Involvement in knowledge-acquisition activities by venture team members and venture performance

Entrepreneurship: Theory and Practice, May, 2009 by Gaylen N. Chandler, Douglas W. Lyon

This research uses concepts of organizational learning to analyze knowledge acquisition by management teams in emerging firms. Involvement in ongoing knowledge-acquisition activities is positively and significantly related to venture performance. In addition, task environment dynamism is a positive moderator of the relationship between involvement in knowledge-acquisition activities and venture performance.

Introduction

Is involvement in ongoing knowledge-acquisition activities related to venture performance? Although this question has been addressed occasionally in the existing body of literature, the knowledge and capabilities of entrepreneurs and entrepreneurial teams have almost always been viewed as a static "stock" rather than a dynamic resource that changes over time through learning (Bird, 1995). Research on the capabilities of start-up companies has focused on the human capital of key individuals at start-up or at some point in time early in the firm's development (Baum, Locke, & Smith, 2001; Cooper, Gimeno-Gascon, & Woo, 1994; Dimov & Shepherd, 2005). We propose that to better understand the venture development process it is necessary to move beyond an analysis of the "stock" of human capital and to begin to consider the learning that occurs after start-up.

Ongoing learning is important because new venture teams do not possess all of the relevant knowledge required for the success of their ventures. These knowledge gaps exist for three predominant reasons. First, evidence suggests that entrepreneurs rarely compose teams based on complementary capabilities, but rather focus on mutual interest or attraction (Chandler, Honig, & Wiklund, 2005). Thus, the new venture team may not initially possess the knowledge, skills, and abilities necessary to drive new venture development. Second, in some industries emerging firms ate likely to face more rapid advances in technology, accelerated globalization, and greater competitive intensity than in the past (Zahra & Bogne, 2000). Even in more stable industries, the task environments (Castrogiovanni, 1991) in which emerging firms operate change when they acquire new customers and suppliers, deal with different regulatory agencies, confront different competitors, and obtain different kinds of financing. These changes in the task environment often create situations that require knowledge that was not initially possessed by new venture team members. Third, changes in the internal environment may require additional knowledge. The internal environment changes when new team members and employees are added to accommodate growth (Hanks, Watson, Jansen, & Chandler, 1993). When these changes occur it is often necessary for the management team to acquire or develop additional competencies to address the dominant problems that emerge as the organization develops (Kazanjian & Drazin, 1990).

By closely examining how the knowledge-acquisition activities of venture team members are related to organizational performance, ours is the first research in the entrepreneurship literature to provide empirical evidence that involvement in vicarious and search-and-notice learning activities after venture start-up is significantly related to venture performance. In addition, we analyze more types of knowledge-acquisition activities than do any of the previous studies we reviewed. Finally, we integrate the organizational learning literature (Huber, 1991) with the literature on training evaluation (Salas & Cannon-Bowers, 2001; Van Buren & Erskine, 2002) to provide a theoretical perspective for our study.

After reviewing the literature and presenting a research model, we define constructs and develop and test hypotheses. We then report the results of a study of 124 emerging ventures and provide evidence that engagement in knowledge-acquisition activities is positively associated with venture performance.

Theoretical Perspective

Our basic research model stipulates that involvement of venture team members in knowledge-acquisition activities, both before and after venture start-up, is positively associated with venture performance. In addition, we show that task environment dynamism moderates the relationship between organizational learning and venture performance such that involvement in knowledge-acquisition activities is more efficacious in rapidly changing task environments.

Emerging ventures face inevitable knowledge gaps that exist because of initial deficiencies or because of changing external and internal environments. An emerging research stream addresses how venture teams acquire knowledge that they did not have when they started the business (e.g., Lichtenstein, Lumpkin, & Shrader, 2003; McGee & Sawyerr, 2003; Ucbasaran, Lockett, Wright, & Westhead, 2003; Zahra & Filatotchev, 2004). This emerging body of literature can be categorized within the organizational learning literature. Although organizational learning has been discussed frequently in conjunction with continued innovation in larger and older firms, it has not yet become a focal issue in the entrepreneurship literature (Ireland, Hitt, Camp, & Sexton, 2001).