Academic journal article Journal of Applied Management and Entrepreneurship

Resource Acceleration: Extending Resource-Based Theory in Entrepreneurial Ventures

Academic journal article Journal of Applied Management and Entrepreneurship

Resource Acceleration: Extending Resource-Based Theory in Entrepreneurial Ventures

Article excerpt

Introduction

In recent years entrepreneurial firms have been examined from a variety of interesting perspectives concerning resources related to the firm. Some examples include: resource alignment (Edelman, Brush, & Manolova, 2005), ethical perspectives with stakeholders (Kuratko, Goldsby, & Hornsby, 2004), external ownership (Roengpitya, Dalton, Dalton & Certo, 2007), employee retention (Wager & Rondeau, 2006), constructing a resource base (Brush, Greene & Hart, 2001), and outsourcing (Stauss & Jedrassczyk, 2008). More specifically, Brush and Chaganti (1998) suggest that resources in small firms can play a greater role than strategy in explaining performance.

However, entrepreneurial firms typically experience a significant gap between their resources and aspirations, especially in a venture's early stages. Hamel and Prahalad (1994, p. 128) note that "starting resource positions are a very poor predictor of future industry leadership." This position leads to the argument that the gap between the entrepreneur's resource pool and the envisioned enterprise can only be closed through strategic leveraging of resources. Arguably, limited resources represent one of the greatest challenges confronting entrepreneurs, and are both a cause and effect of the liabilities of newness and smallness (Morris and Zahra, 2000).

Resource-based theory conceptualizes the firm as a portfolio of resources, where the quality and amount of resources in this portfolio are a major determinant of organizational performance (Barney, 1986; Makadok, 2001; Sirmon, Hitt and Ireland, 2007). Drawing from this theory, we introduce the concept of 'resource acceleration,' which we define as the rate at which resources are brought to bear on an entrepreneurial venture over time that exceeds the venture's set of resources at the time of founding. Through resource acceleration, initial resource endowments are accelerated as the entrepreneur and his or her team augment the resource pool with additional resources. In this context, acceleration can be conceptualized as a ratio of the value of these augmenting resources to the value of the resources initially contributed by the entrepreneurial team. The question of interest that we examine is whether the rate at which entrepreneurs grow their resource pool strongly influences venture performance over time.

A conceptual model of antecedents and outcomes of resource acceleration is the foundation through which we explore the question that interests us. Analysis of resource-based theory within the context of our question led us to ground our model in four resource-related antecedent variables: the entrepreneur's resource-related experience, resource awareness, resource self-efficacy, and growth aspirations. Financial performance and realized growth are the relevant outcomes variables. Resource acceleration is a function of the interrelations of the resource gap at the outset of the venture and resource acquisition strategies employed by the entrepreneur. A moderation model of the effects of resource acceleration on these antecedents of performance is tested with a cross-sectional survey of fiveyear old firms in the Eastern United States. A number of implications are drawn from the findings, and suggestions made for theory building and managerial practice.

Theory Development

Within the context of our research question, the resource-based view of the firm is concerned with the relationship between a venture's resources and its performance where resources are defined as assets, capabilities, routines, and knowledge that are tied to or controlled by an organization (Borch, Huse and Senneseth, 1999). Discovering, acquiring, and combining resources create the unique identity of a firm, while also placing limits on the scale and scope of company operations and delimiting the strategic direction of the organization (Alvarez and Barney, 2005; Chandler and Hanks, 1994; Peteraf, 1993). …

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