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    Many studies have documented the effects of the liability of newness (Stinchcombe, 1965). However, despite the initial uncertainty and high failure rate of new organizations, some start–ups have been able to make a difference. For example Roberts (1980) showed that the new technology–based firms have produced a significant number of radical innovations in industrialized countries. Some entrepreneurial companies, like Apple or Netscape, have transformed the structure of whole industries. This study examines how the increasing involvement of new ventures in collaborative networks affects these innovative abilities.

    What makes some entrepreneurial organizations more successful and more innovative than others? Market competition and other industry–level variables, as well as entrepreneurial background characteristics and founding strategies have been some of the explanatory variables studied in the past (Romanelli, 1989; Eisenhardt & Schoonhoven, 1990; Feeser and Willard, 1990). Few studies have, however, looked at networking, and especially the types of collaborative strategies new ventures choose to pursue. While the use of collaborative linkages among new ventures has been found to be especially common (Rothwell, 1991), most of the literature on cooperation is aimed at large, established firms, and less at new ventures (McGee & Dowling, 1994).

This study focuses on how technology partnering affects the innovativeness of high–technology start–up companies. Building on the resource–based view of the firm and industrial organization economics, we propose that collaboration has contradictory effects on different types of innovation.

The results of the empirical test in a sample of 103 new biotechnology firms confirm the positive effects on growth and innovative output in general, but show that the increasing number of R&D relationships decreases radical innovation. Our results also suggest that incumbent partners may enhance incremental innovation, but that they may become a liability for radical development. In the latter case, liabilities of age become stronger than those of newness.

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