Rialp-Criado et al (2002) noted several key driving forces behind the emergence of global start-ups as well as their age, industry affiliation, export behaviour and performance, geographic distribution, (rise in) number and size. In addition, international operations from the start-up of the business have been seen to be important. General consensus has provided that the underlying notion and theoretical definition of the global start-up phenomenon perceives them as young entrepreneurial firms engaged in international
business from inception (Rialp-Criado et al, 2002). On the one hand, researchers have considered a six-year period as the standard in measuring international operations from the start-up of the business (Oviatt and McDougall, 1997). On the other hand, academics have selected other criteria to empirically define the global start-ups being analysed. Rennie (1993) has reported that firms began exporting two years after foundation on average and realised seventy-six per cent of their total sales by exporting. Other authors have defined this according to foreign sales of twenty-five per cent or more after starting exporting activities and within three years of birth (Knight & Cavusgil, 1996; Madsen et al, 2000; Servais & Rasmussen, 2000).
By describing, understanding and interpreting the reasons behind the emergence of global start-ups it is possible to gain insight into their needs for business support provision. Interestingly, according to Rialp-Criado et al (2002), much of the present literature about global start-ups has been assumed to be
concerned with high tech businesses, considering the globalisation aspects present in sectors within which these firms compete (Bell, 1995; Coviello & Munro, 1995; Roberts & Senturia, 2000; McDougall & Oviatt, 1996; Burgel & Murray, 2000, Autio & Sapienza, 2000; Autio et al, 2000; Zahira et al, 2000).
Characteristics of Global Start-ups
According to Rialp-Criado et al (2002), the top ten characteristics considered as critical success factors (CSFs) for global start-ups (not in rank order) are:
“managerial global vision from inception
high degree of previous international experience on behalf of managers
management commitment
strong use of personal and business networks (networking)
market knowledge and market commitment
unique intangible assets based on knowledge management
high value creation through product differentiation, leading edge technology products,
technological innovativeness (usually associated with a greater use of IT), and quality leadership
niche focussed, proactive international strategy in geographically spread lead markets around the World from the very beginning
narrowly defined customer groups with strong customer orientation and close customer
relationships
flexibility to adapt to rapidly changing external conditions and circumstances” (Rialp-Criado et al, 2002, pp. 25-26).
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Further to this, Rialp-Criado et al (2002) from their research into twenty seven of the most important studies in the decade 1993-2002, which consider global start-ups amongst other forms of these types of businesses, say that having identified, examined and critically assessed these studies they have been able to formulate an adequate observation of the state of the art of this important research area within the field of International Entrepreneurship (IE).
According to Wakkee et al (2003), global start-ups are described in the literature as perfect examples of entrepreneurial ventures and therefore need to be investigated from an entrepreneurial perspective. They go on to say that, the concept of global start-up was first mentioned in a paper by Mamis (1989). At about the same time, Ray (1989) undertook four cases for which the term global start-up was used. Following this, the term global start-up was defined by Oviatt and McDougall (1994) “as one that seeks to derive significant competitive advantage from extensive co-ordination along multiple organisational activities, the location of which is geographically unlimited” (pp. 59-60). Wakkee et al (2003) add that, these firms do not only respond to global market conditions, they also act to acquire resources and sell wherever in the World there is the largest value.
Since Oviatt and McDougall (1994, 1995) the term global start-up has been little used. A number of
authors, including Harveston (2000), Madsen and Servais (1997) and Saarenketo (2002), have also
referred to global start-ups. More recently Rasmussen and Madsen (2002) have suggested that they are the only type of international new venture. Wakkee et al (2003) have said that “a global start-up is the most radical manifestation of the international new venture because it derives significant competitive advantage from extensive co-ordination along multiple organisational activities, the location of which is
geographically unlimited. Such firms not only respond to globalising market conditions but they also proactively pursue opportunities to acquire resources and sell outputs, wherever in the world they have the greatest value” (pp. 6-7). According to Wakkee et al (2003), from their discussion of the literature on the definition of a global start-up, five relevant characteristics are apparent, and these are:
” (1) the diversity or scope of the international activities
(2) the company age
(3) the timing of international activities (time to entry)
(4) the global diversity of the international activities
(5) the purpose of the international activities (strategic choice)” (Wakkee et al, 2003, p. 13).
In fact, they say that the nature of the opportunity differences global start-ups from other types of start-ups since the opportunity is a global one. From this Wakkee et al (2003) define a global start-up as:
“A new venture that from its inception ("opportunity recognition") seeks to pursue opportunities wherever they arise (i.e. global or in an unlimited number of countries around the world), it co-ordinates multiple activities in the value chain through the interaction with network actors around the World. The
entrepreneur(ial team) leading the firm is internationally experienced and skilled.” (Wakkee et al, 2003, p. 14).
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They go on to say that global start-ups are characterised by high levels of entrepreneurial orientation (EO) although originally developed by Lumpkin and Dess (1996) and Lumpkin (1998) for established firms
when considered for global start-ups they exhibit high levels of EO. In these terms Wakkee et al (2003), bring together the descriptions of global start-ups and, describe them as “an entrepreneurial firm that literally from its inception is involved in a variety of international activities around the World” (Wakkee et al, 2003, p. 28).
The case studies selected in this chapter are spin-offs, from a “new” university, which are believed to have global potential and exhibit differing states of technological innovativeness. Those that have been selected are university spin-offs operating in the global market or with a global potential. Founders, closely involved with the spin-offs from establishment until now, have been interviewed. No restrictions have been placed with regard to the spin-off age and industry. Although, it is the case that spin-offs running for a number of years will provide more valuable information about their development than those only
recently founded. For spin-offs in existence for many years it may be difficult to find a founder who has been involved with the business since the original idea. It might also be more difficult for these people to remember the specific problems encountered in the early stages of the development of the spin-off.
Spinout managers identified the interesting spin-off cases and provided contact names for interviews.
They also approached the companies in the first instance to gain their support. The stages of development of the case study companies have also been measured.
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Global Start-ups: Case Studies
Described below are the six global start-up case studies, which were investigated, and these reveal different characteristics and aspects for business development. Perhaps the main limitation is that most of the companies are in the early stage of business development, but it is envisaged that this work will be developed into a longitudinal study which will show interesting evolutionary dynamics in future years.
Due to the sensitive nature and stage of their development all the companies have been referred to
anonymously.
Consultancy Services
The Consultancy Services (CS) company, founded in January 2004 as a University spinout, commenced
trading in January 2005 to assist organisations access European Union (EU) funding in order to implement specific projects in accordance with regulations accompanying the use of funds. In particular the Internet has been used to interact with organisations who, as the customers, need to access EU funds. This has been taken into account in the company’s overall marketing strategy and e-business strategy. Services involve a range of training courses that cover all aspects of European Union (EU) funded projects,
including State Aid Rules and Public Procurement Directive. CS has a team of Prince 2 practitioners and freelance consultants. Table 7.1 summarises the profile and background of the company.
Profile and Background - Consultancy Services
Brief overview of the firm’s activities, its mission and focus
Industry
European Project Management
Technology
Project Management software
Product/service
Training and consultancy
Market and targeted customers
Wales, Romania, Poland, Hungary, Lithuania,
Bulgaria and other European countries
Company’s current mission and focus
To develop the company at a European level
over the next three years.
Table 7.1: Consultancy Services
The company has grown on an incremental basis and this followed a long period of time to receive
approval with the University. The construction of the Web site, which was essential to the operation of the company, took six months and this was achieved on 1st March 2005. The company has won a number of
contracts and this has therefore not been an issue. It has also been important to have clients returning and to draw on their expertise. There are six current clients including public sector and voluntary organisations.
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Energy Management Systems
Energy Management Systems (EMS) was launched in January 2005 as a spinout company. The focus of
the company is to reduce utility costs and to provide customised online utility information regarding these costs and to ensure that they remain low. The company works with customers to provide a full
energy/utility service ranging from fuel purchasing, meter installation, advanced monitoring and targeting to project engineering and information technology (IT) solutions. In its early stages the company received public support through the Spinout programme and more recent developments have been resourced by the founders. In addition to IT and software developments, EMS undertakes remote analysis of customers’
consumption patterns and works closely with clients to achieve reduced costs. The company aims to be a professional service provider by establishing trust through building personal relationships with customers over the Internet. This has been included in the firm’s overall marketing and e-business strategy. Through this trust it enables EMS to work with customers, employing the most appropriate technology to gain outstanding results. The products and services provided include metering hardware and connectivity; IT
support, hosting, VDN and networking; installation of metering hardware and network cabling;
installation of gas, water and steam meters; Web design, Web development and consultancy. Table 7.2
summarises the profile and background of the company.
Profile and Background - Energy Management Systems
Brief overview of the firm’s activities, its mission and focus
Industry
Energy
Technology
Energy management technology
Product/service
.Net Web management system
Market and targeted customers
Public, private and leisure organisations
Company’s current mission and focus
To maintain and consolidate company
activities over the next five years.
Table 7.2: Energy Management Systems
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Literary Book Publishing
Literary Book Publishing (LBP) was launched, and registered, as a limited company in May 2001 as a
spinout company from the University with public support through the Spinout programme. The company
publishes short stories by authors in a small book format and provides retailing through coffee shops, tearooms, restaurants and hotels. The books are being marketed, over the Internet, to customers in the United Kingdom (UK), United States (US) initially and the English speaking world due to the co-founders' business partner being American. This role of the Internet has been included in the company’s overall marketing and e-business strategy. Other markets and languages will be considered later. There is a three-year business plan targeting sales in the UK and USA for the first three years. The spin off is linked to the University since both of the co-founders are graduates of the English Department Centre for Creative Writing. This provides a link with academics and a network of authors. The co-founders are MPhil students from the University. Table 7.3 summarises the profile and background of the company.
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Profile and Background - Literary Book Publishing
Brief overview of the firm’s activities, its mission and focus
Industry