Partnerships between technology-based start-ups and established firms: making them work

As companies face pressure from increased competition, shortening product life cycles and growing product complexity many are finding they need to change the way they develop new technologies, products and services. There has been a trend in many sectors away from a mostly closed to a more open model of innovation as companies realise they can no longer afford to rely solely on their own R&D and need to acquire ideas from others. Within this environment start-ups can be an important source of ideas for larger companies. Technology-based start-ups typically lack the strategic and operational rigidities that can stifle innovation in established firms. On the other hand, start-ups have limited resources and often struggle to access the complementary assets they need to get their ideas to market. Bringing together start-ups and established firms in mutually beneficial partnerships seems an obvious solution. Research shows that making such partnerships work can be problematic. However, there are ways to increase the chances of success. Here we indicate some of the problems that can arise – and some possible ways to avoid them.