Research context. Emerging technology-based firms are highly dependent on external resources such as financing (Jarillo, 1989). To fund their growth, such high-potential ventures usually turn to venture capital investors, who have been shown to provide not only money, but also invaluable hands-on guidance in bringing emerging technologies to market (Hellman and Puri, 2000; Sapienza, 1992). Because of their experience with numerous ventures and their extensive exposure to financial, labor and other resource markets, venture capitalists are uniquely positioned to provide valuable assistance to their portfolio companies in key aspects (MacMillan et al, 1988).
Academic research has identified some of these aspects to be serving as a sounding board to the entrepreneur team, enabling the firm to obtain alternative sources of equity or debt financing, interfacing with the investor group, and monitoring financial and operational performance (Gorman and Sahlman, 1989; Sapienza et al., 1996; Rosenstein et al., 1993). A venture capital investment relationship may also open up access to the resources of the vast venture capital investors’ network of industry and financing contacts, including to those of their other portfolio companies. Such resources include distribution channels, production facilities, research and development, technology, and pricing benefits on certain products and services (Maula and Murray, 2000).
Venture capitalists generally spend half of their time in monitoring and managing post-investment relationships with an average of nine ventures each (Gorman and Sahlman, 1989). They have particular interest to guide their portfolio companies through such processes as:
- Emerging technology assessment: evaluating each technology against robust criteria to make sure that it is truly innovative, can be adequately protected through patenting, has sufficient market potential to justify the investment of time and resources, and has a clear path to commercialization.
- Patent protection and enrichment: ensuring that the potential of the technology can be exploited, both geographically and commercially, and that the patent strategy and execution are commercially sound.
- Marketing: based on thorough market analysis, developing a comprehensive marketing strategy for promising emerging technologies and identifying and pursuing the optimum commercialization routes.
- Deal development: negotiating each agreement with the goal of revenue maximization through approaches that range from out-licensing to the formation of new ventures and strategic alliances.
Therefore, it is expected that venture capital investors play a critical role in shaping investee decisions about managing the R&D process: choice of technologies that are deemed worth pursuing, resource allocation to technology pipelines and specific ways to participate in the process under extreme uncertainty of success.
Unit of Analysis. The main unit of analysis of this project is the relationship between an emerging technology-based firm and its most important venture capital investors (measured by ownership share). By in-depth analysis of the firm dyads, this research aims to add an alternative perspective on the existing body of academic literature on inter-organizational relationships, which is mainly focused on studies assessing the number of relationships and network structures rather than on evaluating specific relationships in greater detail (Stuart, 2000: 809).
CONTENTS
INTRODUCTION
Research Context
Unit of Analysis
RESEARCH PROBLEM
RESEARCH DESIGN
Case Study as an Appropriate Strategy
Data Collections & Techniques
Qualitative Interviews
- Positivist View on Interviewing
Interpretative Approach to Interviewing
Analysis Strategy
Ethical Issues
LIMITATION OF THE STUDY
THEORETICAL APPROACHES
Emerging Technology book techniques
- Scenario Planning
Knowledge Networks
Strategic Alliances
Utilized Methodology
- Resource-Based View of the Firm
Knowledge-Based View of the Firm
Communities-of-Practice Theory
VALUE-ADDING MECHANISMS: EMPIRICAL ASSESSMENT
Research Question No.1: Resource-based Contribution Model
Research Question No.2: Factor Affecting the Resource-based Model
Research Question No.1: Knowledge Transfer
Research Question No.2: Factors Affecting the Knowledge Model
CASE STUDY: AN EMERGING TECHNOLOGY FIRMS AND ITS VENTURE CAPITAL INVESTOR
Research Question No.3: Valued-Adding Mechanisms and Choice of Technology
CONCLUSION
APPENDIX: UTILIZED CONCEPTS
Emerging Technology-Based Firms
Venture Capital
Resources
Knowledge
Knowledge Transfer
Learning in Organizations
Complementarities
List of interviewees at FUND and MOTION with their job position and business unit
The Venture Capital Investing Cycle
REFERENCES
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