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Technological Entrepreneurship The Allocation of Time and Money in TechnologyBased Firms

Technological Entrepreneurship The Allocation of Time and Money in TechnologyBased Firms Technological Entrepreneurship Technological Entrepreneurship: The Allocation of Time and Money in Technology-Based Firms. Patricia L. Braden firms. The managers' firms displayed a This synopsis reports on original research firm, interest paid on outstanding debt, the which was designed and supervised by the much larger average asset base than the firm's income and annual gross sales. author and sponsored jointly by two units of caretakers' ($250,000 vs. $100,000) and a The overall sample shows a typical firm the University of Michigan (Ann Ar­ median sales figure nearly four times as great which (1) produces a custom product or pro­ as that of the caretaker firms (over $1 bor)—the Division of Research of the vides a special service; (2) is five to ten years million vs. $100,000-$250,000). At the Graduate School of Business Administra­ old; (3) has an equity investment under small firm level ($100,000 annual sales or tion and the Industrial Development $250,000 and characteristically low financial Division of the Institute of Science and lower) the managers allocated more of their leverage; (4) has acquired start-up funds Technology. The research focused on the own time to finance than did the caretakers from friends and/or relatives of the founder. amount of time and effort allocated to eight and less of their own time to marketing. In Nearly a quarter of the firms had generated general managers allocated their time more functional areas of management in new tech­ over $1 million in sales during the year prior evenly among functions than did caretakers, nical spin-off firms in Michigan and on the to the study. who showed signs of being crisis-oriented. variation of effort associated with higher The Braden report then examines the levels of success. Although the most sub­ The study also touches on the correlation balance of management effort within the stantive elements of the study concern between the owner's identification of the sample firms. This analysis is first carried Michigan enterprises, the intention of the firm's main recent problem area and his out in terms of the allocation of personnel undertaking—to assist with development of (and of the subcategory of salaried person­ choice of 'most important' functional area. existing technological entrepreneurships, to nel) to the eight basic functional areas—ac­ (The correlation was direct) Marketing and prevent failure due to common pitfalls counting, administration, engineering/- finance were selected outstandingly as major among new technical firms, and to en­ problem areas, with 'caretakers' emphasiz­ R & D, finance, marketing, personnel/- courage the growth of this potentially impor­ ing R & D/engineering and marketing nearly labour relations, production, and public re­ tant sector of industry—permits translation equally and managers selecting marketing lations—with a breakdown for each of the of its findings t o different economies. three main categories of technological spin­ far above any other function. Further at- off—namely, standard product or service titudinal analysis showed that managers The report first reviews the literature on firms, custom product or service firms, and were more convinced that their decisions in entrepreneurship, emphasizing studies of problem areas would influence the future of R & D or consulting firms. The owner's allo­ technological spin-offs in other regions of the the firm than were caretakers and found that cation of his own time to these areas is then United States, Boston and Palo Alto in entrepreneurs as a group did not regard also tabulated in the same breakdown particular. It then supplies profiles of the format. The use of consultants in the work of availability of information as a serious sample's sixty-nine entrepreneurs and of each area, the budget allocations for each, business problem. their firms. The largest age group for the and the founder's own perceptions of the founders was in the 36-47 bracket (37·7%), The report closes with composite profiles most important' among the areas are also set and the great majority (84·1%) had had four of the caretaker firm, the management- forth. Engineering/research, and develop­ years of college education or more. Over half oriented firm, and the refined technological ment, marketing, and production are found of them perceived the major purpose of the business venture, drawn from intensive field to be the major functional areas for the firm they had founded as being to provide interviews which supplemented the survey sample firms, with the relative budget allo­ them with choice in the kind of work they questionnaire. This work provides strong cations for these three areas varying accord­ did. As to the firms themselves, their indications that the founder's sense of ing to the basic category of the firm. For ex­ average age was eight years. About half pro­ purpose affects the ultimate success of the ample, marketing was the most important duced custom products and services; about technological spin-off. area for standard product and service firms 20% operated research and development or This synopsis is based on the report by consulting businesses and 27·5 produced and for the R & D/consulting category as Patricia L. Braden, Technological Entrepre­ well, but it was third most important for the standard products and services. Of the neurship: the allocation of time and money custom product and service firms. 'product' firms, nearly 60% had begun with in technology-based firms, Michigan a self-developed prototype. The report lists in Business Reports, No. 62, 1977. Price $5.00 The researchers also found in their data some detail the kinds of products offered by ISBN 0-87712-187-7. suggestions that business activity varied with both the standard and custom groups. It both the stage of the firm's growth and the does the same for the kinds of research and profit-orientation of the founder, and the re­ consulting activity of the 'R & D ' group and mainder of this report explores these vari­ assigns three-digit SIC codes for firms in ations—specifically it examines the relation each of the three categories. of managerial style (a manifestation of profit-orientation) to the success or failure of The financial profiles of these three main the firm. categories of firm in the study are also pro­ vided. Major elements of the profiles are: On the basis of their answers to the Sources of (start-up) financing, including question 'What do you consider the primary sources approached without success; purpose of your business?' the report methods of financing (equity, assumption of classifies the founders as either 'caretakers' long- or short-term loans, etc., and combi­ or as 'managers'. The sample divided into 37 nations of these); types of consideration caretakers and 30 managers. The managers accorded requests for start-up financing; and were more heavily distributed in the firms general financial performance of the firms in that provided products (both custom and their early years—total investment in the standard) than in the R & D consulting http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management Research News Emerald Publishing

Technological Entrepreneurship The Allocation of Time and Money in TechnologyBased Firms

Braden, Patricia L.
Management Research News , Volume 1 (4): 1 – Apr 1, 1978
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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0140-9174
DOI
10.1108/eb027716
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Abstract

Technological Entrepreneurship Technological Entrepreneurship: The Allocation of Time and Money in Technology-Based Firms. Patricia L. Braden firms. The managers' firms displayed a This synopsis reports on original research firm, interest paid on outstanding debt, the which was designed and supervised by the much larger average asset base than the firm's income and annual gross sales. author and sponsored jointly by two units of caretakers' ($250,000 vs. $100,000) and a The overall sample shows a typical firm the University of Michigan (Ann Ar­ median sales figure nearly four times as great which (1) produces a custom product or pro­ as that of the caretaker firms (over $1 bor)—the Division of Research of the vides a special service; (2) is five to ten years million vs. $100,000-$250,000). At the Graduate School of Business Administra­ old; (3) has an equity investment under small firm level ($100,000 annual sales or tion and the Industrial Development $250,000 and characteristically low financial Division of the Institute of Science and lower) the managers allocated more of their leverage; (4) has acquired start-up funds Technology. The research focused on the own time to finance than did the caretakers from friends and/or relatives of the founder. amount of time and effort allocated to eight and less of their own time to marketing. In Nearly a quarter of the firms had generated general managers allocated their time more functional areas of management in new tech­ over $1 million in sales during the year prior evenly among functions than did caretakers, nical spin-off firms in Michigan and on the to the study. who showed signs of being crisis-oriented. variation of effort associated with higher The Braden report then examines the levels of success. Although the most sub­ The study also touches on the correlation balance of management effort within the stantive elements of the study concern between the owner's identification of the sample firms. This analysis is first carried Michigan enterprises, the intention of the firm's main recent problem area and his out in terms of the allocation of personnel undertaking—to assist with development of (and of the subcategory of salaried person­ choice of 'most important' functional area. existing technological entrepreneurships, to nel) to the eight basic functional areas—ac­ (The correlation was direct) Marketing and prevent failure due to common pitfalls counting, administration, engineering/- finance were selected outstandingly as major among new technical firms, and to en­ problem areas, with 'caretakers' emphasiz­ R & D, finance, marketing, personnel/- courage the growth of this potentially impor­ ing R & D/engineering and marketing nearly labour relations, production, and public re­ tant sector of industry—permits translation equally and managers selecting marketing lations—with a breakdown for each of the of its findings t o different economies. three main categories of technological spin­ far above any other function. Further at- off—namely, standard product or service titudinal analysis showed that managers The report first reviews the literature on firms, custom product or service firms, and were more convinced that their decisions in entrepreneurship, emphasizing studies of problem areas would influence the future of R & D or consulting firms. The owner's allo­ technological spin-offs in other regions of the the firm than were caretakers and found that cation of his own time to these areas is then United States, Boston and Palo Alto in entrepreneurs as a group did not regard also tabulated in the same breakdown particular. It then supplies profiles of the format. The use of consultants in the work of availability of information as a serious sample's sixty-nine entrepreneurs and of each area, the budget allocations for each, business problem. their firms. The largest age group for the and the founder's own perceptions of the founders was in the 36-47 bracket (37·7%), The report closes with composite profiles most important' among the areas are also set and the great majority (84·1%) had had four of the caretaker firm, the management- forth. Engineering/research, and develop­ years of college education or more. Over half oriented firm, and the refined technological ment, marketing, and production are found of them perceived the major purpose of the business venture, drawn from intensive field to be the major functional areas for the firm they had founded as being to provide interviews which supplemented the survey sample firms, with the relative budget allo­ them with choice in the kind of work they questionnaire. This work provides strong cations for these three areas varying accord­ did. As to the firms themselves, their indications that the founder's sense of ing to the basic category of the firm. For ex­ average age was eight years. About half pro­ purpose affects the ultimate success of the ample, marketing was the most important duced custom products and services; about technological spin-off. area for standard product and service firms 20% operated research and development or This synopsis is based on the report by consulting businesses and 27·5 produced and for the R & D/consulting category as Patricia L. Braden, Technological Entrepre­ well, but it was third most important for the standard products and services. Of the neurship: the allocation of time and money custom product and service firms. 'product' firms, nearly 60% had begun with in technology-based firms, Michigan a self-developed prototype. The report lists in Business Reports, No. 62, 1977. Price $5.00 The researchers also found in their data some detail the kinds of products offered by ISBN 0-87712-187-7. suggestions that business activity varied with both the standard and custom groups. It both the stage of the firm's growth and the does the same for the kinds of research and profit-orientation of the founder, and the re­ consulting activity of the 'R & D ' group and mainder of this report explores these vari­ assigns three-digit SIC codes for firms in ations—specifically it examines the relation each of the three categories. of managerial style (a manifestation of profit-orientation) to the success or failure of The financial profiles of these three main the firm. categories of firm in the study are also pro­ vided. Major elements of the profiles are: On the basis of their answers to the Sources of (start-up) financing, including question 'What do you consider the primary sources approached without success; purpose of your business?' the report methods of financing (equity, assumption of classifies the founders as either 'caretakers' long- or short-term loans, etc., and combi­ or as 'managers'. The sample divided into 37 nations of these); types of consideration caretakers and 30 managers. The managers accorded requests for start-up financing; and were more heavily distributed in the firms general financial performance of the firms in that provided products (both custom and their early years—total investment in the standard) than in the R & D consulting

Journal

Management Research News – Emerald Publishing

Published: Apr 1, 1978

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