The purpose of this study is to build a knowledge-based model of venture growth. In doing so, we try to understand the new venture growth process with knowledge strategy in a new venture context. This study presents the results of empirical analysis based on surveys of CEOs in representative ventures in Korea that received research funds from KTB.
A knowledge-based venture-growth model consists of two kinds of growth processes : The first one is a macro-process perspective that explains the organizational changes of dominant problems and configuration along growth stages or organizational life cycle. We adopt the more common distinction of three growth stages : Startup, growth, and maturity.
The second one is the micro-process perspective that explains the internal process of new venture growth. This research suggests a model of a RLR(Recognition of problems, Learning, and Resolution of problems) cycle to explain the internal mechanism of growth stage transition. Learning is the key to accumulate the necessary competence and capability to solve the confronted problems. We additionally suggest a typology of knowledge strategy according to levels of internal and external learning.
There seems to be four types of knowledge strategy in knowledge domains of market and technology. The loner type is just exploiting the existing knowledge base with lesser learning. They appear in a more stable and simple environment. The networker type learns actively from external sources of knowledge like institutions, universities, and other companies. The networker type is more active in the dynamic and complex market and market knowledge domain. The engineer type creates new knowledge mostly based on their internal knowledge base. This type is more prevalent in the technology domain. The Janus type uses both methods of internal and external learning and is more prevalent in dynamic and complex environments.
Effective knowledge strategies are different in two knowledge domains along three growth stages. In the market knowledge domain, the Janus type grows seven times faster than loner type in the growth stage. The Janus type grows three times faster than networker type in the maturity stage. Obviously firms grow slower in the maturity stage than those in earlier stages. In the technological knowledge domain, the engineer type grows faster than the loner type in the startup stage. The growth rate is 90 percent higher than that of the loner type. In the growth stage, the networker type grows three times faster than the loner type. Interestingly the loner type grows almost twice as fast as the networker and engineer type in the maturity stage. On average, new ventures in the startup stage grow faster than those in the maturity stage.
Some academic and managerial implications with some limitations are discussed. Also, this paper provides directions for further studies to understand new venture growth based on knowledge-based perspectives.