Russell W. Wright
University of Illinois at Urbana-Champaign
Champaign, Illinois 61820
In order to be successful, all entrepreneurs must possess some sort of entrepreneurial motivation and spirit. In addition, however, high-technology entrepreneurs usually depend on the transfer of knowledge learned or created at other already existing organizations. Several authors have referred to this as the incubation process of high-technology new ventures. Entrepreneurial knowledge is typically transferred by the personal acquisition of the knowledge from the source organization To acquire knowledge, an individual must have been exposed to the source of knowledge.
This paper argues that organizations are systematically biased in their knowledge development systems. Different knowledge development systems create different sets of capabilities which collectively build different types of competences. Different types of knowledge development systems and competences create different types of entrepreneurs. The paper examines the development of entrepreneurs and entrepreneurial competences in the semiconductor industry from 1970 to 1990. I specifically look at the enabling and constraining effects of experience on entrepreneurial action and the pursuit of growth.
The first section of this paper introduces a general framework for examining the systematic biases in knowledge development processes that exist across firms. The framework suggests that firms are biased in their knowledge development processes and that these biases influence the development of organizational competences. The second section describes the knowledge development biases embedded within the new product development process and presents a series of hypotheses regarding the types of entrepreneurs and entrepreneurial actions that emerge from these competences. In the third section, I describe the evolution of the U.S. semiconductor industry from 1970 to 1990 and I perform an event history analysis to test the hypotheses. The final section discusses the implications of the results and the contribution to the entrepreneurship literature.
I started with a list of 100 of the largest electronics firms as reported by Dataquest Inc. Because of the difficulty of acquiring patent information from Japan, Asia and Europe, only US companies were included in the study. I identified all firms that were producing semiconductor devices in the first quarter of 1975 and tracked the entry of another 20 firms that entered the industry between 1975 and 1989. The data for this study was collected primarily from archival sources. I obtained my participation data from Dataquest Inc., MOS static and Dynamic RAM shipments, year-end reviews. The patent data was obtained through the automated patent system provided by the U.S. Patent and Trademark Office (USPAT). The system provides access to all U.S. patents, issued 1971 to present. The company level data was obtained from Dataquest Inc., Standard and Poors' annual reports, Computstat and Moody's Annual Directories. In addition to an extensive archival search, I conducted about 30 interviews with industry participants. The discussions were useful for gaining insight into the semiconductor product development and manufacturing processes. I use proportional hazard rate or survival rate analysis to test my hypotheses.
Most organizations demonstrate knowledge development biases toward either processes of intangible knowledge codification or tangible knowledge integration. Organizations that tend toward theorizing and intellectual codification processes identify and develop critical knowledge more quickly. They are often the first to market with emerging technologies and product innovation. Organizations that are based on tangible integration processes must often obtain emerging knowledge and technology from external sources. However, these organizations also are often more adept at incrementally and yet quickly improving process technologies. Process development requires both knowledge codification and tangible integration skills. Firms with strong knowledge codification skills tend to redefine their process with every new product development process. That is their bias. Firms with strong tangible integration skills tend to incrementally improve their processes and are more reluctant to completely redefine their process. That is their bias. Entrepreneurs and entrepreneurial actions that emerge from these organizations clearly demonstrate these biases.
Knowledge tends to evolve in two paths. One path is follows a direction of increasing definition and codification. The other path follows a direction of incremental addition and integration. Firms also tend to structure their knowledge development processes around one of these two paths. In other words, firms (and the people working in them) become biased in their knowledge development processes. These biases in turn enable and constrain entrepreneurs and the firms they create in their attempt to develop competences.