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Do intangible assets and pre-founding R&D efforts matter for innovation speed in start-ups?

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Author Info

  • Ans Heirman

    ()

  • Bart Clarysse

    ()
    (Vlerick Leuven Gent Management School)

Abstract

The launch of the first product is an important event for start-ups, because it takes the new venture closer to growth, profitability and financial independence. However, entrepreneurship literature lacks theory and data on new product development and innovation speed. Integrating insights form new product development literature with resource-based theory, we construct a conceptual framework concerning the antecedents of innovation speed in start-ups. In particular, we argue that pre-founding R&D efforts and intangible assets such as team tenure, experience of founders, and collaborations with third parties are important for innovation speed. We collected a unique dataset on 99 research-based start-ups (RBSUs) and use an event-history approach to test our model. We find that RBSUs differ significantly in their starting conditions and that these differences have a significant effect on the time it takes to launch the first product. The impact of starting conditions on innovation speed differs however between software, medical-related, telecom and other technologies. Although intuition suggests that start-ups that are further in the product development cycle at founding launch their first product faster, we find that software firms starting with a beta-version experience slower product launch. Next, it is shown that team tenure and experience of founders leads to faster product launch. Contrary to expectations, alliances with other firms do not significantly affect innovation speed and collaborations with universities lead to longer development times. The insights of this study enhance our understanding of product development processes in start-ups and the differences between slow growers and fast growers.

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Bibliographic Info

Paper provided by Vlerick Leuven Gent Management School in its series Vlerick Leuven Gent Management School Working Paper Series with number 2004-04.

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Length: 40 pages
Date of creation: 12 Apr 2004
Date of revision:
Handle: RePEc:vlg:vlgwps:2004-04

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Keywords: Intangible assets; New Product Development and Start-Ups;

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References

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  1. Edwin Mansfield, 1988. "The Speed and Cost of Industrial Innovation in Japan and the United States: External vs. Internal Technology," Management Science, INFORMS, vol. 34(10), pages 1157-1168, October.
  2. Clarysse, Bart & Moray, Nathalie, 2004. "A process study of entrepreneurial team formation: the case of a research-based spin-off," Journal of Business Venturing, Elsevier, vol. 19(1), pages 55-79, January.
  3. Steven A. Lippman & Kevin F. McCardle, 1987. "Does Cheaper, Faster, or Better Imply Sooner in the Timing of Innovation Decisions?," Management Science, INFORMS, vol. 33(8), pages 1058-1064, August.
  4. Shane, Scott A., 1994. "Are champions different from non-champions?," Journal of Business Venturing, Elsevier, vol. 9(5), pages 397-421, September.
  5. Robert E. Quinn & Kim Cameron, 1983. "Organizational Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence," Management Science, INFORMS, vol. 29(1), pages 33-51, January.
  6. Cantwell, John & Iammarino, Simona, 2001. "EU Regions and Multinational Corporations: Change, Stability and Strengthening of Technological Comparative Advantages," Industrial and Corporate Change, Oxford University Press, vol. 10(4), pages 1007-37, December.
  7. Storey, D. J. & Tether, B. S., 1998. "New technology-based firms in the European union: an introduction," Research Policy, Elsevier, vol. 26(9), pages 933-946, April.
  8. Hellmann, Thomas & Puri, Manju, 2000. "The Interaction between Product Market and Financing Strategy: The Role of Venture Capital," Review of Financial Studies, Society for Financial Studies, vol. 13(4), pages 959-84.
  9. Thursby, Jerry G & Jensen, Richard & Thursby, Marie C, 2001. " Objectives, Characteristics and Outcomes of University Licensing: A Survey of Major U.S. Universities," The Journal of Technology Transfer, Springer, vol. 26(1-2), pages 59-72, January.
  10. Maijoor, S.J. & Witteloostuijn, A. van, 1996. "An empirical test of the resource based theory: strategic regulation in the Dutch audit industry," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5373480, Tilburg University.
  11. Maidique, Modesto A. & Zirger, Billie Jo, 1985. "The new product learning cycle," Research Policy, Elsevier, vol. 14(6), pages 299-313, December.
  12. Thomas Hatzichronoglou, 1997. "Revision of the High-Technology Sector and Product Classification," OECD Science, Technology and Industry Working Papers 1997/2, OECD Publishing.
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