Structural Antecedents of the Seemingly Random Walks of Sales Growth, Profit Growth and Survival of New High-Tech Ventures

Abstract

New High-Tech Ventures are needed to bring new knowledge and innovation to the market but struggle to survive. In their search for the best business strategy to stimulate firm survival they are set on a path to be either ‘patient for growth but impatient for profit’ or ‘impatient for growth and patient for profit’. This research provides insights into the structural antecedents of these seemingly random walks of business growth, profit growth and survival. A comprehensive perspective is taken by relating resources (technological and financial), capabilities (commercial and managerial), firm age, firm size, type of parent organization, business models applied and changes therein to business growth, profit growth and subsequent survival. The results show one independent variable to affect all three behavioral outcomes of 100 new ventures in the Dutch life science industry (2002-2005), namely the amount of venture capital received per funding round. Furthermore, these antecedents affect the path for profit growth opposite to those that affect the path for revenue growth and seem to be related to the parent organizations involved. These insights are translated into managerial implications and business strategies for new High-Tech ventures.