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Securing Their Future? The Role of Markets for Technology, Organization Capabilities and Opportunity Costs on business Model and Performance in the Information Security Market

journal contribution
posted on 01.07.2008, 00:00 by Anand Nandkumar
My dissertation makes use of a unique dataset of the Information Security Market (ISM) to advance our understanding of the phenomenon of entrepreneurship. Its purpose is threefold: First, I examine how the presence of a market for technology (MFT) conditions the choice of business model of firms and post entry performance of firms. I also examine the industry effects of MFT, by exploring the influence of MFT on competition. Second, I explore how opportunity costs of entrepreneurs influence exit as well as success of the entrepreneurial venture started by entrepreneurs. Finally, I examine how different types of firm competencies condition the choice of business model and survival of firms. Results confirm the independent and synergistic role of marketing, technology and scale in conditioning the choice of business model and survival of firms in the ISM. Incumbents appear to be advantaged relative to startups however the exact nature of this advantage cannot be conclusively answered. Interestingly, I also find that startups founded by founders from an unrelated industry tend to outperform firms founded by entrepreneurs from ICT industry and spinoffs. These results highlight the nature of the industry and especially the absence of manufacturing in the ISM. I also find that MFT increases specialization, by allowing even firms without a self generated technology to enter and survive in the ISM. MFT, however also intensifies price competition and hastens firm exits from the ISM, especially by larger firms. MFT also increases the relevance of marketing assets in conditioning performance in the ISM. Finally, in tune with the current literature, I find evidence of entrepreneurs with higher ability starting firms on a larger scale relative to low ability entrepreneurs. Interestingly, I also find that high ability entrepreneurs or, entrepreneurs with higher opportunity costs, are not only more likely to exit the ISM relative to low ability entrepreneurs but are also more likely to succeed in the ISM.




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