- P-ISSN2287-1608
- E-ISSN2287-1616
- KCI
ISSN : 2287-1608
What Ecosystem Factors Impact the Growth of High-Tech Start-ups in India?
Krishna Satyanarayana (Indian Institute of Science)
Abstract
This paper empirically establishes the role played by the ecosystem related parameters in the emergence and growth of high technology start-up clusters in India. It is mainly based on secondary data from six major start-up hubs in India during the period 2005-2013. Our results throw up several interesting findings. First of all, we find that traditional infrastructure related factors or robust macroeconomic situation in general are not the most important drivers. What really seem to matter are the specific start-up ecosystem related factors – such as the Internet penetration, volume of deal flow, availability of VC funding and a pre-existing critical mass of relevant high technology businesses and skill-sets. Above all, our study points out that high economic growth alone will not automatically lead to spillovers in the form of a vibrant start-up ecosystem. Rather it has to be a product of conscious and concerted policy efforts at all levels that directly address the main challenges faced by the early-stage start-ups.
- keywords
- Start-ups, start-up clusters, ecosystem, Bangalore, India
Reference
Aldrich, H. (1980) Asian shopkeepers as a middleman minority: a study of small business in Wandsworth, in Evans, A. and Eversley, D. (eds.), The Inner City: Employment and Industry, London: Heinemann, 389-407.
Aldrich, H.E. (1999) Organizations evolving, First edition, London: Sage Publications.
Andries, P. and Debackere, K. (2007) Adaptation and performance in new businesses: understanding the moderating effects of independence and industry, Small Business Economics, 29(1), 81-99.
Audretsch, D.B. (1991) New-firm survival and the technological regime, Review of Economics and Statistics, 441-450.
Audretsch, D.B. (1995) Innovation, growth and survival, International Journal of Industrial Organization, 13(4), 441-457.
Audretsch, D.B. and Lehmann, E.E. (2004) Financing high-tech growth: The role of banks and venture capitalists, Schmalenbach Business Review, 56, 340-357.
Audretsch, D.B., Keilbach, M.C. and Lehmann, E.E. (2006) Entrepreneurship and Economic Growth, Oxford: Oxford University Press.
Bain and Company, India Private Equity Report 2011; 2012; 2013.
Bala Subrahmanya, M.H. (2014) New generation start-ups in India: Will they be able to make a difference? Unpublished paper prepared for the One-day workshop, How to promote start-ups? Indian Institute of Science, Bangalore.
Barringer, B.R., Jones, F.F. and Neubaum, D.O. (2005) A quantitative content analysis of the characteristics of rapid-growth firms and their founders, Journal of Business Venturing, 20, 663-687.
Baum, J.A.C. (1996) Liabilities of Newness, Adolescence and Obsolescence: Exploring Age Dependence in the Dissolution of Organizational Relationships and Organi-zations, Proceedings of Annual Conference of the Administrative Sciences Association of Canada.
Baumol, W.J. (2002) Entrepreneurship, innovation and economic growth: the David - Goliath symbiosis, Journal of Entrepreneurial Finance and Business Ventures, 7(2), 1-10.
Beaudry, C. and Swann, P. (2001) Growth in industrial clusters: a bird’s eye view of the United Kingdom, Discussion paper, Stanford Institute for Economic Policy Research, 00-38.
Birch, D.L. (1979) The Job Generation Process, unpublished report by the Massachusetts Institute of Technology Program on Neighborhood and Regional Change for the Economic Development Administration, U.S. Department of Commerce, Washington, D.C.
Bhide, A. (2000) The Origin and Evolution of New Businesses, First edition, Oxford Univesity Press.
Brockhaus, R.H. (1980) Risk taking propensity of entrepreneurs, Academy of Management Journal, 23(3), 509-520.
Brockhaus, R.H. (1982) The psychology of the entrepreneur, in Kent, C.A., Sexton, D.L. and Vesper, K.H., Encyclopedia of Entrepreneurship, Englewood Cliffs, NJ: Prentice-Hall, 39-56.
Bruce, D. (2002) Taxes and entrepreneurial endurance: Evidence from the self-employed, National Tax Journal, 55(1), 5-24.
Buttner, E.H. and Rosen, B. (1989) Funding new business ventures: are decision makers biased against women entrepreneurs? Journal of Business Venturing, 4, 249-261.
Center for Economic Studies and Kauffman Foundation Report (2012) In Mutikani, L. and Von Ahn, L., U.S. business startups rate at record low, Reuters Online, http://www.reuters.com/article/2012/05/02/us-usa-economy-businesses-idUSBRE84113G20120502.
Certo, S.T. (2003) Influencing initial public offering investors with prestige: signaling with board structures, Academy of Management Review, 28(3), 432-446.
Churchill, N.C. and Lewis, V.L. (1983) The five stages of small business growth, Harvard Business Review, 61, 30-51.
Cooper, A. and Folta, T. (2000) Entrepreneurship and High-Technology Clusters, Blackwell Handbook of Entrepreneurship, 348-367.
De Soto, H.D. (2000) The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. New York: Basic Books.
Dean, T.J. and Mayer, G.D. (2006) New Firm, Startups, 7, 112.
Desai, N. (2003) Venture Capital at Cross Roads, report by Private Equity Practice Group, www.nishithdesai.com.
Djankov, S. and McLiesh, C. (2005) Doing Business in 2005: Removing Obstacles to Growth, The World Bank and the International Finance Corporation, Oxford: Oxford University Press.
Dumais, G., Ellison, G. and Glaeser, E. (2002) Geographic concentration as a dynamic process, Review of Economics and Statistics, 84(2), 193-204.
Dunne, T., Robert, M.J. and Samuelson, L. (1989) The Growth and failure of U.S. manufacturing plants, Quarterly Journal of Economics, 104, 671-698.
Ensley, M.D., Pearson, A. and Pearce, C.L. (2003) Top management team process, shared leadership, and new venture performance: a theoretical model and research agenda, Human Resource Management Review, 13, 329-346.
Executive Committee, Commission on Strategic Development, Hong Kong (2007) Development of high technology industries in Hong Kong, Paper Ref: CSD/EC/6/2007.
Folta, T.B., Cooper, A.C. and Baik, Y.S. (2006) Geographic cluster size and firm performance, Journal of Business Venturing, 21, 217-242.
Gartner, W.B. (1985) A conceptual framework for describing the phenomenon of new venture creation, Academy of Management Review, 696-706.
Geroski, P.A. (1995) What do we know about entry? International Journal of Industrial Organization, 13, 421-440.
Gompers, P.A. and Lerner, J. (1999) What drives venture capital fundraising? Report No. w6906, National Bureau of Economic Research.
Grail Research (2012) The Indian Startup Ecosystem: On the Cusp? http://www. grailresearch.com/pdf/ContenPodsPdf/Indian-Start-up-Ecosystem-Summary.pdf.
Greenberger, D.B. and Sexton, D.L. (1988) An interactive model for new venture creation, Journal of Small Business Management, 26(3), 107-118.
Greiner, L. (1972) Evolution and revolution as organizations grow, Harvard Business Review, July-August, 37-46.
Gries, T. and Naude, W. (2008) Entrepreneurship and regional economic growth: towards a general theory of start-ups, UNU-WIDER Research, 70.
Gurley-Calvez, T. and Bruce, D. (2008) Do tax cuts promote entrepreneurial longevity? National Tax Journal, 61(2), 225-250.
Hanks, S.H., Watson, C.J., Jansen, E. and Chandler, G.N. (1993) Tightening the life-cycle construct: a taxonomical study of growth stage configurations in high technology organizations, Entrepreneurship Theory and Practice, Winter, 5-29.
Higgins, M.C. and Gulati, R. (2006) Stacking the deck: the effects of top management backgrounds on investor decisions, Strategic Management Journal, 27, 1-25.
Highfield, R. and Smiley, R. (1987) New business start-ups and economic activity: an empirical investigation, International Journal of Industrial Organization, 5(1), 51-66.
Hiroyuki, O. and Nobuo, K. (2006) The impact of regional factors on the start-up ratio in Japan, Journal of Small Business Management, 44(2), 310.
Jaffe, A.B., Trajtenberg, M. and Henderson, R. (1993) Geographic localization of knowledge spillovers as evidenced by patent citations, Quarterly Journal of Economics, 63(3), 577-598.
Johnson, S., McMillan, J. and Woodruff, C. (2000) Entrepreneurs and the ordering of institutional reform: Poland, Slovakia, Romania, Russia and Ukraine compared, Economics of Transition, 81(1), 1-36.
Kim, P.H., Aldrich, H.E. and Keister, L.A. (2006) Access (not) denied: the impact of financial, human and cultural capital on entrepreneurial entry in the United States, Small Business Economics, 27, 5-22.
Kirchhoff, B.A. and Spencer, A. (2008) New high tech firm contributions to economic growth, Proceedings of International Council for Small Business World Conference, Halifax, Nova Scotia, Canada.
Kline, P. (2014) An Easy Guide for Factor Analysis, Chicago: Routledge.
Kolvereid, L., Shane, S. and Westhead, P. (1993) Is it equally difficult for female entrepreneurs to start businesses in all countries? Journal of Small Business Management, 31(4), 42-51.
Lingelbach, D., De La Vina, L. and Asel, P. (2005) What’s Distinctive about Growth-Oriented Entrepreneurship in Developing Countries? Center for Global Entrep-reneurship Working Paper, San Antonio, Texas, University of Texas San Antonio, College of Business.
Maital, S. et al. (2008) Toward a grounded theory of effective business incubation, Vikalpa: Journal for Decision Makers, 33, 1-13.
Matthews, C.H. and Moser, S.B. (1995) The impact of family background and gender on interest in small firm ownership: a longitudinal study, Proceedings of the ICSB 40th World Conference, Sydney, 18-21 June, 245-262.
Mazzarol, T., Volery, T., Doss, N. and Thein, V. (1999) Factors influencing small business start-ups: a comparison with previous research, International Journal of Entrepreneurial Behaviour & Research, 5(2), 48-63.
McClelland, D.C. (1961) The Achieving Society, Princeton, NJ: Van Nostrand.
McMillan, J. and Woodruff, C. (2002) The central role of entrepreneurs in transition economies, Journal of Economic Perspectives, 16(3), 153-170.
Microsoft India Accelerator Report (2012) India Tech Startup Starts and Closure, accessible at:http://www.slideshare.net/mukundmohan/indian-startups-starts-and-closure-research
Millán, J.M., Congregado, E. and Román, C. (2012) Determinants of self-employment survival in Europe, Small Business Economics, 38(2), 231-258.
Ministry of Micro, Small and Medium Enterprises (2013) Recommendations of the Inter-Ministerial Committee for Accelerating Manufacturing in Micro, Small and Medium Enterprises Sector, Government of India, New Delhi.
Paulraj, A.S. (2012) Does India need a high technology industry? The Hindu: Business Line, November 21, 2012.
Pavia, T.M. (1990) Product growth strategies in young high-technology firms, Journal of Product Innovation Management, 7, 297-309.
Pe’er, A. and Vertinsky, I. (2006) The determinants of survival of de novo entrants in clusters and dispersal, Working paper, Darthmouth College, Tuck School of Business.
Porter, M.E. (1998) Competitive advantage, creating and sustaining superior performance, Free press.
Pullen, J.P. (2013) Emerging tech: 9 international start-up hubs to watch, Entrepreneur, May 7, Business Daily, USA.
Reynolds, P.D. (1993) The role of entrepreneurship in economic systems: developed market and post-socialist economies. Paper presented at the Second Freiberg Symposium on Economics, Freiberg, Germany, 9-11 September.
Reynolds, P.D. and Storey, D.J. (1993) Local and regional characteristics affecting small business formation: a cross-national comparison, Paris: OECD.
Ronstadt, R. (1988) The corridor principle, Journal of Small Business Venturing, 3(1), 31-40.
Rosenthal, S.S. and Strange, W.C. (2005) The geography of entrepreneurship in the New York metropolitan area, Federal Reserve Bank of New York Economic Policy Review, 11, 29-53.
Sandberg, W.R. (1986) New Venture Performance: The Role of Strategy and Industry Strurture, Lexington, MA: Lexington Books.
Scott, M. and Bruce, R. (1987) Five stages of growth in small business, Long Range Planning, 20, 45-52.
Scott, M.G. and Twomey, D.F. (1988) The long-term supply of entrepreneurs: students’ career aspirations in relation to entrepreneurship, Journal of Small Business Management, 26(4), 5-13.
Schere, J. (1982) Tolerance of ambiguity as a discriminating variable between entrepreneurs and managers, Proceeding of the Academy of Management Conference, New York, 404-408.
SEBI (2014) Securities and Exchange Board of India, Mumbai, http://www.sebi.gov. in/ investor/venturecap.html.
Start-up Genome (2012) Start-up Ecosystem Report 2012, USA.
Stinchcombe, A.L. (1965) Social structure and organizations, in James, G. (eds.), Handbook of Organizations, 142-193, Chicago: Rand McNally.
Storey, D.J. (1982) Entrepreneurship and the New Firm, Beckenham, Kent.
Stough, R.R., Haynes, K.E. and Campbell, H.S. (1998) Small business entrep-reneurship in the high technology services sector: An assessment for the edge cities of the U.S. national capital region, Small Business Economics, 10, 61-74.
Vesper, K.H. (1980) New Venture Strategies, Englewood Cliffs, NJ: Prentice Hall.
Venture Center (2014) Database of business incubators and science and technology parks across India, http://www.venturecenter.co.in/incubatordb/index.html.
Wang, S. (2006) Determinants of new firm formation in Taiwan, Small Business Economics, 27(4-5), 313-323.
Weber, M. (1930) The Protestant Ethic and the Spirit of Capitalism (1904) translated by Parsons, T.S., New York, NY.
Wennberg, K. and Lindqvist, G. (2010) The effect of clusters on survival and performance of new firms, Small Business Economics, 34, 221-241.
Wiklund, J., Patzelt, H. and Shepherd, D.A. (2009) Building an integrative model of small business growth, Small Business Economics, 32, 351-374.
- Downloaded
- Viewed
- 0KCI Citations
- 0WOS Citations