Initial external knowledge sources and start-up growth
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Initial external knowledge sources and start-up growth Stephan Weemaes & Johan Bruneel Gaeremynck & Jonas Debrulle
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Accepted: 30 October 2020 # Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract We investigate whether the presence of outside members in the board or buying ad hoc professional advisory services fuel short-term start-up growth. Furthermore, how the founding team’s initial knowledge stock as well as environmental uncertainty affect this relationship is examined. Our results only suggest a positive association between professional advisory services and start-up growth, which seem to suggest that the presence of an outside board member does not affect short-term start-up growth. We also find that the relationship between professional advisory services and growth is more pronounced when previous relevant industry expertise of the founding team is lower and technological opportunities in the environment are larger. Our findings S. Weemaes VIVES University of Applied Sciences, Bruges, West Flanders, Belgium e-mail: [email protected] J. Bruneel (*) : J. Debrulle IESEG School of Management, LEM-CNRS 9221, Lille, France e-mail: [email protected] e-mail: [email protected]
J. Debrulle e-mail: [email protected] J. Bruneel : A. Gaeremynck : J. Debrulle KU Leuven, Leuven, Belgium
A. Gaeremynck e-mail: [email protected]
advance understanding of the determinants of short-term start-up growth and are of practical relevance to entrepreneurs and policymakers. Keywords Start-ups . External knowledge . Advisory services . Outside board members . Firm growth JEL classifications L26 . M13 . G34
1 Introduction The entrepreneurship literature emphasizes the importance of knowledge in fuelling the growth of entrepreneurial firms (Macpherson and Holt 2007; Ratinho et al. 2020). However, start-ups often have a limited knowledge base (Sapienza et al. 2006), and therefore face a socalled knowledge gap (Chrisman et al. 2005; Johnson et al. 2007) between the knowledge needed for successful venturing and that present in the firm. Since considerable time and effort are typically required to acquire knowledge internally, external acquisition will often be most efficient (Chrisman and McMullan 2004; Rubin et al. 2015). In this study, we focus on the role of professional advisory services (PAS) and outside board members (OBMs) in closing the knowledge gap. PAS providers, such as accountants, bankers, consultants, and lawyers, are hired mainly for one-off tasks that require specific explicit or tacit knowledge that the start-up lacks (Robson and Bennett 2000), whereas OBMs provide advice and counseling, build external legitimacy, and
S. Weemaes et al.
networks (Hillman and Dalziel 2003). The knowledgebased view (KBV) of the firm suggests two key factors that may influence the effectiveness of using external knowledge sources. First, the firm must be able to aggregate, integrate, and apply external knowledge, which depends on prior knowledge and skills present in the firm
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