Three Key Findings for Technology Ventures to obtain Resources in a resource-poor Context

It is no secret that technology and startups play an important role in meeting sustainability goals. For example, most African countries’ populations keep growing while losing ever more medical professionals to migration. Startups developing novel medical technologies, like faster, simpler, and portable diagnostics tools, can help to remedy this issue. However, these situations also represent a conundrum for entrepreneurs and scholars alike: How can sophisticated technology ventures reconcile their high resource needs with the low resource availability in their immediate environments? Indeed, many low-income countries commonly lack the basic resource infrastructure that high-tech startups rely on and take for granted in the developed world: Without venture capital, regulatory frameworks, accessible talent, and industry networks—how should startups in less privileged countries pursue their worthy missions?

In a recently published article in the Special Issue on Entrepreneurial Resourcefulness of the Journal of Business Venturing, Lina Reypens (TUM School of Management), Prof. Sophie Bacq (Indiana University), and Prof. Hana Milanov (TUM School of Management) address this important question. For their analyses, the authors studied seven startups in Uganda, which develop medical technologies to advance women’s, maternal, and neonatal health.

First, the study shows that all ventures actively transcended their local environment and looked for resources (e.g., approaching investors, manufacturers, or universities) beyond Ugandan (or even African) borders. Such entrepreneurial resilience in refusing the limitations of the local context serves to inspire entrepreneurs to challenge the very meaning of a “resource-scarce context.” When knowledge, money, and goods flow amply beyond national borders, where and how can we draw the line between one context and another?

Second, the study finds that how startups dynamically combine their resource approaches is key to understanding the differences in technological advancements. While the natural tendency of startups in challenging resource environments may be to primarily “make do” with the resources at hand and only supplement inaccessible ones with purposeful search abroad, the findings show that consistently doing so leads to suboptimal outcomes. More successful ventures managed to increasingly adopt standard resource seeking practices (commonly found in higher income countries) by purposefully seeking specific resources that were more difficult to obtain. They combined such acquired resources with dynamically employing complementary creative “making do” approaches. In doing so, the article challenges entrepreneurs and scholars alike to rethink the idea of entrepreneurial resourcefulness from celebrating isolated instances of creatively “making do” towards a more long term, dynamic way of combining resource mobilization behaviors.

Third, the authors were able to trace the differences between less and more successful ventures to their participation in early “catalytic events”—e.g., incubator or contest participations. While the less successful startups were first exposed to local events, which reinforced their “making do” approaches, the more successful ones were first exposed to international catalytic events, that opened their resource seeking repertoire to approaches pursued by startups in Europe or the US. Importantly, both groups eventually participated in international (less successful group) and domestic (more successful) events, but it was the first catalytic event that left a strong mark on their approaches in responding to local resource scarcity. Thus, the study cautions entrepreneurs to not only choose their incubation and award contests wisely, but also be mindful about the sequence of such events.

In conclusion, the study aims to inspire new generations of technology entrepreneurs who face the challenge of getting more for less in helping those that need it the most.

Source: Reypens, L., Bacq, S., Milanov, H. Beyond Bricolage: Early-Stage Technology Venture Resource Mobilization in Resource-Scarce Contexts. Forthcoming Special issue on Entrepreneurial Resourcefulness, Journal of Business Venturing.