Effects of Industry-Startup Collaboration

Collaborating with startups is traditionally best known for reasons of technology transfer. However, nowadays established firms also look at startup collaborations as a strategic venture to become more agile, rapid and innovative, which can be seen as the royal road of collaboration activities. If these ambitious but yet important efforts will be crowned with success, is still unknown in theory & practice. It remains unclear if the interaction with startups has sustaining effects on the established firm and - if so - how  these effects can be managed in order to use startup collaborations more deliberately.

Why collaborating with startups?

By collaborating with startups, established firms (i.e. corporates and small and medium-sized enterprises (SMEs)) try to unlock innovation potential by using entrepreneurs as key collaboration partners in open innovation processes.

Innovating together with startups can be beneficial for established firms: Startups are characterized by entrepreneurial behavior, such as rapidly developing and prototyping promising ideas, organizational agility, learning and experimentation throughout the organization, a proclivity towards risk taking and aspirations for rapid growth, but often face scarcity of resources.

On the other hand, established firms follow a more conservative pattern of routine, business experience, well-functioning networks of customers and suppliers and capital (Weiblen & Chesbrough, 2015; Rigtering & Behrens, 2021). By combining both patterns, established firms can learn to develop and scale up innovative and risky technological ideas (Mercandetti et al., 2017; Usman & Vanhaverbeke, 2017). In addition to that, both partners can collectively launch new products, services and business models in joint licensing processes (Ribeiro-Soriano & Urbano, 2010; Urbano et al., 2019).

Why taking a behavioral perspective?

So far, research about collaboration between established firms and startups predominantly emerges from a technological perspective.

Established firms often have the relevant resources and (technological) capabilities, but firm culture and organizational rigidity inhibit internal innovation. To address this concern, established firms try to insource entrepreneurial behavior of startups, in order to strategically rejuvenate their organizational culture (Klus et al., 2019; Rigtering & Behrens, 2021). The technological perspective does not capture this strategic motive of established firms and thus neglects the behavioral components of the entrepreneurial patterns.

What makes our research relevant?

On the bottom line, startup collaborations might have beneficial as well as negative consequences for established firms.

From an established firm’s view, these wide-ranging consequences emphasize the need for them to understand how to harmonize both the entrepreneurial and the conservative patterns and thus build successful ties with startups. However, research referring to collaborations between startups and established firms is not only scarce about significant success factors, it also lacks meaningful measures indicating the success of a startup collaboration itself (Mocker et al., 2015; Usman & Vanhaverbeke, 2017; Steiber & Alänge, 2020).

Based upon scientific indications and several pre-studies, we propose that the transmission of entrepreneurial behavior between a startup and an established firm constitutes a meaningful and sound measure  for a successful collaboration between a startup and an established firm.

Introductory Literature

  • Klus, M. F., Lohwasser, T. S., Holotiuk, F., & Moormann, J. (2019). Strategic alliances between banks and fintechs for digital innovation: Motives to collaborate and types of interaction. The Journal of Entrepreneurial Finance, 21(1), 1.
  • Mercandetti, F., Larbig, C., Tuozzo, V., & Steiner, T. (2017). Innovation by collaboration between startups and SMEs in Switzerland. Technology Innovation Management Review, 7(12).
  • Mocker, V., Bielli, S., & Haley, C. (2015). Winning togehter: A guide to successful corporate-startup collaborations.
  • Ribeiro-Soriano, D., & Urbano, D. (2010). Employee-organization relationship in collective entrepreneurship: An overview. Journal of Organizational Change Management, 23(4), 349-359.
  • Rigtering, J. C., & Behrens, M. A. (2021). The Effect of Corporate—Start-Up Collaborations on Corporate Entrepreneurship. Review of Managerial Science, 1-28.
  • Steiber, A., & Alänge, S. (2020). Corporate-startup collaboration: effects on large firms' business transformation. European Journal of Innovation Management.
  • Urbano, D., Aparicio, S., & Audretsch, D. (2019). Twenty-five years of research on institutions, entrepreneurship, and economic growth: what has been learned? Small Business Economics, 53(1), 21-49.
  • Usman, M., & Vanhaverbeke, W. (2017). How start-ups successfully organize and manage open innovation with large companies. European Journal of Innovation Management.
  • Weiblen, T., & Chesbrough, H. W. (2015). Engaging with startups to enhance corporate innovation. California Management Review, 57(2), 66-90.