Acknowledgements&
I!would!like!to!express!my!deep!gratitude!to!Professor!Van!der!Eijk!and!Professor! Schoenmakers,! my! research! supervisors,! for! their! patient! guidance! and! useful! critiques!of!this!research!work.!I!would!like!to!offer!my!special!thanks!to!the!staff!of! the! ICT! help! desk! at! Zernike! for! taking! the! time! to! ! help! me! solve! problems! concerning!Excel!and!SPSS.!Also,!I!would!like!to!thank!Accenture!for!their!assistance! with! the! collection! of! my! data.! Especially! the! assistance! provided! by! Paul! van! Renselaar,!Valerie!de!Laat!and!Alexander!van!de!Valk!was!greatly!appreciated.! Finally,!I!would!like!to!thank!my!family!and!friends!for!their!support!and!their! unwavering!believe!in!my!abilities.!
Executive&Summary&
1.! Introduction&
“Determination,$skill,$experience$and$good$judgment$can$make$a$success$of$many$an$
unlikely$project,$whereas$poor,$untrained$or$inexperienced$management$can$ruin$the$ best$business”$?Foley!&!Green,!1995.!
This! thesis! is! the! conclusion! of! a! one?year! master’s! degree! in! strategic! innovation! management.! This! thesis! is! the! result! of! half! a! year! of! writing! and! learning!about!start?ups,!the!challenges!they!face!and!the!effects!of!entrepreneurial! experience! as! seen! through! the! lens! of! entrepreneurship,! process,! economic! and! social!cognitive!research!theories.!The!motivation!for!the!topic!of!this!thesis!stems! first! of! all! from! the! interest! that! I! have! in! innovative! start?ups,! the! importance! of! start?ups!to!society!and!the!incredibly!difficult!odds!that!start?ups!face!in!my!view.! The!quote!placed!at!the!beginning!of!this!introduction!intrigued!!my!interest!for!the! subject!of!this!thesis!even!further.!It!states!that!it!doesn’t!matter!if!you!have!a!great! idea!or!not,!but!that!it!matters!how!you!manage!your!business!and!make!decisions.! If! this! is! the! key! to! the! survival! of! more! start?ups,! then! that! would! be! worth! investigating.!! Start?ups!are!of!great!importance!to!today’s!economy.!According!to!a!study! by!the!Kauffman!foundation!in!the!US,!existing!firms!are!job!destroyers;!they!lose!1! million!jobs!net!combined!per!year.!On!the!other!hand!start?ups!create!an!average!of! 3!million!jobs!per!year!(here,!start?ups!are!defined!as!firms!younger!than!one!year).! Even!though!start?ups!are!of!great!importance!they!face!many!challenges.!Because! of!this!many!start?ups!fail.!According!to!the!Entrepreneur!Weekly,!55%!of!the!start? ups!in!the!US!fail!within!5!years.!!
Start?ups! are! the! engines! of! innovative! activity! (Acs! &! Audretsch,! 1988;! 1990).! One! of! the! challenges! that! a! start?up! faces! is! to! overcome! the! perceived! barriers!to!innovation.!This!challenge!forms!the!basis!for!this!thesis.!!
In! the! upcoming! section! the! theory! that! this! thesis! builds! upon! is! shortly! introduced.! This! theory! leads! us! to! posing! the! research! questions! that! will! be! answered!in!this!thesis.!The!relevance!of!posing!and!answering!these!questions!will! be! discussed! afterwards! by! showing! that! there! is! a! gap! in! the! literature! that! this! thesis!tries!to!fill.!Identifying!the!gap!in!the!literature!leads!us!to!the!explanation!of! the! focus! of! this! study.! The! scope! and! domain! will! show! which! concepts! will! be! discussed!in!this!thesis!and!which!concepts!will!be!put!aside.!The!last!section!of!this! introductory!chapter!will!give!an!overview!of!what!will!be!discussed!in!the!rest!of! this!thesis.! 1.1&Introduction&of&theory& In!this!section!a!short!introduction!of!the!theory!will!be!given.!!This!introduction! shows!why!start?ups!face!so!many!challenges!and!how!entrepreneurial!experience! and!help!from!others!can!decrease!the!perception!of!these!barriers.!!
short! existence,! this! problem! is! called! the! liability! of! newness! (De! Roo! &! Van! der! Eijk,!2014).!Another!common!reason!for!start?ups!to!fail!is!a!lack!of!marketing!skills! (Larsen!&!Lewis,!2007).!Especially!managers!of!start?ups!in!technological!industries! tend!to!focus!too!much!on!the!technical!aspects!of!their!innovation!neglecting!the! question! of! how! to! commercially! exploit! the! technology! that! they! have! created! (Foley! &! Green,! 1995;! Freel,! 2000).! Furthermore! Birley! and! Niktari! (1995),! and! Kakati!(2003),!found!that!one!of!the!most!important!reasons!for!start?ups!to!fail!is! the!lack!of!management!expertise!by!the!founders.!
Some! of! these! barriers! to! innovation! for! start?ups! can! be! overcome! by! the! entrepreneur’s! experience.! Experience! in! the! relevant! industry,! experience! in! starting! up! businesses! and! membership! of! a! small! business! owner! association! enhances!start?up!performance,!independent!from!which!measure!of!performance!is! used.!It!is!unlikely!that!the!entrepreneurs!would!perform!better!due!solely!because! of!talent!(Bosma!et!al.,!2004).!!Hills!and!Shrader!(1998;!1999)!support!the!view!that! entrepreneurial! experience! is! very! important! for! the! successful! development! of! startups.! By! using! previous! research! Hills! demonstrated! that! between! fifty! and! ninety!percent!of!start?up!ideas!come!from!prior!work!experience.!Bygrave!(1997)! and!Vesper!(1996)!also!express!the!importance!of!prior!commercial!experience!in! the! development! of! startups.! It! can! be! concluded! that! the! relevance! of! entrepreneurial! experience! in! overcoming! these! barriers! is! already! confirmed.! However,! the! question! remains! of! how! the! barriers! are! perceived! by! the! entrepreneurs,!and!if!entrepreneurial!experience!also!lowers!the!perception!of!how! troublesome!these!barriers!are!for!the!survival!and!performance!of!the!firm.!!
The!expectation!is!that!entrepreneurial!experience!will!lower!the!perception! of!the!barriers!to!innovation!because!entrepreneurial!experience!increases!the!self? efficacy! of! the! entrepreneur! (Zhao! et! al.,! 2005).! However,! the! entrepreneurs’! experience! is! not! the! only! factor! that! influences! the! perception! of! these! barriers.! Process! theory! states! that! the! amount! of! external! help! from! others! is! also! an! important!factor!in!determining!the!survival!chances!and!performance!of!the!start? up! (Greve,! 1995).! Therefore! it! also! important! to! ask! ourselves! how! help! from! external! parties! ! influences! the! perception! of! the! barriers! to! innovation.! Because! help! from! external! parties! also! positively! influences! the! survival! chances! and! performance! of! start?ups! it! is! expected! that! this! will! lower! the! perception! of! the! barriers!even!further.!!
It! can! be! concluded! that! start?ups! face! many! barriers! such! as! a! lack! of! finance,! management! expertise! and/or! marketing! skills.! The! perception! of! these! barriers! can! lower! because! entrepreneurial! experience! increases! self?efficacy,! and! help! by! others! increases! the! performance! and! survival! chance! of! the! start?up.! Existing!research!suggests!that!entrepreneurial!experience!and!help!from!external! parties! will! lower! the! perception! of! the! barriers! to! innovation! for! start?ups.! This! ‘suggestion’! of! a! relationship! has! not! yet! been! empirically! proven.! Therefore,! this! thesis!will!focus!on!finding!answers!to!questions!that!clarify!this!relationship.!
1.2&Research&question& In!order!to!come!to!a!conclusion!about!these!expected!relationships!two!main!and! two!sub!questions!will!need!to!be!answered.! The!main!questions:! 1.! Does$entrepreneurial$experience$influence$the$entrepreneurs’$perception$of$the$ barriers$to$innovation$that$his$startWup$faces?$ 2.! Does$help$by$others$influence$the$entrepreneurs’$perception$of$the$barriers$to$ innovation$that$his$startWup$faces?$ The!sub!questions:! 1.! What$are$the$relevant$barriers$to$innovation$that$entrepreneurs$perceive?! 2.! What$determines$entrepreneurial$experience?! 1.3!Gap&in&the&literature&&
In! the! next! part! of! this! thesis! the! relevance! of! posing! these! questions! will! be! discussed.!This!is!achieved!by!addressing!the!current!literature!about!the!theories! that!are!relevant!to!answering!these!questions.!By!doing!so,!the!gap!that!still!exists! in! the! literature! will! also! be! addressed.! Previous! literature! has! proven! that! entrepreneurial!experience!has!a!positive!influence!on!the!performance!of!start?ups.! There! has! yet! to! be! an! investigation! into! the! exact! effects! of! entrepreneurial! experience!on!overcoming!the!barriers!to!innovation,!or!at!least!decreasing!them!in! the! eyes! of! entrepreneur.! The! theories! and! research! areas! that! are! relevant! for! answering!the!questions!posed!in!this!thesis,!are!research!about!entrepreneurship! and! economy,! and! theories! about! the! processes! of! developing! startups! and! social! cognitive! behaviors.! The! findings! and! gaps! of! each! of! these! research! fields! and! theories!will!be!discussed!separately!in!the!upcoming!section.!!!
Entrepreneurship+research+
Early!research!on!entrepreneurship!focused!mainly!on!the!traits!and!personalities! of! entrepreneurs! to! explain! the! successes! and! failures! of! start?ups.! Personal! qualities!that!were!seen!as!important!were!the!need!for!achievement!(McClelland,! 1961),! locus! of! control! (Rotter,! 1966),! or! the! ability! to! transform! markets! via! innovation! (Schumpeter,! 1934).! Later! on,! in! the! 1980’s! and! 1990’s,! a! broader! research! approach! was! chosen.! Gartner! (1988),! Aldrich! (1999),! Brockhaus! &! Horwitz! (1986)! and! Low! &! MacMillan! (1988),! argued! that! research! on! the! entrepreneurs’!personality!traits!was!a!dead?end!because!the!correlations!between! personality!traits!and!the!behavior!of!entrepreneurs!were!not!big!enough!to!matter.! But!all!of!these!articles!were!based!on!narrative!reviews,!therefore!the!subject!was! reintroduced! by! Rauch! &! Frese! (2007).! They! conducted! a! meta?analysis! in! which! they!found!that!there!was!a!relationship!between!personality!traits!and!task!related! entrepreneurial! behavior.! Positive! characteristics! that! were! found! to! help! startup! performance! were! creativity! (Schumpeter,! 1935),! risk! taking! propensity! (Knight,! 1921;!Mill,!1909),!and!need!for!achievement!(McLelland,!1961)
performance! of! the! startup! it! is! important! to! focus! on! this! aspect.! In! this! thesis! entrepreneurial! experience! will! be! researched! to! see! if! and! how! it! influences! the! performance!of!startups!as!perceived!by!the!entrepreneur.!
As! mentioned! before,! the! focus! of! entrepreneurial! research! shifted! during! the!1990’s.!Both!Bygrave!&!Hofer!(1991)!and!Shaver!&!Scott!(1991),!introduce!the! subject!of!opportunity!recognition!as!a!separate!subject,!as!it!is!the!first!step!in!the! entrepreneurial! process.! Bygrave! and! Hofer! (1991)! focused! on! how! firms! and! entrepreneurs! differ! from! each! other! in! the! way! they! identify! and! exploit! opportunities,!whereas!Shaver!and!Scott!(1991)!focused!on!the!psychology!of!how! entrepreneurs! identify! and! exploit! opportunities.! In! the! research! field! of! opportunity! recognition,! entrepreneurial! experience! was! taken! into! account.! It! is! suggested! that! experience! in! the! relevant! markets! plays! an! important! role! in! opportunity! recognition! (Shane,! 2000;! Ardichivili! et! al.,! 2003).! Collarelli?O’Connor! and! Rice! (2001)! confirm! this! idea! by! showing! that! it! is! often! the! senior! business! manager! who! delivers! the! critical! insight! into! the! true! commercial! value! of! a! technological!breakthrough.!
Venkataraman!(1997)!argues!that!people!interpret!the!world!through!a!lens! that! is! colored! by! the! knowledge! that! they! already! have.! This! knowledge! and! experience! enables! people! to! make! more! accurate! judgments! about! opportunities! that!present!themselves.!However,!opportunity!recognition!is!only!the!first!step!in! creating! a! startup.! There! are! still! many! questions! to! be! asked! about! how! entrepreneurial! experience! influences! the! other! steps! in! the! process! of! creating! a! successful!startup,!such!as!gathering!financial!means!and!marketing!the!technology.! These! steps! could! also! be! positively! influenced! by! the! experience! of! the! entrepreneur.!!
Furthermore,! entrepreneurial! research! has! always! investigated! the! role! of! the! entrepreneur! in! relationship! to! performance.! However,! this! relationship! has! never!been!investigated!in!more!detail!by!looking!at!how!performance!is!influenced.! Do! the! positive! aspects! of! an! entrepreneurs’! ability! help! to! overcome! the! specific! barriers! that! innovative! startups! encounter! to! create! higher! performance?! And! which!barriers!are!these?!
Economic+research+
Also! in! economic! research! the! gap! in! the! literature! pertaining! the! effect! of! entrepreneurial!experience!in!overcoming!the!most!common!barriers!of!innovative! startups!is!not!filled.!Firstly,!because!economists!are!generally!not!interested!in!the! individual!firm,!the!individual!firms!as!discussed!in!most!economic!research!is!the! average! firm,! instead! of! any! individual! firm (Penrose,! 1980).! Secondly,! entrepreneurship!is!not!integrated!into!mainstream!economics!theory,!leaving!the! field!of!entrepreneurship!and!the!birth!of!a!firm!under!investigated!(Casson!1982).!!
The!aim!of!this!research!is!to!fill!the!gap!in!the!literature!regarding!the!effect! of! entrepreneurial! experience! on! the! most! common! barriers! to! innovation! as! perceived!by!the!entrepreneur!that!start?ups!face.!!
Process+theory+
the! start?up! process! can! be! divided! in! three! general! phases:! idea! development,! organizing! the! founding! of! the! firm! and! running! the! newly! created! firm! (Wilken,! 1979).!These!different!phases!all!have!their!different!needs!and!challenges!(Greve,! 1995).! Important! challenges! that! were! identified,! were! finance! both! internal! and! external!(present!in!all!phases!of!the!start?up!process).!Also!the!search!for!qualified! staff! was! seen! as! a! challenge,! especially! in! the! third! phase,! where! the! focus! is! on! expansion!and!the!need!for!more!qualified!staff!can!no!longer!be!ignored!(Fielden!et! al.,! 2000).! The! factors! that! were! found! to! influence! the! successful! development! of! start?ups!were!the!personality!of!the!entrepreneur,!the!barriers!they!face!during!the! process,!the!support!that!they!can!get!from!others,!and!the!economic!and!financial! difficulties!that!they!encounter!(Greve,!1995;!Golden?berg!and!Kline,!1999).!!
It!can!be!concluded!that!in!the!process!theory!field!some!barriers!to!start?up! development! have! been! identified! together! with! the! factors! that! influence! them.! However,!this!field!of!research!is!still!very!immature.!This!results!in!an!incomplete! picture!of!all!the!barriers!that!innovative!start?ups!face.!At!the!moment!the!focus!of! many!studies!is!still!very!much!on!the!most!important!barrier!to!start?ups,!which!is! finance.! Leaving! the! less! important,! but! still! relevant! barriers! under! investigated.! Furthermore,!the!largest!proportion!of!studies!focuses!on!start?ups!that!fail!versus! start?ups! that! succeed! and! the! root?cause! of! this! failure.! In! this! thesis! reasons! for! bankruptcy!are!not!important.!This!thesis!will!focus!on!start?ups!that!are!all!still!in! business,! to! see! how! the! experience! of! the! entrepreneurs! influences! their! perception!of!the!barriers!to!innovation!they!face.!!
Social+cognitive+theory+
Embedded! in! social! cognitive! theory,! a! reason! might! be! found! for! why! entrepreneurial!experience!can!lower!the!barriers!to!innovation!as!perceived!by!the! entrepreneur.!The!reason!lies!with!self?efficacy.!According!to!social!cognitive!theory,! an!entrepreneurs!feeling!of!self?efficacy!can!be!influenced!through!four!processes:! enactive! mastery,! role! modeling,! vicarious! experience,! social! persuasion! and! judgments! about! their! own! psychological! state! (Bandura,! 1982).! Studying! entrepreneurship!and!previous!entrepreneurial!experience!are!positively!associated! with!the!level!of!entrepreneurial!self?efficacy!that!an!entrepreneur!has!(Zhao!et!al.,! 2005).!Both!past!successes!and!failures!create!experience!that!can!lead!to!skills!and! performance! strategies! that! can! be! useful! for! the! entrepreneurial! role! (Minniti! &! Bygrave,! 2001).! Therefore,! experience! can! be! seen! as! a! form! of! enactive! mastery.! Being! an! entrepreneur! with! previous! experience! might! also! mean! that! the! entrepreneur!has!been!to!a!training,!club!meetings!or!business!dealing!with!other! entrepreneurs,! meaning! that! the! entrepreneur! has! had! the! chance! to! observe! and! learn! from! others,! although! of! smaller! significance,! these! activities! also! create! a! feeling! of! self?efficacy.! In! short,! previous! entrepreneurial! experience! can! lead! to! a! high!level!of!entrepreneurial!self?efficacy!(Zhao!et!al.,!2005).!This!high!level!of!self? efficacy! could! lead! the! entrepreneur! to! lower! his! estimation! of! the! severity! of! the! barriers!to!innovation!that!he!might!face.!Although!feelings!of!self?efficacy!are!not! measured!in!this!thesis,!it!will!partly!uncover!if!this!statement!is!true.!
To!summarize,!entrepreneurship!research!has!uncovered!that!certain!personal! qualities! are! important! to! determine! behaviors! that! are! important! to! the! performance! and! survival! of! the! start?up,! however! the! influence! that! entrepreneurial!experience!!has!on!these!behaviors!is!still!under!investigated.!The! effect! of! entrepreneurial! experience! was! researched! in! the! context! of! opportunity! recognition,! however! this! is! only! the! first! step! of! running! a! successful! startup.! Economic!research!is!also!not!a!great!help!in!answering!the!questions!that!are!posed! in!this!study,!the!birth!of!the!firm!is!still!a!very!immature!field!in!economic!research.! In!process!theory!barriers!to!innovation!have!been!identified,!such!as!financial!and! knowledge! barriers.! Process! theory! has! also! uncovered! three! factors! that! are! important! for! determining! the! success! of! the! start?up.! They! are! the! personality! of! the!entrepreneur,!the!difficulties!that!he!faces,!and!the!help!that!they!can!get!from! others.! To! complete! the! search! for! relevant! theories! social! cognitive! theory! was! discussed.! It! showed! that! self?efficacy! influences! both! the! behavior! of! the! entrepreneur! and! the! perception! of! difficulty! in! overcoming! problems.! It! can! be! concluded!that!all!the!puzzle!pieces!to!answer!our!research!questions!are!present,! they! just! need! to! be! connected.! This! study! will! attempt! to! connect! some! of! these! pieces.! Which! pieces! this! study! will! connect! will! be! discussed! in! the! upcoming! section!in!which!the!scope!and!domain!of!this!study!will!be!explained.!!
1.4!Scope&and&domain&
This! thesis! investigates! the! relationship! between! entrepreneurial! experience! and! the! perception! of! the! barriers! to! innovation! for! start?ups,! it! will! also! look! at! the! influence!that!help!from!others!has!on!this!relationship.!These!two!relationships!are! tested! through! a! linear! regression.! The! dataset! that! was! used! to! test! this! relationship!contains!firms!that!all!introduced!a!new!concept!to!the!market!in!the! last!three!years.!The!firms!in!the!dataset!all!come!from!different!industries,!but!the! factor!that!binds!them!together!is!that!they!all!develop!innovative!concepts.!!
The!actual!existence!of!the!barriers!and!general!feelings!(e.g.!feelings!of!anxiety!or! confidence)! of! the! entrepreneurs! in! question! were! not! measured.! Therefore,! this! thesis!will!not!make!any!inferences!about!the!differences!between!reality!and!how! the! entrepreneurs! perceive! reality.! Only! the! perception! side! of! the! story! will! be! investigated!in!this!thesis.!!
Furthermore,! this! thesis! will! test! the! perception! of! the! most! important! barriers!as!experts!from!Accenture,!who!created!the!questionnaire!that!was!used!to! gather!the!data!for!the!analysis!in!this!thesis,!identified!them.!This!means!that!the! list!of!barriers!that!is!used!in!this!study!is!not!exhaustive.!More!barriers!will!exist,! but!these!are!not!taken!into!consideration!in!this!thesis.!!
Entrepreneurial!experience!will!be!tested!based!on!three!constructs,!experience!in! the! industry,! experience! in! ownership! and! the! level! of! education.! Age! was! not! included! in! the! dataset.! This! should! not! cause! any! problems! for! this! thesis! in! determining! the! experience! of! the! entrepreneur! because! it! does! not! influence! any! actions! taken! by! the! entrepreneur! that! relate! to! entrepreneurial! performance! (Bosma!et!al.,!2004).!!
business!network!(Johanisson,!1996).!They!are!referred!to!as!the!informal!and!the! formal!network!respectively!(Ibarra,!1993).!Although!informal!networks!can!also!be! a! source! of! information! or! financial! resources,! people! in! informal! networks! often! lack!industry!specific!knowledge!and!experience.!Therefore,!they!will!be!less!helpful! to!entrepreneurs!than!formal!business!networks!(Singh!et!al.,!1999).!The!constructs! that!were!used!to!test!the!effect!of!help!by!others!were!incubators,!the!number!of! employees!and!the!number!of!people!that!worked!on!the!project.!Non?professional! help!such!as!help!from!spouses,!close!relatives!or!friends!were!not!included!in!the! dataset.!To!summarize!help!by!the!informal!network!will!not!be!tested!in!this!thesis! because!the!information!was!not!available!in!the!dataset.!This!should!!not!create!any! problems! because! previous! studies! have! found! that! the! informal! network! is! less! relevant!as!a!source!of!help.!!
To! conclude! this! study! will! focus! on! the! relationship! between! entrepreneurial! experience,!and!the!most!important!barriers!to!innovation!for!start?ups!as!perceived! by!the!entrepreneurs!and!identified!by!Accenture’s!specialists.!Furthermore,!it!will! focus! on! the! effect! of! professional! help! from! others.! The! diversity! of! industries! where!the!start?ups!in!the!database!operate!in!increases!the!generalizability!of!this! study.! The! exclusion! of! some! constructs! will! lower! the! explanatory! power! of! the! model! that! will! be! proposed! in! this! thesis.! The! wish! to! include! these! missing! constructs!into!the!model!could!serve!as!an!incentive!for!future!research.! 1.5!Overview&of&paper& In!order!to!guide!you!through!the!rest!of!this!thesis,!an!overview!of!the!thesis!will!be! given.!In!the!upcoming!sections!of!this!thesis!literature!will!be!discussed!that!will! explain!all!the!relevant!concepts!and!how!they!will!interact.!Here!you!will!also!be! able!to!find!a!table!with!all!the!relevant!concepts!their!definitions!and!references.!! Next!the!conceptual!model!will!be!introduced!together!with!the!conforming! hypotheses.!Afterwards!we!will!move!on!to!the!methodology,!which!will!discuss!the! strategy! of! investigation,! the! sample! selection! and! a! description! of! the! sample.! In! this!chapter!a!table!can!be!found!that!gives!an!overview!of!all!the!used!variables!and! their!characteristics.!This!chapter!also!provides!a!table!that!shows!the!results!of!a! factor!analysis!that!has!been!conducted!for!the!barriers!to!innovation,!which!are!the! dependent! variables.! Lastly! this! methodology! chapter! will! discuss! the! validity,! reliability!and!generalizability!of!the!analysis!that!has!been!conducted!for!this!study.!
Next! the! results! of! the! analysis! will! be! discussed.! Here! tables! can! be! found! with!descriptives,!a!correlation!matrix,!the!results!of!the!regression!analysis,!and!an! overview!of!the!acceptation!or!rejection!of!the!hypothesis.!!
In! the! discussion! chapter! the! results! of! the! analysis! will! be! related! back! to! the! theory! that! underlies! the! hypotheses.! If! unexpected! results! exist,! they! will! be! discussed!in!the!light!of!relating!theories!to!see!if!an!explanation!can!be!found.!!!!
Finally,! a! conclusion! will! be! given! on! the! answers! to! the! research! questions! that! were! posed! at! the! beginning! of! this! thesis,! about! the! implications! for! theory,! about!the!implications!for!practice,!and!finally!about!the!limitations!and!the!need!for! future!research.!
2.! Literature& In!this!part!of!the!thesis!the!general!concepts!underlying!the!theories!used!in!this! thesis!will!be!defined.!Also!the!interaction!variables!will!be!discussed!and!defined.! This!review!of!all!the!relevant!concepts!and!their!interactions!will!then!lead!us!to! the!creation!of!the!conceptual!model.!! 2.1&General&concepts& Before!discussing!the!interaction!variables!on!which!the!conceptual!model!is!based! it!is!important!to!discuss!some!general!concepts!that!relate!to!all!the!theories!that! form!the!foundation!of!this!thesis.!! Start6ups+ The!focus!of!this!thesis!will!be!on!start?ups.!Because!the!focus!is!on!start?ups!it!is! important! to! define! which! types! of! firms! can! be! classified! as! start?ups! before! continuing!with!this!thesis.!According!to!Luger!and!Koo!(2005)!start?ups!are:!!
“Firms$ which$ did$ not$ exist$ before$ a$ given$ time$ period$ (new),$ which$ starts$ hiring$ at$ least$one$paid$employee$during$the$given$time$period$(active),$and$which$is$neither$a$ subsidiary$nor$a$branch$of$an$existing$firm$(independent).”$
Innovation+
As! the! scope! of! this! thesis! will! be! focused! on! innovative! start?ups,! it! is! also! important!to!define!what!it!means!to!be!innovative!and!thus!define!what!innovative! start?ups! are.! SMEs! (Small! to! Medium! Sized! Enterprises)! are! generally! innovative! however,!this!innovativeness!does!not!necessarily!lead!to!better!firm!performance! or!greater!profitability!(Hoffman!et!al.,!1998).!Specialized!organizational!resources! and! capabilities! are! needed! to! successfully! capture! value! from! innovations! (Rosenbusch! et! al.,! 2011).! Start?ups! will! have! challenges! in! competing! with! incumbent!firms!because!of!their!lack!of!legitimacy!due!to!their!newness!(Singh,!et! al.,!1986).!
Innovation!is!of!great!importance!to!society!and!to!the!long!term!survival!of! firms!(van!der!Eijk!et!al.,!2013;!Ancona!and!Caldwell,!1987),!because!it!is!one!of!the! most!important!ways!for!a!firm!to!create!value!(Schumpeter,!1934;!Wijnberg,!2004).! This! also! points! directly! to! what! the! most! important! distinction! between! an! innovation!and!an!invention!is.!An!invention!is!an!idea!or!concept!for!a!new!product! or! service.! An! innovation! is! the! commercial! transaction! of! the! new! product! or! service,! which! leads! to! the! capturing! of! value! (Schumpeter,! 1934).! It! can! be! concluded! that! innovative! start?ups! are! new,! active! and! independent! firms! who! engage!in!commercialization!of!a!new!product,!service!or!business!model.! 2.2&Interaction&Variables& & Now!the!interaction!variables!that!are!used!to!create!the!conceptual!model!will!be! discussed.!They!will!be!defined,!there!relevance!to!the!model!will!be!identified!and! their!interaction!with!the!other!variables!will!be!discussed.!! Entrepreneurial+experience+
Experience! is! defined! as! “the! knowledge! and! skill! that! you! have! gained! through! doing!something!for!a!period!of!time;!the!process!of!gaining!this”!(Oxford!dictionary,! 2015).! Entrepreneurial! experience! increases! both! the! performance! of! the! start?up! and!the!chance!of!survival!of!the!start?up!(Bosma!et!al.,!2004).!When!talking!about! entrepreneurial! experience! there! are! several! dimensions,! because! entrepreneurial! experience! can! develop! in! several! ways.! Bosma! et! al.! (2004)! included! seven! variables! in! his! research! to! determine! an! entrepreneurs’! human! capital.! Human! capital!relates!to!the!concept!of!entrepreneurial!experience.!!These!variables!were! tested!in!relationship!to!an!individual’s!entrepreneurial!performance.!The!variables! that!were!used!in!this!study!to!measure!human!capital!were!experience!in!business! ownership,! experience! in! activities! relevant! to! business! ownership,! experience! in! the!industry,!age!divided!by!10,!age!divided!by!10!squared,!level!of!education!and! experience!as!an!employee.!It!was!concluded!from!the!study!that!age!had!no!effect! on! performance! at! all! and! experience! as! an! employee! only! had! an! effect! on! their! own! employment! decisions,! therefore! these! variables! will! not! be! included! in! this! thesis.!Because!if!they!do!not!influence!the!behaviors!of!entrepreneur!that!lead!to! higher!performance,!they!will!not!be!relevant!for!testing!the!effect!on!decreasing!the! perception! of! the! barriers! to! innovation.! For! this! thesis! the! variables! that! will! be! used! are! experience! in! the! relevant! industry,! experience! in! ownership! and! education,! as! these! variables! are! important! for! determining! entrepreneurial! experience!and!these!constructs!are!provided!in!the!dataset.!!
Higher! levels! of! education! have! been! found! to! influence! the! performance! among! manufacturing! firms! in! Oklahoma! (Box! et! al.,! 1993).! A! longitudinal! study! focused! on! business! ownership,! showed! that! the! level! of! education! has! also! been! found!to!influence!the!levels!of!staying!and!reentering!a!business,!and!it!argued!that! lesser! levels! of! education! were! associated! with! financial! or! human! capital! constraints!that!limit!business!pursuits!(Dolinsky!et!al.,!1993).!!
Experience! in! the! industry! and! experience! in! business! ownership! both! influence!the!performance,!and!business!growth!of!start?ups!(Hisrich!&!Brush,!1991;! Lerner!et!al.,!1997).!
To! conclude! the! variables! that! relate! to! entrepreneurial! experience! and! increase! both! survival! chances! and! performance! are! experience! in! the! industry,! experience!in!business!ownership!and!the!level!of!education.!!
Self6efficacy+
1982;!Bandura,!1986;!Bandura!and!Schunk,!1981;!Wood!and!Bandura,!1989).!There! are!also!other!sources!of!self?efficacy!that!have!a!lesser!effect!then!experience.!The! first!is!vicarious!experience,!self?efficacy!increases!by!seeing!others!perform!difficult! activities!without!negative!consequences.!Self?efficacy!also!increases!through!verbal! persuasion,!through!suggestion!people!are!led!to!believe!that!they!can!successfully! cope! with! situations! that! have! overwhelmed! them! in! the! past.! Lastly! emotional! arousal! leads! to! higher! self?efficacy! because! stressful! situations! can! invoke! emotional!arousal!which!gives!the!individual!information!about!his!or!hers!ability!to! cope!with!the!actions!that!need!to!be!taken!(Bandura,!1977).To!summarize,!having!a! high! level! of! self?efficacy! lowers! the! perception! of! the! barriers! to! innovation! for! start?ups,! because! the! entrepreneur! will! be! more! confident! about! being! able! to! overcome!these!barriers.!!
Barriers+to+innovation+
This!thesis!focuses!on!the!relationship!between!entrepreneurial!experience!and!the! barriers! to! innovation! for! start?ups.! Larsen! &! Lewis! (2007)! identified! financial! obstacles,! lack! of! marketing! skills,! lack! of! management! expertise! and! finding! trustworthy! partners! as! the! most! important! barriers! to! innovation.! Other! studies! identify! barriers! related! to! finance,! human! resource! management,! marketing,! competition,!and!external!information!(Van!der!Eijk!et.!al.,!2013;!Freel,!2000;!D’este,! 2012).!It!can!be!concluded!that!for!SMEs!obstacles!mainly!revolve!around!resources.! The! specific! barriers! that! will! be! investigated! in! this! research! will! be! discussed!in!more!detail!in!the!coming!section;!these!are!the!barriers!as!defined!in! the!raw!dataset.!To!more!clearly!identify!which!barriers!are!relevant!and!how!they! relate!to!each!other!a!confirmatory!factor!analysis!has!been!conducted.!! Financial!barrier! Many!SMEs!have!trouble!accessing!finance;!this!barrier!has!been!widely!recognized! as!a!barrier!to!survival,!growth!and!innovation!(Tidd!et!al.,!1997).!According!to!Freel! (2000)! and! D’este! et.! al.! (2012)! access! to! finance! has! been! cited! most! often! as! a! barrier!to!innovation.!
The! pecking! order! theory! explains! that! firms! have! an! order! of! preference! when!it!comes!to!funding!their!business.!They!first!opt!for!internal!financing,!after! which! they! turn! to! external! financing! and! equity! financing! is! seen! as! a! last! resort! (Myers,! 1984;! Mina,! 2013).!This! order! exists! because! the! cost! of! capital! is! much! larger! for! start?ups! than! for! older,! bigger! firms.! Van! Renselaar! (2014)! found! that! most! firms! were! aware! of! bank?loans! but! many! firms! were! not! aware! of! other! options,!such!as!business!angel!funding,!loans,!equity!funding,!and!grants.!The!most! important! reasons! for! not! getting! access! to! financial! capital! were! difficulty! in! validating!techniques,!difficulty!in!assessing!risk,!the!pay?back!period!was!too!long,! difficulties!in!creating!a!sound!business!plan,!difficulties!in!estimating!the!return!of!a! project,! difficulties! in! finding! adequate! personnel,! and! difficulties! in! providing! sufficient!assets.!
Several!other!factors!that!create!a!financial!barrier!for!start?ups!were!found! in!other!studies,!such!as!the!costliness!of!innovation,!the!uncertainty!of!the!costs!of! the! process,! high! monitoring! costs,! the! difficulty! to! determine! whether! an! innovation!will!be!successful,!and!poor!financial!management!(Freel,!2000;!Madrid? Guijarro!et.!al.,!2009;!D’este,!2012;!Blanchard!et!al.,!2012;!Larsen!&!Lewis,!2007).!
To! conclude,! start?ups! face! both! external! as! well! as! behavioral! barriers.! These! behavioral! barriers! such! as! difficulties! in! assessing! risk! and! returns,! information!asymmetries!towards!partners,!and!a!lack!of!knowledge!about!funding! options!could!be!overcome!by!the!experience!of!the!entrepreneur!or!help!by!others.!!!
Knowledge!barrier!
By! knowledge! barrier! a! lack! of! qualified! personnel,! a! lack! of! technological! information,! a! lack! of! market! information! and! trouble! with! finding! suitable! collaborative! partners! is! meant.! Marketing! intelligence! is! seen! as! one! of! the! most! critical!skills!required!to!achieve!innovative!success!(Freel,!2000;!Wren!et!al.,!2000).! A!lack!of!management!expertise!is!the!second!most!important!reason!for!business! failure! (Birley! and! Niktari,1995).! Furthermore,! many! SMEs! have! trouble! finding! suitable!partners!that!can!provide!them!with!reliable!knowledge!because!the!larger! consulting! firms! are! often! too! expensive,! whereas! it! is! difficult! to! determine! the! reliability!of!the!smaller!consulting!firms!(Larsen!&!Lewis,!2007).!$
Market!barrier!
The! market! barrier! refers! to,! to! what! extent! firms! experience! the! market! to! be! dominated! by! settled! firms,! which! makes! entry! into! the! market! more! difficult.! D’! este!et!al.!(2012)!identified!the!market!barrier!as!being!perceived!as!important!for! firms!that!engage!in!highly!innovative!activities.!!!!!
Demand!barrier! The!demand!barrier!refers!to!start?ups!struggling!because!they!experience!a!lack!of! demand!for!their!product!or!service.!Start?ups!might!perceive!this!barrier!especially! in!the!early!stages!of!the!development!of!their!product,!because!it!can!be!difficult!for! start?ups!to!explain!the!value!of!their!concept!to!outsiders.!Also!if!development!time! is!long,!competitors,!especially!larger!more!settled!firms,!might!make!the!innovation! of!a!start?up!irrelevant!by!having!a!shorter!time?to?market!(Litvak,!1992).!!Another! factor! that! creates! this! demand! barrier! is! the! difficulty! of! making! correct! capacity! investment! decisions.! The! uncertainty! about! market! size! reduces! with! time,! therefore!an!early!capacity!investment!is!subject!to!high!uncertainty,!but!if!demand! sets!in!early!a!quick!decision!to!invest!in!capacity!could!make!the!firm!a!first!mover.! A! miss! match! between! capacity! investments! and! demand! may! result! in! not! being! able! to! earn! back! the! investment,! or! not! being! able! to! maximize! performance.! Conclusion!is!that!demand!barrier!is!difficult!to!estimate,!and!therefore!it!can!make! important!investment!decisions!very!insecure!(Swinney!et!al.,!2012).!!
Help+by+others+
Help! by! others! is! an! important! determinant! for! the! performance! and! survival! chances!of!a!start?up.!When!an!entrepreneur!starts!a!new!firm!he!or!she!needs!to! gather!a!set!of!resources!in!order!to!successfully!run!the!firm.!Most!entrepreneurs! begin! their! business! with! a! business! idea! and! some! capital.! Contact! with! other! people!who!can!provide!information,!more!relevant!contacts!or!other!resources!are! therefore!very!important!(Greve,!1995).!This!thesis!focuses!on!help!by!incubators,! the! number! of! people! worked! on! the! concept! and! the! number! of! people! in! the! organization.!!
! Incubators! are! organizations! that! constitute! or! create! a! supportive! environment!that!is!conducive!to!the!hatching!and!development!of!new!firms!(Chan! and! Lau,! 2005;! Lindholm?Dahlstrand! &! Klofsten,! 2002;! Lyons! &! Li,! 2003).! Incubators! cause! more! start?ups! to! succeed! because! incubators! can! help! entrepreneurs! in! gaining! credibility,! solving! problems,! getting! access! to! entrepreneurial! networks! and! learning! about! management! skills! (Smilor,! 1987;! Allen!&!David,!1985).!The!number!of!people!that!worked!on!the!concept!positively! relates!to!the!success!of!the!firm!because!research!about!new!venture!teams!showed! that! team?founded! ventures! have! a! better! performance! than! individually! founded! firms! (Cooper! and! Bruno,! 1977;! Teach! et! al.,! 1986;! Weinzimmer,! 1997).! Next,! the! number!of!people!in!the!organization!can!also!help!start?ups!because!the!size!of!the! start?up!reflects!the!ability!of!the!firm!to!attract!financial!resources,!which!increases! its! chance! of! survival! (Audretsch,! 1990).! Furthermore,! Wagner! (1994)! proposes! that! a! positive! relationship! between! start?up! size! and! survival! chances! can! be! expected,!even!though!you!cannot!judge!a!firm!by!size!alone.!!
!
of!problems!that!innovative!start?ups!face.!Therefore,!the!underlying!problems!that! these!barriers!consist!of!will!be!given!here!as!the!definition!of!these!barriers.!!
!
Item! Definition! References!
to!determine!success! innovation!and!poor!financial! management;! Knowledge!barrier! Lack!of!management!expertise;! Trouble!finding!suitable! partners;!lack!of!marketing! intelligence;!A!lack!of! management!expertise!is!the! second!most!important!reason! for!business!failure.! Birley!and!Niktari,1995! Freel,!2000;!! Wren!et!al.,!2000! Larsen!&!Lewis,!2007! Market!barrier! to!what!extent!firms!experience! the!market!to!be!dominated!by! settled!firms! D’!este!et!al.,!2012! Demand!barrier! Difficulty!explaining!added! value!product;!long! development!time!makes! product!irrelevant;!difficulty! making!capital!investment! decisions! Litvak,!1992! Swinney!et!al.,!2012! Help!by!others! formal!or!professional!help!that! comes!from!incubators,!the! people!that!worked!on!the! concept!or!the!people!in!the! organization!! Greve,!1995! Goldenberg!and!Kline,!1999! Incubators! organizations!that!constitute!or! create!a!supportive! environment!that!is!conducive! to!the!hatching!and! development!of!new!firms! Chan!and!Lau,!2005!! Lindholm?Dahlstrand&! Klofsten,!2002!! Lyons!&!Li,!2003! Smilor,!1987! Allen!&!David,!1985! Number!of!people!worked!on! the!concept! team?founded!ventures!have!a! better!performance!than! individually!founded!firms.! Cooper!and!Bruno,!1977!! Teach!et!al.,!1986! !Weinzimmer,!1997! Number!of!people!in!the!
organization! The!size!of!the!start?up!reflects!the!ability!to!attract!financial! resources,!which!increases!it’s! chance!of!survival! Audretsch,!1990!! Wagner,!1994! Table!1! Now!that!all!the!concepts!used!to!create!the!conceptual!model!are!defined!and!their! interaction!is!explained!the!conceptual!model!can!be!presented.!This!conceptual! model!will!be!provided!in!the!upcoming!section.!! 3.! Conceptual&model&
experience! will! lower! the! perception! of! the! barriers! to! innovation! for! start?ups! is! the! concept! of! self?efficacy! (Bandura,! 1977;! Bandura,! 1982;! Bandura,! 1986).! The! barriers! that! are! identified! in! the! model! are! based! on! the! factor! analysis! that! is! conducted! in! this! thesis.! In! the! rest! of! the! upcoming! chapter! the! hypotheses! and! their!underlying!theory!will!be!discussed.! Entrepreneurial+experience .+Educational+level .+Experience+in+the+industry .+Experience+in+ownership Barriers+to+innovation: .Financial+ .Knowledge .Demand Help+by+formal+network .Incubator .No+of+employees .No+of+people+worked+on+the+project ! Figure!1! ! 3.1&Entrepreneurial&experience&
As! mentioned! before! entrepreneurial! experience! is! highly! relevant! for! increasing! performance!and!survival!chances.!In!order!to!come!to!a!higher!performance!and!a! greater! chance! of! survival! the! barriers! to! innovation! need! to! be! overcome.! Self? efficacy! is! created! through! learning! about! entrepreneurship! and! previous! entrepreneurial! experience! (Zhao! et! al.,! 2005).! ! ! Since! entrepreneurial! experience! increases!both!performance!and!self?efficacy!it!is!expected!that!the!experience!of!the! entrepreneur!is!self?reinforcing!in!the!sense!that!the!experience!of!the!entrepreneur! will!lead!to!higher!self?efficacy.!Self?efficacy!positively!influences!the!perception!of! how!well!the!entrepreneur!will!be!able!to!deal!with!the!challenges!that!he/she!faces,! making!him/her!work!more!effectively!(Bandurra,!1977).!Because!the!entrepreneur! works!more!effectively!the!performance!of!the!start?up!will!increase,!reinforcing!his! feelings! of! self?efficacy.! Because! of! this! interaction! effect! it! is! expected! that! the! perception!of!the!barriers!to!innovation!will!be!lower!for!entrepreneurs!who!have! entrepreneurial!experience.!Therefore!the!first!hypothesis!states!that:!!!
$
H1:$ Entrepreneurial$ experience$ has$ a$ positive$ effect$ on$ decreasing$ the$ financial,$
demand$and$knowledge$barriers$as$perceived$by$the$entrepreneur.!$
3.2&Help&by&others&
The!help!that!an!entrepreneur!can!get!from!others!increases!the!performance!and! survival! chances! of! the! start?up! (Greve,! 1995;! Goldenberg! and! Kline,! 1999).! Previous!research!indicates!that!entrepreneurs!that!have!a!high!self?efficacy,!which! is!created!by!entrepreneurial!experience,!generally!have!a!broader!social!network! and! are! more! popular! then! entrepreneurs! who! lack! self?assurance! (Baron! et! al.,! 2005).!The!broader!someone’s!network!is,!the!more!information!he!receives!(Ozen! &!Baron,!2007).!This!relationship!could!work!both!ways,!because!help!from!others! might!increase!the!entrepreneurs!believe!that!his!start?up!will!become!a!success!in! the! sense! of! both! survival! and! performance,! and! at! the! same! time! might! decrease! the!entrepreneurs’!perception!of!the!barriers!to!innovation.!This!reasoning!relates! to!the!underlying!factors!that!create!self?efficacy.!Verbal!persuasion!by!others!also! leads! to! self?efficacy! (Bandura,! 1977).! The! specific! constructs! underlying! ‘help! by! others’!are!discussed!in!more!detail!in!the!upcoming!section.!
Number+of+people+in+the+organization+
Although! not! all! people! in! the! organization! may! have! worked! directly! on! the! concept,! having! greater! human! capital! within! an! organization! might! increase! the! accessibility!to!managerial!expertise!and!contacts,!that!lead!to!other!resources!such! as!financial!funds!or!market!information.!This!notion!was!confirmed!by!Audretsch! (1990)! by! showing! that! the! size! of! the! firm! reflects! the! firms’! ability! to! attract! financial! resources.! ! To! conclude,! the! main! entrepreneur! might! experience! less! challenges!because!help!is!more!readily!available.!Therefore:!
!
H2:$ The$ number$ of$ people$ working$ in$ the$ organization$ has$ a$ positive$ effect$ on$ decreasing$ the$ financial,$ demand$ and$ knowledge$ barriers$ as$ perceived$ by$ the$ entrepreneur.$
Incubators+
Incubators! can! be! useful! tools! to! overcome! many! of! the! barriers! that! innovative! start?ups! face.! Almost! twice! as! many! companies! succeed! instead! of! fail! when! participating! in! an! incubator! (Allen! and! David,! 1985).! ! An! incubator! has! many! advantages!to!the!participating!firms.!The!firms!that!participate!can!gain!credibility,! shorten! the! learning! curve! for! marketing! and! management! skills,! quickly! solve! problems! and! gain! access! to! entrepreneurial! networks! (Smilor,! 1987). It! can! be! concluded! that!incubators! form! an! important! source! of! help! that! could! lower! the! perception! of! the! barriers! to! innovation! for! start?ups! as! perceived! by! the! entrepreneur.!
!
H3:$ Incubators$ has$ a$ positive$ effect$ on$ decreasing$ the$ financial,$ demand$ and$ knowledge$barriers$as$perceived$by$the$entrepreneur.$
Number+of+people+worked+on+the+concept+
human! capital! and! resources! such! as! information,! time! and! money! than! smaller! teams!(Roberts,!1991;!Klepper,!2001).!The!combined!experience!of!the!group!will! also!decrease!the!perception!of!the!barrier!to!innovation!for!the!main!entrepreneur.! Furthermore,! a! larger! team! also! increases! the! social! network! of! the! start?up,! increasing!the!chance!of!finding!financial!resources!or!information!(Ozen!&!Baron,! 2007).! To! summarize,! a! bigger! team! of! people! could! decrease! the! barriers! to! innovation!for!start?ups!as!experienced!by!the!main!entrepreneur.!Therefore:!!
!
H4:$ A$ larger$ number$ of$ people$ working$ on$ the$ concept$ has$ a$ positive$ effect$ on$ decreasing$ the$ financial,$ demand$ and$ knowledge$ barriers$ as$ perceived$ by$ the$ entrepreneur.$
$
Now! that! the! hypotheses! have! been! described,! they! will! have! to! be! tested.! Before! moving! towards! the! analysis! it! is! important! to! define! the! research! strategy,! and! describe!the!dataset.!This!is!what!will!be!presented!in!the!upcoming!section.!
4.! Methodology&
In! this! chapter! the! methodology! that! was! used! for! the! analysis! will! be! discussed.! First!the!research!strategy!will!be!explained!by!discussing!the!reasons!for!choosing! a!linear!regression!approach.!Next!the!selection!process!of!the!sample!is!discussed,! the! dataset! as! used! in! the! analysis! will! be! described,! and! the! method! of! data! collection!will!be!explained.!The!confirmatory!factor!analysis!that!was!conducted!on! the! barriers! to! innovation! can! also! be! found! in! this! chapter.! Furthermore,! some! inferences! will! be! made! about! the! reliability,! validity! and! generalizability! of! this! thesis.!Finally,!the!control!variables!used!for!the!analysis!are!described!and!a!table!is! provided!on!how!the!variables!in!the!analysis!have!been!measured.!!
4.1!Research&strategy&
In! order! to! answer! the! research! questions! that! have! been! posed! in! this! thesis,! empirical! evidence! needed! to! be! gathered.! The! strategy! was! to! collect! enough! empirical! evidence! in! order! to! be! able! to! make! statistical! inferences! about! this! evidence.! Because! the! aim! was! to! collect! a! large! amount! of! data,! the! choice! was! made!to!collect!data!through!a!survey.!The!advantages!of!collecting!data!through!a! survey!are!that!they!can!be!recorded!remotely.!For!this!research,!this!was!the!case! as!well,!as!the!survey!was!conducted!online.!Creating!geographical!independence!for! both!the!researcher!and!the!respondents.!Furthermore,!a!survey!makes!it!possible! to!collect!comparable!data!from!a!large!number!of!respondents.!Therefore,!surveys! lend! themselves! to! being! analyzed! with! statistical! techniques! (Wyse,! 2012).! The! survey!data!that!was!collected!is!analyzed!through!a!linear!regression!analysis.!This! mode! of! analysis! was! chosen! because! the! conceptual! model! that! underlies! the! analysis!contains!more!than!one!explanatory!variable!and!one!dependent!variable! (per!barrier)!for!consideration.!A!simple!representation!of!the!formula!for!a!linear! regression!is:!!!!
Where!Y!is!the!dependent!variable,!X!represents!the!independent!variables,!and!b! represents!the!Beta’s!or!regression!coefficients!(Field,!2009).$
4.2&Sample&selection&
The! sample! for! the! study! contained! 726! firms! from! different! industries! such! as! telecom! &! communications,! media! &! entertainment,! high?tech,! consumer! goods! &! services,! financial! services,! energy,! chemicals,! health,! public! services! and! sustainability.!All!firms!in!the!dataset!have!launched!or!will!launch!a!new!concept!to! the! market! between! January! 2011! and! January! 2016.! The! firms! selected! for! this! study!all!participated!in!the!Accenture!Innovation!Awards!(AIA)!of!2014.!The!AIAs!is! an!annual!innovation!competition!for!Dutch!innovative!concepts.!All!the!entrants!of! the!innovation!awards!have!been!screened!by!market!leaders!and!experts!from!the! participating!industries!based!on!three!factors.!The!concept!had!to!be!younger!than! three!years,!launched!in!the!Netherlands,!and!there!should!be!a!degree!of!newness! compared!to!current!products!or!services!(Accenture:!Over!de!Awards,!2015).!Of!the! 726!firms!that!participated!in!the!AIAs!396!firms!provided!all!the!information!that! was!needed!for!this!thesis.! Key!informants!of!the!firms!such!as!founders,!CEOs!or! product! development! managers! filled! out! the! questionnaires.! Giving! an! effective! participation! rate! of! 55%.! In! order! to! assure! that! no! biases! arise! because! of! the! entrepreneurs! that! did! not! respond! to! the! questionnaire! a! t?test! to! compare! independent!means!was!conducted.!The!initial!t?test!showed!that!the!means!of!the! number!of!employees!differed!for!the!group!that!filled!out!the!questionnaire!and!the! group!that!did!not!fill!out!the!questionnaire.!This!difference!was!based!on!the!type! of! company! (start?up,! part! of! a! bigger! company,! medium! sized! company,! large! company!or!foundation).!The!initial!sample!consisted!of!396!firms!of!which!eighty? one!percent!of!the!firms!identified!themselves!of!start?ups.!After!deleting!the!other! types!of!companies!319!start?ups!are!left!in!the!sample.!The!reason!for!deleting!the! other! types! of! companies! is! that! these! companies! bias! the! results.! As! the! focus! of! this!thesis!is!on!start?ups,!the!choice!was!made!to!take!the!other!types!of!companies! out! of! the! sample.! The! results! of! the! t?tests! with! and! without! the! inclusion! of! the! other!types!of!firms!can!be!found!in!appendix!3.!!
4.3&Sample&description& Of! the! firms! in! the! sample! fifty?two! percent! developed! a! new! product! as! opposed! to! a! service! or! business! model.!Forty?one!percent!of! the! firms! had! access! to! external! funding,! and! twenty?nine! percent! of! the! firms! were! connected! to! an! incubator.! Thirty?seven! percent! of! the! firms! only! market!their!products!in!the! Netherlands,! the! rest! of! the!
companies! also! operate! in! foreign! countries.! Ninety?three! percent! of! the! entrepreneurs!had!an!educational!level!of!at!least!HBO.!To!clarify!this!information!a! graphical!representation!is!given!in!figure!2.!The!category!‘educational!level’!draws! attention! because! it! shows! that! the! dataset! contains! much! more! highly! educated!
entrepreneurs! than!
entrepreneurs! with! lower! levels! of! education.! This!! creates! difficulties! for! analyzing! the! effect! of! education! on! the! perception! of!the!barriers!to!innovation.! Assuming! that! the! sample! used! for! this! study! is! a! good! representation! of! the! population!of!start?ups!in!the! Netherlands,! the! conclusion! could!also!be!that!people!with!higher!levels!of!education!are!more!likely!to!become! entrepreneurs.!Furthermore,!the!firms!had!on!average!about!six!people!working!on! their! concept,! for! an! average! of! sixty?eight! full! time! workweeks,! while! on! average! about! thirty! people! worked! for! their! company.! A! graphical! representation! of! the! distribution!of!these!data!can!be!found!in!figure!3,!this!graph!shows!the!frequencies! of!the!given!answers.!This!graph!shows!that!for!all!these!data!the!modes!are!quite! low.!!
The!mode!for!FTE!is!two!weeks,!the!mode!for!the!number!of!people!worked!on!the! concept! is! three! and! the! mode! for! the! number! of! employees! is! three.! Which! also! shows!that!most!firms!have!all!their!employees!working!on!their!innovative!concept.!! As!all!these!data!are!related!to!the!size!of!the!company!and!the!time!that!they!are!in! existence!it!is!quite!logical!that!most!of!the!firms!in!this!dataset!score!low!on!these! questions,!as!they!identify!
to! include! this! variable! into! figure! 3.! Therefore,! this! variable! will! be! described! separately.! The! variable! total! investment! has! a! mean! of! €460,000! however! the! median!of!total!investment!is!€60,000!and!the!maximum!is!€13,000,000.!The!mean! (€460,000)!lies!above!the!75th!percentile!(€260,000)!of!the!data.!These!figures!show! that!there!are!great!differences!between!some!of!the!firms’!investments.!However,! the!largest!part!of!the!firms!have!invested!less!than!€60,000.!! It!can!be!concluded!that!most!of!the!firms!in!this!sample!are!characterized!by! having!highly!educated!owners,!by!operating!without!an!incubator,!by!operating!in! more! than! the! Dutch! market! alone! and! by! having! access! to! external! funding.! Furthermore,! most! of! the! firms! in! this! dataset! have! between! two! and! five! employees,! who! all! work! on! the! same! concept,! these! firms! have! worked! less! than! three! full! time! weeks! on! their! concept.! The! entrepreneurs! in! this! dataset! are! characterized! by! high! experience! in! the! industry,! but! relatively! low! experience! in! ownership.!Lastly,!most!of!these!start?ups!have!invested!less!than!€60,000!in!their! innovative!concept.!!
4.4&Data&collection&&
The! data! was! collected! by! asking! key! informants! of! the! firms! at! the! moment! of! entering! the! Accenture! Innovation! Awards! to! fill! out! an! online! questionnaire,! this! questionnaire!did!not!have!to!be!filled!out!at!the!moment!of!the!request!but!could!be! handed! in! at! a! later! moment! in! time.! Therefore,! not! all! data! was! collected! at! the! exact!same!moment!in!time.!The!questionnaire!that!this!dataset!is!based!on!can!be! found!in!appendix!1.!
4.5&Factor&analysis&
As! mentioned! before! a! factor! analysis! was! performed! to! determine! how! the! constructs! that! make! up! the! barriers! to! innovation! fit! together,! the! results! can! be! found!in!table!2.!This!will!give!a!more!valid!image!of!which!barriers!there!are.!This! will! also! help! increase! the! reliability! in! testing! the! relationship! between! the! experience!of!the!entrepreneur!and!the!barriers!to!innovation.!As!was!expected,!the!! market!barrier,!which!relates!to!the!construct!of!the!entrepreneurs’!perception!that! incumbent!firms!dominate!the!market!for!their!product/service,!correlates!with!the! second! factor! in! table! 2.!
Therefore,! the! conceptual! model!was!adapted!based! on! the! factor! analysis.! Which! means! that! there! will! be! three! dependent! factors.! The! first! factor! will! be! the! financial! barrier! including;! barrier! to! external! financial! resources,! barrier! to! internal! financial! resources,! and! height! of! innovation! costs.! The! second! factor! will! be! the!
demand! barrier! including;! lack! of! need! or! interest! for! innovation,! previous! innovations!make!the!innovation!of!the!entrepreneur!irrelevant,!uncertain!demand! and!the!market!is!dominated!by!incumbent!firms.!Lastly,!the!third!factor!will!be!the! knowledge!barrier!including;!a!lack!of!market!information,!a!lack!of!product/service! specific! information,! finding! suitable! cooperation! partners! and! finding! qualified! staff.!
4.6&Validity,&Reliability&and&generalizability&&
For!this!thesis!it!is!important!that!the!data!and!measurements!that!were!used!are! constructed! according! to! construct,! internal! and! external! validity,! and! reliability! (Yin,! 1989;! Cooper! &! Schindler,! 2008).! Construct! validity! refers! to! the! vertical! correspondence! between! constructs.! ! The! constructs! need! to! correspond! at! an! unobservable,! conceptual! level! and! at! an! operational! level! which! is! the! claimed! measure! of! the! construct! (Peter,! 1981).! In! order! to! achieve! construct! validity,! correlations! and! the! regression! analysis! were! used! to! determine! the! impact! of! entrepreneurial!experience!and!help!by!others!on!the!perception!of!the!barriers!to! innovation! for! start?ups.! Also! control! variables! were! included! such! as! the! type! of! innovation! (product/service),! type! of! funding! (external/internal),! geographic! markets,! total! investment,! firm! size! and! FTE’s.! Furthermore,! Accenture! specialists! have!helped!create!the!questionnaire,!assuring!accuracy!and!precision.!
In! order! to! assure! internal! validity,! there! needed! to! be! multiple! evidence! pieces!from!multiple!sources,!so!that!convergent!lines!of!inquiry!can!be!uncovered! (Yin,! 1989).! This! was! achieved! by! having! a! jury! consisting! of! market! leaders! and! experts!from!the!relevant!industry!screen!the!entrants!based!on!three!factors.!The! concept! needed! to! be! no! more! than! three! years! old,! the! concept! needed! to! be! launched!in!the!Netherlands!and!there!should!be!some!degree!of!novelty!compared! to!the!current!developments!in!products!and!services.!!
Lastly! external! validity! refers! to! the! generalization! of! the! results.! Since! the! firms! in! the! database! that! have! been! used! for! this! thesis! do! not! pertain! to! one! specific! industry! the! thesis! should! be! able! to! serve! as! an! indicator! for! innovative! start?ups!from!differing!industries.!However,!the!firms!in!this!dataset!are!similar!in! certain!other!aspects!such!as!the!level!of!education!and!the!size!of!the!firms.!These! similarities!should!be!taken!into!consideration!when!discussing!the!generalizability! of! this! thesis.! Outcomes! may! differ! for! datasets! that! contain! more! entrepreneurs! with!lower!levels!of!education,!or!for!start?ups!that!have!more!employees,!or!start? ups!that!have!invested!more!FTE’s!into!the!developed!innovative!concept.!Therefore! this!study!cannot!be!seen!as!having!implications!for!all!start?ups.!Lastly!it!should!be! noted! that! this! study! focusses! on! start?ups! that! have! been! founded! in! the! Netherlands.!Although!many!of!the!start?ups!also!operate!in!foreign!countries,!the! start?ups! were! founded! in! the! Netherlands.! This! decreases! the! generalizability! of! this! study! because! the! rules! and! regulations! for! founding! start?ups! differ! per! country.!
4.7&Description&of&used&variables&
control!variables!and!their!expected!effect!on!the!model!will!be!discussed!in!more! length!in!this!section.!
The!first!control!variable!that!will!be!used!is!the!type!of!innovation,!by!this!is! meant! if! the! newly! introduced! concept! is! a! product! or! service.! The! reason! for! including! this! control! variable! is! that! there! is! literature! that! shows! that! there! are! differences!between!the!development!of!a!product!and!a!service!(!Djellal!&!Gallouj,! 2001;! Gallouj! &! Weinstein,! 1997;! Menor,! Tatikonda! &! Sampson,! 2000).! These! differences!are!based!on!the!characteristics!of!services!such!as!their!intangibility,!co? production! with! customers,! simultaneity,! perishability! and! heterogeneity! (Fitzsimmons!&!Fitzsimmons,!2000).!Because!of!these!differences!the!importance!of! certain!barriers!to!innovation!might!also!be!different.!Finding!financial!funds!might! be! even! harder! because! of! the! intangibility! and! simultaneity! of! a! service.! Furthermore,! experience! in! the! industry! might! be! less! relevant! if! this! experience! only!pertains!to!products!while!the!entrepreneur!now!tries!to!launch!a!service.!!
The!next!control!variable!that!was!introduced!into!the!model!is!geographic! markets! with! which! is! meant! if! the! new! concept! was! introduced! only! in! the! Netherlands! or! also! in! foreign! counties.! A! study! by! Kropp! Noel! &! Aviv! Shoham! (2008)! showed! that! the! entrepreneurs! age! and! risk! taking! propensity! positively! influenced! the! decision! to! launch! an! international! start?up.! It! was! also! stated! that! risk?taking!increased!with!self?confidence,!which!comes!from!experience.!Therefore,! we! can! state! that! the! choice! of! going! abroad! is! influenced! by! entrepreneurial! experience.! Furthermore,! we! expect! that! the! barriers! will! be! perceived! differently! for!entrepreneurs!that!operate!in!foreign!countries.!e.g.!the!knowledge!barrier!might! be! higher! because! it! will! be! more! difficult! to! find! market! knowledge! because! of! a! culture!and!language!barrier.!Lastly,!experience!in!ownership!and!industry!might!be! less! relevant! if! this! experience! only! pertains! to! the! Netherlands.! The! norms! and! rules!of!starting!a!business!in!a!certain!industry!might!be!completely!different!in!a! foreign!country.!!
investment!will!also!be!higher!under!these!circumstances.!Higher!investments!are! also!expected!to!increase!the!chances!of!survival!of!the!firm.!Entrepreneurs!that!are! aware!of!this!will!perceive!the!barriers!to!innovation!to!be!lower!when!investments! are!high.!Lastly!we!controlled!for!FTE’s!(full!time!equivalent).!By!this!is!meant!the! amount!of!full!time!weeks!that!the!entire!team!of!entrepreneurs!have!worked!on!the! project.! Having! spent! more! time! working! on! the! concept! reflects! how! far! the! development! of! the! concept! is.! As! a! concept! is! further! along,! and! the! people! have! invested!more!time!in!the!concept,!uncertainty!should!decrease!to!a!certain!point.! Decreased!uncertainty!increases!the!survival!chances!of!the!firm!(Hyytinen,!2015),! possibly!also!decreasing!the!perception!of!the!barriers!to!innovation.! Having!discussed!the!control!variables,!it!is!time!to!move!on!to!the!data!as!it! was!collected!through!the!questionnaires.!This!data!needed!to!be!recoded!to!make!it! suitable!for!using!it!in!linear!regressions.!In!table!three!the!recoded!variables!will!be! further!discussed.!The!table!shows!the!names!of!the!variables,!the!type!of!variable! (independent!variable,!dependent!variable!or!control),!the!definition!as!used!in!the! analysis,! the! operationalization,! the! references! that! provide! the! underlying! theory! and!the!scale.!!!
!
!
Name! Type! Definition! Operation! References! Scale!
Level!of!education! IV! Higher!education!is!every!level!
of!education!of!HBO!or!higher! (as!defined!in!the! Netherlands)!! Higher!education!=!1;! Lower!education!=!0! Bosma!et!al.,!2004;!Box!et! al.,!1993;!! Dolinsky!et!al.,!1993! ! Ordinal! Low!experience! business! ownership! IV! Having!started!at!least!one!
business! Low!experience!=!1;!No!experience!=!0! Hisrich!&!Brush,!1991;!Lerner!et!al.,!1997;! Bosma!et!al.,!2004! Ordinal! Medium! experience! business! ownership! IV! Having!started!at!least!two!or! three!businesses! Medium!experience!=! 1;!less!experience!=!0! Hisrich!&!Brush,!1991;! Lerner!et!al.,!1997;! Bosma!et!al.,!2004! Ordinal! High!experience! business! ownership! IV! Having!started!more!than!four!
businesses! High!experience!=!1;!less!experience!=!0! Hisrich!&!Brush,!1991;!Lerner!et!al.,!1997;! Bosma!et!al.,!2004! Ordinal! Low!experience! industry! IV! Up!to!three!years!of! experience! Low!experience!=1;! No!experience!=!0! Hisrich!&!Brush,!199;1! Lerner!et!al.,!1997;! Bosma!et!al.,!2004! Ordinal! Medium! experience! industry! IV! More!than!three!years!of! experience! Medium!experience!=! 1;!less!experience!=!0! Hisrich!&!Brush,!1991;! Lerner!et!al.,!1997;! Bosma!et!al.,!2004! Ordinal! High!experience!
industry! IV! More!than!ten!years!of!experience! High!experience!=!1;!less!experience!=!0! Hisrich!&!Brush,!1991;!Lerner!et!al.,!1997;! Bosma!et!al.,!2004!
Ordinal!
Incubator! IV! Having!participated!in!an!
incubator! Yes!=!1;!No!=!0! Chan!&!Lau,!2005;!Lindholm?Dahlstrand!&! Klofsten,!2002;!Lyons!&! Li,!2003;! Smilor,!1987;!Allen!&! David,!1985! ! Nominal! Number!of!people!
concept! Teach!et!al.,!1986;! Weinzimmer,!1997! ! Number!of!people! in!the!organization! IV! The!number!of!people!that! work!for!the!organization!that! has!developed!the!concept! Number!of!people! Audretsch,!1990;! Wagner,!1994! ! Interval!
Type!of!innovation! Control! If!the!innovation!is!a!product,!
service!or!business!model! Product!=!1;!Other!=! 0! !Djellal!&!Gallouj,!2001;! Gallouj!&!Weinstein,! 1997;!Menor,!Tatikonda! &!Sampson,!2000;! Fitzsimmons!&! Fitzsimmons,!2000! Nominal! Geographic!
markets! Control! If!the!firm!operates!in!the!Netherlands,!or!also!in!foreign! countries! In!the!Netherlands!=! 1;!Also!in!other! countries!=!0! Kropp!Noel!&!Aviv! Shoham;!2008! Nominal!
Type!of!funding! Control! If!the!firm!only!uses!internal!
financial!resources!or!also! external!financial!resources! Internal!=!1;!also! external!=!0! Myers,!1984;!Mina,!2013;! Renselaar,!2014! ! Nominal!
Total!investment! Control! The!total!amount!of!money!
that!has!been!invested!in!the! innovation! Amount!of!money! Myers,!1984;!Mina,!2013;! Kropp!Noel!&!Aviv! Shoham,!2008! ! Ratio!
FTE! Control! The!amount!of!full!time!weeks! (40!hours)!that!the!
entrepreneurs!and!employees! have!worked!on!the!concept!
Time!in!weeks! Hyytinen,!2015! Ratio!
The!financial!
barrier! DV! The!extent!to!which!the!entrepreneur!experiences! financial!obstacles! Likert!scale! constructs!combined! by!factor!analysis! Tidd!et!al.,!1997;! Freel,!2000;!D’este!et.!al.,! 2012;!Birley!and!Niktari,! 1995;! European!Commission,! 2010;!Van!Renselaar,! 2014! ! Ratio! The!demand! barrier! DV! The!extent!to!which!the! entrepreneur!experiences! demand!obstacles! Likert!scale! constructs!combined! by!factor!analysis! D’!este!et!al.!2012;! Swinney!et!al.,!2012;!! Litvak,!1992! ! Ratio! The!knowledge! barrier! DV! The!extent!to!which!the! entrepreneur!experiences! knowledge!obstacles! Likert!scale! constructs!combined! by!factor!analysis! Foley!&!Green,!1995;! Freel,!2000;!Wren!et!al.,! 2000;! Birley!and!Niktari,1995;! Larsen!&!Lewis,!2007! ! Ratio! Table!3! 5.! Analysis&and&Results&
5.1&Analysis&
This! thesis! has! used! a! quantitative! research! approach.! This! means! that! numerical! data!was!collected!to!measure!a!variation!in!a!phenomenon,!situation,!problem!or! issue!(Muijs,!2010).!The!data!that!was!collected!for!this!thesis!consisted!of!primary! data!that!was!collected!through!an!online!questionnaire!with!the!participants!of!the! Accenture!Innovation!Awards!of!2014.!This!data!has!been!analyzed!using!SPSS!22.! First! a! series! of! linear! regressions! using! only! the! independent! variables! was! conducted! to! check! for! multi?collinearity.! This! is! checked! by! analyzing! the! VIF! values!that!this!analysis!produces.!For!variables!that!have!a!VIF!value!of!higher!than! three! a! separate! single! linear! regression! has! been! run! to! assure! that! no! collinear! values!are!used!in!the!multiple!linear!regression.!In!the!dataset!for!this!research!no! variables!showed!multi?collinearity!as!all!variables!showed!VIF!values!of!less!than! three.!Therefore,!no!variables!were!removed!from!the!dataset.!
Histograms!were!created!to!check!for!normality!of!the!data.!Even!though!it!can! be!assumed!that!the!data!is!normally!distributed!because!of!the!size!of!the!sample,! extreme! skewness! or! kurtosis! could! create! difficulties! in! conducting! the! linear! regression.! By! looking! at! the! histograms! it! was! discovered! that! the! dependent! variable!of!the!demand!barrier!was!extremely!skewed.!To!correct!for!this!skewness! a! log! version! of! the! demand! barrier! variable! is! used! for! the! regression.! As! the! demand!barrier!is!now!more!normally!distributed!the!results!will!be!more!reliable.! The! size! of! the! coefficients! changes,! but! for! this! thesis! it! is! only! relevant! if! the! coefficients!are!positive!or!negative.!The!change!that!was!brought!about!by!using!a! log!function!on!the!demand!barrier!can!found!in!appendix!2.!!
Next,! all! the! variables! were! simultaneously! inserted! into! the! regression! analysis! using! the! enter! method.! The! existing! relationships! between! the! independent! and! dependent! variables! are! analyzed! through! this! linear! regression! model.! 5.2&Descriptives&and&correlation&matrix& On!the!next!page!table!4!can!be!found!containing!the!descriptives!and!correlation! matrix.!This!table!shows!if!there!is!a!correlation!between!variables!that!are!used!in! the!analysis.!What!the!table!shows!is!that!there!is!correlation!between!the!barriers! to!innovation.!This!is!not!surprising!as!the!expectation!is!that!these!barriers!will!all! move!in!similar!direction!as!entrepreneurial!experience!increases!or!decreases.!The! reason!for!this!is!that!these!barriers!are!as!perceived!by!the!entrepreneur,!and!that! these! barriers! are! influenced! by! the! entrepreneurs! feelings! of! self?efficacy! or! anxiety.!If!an!entrepreneur!has!a!greater!feeling!of!self?efficacy!it!would!seem!logical! that!all!barriers!would!seem!less!threatening,!not!just!one!particular!one.!!
entrepreneur!has!previously!started!at!least!four!firms.!It!would!not!be!unlikely!that! these! previously! started! businesses! all! relate! to! the! same! industry.! As! mentioned! before! experience! in! the! relevant! industry! increases! the! ability! to! recognize! opportunities! (Shane,! 2000;! Ardichivili! et! al.,! 2003).! When! an! opportunity! is! recognized! the! possibility! of! starting! a! business! has! arisen.! Creating! a! situation! where! both! experience! in! the! industry! and! experience! in! owning! businesses! are! gained.!!
! More! surprising! ! and! worrying! are! correlations! between! independent! variables! such! as! the! correlations! between! a! medium! level! of! experience! in! ownership! and;! the! number! of! employees,! ! being! part! of! an! incubator,! and! geographic!markets.!However,!there!was!no!multi?colinearity!found!between!these! variables.! Also! the! size! of! the! effects! all! vary! around! 0.1,! which! means! that! these! effects! are! only! minor.! There! are! also! correlations! with! larger! effects,! such! as! the! correlations! between! the! type! of! funding! and! incubators,! the! number! of! people! worked!on!the!project!and!the!total!investment,!and!between!being!a!start?up!and! the! number! of! employees.! There! are! reasons! that! these! variables! correlate,! however,!these!reasons!are!not!important!as!there!was!no!multi?collinearity!found! between!these!variables.!!Lastly,!this!table!also!shows!some!correlations!that!relate! to! the! hypothesis! as! posed! in! this! thesis.! Negative! correlations! have! been! found! between!a!high!level!of!experience!in!ownership!and!the!demand!barrier,!and!a!high! level! of! experience! in! the! industry! and! the! financial! and! knowledge! barrier.! Furthermore! there! is! a! positive! correlation! between! incubators! and! the! financial! and! demand! barrier,! which! points! towards! a! relationship! opposite! of! what! was! expected! in! this! thesis.! The! regression! analysis! will! point! out! the! direction! of! this! relationship.!!
! It! can! be! concluded! that! there! are! some! correlations! between! independent! variables! that! are! not! constructive! towards! the! purpose! of! this! thesis.! However,! these!size!of!these!effect!are!all!minor.!Furthermore,!no!multi?collinearity!was!found! between!these!variables.!Therefore,!these!correlations!will!not!decrease!the!validity! of!this!study.!!
5.3!Multiple&linear®ression&
