A primary challenge faced by new organizations is that they experience a substantial power imbalance when engaging in exchange relationships—particularly with large established organizations. This study draws on resource dependence theory to explore ways in which new organizations can balance the power-dependence relationship when selling to the government. Consistent with resource dependence theory we find that dependence on the government for sales hinders organizational performance. However, intellectual property, product diversification, and government financial support act as counterbalance mechanisms that lessen the negative effects of dependence on the government for sales and organizational performance.
THE JOURNAL OF SMALL BUSINESS MANAGEMENT (JSBM) AWARD FOR EXCELLENCE IN RESEARCH ON THE TOPIC OF PUBLIC POLICY
Sproul, Curtis R.; Carnes, Andrew M.; Marvel, Matthew R.; and Pozzuto, Amanda
"DOES A RELIANCE ON THE GOVERNMENT FOR SALES HINDER NEW VENTURE PERFORMANCE? A RESOURCE DEPENDENCE PERSPECTIVE,"
Frontiers of Entrepreneurship Research: Vol. 34
, Article 1.
Available at: http://digitalknowledge.babson.edu/fer/vol34/iss11/1