Technological discontinuities have been characterizing many markets for several years. Essential drivers for that are the Internet and startups, which make use of this technology in order to create new business models. This progress is quite often challenging established firms and call for them to leave their “comfort zone”. In contradiction to this competitive perspective, this paper aims to highlight the synergies between companies that have already been operating for many years and new market entrants. By doing so, it is examined how both may interact with the aim of commercializing products and sustaining innovation. Thereby, corporate incubators, corporate venture capitalists and non-equity relationships between established firms and startups are considered as forms of cooperation. In addition to that and by using the data of a conducted survey, insights into the experiences and expectations of incumbents and startups will be also provided. Following this, managerial implications shall serve as a base for future cooperation and the management of technological discontinuities.
Table of Contents
1 INTRODUCTION
2 LITERATURE REVIEW
2.1 Conditions of incumbents and startups
2.1.1 Challenges of startups
2.1.2 Challenges of incumbent firms
2.2 Interfaces between incumbents and startups
2.2.1 Challenges associated with cooperation
2.2.2 Benefits associated with cooperation
2.3 Types of cooperation
2.3.1 Corporate Incubator
2.3.2 Corporate Venture Capital Firms
2.3.3 Non-equity relationship
3 METHODOLOGY
4 RESULTS
4.1 Survey of startups
4.2 Survey of incumbents
4.3 Limitations
5 DISCUSSION
5.1 Managerial Implications
6 SUMMARY
Research Objective and Key Themes
The primary objective of this paper is to explore the role of cooperation between established firms and startups in addressing technological discontinuities, focusing on how synergies between these diverse market players can foster innovation and adaptation to dynamic market environments.
- Theoretical analysis of technological discontinuities and firm-specific challenges.
- Evaluation of transaction-cost economics in the context of inter-organizational relationships.
- Comparison of three primary forms of cooperation: corporate incubators, corporate venture capital, and non-equity partnerships.
- Empirical insights based on a survey of startups and incumbent firms regarding their cooperation experiences.
- Development of managerial guidelines for effectively managing external innovation collaborations.
Excerpt from the Book
1 INTRODUCTION
The world economy has become more and more open and dynamic in recent years. This is mainly based on the achievements of globalization and the Internet. As a consequence, the development of prototypes as well as market entries are easier then ever before. In the following, the diffusion of products can be done faster due to the global access to markets. However, this progress also results in technological discontinuities. Consequently, environmental uncertainty is also increasing. This means that no dominant design exists and that several products are competing in order to become the product-class standard (Tushman and Anderson, 1986). The rapid development cycle of technologies and the following discontinuities change the nature of this competition. As a result, obtaining and maintaining of a competitive advantage require fast innovation in products and processes (Bettis and Hitt, 1995). Due to this evolution established firms often find themselves in desperate straits (Rothaermel, 2002). In times of market equilibrium, incumbents are profiting from their product or process innovations. However, given that it is simply a matter of time before new innovations are introduced the competitive advantage of incumbents can be lost (Rothaermel, 2000).
Thus, an adaptation to the changes is required. With this comes the question of how to adapt especially in terms of designing innovation procedures. There are basically two options to initiate and execute an adaptation process. This can be either an internal opportunity whereby the firm focuses on the in-house resources and capabilities or, alternatively the external way whereby outside sources are used to acquire the necessary resources. The former comes along with the complete integration of all value-added activities in extreme cases. However, due to the broad spectrum of capabilities it is quite costly and not really necessary to integrate all required complementary assets. Conversely, the external perspective involves for instance contractual relationships with suppliers, fabricators and service providers that provide the required resources (Teece, 1986).
Summary of Chapters
1 INTRODUCTION: Sets the stage by describing the impact of technological discontinuities on the global economy and the necessity for firms to adapt through external cooperation.
2 LITERATURE REVIEW: Analyzes the theoretical conditions of incumbents and startups, the interfaces between them, and explores specific types of cooperative arrangements.
3 METHODOLOGY: Explains the design and structure of the survey conducted among startups and incumbents to gather empirical evidence on their collaborative practices.
4 RESULTS: Presents the findings from the surveys, detailing experiences, challenges, and assessment criteria from both the startups' and incumbents' perspectives.
5 DISCUSSION: Evaluates the survey results against existing literature and provides actionable implications for executives regarding inter-firm collaboration.
6 SUMMARY: Concludes the work by synthesizing the key insights regarding the role of cooperation in navigating technological changes and future business survival.
Keywords
Technological discontinuities, Incumbents, Startups, Cooperation, Innovation, Transaction-cost economics, Corporate Incubator, Corporate Venture Capital, Non-equity relationships, Commercialization, Synergy, Ambidextrous organization, Strategic alliances, Resource exchange, Adaptation.
Frequently Asked Questions
What is the core focus of this publication?
The publication examines how established firms and startups can collaborate to navigate and overcome the challenges posed by technological discontinuities through various forms of partnership.
What are the primary themes discussed in this work?
Central themes include the nature of technological change, the challenges faced by both incumbents and new entrants, transaction-cost economics, and specific collaborative structures like incubators and venture capital.
What is the ultimate goal of the research?
The goal is to provide a theoretical and empirical foundation for understanding how cooperative strategies can serve as a tool for incumbents to maintain competitiveness and for startups to commercialize their innovations.
Which scientific methods were employed?
The research combines an extensive literature review with empirical data collection through structured questionnaires distributed to both startups and representatives of established corporations.
What topics does the main body of the work cover?
The main body covers the conditions of market players, the governance structures of inter-organizational transactions, and a detailed analysis of three cooperation forms: corporate incubators, CVCs, and non-equity partnerships.
Which keywords best describe this study?
Key terms include Technological discontinuities, Incumbents, Startups, Cooperation, Innovation, and Ambidextrous organization.
How do corporate incubators support startups?
Corporate incubators provide tangible assets like office space and funding, while also offering intangible benefits such as access to corporate networks, industry-specific knowledge, and improved credibility.
What specific conflict resolution mechanisms are highlighted?
The research identifies communication, trust-building, and clear contractual definitions as primary instruments to mitigate disputes and foster commitment between partners.
How does corporate venture capital differ from independent venture capital?
Unlike independent venture capital, which primarily seeks financial returns, corporate venture capital (CVC) is driven by strategic motives, such as aligning with the parent company's innovation goals and exploring new technological domains.
- Quote paper
- Tobias Gebhardt (Author), 2014, Cooperation Between Established Firms and Startups in Order to Address Technological Discontinuities, Munich, GRIN Verlag, https://www.grin.com/document/298444
