The Growth Paths Of Technology-based Start-ups Towards Discontinuous Innovation

Discontinuous innovation has great significance on establishing technology-based start-ups(TBSs), incubatoring regional strategic industries and building an innovative country in China. However, most existing studies focus on the macro levels or on established firms and little research concern the discontinuous innovation of TBSs empirically. In such an emerging economy of China, how to deal with the relations among innovation, growth and value is critical to the survival and growth of new ventures.The paper firstly puts forward the definition of Discontinuous Innovation Orientation(DIO), and then establishes and demonstrates a structural model of DIO's effects on New Venture Growth Performance(NGP). Secondly it builds and demonstrates the models of effects and working mechanism between DIO and NGP based on investigation data. Thirdly, it explains the formation paths and decision mechanism of firm capabilities growth towards discontinuous innovation by means of case studies. Lastly, it analyzes the evolution mechanism of discontinuous innovation growth options value under uncertainties. The main academic contributions of this paper are as followings.(1) Construct a structural model on the effects of DIO on NGPThe paper models the affecting paths of DIO on NGP through SEM method based on the investigation data of 176 new ventures, and the results show that the indirect effects are stronger than the direct ones, which constructs a relatively new perspective on the explanation of the innovator's dilemma. In addition, it puts forward a new classifying method on innovation orientation by introducing the definition of DIO, and classifies DIOs into discontinuous product innovation orientation, discontinuous marketing innovation orientation and discontinuous business model innovation orientation, which enriches the concepts and measurements in the area of innovation orientation and discontinuous innovation.(2) Build a model of capabilities growth paths towards discontinuous innovationFrom the perspectives of technological, markets and organizational, the paper builds a three-dimensional model of the capabilities growth paths towards discontinuous products, markets, and business model innovation for TBSs. It analyzes the drives and formation paths composed of technological capabilities breakthrough, organizational capabilities breakthrough and marketing capabilities breakthrough of TBSs, illustrates such three models and procedures of capabilities building, capabilities integration and capabilities reconfiguration, and introduces a three-feedback mechanism on growth paths decision. Furthermore, it validates the model of capabilities growth paths based on the case studies of three typical firms from high-technology manufacturing industries.(3) Establish a growth option value model of discontinuous innovation for TBSsFocusing on the continuously random change, most of the existing research on technology innovation investment is not capable to reflect the real conditions dominated by discontinuous changes. Therefore, this paper constructs a growth option value model of discontinuous innovation based on the jump diffusion model for TBSs, and analyzes the effects of discontinuous innovation project value uncertainties and its success rate on the growth options value of discontinuous innovation when investment cost is fixed. Meanwhile it extends the model to the condition under which investment cost change is random. The simulation results of Monte Carlo Method demonstrates that the jump rate of discontinuous change and project value fluctuation have positive effects on the growth option value of discontinuous innovation project. Finally, the policy implications are suggested.