Networked Growth of High Tech Firms
Anita Juho1; Tuija Mainela2; Vesa Puhakka3; Sakari Sipola4
1
Assistant, University of Oulu, Marketing, anita.juho@oulu.fi
2
Professor, University of Oulu, Marketing, tuija.mainela@oulu.fi
3
Professor, University of Oulu, Management and Entrepreneurship, vesa.puhakka@oulu.fi
4
Researcher, University of Oulu, Information Processing Science, sakari.sipola@oulu.fi
Abstract
In this article we build a conceptual framework for studying growth of high tech firms relying
on two often separately used theoretical discussions. On one hand, we use the entrepreneurial
opportunity creation perspective that suggests that entrepreneurs build their new ventures in a
complex process of opportunity creation. This perspective lays conceptual emphasis on
entrepreneurial orientation and dynamic capabilities of entrepreneurs in creating and
effectuating novel types of business opportunities opened up by the environmental dynamism.
On the other hand, we use the so called network action perspective that suggests there is value
in analysis of firms as actors embedded in over time changing relationship networks and
driven by the actions of their managers in relationship development. This perspective lays
conceptual emphasis on networking for embedding the firm in networks that support
appropriate ways of internationalization and emerging value networks. As a conclusion we
suggest two alternative templates for analyzing the process of high tech firm growth. The
templates can be seen as both competitive and complementary explanations for growth.
Keywords
Growth, High Tech, Networks, International Entrepreneurship
Acknowledgements
The authors wish to acknowledge the support of the Global Clusters Program.
Introduction
Growth of firms is regarded as a key issue in the development of national economies, and
growth is at the top of the target lists in many companies (Haour 2005). Some firms manage
to take temporary spurts of growth but are not able to keep it up. Many firms do not get to the
growth track at all. This is especially true in high-technology industries in which continuous
technological change and market globalization are the main drivers of business development
(Schumpeter 1934; Solow 1957; Romer 1986; Pohjola 2002; Christensen & Raynor 2003).
During the change of the millennium great expectations were placed on the growth potential
of new technology firms, and especially on software firms (see Hoch et al. 1999). However,
technological uncertainty and other industry characteristics caused many of them to fail and
expectations were proven too optimistic.
On these grounds it is not surprising that firm growth has attracted a lot of interest among
researchers (see Davidsson & Wiklund 1999; Delmar et al. 2003). Many theories about
1
growth of a firm have been proposed since Penrose (1959) depicted hers but none of them has
been widely approved by the academic society (Barringer et al. 2005). On the basis of prior
research we know about great variety of factors that have influence on firm growth but as a
whole the knowledge is limited and fragmented (Delmar 1997). Most research has been made
using variance-based research methods describing growth through numeric values whereas
the process through which growth emerges has seldom been examined. The process of growth
is still a black box between independent and dependent variables. Consequently, we are able
to measure growth but cannot say why and how it comes about.
The advancing globalization, speeding technological development and differentiation of the
customers mean that growth of high tech firms often takes place in multicultural and turbulent
settings where the entrepreneurs/managers need to interact and establish relationships with
actors with diverse cultural backgrounds and interests. Building effective international
networks has been noted as one of the most important issues of business development in the
recent academic research (e.g. Academy of Management Review, Special Issue 2006).
We aim to create further understanding of the underlying mechanisms and processes by which
high tech firms achieve international growth based on relationship networks. The research
question to be answered is: What are the drivers of high-tech firm growth processes in their
global markets of operation?
In the following, we start with an overview of previous research on firm growth approaching
it from the viewpoints of entrepreneurship and internationalization of high tech firms. Then,
we build a conceptual framework for studying growth of high tech firms relying on two often
separately used theoretical discussions. On one hand, we use the entrepreneurial opportunity
creation perspective that suggests that entrepreneurs build their new ventures in a complex
process of opportunity creation (see e.g. Sarasvathy 2001). This perspective lays conceptual
emphasis on entrepreneurial orientation and dynamic capabilities of entrepreneurs to create
and effectuate novel business opportunities opened up by the environmental dynamism. On
the other hand, we use the network action perspective that suggests there is value in analysis
of firms as actors embedded in over time changing relationship networks and driven by the
actions of their managers in relationship development (see e.g. Håkansson & Snehota 2006;
Johanson & Vahlne 2006). This perspective lays conceptual emphasis on managerial
networking for embedding the firm in relationship networks that support appropriate ways of
internationalization and emerging value networks. Building on the so called alternate
templates strategy (see Langley 1999) we elaborate these perspectives as competitive as well
as complementary models of networked growth of high-tech firms.
Growth of high tech firms
In approaching growth of high tech firms we see the intersection of entrepreneurship with
international business context as a particularly interesting one (see the Special Issue on
international entrepreneurship in International Business Review 2005). Lately, several
researchers (e.g. Bell et al. 2003; McDougal et al. 2003; Zahra et al. 2005) have emphasized
the role of entrepreneurial opportunity creation or entrepreneurial team in connection to the
internationalization process of high-tech firms. What the theoretical discussions have in
common is the emphasis on relationship networks. Entrepreneurship research suggests growth
2
to require entrepreneurial opportunity creation in social network context. Internationalization
research, in turn, emphasizes the capability to build effective firm-level networks over
national borders. Therefore, growing in global markets is hardly ever a lonely process by a
single firm but growth can actually be described as a networked process.
Entrepreneurial growth
Growth of entrepreneurial firms has been under the spotlight in a number of studies (see
Davidsson & Wiklund 1999; Delmar 1997). The discussion as a whole can be described as a
complex one starting from the point that growth as a multifaceted phenomenon (see e.g. Autio
et al. 2000; Delmar et al. 2003) has made researchers constantly make own definitions for
growth. Different definitions, in turn, have created a great diversity of studied variables. In the
end, there is considerable lack of reliability and comparability of the results and fragmentation
of previous research. Zahra, Sapienza & Davidsson (2006) conclude that “the previous
research has not provided a compelling explanation for the ability of some new and
established companies to continuously create, define, discover and exploit entrepreneurial
opportunities”.
Entrepreneurship can be understood at the general level as the creation of new business in an
existing firm or as establishment of a new firm (Amit et al. 1993). Thus, entrepreneurship
research is interested in how opportunities for bringing into existence future goods and
services are discovered and exploited, by whom and with what consequences (Shane &
Venkataraman 2000; Venkataraman 1997). Entrepreneurial opportunities are socially
constructed (Sarason et al. 2006; Sarasvathy 2001) and the opportunity creation takes place in
a social dialogue (Ardichvili & Cardozo 2000; Davidsson & Honig 2003; Elfring & Hulsink
2003; Singh et al. 2000). Opportunity creation involves as well experience-based searching
for something valuable not yet available, and creative information processing in which distant
pieces of information are woven new ways into an opportunity (Shane & Venkataraman
2000). Entrepreneurship is also a process by which individuals pursue opportunities without
regard to the resources they currently control (Stevenson & Jarillo 1990; see also Varamäki &
Vesalainen 2003). On this basis, entrepreneurship is a network based process of creating new
business, in which an opportunity is created and turned into a form in which it adds economic
value by using own and others’ resources and personal relationships.
Prior studies on entrepreneurial growth have mostly seen growth as a phenomenon to be
modelled by defining different phases and actions related to growth. The research has
overwhelmingly adopted positivistic, variance-based methods to explain and predict what
happens in a social reality by searching natural law like regularities and causalities (cf. Burrell
& Morgan 1979). Therefore, prior research on growth has not taken into account that most
events in social world take place in spatiotemporal open systems – in networks – in which
events do not follow a determined and recurrent pattern (Tsoukas 1989). This makes it
difficult to find general causalities and patterns of growth that would be applicable at firm
level. To overcome this problem, some recent research has applied process approach on
growth studying different kinds of overlapping episodes that are not tied to certain sequence
of execution or time in firm’s life-cycle (e.g. Barringer et al. 2005). This moves the focus
from static description of growth towards analyses of growth as a spatiotemporal process
consisting of different behavioural processes.
3
We see growth as an emerging process and stress the behaviours and attitudes inside the firm
as well as its context and the temporal nature of growth. This way of seeing growth, which
significantly differs from the traditional conception, is important because it offers a basis for a
real-time study of how and why firms grow (Davidsson & Wiklund 1999). Further, we
suggest that growth is related to networked actions emphasizing questions on how business
opportunity is emerging in a social dialogue (e.g. Sarasvathy 2001).
In addition to emphasizing processual approach to growth, we stress global industries and
international markets as the most typical context for growth of high tech firms. This leads us
to contribute to the central aspect of international entrepreneurship, namely the discussion on
international new ventures (Oviatt & McDougall 1994) and research on how they develop and
grow over time. Networks and relationships have been noted to have an important influence
on their business development (e.g. Coviello & Munro 1995; Sharma & Blomstermo 2003)
but in-depth research on their development processes is still limited.
Internationalization of high tech firms
The process of high tech firms internationalization has been increasing researched since 1994
article by Oviatt and McDougall. The emerging body of international entrepreneurship and
high tech firm internationalization research shows that firms can be global short after their
inception (see, e.g. McDougall et al., 2003; Knight & Cavusgil, 1996; Madsen & Servais,
1997). High-tech business has offered a fertile ground for internationalization research
because firms in high-tech industries often experience faster routes to international markets
than firms in more traditional industries. By definition the high-tech firms produce products
and services with leading edge technologies (see e.g. Bell 1995). Typically high-tech firms
are relatively small companies. The growth of the SMEs is strongly related to successful
internationalization because the high-tech companies are acting globally in highly competitive
niche markets as well as the lifecycles for software products are relatively short. Therefore
international expansion is a necessity for growth (see Coviello & Munro 1994; Bell 1995;
Madsen & Servais 1997; Crick & Jones 1998). Jones and Crick (2004) emphasize the
impossibility of gradual development in the domestic markets because of the ever shortening
windows of opportunity for the new technology exploitation.
After some twenty years of research on internationalization of high tech firms, Crick and
Spence (2005) summarise the research well combine different characters of high-tech with
dynamic internationalization. A recurring theme is the challenging of the traditional process
theories of internationalization (see e.g., Bell 1995; Bell et al. 2003, Crick & Spence 2005).
Furthermore, the research of international new ventures has supported Oviatt and McDougal’s
(1994) original idea that the business environment with highly specified industries is
globalizing and offering opportunities to innovative and dynamic firms. In 2005 Oviatt and
McDougall defined opportunities and individuals who strive to take advantage of them as the
two key elements of international entrepreneurship. Entrepreneurs or the entrepreneurial
teams are the actors who act to exploit the opportunities (Bell et al. 2003; McDougal et al.
2003; Zahra et al. 2004; Oviatt & McDougall 2005).
Although often operating with limited internal resources (McDougall et al. 2003), especially
the willingness of the entrepreneurs to rely on external resources in the business networks
creates opportunities to enter international markets (Coviello & Munro 1995). Johanson and
4
Mattsson (1988) presented in their seminal article that success in internationalization is more
dependent on networks than on markets or culture of the target-market. Johanson and Vahlne
(2003) brought this to pertain to new businesses as well. The active utilization of various
interpersonal and interfirm networks often creates international new ventures, born globals or
instant exporters (Bell et al. 2003). However, many high-tech firms also enter international
markets and internationalize their businesses only after several successful operation years in
the home market (see Bell et al. 2003; Crick & Jones 2000; Komulainen et al. 2006; Madsen
& Servais 1997). Jones (2001) emphasizes the importance of networks concretely when
noting that without flows into and out of the system, the firm dies. As a whole, the previous
research has indicated that network theory should be in important role when studying
international entrepreneurship (Johanson & Vahlne 2003).
In this study we combine entrepreneurship and internationalization with network approach to
contribute to the discussion on international entrepreneurship. In general the growth of a high
tech firm can be seen as an entrepreneurial process that is embedded in international
institutional and social networks which support the firm’s access to external resources (Bell et
al. 2003). Our growth process starts from a situation where a high tech firm has discovered
the business opportunity and is starting to organize activities and resources for exploiting it.
The firm does not necessarily have its first customer yet. This is important to notice because
in many growth studies the first customer is seen as a starting point for the firm’s business.
We feel that business starts to develop during the opportunity creation (cf. the overlapping
phase of discovery and exploitation, Shane and Venkataraman 2000; Davidsson 2003).
Two conceptualizations of high tech firm growth
Creating understanding of processual phenomena, such as firm growth, is a challenging task.
The phenomenon itself is a complex and dynamic one and the data typically produced are
extensive, rich and finegrained. To make sense of growth processes of high tech firms we
suggest the alternate templates strategy described by Langley (1999) as an especially useful
one. The alternate templates strategy overcomes the overwhelming nature of process data by
basically fixing attention to certain theoretically derived concepts. Furthermore, a central idea
in the process theory development is to contrast alternative theoretical conceptualizations of
the phenomenon. Our aim is to develop two conceptual models of the drivers of high tech
firm growth, namely entrepreneurial opportunity creation and network action, and contrast
these models to each other as the explanations of the growth processes. We suggest the two
conceptualizations to consist of such internally coherent sets of theoretical premises that they
can be used to propose alternative interpretations for the events in the growth processes. The
first one is derived from the entrepreneurship theory and the second one from the network and
internationalization theories. In the end the models can be seen as both competitive and
complementary to each.
Entrepreneurial opportunity creation perspective to growth
Business opportunity forms the first key concept of entrepreneurial opportunity creation
approach to growth. Type and novelty of the business opportunity has been recognized to
affect the way the opportunity is exploited by the firm (Saemundsson & Dahlstrand 2005¸
Sarasvathy et al. 2003). Sarasvathy et al. (2003) define opportunities to consist of (1) new
5
idea/s or invention/s that may or may not lead to the achievement of one or more economic
ends that become possible through those ideas or inventions; and (2) beliefs about things
favourable to the achievement of those ends; and (3) actions that implement those ends
through specific (imagined) new economic artefacts. The definition relates to a classification
of different opportunity types, namely recognition, discovery and creation, based on
Knightian uncertainty (see Knight 1921).
When examining business opportunities of firms with high growth objectives we emphasize
activities during the whole process starting from initial idea followed by opportunity
refinement and market making. The level of entrepreneur’s growth aspirations should be
taken into account from the beginning. Prior research has not described how highly growth
oriented firms select their initial markets and how they approach opportunity refinement in
order to be competitive and successful in the selected market. When opportunity is understood
in-depth, we can better grasp the uncertainty and the role of the entrepreneur as a challenger
and a web-weaver of various interests to create new realities.
Knowledge of the content of business helps us to understand the second key concept, the
entrepreneurial orientation. It may be seen as a firm-level strategy-making process that firms
use to enact their organizational purpose, implement their vision, and create competitive
advantage. Miller (1983) proposed that entrepreneurial orientation consists of three
dimensions, used widely in the later literature: innovativeness, risk taking and proactiveness.
Entrepreneurial orientation is strongly linked to motivation towards growth (cf. Wiklund
1999). It can be assumed that if a firm wants to grow, it has to be motivated to seek growth
and take growth into account in its decision-making and operation from the beginning.
Entrepreneurial orientation illustrates this attitude whose strength considerably differs
between firms (Wiklund & Shepherd 2005). Strong entrepreneurial orientation does not help
to create growth if the business opportunity does not have enough potential and carrying
capacity. The concept combined with the in-depth knowledge of business opportunity stresses
the understanding of the mental issues and attitudes as drivers of growth of firms.
Thirdly, a growth-oriented high tech firm should be equipped with dynamic capabilities. We
follow the definition proposed recently by Zahra et al. (2006) who see dynamic capabilities as
the abilities to reconfigure a firm’s resources and routines in the manner envisioned and
deemed appropriate by its principal decision-makers. These are needed for making internal
and external competencies for operations in rapidly changing environments. In this research,
dynamic capability reflects the ability to change or reconfigure the way the firm solves its
problems to accommodate new experiences and situations. In order to understand the type and
number of needed capabilities, the business content must be well understood. This intertwines
definition of dynamic capabilities with in-depth analysis of opportunity type and business
sector. Defining the industry at the general level as high tech does not reveal a wide spectrum
or spatial and temporal roles of different capabilities relevant for growth. Discerning the
relevant dynamic capabilities is very much a context dependent issue and requires detailed
understanding of the high tech business environment in question.
Therefore, to be able to understand the mechanisms growth of firms, business environment
has to be taken into consideration. Zahra et al. (1997) and Zahra and Neubaum (1998) noticed
that even within an industry, companies vary in their environmental perceptions because of
their different risk orientations, relative capacities, and past performance histories, and these
6
perceptions influence their behaviour and reasoning of it. In this approach, the concept of
environmental dynamism is used to capture the firm's perception of its environment. This is
crucial for understanding the growth process. We need knowledge on the influence of the
perception of environmental dynamism on the perception of fit between the business
opportunity and environment of the firm. On this basis we suggest the concepts of business
opportunity, entrepreneurial orientation, dynamic capabilities and environmental dynamism to
form a relevant conceptual framework for examining growth of high tech firms.
Network action perspective to growth
We suggest the so-called network action perspective to provide an alternative theoretical
perspective to understand growth of high tech firms in global markets. The network action
perspective is built on the assumption that the character of a certain social unit is possible to
define and understand only in terms of its exchange relationships with other social units (see
Anderson et al. 1993; Gulati 1998; Håkansson & Snehota 1989).
Network action perspective centres on the different pathways to international markets as
requested by for example Bell et al. (2003). We define internationalization as “the process of
increasing involvement in international operations” (Luostarinen & Welch 1990 p. 249)
seeing the route to international markets of primary interest. Traditional models of
internationalization posit that firms internationalize through a series of evolutionary stages
and despite some criticism against the stage models (e.g. Anderson 1993) many companies
still internationalize through these stages (Bell et al. 2003). Jones (2001) argues that
relationships and networks are not the single explanation for successful internationalization.
The discussion of entry modes cannot be ignored since decisions on them are the building
blocks and the main decision stages for internationalization of a high-tech firm (Jones 2001)
although the firms may have quite a flexible attitude towards the choices (Bell et al. 2003).
The entry mode alternatives can be divided to export entry modes, contractual entry modes
and investment entry modes (Sharma & Erramilli 2004). According to Bell et al. (2003) the
internationalization process is situation specific and unique and therefore firms’ motivation,
objectives and knowledge intensity influence the internationalization pathway.
Secondly, network action perspective looks at how change comes about within the
international networks through individual level action. To capture these dynamics we look at
the actions of the managers through the concept of networking. Networking is a process of
connecting actors through bonding and commitment by individuals, and performing activities
to get access to the resources controlled by those actors (Melin 1989; Halinen et al. 1999).
Networking is also a strategic process in which relationships are changed and actions taken to
place the firm in a stronger competitive position (Håkansson & Snehota 1989; Melin 1989;
Håkansson & Snehota 2006).
In high tech business the value of technology cannot be ignored but we see as the most
interesting issue the value that is created through interaction in networks. Therefore the third
concept of network action perspective is value networks. How the relationships form larger
networks has influence on company’s present and future position in the market (Lindgreen
and Wynstra 2005). In high-tech business also the knowledge and technological resources of
single firms are limited (Oviatt & McDougall 1994) and firms try to overcome this by
utilizing external resources through vertical and horizontal networking (Möller & Svahn
7
2004; Möller & Svahn 2006). Even though value creation is defined as one of the key
concepts of international entrepreneurship (Jones 2001; McDougall & Oviatt 2000; Oviatt &
McDougall 1994; Zucchella 2006) value in networks has not been in the centre of research. In
the dynamic environment of high-tech business the relationships are usually project based and
the discontinuity of relationship is one of the key challenges (Cova & Hoskins 1997; Cova &
Salle 2005; Hadjikhani 1996). To be able to survive, suppliers need to understand how value
can be created through relationships (Lindgren & Wynstra 2005) so that they are able to
internationalize and grow. Therefore a firm’s capability of creating and influencing various
value networks can have a significant impact on firm’s growth.
Embeddedness in relationship networks forms the fourth key concept of the network action
perspective (cf. Mainela & Puhakka 2007). The focus of the perspective is on the relational
embeddedness that describes the characteristics of the relationships and the intensity of
interaction (Granovetter 1973; Nahapiet & Ghoshal 1998). Embeddedness can be seen to
describe the social side of business relationships; economic action is always embedded in
concrete personal relationships between individuals (Granovetter 1985) and business
relationships are built up as a social exchange process between individuals (Håkansson &
Snehota 1989). Following Nahapiet and Ghoshal (1998) we define embeddedness as the kind
of interpersonal relationships that people have developed for business interaction in networks.
Framework to study growth
On the basis of the above discussion we can build a two-sided conceptual framework for
studying growth of high tech firms (see Figure 1). On one hand, we use the entrepreneurial
opportunity creation perspective that suggests that entrepreneurs build their new ventures in a
complex process of opportunity creation. This perspective lays conceptual emphasis on
entrepreneurial orientation of entrepreneurs and dynamic capabilities of firms to create and
effectuate novel types of business opportunities opened up by the environmental dynamism.
On the other hand, we use the network action perspective that suggests there is value in
analysis of firms as actors embedded in over time changing relationship networks and driven
by the actions of their managers in relationship development (see e.g. Håkansson & Snehota
2006; Johanson & Vahlne 2006). This perspective lays conceptual emphasis on
internationalization through managerial networking for embedding the firm in relationship
networks that support the emerging value networks.
The two perspectives can be seen to propose two differently structured mechanisms of high
tech firm growth. The entrepreneurial opportunity creation perspective is more centred on the
individual level of analysis and sees the business opportunity as the primary content of the
development process. Dynamic capabilities form the central resources and entrepreneurial
orientation describes the strategic behaviour in the process. The entrepreneur’s perception of
environment emphasizes the environmental dynamism. The network action perspective is
centred on relationship level of analysis and sees the internationalization as the primary
content of the process. The value networks are the central resources and networking describes
the strategic behaviour. The perception of environment emphasizes embeddedness in
relationship networks. Together the two perspectives can be seen to propose high-tech firm
growth to be (1) a process consisting of relations and interchange with the outside
environment and (2) a process in which relationships do not just happen but they are created,
supported and coordinated globally around an opportunity.
8
Entrepreneurial
Orientation
Environmental
Dynamism
Business
Opportunity
(BO)
Dynamic
Capabilities
Mechanisms of ICT firm change and
development
New
Venture
Creation
Process of high-tech firm’s growth
Added Value
Sales Growth
Learning
Mechanisms of ICT firm’s
internationalization
Internationalization
Value Networks
Networking
Embeddedness
Future
History
Time
Figure 1. Two conceptualizations of growth of high-tech firms.
Conclusions
Developed countries are facing the challenges of economical transformation and structural
change caused by the digital age and globalization. Business environments have become
global in many industries making ineffective the resource-based competitive advantages of
size and scope, infrastructure, and other previously strong capabilities. The nature of business
has moved firms from the possession of resources towards knowledge creation and renewal.
Global business environments are in many cases ruthless, firms cannot survive with outdated
products or business models. This is emphasized by the general tendency of shortening
product and business model lifecycles (Hamel 2000). The activities of competitors,
customers, and partners are difficult to predict alongside with fast technological development.
The rules of competition change and are quickly rewritten. As a consequence, the ability to
engage in rapid and relentless continuous change under uncertainty is crucial for growth of
firms in post-modern business environments.
9
Despite numerous studies on firm growth, knowledge is still scattered and limited (Davidsson
& Wiklund 2000). Previous research has strongly focused on explaining and predicting
changes in firm size and on the internal process leading to changes in size often described as
growth patterns. This can be seen strongly influenced by the “old economy” where the
amount of different resources was important source of competitive advantage (cf. Penrose
1959). Consequently, majority of research on firm growth has used variance-based methods
aiming at explaining and predicting what happens in a social reality by searching causation
within research phenomenon. The concern has been more on finding the causal relations
between observed events than on understanding why or how these events emerge. As a result,
we are able to show many causal relations but are unable to illustrate social mechanisms
generating and explaining firm growth (Davidsson & Wiklund 2000).
In the present study we have defined the key concepts of two alternative as well as
complementary theoretical approaches to growth. We have constructed the approaches of four
concepts that the previous research has seen as important and often strongly intertwined
concepts in explaining either growth of entrepreneurial ventures or internationalization of
high tech firms. The first approach has its roots in the entrepreneurship theory and the second
one is primarily rooted in the international business network research. This makes the
suggested research program as a particularly interesting one in the emerging field of
international entrepreneurship.
Methodologically the proposed research program shares the interest of growth process
researchers (e.g., Davidsson & Wiklund 1999; Delmar 1997; Delmar et al. 2003; Wiklund &
Shepherd 2005) in seeing the firm growth as a processual phenomenon. However, the
concentration of these studies on the causal relations, although time sensitive, means that they
take quite a partial view of the emergence and development of growth. This study, in turn,
rests on the premise that contextual embeddedness and generative mechanisms are the central
determinants of firm growth. Thus, we do not search for the causal relations and contingent
boundaries of them because social arenas of human behaviour are numerous (Bhaskar 1998)
but aim at understanding generative mechanisms and how and why they pull and push firm
growth in historically contingent and socially situated contexts. Following the above
reasoning, we propose that the variance-based research does not take into account that most of
the events in social world take place in open systems, in which events do not invariably
follow a determined and recurrent pattern (Hedström & Swedberg 1998; Tsoukas 1989).
Therefore, it is difficult to find general causalities and patterns of growth that would be
applicable on a firm level.
We contribute to the existing research on firm growth in two particular ways. Firstly, we
demonstrate that firm growth is a process embedded in a particular context, high tech business
in this study. Secondly, we demonstrate that firm growth is driven by generative mechanisms,
i.e. process through which causal relations come about. This way we bring new knowledge on
how firm growth is actually accomplished. The results will help researchers and practitioners
to further understand the entrepreneurial behaviour, dynamism and episodic nature of firm
change and development. Furthermore, results will offer more insight into how firms learn
and develop new capabilities for creating and sustaining competitiveness in rapidly changing
and uncertain modern business environments.
10
High-tech business is one of the major drivers of innovation and economic growth. High-tech
business is not only about how to commercialize new technologies, but more broadly about
the interplay between new technologies and business in which business processes and ways of
organizing new ventures are constantly redefined. High-tech business is, therefore, very
malleable and there is no single route to success, but the strategic actions of the involved
actors co-produce the outcome. Taken together, growth of a venture in high-tech business is
not an individual or a firm level process, but rather a process embedded in wide networks of
economic actors and driven by entrepreneurial level action for relationship building. We
propose that this area of research should focus on examining how growth comes into the
existence in a dynamic business environment and how the dialogue between technological
innovations and new venture creation add new economic value.
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