Entrepreneurship, technology, and the growth process: A study of young, medium-sized technology-based firms

Abstract

The purpose of this thesis is to contribute to the study of the growth process in young technology-based firms. Two sets of issues are addressed in the thesis which are related to one another by using a conceptualization of Penrose's theory of the growth process. The first set of issues concerns how young technology-based firms achieve reinforced growth. It is investigated how the characteristics of start-up opportunities may constrain firms from attaining reinforced growth, how specific actors - such as venture capital firms and large corporations - help firms to avoid resource constraints, and finally whether the growth orientation of the firms is affected by these actors. The second set of issues concerns how the growth process affects the development of technical knowledge in young technology-based firms, and hence, their ability to create and detect new opportunities for further growth.

In order to investigate the above issues, two empirical studies have been conducted. Both focus on the population of new technology-based firms in Sweden established between 1975 and 1993. A mixture of quantitative and qualitative data collection methods is used in both studies. Analysis of quantitative data is used for comparing firms that have become medium-sized with those that have not. Interviews in medium-sized firms are used to analyze the growth process.

The main findings can be divided into two parts. First, it was found that differences in the novelty of opportunities at start-up may influence the probability of attaining reinforced growth. Additionally, a relationship was found between access to resources, ownership changes and growth orientation. New owners both provide access to resources necessary for growth and increase the growth orientation of the firm. Hence, they may enable growth in two ways. Second, the study found that growth affects the organization of technical knowledge as well as the incentives for seeking new technical knowledge. The number of distinctive fields of technical knowledge was found to increase during growth, but this increase was limited by the characteristics of the firms' technology and by growth itself. Incentives for knowledge-seeking were also found to change during growth, leading to problems related to retention of technical employees and updating of the technical knowledge base.

The chief contribution of this thesis is the conceptualization of the growth process that is used to connect the two sets of research issues. The study also provides empirical support for the need to consider multiple intentions and incentives when examining growth in young technology-based firms. Intentions and incentives are not predetermined, but are among the variables that may change and are to be explained. Finally, the study empirically demonstrates some aspects of the interaction between technical knowledge and growth.

The findings of the thesis point to tensions, inherent in the growth process in young technology-based firms, that must be attended to by management in order to attain and sustain reinforced growth.