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Firm-Specific Resources and Wealth Creation in High-Technology Ventures: Evidence from Newly Public Biotechnology Firms

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  • David L. Deeds
  • Dona Decarolis
  • Joseph E. Coombs

Abstract

We explore the relationship between wealth creation in high-technology ventures and firm-specific resources. We argue that Market Value Added is a particularly appropriate measure of entrepreneurial performance because of its focus on wealth creation, which is the essence of entrepreneurship. We present a model of wealth creation in new ventures based on the resource-based theory of firm behavior. The model suggests that firm-specific research and scientific capabilities are associated with wealth creation. The model is tested on a sample of 89 biotechnology firms. The results provide strong evidence for the hypothesized relationship between firm-specific capabilities and wealth creation in new ventures.

Suggested Citation

  • David L. Deeds & Dona Decarolis & Joseph E. Coombs, 1998. "Firm-Specific Resources and Wealth Creation in High-Technology Ventures: Evidence from Newly Public Biotechnology Firms," Entrepreneurship Theory and Practice, , vol. 22(3), pages 55-73, April.
    • Handle: RePEc:sae:entthe:v:22:y:1998:i:3:p:55-73
    DOI: 10.1177/104225879802200303
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