Creating Value in Young High Growth Technology Based Firms: The Impact of Environmental Contingencies on Building Resource Portfolios



We explore how young, high growth technology based firms build their resource portfolios and adjust them to the environmental conditions in which they operate during the first five years after founding. The received literature views the structuring of the resource portfolio as the first step in building capabilities. We extend the capability literature by introducing an environmental contingency perspective to the theory. More specifically, we make a distinction between the degree of environmental uncertainty, defined as the extent to which a young high growth technology based firm can appropriate its technology on the market for technology or the market for products, and the degree of environmental complexity, defined as the extent to which young technology based firms can reach their end customers. We base our analysis on six in-depth case studies of high growth technology based firms, involving 27 interviews over time and rich archival data from a number of sources including 121 press releases and 605 press articles, patent data, and financial and employee data. Two of the firms have exceptional growth rates in terms of employees, two in terms of revenues and two experience high grow in both employees and revenues. Based upon induction, we build propositions about the way in which these environmental conditions affect the resource portfolios that the young high growth technology based firms either develop or acquire during the first five years. We also show how these different resource portfolios lead to different forms of growth.
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Contact information:
Ingrid Verheul Jörn Block
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