THE STRATEGIC NETWORKS AND PERFORMANCE OF ENTREPRENEURIAL FIRMS: IMPACT OF PRE-FOUNDING TIES.
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This dissertation examines the effect of founders’ background in shaping alliance ties and firm performance of new ventures. In the first chapter, I examine how founders’ prior affiliations contribute to the formation of network ties for new ventures founded by employee entrepreneurs. Prior research on employee entrepreneurship attributes the success of new ventures founded by employees (called <italic>spinouts <italic>) to knowledge inheritance from founders’ previous employers (parents). However, studies on new venture alliances suggest that the success of new firms stems from establishing strategic alliances with other firms. I bridge the gap between these two literatures by examining how the knowledge accumulated by the spinout’s founder influences the new venture’s alliance partner choice, using a panel data of pharmaceutical and medical device firms from 1986 to 2012. The findings suggest that a spinout that is similar to its parent in terms of technology and product markets is likely to form marketing, manufacturing, or funding ties with firms that have no parent ties. Conversely, a spinout that is not similar to its parent more likely to form commercialization ties with firms that have indirect ties to the parent, as a way to deal with the risk of collaborating with its parent and its partners. Finally, a spinout that has different technology but operates in a similar market, as its parent is likely to forge commercialization ties with the parent’s partners. In the second chapter, I examine how heterogeneity in the founders’ backgrounds affects the start–up ’s performance. I examine two types of founder backgrounds: employee and academic entrepreneurs. Employee entrepreneurs have relevant industry experience due to their founders ’ prior affiliation, whereas academically founded firms are endowed with research–related resources through their founders’ experience. I use the panel data of academic and employee start–ups in the pharmaceutical and medical device industry, 1986–2013. I find that academic start–ups have higher research output and smaller alliance networks than do employee start–ups. Further, the founders’ background has no impact on the start–up’s performance outcome; instead, it shapes the patents and alliance ties formed by them.