Patterns of Performance in New Firms: The Relative Effects of Potential and Realized Absorptive Capacity

Babson College Entrepreneurship Research Conference (BCERC) 2007

Frontiers of Entrepreneurship Research 2007

14 Pages Posted: 6 Dec 2007

See all articles by Erik Wetter

Erik Wetter

Stockholm School of Economics

Frédéric Delmar

Lund University School of Economics and Management; EM Lyon (Ecole de Management de Lyon); Research Institute of Industrial Economics (IFN)

Abstract

Scholars agree on the importance of new firms in knowledge-intensive fields for creating economic development and growth, yet there is still not a refined framework for assessing and predicting new firm performance. Absorptive Capacity (ACAP) is the capability of a firm to discover, recombine, and exploit technological knowledge internal and external to the firm, and it has been shown to be a relevant predictor of performance in knowledge-intensive fields such as biotechnology. Common operationalizations of ACAP are less useful when assessing the performance of new firms. This paper proposes the proportion of employees with technology or science education as an alternative measure for potential ACAP and patent data as a proxy for realized ACAP. Applying these measures on a full population of knowledge-intensive start-ups we find that ACAP is a relevant construct when predicting survival and multiple aspects of new firm performance, and that proportion of employees with university-level technology/science education seems to be a working and reliable operationalization.

Keywords: Entrepreneurship

JEL Classification: M13

Suggested Citation

Wetter, Erik and Delmar, Frédéric, Patterns of Performance in New Firms: The Relative Effects of Potential and Realized Absorptive Capacity. Babson College Entrepreneurship Research Conference (BCERC) 2007; Frontiers of Entrepreneurship Research 2007. Available at SSRN: https://ssrn.com/abstract=1064441

Erik Wetter (Contact Author)

Stockholm School of Economics ( email )

PO Box 6501
Stockholm, 11383
Sweden

Frédéric Delmar

Lund University School of Economics and Management ( email )

P.O Box 7080
Lund
Sweden

EM Lyon (Ecole de Management de Lyon) ( email )

23 Avenue Guy de Collongue
Lyon, Ecully 69134
France
+33 (0)4 78 33 70 18 (Phone)

HOME PAGE: http://www.em-lyon.com/france/professeurs/delmar/index.aspx

Research Institute of Industrial Economics (IFN)

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

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