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COMPETING FOR THE CRITICAL MASS: AN ANALYSIS OF THE SUCCESS AND FAILURE OF HIGH GROWTH FIRMS IN EMERGING INDUSTRIES
Armand Gilinsky, Jr. (1)
Susan J. Fox-Wolfgramm (2)
(1) School of Business and Economics
Sonoma State University
1801 East Cotati Avenue
Rohnert Park, CA 94928-3609
(2)College of Business
Francisco State University
Francisco, CA 94132
We are developing a theory about the extent to which start-up firms attain critical mass (i.e. varying degrees of alignment of capabilities with opportunities). Our inquiry includes defining critical mass, drawing from the entrepreneurial, organizational, and ecological perspectives. We have developed a sample of nine pioneering firms in Northern California in an effort to extend and operationalize Aldrich and Fiols (1994) approach to new industry evolution.
A structured questionnaire is used to identify and measure the effectiveness of competitive strategies of high growth start-up companies and case histories of our sample firms are evaluated. Based upon a statistical analysis of quantitative data and the review of our qualitative case studies, we classify the start-up firms according to a typology based on our literature review.
We find that the start-up firms we have been studying do fall into the typology that we interested in. This typology includes the classification of firms as one of the following: (1) Champions- pioneers that succeed in creating an emerging industry; (2) Challengers-pioneers that are striving to create an emerging industry or transform an existing industry; (3) Collaborators--pioneers that form partnerships with mature firms in order to transform existing industries; and Capitulators--pioneers who are unable to sustain growth and ultimately fail. Supplemental qualitative findings suggest that this typology should be used to study the "process" of success and failure of high growth firms in emerging industries and not just the context at a point in time.
This research is important for entrepreneurs hoping to learn from the success and failure of others, policy-makers desiring to stimulate job creation via new industry development, and researchers in the field seeking to further their understanding of new venture and industry formation.