Resource, Inter-organizational Linkages, and New Venture Performance
Date Issued
2008
Date
2008
Author(s)
Chen, Hui-Ju
Abstract
The garnering and utilization of resources is at the heart of both strategy and entrepreneurship literature. Concerning the resources possessed by ventures are typically scant, this dissertation is premised on inter-organizational linkages being important means to bridge the needed resources or provide the base of resource leverage for young ventures, especially those operated in the turbulent high tech industries. The strong form of inter-organizational linkages, linkages through equity holding, is the focus of the study. Particularly, the effect of corporate venture backing, in a broader sense of equity investment in venture by the established corporations, as well as in a narrower sense of corporate spin-offs, is examined in two studies contained in this dissertation. The central question is to examine if technology-based firms that were supported or instigated by established corporations have different resource profiles and performance consequence. he empirical context is a carefully selected sector of the IC design industry, because of its emergent, dynamic nature and its high varieties in entrant origin. Various sources of data were utilized to examine ventures that had gone through the IPO process between 1995 to 2005. To reflect the multiple-dimensional aspect of technology-based venture performance, several performance measures, such as profitability, growth, time to IPO, and technological outputs were adopted. The concept of corporate backing was expressed in terms of the presence, the level, as well the characteristics associated with the relations between the corporate investors and the ventures. he results demonstrate that inter-firm connections contribute to a positive performance effect; however, the evidence does not provide any real support for the benefits of venture capital involvement, benefits which have been typically assumed in prior studies. While internal capabilities are seen as strong predictors of performance, we suggest that linkages via corporate spin-off also provides a strong initial boost for the subsequent build up of resource strength. urthermore, the dissertation also demonstrates the divergent findings of significant enhancing impact on time to IPO and equivocal impact on financial performance. There is obviously a positive impact on time to IPO, that is firms funded in part by established corporations develop faster, bigger and reach initial success of getting IPO sooner, supporting the value added role of CVB. Nevertheless, there are no equivalent positive impacts on financial performance nor on technological performance. Additional probing reveals that although CVB firms as a group appears no more likely than non CVB firms to have better financial performance, it is more likely for CVB firms to have super star performers. ur study applies the knowledge of the extant literature on resources, networks and venture finance to a relatively unexamined phenomenon which has gained increasing importance in the business practices. The dissertation contributes to demystify the generally conceived notion of “rich dad effect” and provide a rationale to reconcile the notion and the empirical findings. Also, the dissertation provides opportunities for further studies in the extended area of corporate governance, and the social impact of entrepreneurial efforts.
Subjects
corporate venture backing
corporate spin-off
inter-organizational linkages
venture resources
Type
thesis
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