Collaboration between Start-ups and Corporates
within an Accelerator Program:
How can this be successful?
University of Amsterdam
MSc Business Administration | Entrepreneurship & Innovation Master Thesis
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6314M0254Supervisor: Dr. Ileana Maris de Bresser Second reader: Dr. van der Aa
Author: Eveline Sintnicolaas Student number: 10203427 Word count: 17.510
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Statement of Originality
This document is written by student Eveline Sintnicolaas who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
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Acknowledgements
This Master thesis is written as the final assignment for the Master Business Administration – Entrepreneurship & Innovation at the University of Amsterdam. This research provided me the opportunity to connect all the aspects I have learned during my study and it allowed me to put my skills into practice.
I would like to thank Dr. Ileana Maris de Bresser for providing me the opportunity to choose this subject for my thesis. Her guidance during the research process and critical insights helped me to write this thesis. Secondly, I would like to thank Gerben Klop for his insights on the collaboration between start-ups and corporates, and for introducing me to the people involved at Startupbootcamp Amsterdam. Especially, the provided office space at their office in B. Amsterdam was of great advantage. This served as a valuable opportunity to observe the environment and interaction among all actors involved. In addition, I would like to express my appreciation to all the participants contributing to my research, their willingness to share their experience with me and providing the data necessary for this research.
I really enjoyed writing my master thesis and to have used the theoretical skills with practical execution. Not only, it was a great experience to execute my own research, it also leveraged upon my interest and enhanced my insights of the different industries. This master thesis provided me the opportunity to talk with very interesting and powerful people and I took advantage of that. It is the end of my time at the University of Amsterdam, new challenges lie ahead and I am sure that all the knowledge acquired, lessons obtained, and overall great experience will help me to take up new challenges successfully.
Eveline Sintnicolaas Amsterdam, 24th
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ABSTRACT
The economy of today is characterized by the engagements of corporations with start-ups, the urgency of seeking outside-in innovation, and the participation in an innovation network in order to improve the innovation capacity of the organization and to create added value. The aim of this study is to gain insight into the internal workings of successful innovation networks, the motives for firms to engage in an accelerator and how new external knowledge is used to create value.. The following research question is formulated: ‘What are the characteristics of a successful collaboration between start-ups and corporates?’ Many factors come into play. One underlying mechanism is absorptive capacity, an important learning capability which can be developed to enhance innovation capacity. A multiple case study is conducted using the cases of HighTechXL and Startupbootcamp Amsterdam. Both corporates and start-ups are interviewed. Based on the data collected, the main motive for start-ups is the access to the network; for corporates, it is to be involved in an innovation network and understand its contribution. Based on the findings, it is recommended that mutual understanding be enhanced, familiarity with the strengths and weaknesses of the other party be acquired, and aligned interest and strategic goals be leveraged. Moreover, enhanced insights of successful internal working of collaboration between start-ups and corporates are needed to increase successful outcomes. Future research is encouraged to explore how start-ups and corporates can generate the greatest impact together.
Key words: Innovation network; Accelerator Program; Start-up; Corporate; Collaboration;
5 TABLE OF CONTENTS Acknowledgements p. 3 Abstract p. 4 I. Introduction p. 7
II. Literature Review p. 12
II.I Innovation p. 12
II.II Business ecosystem p. 13
II.III Absorptive capacity p. 16
II.IV Corporates and start-ups p. 19
III. Data and Method p. 21
III.I Research design: a qualitative multiple case study p. 21 III.II The business ecosystem: The accelerator programme p. 22 III.III Methods used to collect empirical data p. 25
III.IV Data analysis p. 26
IV. Results p. 29
IV.I Innovation networks: characteristics p. 30
IV.I.I Roles and responsibilities p. 33
IV.II Motives to participate p. 34
IV.III Essential elements for successful collaboration p. 38
IV.IV Absorptive capacity p. 42
IV.I Perceived knowledge transfer p. 43
IV.II Accessibility of external knowledge p. 43 IV.III Applicability of external knowledge p. 44 IV.IV Commercially used external knowledge p. 45 IV.V Inter-start-up and inter-intrapreneur in residence
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lessons obtained p. 46
IV.VI Personal and team development p. 47
IV.VII Mechanisms to assimilate external knowledge p. 48 IV.V Expectations and outcomes: measuring the success of the
accelerator program p. 51
IV.VI Key lessons obtained by start-ups and corporates p. 52 IV.VII Brief summary of findings from both cases p. 54
V. Discussion p. 54
V.I Theoretical discussion of this study’s findings p. 55 V.II Theoretical contributions of this study p. 58 V.III Practical implications of this study p. 60
V.III.I Start-up implications p. 60
V.III.II Corporate implications p. 61
VI. Conclusion and future recommendations p. 64
References p. 66
Appendixes p. 70
I. Figure 1: Model of Absorptive Capacity p. 70
II. Interview scheme p. 71
III. Codebook p. 74
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I. INTRODUCTION
An African proverb says ‘If you want to go fast, go alone; if you want to go far, go together’. This expresses the importance of using external sources to develop and maintain a competitive advantage. The increasing competition and globalization of industries, markets, and technologies has raised the demand for outside-in innovation and acquisition of technology through integrated research and development (R&D) networks, which Chesbrough (2004) calls a new ‘open innovation’ paradigm. Corporates cannot ignore the start-ups in their field of expertise. Rather, they must see the potential value of these start-ups for their own company and assess whether they can establish a mutually beneficial collaboration (Roos, 2015; Horn, 2015). It is of great value to guard against the competitive threats by proactively transferring these external capabilities and skills into an organization to enhance its innovation capability.
Collaboration between corporations and institutions with start-ups gives rise to mutual benefits from each other’s strengths, allowing them to conquer competitive market conditions. Start-ups quite often disrupt traditional business models by applying the most recent technology to products, service development, or both. One author notes, ‘The popular perception is that most corporations are just too big and deliberate to produce game-changing inventions’ (Anthony, 2012, p. 1). For start-ups with limited resources, the strategic alliance is an opportunity to gain access to corporations’ resources. At the same time, the corporation may benefit from the use of the latest technology and experimental models of the start-up to enter new markets or cope with market changes (Park, Chen, & Gallaghar, 2002).
It is not the giant corporate who dominates the business ecosystem, but the networked structure of collaboration among different entities (Cowan, Janard, & Zimmerman, 2007). As innovation is linked with enhanced performance and creation of a competitive advantage, companies seek new ways to be innovative (Ahuja & Katila, 2001).
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Currently, accelerator programs are networked collaborative structures, which have begun to attract academic attention. The number of accelerator programs in Europe is growing rapidly, with more than a hundred accelerators today. Their economic importance is stressed by StartupDelta, which is empowering the Netherlands as an entrepreneurial ecosystem (Sluijters, 2016). More and more, established businesses are involved in structured programs to engage and support entrepreneurial power. The accelerator program acts as a platform where good ideas can be nurtured.
Knowledge is one of the most important organizational resources (Cohen & Levinthal, 1990), and knowledge transfer is very important, especially to accelerate the growth of a start-up (Horn, 2015). The accelerator is creating a network to generate learning and knowledge by bringing start-ups and corporates together. By doing so, interaction and knowledge transfer takes place, which contributes to the development of capabilities and skills. Koschatzky (2001) explains the importance of networks as follows:
‘Since the innovation process is no longer regarded as a linear process in which some amounts of input are transformed in a kind of black box to a certain output, but as a learning process characterized by uncertainty and risk, in which several actors interact with each other, networking is believed to be a major success factor for economic development and innovation (p. 3)’.
Current academic literature has begun studying the gaining leverage effects from knowledge within corporate incubators (Becker & Gassmann, 2006). This study aims to contribute to the understanding of accelerator programs as arenas where transfer of knowledge between the partnering companies for generating innovations takes place. Thereby, contributing to the understanding of networks of innovation with the focus on collaboration between start-ups and corporates in accelerator programs.
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It is of great importance to explain the learning mechanisms underlying successful collaborations and how practical implications can be understood in order to improve the chances of success. In particular, to expand the limited academic literature on collaboration and learning between start-ups and corporates within an accelerator. The academic literature indicates that corporates and start-ups differ in their opportunity recognition, risk taking, pace, motives, goals, and definitions of success (Blank, 2013). Moreover, to capture learning out of this collaboration, knowledge must be managed and transformed into responsiveness and actions aligned with the strategic plan (Hansen, Nohria, & Tierney, 1999; Bullinger Auernhammer, & Gomeringer, 2004). In addition, the business model and execution strategy must fit the strategic goals and implementation of innovation in order to achieve commercial viability (Teece, 2010).
Tidd, Bessant, and Pavitt (2001) suggested that companies can learn through alliances. The exploitation of external sources of innovation can be achieved through different means of collaboration, for example, reduce the cost of technological development of market entry; achieving economies of scale; or reducing the time needed to develop and commercialize products. External networks can enhance organizational learning capability for solutions and discover networks of new technology and products (Hansen & Birkenshaw, 2007).
Innovation capability is conceptualized by Kogut and Zander (1992) as ‘the ability to activate and combine knowledge that reflects in innovation results such as products, services, processes, and systems’ (p. 13). The outcome of learning processes is to transform knowledge into something of value for the company. Absorptive capacity is a seen as a fundamental learning capability that could explain the success or failure of strategic alliances (Lane, Koka, & Pathak, 2006).
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Previous studies suggest that open innovation activities positively influence innovation outcomes in large firms. However, only several studies have investigated the adoption of open innovation by small- and medium-sized enterprises’ (Parida, Westerberg, & Frishammar, 2012). Resource-constrained firms in, the early stages of start-up, can benefit from strategic alliances by gaining access to required resources (Gulatti, 1998; Baum, Calabrese, & Silverman, 2000). Recent research on alliances and networks has stressed the value of inter-organizational relationships for the purpose of accessing resources and creating competitive advantage (Dyer & Singh, 1998).
Moreover, previous studies have examined the corporate perspective, and have not examined the role of start-ups in this collaboration. This study extends the literature by examining not only the role of corporates in the collaboration, but also that of start-ups. It seems very promising that these two types of entity may strengthen each other’s weaknesses. However, in reality, it is more complicated to create a collaboration model that fits the means, and a number of obstacles must be overcome in order to generate successful innovation outcomes (Weiblen & Chesbrough, 2015). The differences in culture, flexibility, resources, and mental models challenge the co-innovation process. Annually, corporations invest hundreds of millions of dollars in start-ups to profit strategically and financially from their innovation power (Eveleens, 2015; Horn, 2015). However, most of these investments are sinking costs due to mismatched collaboration models and cultural misunderstandings and expectations (Park et al., 2002; Horn, 2015). This study aims to study such collaborations between start-ups and corporates, to obtain insight into the difficulties they encounter and the manner in which they deal with these difficulties to generate successful innovations, addressing this interesting gap in the literature on successful collaboration by very early-staged start-ups and established corporates.
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and this should be an important parameter for successful collaboration (Lane et al., 2006). However, absorptive capacity as an underlying mechanism through which new external knowledge is assimilated by start-ups and corporate in an accelerator program is yet unexplored. Therefore, this study aims to provide insight on absorptive capacity, what underlying mechanisms are at play, and how this is captured by both start-ups and corporates during collaboration, thereby contributing to the existing literature and practical implications.
This study is centered on exploring these theoretical arguments and offering empirical evidence for them. To elaborate on these gaps this research aim to contribute to the understanding of networks of innovation, the collaboration and internal working between start-ups and corporates, and the theory of absorptive capacity by identifying mechanisms at play to assimilate external knowledge into value creation.
The overarching question of this thesis is:
What are the characteristics of a successful collaboration between start-ups and corporates
in an accelerator program?
To provide insights in the internal working of a successful collaboration the following question will be addressed:
How do start-ups and corporates use the knowledge gained from collaboration to create
value for their companies?
These questions are align with what can be expected from this thesis, particularly considering the nature of collaboration and the ideas of learning and innovating. The objective of this study is to identify the characteristics of a successful collaboration and to gain insights into the internal workings of successful innovation networks, the motives for
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firms to engage in an accelerator program and how new external knowledge is used to create value.
I. II Structure of the thesis
First, the body of literature on innovation networks, business ecosystems, absorptive capacity, start-ups, and corporates will be reviewed. The qualitative research will be introduced with a methodology chapter, containing detailed information on the study that was conducted. Afterwards, the results will be presented and discussed. Finally, the last chapter will conclude and provide recommendations for further research.
II. LITERATURE REVIEW
This section reviews the relevant literature relating to business ecosystems, absorptive capacity, start-ups, and corporates. In the literature review, the key concepts and particularly relevant constructs for the analysis and discussion of successful collaboration between start-ups and corporates are explained.
II.I Innovation
First, it is necessary to define ‘innovation’. There are many different interpretations, and to prevent misunderstanding, the meaning of innovation for purposes of this study is explained. The simplest definition of innovation is ‘new ways to do things’ (Lee, Olsen, & Trimi, 2012, p. 818). A broader concept of innovation is ‘any new idea or approach that is applied in fundamentally different ways to create value for the organization and other stakeholders’ (Lee et al., 2012, p. 818). Innovation is directly linked with value creation (Chesbrough, 2004; Enkel, Gassman, Chesbrough, 2009; Lee et al., 2012). Moreover, innovation relates to recombination of existing knowledge, concepts, and technology (Enkel
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et al., 2009). This study will refer to innovation as the combination of existing knowledge, concepts, and technology to create value for the organization.
II.II Business Ecosystem
The economy of today is challenging traditional business models, and innovation is seen as a key component for a company’s success. This puts pressure on companies to constantly seek for new ways to keep pace with rapidly changing market needs. Chesbrough (2004) explains that in order to evaluate early-stage technologies, companies need to stay close to their competitors, in particular, the ones who are disrupting the industry. Moreover, they need to make use of external sources in the firm’s innovation process. In other words,
‘The open innovation paradigm assumes that firms can and should use external as well as
internal ideas, and internal and external path to market, as they look to advance their technology’ (Chesbrough, 2004, p. 23).
A more general idea is a business ecosystem defined by Moore (1993), which emphasizes the importance of a company viewing their innovation environment as a whole, involving all parties that contribute to innovation developments in the company to some extent. This business ecosystem perspective integrates all manner of partners, such as competitors and customers, in order to increase innovation capacity. In order to do so, the business model needs to be aligned with the company’s strategy for innovation. The business model should explain how to deliver value to the customer and how to capture value while doing so (Blank, 2013). It describes such factors as the product or service, the consumer, the distribution channels, how demand is created, and how profits will be made. Two important functions of a business model are creating value and capturing a portion of that value (Chesbrough, 2007). Companies need to create and maintain unique resources or assets that give them a sustainable competitive advantage. By expanding the business model, the firm
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enables itself to engage with external sources, which will increase the availability of resources and capabilities to leverage their value creation. Furthermore, capturing the value of unique resources can be enhanced if used in other businesses as well.
Companies differ in their unique resources, assets, market position, and the opportunities they seize. If business models are expanded, external resources can be used to accelerate the innovation process, which results in savings of time and money. Therefore, ‘open innovation’ or ‘better-defined co-innovation’ represents engagement, experience, and co-creation for value that is difficult to imitate by the competition using various internal and external sources (Baldwin & Von Hippel, 2011). Innovation, as the recombination of existing knowledge, concepts, and technology (Enkel et al., 2009), already stresses the importance of the other players within the industry to challenge innovation and use external sources to enhance innovation capacity.
To further stress the importance of using external sources, Enkel et al. (2009) state that ‘once the notion of inter-organizational innovation collaboration has entered an industry, everyone who does not participate will cope with serious competitive disadvantages’ (p. 311). In addition, firms that are not involved in inter-organizational collaboration and forgo on knowledge exchange reduce their knowledge resources in the long term are not attractive to other firms and organizations (Koschatzky, 2001). To become even more attractive, corporations that use external knowledge sources increase their innovativeness and reduce time to market. Consequently, there is an increasing awareness of the importance of innovation networks (Swan, Newell, Scarbrough, & Hislop, 1999; Bullinger et al., 2004). In particular, firms involved in technological developments rely on collaborative relationships to access, survey and exploit emerging technological opportunities (Powell, 1998).
Collaboration is driven by different motives, such as strategic reasoning, learning consideration, or embeddedness in a community and connectivity to an inter-organizational
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network (Powell, 1998). The networking activities, characterized by encouraging sharing of knowledge, can provide access and awareness of new technologies. The knowledge acquired through these activities can be very relevant to their own organization (Swan et al., 1999). In addition, innovation processes are becoming more interactive, and it is particularly necessary for SMEs to be part of such networks that enable them to profit from complementary expertise (Bullinger et al., 2004). Previous studies particularly identified that the main motives for external sourcing are improved efficiency through economies of scale and access to knowledge not held by the organization (West & Boger, 2014). Therefore, this study will explain empirically the main motives of start-ups and corporates for participating in an accelerator program.
Furthermore, successful characters of innovation networks, are the face-to-face interaction, adapt current way of working to the needs of the network, aligning strategies by a common vision which is identified to increase sharing of necessary knowledge (Bullinger et al., 2004). The strategic perspective is an important success factor within the innovation network. The participating companies have different strategic intents and they should achieve a common vision of shared interest and leverage on that. Otherwise, the participating companies do not focus on specific innovation goals and no value is captured from the innovation activities (Bullinger et al., 2004). This study will elaborate on the accelerator program as innovation network and the importance of innovation strategies expressed by the participating companies.
Regardless of motive to participate in an accelerator program, knowledge transfer always takes place. However, gaining access to knowledge, learning from it and the ability to use it are very different from one another. This leads to the following concept of absorptive capacity (Cohen & Levinthal, 1990; Zahra & George, 2002).
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II.III Absorptive Capacity
A firm’s ability to absorb and manage knowledge from external knowledge resources is defined as absorptive capacity (Cohen & Levinthal, 1990). The importance of this concept is especially linked with the innovative capabilities of the firm. Not only the direct interaction with the external environment, but also the transfer of knowledge across and within subunits, influences the capacity of the organization. Additionally, it influences decision-making related to allocation of resources to innovation activities. Zahra and George (2002) defined absorptive capacity ‘as a dynamic capability pertaining to knowledge creation and utilization that enhances a firm's ability to gain and sustain a competitive advantage’ (p. 185). These capabilities enable the firm to reshape their resources to adapt to changing market conditions in order to achieve a competitive advantage.
Knowledge is a resource that can be shared and different sources can lead to new information and understanding (Huber, 1991; Cohen & Levinthal, 1990; Zahra & George, 2000). In order to enhance the conversion of resources into capabilities, coordinating mechanisms play a role. The capability of a firm to manage knowledge will result in it using resources more efficiently, and therefore enhance innovativeness and performance (Darroch, 2005).
The locus of innovation is found in networks of learning, rather than in an individual firm. To engage in the practice of innovation, different entities are integrated in an ecosystem to access both knowledge and resources through inter-organizational linkages. These linkages are critical to knowledge diffusion, learning, and technology development (Powell, 1998). The focus will be on corporates and start-ups: how these two entities find each other in a business ecosystem, what their motives are, how they collaborate, and what the outcomes of the co-innovation process are.
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O’Dell and Jackson Grayson (1999) argued that the organization’s value proposition is at the core of transferring knowledge. Both start-up and corporate will have different reasons for their collaboration and the transfer of knowledge and best practices. It can be reasoned that one of the shared goals is to gain insights from one set of experiences to shape subsequent activities (Powell, 1998). Additionally, Zahra and George (2002) argued that effective internal knowledge sharing and integration are the critical part of absorptive capacity.
They further suggested that a distinction can be made among potential absorptive capacity, external knowledge that could be acquired and utilized, and realized absorptive capacity, external knowledge that has been acquired and utilized. Moreover, an organization’s absorptive capacity can be increased by being part of a community and through increased familiarity of inter-organizational relationships (Liebeskind, Oliver, Zucker, & Brewer, 1996). Considering the network perspective, Tsai (2001) suggested that the position within a network can produce more innovations and can lead to better performance. This largely depends on the ability to successfully replicate new knowledge, or on the absorptive capacity.
In this study, the focus will be on understanding how an accelerator program functions as an innovation network and how knowledge is shared among all actors involved. Likewise, this study will examine what knowledge benefits start-ups acquire from this collaboration and how they are able to apply it commercially or for organizational innovation in general. The aim is to understand the mechanisms at play and the functioning of such collaborations. Through collaboration, both parties may gain critical competencies that contribute their competitive advantage.
The study of Jansen, Van Den Bosch, and Volberda (2005) suggested that organizational mechanisms associated with coordination capabilities can enhance potential
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absorptive capacity, and moreover, organizational mechanisms associated with socialization capabilities increase realized absorptive capacity. The coordination capabilities were defined as cross-functional interfaces, participation, and job rotation. Additionally, Cohen and Levinthal (1990) suggested that rotation of employees can increase the capacity for making novel linkages and associations, thereby enhancing the absorptive capacity of the organization. Moreover, certain processes and procedures that enhance internal sharing are to be identified in order to understand how absorptive capacity can be optimized. In order to develop and maintain competitive advantage, the organization’s ability to identify and value external knowledge, assimilate it, and commercially apply it, is critical. The organizational mechanisms discussed by Jansen et al. (2005) are expressed as connectedness and socialization tactics. These can be referred to the innovation network, which provides the opportunity to increase socialization capabilities, resulting in increased realized absorptive capacity.
Lane et al. (2006) generated a model of absorptive capacity (Appendix I, Figure 1). They suggested that several different elements are linked, playing a role in increasing absorptive capacity. It can be deduced that the environmental condition of an accelerator program boosts incentives for developing absorptive capacity. In addition, the structured program and all facilitated tools, provided by the accelerator program, to structure and process information, such as Business Model Canvas and lean management, could further the efficiency and effectiveness of assimilation and application. The measure of success is primarily defined by the growth of the start-up and, for the corporates, the knowledge output that can leverage the firm’s innovative capabilities and transfer within the firm. This research will explore how both start-ups and corporates recognize new external knowledge, assimilate valuable external knowledge, and apply assimilated external knowledge. Moreover, this study
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will focus on identifying and explaining the mechanisms used for assimilation and application of external knowledge.
Taking the above literature into account, the networked innovation ecosystem, the accelerator, creates an environment in which knowledge can easily be shared by both start-ups and corporates. Subsequently, the accessibility, applicability, and commercially used new external knowledge and its perceived value indicate the absorptive capacity of the organization (Lane et al., 2006). Absorptive capacity positively affects the innovation capability of an organization (Cohen & Levinthal, 1990; Zahra & George, 2002; Tsai, 2001). In turn, this indicates the learning capacity of the organization and therefore, which will lead to increased firm’s performance.
II.IV Corporate and Start-up
In order to understand the context of this research, a deeper understanding of the characteristics of both corporate and start-up are necessary. First, the corporate is a company that presents a permanent organization designed to execute a repeatable and scalable business model (Blank, 2013). By contrast, a start-up is looking for a repeatable and scalable business model. Moreover, the appropriate value proposition has not yet been defined by the start-up. In general, the start-up is newly created, innovative, in the process of development and validation, and in search of target markets (Blank, 2013).
Another key difference between corporates and start-ups is the opportunity recognition of new markets (Chesbrough, 2007). Start-ups are more flexible in adjusting to market needs and can respond quickly to these demands, whereas corporates are known for their bureaucratic culture, which cannot compete with the speed of start-ups. The start-ups often disrupt the industry, and corporates cannot afford to ignore them, as they may become a threat as soon as they enter the market. The risk of ignorance is too great, so they seek
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opportunities to collaborate and remain engaged with these rapid technological developments.
As previously mentioned, there are different motives that drive collaboration, such as strategic reasoning, learning consideration, or embeddedness in a community and connectivity to an inter-organizational network (Powell, 1998). The main motives of corporate and start-up may differ depending to their size and experience. Both entities have different needs, resulting in different motives. For a corporate, a start-up can function as a resource and development resource, and through collaboration they are closely engaged with potential competitors. On the other hand, the start-up is in need of market knowledge and sales know-how, something the corporate could provide based on its experience.
There is a great deal to be gained for both parties, and there is increasing awareness of the importance of collaboration. The networked character of the corporate can play a great deal in scaling the start-up, and vice versa. The start-up can make the corporate more attractive through their innovativeness. The corporate should be aware of its needs and innovation key performance indicators, processes and outcomes (Blank, 2013). The innovation should occur as an integral process, parallel to execution; it must be designed, not simply occurring by coincidence. To use this as guidance for the qualitative research design, the corporate should be aware of its innovation strategy and the role of start-ups to execute this strategy. In addition, the start-up should be aware of the manner in which they can use corporates to create added value. Next to that, the motives of both start-ups and corporates are identified and linked to the characteristics of the innovation network.
This study will focus on insights into the internal workings of successful innovation networks, the motives for firms to engage in an accelerator, and how new external knowledge is used to create value. It is acknowledged that there are other mechanisms at play that influence a successful collaboration between start-ups and corporates. However, the scope of
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this thesis is limited and therefore will focus on the identified elements. In addition, the exploratory nature of this study may produce more interesting findings that will deepen the understanding of absorptive capacity and other mechanisms at play that explain the successful collaboration between start-ups and corporates within an accelerator program.
In the next section, a multiple case study is presented and explains how these cases may provide insights into the collaboration between corporates and start-ups in an accelerator program.
III. DATA AND METHOD
This chapter concerns the study that was conducted, its design, and data analysis. The purpose of this research is to understand the collaboration of start-ups and corporates within an accelerator program, and more specifically, how they perceive value creation derived from the collaboration. Moreover, this study aims to clarify the main motivations these entities have to participating in the program, the mechanisms used for assimilation of new external knowledge, and the perceptions of both start-ups and corporates as to the necessary qualities contributing to a functional and successful collaboration. A multiple case study was conducted in order to enhance the generalizability of the results (Yin 2009; Miles & Huberman, 1994). In addition, the exploratory nature of this study provided the opportunity to gain new insight into this phenomenon and deepen the understanding of mechanisms that influence the collaboration between start-ups and corporates.
III.I Research design: a qualitative multiple case study
This study combines a deductive and an inductive approach. Exploratory research is most appropriate for this study, due to the active search to identify and explain the investigated phenomenon. A multiple case study design was selected for this research. Yin
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(2009) defines multiple case study design as using multiple cases to explore a phenomenon in a real-life context. The multiple case study consists of two cases involving two different accelerator programs. Both start-ups and corporates are interviewed. A within-case and cross-case analysis, according to the principles of Yin (2009), is used to analyze the data. The cross-case method is used to identify patterns in both accelerator programs that potentially yield important insights concerning the absorptive capacity and identified mechanisms used by both start-ups and corporates.
A multiple case study is conducted to collect data using qualitative research (Yin, 2009). This method suits the research question because the behaviour related constructs to be researched can be explored through interviews. Qualitative research provides a method to understand this process within different companies and contexts, and can provide answers to questions like ‘how’ and ‘why’ (Eisenhardt, 1989). The research has two main purposes: First, it aims to be descriptive by providing an accurate understanding of the motives for collaboration between corporate and start-up. Second, it will be exploratory by investigating mechanisms of learning and how success is measured for both start-ups and corporates that participate in an accelerator program.
III.II The business ecosystem: The accelerator programme
The accelerator programme creates the business context in which corporates and start-ups interact with each other, simultaneously, exchanging resources, complementing each other’s knowledge, and executing and testing the product and the market. The data is collected via two case studies: HightechXL and Startupbootcamp Amsterdam. These accelerator programs are chosen for their reputation and both have a strong partner network, which makes them appropriate cases for this study.
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HighTechXL is the business accelerator for hightech hardware start-ups in Europe. With a strong partner network, including companies like Philips, NXP, EY and the High Tech Campus, they are able to bring hightech hardware companies to the next level. By sharing the network and expertise of more than 150 mentors, they can accelerate the start-up. HighTechXL select start-ups that focus on the following ‘disruptive technologies’: Internet of Things, Advanced Materials, Advanced Robotics, Autonomous & Near-Autonomous Vehicles, Energy Storage, 3D-Printing, Renewable Energy and Lifetech-Medtech.
2. Startupbootcamp Amsterdam
Startupbootcamp is the number one accelerator in Europe. Startupbootcamp included the most promising start-ups in the ‘Smart City & Living’ accelerator program. This means that together with the selected start-ups, they will realize in three months what would normally take 18 months. Through sharing the network and expertise of more than 150 mentors, they can accelerate the start-ups.
One guiding statement of the accelerator programs is, ‘We take start-ups global by giving them direct access to an international network of the most relevant partners, investors and mentors in their sector’.
When start-ups join Startupbootcamp or HighTechXL, every team receives €15,000 in cash as a seed funding, €450,000+ in partner services, and three months of free office space in a new office, either in the B. Amsterdam building or Hightech Campus Eindhoven. In return, Startupbootcamp and HighTechXL receive an 8% equity ownership in every start-up.
During the intense three-month accelerator program, up to 10 selected start-ups will collaborate with more than 150 mentors, partners and investors to build world-class products,
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with the ultimate goal of becoming industry-leading sustainable companies. At the end of the program, start-ups will pitch their innovative ideas to hundreds of investors, partners and mentors at Demo Day. At Demo Day the start-ups pitch their ideas to investors.
Within these three months the start-ups are continually experimenting according to the lean start-up approach (Blank, 2013). The lean start-up focuses on adapting, iterating, improving, and learning from customers, which can significantly improve the success rate of new venture creation. Moreover, entrepreneurship needs a strategy to provide guidance and a clearly defined goal. In the absence of these, there could be total chaos or a situation where value cannot be captured from all entrepreneurial activities (Collis, 2016). Therefore, the lean strategy process can design a supportive structure to reinforce the distinctive value proposition of the firm. Additionally, a clear strategic perspective creates the ability to effectively learn from activities. The lean method can transform start-ups into effective innovators.
The entrepreneurs need to create a Business Model Canvas, consisting of nine building blocks that summarize their hypothesis in a coherent framework. The core aspects of lean innovation are learning, building, and testing the assumptions, and if dissatisfied with the results beginning again. Agan (2014) suggested that lean innovation is a not a better innovation process, but a more efficient learning process. During this process, they have access to skilled mentors and are provided with a significant amount of training that enhances the learning curve. The transfer of knowledge is at the core, and it is interesting to discover how both start-ups and corporate make use of this knowledge, and how they measure the outcome of participating in such accelerator programmes.
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III.III Methods used to collect empirical data
According to Kaplan and Maxwell (2005), qualitative research is an on-going process; research questions and overall research design are constantly redefined during the study. Observation was carried out in order to improve the understanding of the case to be investigated. This thesis has the advantage of access to two locations, which served as a valuable opportunity to observe the environment and interaction among all actors involved.
1. Semi-structured interviews
Seventeen semi-structured interviews were conducted with four different corporates, six different start-ups actively involved in the accelerator program, and two alumni start-ups of Startupbootcamp Amsterdam. This provided the opportunity to view both start-ups’ and corporates’ perspectives on collaboration and to have a post perspective on the collaboration from alumni start-ups to deepen the understanding. Due to the exploratory research, interviewing participants is the most suitable method, since it provides in-depth data about the investigated subject (Saunders & Lewis, 2012). In line with the research objective, the interviews provided insight into the need for innovation networks, the motives for firms to engage in an accelerator and how new external knowledge is used to create value.
In total, seven interviews were conducted with corporate actors, eight interviews with start-ups, and two interviews with alumni start-ups of Startupbootcamp Amsterdam. The interviews mainly consisted of open-ended questions, allowing new information to be gathered. The interviews were conducted by the researcher and recorded with a voice-recorder. The themes addressed in the interviews were: motives to participate in the accelerator, knowledge transfer, perceived assimilation of new external knowledge, and essential factors for functional and successful collaboration between start-up and corporate. The interview scheme used in this study can be found in Appendix II. Two examples of
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guiding interview questions are: ‘What are the main motives for this collaboration?’ And ‘How do you perceive the transfer of knowledge and capabilities in this collaboration with…?’
The interviews lasted from 30 to 60 minutes. Some interviews were conducted at the High Tech Campus in Eindhoven, others at B. Amsterdam. The participants were recruited via either HighTechXL or Startupbootcamp Amsterdam. Prior to the interview, all participants were asked about their collaboration in order to make ensure the participants had adequate experience and were willing to share their insights. The purpose of the interview was explained to each participant prior to the interview and each interviewee consented to the recording of the interview.
Absorptive capacity is examined in terms of perceived accessibility, applicability, and commercial use of external knowledge. Mechanisms to coordinate knowledge transfer and absorption are identified and explained by the actors involved. According to the theoretical foundation, it was anticipated that the main motive to participate in such a program is to be embedded in the network of the accelerator and to gain access to complementary skills and capabilities that accelerate the innovation process. The interview scheme and transcripts of the interviews are presented in the appendices II and III. Due to the promise of anonymity, all the participants are remained anonymous. The function and industry sector of the participant is given to provide some background information.
III.IV Data analysis
This chapter concerns the qualitative data analysis techniques employed to analyse the empirical data. For this thesis, a within-case and a cross-case analysis were used. The goal of a within-case analysis is to enable the researcher to find patterns within each case before making any generalizations across cases. This provides a good starting point for a thorough
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cross-case analysis (Eisenhardt, 1989). The cross-case analysis is used to deepen understanding of the collaboration and understand concepts useful in the context of co-innovation (Yin, 2009).
Within-case
First, the findings of the within-case analysis are summarized. The perceived participation motives, innovation capacity, knowledge transfer, coordinating mechanism for knowledge transfer, and measurement of success indicate the absorptive capacity of the start-up or corporate. Quotations are used to provide meaning to these concepts.
Coding
The interview data were systematically analyzed and coded to identify emerging patterns or common themes (Strauss & Corbin, 1990). The data were coded and partially processed in QSR Nvivo, a software tool designed specifically to code qualitative data. Coding of information and labeling of concepts is the most important process in performing analysis during qualitative research. The coding process begins with ‘open coding’, and later these open codes are emerged into ‘axial codes’ (Mortelmans, 2007). Open coding is defined as selecting fragments that are given a certain code. Some examples of open codes that were used in this study are access to the network, lean management, and perceived knowledge transfer. The axial coding became apparent while connecting open codes to coherent themes. Two examples of axial codes that emerged during analysis were motives to participate and absorptive capacity. Finally, selective coding was performed, defined by Mortelmans (2007) as in-depth understanding of the axial codes. The aim of selective coding was to connect the meaning of the different codes to identify and explain certain relationships. Appendix IV presents the codebook, a table listing all the codes and their definitions, an explanation of when that code is used, and a quotation from the data that indicates that code.
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Frequencies, similarities, and differences were used as the basis of analysis in order to identify patterns in the data. The data were coded during and after collection as an analytic tactic (Miles & Huberman, 1994). The results are presented according to the principles of within-case and cross-case analysis (Yin, 2009), enabling this research to find patterns and transform the acquired data into valuable information on both perspectives of start-ups and corporates and the internal working of a successful collaboration in the accelerator program. The cross-case analysis provided a synthesis, examining consistencies and differences across the two cases.
Cross-case
A cross-case analysis was completed, after the analysis of the individual cases. The following section will deepen the understanding of the comparisons between the different cases. The goal was to find patterns between the cases and statements to be formulated about the generalizability of concepts regarding innovation network, motives, absorptive capacity, and mechanisms used to assimilate new external knowledge into added value for an organization. Cross-case analysis is a research method that facilitates the comparison of commonalities and differences between the cases. It enables deepened understanding of the investigated concept by further development of the findings across cases. Moreover, it provides opportunities to learn from different cases and gather critical evidence to ground theories.
Ensuring research quality
In order to increase the validity of the research multiple case studies were conducted. Also, to guarantee the reliability of this study the codebook is included to be transparent about the tool used to analyze the data. The data analysis was done with Nvivo software in order to be consistent and transparent. However, the researcher’s interpretation influenced the collected data, and therefore a codebook was created to provide insight into the researcher’s reasoning process. Open ended questions were used during the data collection to provide the
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opportunity to facilitate the participant interpretation and minimize research biases by suggesting questions and directions.
Transferability refers to the level of applicability of the research in another setting or situation; therefore two different accelerator programs were studied. A limitation of the study is that it is not longitudinal and that the study does not cover the entire duration of the accelerator program. Therefore, there are no multiple measurements over time and the learning curve, and other measures of success, cannot be captured over time. Another critical note, is it that it may not be generalizable due to the small sample size.
Taken the reliability into account, the transcripts of the interviews used during the data analysis were not translated into English to reduce subjectivity and interpretation of the collected data. The data is coded in its ‘raw’ way and only quotes used for this thesis are translated in order for the reader to understand. Nevertheless, the subjectivity of the data can be reduced but not prevented, as it is one of the characteristics of a qualitative research design.
IV. RESULTS
This chapter describes the findings of this study, following the concepts of the literature review. First, the findings will be presented, and then discussed in the context of the existing literature. The principal findings provide insights into the innovation network, motives to participate, and essential elements for successful collaboration between corporates and start-ups, mechanisms to enhance absorptive capacity, and the participants’ expectations and outcomes.
No significant differences between the cases were found; they share so many similarities that they will be presented together. Patterns will be identified across both cases. A brief summary of the results will be provided at the end of this chapter.
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IV.I Innovation networks: characteristics
As previously mentioned, the innovation network entails inter-organizational linkages. The accelerator is the innovation network, or business ecosystem. It brings together the two worlds of start-ups and corporates. As the traditional way of doing business is challenged by the rapid development of advanced technologies and unique collaboration with different entities, more and more companies feel compelled to become part of an innovation ecosystem and to make a contribution. All the corporates, regarding both cases, observed that they feel the urgency to gain insights in the innovation ecosystem. They acknowledged that they do not possess all the capabilities themselves and look to partnerships to hasten the process of innovation. The company does not drive itself to innovation, but rather the influence of stakeholders, primarily customers, is forcing them to recognise new market opportunities. One ‘intrapreneur’, a derivation of entrepreneur used for corporate participants at Startupbootcamp, in residence (IIR, working in Group Business Development in the Financial Services sector, said, ‘We have acknowledged in our strategy, that partnerships are
of great importance to innovate, so not innovate in isolation but by binding forces and smart
collaboration’ (c.7). In addition, another IIR, working in Product Development in the Energy
Sector, said that ‘it is necessary to be part of an innovation network, as we are looking for
our new role while the industry we are active in is changing rapidly’ (c. 6). To summarize,
the corporates want to be involved in the innovation network to stimulate cross-pollination, to be introduced to start-ups, and to perhaps enter a partnership agreement with start-ups, which may then be incorporated in the innovation strategy.
Startupbootcamp Amsterdam expanded its innovation network with Innoleaps and The Talent Institute, which presented more sources for innovative ideas and implementation that could be useful for the corporate partners. Moreover, the innovation network of Startupbootcamp is not merely the corporate engagement with start-ups, but also with the
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other IIRs. One interviewee stated, ‘I truly believe it is surplus value. The partnership is not
only focused on start-ups, but to become part of the ecosystem (c. 7, Group Business
Development, Financial Services).
On the other hand, the start-ups have another perspective or tendency in seeking partnerships. For start-ups, the main purpose of becoming part of the innovation network is to gain access to a strong network and to complete their skill set with the resources and capabilities of the mentor network, which will accelerate their growth. This is stressed by the start-ups. One participant observed, ‘So by surrounding ourselves with all these mentors that
have experience in other areas, we complete the skills that we need to proceed (s. 1, CTO,
Smart Flight Inspections, Startupbootcamp Amsterdam). Another noted, ‘the access to the
network results in connections with decision makers, which saves a lot of time’ (s. 6, CEO,
smart medical accessories, HighTechXL).
Not only are the mentors of great value, but also the other start-ups that are part of the network. All of the start-ups that are participating in the accelerator are located in the office space provided. Startupbootcamp Amsterdam is located in B. Amsterdam and HightechXL is located on the high-tech campus in Eindhoven. Consequently, there is an open environment, in which all the start-ups, partners of the accelerator, the acceleration manager, and the team of the accelerator have a great deal of interaction. As one participant observes, ‘Another
advantage is the collaboration with other start-ups. It is great to experience that you can help
each other out and share knowledge and learn from each other’s mistakes’ (s. 6, CEO, Smart
Medical Accessories, HighTech XL).
The corporates feel the need to understand the start-ups’ manner of operating, and to become familiar with them and their ecosystem. Many companies acknowledge that they need to innovate, or more specifically, that they want to be in proximity to start-ups that have
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newly developed technologies and are putting ideas in the market which may eventually disrupt their business. Therefore, as an innovation network, the accelerator program provides the opportunity to be introduced to start-ups and to establish the frame of mind that is needed in order to develop partnership agreements with them. As explained by a participant, ‘One
mentor told me that they want to see fresh ideas, create an understanding how new
companies work. They feel they lack a dynamic environment’ (s. 7, CEO, Smart Agriculture,
HighTechXL).
The innovation network positively influences the innovation capabilities of both parties. The start-ups secure easy access to decision-makers, knowledge and expertise from within their mentor network, lessons shared by the other start-ups, and the power of corporates with which they can collaborate. For example, a start-up would be able to establish a pilot, using the resources of an established company to test and to validate the product or service with which they want to serve the market. As one participant observes, ‘A
start-up is much more agile in terms of innovation and speed of development (s. 1, CTO,
Smart Flight Inspections, Startupbootcamp Amsterdam).
For the corporate, to be actively involved in the entrepreneurial activities of start-ups, and the fast-paced environment challenging the quick decision-making and development of new ideas, is opening up new windows of opportunities. To be close to the technological development is contributing to their innovation capabilities by access of start-ups ideas and workshops provided by the accelerator. As one participant observes, ‘By doing so, we
stimulate he innovative capabilities of our own employees and might generate something that
could be implemented in our own organization’ (c. 3, Senior Consultant, Professional
Services).
Both start-ups and corporates admit that to maintain and sustain a competitive advantage ‘you cannot go at it alone’ (c. 5, Digital Strategy Consultant, Professional
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Services). In particular, for start-ups that have excellent ideas but limited resources and time, the experience and expertise of the established corporate can enhance its product or service. Co-innovation may be beneficial for both parties.
We live in a connected world, in which you can easily gather information. However,
the practical skills are more difficult to acquire, and we do not have the capacity to
do it all ourselves. Therefore, we seek collaboration with other organization, that are
capable of doing the things we cannot do ourselves (s. 4, Technician, Electric
Vehicles, HighTechXL).
Moreover, three start-ups mentioned that the credibility of the corporate positively affects their market entrance. One participant explained, ‘This will gives us enough trust, credibility,
and to be more attractive for investors’ (s. 1, CTO, Smart Flight Inspections,
Startupbootcamp Amsterdam).
IV.I.I Roles and responsibilities
The accelerator program manages the ecosystem. Specifically, the accelerator mentors have the responsibility to create the environment in which start-ups can evolve as full-fledged start-ups. The accelerator brings all necessary elements together in order to accelerate the process of bringing the idea to the market. Additionally, the mentor facilitates evaluation sessions with the start-ups, highlighting the importance of continuous feedback and assistance. A schedule containing all deadlines and deliverables leads to clear overview of what is expected and makes it straightforward to monitor development.
The acceleration manager is the head mentor on the team. It is his or her role to stimulate feedback, bridge the gap to the corporate, use his or her network, be critical, and provide guidance. He or she is easily accessible and always willing to respond to the start-up’s questions.
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An important consideration is maintaining the feeling of control over decision-making by the start-up. The main goal of the accelerator is to permit the start-up to mature, and a key aspect is the development of the team. Therefore, it may be suggested that decision-making should lie within the responsibility of the team. This view is supported by the start-ups. They all stated that they feel in control of the decision-making, and have taken advantage of all the advice given to them by the mentors. The experience of the mentors can provide valuable insight and guidance, but the final decision is made by the start-up. One participant observes, ‘Every single mentor, or workshops give only insights or opinions and you have to leverage
on that and make you own decision’ (s. 1, CTO, Smart Flight Inspections, Startupbootcamp
Amsterdam). Moreover, ‘they sometimes give you opposite advice, and we have to decide
ourselves. It makes you think critically and that is what we need to do right now at this stage
of the process’ (s. 8, CTO, Smart Agriculture, HighTechXL).
IV.II Motives to participate
The following motives for participating in the acceleration program were identified by the corporates: enhancing the innovation capability of their own employees, pursuing innovation under a different name, marketing, attracting new talent, selection of start-ups is done by the accelerator, insights ecosystem, and potential clients.
It can be difficult for established corporates to innovate and cannibalize their own product or service offering, and confusing for their traditional customers. The innovator’s dilemma can be decreased by actively innovating under a different name, with start-ups, for example. The accelerator program provides the corporate with the opportunity to be introduced to relevant start-ups that may be potential partners in the future. One participant notes, ‘Start-ups are going extremely fast, there are a lot, so it can be difficult for the
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unique chance to meet many relevant start-ups in short notice’ (c. 6, Product Developer,
Energy Sector).
Another participant states, ‘I think these start-ups are potential clients of X. We want
to be involved in an early stage, so we can build on the long-term relationship’ (c. 4, Senior
Consultant, Professional Services). Furthermore, ‘It is a very good experience to see what
they are going through, not from an outside perspective but to be fully engaged in the
process’ (c. 3, Senior Consultant, Professional Services). The talent development of
employees was also emphasized: ‘The accelerator program can be compared with a
hands-on MBA in very short time. If employees can participate in the program, they know exactly
what a start-up is going through. Once these start-ups become clients of X, they know how to
help them, better than their competitors, due to their experience’ (c. 1, Co-founder
HighTechXL).
By actively engaging within the innovation network, the corporate positioned itself to be more attractive to talented new people. The start-up scene is very popular among young executives, and to be well known for having a connection within the innovation network has a positive effect (c. 1, Co-founder HighTechXL). In particular, one acceleration manager, referring to the collaboration with start-ups, stated ‘If I could not do all these things, I do not
know if I would have taken this job at X’ (c. 2, Junior Consultant, Professional Services).
The main motive for the start-up to participate in the accelerator program is having access to the network. All start-ups identified this as their key motive. The strong network of mentors provides a unique opportunity to achieve easy access to their knowledge, expertise, know-how, advice, and coaching. The accelerator facilitates this network and the start-ups then save time in searching for a suitable person to assist them. Most start-ups are technologically driven and have a foundation in engineering. Consequently, they tend to lack
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business sense. The start-ups take full advantage of the network in all respects and use it to complete their business case. One participant observed, ‘All the other mentors can teach us
so much of the whole business process. We are all engineers so we lack a business sense, like
marketing. So by surrounding ourselves with all these mentors that have experience in other
areas, we complete the skills that we need to proceed’ (s. 1, CTO, Smart Flight Inspections,
Startupbootcamp Amsterdam).
Accessing the network can be defined as acquiring the essential knowledge and know-how that is needed to cultivate ideas and put them into practice. Start-ups mentioned this essential knowledge as a motive to participate. Moreover, acquiring the appropriate skills and capabilities and the ability to learn how to transform time into something valuable is motivating the start-ups as well. In other words, ‘The development of new skills and
capabilities is the most important resources you need, and the accelerator is the place to
obtain this’ (s. 4, Technician, Electric Vehicles, HighTechXL).
Other motives are: the location of the accelerator, the reputation of the accelerator, and partnership agreements. A few start-ups approached the issue from an international perspective, by identifying the opportunity to come to the Netherlands, which is developing as an entrepreneurial ecosystem, is very attractive for international start-ups. The Netherlands is advanced in its development of new technologies, and many large companies are willing to collaborate with start-ups. In addition, a participant observes, ‘This is a high-tech campus and
Holland has a lot of technological companies and it is very international. That made it very
attractive for us’ (s. 7, CEO, Smart Agriculture, HighTechXL). The reputation of the
accelerator also influences their choice. Another participant noted that the rate of success, saying, ‘The percentage of successful start-ups that come out this program is the highest in
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Secondly, the motive ‘looking for partnership agreements’ is revealed by the urgency of ups to partner with corporates in order to bring their product to the market. One start-up already has a clearly defined market and needs to establish a partnership agreement with a well-known corporate in the aviation industry. The network of the accelerator can be of great value in hastening the process by connecting directly with the decision-maker. For example, a participant stated, ‘First, Schiphol group is one of the partners. And we are looking for a
partner to test our product. This immediately means that we get access and have different
entry points’ (s. 1, CTO, Smart Flight Inspections, Startupbootcamp Amsterdam).
Also for the corporates, the location of the accelerator motivates their participation; both Amsterdam and Eindhoven are attractive regions for innovations. The reputation of the accelerator is also a driver for participation. One IIR mentioned that they were introduced with Startupbootcamp at a Demo Day, ‘this was very inspiring and we directly felt the need
to do something with them’ (c. 7, Group Business Development, Financial Services).
In addition, the partnerships with start-ups, in terms of the start-up become their client (c. 1, Co-founder HighTechXL) or together bring a product to the market (c. 6, Product Developer, Energy Sector). All corporate participants acknowledge that they are still in an early stage of the process and that there is a great deal to be gained to establish partnerships with start-ups, and the accelerator is the first step to be introduced in this market scene. One participant explains, ‘We are still figuring out what start-ups are and how we can best
collaborate…a long term goal is a partnership agreement with a start-up’ (c. 7, Group
Business Development, Financial Services). One alumni participant explained the motive of the corporates as follows: ‘We, the start-ups, are the R&D they not have and we are much
