Horse Before the Cart: Opportunity Value and the Order of Resource Accumulation
Posted: 26 Nov 2014
Date Written: August 2011
The process by which entrepreneurs build their companies has important implications for growth and venture performance. While the literature highlights resources that may be important for venture performance, the order by which entrepreneurs acquire such resources has received scant attention. In this paper, we develop theory for the order of resource accumulation using a simple agent based model. We validate our theory by using a cohort of new ventures that acquired two types of resources - equity resources that improve search and hiring resources that improve speed of exploitation. Early in the process of resource acquisition, acquiring search resources before speed resources leads to better performance. We also find that order of resource accumulation is especially salient for high opportunity potential.
Keywords: resource accumulation, resource based view, capability development, KFS, Kauffman Firm Survey
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