Start-up firms are notoriously resource and time poor. One way of addressing these deficits is to develop strategic capability to access, activate and co-shape resources with other firms in the start-up’s network. The capability literature assumes such a development is inevitable, provided a start-up survives. But developing network capability depends on the managers of other firms, the deepening managerial understanding of business relationships, and the ability of the start-up managers to adjust to and understand interdependence in networks. We present a processual model of how managerial understanding of network capability develops, comprising of three parts each building on the earlier: (i) in relationships, (ii) through relationships and (iii) in the network. The model was inductively developed from a longitudinal study of a start-up firm. Also, two sensemaking processes were found to predominate – problem solving and social-cognitive processes. Our model highlights the role of the start-up manager in sensemaking with managers across a number of firms to resolve commercial problems. Thus, the independence many start-up managers seek must turn towards interdependence. Second, managers’ temporal horizons and the specific temporal profile of events and activities inside the involved business relationships are important in understanding and developing, with other firms, network capability.

Introduction

Born with the liabilities associated with being small and new, startups have limited development and growth options. One path is through external resource access by joining business networks. Some start-up managers know well from past ventures how to apply business relationships in networks, while for others an intuitive understanding is found from within their set of social and economic relationships (Dodd & Anderson, 2007). That business relationships and network embeddedness for a start-up will change over time is not new (Coviello, 2006; Greve & Salaff, 2003; Hoang & Yi, 2015; Lechner, Dowling, & Welpe, 2006). However, our inductive study brings to the literature an understanding of strategic network capability, which is how managers jointly with partners build the capability to access, activate and coshape resources with other firms so as to develop and/or change a network. Our study also contributes to an understanding of how managers make sense of and shape business relationships so as to access resources to support their start-up business. There appears in the literature an underlying assumption that network capability is naturally endowed on firms (Eisenhardt & Martin, 2000). However, network capability is developmental in nature rather than inherent (Möller & Svahn, 2003), as firms must internally build capabilities (Teece, Pisano, & Shuen, 1997). We argue that an important part of developing network capability is the evolving managerial understanding of the potential of business relationships and networks.