John D. Aram

Networking and growth of young technology-intensive ventures in China☆

Abstract More often than not, new ventures lack established products, known technologies, longstanding customer relations, experienced managerial teams, sufficient capital, and strong reputations. Almost by definition, small, new firms lack the resources of many larger, established firms. The task of an infant firm, and a measure of its success, is to make a transition from being resource weak to being resource strong. How can resources that are critical for profitable growth be acquired for the resource weak new venture? Researchers have found that entrepreneurs can gain access to valuable resources and they can seek to achieve competitive advantage through “networking activities.” Forming and utilizing available relationships with external organizations can allow entrepreneurs to build credibility, gain advice, financing, and customer access, build a positive image and obtain resources at below-market prices, and obtain channel access, information, and innovations. Business relationships with other organizations allow an entrepreneur to achieve desired business results through “asset parsimony.” A favorable view toward networking for new ventures leaves a number of unanswered questions, however. Relevant research questions might include, who should the entrepreneur seek as a business partner? Are all inter-organizational relationships equal, or are some types more valuable to new ventures than other relationships? Do firms relying on high levels of networking activities actually outperform firms that less actively seek resources through external organizational relationships? The present study provides a specific understanding of the concept of networking for entrepreneurs. We propose that networking can be understood in terms of “range,” the number of external relationships to obtain resources, and of “intensity,” the frequency of contact of and amount of resource obtained from these relationships. This research project evaluates the range and intensity of networking among high-growth and low-growth entrepreneurial ventures. Extensive interviewing with managers of six young technology-oriented firms in the Peoples Republic of China (PRC) affirmed the importance of entrepreneurial networking. Managers in the three high-growth firms reported greater range and intensity of business networking than did managers of three low-growth firms, matched by industry and age. Moreover, the relationship between networking activities and growth transcended the stage of firm development. Where networking range and intensity are deemed important in the growth process, new venture success may call for entrepreneurs to reach out deliberately to external organizations to capture needed resources. To a certain extent, such networking activities run counter to important entrepreneurial motivations of independence and autonomy. The concept of networking, and the results of this study, imply that entrepreneurs need to combine the spirit of independence with the reality of resource dependence, and they need to balance personal autonomy with strategic business relationships. This study also contributes to the understanding of entrepreneurship in our increasingly global economy, particularly in the PRC. Business relationships between the United States and the PRC have been expanding rapidly in the last decade. Many foreign businesses seek license agreements, joint venture partners, equity participation, or channel relationships with young ventures in that country. Do the same rules of networking apply in the PRC as the literature suggests apply in the United States? New ventures in this study were found to engage in processes of networking activities consistent with those in the West. Although networking activities may have different cultural roots, firm success appeared influenced by the same principles of networking.

Linking technology and institutions: the innovation community framework

Abstract The technological innovation and diffusion literatures consistently suggest the importance of the institutional environment, including non-market as well as market organizations and relationships, in the commercialization of innovation. There is, however, no general framework for studying the relevant organizations and relationships as a structured system. This paper draws on organizational ecology to develop such a framework, ‘the innovation community’. The paper then suggests how the new framework could be employed in guiding research and in developing a general institutional theory of technology commercialization.

Bridging Scholarship in Management: Epistemological Reflections

If the relevance gap in management research is to be narrowed, management scholars must identify and adopt processes of inquiry that simultaneously achieve high rigour and high relevance. Research approaches that strive for relevance emphasize the particular at the expense of the general and approaches that strive for rigour emphasize the general over the particular. Inquiry that attains both rigour and relevance can be found in approaches to knowledge that involve a reasoned relationship between the particular and the general. Prominent among these are the works of Ikujiro Nonaka and John Dewey. Their epistemological foundations indicate the potential for a philosophy of science and a process of inquiry that crosses epistemological lines by synthesizing the particular and the general and by utilizing experience and theory, the implicit and the explicit, and induction and deduction. These epistemologies point to characteristics of a bridging scholarship that is problem-initiated and rests on expanded standards of validity. The present epistemological reflections are in search of new communities of knowing toward the production of relevant and rigorous management knowledge.

Knowledge Representations and Knowledge Transfer

Cognitive and learning theories were used to develop a framework in which different knowledge representations prime recipients with different schemata and thereby differentially affect their decisi...

Concepts of Interdisciplinarity: Configurations of Knowledge and Action

Twelve faculty directors of graduate liberal studies programs primarily in the US were interviewed by recorded telephone conversation in an effort to understand how they define interdisciplinarity, the intellectual aims to which they aspire, and their views about the nature of reality in knowledge development. Classification of their comments reinforces other writers’ observations that scholars differ in the degree to which knowledge integration defines interdisciplinarity and they differ in the degree to which they believe interdisciplinary knowledge is endogenous or exogenous to the university. Based on their views of knowledge integration and the social relevance of knowledge, four types of interdisciplinary scholars are hypothesized. Of additional interest are the perceived functions of interdisciplinary work and the way that these scholars by-pass philosophical debates about the nature of reality in favor of their practices of scholarship. Implications for the nature, meaning, and practice of interdisciplinarity are discussed.

Strategic planning for increased profit in the small business

Abstract This article examines the problems facing the owner-managers of small businesses, and details the investment required in strategic process development which would guarantee the critical 5 per cent difference to ensure the successful growth and adaptability of the company. Formal strategic planning needs to blend with team development to create the concept of ‘strategy-in-use’ and the development of effective management teamwork out of a planning process.

Attitudes and behaviors of informal investors toward early-stage investments, technology-based ventures, and coinvestors

Abstract Seed capital financing for new firms is important to the commercialization of business innovations. Yet few entrepreneurs have the personal resources necessary to finance very-early-stage ventures, and they often find themselves relying on external sources of seed capital. Their personal financial capabilities can easily become exhausted, and the venture capital industry represents only a partial source of needed capital for start-up and infant firms. In recent years researchers have “discovered” the individual of financial means who invests a portion of his assets in early-stage risk ventures. This individual is variously termed an “informal investor” or an “angel.” Following an initial study by Seymour and Wetzel in 1981, researchers have expanded the knowledge about the backgrounds, investment interests, and behavioral patterns of informal investors. The fact that informal investors generally invest within 50 miles of their homes or offices makes their participation in the entrepreneurial process particularly important for local economies. Our understanding of the general role of informal investors in risk venture financing has been greatly enhanced by prior studies. However, additional work is needed to identify characteristics of persons committed to start-up firms or to technology-based ventures, two especially important types of business activity in the regional competition for economic development. Fifty-five informal investors participated in a mail questionnaire modeled after prior studies sponsored by the Small Business Administration. Respondents differentiated themselves on a scale of very-early-stage (start-up) versus later-stage risk venture investments and on a scale of technology-oriented versus nontechnology-oriented investments. Informal investors in this sample also differed on the average number of coinvestors (including institutions) per investment. Implications arise from the study for individuals interested in regional economic development and for entrepreneurs seeking seed capital. First, persons more committed to start-up investing are more likely to have been (or to be currently) entrepreneurs themselves. Also, these individuals may not be the most visible community members in terms of past entrepreneurial success and acquired wealth. In fact, persons committed to start-up investing tend to have a lower annual income and lower net worth than persons investing in later-stage risk ventures. Individuals playing this important financing role are particularly hard to identify. A valuable key to their identification may lie in the fact that they tend to have worked (or currently work) in ventures similar to those In which they invest. Individuals committed to investments in technology-oriented risk ventures give very little information about their personal characteristics. However, they do indicate a considerable amount about their investment patterns. These investors play a higher-risk, higher-return investment game than do persons less committed to technology-based firms. Technology-oriented investors also report a number of actions that appear to help them manage the risks inherent in their Investment behaviors. Contrary to conventional wisdom about informal investors in general, technology-oriented investors use friends as referral sources less frequently. People more interested in technology-based ventures in the future look more to business service professionals—investment/business brokers and accounting/law persons— as referral sources. Finally, a persons pattern of coinvesting indicates that individuals orientation toward risk. A greater number of individual coinvestors in a typical deal is associated with a willingness to invest further from home, for example, and with a lower return expectation. Also, persons investing with a fewer number of different types of coinvestors (individuals and institutions) tend to have more personal entrepreneurial experience, to invest more in very-early-stage ventures, and to be more interested in financing inventors. This study is relevant to community leaders and entrepreneurs in several ways. First, the project begins to ask pertinent research questions about types of informal investors who play particularly important roles in local economic development. Second, a more differentiated view of the role of the informal investor is suggested because special characteristics of start-up investors and technology-based investors can be distinguished. Third, some initial clues about identifying these key individuals emerge. The study demonstrates a productive line of thinking for community leaders and entrepreneurs in the risk venture financing process.

The institutional domain of technology diffusion

Marketing implications of technological innovation have received considerable attention in the recent past. In this article, Mohan Reddy, John Aram, and Leonard Lynn suggest that the institutional scope for understanding technology diffusion, in addition to supplier and user organizations and industries, should include organizations that manufacture technological complementarities, institutions that possess vertical complementary assets, and the nonmarket sector. The nonmarket sector includes trade associations, professional societies, governmental agencies, independent research agencies, and public service organizations. The authors develop a set of propositions and discuss the implications of our framework for marketers of technical products.

Technology communities and innovation communities

Abstract The technology community framework provides new insights into how technologies and organizational systems co-evolve. Little has been written by the creators of this framework, however, about community-level variables. As a result, this literature has yet to provide a good basis for addressing many of the traditional concerns of researchers and policymakers about technological innovation: e.g. how various characteristics of communities influence the speed and extent to which an innovation is used. This paper presents an alternative framework for the study of the commercialization of technology, the ‘innovation community.’ An innovation community includes the organizations involved in the commercialization of a specific technology. It comprises a superstructure of coordinating organizations and a substructure of business firms providing inputs for the innovation. Research using this framework can address either how community attributes such as size or inclusiveness of superstructure impact on the development and use of new technologies or how the attributes of new technologies can influence community attributes. The framework seems particularly suitable as a basis for comparative research.

Institutional relationships and technology commercialization: Limitations of market based policy

Abstract U.S. technology commercialization policies have focused on efforts to correct “market failures”. Policy subsidizing innovation and antitrust policy both seek to increase market efficiency and thus attain welfare gains. One problem is that these policies make conflicting assumptions about individual economic behavior. This leads to inconsistent policy. A second problem is that non-market relationships, such as those embodied in industry standard-setting bodies, professional and trade associations, and inter-institutional cooperation also influence the process of technology commercialization. A comparison of U.S. and Japanese institutional responses to the commercial potential of high definition television suggests that (1) the market approach to this technology has led to conflicting policy prescriptions in the U.S., and (2) Japanese policymakers have been more effective than their American counterparts in facilitating non-market relationships. Implications for U.S. policy are discussed.