Globalisation of internal venture capital opportunities in developing small and medium enterprises' relationships
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The global market has an impact on almost all Small and Medium Enterprises (SMEs), but the high-technology industry appears to be most affected by the changes coming about due to globalisation. The industry is confronted with shorter product life cycles, blurring of industry boundaries and not knowing your competition in the face of nearly impossible sustainable competitive advantage. High-tech SMEs are now turning towards strategic alliances and the networks of these alliances to compete effectively. This paper views the importance of the network of alliances from a dynamic capabilities perspective, which builds on the Resource-Based View (RBV) of the SME. We explore the development of strong-form trust to maintain and facilitate the advantages of the network members. The use of internal venture capital is suggested to be a superior strategy to develop a network with an inherent strong-form trust. The steps in which the internal venture capitalist may be involved for this trust development is outlined: appropriate identification, funding, network inclusion, Top Management Team (TMT) inclusion and communication.
This document has been peer reviewed.