Internal capabilities, external networks, and performance: a study on technology-based ventures

This study examined the influence of internal capabilities and external networks on firm performance by using data from 137 Korean technological start-up companies. Internal capabilities were operationalized by entrepreneurial orientation, technological capabilities, and financial resources invested...

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Bibliographic Details
Published in:Strategic management journal 2001-06, Vol.22 (6-7), p.615-640
Main Authors: Lee, Choonwoo, Lee, Kyungmook, Pennings, Johannes M.
Format: Article
Language:English
Subjects:
Assets
Business structures
capabilities
Competitive advantage
Economic resources
Entrepreneurs
Entrepreneurship
Hypotheses
innovation
Innovations
Organization theory
Regression analysis
Sales growth
Social capital
Social networks
Start up firms
start-up companies
Startups
Strategic management
Studies
Universities
Value creation
Venture capital
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Summary:This study examined the influence of internal capabilities and external networks on firm performance by using data from 137 Korean technological start-up companies. Internal capabilities were operationalized by entrepreneurial orientation, technological capabilities, and financial resources invested during the development period. External networks were captured by partnership- and sponsorship-based linkages. Partnership-based linkages were measured by strategic alliances with other enterprises and venture capitalists, collaboration with universities or research institutes, and participation in venture associations. Sponsorship-based linkages consisted of financial and nonfinancial support from commercial banks and the Korean government. Sales growth indicated the start-up's performance. Regression results showed that the three indicators of internal capabilities are important predictors of a start-up's performance. Among external networks, only the linkages to venture capital companies predicted the start-up's performance. Several interaction terms between internal capabilities and partnership-based linkages have a statistically significant influence on performance. Sponsorship-based linkages do not have individual effects on performance but linkage with financial institutions has a multiplicative effect with technological capabilities and financial resources invested on a start-up's performance. Implications and directions for future research were discussed.
ISSN:0143-2095
1097-0266
DOI:10.1002/smj.181