Technology-based, “adolescent” firm configurations: strategy identification, context, and performance

• Published in: Journal of business venturing 1998, Vol.13 (3), p.205-230
• Main Author: Bantel, Karen A.
• Format: Article
• Language: English
• Subjects: Entrepreneurs; High technology; Organization theory; Organizational behavior; Strategic management; Studies
• ISSN: 0883-9026; 1873-2003
• DOI: 10.1016/S0883-9026(97)00033-5

Managers and stakeholders of entrepreneurial firms have an obvious vested interest in understanding those factors that contribute to the success or failure of such firms. Insight into strategic and contextual factors related to success for 162 “adolescent” (5–12 years old) firms, competing within a variety of rapidly changing technology-based industries, results from this study. Analyses focus on pinpointing patterns of strategy, context, and performance. In the first stage of analysis, six nonmutually exclusive dimensions of strategy were identified: (1) technology/product leader; (2) product/market breadth; (3) marketing/sales expertise; (4) quality/service; (5) customer alliances; and (6) specialization. Second, cluster analysis was conducted to group the firms on their overall pattern of strategic emphasis; six groups (clusters) were identified. Each group corresponded with one of the following four strategy quadrants: (1) defenders/K-specialists, (2) entrepreneurs/r-specialists, (3) analyzers/K-generalists, and (4) prospectors/r-generalists. Subsequent analysis of variance demonstrates significant differences across the six clusters on three contextual variables—environmental instability, stage of product development, and firm age, and on six outcomes—R&D results, operating efficiency, market development, sales growth, future prospects, and performance. Conclusions indicate which strategies, under which conditions, are most successful. A description of each group follows. Cluster 1 n = 19 : Focus on narrow niche of specialized, infrequently purchased, large investment products; direct sales and support. These firms compete on their reputation in their targeted market segment, their ability to find and sell to a narrow range of customers, and customer service. This strategy occurred in relatively stable and mature industries and resulted in high performance in operating efficiency, market development, financial stability, and overall performance; sales growth was average. Cluster 2 n = 12 : “Spin-offs” reliant on contracts with original employers. These firms represent an outsourcing opportunity for larger companies not desiring to develop “in-house” expertise in a product area. They are the youngest and the smallest, and have products in the earliest stage of development. Their environment is relatively stable, given the dependence of their large customers for their product. They are average performers, except for having relatively high operating effi