The Life Cycle of New Ventures

The Life Cycle of New Ventures

Emergence, Newness and Growth

Edited by Candida G. Brush, Lars Kolvereid, L. Øystein Widding and Roger Sørheim

The contributors to this book provide a cross-national comparison of venture emergence, newness and growth. Their chapters examine the influences of cultural, social and economic factors on venture development, compare the approaches of entrepreneurs who move from idea to emerging organization, and investigate acquisition and development of resources in growth and performance.

Chapter 6: The Link Between Open Innovation Policy and Entrepreneurship: The Case of Industry Incubators in Norway

Tommy Høyvarde Clausen, Einar Rasmussen and Mark P. Rice

Subjects: business and management, entrepreneurship, international business

Extract

Tommy Høyvarde Clausen, Einar Rasmussen and Mark P. Rice INTRODUCTION A central challenge for emerging firms is to access resources and to get access to a diverse competence and skill base from which they can develop new products and services that will enable them to compete with other firms (Aldrich, 1999). Emerging firms also lack working ties to suppliers, customers and other external resource providers, causing them to face a ‘liability of newness’ (Stinchcombe, 1965). Whereas new firms lack resources in general, established incumbent firms often face resource abundance as they often generate and make new technologies and resources that may, or may not, be compatible with their existing strategy (Burgelman, 1983). Recent organizational theory suggests that older and established firms face a ‘liability of senescence’ where they accumulate durable features, such as precedents, political coalitions and taken for granted understandings that constrain collective behavior and force firm strategy towards exploitation of known alternatives (Hannan, 1998). Empirical research has confirmed that incumbent firms possess technologies that are economically valuable, but which the firms have chosen not to exploit (Rivette and Kline, 1999). We argue that policy may have a role in addressing and connecting (1) new firms searching for valuable external resources and (2) incumbent firms possessing – but not exploiting – valuable resources. Policies addressing these issues may differ from traditional neoclassical technology policies which are based upon the premise of market failures that recommend policymakers to subsidize internal research and development (R&D) within firms. In contrast to market...

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