Abstract

Over the past few decades, technology-based firms have emerged as a key source of innovation and entrepreneurship. These firms differ from their established counterparts in that they are often resource constrained. For example, they may lack vital complementary assets such as manufacturing facilities and distribution channels. Moreover, they may also lack the knowledge and experience about the market, customers and other external stakeholders. These limitations seriously impede these firms’ ability to commercialize new technologies successfully (Shepherd et al., 2000).

Meanwhile, the extant literature advocates the necessity for these firms to form cooperative relationships especially with their established counterparts to overcome their limitations (Powell et al., 1996; George et al., 2001). One common theme emerges from this literature is that it focuses on the internal determinants of cooperative strategies and mostly ignores the external ones. In this paper, I intend to fill this important gap by examining how competition influences the choice of level of cooperative strategies of technology-based firms. To understand the phenomenon more fully, I ask: (a) Does increased competition induce technology-based firms to choose collaborative strategies? (b) How do entry timing and firm-specific attributes shape this choice? (c) Given that a focal technology-based firm chooses collaborative strategies under competitive pressure, what are the performance implications of such strategies?

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