مقاله سال ۲۰۱۶

Innovative startups are key drivers of new and novel products, services, and ideas in existing industries (Dushnitsky & Lenox, 2005; Schumpeter, 1934). The pursuit of innovation is often characterized as highly uncertain compared with implementing previously developed competencies or investing in known technology (Beckman, 2006; McGrath & Nerkar, 2004). While innovations originating from internal markets relate positively to long-term performance, a firm’s innovation strategy may weaken as a result of governance changes that occur during the growth stages of a firm (Bernstein, 2012; Guo, Lev, & Shi, 2006; Wu, 2012). When seeking support from outside corporate investors, entrepreneurial firms face a tradeoff between satisfying the need for capital and disclosing private information about their innovation capabilities. Young firms may be able to create immediate value when they disclose information that might appropriate their novel technologies (Dushnitsky & Lenox, 2005). Ownership dilution and governance changes following acceptance of outside investment are also likely to affect firm-level strategy, particularly as it relates to innovation (Bernstein, 2012; Jiménez-Jiménez & Sanz-Valle, 2011; Kaplan & Strömberg, 2003; Wu, 2012).

This situation presents a critical question: which circumstances will allow greater pursuit of innovation following equity exchange? Recent studies identify the setting of initial public offerings (IPO) as a specific context influencing firm-level decision making, and find that the process of equity exchange may have a negative impact on firm innovation strategy (Bernstein, 2012). We contribute to literature examining how and why firm innovate through the use of exploratory relationships; in addition, we examine how these firms can reap the greatest benefit from different investor relationships. This paper contributes to the growing stream of literature investigating the innovation performance effects of different governance structures (Colombo & Murtinu, 2016; Dushnitsky & Lenox, 2005; Park & Steensma, 2013; Van de Vrande & Vanhaverbeke, 2013; Wadhwa, Phelps, & Kotha, 2016; Yoo & Sung, 2015).

We propose that a young firm’s innovation strategy will impact the governance structure following an equity exchange. The governance structure that emerges will determine whether a firm utilizes an exploration or exploitation alliance framework (March, 1991; Rothaermel & Deeds, 2004). Extensive research explores the performance implications of exploration versus exploitation, yet few studies focus on how young ventures are organized to pursue innovation, despite increased pressure from equity partners. Specifically, little is known about how differences in governance structure and organization may change a young venture’s pursuit of innovation over exploitation (Gulati & Higgins, 2003; Park & Steensma, 2013; Rothaermel & Deeds, 2004; Tidd, 2001).