Details

The influence of commercial capabilities and orientations in new technology ventures

by Graaff, Joost Adriaan, MS

Abstract (Summary)
Entrepreneurs in technology start-ups face the challenge of developing their technology next to the development of customers. Relevant topic regarding this problem are the commercial capabilities and orientations of the new technology ventures. Analysis of 68 technology start-ups and spin-offs showed a beneficial influence of having commercial capabilities within the founding team on the business performance. This benefit is even higher when the start-ups are focused on their competitors. How the acquired market information regarding the customer or competitor is processed within the start-up team affects the business performance as well. This thesis shows that possessing commercial capabilities as start-up founders is crucial for start-up success and survival, where these capabilities enable the organization to process competitor information correctly.
Full Text Links

Main Document: View

10-page Sections: 1 2 3 4 5 6 Next >

Bibliographical Information:

Advisor:TU/e

School:Technische Universiteit Eindhoven

School Location:Netherlands

Source Type:Master's Thesis

Keywords:marketing capabilities, sales capabilities, market orientation, sales orientation, entrepreneurship, small business, new venture, RBT

ISBN:

Date of Publication:02/17/2014

Document Text (Pages 1-10)

Eindhoven, February 2014

The influence of commercial
capabilities and orientations in new
technology ventures

by
Joost van der Graaff

BSc Industrial Engineering and Innovation Science
Student identity number 0578161

in partial fulfilment of the requirements for the degree of

Master of Science
in Innovation Management

Eindhoven University of Technology
First supervisor: prof.dr. E.J. Nijssen, TU/e, ITEM
Second supervisor: dr. A. de Jong, TU/e, ITEM


Page 2

TUE. School of Industrial Engineering.
Series Master Theses Innovation Management

Subject headings: marketing capabilities, sales capabilities, market orientation, sales
orientation, entrepreneurship, small business, new venture, RBT


Page 3

Management summary

Context and problem definition
Entrepreneurs in technology start-ups face the challenge of developing their technology next to
the development of customers. This is indicated by entrepreneurs as a problematic process
which can be eased by acquiring or developing commercial capabilities in an early stage of the
start-up (Onyemah et al., 2013). Literature on the subject included work on commercial
capabilities and studies on a Market/ Sales orientation. The problem of these firms is that they
do not know whether and how these commercial capabilities can secure success or survival of
the firm. The research therefore needs to answer the following questions:
Main research question: How do commercial capabilities of the founding team affect the
commercialization process of technology in a start-up firm?
Sub questions:




What is the role and influence of a customer orientation in the commercialization
process of a technology start-up firm?
What is the role and influence of a competitor orientation in the commercialization
process of a technology start-up firm?
What is the role and influence of a sales orientation in the commercialization process of
a technology start-up firm?
This research addresses issues raised by The Holst Centre, an independent open-innovation R&D
centre, regarding the exploitation of their commercialization via new ventures. We therefore
extended the data and model of Witte (2012), a research initiated earlier to address these issues
The Holst Centre. With limited studies on entrepreneurship, this research takes both small
established firms and small entrepreneurial firms, start-ups, into account who share many of
their marketing problems.

I


Page 4

Literature background
A literature review was executed with the following keywords: commercial capabilities,
entrepreneurship, small firms, sales, marketing or combinations thereof. This identified two
literature streams:
1. Commercial capabilities in small and start-up firms
This literature stream on commercial capabilities reasons from the Resource Based Theory (RBT)
and suggests that capabilities are needed to recognize unique resources within a firms and
transform these resources into customer value (Amit and Schoemaker, 1993; Day, 1994). In
small firms and start-ups, these capabilities mainly involve the founding team. Research has
mainly focused on marketing capabilities, but recent attention has also focused on the influence
of possessing sales capabilities within the founding team. Furthermore, several studies reason
according to the RBT that marketing and sales capabilities in itself do not deliver a competitive
position in the market place and these capabilities influence the business performance in
relation to the culture of an organization, i.e. a market or sales orientation. Ambiguity exists on
the type of relation between these commercial capabilities and orientations and especially
literature on small and start-up firms regarding this topic is undeveloped.

2. Market/ Sales orientation& customer development in small and start-up firms
The second research stream includes publications on the level and benefit of market and sales
orientation in small and start-up firms. The results of these studies reveal that these firms
mainly rely on their customers for the acquisition of market information (Blankson and Cheng,
2005; Blankson et al., 2006). The vital role of the customer has been highlighted by studies on
the importance of having a reference customer as a small or start-up firms, who can refer the
firm to other customers on the market . With little experience in customer relationship building,
researchers argue that the sales activities of a firm are crucial to connect with these customers.
Therefore, recent attention has focused on the benefit of a sales orientation, next to an MO, in
small and start-up firms. Focusing on learning from the customer via sales and thus integrating
sales in the NPD process is seen by researchers as an important determinant for start-up
success. Responding to the feedback of the customer acquired with sales activities is done best
by acquiring minimal resources and thereby launching lean.

II


Page 5

Conceptual model
The following model was created to guide this research:

We have developed a model in which we combine the two literature streams. The first stream of
articles regarding commercial capabilities in small and start-up firms is represented in the
bottom half of the model. The articles concerning an MO/SO and customer development are
shown in the upper half of the model in which the components of an MO/SO are included
separately. To combine these two streams we built on Morgan et al. (2009) who have also
studied the interaction between commercial capabilities and MO/SO in general. We on the
other hand focussed on the start-up context discussed in the previous section and distinguished
between marketing and sales capabilities, but also shared interpretation of the market
information by the founding team.
Methodology
To test the newly developed model the original data set of Witte (2012) was extended from 35
to 68 cases, enhancing for instance also the measure for the level of technology push. The
model was tested with a sample of Dutch spin-offs and spinouts involved in technology based
innovations. We used a SEM based partial least square method to analyse the hypotheses.

III


Page 6

Results
The reliability and validity of the measures was analysed and the hypotheses were tested.
Validity of the model resulted in 4 of 13 supported hypotheses. The main hypothesis was
supported, indicating a positive significant influence of founding team commercial capabilities
on the business performance. When commercial capabilities are combined with a competitor
orientation, this will benefit the performance even more. A combination of commercial
capabilities and a low customer orientation benefits the business performance as well. No
support could be found for an influence of a customer or sales orientation on the business
performance. The results did show a significant positive effect of a competitor orientation on
the business performance of a start-up. Monitoring the developments of the competitors and
knowledge on whether the customers of the competitors are satisfied delivers a benefit for
survival and growth of a start-up. Several other interaction effects are identified as well. A high
orientation on the customer and sales only influences the business performance under a low
share interpretation by the founding team. The results also show that when a start-up is highly
driven by technology, the firm’s performance benefits even more from an orientation towards
the competitor.
Discussion
As hypothesized, commercial, i.e. marketing and sales, capabilities enable the founders to
recognize valuable market information and turn this information into customer value. The
positive influence of commercial capabilities on the performance of the start-up is dependent
on the level of competitor and customer orientation. First, being commercially capable seems
particularly important when little information about the customer is available and the start-up
has little insights in the existing or latent needs of the customer. Second, when the start-up has
a high focus on the competitor, the information of the competitor needs to be interpreted with
the use of the commercial capabilities of the founders and transformed into useable
information. No direct effects of having a customer and sales orientation could be found, in
contrary to our hypotheses and findings of prior studies (Blankson and Cheng, 2005;
Ruokolainen, 2005). It seems that predicting customer needs is a more difficult process for startups
than assumed by researchers. An explanation could be the false assumption of a predictable
and an effectual marketing approach might be more suitable for start-ups (Sarasvathy, 2001).
Having an organization-wide traditional causational orientation towards customer and the
selling activities might therefore not deliver a benefit for the business performance of the start-
IV


Page 7

ups. They should rather rely on the competitor for their information instead of their customer or
sales activities. With a high focus on the customer, start-ups might become over dependent on
their customer and lose the beneficial focus on the competitor. It seems that start-ups should
mind the strategy of the competitor in order to determine the direction of the technology on
the market, or certain technology paths. This is in line with the results on the level of technology
push of the start-ups which indicate that especially start-ups who are driven by technology
benefit from a focus on the competitor. Especially these start-ups should mind the technology
strategy of the competitor and adapt their innovations accordingly.
How the information is interpreted by the founding team has a significant influence on the
benefit of a commercial orientation. When a start-up is involved in the process of customer
involvement, this process should not be interrupted with frequent meetings that can distort this
process. What might happen, is that the more traditional marketing and sales functions
interrupt the process by trying to convince the founding team with their own collected market
information. It is however beneficial to meet frequently and create a shared interpretation
when the start-up has a low focus on the customer and its selling activities and little customer
and sales information available.

V


Page 8

Preface

This thesis marks the completion of my Master Innovation Management at the Eindhoven
University of Technology.
The writing of this thesis has been going through some ups and downs with the last mile as
hardest. The passion of the entrepreneurs participating in my research kept me motivated
throughout the whole process. With a life-long dream of starting a business on my own, I was
more than happy to take a quick glance in the mind of the entrepreneur, characterized by
endless persistence.
I am grateful towards several people which supported me during my research. Therefore, I
would like to thank Ed Nijssen for keeping me focused and stimulating me to take a critical
standpoint regarding my research. In our meetings he was able to give me direct feedback and
quickly identify problems, leading to a better quality of the output. He taught me to look at my
thesis in a structured way, accompanied with a large dose of common sense. Furthermore, I
would like to thank Ad de Jong for providing an alternative and creative point of view on my
work. I also want to thank Erwin Meinders from TNO Holst Centre for providing the basis of this
research. Finally, I would like to thank my family and friends for the unconditional support
during my research.
Joost van der Graaff,
Eindhoven, February 2014

VI


Page 9

Table of Contents

Management summary .................................................................................................................... I
Preface............................................................................................................................................ VI
Table of Contents .......................................................................................................................... VII
1 Introduction............................................................................................................................. 1
2 Literature background............................................................................................................. 6

2.1 Commercial capabilities in small and start-up firms ....................................................... 6
2.2 Market/Sales orientation & customer development in small and start-up firms........... 8

2.2.1 Market orientation .................................................................................................. 8
2.2.2 Customer development......................................................................................... 10
2.2.3 Sales orientation.................................................................................................... 11
3 Model and hypotheses .......................................................................................................... 14
4 Research methodology.......................................................................................................... 20

4.1 Data collection............................................................................................................... 20
4.2 Measurement ................................................................................................................ 20
4.3 Sample characteristics................................................................................................... 21
4.4 Data analysis.................................................................................................................. 21
4.5 Measure reliability and validity ..................................................................................... 22

4.5.1 Internal consistency reliability............................................................................... 22
4.5.2 Item reliability........................................................................................................ 22
4.5.3 Convergent validity................................................................................................ 23
4.5.4 Discriminant validity .............................................................................................. 23
4.1.1 ‘Technology push’ construct ................................................................................. 27
5 Results ................................................................................................................................... 28
6 Discussion .............................................................................................................................. 36

6.1 Discussion of results ...................................................................................................... 36
6.2 Comparison present study and study of Witte (2012) .................................................. 38
6.3 Managerial implications ................................................................................................ 38
6.4 Limitations & directions for future research ................................................................. 40
7 Bibliography........................................................................................................................... 41
Appendix A: Cross-loadings of items ............................................................................................. 46

VII


Page 10

Appendix B: Survey questions ....................................................................................................... 47
Appendix C: Comparison present study and study Witte (2012).................................................. 48

Table of Tables
Table 1 Descriptives, reliability, validity and construct interrelations .......................................... 24
Table 2 Constructs, items and survey questions ........................................................................... 25
Table 3 Items 'technology push'.................................................................................................... 27
Table 4 Rotated Component Matrix.............................................................................................. 27
Table 5 Overview results SEM models .......................................................................................... 29
Table 6 Cross-loadings of items..................................................................................................... 46
Table 7 Overview survey questions............................................................................................... 47
Table 8 Comparison present study and study Witte (2012) ......................................................... 48

Table of Figures
Figure 1 Customer development model (Blank, 2005) ................................................................. 11
Figure 2 Sales Learning Curve (Leslie & Holloway, 2006).............................................................. 12
Figure 3 Conceptual model ........................................................................................................... 14
Figure 4 Product or Service ........................................................................................................... 21
Figure 5 Market type ..................................................................................................................... 21
Figure 6 Commercial capabilities X Pro-active customer orientation........................................... 31
Figure 7 Commercial capabilities X competitor orientation ......................................................... 32
Figure 8 Pro-active customer orientation X Shared interpretation .............................................. 33
Figure 9 Pro-active sales orientation X Shared interpretation...................................................... 34
Figure 10 Competitor orientation X Technology push .................................................................. 34

VIII

© 2009 OpenThesis.org. All Rights Reserved.