Brian S. Silverman

Don't go it alone: alliance network composition and startups' performance in Canadian biotechnology

We combine theory and research on alliance networks and on new firms to investigate the impact of variation in startups’ alliance network composition on their early performance. We hypothesize that startups can enhance their early performance by 1) establishing alliances, 2) configuring them into an efficient network that provides access to diverse information and capabilities with minimum costs of redundancy, conflict, and complexity, and 3) judiciously allying with potential rivals that provide more opportunity for learning and less risk of intra-alliance rivalry. An analysis of Canadian biotech startups’ performance provides broad support for our hypotheses, especially as they relate to innovative performance. Overall, our findings show how variation in the alliance networks startups configure at the time of their founding produces significant differences in their early performance, contributing directly to an explanation of how and why firm age and size affect firm performance. We discuss some clear, but challenging, implications for managers of startups. Copyright

Picking winners or building them? Alliance, intellectual, and human capital as selection criteria in venture financing and performance of biotechnology startups

In the entrepreneurial setting, financial intermediaries such as venture capital firms (VCs) are perhaps the dominant source of selection shaping the environment within which new ventures evolve. VCs affect selection both by acting as a ‘‘scout’’ able to identify future potential and as a ‘‘coach’’ that can help realize it. Despite the large literature on the role of VCs in encouraging startups, it is generally taken for granted that VCs are expert scouts and coaches, and so the ways in which VCs actually enhance startup performance are not well understood. In this study, we examine whether VCs’ emphasize picking winners or building them by comparing the effects of startups’ alliance, intellectual, and human capital characteristics on VCs decisions to finance them with the effects of the same characteristics on future startup performance. Our findings point to a joint logic that combines the roles: VCs finance startups that have strong technology, but are at risk of failure in the short run, and so in need of management expertise. Our findings thus support the belief in VC expertise, but only to a point. VCs also appear to make a common attribution error overemphasizing startups’ human capital

Why Firms Want to Organize Efficiently and What Keeps Them from Doing So: Inappropriate Governance, Performance,and Adaptation in a Deregulated Industry

This paper integrates content-based predictions of transaction cost economics with process-based predictions of organizational change to understand adaptation to deregulation in the for-hire trucking industry. We predict and find that firms whose governance of a core transaction is poor (according to transaction cost reasoning) will realize lower profits than their better-aligned counterparts and that these firms will attempt to adapt so as to better align their transactions. Results show that several organizational features affect the rate of adaptation: (1) firms with large investments in specialized assets adapt less readily than firms that rely on generic assets, (2) firms with unions adapt less readily than firms without unions, (3) firms that must replace employee drivers with owner-operators adapt less readily than firms that must replace owner-operators with employee drivers, and (4) entrants adapt more quickly than incumbent carriers. There is evidence of institutional isomorphism in that although carriers move systematically to reduce misalignment, they do so less assiduously when this will make their governance of drivers look less like that of nearby, similar carriers. Finally, our results indicate that firms that ultimately exited adapted more quickly than firms that survived.

How does innovative activity change as industries mature

Abstract In this paper, we use evidence on the activity of U.S. publicly traded firms from the early 1980s to the mid-1990s to investigate whether innovation – measured by patenting activity – declines during the mature phase of the industry life cycle. Overall, the analysis reveals that the general level of patenting activity is not lower in mature industries than in emerging industries. We also find no evidence of a shift from product to process innovation with industry maturity, and no evidence that leaders innovate less in mature industries than in non-mature industries.

Churn, Baby, Churn: Strategic Dynamics Among Dominant and Fringe Firms in a Segmented Industry

This paper integrates and extends the literatures on industry evolution and dominant firms to develop a dynamic theory of dominant and fringe competitive interaction in a segmented industry. It argues that a dominant firm, seeing contraction of growth in its current segment(s), enters new segments in which it can exploit its technological strengths, but that are sufficiently distant to avoid cannibalization. The dominant firm acts as a low-cost Stackelberg leader, driving down prices and triggering a sales takeoff in the new segment. We identify a “churn” effect associated with dominant firm entry: fringe firms that precede the dominant firm into the segment tend to exit the segment, while new fringe firms enter, causing a net increase in the number of firms in the segment. As the segment matures and sales decline in the segment, the process repeats itself. We examine the predictions of the theory with a study of price, quantity, entry, and exit across 24 product classes in the desktop laser printer industry from 1984 to 1996. Using descriptive statistics, hazard rate models, and panel data methods, we find empirical support for the theoretical predictions.

Intellectual Capital Management Strategy: The Foundation of Successful New Business Generation

This paper describes a process that integrates business, technology and intellectual capital strategy to identify and exploit business opportunities. It then discusses how business, technology and intellectual capital strategy are linked. The authors introduce a competitive strategy process (or model) which they call Strategy Integration Analysis (SIA). Two examples of the application of SIA by two different technology‐based firms are provided which emphasize the intellectual capital and technology aspects.

Technological Resources and the Logic of Corporate Diversification

1. Introduction 2. Review of Prior Theoretical and Empirical Research on Diversification 3. The Effect of Resource Attributes on the Direction, Mode and Performance of Corporate Diversification 4. Patent Data and Construction of a US Patent Class - SIC Concordance 5. An Empirical Analysis of the Effect of Technological Resources on the Direction of Corporate Diversification 6. An Empirical Analysis of the Effect of Technological Resources on the Mode of Corporate Diversification 7. Conclusion

Firm Survival and Industry Evolution in Vertically Related Populations

This paper examines how the density and governance of vertically related populations affect the life chances of organizations. We integrate the literatures on organizational ecology and vertical integration to develop a theory of how (1) specialized upstream industries affect downstream survival rates, (2) the prevalence of different governance forms among upstream and downstream organizations moderates this relationship, and (3) different forms of governance exert differential competitive pressures on focal organizations. We find evidence supporting our hypotheses in an empirical examination of the downstream laser printer industry and upstream laser engine industry. This paper was accepted by Jesper Sorensen, organizations.

HISTORY IN STRATEGY RESEARCH: WHAT, WHY, AND HOW?

Purpose – This chapter is intended to help strategy scholars evaluate when, why, and how to employ historical research methods in strategy research. Design/methodology/approach – Drawing on theory and practice of historical research as well as on key examples from the history and strategy literatures, we develop a typology of research approaches to highlight the areas of potential complementarity between historical methods and “traditional” empirical methods in strategy. We then provide annotated examples of historical strategy research to highlight the benefits of this approach and to demonstrate how to make research-related decisions when employing such methods. Findings – The chapter provides a step-by-step conceptual roadmap for conducting historical strategy research, primarily using an analytic narratives approach. Originality/value – The chapter fulfills an explicit need for strategy scholars on the boundary of history. We anticipate that it will be a useful reference for those who are considering the use of history in their strategy research.

Learning by hiring or hiring to avoid learning

Purpose – The purpose of this paper is to advance the understanding of the mechanisms associated with learning-by-hiring. Design/methodology/approach – The authors built a yearly dyad data structure of all of the hiring and sourcing firms in the US biotechnology sector between 1973 and 1999. Findings – The authors found that hiring firm’s learning from a prior employer’s knowledge is limited in scope to the knowledge developed by the newly hired inventor, and could be attributed to new hire direct involvement. Learning from new recruit occurred only when incumbent inventors collaborate intensively with the hired inventor. Accordingly, what might seem like learning-by-hiring may result in hiring to avoid learning, unless the organization creates the social structures that facilitate the exchange of knowledge within and throughout the organization. Practical implications – The results, thus, highlight the importance of aligning a firm’s social environment with its strategic goal to learn from its external c...