Power plays a key role in the relationships between startups and established organisations. Yet researchers have devoted little attention to the startup’s perspective on power in such relationships. To study startups’ view on power, a useful starting point is their structural power, but this also requires an investigation of their power behaviour. We explore how structural and behavioural power interrelate in a startup’s relationships with its established partners in the medical device business. Our longitudinal, embedded case study reveals nine interaction episodes in which power plays a decisive role. The power episodes show that the case startup often uses hostile power use tactics because it overestimates its structural power. Since its established partners recognise its lack of power, they usually do not accept such behaviour. Thus, the case startup could not extract the intended benefits. Nonetheless, we find that the case startup could benefit from its relationships if it employs conciliatory power use tactics or power change tactics. With these insights, we contribute to the startup business relationship literature by providing a better understanding of startups’ experience with power. We also extend the power literature by showing that it is the perception of power that determines power behaviour rather than the de facto structural potential.

Introduction

When startups are founded, they are usually exposed to liabilities of smallness and newness: they lack the resources (e.g. financial, human, social and/or marketing capital) and have not yet established the business relationships (e.g. with suppliers and customers) necessary to successfully exploit opportunities for new products and services (Aaboen, Holmen, & Pedersen, 2017; Bruderl & Schussler, 1990; LaageHellman, Landqvist, & Lind, 2017). These liabilities can be compensated for by interacting with other organisations (Das & He, 2006; Håkansson, Ford, Gadde, Snehota, & Waluszewski, 2009). Research has shown that especially relationships with established organisations are a major source of financial and non-financial resources (Baum, Calabrese, & Silverman, 2000; Deeds & Hill, 1996). They can also provide startups with the legitimacy and endorsement they need to survive (Bengtsson & Johansson, 2012; Stuart, 2000). However, startups and established organisations do usually not have compatible goals, shared benefits and mutual interdependence (Chicksand, 2015). Thus, their interactions are usually characterised by disagreements about what to do and how to do it. To coordinate their relationship, they need to negotiate and use their power, because there is a lack of formal hierarchy (Achrol, 1997; Pfeffer, 2009; Whetten, 1981). Thus, power is an important characteristic of interactions between startups and established organisations, and an unavoidable mechanism to decide on an appropriate course of action (Achrol, 1997).