Elsevier

Research Policy

Volume 26, Issues 7–8, April 1998, Pages 883-895
Research Policy

Combining technology and corporate strategy in small high tech firms

https://doi.org/10.1016/S0048-7333(97)00064-4Get rights and content

Abstract

The gap between technology management and business planning in the small high tech firm has been variously described as an opportunity area, a source of strategic weakness, and a root cause of competitive disadvantage. Similarly, the link between technology strategy and corporate strategy has been viewed as a natural concomitant of growing maturity in the small high tech firm, an integral and necessary evolution in corporate philosophy, and a positive task for an increasingly professional management team. The purpose of this paper is to report on an empirical research project into these issues. A survey of 223 small high tech firms located on science parks was carried out, though the analysis presented here concentrates on the 150 or so of the sample that carried out in-house R&D work. The discussion indicates a strong evolutionary effect within which firms demonstrate a high degree of informality and flexibility in early stages of the firm's life in terms of both technology strategy and overall business strategy. As the firm develops, formality increases significantly and the technology-push imperative gives way to a powerful market orientation. The results give empirical support to a number of concepts that have been developed in the literature in small high tech firms, and also raise a question about the impact of multinationality on the development of such firms.

Introduction

Most business strategy textbooks (for example: Thomson and Strickland, 1993) note the importance of technology in the process of corporate strategy formulation, but fewer (for example: McNamee, 1992) offer specific guidance for managers. Similarly, many texts that focus on technology-intensive firms (for example Håkanson and Zander, 1986) suggest that technology strategy should be formulated in parallel with—and integrated into—corporate strategy, but fewer (for example: Taggart, 1993) analyse the benefits of doing so.

Markets and industries in every part of the world are subject to many change agents, none so all-pervasive as technology and, for a rapidly increasing number of firms, it is one of the principal drivers of competitiveness. As organisations respond to global competition there is growing recognition of the pivotal role of technology in determining market success (Zahra and Covin, 1993). This makes active management of technology a critical activity for high tech firms in a wide range of industries, and perhaps particularly so for smaller firms. Small high tech firms are often perceived as an important source of innovation during the early stages of new, emerging technologies (Abernathy and Utterback, 1978; Utterback and Suarez, 1993). Furthermore, they are viewed as representing a powerful medium for the creation of new jobs, for regional economic regeneration, and for enhancing national rates of technological innovation and international competitiveness (Rothwell, 1984; Pavitt, 1990; Oakey, 1991; Westhead and Storey, 1994; Jones-Evans and Westhead, 1996). Despite this, very little detailed study has been undertaken into strategic management practice in small high tech firms and, more specifically, there is a dearth of detailed empirical research that investigates the technology–strategy link in such companies (Dodgson and Rothwell, 1990, Dodgson and Rothwell, 1991).

The purpose of this paper, then, is to examine the process of technology strategy formulation in small high tech firms and to evaluate the extent to which this is linked with, and integrated into, overall business planning.

Section snippets

Strategic management of technology

During the 1970s, technology was considered only peripherally in relation to product, process and system development within businesses (Meyer and Roberts, 1988). Technology management was conventionally perceived as a tactical issue and rarely viewed as one of strategic significance (Adler et al., 1989). Over the last fifteen years however, technology and technological considerations have become recognised as critical strategic factors and it is now generally accepted that technology is a key

Integrating technology and corporate strategy

It is widely accepted that significant benefits can be gained by the firm in integrating technology strategy, and more specifically the R&D component of that strategy, into overall corporate strategy (Fusfeld, 1989; Erickson et al., 1990; Green, 1995). Numerous authors vigorously support the notion that strong links must be established between R&D activity and other functional areas in the strategy formulation process (Rothwell, 1977; Kantrow, 1980; Liberatore and Titus, 1983; Petroni, 1983;

The context of small high tech firms

A major criticism of much of the literature on technology strategy is that it often neglects the context within which technology strategies are generated, chosen and implemented. Some writers have argued forcefully that formal strategic management procedures are inappropriate for small firms which have neither the management or financial resources to indulge in elaborate strategic management techniques, and for companies operating within the turbulent environment of high technology industries

Organisational evolution: from technology to market orientation

Research evidence suggests that small high tech firms must adapt organisationally and philosophically as the business grows, as core technologies mature and competition within their chosen industry intensifies (Shanklin and Ryans, 1984; Berry, 1996). Within a few years of their foundation, technology-based firms must undergo a transformation from a management philosophy of merely identifying profitable commercial markets for the company's R&D output to one that is market-driven with far tighter

Research methodology

Based upon previous studies (Stanworth and Curran, 1976; Monck et al., 1988; Oakey et al., 1988), the following working definition of a small high tech firm was developed and employed throughout this research.

1. The firm has an annual turnover of less than £50 m and fewer than 250 employees.

2. The firm is not a subsidiary of an established company; ownership is less than 25% by one or more companies not falling within the above two parameters except where investment is provided by public

Formulation of technology strategy

Twenty-eight percent of firms considered business planning to be of no importance or of limited importance to future success of the business; 48% regarded business planning as either very important or essential, while 24% believed it was `important'. Three-fifths of firms prepared a business plan every year and the most common reason given for preparation of the business plan was that of internal control purposes. Nine out of ten of firms set long term objectives for the business; however, only

Discussion and conclusions

Four research objectives were defined earlier, the first being descriptive in nature and the remainder analytical. In relation to the first objective, about a quarter of the firms in the sample demonstrated an informal approach to planning in general, and about half were similarly informal about technology planning. At the other end of the scale, a substantial proportion of companies put more emphasis on planning, and implemented their procedures in a manner that reflected both formal and

Dr. Berry is Lecturer in Strategic Marketing within the Strathclyde International Business Unit at the University of Strathclyde. Her research interests focus on technology strategy, particularly within small and medium size firms. Dr. Taggart is Senior Lecturer in International Business Strategy within the Strathclyde International Business Unit at the University of Strathclyde. His research interests focus on technology strategy and strategy evolution within multinational subsidiaries.

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    Dr. Berry is Lecturer in Strategic Marketing within the Strathclyde International Business Unit at the University of Strathclyde. Her research interests focus on technology strategy, particularly within small and medium size firms. Dr. Taggart is Senior Lecturer in International Business Strategy within the Strathclyde International Business Unit at the University of Strathclyde. His research interests focus on technology strategy and strategy evolution within multinational subsidiaries.

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