title: Resolving the growth challenges of high technology new ventures: An absorptive capacity perspective
Creators: name: Cay, Gillian Elizabeth
Publisher: name: University of Glasgow
Year: 2011
Subjects: subject: Absorptive capacity, high technology new ventures, HTNVs, growth challenges at critical events, temporality, social capital, life sciences

description: This thesis examines how high technology new ventures (HTNVs) in the life science industry in Scotland leverage external knowledge to resolve challenges that they face at critical events to enable the firm to grow. The theoretical approach is holistic, drawing on the fields of entrepreneurship, innovation and internationalisation, which are all key drivers of the growth of HTNVs. Reviews of this diverse literature point to the key role of knowledge for the growth of these firms, however, little is known about the processes and routines that enable them to leverage knowledge. Therefore, the construct of absorptive capacity (ACAP) is an appropriate lens to investigate how HTNVs resolve growth challenges by leveraging external knowledge. As this is a complex issue, this exploratory study takes a holistic view, drawing on the interpretivist paradigm, and utilises in-depth case studies to examine key challenges that firms face at critical events, and the knowledge leverage processes associated with these events.

A key finding is that HTNVs experiencing rapid growth have to address a number of growth challenges simultaneously in relation to the three key drivers of growth. Therefore, the knowledge processes that support this activity transcend functional boundaries and are interlinked with and interdependent on these simultaneous business processes. With limited internal resources, the demand of these firms for external knowledge to resolve these challenges is acute. The six types of knowledge that firms were found to require are: market, technical, managerial, regulatory, internationalisation and relational knowledge. The firm’s ability to combine different types of knowledge from outwith the firm and from within the firm’s knowledge stocks to find solutions for the challenges they face is important for their growth.

The major contribution of this thesis is that the pace of the leverage of knowledge at critical events is maximised when HTNVs have multiple enablers of ACAP in place. This has emerged from combining other findings on key enablers and temporality of ACAP. A new process model of ACAP is proposed, which highlights the connection between the individual- and firm-level ACAP, and emphasises the importance of effective communication within the firm and the effective management of the firm’s knowledge stocks to maximise the firm’s ability to exploit the knowledge it acquires. The model also highlights the importance of social capital to the ACAP process, in particular to the timely acquisition and assimilation of knowledge. This process model significantly enhances the understanding of how knowledge is leveraged through the ACAP process.

There are important implications in these findings, amongst which there is evidence that social capital provides the firm with timely access to the knowledge, in particular the links of board members. In dynamic industry environments where there are constant technological advances and market opportunities are short-lived, the ability to assimilate and respond to opportunities and threats quickly is crucial to the firm’s competitive advantage. For the management of HTNVs, understanding how to optimise the use of their Boards of Directors, including venture capital representatives, in order to leverage their experience and connections, can significantly enhance the firm’s competitive advantage. Furthermore, exploiting the firm’s social capital in order to access and assimilate knowledge more effectively could have a significant impact on the growth of the firm. At policy level, it is imperative that small firms are encouraged to invest in the enablers of ACAP, to develop appropriate connections across the value chain that can assist their growth and, in particular, to ensure that they appoint to their Board Non-Executive Directors who are appropriate to the key challenges they are facing.