Chapter 5: Processes at the Firm Level: Phases and Models of Development
5. Processes at the ﬁrm level: phases and models of development1 5.1 INTRODUCTION In new high-tech ventures, the novelty of the venture and inexperience of the entrepreneur, create a barrier that constrains the ability of the new venture during the early stages of growth to become an established ﬁrm. There is a need to overcome this challenge to achieve a succession of transitions from one phase of growth to the next. The problems faced by new high-tech ventures are particularly acute in university spin-oﬀs since universities typically lack resources and academic entrepreneurs may lack commercial skills to create ventures in an attempt to commercialize technological assets. These problems may be compounded by conﬂicting objectives among key stakeholders such as the university, the academic entrepreneur, the venture’s management team and suppliers of ﬁnance (such as venture capitalists). This chapter examines the phases that spin-offs go through in their development, and analyses the key challenges these ventures face in their development. Stage-based models identify the organizational characteristics exhibited within each stage of development and suggest the changes required in the behaviour and practices of entrepreneurs if their business is to progress to the next stage. A resource-based perspective of the ﬁrm (Barney et al., 2001; Penrose, 1959) suggests that in order to progress through diﬀerent phases of development, spin-offs need to develop both resources and internal capabilities over time. In addition, there has been increasing recognition of the role of feedback and the potential for nonlinear development. To examine...
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