Experts' views on success factors for high tech start ups - lessons from Israel.
Anderson, Alistair R.
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Beyond the widely acknowledged importance of new business, the role of young exporting high-tech business in Israel and many other small economies is seen as vital for economic growth. Israel is small and geographically isolated from the main markets, suffers from security difficulties, but fosters a culture which promotes knowledge rich new technologies. Thus, new ventures with leading edge technologies and prospects of high growth and profitability offer a means to achieve the national goal of economical independence. Internationally however, the high-technology sector has recently suffered badly from the bursting of the dot.com bubble and the crash of the Nasdaq. Prior to the collapse, the remarkable enthusiasm for new high-technology ventures led to quite unrealistic expectations about the profitability and sustainability of many of these new companies. A characteristic of companies formed during the overheated period was the elevation of ideas over substance and in particular, the lack of a sound business practices. Nonetheless, the potential value of these high-technology companies is recognized and there is some evidence of their gradual re-emergence under difficult circumstances. To aid the sustainability of this re-emergence, this study addresses the issue of viable business models that could enhance the prospects of success. Such a model of best practices, if properly grounded in the experiences of both successful and unsuccessful entrepreneurs, may provide a template to guide the formation and operation of new and growing high-tech companies. The contribution of this paper is twofold, first to collate the experiences of practitioners and secondly, to synthesise these into a model that identifies factors critical for success, and factors that are important, but not deemed essential and the roles they play in shaping success. Thus the study captures the implicit knowledge embedded in the experiences of entrepreneurs and others who are, or have been, engaged in the realities of high-tech venture creation. It categorises and synthesises this material and by analysis, establishes a practical model specifying the factors and their criteria seen to be critical for improving the success of high-technology new ventures. We developed a multi stage study, consisting of multiple interviews of key players to develop a model, which was then tested and refined in a pilot and a final survey. The nature of this study thus provides empirical evidence regarding the factors deemed necessary for successful high-tech venturing in Israel. The paper begins by considering the role of high-tech ventures for economic growth generally and in Israel in particular. We then explain our methodology that builds upon the existing literature. Key factors and their roles are identified. From this, we present our initial findings as a tentative model which we operationalised in our pilot study. Our revised questionnaire was completed by some 80 experts and finally refined in a Delphi review. From these data we arrive at our final model.