Resource-Based Capability Trajectories of Early-Stage Ventures

It is widely acknowledged that resources and capabilities are critical for a new venture’s competitiveness and that early stage ventures face severe challenges to develop competitive capabilities. We conduct the first large-scale longitudinal empirical examination of this important phenomenon. We track the resource / capabilities advantages / disadvantages, measured across nine domains, as perceived by the founders of 495 Nascent Ventures and Young Firms over three annual waves. We use a novel method, latent class Markov models, to simultaneously identify four clusters of firms with similar resource configurations and track changes in these configurations over time. We find ventures with founders that engage in bricolage behaviours and high technology orientated firms exhibit the most positive resource development trajectories. Entrepreneurial experience and collaboration appear positive for Nascent Ventures, but not critical for operational Young Firms.