Heather A. Haveman, Geraldine A. Wu Doctoral Dissertation Improvement Grant Doctoral Dissertation Research: The Interdependence of Organizational Knowledge and Financing - Three Papers on Technological Innovation, Learning, and Restructuring
To raise the large amounts of capital required for continued growth, R&D-intensive start-ups must often turn to IPOs or takeovers by established firms. Yet, the restructuring events that are critical to continued innovation may subsequently shape the very innovative activities that they are funding. These transactions delineate distinct stages in the evolution of high-tech ventures and therefore have long-term effects, not only on organizational structures, but also on organizational processes, most notably innovation. This dissertation will explore this highly complex and recursive relationship between financing and innovation: flows of funds to firms that are intended to support high-tech R&D shape subsequent innovation efforts. The research will consist of three papers that develop and test theories to probe interdependencies among organizational innovation, learning, and corporate restructuring at different stages - pre-liquidity event and post-IPO - in the life cycles of high-tech ventures. Specifically, the studies address the following research questions: 1) How and when do privately-held ventures' innovative capabilities determine their IPO versus acquisition rates? Do environmental conditions and firms' key relational resources moderate these effects? 2) What are the implications of going public for firms' innovative activities? 3) Given that a firm has gone public, does the impact of going public on firm innovation depend on governance-related contingencies, in particular ownership structures? These questions will be examined by tracking firms in the U.S. medical device industry over the 30-year period following the passage of the Medical Device Amendments of 1976, which initiated major changes in the way that new devices were brought to market. To test the hypotheses, quantitative longitudinal data on medical device firms, patents, products, FDA filings, and financial transactions will be collected, and event-history, event-count, and panel-data models will be estimated. Information on medical device ventures will be compiled from several company directories, including the CorpTech Directory of Technology Companies, the Medical & Healthcare Marketplace Guide, the Health Devices Sourcebook, and the Medical Device Register. Together, the three papers will enhance understanding of how financial markets and knowledge networks intersect, thereby informing sociological and organizations research on organizational learning, technological innovation, entrepreneurship, and organizational change. The research contributes to sociological explanations of the structures and processes associated with organizational innovation and complements work on the determinants and consequences of core organizational change by providing a richer picture of how innovation and search behavior vary as firms evolve. The papers also inform sociological studies of financial market influence on firm processes and behaviors. Broader impacts of the research include its relevance to policymakers as an in-depth analysis of organizations that produce important inventions, and its potential to inform the management practices and investment decisions of entrepreneurs and other practitioners in organizations considering restructuring and growth options. Results will be disseminated to broader audiences via interdisciplinary conferences and journals.
