The making of an entrepreneurial community in the new economy: Entrepeneurs, networks & dynamics in the Dutch ICT-industry 1975 - 2000
12 / 2003 - 08 / 2007
Nederlandse Organisatie voor Wetenschappelijk Onderzoek (NWO)
This study examines the contribution of start-up entrepreneurs, dynamic firms and their networks to the emergence of the ICT/Internet industry community in the Netherlands between 1975 and 2000. Besides building on previous work by the research team on the peculiarities of the new entrepreneurial economy and the importance of new companies and their networks (e.g. Audretsch & Thurik, 2000; 2001; Elfring & Hulsink, 2002), this proposal elaborates on the ICT starters and their networks project that was recently funded by NWO-MES (Thurik et al., 2001). That study has generated a number of hypotheses on the basis of 30 in-depth case-studies on entrepreneurial firms and their founders, concerning the way a particular mix of strong and weak ties contributes to the early development of ICT and Internet ventures (Hulsink & Elfring, 2002). These hypotheses need to be tested to clarify and resolve some of the confusion and inconclusive results in the literature on the particular role of networks in entrepreneurship and industry formation. In this proposal, the emphasis will be on the emergence and creation of the Dutch ICT/Internet industry community between 1975 and 2000 (from PC to Internet 2; from micro-electronics, hardware equipment, software, to telecommunications services and applications). In the shaping of these new technologies and markets over time, several (f)actors can be distinguished: the role of large integrated firms (e.g. Philips, KPN) and research laboratories (e.g. CWI), the dynamic posed by start-up firms (either individually or organizationally induced: e.g. Prolin and several of its offshoots), and the indirect and facilitating role played by institutions addressing the particular needs of entrepreneurs and young firms (e.g. venture capitalists, law firms, innovation & transfer centres etc.). This proposal adheres to the distinction made in the previous research design between entrepreneurs without and those with a support network. In the first group, the 'lonesome cowboys', the entrepreneur or entrepreneurial team sets out by using several weak ties and transforming some of them into strong partners at a later stage. The tentative results in the previous study on the network dynamics of lone starters (Hulsink & Elfring, 2002) seem to conflict with some of the existing literature (Hite and Hesterly, 2001). This issue will be addressed in the proposed study by using actor-oriented statistical models (for social network analysis) on a larger sample of start-up entrepreneurs (Van de Bunt, 1999). Spin-offs are different from 'lonesome cowboys', not only in terms of their support network, but also with regard to the type of start-up. While lonesome cowboys, often outsiders, pioneer with new business models, spin-offs (insiders) generally exploit the knowledge base of the 'mother' organization and rely upon the dominant heuristics in an industry (Elfring & Foss, 2000). Successful spin-offs initially rely upon a small set of strong ties to which weak ties are added at a later stage. Besides plenty of successful ventures, both type of start-ups (lone starters and spin-offs) generate failures as well. Interesting questions in that respect are: are failures real failures; are they able to learn and recycle some of their ideas, people, and assets in a new firm? New and recent evidence points at the learning effects of startups which fail in their early years but contribute in two ways to the knowledge base of the ecosystem of the entrepreneurial community. First, it contributes directly to the expertise, experience and knowledge of those involved. Hence, they are likely to use this knowledge in a further venture whether it be independent or in the framework of an existing firm. Secondly, it contributes to other participants of the system. Their awareness of the dominant and possibly successful design increases by the unsuccessful experiment. Failure within the context of an ecosystem of an entrepreneurial community contributes in that the variety/selection/learning process becomes active and accumulates a knowledge base in the Schumperetian sense (Audretsch et al., 2002; Carree & Thurik, 2002). The so-called 'recombinant firm (Stark, 1996)' and 'flexible recycling (Bahrami & Evans, 2000) are new phenomena and worth studying in more detail. These recombinant firms and their recycling networks also contribute to the increasing dynamic in the high technology industries. Thus each of the three projects (lone starters, spin-offs and recombinant firms/flexible recycling) adds insights into how different types of start-ups and their particular networks have fueled (and continue to fuel) the development of the Dutch ICT/Internet industry community over time (1975-2000). The combined results of the three projects may help improve our understanding of the emergence of industrial communities.