New Ventures External Network Relationship Quality, Internal Capacity And Growth Performance

Social economic value contrasts with commonly existing high fatality rate and low growth of new ventures, which attracts a lot of researchers and results in a great many of studies. It is easy to find either theoretical or empirical studies which based on social capital theory or resource and capabilities-based theory to elaborate the growth of new ventures. However, few studies are found where both these two theories are involved taking external network relationship, internal capacity and growth into an integral model. This is why people hardly know the internal relationship between these two theories and how they contribute to levels of the growth of new ventures. Based on social capital theory and resource and capabilities-based theory, this research constructed the comprehensive framework integrating the relationship quality (RQ) of external network, internal capabilities and growth, made theoretical and empirical studies on the influences of external network RQ on growth by means of internal capabilities. Thus it attempts to find out the relationship among these variables and the mechanism.To realize the general purpose mentioned above, this research conducted a profound study on the following aspect:(1) the relationship between internal capabilities and growth of new ventures.(2)the relationship between RQ of external network and internal capabilities of new ventures.(3)the relationship between RQ of external network and growth of new ventures.(4) the integrating relationship among RQ of external network, internal capabilities and growth of new ventures.The research issues mentioned above were analyzed in the following steps:(1) The research constructed a theoretical framework for all the research issues through logical deduction and drawing the outline of theory model which would be constructed.(2)The research analyzed in depth the influences of internal capabilities on growth, the direct influences of external network RQ on internal capabilities and growth and the indirect influences of external network RQ on growth by means of internal capabilities. At the same time, the research did put forward a series of related hypotheses in order to picture the detail of the theory model which would be constructed.(3)The research constructed several comparing theoretical model to be tested by empirical studies.(4)The research analyzed the sample data by using the statistic technology of structural equation modeling to test which of all the hypotheses were supported by the sample data.(5)The research made several conclusions about all research issues by comparing hypotheses and related tested outcome, and discussed their theoretical and empirical contribute.According to the empirical analysis on the data from 276 high-tech new ventures, the principal conclusions are drawn as follows.(1) The RQ is a multi-dimensional high-order variable. Communication, trust, promises, coordination and satisfaction interplay with each other, all of which is one of the essential dimensional of the RQ. However, the measurement of RQ depends upon the definite situation.(2) Entrepreneurial orientation, technological capabilities, marketing capabilities and financing capabilities make up the crucial internal capabilities of the first few years of development of new ventures. The stronger these capacities are, the faster and more healthy these new ventures will grow.(3)For new ventures, strong capabilities in technical, marketing and financial terms will contribute to the betterment of its entrepreneurial orientation. Moreover, enhancement in technical and marketing capabilities depends, to a large extent, on the financing capabilities of these new ventures. From this aspect, we can say that there exists a close association between the four essential elemental internal capabilities of new ventures, so they play their role in the growth of new ventures on different levels.(4)Partners, customers, government departments, and financial agencies are the main elements of the external networks of new ventures. The higher the RQ of the connection between these new ventures and either of these elements, the better is helps with the growth of these new ventures.(5)High RQ between new ventures and their external network objects can contribute to the improvement of the internal capabilities of new ventures. Among these relationships, High RQ between new ventures and their partners, and that between new ventures and their customers both help to improve the entrepreneurial orientation, technical and marketing capability; High RQ between new ventures and their government departments helps to promote its entrepreneurial orientation, marketing and financing capabilities; High RQ between new ventures and their financial agencies also helps to improve both its entrepreneurial orientation and financing capabilities.(6)The RQ of external networks is one of the fundamental element of the influence of external networks on the development of new ventures. It can be used when explaining the impacts of all the external networks on these new ventures, which makes an important approach to the research on the external networks.(7)The internal capabilities plays a notable positive part in the growing of these new ventures. The RQ of external network, however, mainly contributes to the growth of these new ventures indirectly by firstly improving their internal capabilities. Thus, the RQ of external network is the indirect element while internal capacities are the direct element in influencing growth of these new ventures, and internal capacities function as the media between the RQ of external network and the growth of these new ventures. In the course of this process: ?both the high quality partner relationship and customers relationship effect the growth of these new ventures indirectly mainly through entrepreneurial orientation, technological capabilities and marketing capabilities; The high quality government departments relationship plays its due part in the development of new ventures indirectly mainly through entrepreneurial orientation, marketing capabilities and financing capabilities; The high quality relationship with financial agencies effect the growth of these new ventures indirectly mainly through entrepreneurial orientation and financing capabilities. (2) among these interactions, for new ventures, technological capabilities acts as the medium between the partner and customer relationship as a whole and growth; Marketing capabilities plays the part of medium mainly between partner relationship, customer relationship and government department relationship as a whole and growth; Financing capabilities acts as the medium mainly between government department relationship and financial agencies relationship as a whole and growth; entrepreneurial orientation acts as the medium between all the external networks and growth.(8)The approach of applying all the external networks and internal capabilities as a whole and analyze the interplay between them makes a stronger proof for the growth of new ventures and explains better the dynamic between both internal and external factors of new ventures than simply applying one of these factors.To synthesize the conclusion of this research and other exploration during the research, with an eye on previous research results, the innovativeness of this study lies in the following:(1)It is found in this research that the high RQ between new ventures and their external network objects helps improve their internal capacities so as to build a new bridge between social capital theory and resource and capabilities-based theory.(2)The research found external network RQ exerts a positive influence on the internal capabilities and growth of new ventures. Therefore, it sheds new light on the study of the influence of external network on new ventures in the perspective of RQ.(3)The research successfully measures RQ between new ventures and their external network objects so as to broaden the domain of RQ evaluation.(4)The research found that the internal capabilities of new ventures plays a notable positive part in the growing of new ventures. The RQ of external networks, however, mainly contributes to growth of new ventures indirectly by firstly improving internal capabilities of these new ventures. Thus, The RQ of external networks is the indirect element while internal capacities are the direct element in influencinggrowth of new ventures, and internal capacities function as the media between RQ of external networks and growth. Therefore, the research reveals more profoundly the interrelationships between RQ of external networks, internal capabilities and growth of new ventures, offers a better interpretation of the inner relation between social capital theory and resource and capabilities-based theory, as well as their influence on the growth of new ventures.(5)The research mainly focuses on the growth of new ventures from the angle of the identification, acquisition and exploitation of opportunity, which are positively influenced by internal capabilities and RQ of external networks. So the research extends the opportunity theory in the entrepreneurial research from decision making stage to undertaking stage, and offers a new vision on the research about the growth of new ventures.Finally, this research also gives a more or less comprehensive analysis on the theoretical and empirical contribution without ignoring its own shortcomings, which can serve as a referential hint for future researches.