Centre for Technology Management

Problem-Solving and Competence Creation in New Firms

Hugo, O. and Garnsey, E.

Centre for Technology Management, Institute for Manufacturing, Engineering Department, University of Cambridge, UK

Abstract

This paper aims to identify how entrepreneurial responses to �barriers' can provide opportunities for new firms. The poor predictive record of studies analyzing favourable initial factors as determinants of new firm growth reflects entrepreneurial responses to problems of growth, as illustrated by three case companies which were able to overcome adverse initial conditions despite the absence of �success attributes'. They did so by finding alternative opportunities and by economy, resource leverage and resource creation, aided by strategic relationships with other players. Spurred by the problems they encounter, entrepreneurial firms make business conjectures and engage in innovative activities, their business models evolving through trial and error. Creative responses to unexpected developments by entrepreneurial makers have implications for research methodology and business support.