Building Dynamic Capabilities in Rapid Innovation-based Industries
Edited by Stuart Wall, Carsten Zimmermann, Ronald Klingebiel and Dieter Lange
Chapter 6: Resource Acquisition and Venture Survival in the Telecommunications Industry
Berna Polat1 ABSTRACT Using resource-based theory and upper echelon theory, this study identifies factors influencing new venture survival and failure. The resources firms control and the characteristics and composition of their top management teams (TMTs) play a major role in firms’ likelihood of failure. The results indicate that TMT characteristics do not significantly differ among survivors and non-survivors and TMT composition does not impact firm failure. Consistent with earlier literature, firms entering the market earlier, patenting their innovations, and those with a scale advantage have a higher likelihood of survival. INTRODUCTION In the last decade, triggered by technological breakthroughs and government deregulation, the number of new firms in Internet-based and telecommunications industries increased dramatically. While some of these ventures created successful public firms and jobs in the short run, many failed within a few years. The number of new issues was dramatically lower in 2001–2005 after the dotcom era than in any other period in the last two decades. It is important for researchers to identify and understand how and why these boom and bust cycles occur. This chapter examines such survival and failure patterns. Failure of new ventures is an area that has not been systematically explored in the strategic management or the entrepreneurship literature. This chapter proposes that past research attempting to investigate this topic has serious limitations in that it has relied solely on data collected from successful companies. The study is designed to overcome the survivor 130 Resource acquisition and venture survival 131 bias inherent...
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