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Founder human capital and new technology venture R&D search intensity: the moderating role of an environmental jolt

Author

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  • Xian Cao

    (University of Connecticut)

  • Junyon Im

    (University of Manitoba)

Abstract

We argue that founder human capital—formal education, same-industry work experience, and prior entrepreneurial experience—will be positively related to the research and development (R&D) search intensity of new technology ventures. In addition, these positive relationships will be strengthened when new technology ventures face an environmental jolt, such as the Great Recession. An empirical analysis of longitudinal data on new technology ventures in the manufacturing industry from the Kauffman Firm Survey (KFS) broadly supports our hypotheses. The results show that all dimensions of founder human capital increase new technology ventures’ R&D search intensity, and the positive effect of same-industry work experience becomes stronger during the Great Recession. However, in contrast to our expectation, the positive effect of prior entrepreneurial experience is weaker during the Great Recession, not stronger. Furthermore, we do not find support for our hypothesis that the positive relationship between founders’ formal education and new technology ventures’ R&D search intensity is stronger during the Great Recession. These seemly contradictory results suggest that although the different dimensions of founder human capital are all positively related to new technology ventures’ R&D search intensity, they exert divergent impacts on it when confronting an environmental jolt. As such, our study extends the situational and institutional determinants of R&D search intensity by focusing on founders’ human capital and provides deeper insights by considering environmental conditions. By shifting the focus from established firms to new ventures, our study also enriches the understanding of new technology ventures’ innovative activities.

Suggested Citation

  • Xian Cao & Junyon Im, 2018. "Founder human capital and new technology venture R&D search intensity: the moderating role of an environmental jolt," Small Business Economics, Springer, vol. 50(3), pages 625-642, March.
    • Handle: RePEc:kap:sbusec:v:50:y:2018:i:3:d:10.1007_s11187-017-9911-5
    DOI: 10.1007/s11187-017-9911-5
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    2. Lv, David Diwei & Chen, Weihong & Zhu, Hang & Lan, Hailin, 2019. "How does inconsistent negative performance feedback affect the R&D investments of firms? A study of publicly listed firms," Journal of Business Research, Elsevier, vol. 102(C), pages 151-162.
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    7. Claudia Cantabene & Iacopo Grassi, 2020. "R&D cooperation in SMEs: the direct effect and the moderating role of human capital," Applied Economics, Taylor & Francis Journals, vol. 52(28), pages 3090-3105, June.
    8. Patel, Pankaj C. & João Guedes, Maria & Pagano, Michael S. & Olson, Gerard T., 2020. "Industry profitability matters: The value of sustainable growth rate and distance from bankruptcy as enablers of venture survival," Journal of Business Research, Elsevier, vol. 114(C), pages 80-92.

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    More about this item

    Keywords

    Founder human capital; New technology ventures; R&D search intensity; Environmental jolts;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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