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Internal capabilities, external networks, and performance: a study on technology‐based ventures


  • Choonwoo Lee
  • Kyungmook Lee
  • Johannes M. Pennings


This study examined the influence of internal capabilities and external networks on firm performance by using data from 137 Korean technological start‐up companies. Internal capabilities were operationalized by entrepreneurial orientation, technological capabilities, and financial resources invested during the development period. External networks were captured by partnership‐ and sponsorship‐based linkages. Partnership‐based linkages were measured by strategic alliances with other enterprises and venture capitalists, collaboration with universities or research institutes, and participation in venture associations. Sponsorship‐based linkages consisted of financial and nonfinancial support from commercial banks and the Korean government. Sales growth indicated the start‐up's performance. Regression results showed that the three indicators of internal capabilities are important predictors of a start‐up's performance. Among external networks, only the linkages to venture capital companies predicted the start‐up's performance. Several interaction terms between internal capabilities and partnership‐based linkages have a statistically significant influence on performance. Sponsorship‐based linkages do not have individual effects on performance but linkage with financial institutions has a multiplicative effect with technological capabilities and financial resources invested on a start‐up's performance. Implications and directions for future research were discussed. Copyright © 2001 John Wiley & Sons, Ltd.

Suggested Citation

  • Choonwoo Lee & Kyungmook Lee & Johannes M. Pennings, 2001. "Internal capabilities, external networks, and performance: a study on technology‐based ventures," Strategic Management Journal, Wiley Blackwell, vol. 22(6‐7), pages 615-640, June.
  • Handle: RePEc:bla:stratm:v:22:y:2001:i:6-7:p:615-640
    DOI: 10.1002/smj.181

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