Abstract

The knowledge based view of the firm states that knowledge is the foundation for the rent earning potential of all resources. In the context of start-ups, several authors mention the existence of a knowledge gap, which can be filled by using external sources of knowledge. In this study, we consider two important sources of external knowledge: (1) external advisory services (EAS) such as lawyers and consultants and (2) outside members in the board of directors of the firm (OBM). We argue that the impact of external advisory use on start-up growth will dominate the impact of the presence of OBM due to the higher accuracy and timeliness of the EAS. In addition, we introduce two contingencies, rooted in organizational learning theory: absorptive capacity (AC) and congenital learning (CL). Higher AC allows the firm to use external knowledge more effectively. As a result, AC will increase the impact of EAS on new firm growth. CL is the firm’s stock of knowledge at founding. We expect that the relationship between EAS and firm growth will be stronger when the level of CL is low.

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