Antecedents of Innovation Strategies in New Technology-Based Firms : Interactions between the Environment and Founder Team Composition

This research contributes to the ongoing stream of research on the integration of technical and business knowledge for successful innovation, but does so with a unique focus – that of new firm founder teams. This is in contrast to much of the existing literature, which focuses on organizational units in large firms. As part of their strategy for success, new technology-based firms need to find an optimal balance between exploration and exploitation in their innovation activities. However, the resource constraints they typically face make it difficult for them to pursue both at the same time, which means that at any given point in time they are likely to opt for either exploration or exploitation rather than both. The purpose of this research is to investigate what influences new technology-based firms to select one innovation strategy over another. Data collected in 145 new technology-based firms are used to test hypotheses about how environmental conditions and founder team composition interact in their contributions to choice of innovation strategy. Based on hierarchical regression analysis of the data, the research findings suggest that teams consisting of individuals who have dissimilar backgrounds are more likely to adapt their innovation strategy to the characteristics of the environment than teams of individuals with similar backgrounds. Conversely, teams consisting of individuals with similar backgrounds are more likely to continue to follow their preferred strategy. However, as competitive intensity or environmental dynamism increases, such teams are likely to deviate from their preferred strategy