Critical Development Paths of University Spinoff Ventures

Abstract

This research draws on two literature themes used to analyse new firm development. The first is around stage-based models (Greiner, 1998; Miller & Friesen, 1984; Smith et al., 1985; Van de Ven et al., 1984; Wernerfelt, 1984) and the model developed by Vohora et al. (2004) in particular, as detailed in Figure 1. It shows how USOs go through a number of distinct phases of development. Each phase involves an iterative, non-linear process of development where earlier decisions and activities may have to be re-visited. Additionally, at the boundaries between each phase, junctures exist in terms of the resources and capabilities that are needed to proceed to the next phase. The junctures are critical because they have to be surmounted in order to progress. The second theme is RBV, a framework for understanding how resources within a firm can be used to achieve sustained competitive advantage (Barney, 1991; Eisenhardt & Martin, 2000; Teece et al., 1997; Wernerfelt, 1984). It assumes a firm can be thought of as a bundle of resources, spread in a heterogeneous manner across the enterprise, and that competitive advantage depends on this heterogeneity (West III & DeCastro, 2001). Internal resources, such as knowledge, learning, culture, teamwork and human capital, play a vital role in the RBV and are likely sources of sustained competitive advantage (Barney, 2001b; Wright et al., 2001), particularly when they are embedded in value-creating strategies (Barney, 1991; Daft, 1989). Resource deficiencies and weaknesses may constrain the development of a USO and may be exacerbated by an non-entrepreneurial university environment (Vohora et al., 2004; West III & DeCastro, 2001). Therefore, as suggested in the literature, USOs need to nurture resources over time in order to progress through the different phases of development.