this study are as follows: (1) it enriches the research on the antecedents of business model innovation in new ventures; (2) it expands the application scenarios of resource conversation theory and signal theory; and (3) it is emphasized that the innovation of business model of new ventures is the result of the interaction and value-added linkage of various internal and external resources.

Driving Sustainable Innovation in New Ventures: A Study Based on the fsQCA Approach

With the external environment becoming increasingly complex and changeable, how we can effectively enhance the innovation of companies in sustainability has become the focus of research. For startups, due to their lack of resources and poor independent innovation capabilities, they need to search for external knowledge from outside to meet their own needs. Therefore, obtaining external knowledge sources and adopting appropriate methods for knowledge search is the key to affecting innovation in sustainability. Moreover, enterprise capability is also an important factor restricting sustainable innovation. In this paper, we construct an integrated framework of resources and capabilities based on theoretical learning and practice between 2018 and 2021, containing technical knowledge, market knowledge, a formal search, an informal search, organizational learning, and strategic flexibility. Taking 450 new ventures in China as the research sample, we adopt the fsQCA method and derive the path driving the sustainable innovation of new ventures. The results show that resources and enterprise capabilities combine to influence sustainable innovation, and there are two configuration paths driving the sustainable innovation of new ventures. In the first pathway, a technical knowledge search, a market knowledge search, organizational learning and strategic flexibility are the core conditions; in the second pathway, a formal search, an informal search, organizational learning, and strategic flexibility are the core conditions.

An empirical evaluation of entrepreneurial orientation in the context of innovation in new ventures

An empirical evaluation of entrepreneurial orientation in the context of innovation in new ventures

An empirical evaluation of entrepreneurial orientation in the context of innovation in new ventures

An empirical evaluation of entrepreneurial orientation in the context of innovation in new ventures

Innovation, new ventures, and corruption: Evidence from India

We investigate the effect of corruption on product, process, marketing, and organizational innovation in new ventures. Based on differences in the ability of firms to appropriate economic returns from these types of innovation, we argue that corruption undermines the formal property protection associated with product innovation, privileging the other kinds of innovation, which are less susceptible to the effects of corruption and thus provide more attractive returns. Furthermore, we argue for a differential impact of corruption on innovation for new ventures relative to incumbent firms. We find that corruption reduces product innovation, but increases process, marketing, and organizational innovation. The impact of corruption on the product innovation of new ventures is more severe relative to that of incumbent firms, while the positive impact of corruption on marketing and organizational innovation is weaker for new ventures.

Escaping the knowledge corridor: How founder human capital and founder coachability impacts product innovation in new ventures

Innovation is of central importance to entrepreneurship research, as independent entrepreneurs account for the most fundamentally novel product offerings. This study investigates how founder human capital and founder coachability relate to exploiting product innovation in new ventures. Drawing on a dyadic sample of founders and startup coaches, we clarify how general human capital broadens the knowledge corridor to enhance product innovation. Conversely, our study shines a light on the dark side of specific human capital and illustrates how specific prior knowledge constrains the knowledge corridor to limit product innovation. Further, we find that founder coachability—the degree to which an entrepreneur seeks, considers, and integrates feedback—is related to exploiting product innovation. Perhaps most importantly, we advance coachability as a learning mechanism that moderates the relationship between specific human capital and product innovation to overcome knowledge corridor constraints. Our findings have implications for human capital, coachability, and entrepreneurial learning.

Unpacking liabilities of newness and smallness in innovative start-ups: Investigating the differences in innovation performance between new and older small firms

New ventures face both liabilities of newness and smallness, which may inhibit their innovation efforts and output. However, existing research has not clearly distinguished between the two liabilities, leaving it unclear how certain determinants differentially affect innovation performance in start-ups relative to older established small and medium sized enterprises (SMEs). Therefore, in this study we investigate the impact of R&D investments, external knowledge sourcing and public R&D subsidies on innovation effectiveness in new versus older small firms. Employing panel data from the Spanish Community Innovation Survey (CIS), we show that R&D investments have a lower contribution to the innovation performance of new ventures, compared to older small firms. In contrast, we find that external knowledge sourcing makes a higher contribution to the innovation performance of new compared to older small firms, but only in high-tech settings. However, we find no support for a differentiating effect of R&D subsidies in new versus established small firms. Effectively, our results highlight the limited effects of internal R&D investments and R&D policy instruments to promote the growth of innovative start-ups, while highlighting potential benefits of their openness to external sources of innovation. As such, these results have important implications for research, practices and policies that relate to innovation in new ventures and SMEs, while casting doubts on the effectiveness of some of the common strategy and policy instruments to stimulate performance in small innovative start-ups.

The Impact of Organizational Legitimacy on Product Innovation: A Comparison Between New Ventures and Established Firms

What is the impact of organizational legitimacy (OL) on the firm innovation? The extant literature shows ambiguous answers. This study argues that such an ambiguity stems from two neglected facts. First, OL is audience dependent. Second, OL varies across firm life cycle stages. This study clarifies political legitimacy (PL) and market legitimacy (ML) as two key types of OL, and distinguishes them in resources they provide access to and firm behaviors they result in. Then, it examines the impact of PL and ML on the product innovation in new ventures and established firms, respectively. Drawing on the data of 211 firms, this study finds that the relationship of PL to product innovation is inverted U-shaped in new ventures, while negative in established firms, and the linkage between ML and product innovation is positive in new ventures but inverted U-shaped in established firms. This study not only draws a more comprehensive picture about the impact of OL on the product innovation, but also lays down a threshold over which to elaborate the implications of OL. In addition, it guides new ventures and established firms in taking advantage of OL to foster the product innovation.

The Adverse Effect of Role Formalization on Social Mechanisms of Innovation in New Ventures

In this study, I argue that under conditions of high uncertainty, while defying the rational tendency to introduce order through formalization, it is indeed crucial to allow tacit, yet formidable, ...

Entrepreneurs and innovation: The contingent role of institutional factors

Entrepreneurs play a key role in introducing innovations into the market. However, the extant literature has found that the degree of innovation within new ventures varies considerably and that these differences can be related to the individual factors of entrepreneurs. In this article, we go one step further and suggest that the influence of individual factors on innovation is contingent on the institutional context. We use a sample of more than 140,000 entrepreneurs from 101 countries that have participated in the Global Entrepreneurship Monitor (GEM) project between 2005 and 2015. Our results show that individual characteristics of the entrepreneur, such as risk tolerance, entrepreneurial alertness, education and previous entrepreneurial experience, influence innovation in new ventures but that their effect is reinforced by an institutional context with high economic freedom.

ENTREPRENEURIAL PASSION AND ORGANIZATIONAL INNOVATION: THE MODERATING ROLE OF THE REGULATORY FOCUS OF ENTREPRENEURS

This study examines the relationship between entrepreneurial passion and organizational innovation in new ventures. We also investigate the moderating role of entrepreneurs’ cognition, namely regulatory focus, in the relationship between entrepreneurial passion and organizational innovation. Findings from data collected from 141 Chinese new ventures indicated that entrepreneurial passion is positively related to organizational innovation. Moreover, the regulatory focus of entrepreneurs moderates the relationship between entrepreneurial passion and organizational innovation, such that the relationship is stronger under high promotion focus or low prevention focus. Theoretical and practical implications of these findings are discussed.

The choice of suitable cooperation partners for product innovation: Differences between new ventures and established companies

This article examines the effect of different types of cooperation partners on product innovation in new ventures and in established companies. We argue that the effectiveness of interorganizational cooperation depends on how the resources or capabilities the partners provide match the different characteristics of new ventures and established companies. Specifically, we argue that new ventures cooperate under a cost-economizing and risk-sharing logic; consequently, other new ventures, small firms, universities/research centers and financial institutions are suitable partners. Conversely, large established companies and public administrations are better partners for established companies because they are more motivated to enter into innovation partnerships based on a strategic rationale. We use data from 2473 firms operating in intensive innovation sectors in cluster-like environments in 32 European countries. By using different proxies for product innovation, our results generally confirm our arguments. These findings yield relevant contributions to the study of innovation, new ventures and interorganizational cooperation and provide salient implications for practitioners.

Labor flexibility and innovation in new ventures

The study investigates how labor flexibility affects innovation in new ventures. More specifically, drawing upon a sample of 143 Greek ventures less than 8 years old, it examines empirically the individual and interactive effects of functional and numerical flexibility on product innovation. It also considers how these effects are moderated by the entrepreneur’s political skill. Results suggest that functional flexibility has a positive direct effect on incremental innovation, whereas numerical flexibility has a positive direct effect on radical innovation. The interactions between numerical and functional flexibility affect both types of innovation. The results also suggest that the labor flexibility–innovation relationship is positively moderated by the entrepreneur’s political skill. These findings point toward aspects of knowledge related with flexible labor engagement and entrepreneurial relational capital that affect innovation.

The differing impact of the type of partner on product innovation in new ventures

We analyze the effect of different types of cooperation on product innovation in new ventures and in established companies. We argue that the effectiveness of cooperation depends on how the resourc...

Fitting Effects between Strategic Flexibility and Managerial Ties on Radical Innovation

In emerging economies, radical innovation is critical for new ventures' survival and prosperous. This paper examine how strategic flexibility (via resource flexibility and coordination flexibility) interacts with managerial ties (via ties with other firms and ties with government) to affect radical innovation in new ventures. Survey data from China demonstrate that the effects of resource flexibility and coordination flexibility are contingent on ties with other firms and ties with government in opposite ways. In particular, a new venture with stronger resource flexibility is more likely to achieve radical innovation by matching their close ties with government rather than ties with other firms. In contrast, a new venture with stronger coordination flexibility is more capable of developing radical innovation by matching their close ties with other firms rather than ties with government.

Product Innovation in New Ventures: Evidence from the Kauffman Firm Survey

Product Innovation in New Ventures: Evidence from the Kauffman Firm Survey