New venture technology sourcing: exploring the effect of absorptive capacity, learning attitude and past performance.

SUMMARY

Based on the literature on learning and technological alliances, this paper explores the relationship between the learning attitude, performance and absorptive capacity with companies' ways of sourcing for technologies. Using a sample of 110 high-tech ventures, the statistical results show a clear link between the span of technology access modes and the learning attitude and absorptive capacity. This behaviour in our sample leads also to a better performance, especially in term of foreign expansion, product innovation and speed of new products commercialization. Suggestions for managers on how to improve their technology access processes are given at the end of the text.

KEY WORDS

technology sourcing; absorptive capacity; attitude towards learning; high-tech businesses

1. INTRODUCTION

Technology sourcing is now crucial for sustaining competitive advantage for firms, in term of innovation or new product development (Kessler et al. 2000). This is obviously true for high-tech businesses (microelectronic, pharmacy, aerospace, etc.). It is also relevant for low-tech businesses that have been transformed by disruptive technologies, such as distribution, because of the Internet (Fulk and DeSanctis 1995). Specifically, high-tech companies, as producers of technologies, have to source outside as well as inside. Over the years, modes of technology sourcing have dramatically diversified, due to the growth of mergers and acquisitions as well as inter-firms alliances. Companies face, for example, difficulties in transferring one technology from one organization to another. Integrating a high-tech start-up after a take-over in a large company is also a well known difficulty that companies have to face. In the case of technological alliances, most of the companies report to be disappointed with the performance of technology consortia (Grindley and Mowery 1994). Technology sourcing was analyzed in relationship with issues such as new product development (Kessler et al. 2000), dependence/independence (Stensma and Corley 2000), previous direct or indirect ties (Vanhaverbeke et al. 2002) or intellectual property protection (Jones et al. 2001).

This paper casts a light on the conditions that have lead high-technology ventures to expand the range of their technology sourcing modes and the issues encountered by companies in this process. To do so, it explores the underlying variables that are hypothesized to facilitate technology sourcing. It suggests that companies should pay more attention to their 'learning attitude' and 'absorptive capacity' when defining their technology sourcing strategy as well as their 'past performance'. The theoretical contribution of this research lies in the modelling of the relationship of these three variables with technology sourcing. Paper is organized into five parts. Section 2 depicts the research theoretical background--a special emphasis is made on the resource based view and the learning literature. Section 3 is devoted to our conceptual framework and the formulation of our research hypothesis. Section 4 explains the methodology used to test empirically our hypothesis. Section 5 presents the results and section 6 discusses the findings.

2. THEORETICAL BACKGROUND

Technology sourcing has considerably diversified over the last twenty years while at the same time companies have been more and more sensitive to the issue of learning. This point is important for large established companies as well as for new high-tech ventures. As such, resource-based and learning literatures will be used as foundations of this research.

2.1 Diversification of technology sourcing modes

As well as auditing the technology portfolio, forecasting technology development, or commercializing technology, technology sourcing is one of the research issue included in the Management of Technology (MoT) discipline (Burgelman et al. 1996; Tushman and Anderson 1997; Tidd et al. 2001). Sourcing for new technologies is needed as company's technology portfolio must be nurtured--especially because technologies are subject to obsolescence (Utterback 1994). Technology sourcing is even a key activity in high-tech firms.

Companies face several options for technology sourcing. The practical issue facing managers is to define which mode one given company should use for gaining access to technologies (Humbert and Jolly 1997). Taking an historical perspective, in-house R&D has long been the sole generator of new technologies. For almost two decades, this autonomous approach has been proved difficult to sustain as a unique source (Friar and Horwitch 1984; Teece 1986). Firms are nowadays still putting a strong emphasis on in-house R&D as demonstrated by the large number of researchers working in companies' labs. But companies have considerably diversified their technology sourcing. This has been observed, for example, in biotech industries (Roberts and Mizouchi 1989; Jolly and Ramani 1996). Technology sourcing includes technological partnerships with competitors, with suppliers, with customers (Fusfeld and Haklish 1985; Nueno and Oosterveld 1988; Hagedoorn 1990; Hagedoorn and Schakenraad 1992; Narula and Hagedoorn 1999), as well as consortia (Spencer and Grindley 1993; Carayannis and Alexander 2002). This covers also technology acquisition with simple license acquisition or more complex take-over of other companies (Roberts and Liu 2001). Technology sourcing also frequently relies on R&D sub-contracting with universities and with public research centers (Roessner et al. 1998). Most companies are now used to sub-contract research, to acquire technology and to partnership with other organizations (Dodgson 1992). Because of globalization of knowledge, growing complexity and increasing uncertainty, this pattern of diversification of technology sourcing modes should continue to expand.

Technology sourcing is important for high-tech ventures for at least three reasons. First, high-tech ventures are often spin-offs of a public research lab or a large private company. This means that the success of these companies frequently relies on technological breakthrough resulting from R&D conducted previously. Their competitive advantages are much more based on technological innovation than on innovative marketing practices. Secondly, the increasing cost of technological development leads companies to develop collaborative behaviours to reach the critical financial size. Furthermore, complexity induces specialization of the technological knowledge developed in companies or R&D centres. As stressed in the resource-based view, there is no single firm having an infinite portfolio of resources. New high-tech ventures are particularly concerned by the acquisition of new knowledge because of their lack of resources (Mc Dougall et al. 1994). It means that complementary assets must be searched outside.

2.2 Resource-based view

The resource-based framework addresses the question of how can the performance of a firm be explained. The traditional explanation suggests that the performance of one firm depends on the characteristics of the environment in which it operates (epitomized by authors such as Learned et al. 1965; Porter 1980; or Buzzell and Bradley 1987). Economic profits are gained from market positioning. In a poor environment, with sluggish (or even negative) growth and numerous competitors, even the best firm will do badly. On the contrary, the resource-based view suggests that the firm's performance is related to the value of its resources and competencies (Wernerfelt 1984; Grant 1991). Scarcity and idiosyncrasy of resources allow the company to capture rents. The objective is no longer to adapt to the environmental forces but to choose a strategy that allows the best exploitation (the best return) of resources and competencies given the external opportunities. As such, the resource-based view displaced the emphasis and the starting point of strategy formulation from the environment to the firm's resources (Hamel and Prahalad 1990).

Resource-based scholars contend that competition in a specific industry should not only be considered from the final service and product point of view. It also has to be gauged with respect to the underlying resources and competencies owned by the firm (Stalk, Evans and Shulman 1992). The typical resource-based strategy is to identify, develop, protect, exploit, deploy and renew resources. Developing resources is done through a constant enlargement and renewal of the resource base. Last section noticed that different modes exist for nurturing the resource-base, such as in-house development, acquisitions and alliances. Regarding the core competencies theory, in order to avoid the transformation of core competencies in core rigidities, companies need to open their mind (Leonard-Barton 1997). Here is the point for the present research. Resource-based approach stresses the importance of technology because it is a source of potential competitive advantage and wealth creation (Prahalad 1993).

2.3 Learning perspective

An organization learns through its individuals (Spender 1996). But organizational learning is more than the sum of learning by individuals' members of the organization (McKee 1992). Senge (1990) defines a learning organization as an organization 'where people continually expand by their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together'. Based on previous works (e.g. Day 1994; Senge 1990; Argyris and Schon 1978), Sinkula et al. (1997) derive the core components of a learning orientation: