XI_B Text

SUMMARY

SUSTAINING INNOVATION IN THE NEW FIRM: THE ROLE OF TECHNOLOGY PORTFOLIOS AND ALLIANCE FORMATION

Donna Kelley, Rensselaer Polytechnic Institute
Mark P. Rice, Rensselaer Polytechnic Institute

Principal Topic

This research explores the relationship between technology development, alliance formation, and new product introductions in the new, technology-based firm. Two hypothesis are tested: (1) the importance of a new firm’s technology portfolio is positively associated with rate of new product introductions, and (2) the rate of alliance formation is positively associated with rate of new product introductions in the new firm.

A central concern of this research involves identifying how new firms can improve their capacity for product innovation. We focus on technologies as the underlying foundation for sustained product innovation. We propose that, in order to sustain product innovation, firms will need to access new technologies. To do so, they must make strategic decisions about accumulating technologies internally and forming alliance relationships with other firms to source, develop or leverage technologies. New firms can differ with respect to the existence and importance of their technology portfolios, and in their efforts and abilities to form alliance relationships. These differences, we propose, are reflected in differential rates of new product introductions.

Method

For the empirical analysis we collect and analyze data on patent, alliance, and new product activities for 54 firms in the computer and telecommunications industries. We use secondary data from the Cassis, Lexus/Nexus, and Infotrak databases. Primary data—telephone and email interviews with the sample companies—are used to confirm the validity of our alliance and new product data. Patent citations are used as an indicator of the importance of a firm’s technology portfolio, and counts of alliance and new product announcements provide rates of alliance formation and new product introductions. We employ control variables and use multivariate analysis techniques to explore the hypothesized relationships.

Implications

With this research, we wish to illustrate—to new firms—the importance of critically examining technology alternatives early on. These alternatives involve building an important technology portfolio, and seeking alliance relationships. These actions, we maintain, can provide a foundation that supports continued product innovation. Our objectives for academics include demonstrating the role of founding resources and early strategic actions in sustaining advantage in the new firm.

CONTACT: Mark Rice, Lally School of Management and Technology, Rensselaer Polytechnic Institute, Troy, NY 12180 (T) 518-276-8661; (F) 518-276-8661; ricem@rpi.edu