Startup size and the mechanisms of external learning: increasing opportunity and decreasing ability?

Abstract

An important area of investigation in the field of entrepreneurship examines how people and organizations exploit technological opportunities. Prior research suggests that alliances, the mobility of experts, and the informal mechanisms associated with geographic co-location can present firms with useful opportunities to source technological knowledge. This paper uses insights from strategic management and organizational theory to suggest that organizational size may have an important impact on the extent of external learning, since it differentially affects the likelihood of learning via formal and informal mechanisms. Examining a cross-section of semiconductor startups, we find that external learning increases with startup size. With regard to the specific mechanisms of learning, we find that firms learn from alliances regardless of their size. For the informal mechanisms of mobility and geographic co-location, however, learning decreases with firm size. These results suggest that as startups grow, they may have increasing opportunities to access and exploit external knowledge, but their motivation (and hence ability) to learn from more informal sources may decrease.

Entrepreneurship, innovation and regional growth: a network theory

“…Knowledge accessing from external organizations is considered to have become increasingly important to entrepreneurial firms, which often cannot generate internally all the knowledge necessary for innovation (Freel 2000a;Hite and Hesterly 2001;Yli-Renko et al 2001;Almeida et al 2003;Huggins and Johnston 2009;Doran et al 2012). Within an entrepreneurial firm environment, the role of inter-organizational networks and knowledge sources are recognized as potentially important assets for creating and sustaining innovation and competitiveness (Lechner and Dowling 2003).…”

International exposure through network relationships: Implications for new venture internationalization

“…In a foundational study on network relationships, Birley (1985) concluded that informal and formal network relationships offer varied benefits. It has also been posited that learning is dependent upon the informal versus formal mechanisms that exist (Almeida et al, 2003). Anand et al (2002) further argue that exposure leveraged from informal and formal sources differs in its content and accessibility and that firms need to "continuously monitor the quality of knowledge derived" from different sources (p. 87).…”

“…First, although pioneering research on entrepreneurial networks has long recognized the differential benefits of informal versus formal networks (Birley, 1985), the implications of network relationship formality for internationalization have not yet been explored. This is rather surprising as learning has been found to be largely dependent upon the informal versus formal mechanisms that exist (Almeida et al, 2003 andAnand et al, 2002).…”

“…First, although pioneering research on entrepreneurial networks has long recognized the differential benefits of informal versus formal networks (Birley, 1985), the implications of network relationship formality for internationalization have not yet been explored. This is rather surprising as learning has been found to be largely dependent upon the informal versus formal mechanisms that exist (Almeida et al, 2003 andAnand et al, 2002).Second, only a limited number of studies consider the ability of existing network relationships to expose a new venture to internationalization. For the purposes of this research, international exposure is broadly defined as the extent to which a venture's management team comes into contact with international knowledge through prior experiences or network relationships.…”

14 Organizational and Institutional Genesis

“…Studies drawing on ethnographic research as well as patent citation data have demonstrated that: 1) ideas travel across organizations more readily when they are co-located; 2) the size and mobility of the scientific labor force increase local information sharing; and 3) strategic alliances among co-located firms augment the stock of common knowledge (Saxenian, 1994;Almeida and Kogut, 1999;Almeida et al, 2003 But diversity alone is not the whole story. Depth and quality are critical too.…”