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How Can Business Ventures Attain Sustainability? : System Dynamics Approach

  • Journal of Knowledge Information Technology and Systems
  • Abbr : JKITS
  • 2018, 13(3), pp.399-409
  • DOI : 10.34163/jkits.2018.13.3.011
  • Publisher : Korea Knowledge Information Technology Society
  • Research Area : Interdisciplinary Studies > Interdisciplinary Research
  • Published : June 30, 2018

Ho Lee 1

1정보통신정책연구원

Accredited

ABSTRACT

The 2007–2008 global economic recession and consequent high unemployment have led to the emergence of business ventures that play a major role in local economic development and job creation. In particular, the success rate of technology-based business ventures is higher than that of other small businesses. The number of such success stories rises with proper incubation support. The Korean government is making persistent efforts to promote job-creating business ventures. Previous research has only contributed a fragmentary understanding of the sustainability of business ventures. By contrast, this study focuses on a more comprehensive understanding, by simultaneously considering the knowledge of the founder(s), sustainability, and the influence of support for ventures using the system dynamics method. This method helps address the factors critical to the sustainability of business ventures. It also helps to understand the correlations among the key factors such as types of knowledge and the incubation timing. The present study adopts the well-known resource-based view theory (RBV) as a framework. Human resources are a major source of venture business sustainability. Especially, the knowledge held by business founder(s) may ultimately determines the competitive advantage of the venture firm. Hence, in this study, knowledge resources of ventures are considered in three dimensions, such as the understanding of ways by which to start a new business, know-how about the business type, and a deep understanding of the relevant industry. This study finds that pre-entry knowledge and incubation timing are significant factors influencing the success of business ventures. By investigating the relationship between three types of knowledge and two possible incubation times, entrepreneurs can decide when to opt for incubation, a decision that depends on their pre-existing knowledge. This study also found that sustainability does not always improve even with proper incubation because of a negative relationship between management experience and technological experience. Incubation can only help correct biases stemming from the founder’s experience, but incubation before the launch of a business cannot improve the founder’s technological knowledge about his business since it is hard to acquire technological expertise without practical experience.

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