Functional Management Competence and Growth of Young Technology‐Based Firms

Abstract

Acknowledging an increased research interest into the success factors for young technologybased firms in the last decade, the present study serves two main purposes. First, we aim at developing a comprehensive concept of functional management competence in young technology-based firms. Functional management competence covers the understanding of and proficiency in managing specific functional tasks (Katz, 1974). As we focus on young technology-based firms, it is suggested that marketing, financial and technology management tasks are at the core of functional management competence. Second, we aim at delineating and validating an appropriate measurement model for functional management competence. In order to test the model's nomological validity, we investigate the impact of functional management competence on firm growth. Therefore, building on established firm development approaches, we propose a phase model for the development of young technology-based firms. Our study builds upon data from 212 young technology-based firms in the field of microtechnology, nanotechnology, electronics, optics and lasers. We use formative measurement models to establish valid and reliable constructs and a path model based on partial least squares modelling to investigate the performance effects. The results suggest that functional management competences generally are significant drivers of firm development speed. In particular, technology and marketing management competences are shown to impact development speed. While technology management competence is positively driving development speed, the marketing management competence impact on speed is mediated by competitive advantage of the new products developed by young technology-based firms. Financial management competence has no significant link to firm development speed.

Firm competencies on market entry success: Evidence from a high-tech industry in an emerging market

“…Here, we connected NPD to marketing management as suggested by Arora and Nandkumar (2011) and gained a significant result at p b 0.1. We kept the connection of marketing management to market entry success as suggested by literatures in marketing (Salomo et al, 2008;Vorhies et al, 2009). Following this, we find that (MM → MES) is significant at p b 0.05 and overall generated better fitness model as compared to Model 1.…”

“…However, to deploy successfully firms need to develop marketing capabilities that enable them to deliver repeatedly the desired benefit bundles to customers (Vorhies et al, 2009). Previous studies show that marketing has a positive impact on market success (Jaworski & Kohli, 1993;Salomo et al, 2008). Specifically, it enables the realization of the firm's strategies (i.e., differentiation, cost, and product market), which leads to increased market and financial performance.…”

“…First, the industry is challenged to discover and develop new products, and needs to build credibility in novel areas such as cell biology, molecular genetics, and medicine delivery (Khilji, Mroczkowski, & Bernstein, 2006). Second, product development and process innovation have a key function in the transition of products from bench to market, where these competencies positively drive firm development speed (Ritter & Gemunden, 2003, 2004Salomo et al, 2008), and contribute to firm renewal (Danneels, 2002). Third, it takes longer time to develop biopharmaceutical products (about 15 years) from scientific discovery to commercialization, than traditional pharmaceutical, thus the ability to design effective and efficient NPD is critical to reduce costs (Dimasi & Grabowski, 2007).…”

“…Further, existing studies have discussed the types of competencies needed but only in a limited scope. Subramaniam and Venkrataman (2001) highlight NPD and innovation, others are exploring marketing (Jaworski & Kohli, 1993;Salomo, Brickmann, & Talke, 2008;Vorhies, Morgan, & Autry, 2009), or business networks (Lee, 2007;Li, 2005;Nielsen, 2005;Yang, 1998). Broader studies are simultaneously observing NPD and marketing (Aydin, Cetin, & Ozer, 2007;Bruni & Verona, 2009;Song, Droge, Hanvanich, & Calantone, 2005), investigating business networks and product process innovation (Pittaway, Robertson, Munir, Denyer, & Neely, 2004;Ritter & Gemunden, 2004;Zhou, 2010), or exploring networking and marketing (Fan, 2007;Yu, Gilbert, & Oviatt, 2011).…”

New Venture Growth: Current Findings and Future Challenges

“…For instance, one study found that marketing and financial capabilities can be associated with market expansion and innovation as two ways of achieving high growth (Barbero, Casillas, & Feldman, 2011). Another study based on 212 young technology firms established that technology and marketing management competences are linked to higher development speed (Salomo, Brinckmann, & Talke, 2008). Developed capabilities are a key growth enabler as high levels of resources cannot compensate for weak capabilities (O'Cass & Sok, 2014).…”